Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
Results for the 12 Months Ended 31 October 2019Stephen MurdochBrian McArthur-Muscroft4 February 2020
2
Safe Harbour statementMicro Focus International
The following presentation is being made only to and is only directed at persons to whom such presentation may lawfully be communicated (ldquorelevant personsrdquo) Any person who is not a relevant person should not act or rely on this presentation or any of its contents Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments
This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite subscribe for or otherwise acquire securities in Micro Focus International plc (the ldquoCompanyrdquo) or any company which is a subsidiary of the Company
The release publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released published or distributed should inform themselves about and observe such restrictions
Certain statements contained in this presentation constitute forward-looking statements All statements other than statements of historical facts included in this presentation including without limitation those regarding the Companyrsquos financial condition business strategy plans and objectives are forward-looking statements These forward-looking statements can be identified by the use of forward-looking terminology including the terms ldquobelievesrdquo ldquoestimatesrdquo ldquoanticipatesrdquo ldquoexpectsrdquo ldquointendsrdquo ldquomayrdquo ldquowillrdquo or ldquoshouldrdquo or in each case their negative or other variations or comparable terminology Such forward-looking statements involve known and unknown risks uncertainties and other factors which may cause the actual results performance or achievements of the Company or industry results to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements Such forward-looking statements are based on numerous assumptions regarding the Companyrsquos present and future business strategies and the environment in which the Company will operate in the future Such risks uncertainties and other factors include among others the level of expenditure committed to development and deployment applications by organisations the level of deployment-related turnover expected by the Company the degree to which organisations adopt web-enabled services the rate at which large organisations migrate applications from the mainframe environment the continued use and necessity of the mainframe for business critical applications the degree of competition faced by the Company growth in the information technology services market general economic and business conditions particularly in the United States changes in technology and competition and the Companyrsquos ability to attract and retain qualified personnel These forward-looking statements speak only as at the date of this presentation Except as required by the Financial Conduct Authority or by law the Company does not undertake any obligation to update or revise publicly any forward-looking statement whether as a result of new information future events or otherwise
Introduction
Chief Executive Officer (CEO) Update
Chief Financial Officer (CFO) Update
Strategic amp Operational Review Update
Outlook and Guidance
Agenda
CEO UpdateStephen Murdoch
Financial Summary Revenue in line with revised guidance at $33484m down 73 on constant currency basis compared to the prior year Improvement in Adjusted EBITDA margin from 387 to 407 on a constant currency basis Adjusted EBITDA decreased by
26 to $13625m compared to the prior year
$23bn returned to shareholders (which equates to $537 per share)
Final dividend of 5833c proposed today giving total dividend of 11666 cents for the twelve month period
Delivering Innovation for customers 500+ Product releases delivering key innovation such as Robotic Process Automation (RPA) Artificial Intelligence Behavioural
Analytics Hybrid Cloud management and Container deployment capabilities
Solid progress has been made on our key integration amp operational improvement initiatives
Strategic amp Operational Review announced in August 2019 Business performance below expectations amp integration of HPE Software proving more challenging and taking longer
Comprehensive in scope covering both assessment of full range of strategic options for value creation and critical assessmentof current integration programme and overall execution
Review is substantially complete with findings and next steps covered later in this presentation
5
Year in review
Continuing operations
6
Solid progress in execution of our key integration amp operational simplification programs coupled with significant portfolio actions within the period
Making it easier to execute and move faster
Increasing agility3
Making it easier for us to do business and for people to do business with us
Simplifyingcore operations 2
Making it easier for us to connect with customers partners and across the organisation
Connecting teams 1
Systems
Simplifying our Business
Portfolio Actions
IT infrastructure migration 10000 PCs 25000 mail boxes2750 servers 139 applications
Business SystemsSingle Platform amp
Common Processes
ProcessesLegal Entity SimplificationStandardisation of Policies
Structure Finance amp HR Transformation
(60 reduced to 5 key locations)20 reduction in Real Estate
Single HR Platform
SUSE Divestiture310 Apps 17 Workstreams
1600 People 33 Legal Entities
Interset AcquisitionUser amp Entity Behavioural Analytics
capability being leveraged across the portfolio
7
bull The fundamentals underpinning our model and approach remain valid
bull We significantly underestimated the challenges that have emerged in the integration of the HPE Software business
bull The key issues in relation to this integration and overall execution are understood in detail progress has been made on these and there is clear visibility of what remains to be done
bull The pace of change within the Enterprise software market has accelerated and we now need to evolve our business model to capture the opportunities
Strategic amp Operational Review Conclusions
The Board has concluded that at this time the greatest opportunity for value creation is through the successful execution of the internal plan built on four key actions targeted to deliver by 2023 a business with
bull Stable revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of sustainable free cash flow bull Built on a platform to enable accretive portfolio actions to be taken
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
2
Safe Harbour statementMicro Focus International
The following presentation is being made only to and is only directed at persons to whom such presentation may lawfully be communicated (ldquorelevant personsrdquo) Any person who is not a relevant person should not act or rely on this presentation or any of its contents Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments
This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite subscribe for or otherwise acquire securities in Micro Focus International plc (the ldquoCompanyrdquo) or any company which is a subsidiary of the Company
The release publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released published or distributed should inform themselves about and observe such restrictions
Certain statements contained in this presentation constitute forward-looking statements All statements other than statements of historical facts included in this presentation including without limitation those regarding the Companyrsquos financial condition business strategy plans and objectives are forward-looking statements These forward-looking statements can be identified by the use of forward-looking terminology including the terms ldquobelievesrdquo ldquoestimatesrdquo ldquoanticipatesrdquo ldquoexpectsrdquo ldquointendsrdquo ldquomayrdquo ldquowillrdquo or ldquoshouldrdquo or in each case their negative or other variations or comparable terminology Such forward-looking statements involve known and unknown risks uncertainties and other factors which may cause the actual results performance or achievements of the Company or industry results to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements Such forward-looking statements are based on numerous assumptions regarding the Companyrsquos present and future business strategies and the environment in which the Company will operate in the future Such risks uncertainties and other factors include among others the level of expenditure committed to development and deployment applications by organisations the level of deployment-related turnover expected by the Company the degree to which organisations adopt web-enabled services the rate at which large organisations migrate applications from the mainframe environment the continued use and necessity of the mainframe for business critical applications the degree of competition faced by the Company growth in the information technology services market general economic and business conditions particularly in the United States changes in technology and competition and the Companyrsquos ability to attract and retain qualified personnel These forward-looking statements speak only as at the date of this presentation Except as required by the Financial Conduct Authority or by law the Company does not undertake any obligation to update or revise publicly any forward-looking statement whether as a result of new information future events or otherwise
Introduction
Chief Executive Officer (CEO) Update
Chief Financial Officer (CFO) Update
Strategic amp Operational Review Update
Outlook and Guidance
Agenda
CEO UpdateStephen Murdoch
Financial Summary Revenue in line with revised guidance at $33484m down 73 on constant currency basis compared to the prior year Improvement in Adjusted EBITDA margin from 387 to 407 on a constant currency basis Adjusted EBITDA decreased by
26 to $13625m compared to the prior year
$23bn returned to shareholders (which equates to $537 per share)
Final dividend of 5833c proposed today giving total dividend of 11666 cents for the twelve month period
Delivering Innovation for customers 500+ Product releases delivering key innovation such as Robotic Process Automation (RPA) Artificial Intelligence Behavioural
Analytics Hybrid Cloud management and Container deployment capabilities
Solid progress has been made on our key integration amp operational improvement initiatives
Strategic amp Operational Review announced in August 2019 Business performance below expectations amp integration of HPE Software proving more challenging and taking longer
Comprehensive in scope covering both assessment of full range of strategic options for value creation and critical assessmentof current integration programme and overall execution
Review is substantially complete with findings and next steps covered later in this presentation
5
Year in review
Continuing operations
6
Solid progress in execution of our key integration amp operational simplification programs coupled with significant portfolio actions within the period
Making it easier to execute and move faster
Increasing agility3
Making it easier for us to do business and for people to do business with us
Simplifyingcore operations 2
Making it easier for us to connect with customers partners and across the organisation
Connecting teams 1
Systems
Simplifying our Business
Portfolio Actions
IT infrastructure migration 10000 PCs 25000 mail boxes2750 servers 139 applications
Business SystemsSingle Platform amp
Common Processes
ProcessesLegal Entity SimplificationStandardisation of Policies
Structure Finance amp HR Transformation
(60 reduced to 5 key locations)20 reduction in Real Estate
Single HR Platform
SUSE Divestiture310 Apps 17 Workstreams
1600 People 33 Legal Entities
Interset AcquisitionUser amp Entity Behavioural Analytics
capability being leveraged across the portfolio
7
bull The fundamentals underpinning our model and approach remain valid
bull We significantly underestimated the challenges that have emerged in the integration of the HPE Software business
bull The key issues in relation to this integration and overall execution are understood in detail progress has been made on these and there is clear visibility of what remains to be done
bull The pace of change within the Enterprise software market has accelerated and we now need to evolve our business model to capture the opportunities
Strategic amp Operational Review Conclusions
The Board has concluded that at this time the greatest opportunity for value creation is through the successful execution of the internal plan built on four key actions targeted to deliver by 2023 a business with
bull Stable revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of sustainable free cash flow bull Built on a platform to enable accretive portfolio actions to be taken
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
Introduction
Chief Executive Officer (CEO) Update
Chief Financial Officer (CFO) Update
Strategic amp Operational Review Update
Outlook and Guidance
Agenda
CEO UpdateStephen Murdoch
Financial Summary Revenue in line with revised guidance at $33484m down 73 on constant currency basis compared to the prior year Improvement in Adjusted EBITDA margin from 387 to 407 on a constant currency basis Adjusted EBITDA decreased by
26 to $13625m compared to the prior year
$23bn returned to shareholders (which equates to $537 per share)
Final dividend of 5833c proposed today giving total dividend of 11666 cents for the twelve month period
Delivering Innovation for customers 500+ Product releases delivering key innovation such as Robotic Process Automation (RPA) Artificial Intelligence Behavioural
Analytics Hybrid Cloud management and Container deployment capabilities
Solid progress has been made on our key integration amp operational improvement initiatives
Strategic amp Operational Review announced in August 2019 Business performance below expectations amp integration of HPE Software proving more challenging and taking longer
Comprehensive in scope covering both assessment of full range of strategic options for value creation and critical assessmentof current integration programme and overall execution
Review is substantially complete with findings and next steps covered later in this presentation
5
Year in review
Continuing operations
6
Solid progress in execution of our key integration amp operational simplification programs coupled with significant portfolio actions within the period
Making it easier to execute and move faster
Increasing agility3
Making it easier for us to do business and for people to do business with us
Simplifyingcore operations 2
Making it easier for us to connect with customers partners and across the organisation
Connecting teams 1
Systems
Simplifying our Business
Portfolio Actions
IT infrastructure migration 10000 PCs 25000 mail boxes2750 servers 139 applications
Business SystemsSingle Platform amp
Common Processes
ProcessesLegal Entity SimplificationStandardisation of Policies
Structure Finance amp HR Transformation
(60 reduced to 5 key locations)20 reduction in Real Estate
Single HR Platform
SUSE Divestiture310 Apps 17 Workstreams
1600 People 33 Legal Entities
Interset AcquisitionUser amp Entity Behavioural Analytics
capability being leveraged across the portfolio
7
bull The fundamentals underpinning our model and approach remain valid
bull We significantly underestimated the challenges that have emerged in the integration of the HPE Software business
bull The key issues in relation to this integration and overall execution are understood in detail progress has been made on these and there is clear visibility of what remains to be done
bull The pace of change within the Enterprise software market has accelerated and we now need to evolve our business model to capture the opportunities
Strategic amp Operational Review Conclusions
The Board has concluded that at this time the greatest opportunity for value creation is through the successful execution of the internal plan built on four key actions targeted to deliver by 2023 a business with
bull Stable revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of sustainable free cash flow bull Built on a platform to enable accretive portfolio actions to be taken
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
CEO UpdateStephen Murdoch
Financial Summary Revenue in line with revised guidance at $33484m down 73 on constant currency basis compared to the prior year Improvement in Adjusted EBITDA margin from 387 to 407 on a constant currency basis Adjusted EBITDA decreased by
26 to $13625m compared to the prior year
$23bn returned to shareholders (which equates to $537 per share)
Final dividend of 5833c proposed today giving total dividend of 11666 cents for the twelve month period
Delivering Innovation for customers 500+ Product releases delivering key innovation such as Robotic Process Automation (RPA) Artificial Intelligence Behavioural
Analytics Hybrid Cloud management and Container deployment capabilities
Solid progress has been made on our key integration amp operational improvement initiatives
Strategic amp Operational Review announced in August 2019 Business performance below expectations amp integration of HPE Software proving more challenging and taking longer
Comprehensive in scope covering both assessment of full range of strategic options for value creation and critical assessmentof current integration programme and overall execution
Review is substantially complete with findings and next steps covered later in this presentation
5
Year in review
Continuing operations
6
Solid progress in execution of our key integration amp operational simplification programs coupled with significant portfolio actions within the period
Making it easier to execute and move faster
Increasing agility3
Making it easier for us to do business and for people to do business with us
Simplifyingcore operations 2
Making it easier for us to connect with customers partners and across the organisation
Connecting teams 1
Systems
Simplifying our Business
Portfolio Actions
IT infrastructure migration 10000 PCs 25000 mail boxes2750 servers 139 applications
Business SystemsSingle Platform amp
Common Processes
ProcessesLegal Entity SimplificationStandardisation of Policies
Structure Finance amp HR Transformation
(60 reduced to 5 key locations)20 reduction in Real Estate
Single HR Platform
SUSE Divestiture310 Apps 17 Workstreams
1600 People 33 Legal Entities
Interset AcquisitionUser amp Entity Behavioural Analytics
capability being leveraged across the portfolio
7
bull The fundamentals underpinning our model and approach remain valid
bull We significantly underestimated the challenges that have emerged in the integration of the HPE Software business
bull The key issues in relation to this integration and overall execution are understood in detail progress has been made on these and there is clear visibility of what remains to be done
bull The pace of change within the Enterprise software market has accelerated and we now need to evolve our business model to capture the opportunities
Strategic amp Operational Review Conclusions
The Board has concluded that at this time the greatest opportunity for value creation is through the successful execution of the internal plan built on four key actions targeted to deliver by 2023 a business with
bull Stable revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of sustainable free cash flow bull Built on a platform to enable accretive portfolio actions to be taken
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
Financial Summary Revenue in line with revised guidance at $33484m down 73 on constant currency basis compared to the prior year Improvement in Adjusted EBITDA margin from 387 to 407 on a constant currency basis Adjusted EBITDA decreased by
26 to $13625m compared to the prior year
$23bn returned to shareholders (which equates to $537 per share)
Final dividend of 5833c proposed today giving total dividend of 11666 cents for the twelve month period
Delivering Innovation for customers 500+ Product releases delivering key innovation such as Robotic Process Automation (RPA) Artificial Intelligence Behavioural
Analytics Hybrid Cloud management and Container deployment capabilities
Solid progress has been made on our key integration amp operational improvement initiatives
Strategic amp Operational Review announced in August 2019 Business performance below expectations amp integration of HPE Software proving more challenging and taking longer
Comprehensive in scope covering both assessment of full range of strategic options for value creation and critical assessmentof current integration programme and overall execution
Review is substantially complete with findings and next steps covered later in this presentation
5
Year in review
Continuing operations
6
Solid progress in execution of our key integration amp operational simplification programs coupled with significant portfolio actions within the period
Making it easier to execute and move faster
Increasing agility3
Making it easier for us to do business and for people to do business with us
Simplifyingcore operations 2
Making it easier for us to connect with customers partners and across the organisation
Connecting teams 1
Systems
Simplifying our Business
Portfolio Actions
IT infrastructure migration 10000 PCs 25000 mail boxes2750 servers 139 applications
Business SystemsSingle Platform amp
Common Processes
ProcessesLegal Entity SimplificationStandardisation of Policies
Structure Finance amp HR Transformation
(60 reduced to 5 key locations)20 reduction in Real Estate
Single HR Platform
SUSE Divestiture310 Apps 17 Workstreams
1600 People 33 Legal Entities
Interset AcquisitionUser amp Entity Behavioural Analytics
capability being leveraged across the portfolio
7
bull The fundamentals underpinning our model and approach remain valid
bull We significantly underestimated the challenges that have emerged in the integration of the HPE Software business
bull The key issues in relation to this integration and overall execution are understood in detail progress has been made on these and there is clear visibility of what remains to be done
bull The pace of change within the Enterprise software market has accelerated and we now need to evolve our business model to capture the opportunities
Strategic amp Operational Review Conclusions
The Board has concluded that at this time the greatest opportunity for value creation is through the successful execution of the internal plan built on four key actions targeted to deliver by 2023 a business with
bull Stable revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of sustainable free cash flow bull Built on a platform to enable accretive portfolio actions to be taken
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
6
Solid progress in execution of our key integration amp operational simplification programs coupled with significant portfolio actions within the period
Making it easier to execute and move faster
Increasing agility3
Making it easier for us to do business and for people to do business with us
Simplifyingcore operations 2
Making it easier for us to connect with customers partners and across the organisation
Connecting teams 1
Systems
Simplifying our Business
Portfolio Actions
IT infrastructure migration 10000 PCs 25000 mail boxes2750 servers 139 applications
Business SystemsSingle Platform amp
Common Processes
ProcessesLegal Entity SimplificationStandardisation of Policies
Structure Finance amp HR Transformation
(60 reduced to 5 key locations)20 reduction in Real Estate
Single HR Platform
SUSE Divestiture310 Apps 17 Workstreams
1600 People 33 Legal Entities
Interset AcquisitionUser amp Entity Behavioural Analytics
capability being leveraged across the portfolio
7
bull The fundamentals underpinning our model and approach remain valid
bull We significantly underestimated the challenges that have emerged in the integration of the HPE Software business
bull The key issues in relation to this integration and overall execution are understood in detail progress has been made on these and there is clear visibility of what remains to be done
bull The pace of change within the Enterprise software market has accelerated and we now need to evolve our business model to capture the opportunities
Strategic amp Operational Review Conclusions
The Board has concluded that at this time the greatest opportunity for value creation is through the successful execution of the internal plan built on four key actions targeted to deliver by 2023 a business with
bull Stable revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of sustainable free cash flow bull Built on a platform to enable accretive portfolio actions to be taken
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
7
bull The fundamentals underpinning our model and approach remain valid
bull We significantly underestimated the challenges that have emerged in the integration of the HPE Software business
bull The key issues in relation to this integration and overall execution are understood in detail progress has been made on these and there is clear visibility of what remains to be done
bull The pace of change within the Enterprise software market has accelerated and we now need to evolve our business model to capture the opportunities
Strategic amp Operational Review Conclusions
The Board has concluded that at this time the greatest opportunity for value creation is through the successful execution of the internal plan built on four key actions targeted to deliver by 2023 a business with
bull Stable revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of sustainable free cash flow bull Built on a platform to enable accretive portfolio actions to be taken
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivityto capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
CFO UpdateBrian McArthur-Muscroft
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
Revenue declined 73 period-on-period on a CCY basis for the twelve months to 31 October 2019
Licence revenue decline of 72 in FY19 is less than the FY18 decline of 128
Decline in maintenance revenue was impacted by one off events including the disposal of Atalla and selling to the US Government via a strategic partner rather than direct Restating for these two items maintenance revenue decline would have been 47 (FY19 actual 62) See appendix 2 for further detail
SaaS and other recurring and Consulting revenue accounts for 26ppts of the overall decline
Adjusted EBITDA margin increase of 20 ppt to 407 in the twelve months ended 31 October 2019
Diluted adjusted Earnings per share from continuing operations of 19589 cents - an increase of 45 primarily driven by a lower share count
10
Micro Focus International Financial performance (1 of 2)
Diluted adjusted EPS from continuing operations
FY19 FY18Reported CCY
Licence 8000 8624 (72)Maintenance 20576 21937 (62)SaaS and other recurring 2797 3148 (111)Consulting 2179 2777 (215)Constant currency revenue (before haircut) 33552 36486 (80)Deferred revenue haircut (68) (347) (804)Constant currency revenue 33484 36139 (73)Total constant currency costs (19859) (22144) (103)Constant currency adjusted EBITDA 13625 13995 (26)
Constant currency adjusted EBITDA margin 407 387 20 ppt
Per share data presented at Actual rates Diluted adjusted EPS (cents) 19589 18751 45Dividend per share (cents) 11666 10084 157
Change
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other intergration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (103)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
11
HPE Software related actual exceptional charge of $2943m Total HPE software exceptional forecast spend still on target at $960M assuming delivery of systems project to current schedule
In the twelve months to 31 October 2019 adjusted cash conversion of 953 and free cash flow of $5762m Long term adjusted cash conversion target range remains 95-100
Underlying free cash flow of c $700-800m due to tailwind of the end of exceptional costs partially offset by tax increases
Net debt of $43385m and period end gearing of 32x Adjusted EBITDA Further gearing analysis presented later in this section
Other is net of costs and revenue
Cash flow includes results for SUSE for entire period in FY18 but for only 4 months in FY19
Adjusted EBITDA for FY19 is for continuing operations only the comparatives include the discontinued operation
FY19 FY18Reported Reported
Exceptional spend (at actual rates)System related spend ($m) 1263 1144 104Other integration costs ($m) 1680 2935 (428)Total HPE Software related exceptional spend 2943 4079 (278)Other ($m) (01) 318 (1003)Total (reported in operating profit) 2942 4397 (331)
Adjusted cash conversion 953 1057 (104)pptFree cash flow ($m) 5762 7556 (237)
Net debt ($m) 43385 42535 20 Net debt to Adjusted EBITDA ratio 32x 28x 04x
Change
Financial performance (2 of 2) Micro Focus International
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA56370000000000005575300000000000076226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA23116473NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsMovements in provisionsOther non-cash itemsWorking capitalCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANANA117739135900000000000006NALines70215407000000000000554070000000000005563700000000000055753000000000000762266226504900000000000034658429942990954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base+1NANANA23116473NANANANANANANANA56370000000000005575300000000000076226NANANANANA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2Base-NA1614NANANANANA117739135900000000000006NA1NA54070000000000005NANANANANA5049000000000000346584299NA0954545454545454590863636363636363650772727272727272710681818181818181770590909090909090940504090909090909091203181818181818181802272727272727272701363636363636363545454545454545456E-2
Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow7021NA54070000000000005NANA6226NANANA4299InvisibleAdjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA7021NA6116226NA62265049000000000000346579999999999995NALabel+Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA703116NANANANANALabel-Adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA1614NANANANA117739135900000000000006NALines702154070000000000005540700000000000056116226622650490000000000003465842994299095085075065055000000000000004045035025015005Base+1NANANA703116NANANANANANANANA6116226NANANANANA095085075065055000000000000004045035025015005Base-NA1614NANANANA117739135900000000000006NA1NA54070000000000005NANANANA5049000000000000346584299NA095085075065055000000000000004045035025015005
ampArialRegularamp8ampK01+049httpswwwvertex42comExcelTemplateswaterfall-charthtmlampArialRegularamp8ampK01+049Waterfall Chart Template by Vertex42com
Pillars
Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flow13625NA14025NA11083NANA1056NANANA5759InvisibleAdjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA14025NA14025NA110831056NA105682896615NALabel+Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNA40NANANANA312NANANANANALabel-Adjusted EBITDA (cont ops)Adjusted EBITDA (SUSE)Group adjusted EBITDAExceptional itemsAdjusted EBITDA less exceptionalsChange in working capitalOther non-cash itemsCash from operationsInterest paymentsTax paymentsCapex and intangiblesFree cash flowNANANA2942NA835NANA22711674856NALines136251402514025110831108310248105610568289661557595759095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base+1NA40NANANANA312NANANANANANA14025NANANANA1056NANANANANA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2Base-NANANA2942NA835NANA22711674856NA1NANANA11083NA10248NANA828966155759NA095833333333333337087507916666666666666307083333333333333706250541666666666666630458333333333333310375029166666666666669020833333333333334012541666666666666664E-2
$400m
$14025m
$2942m
Leverage profile
Net debt
October 2017April 2018October 2018April 2019October 20194409742004254380743385AEBITDA ratio
October 2017April 2018October 2018April 2019October 20193062079022290118929370629370629371282732
Debt maturity profile
Term loans
FY20FY21FY22FY23FY23+0046509618074999998143129059463350998999999999983308165575
FY20FY21FY22FY23FY23+
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total200150188619Total
6 months to Apr-176 months to Oct-176 months to Apr-18Total incurred todateFY18FY19FY20Total750
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
H119 | |||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4046) | 75 | 1067 | 88 | (2816) | ||||||||||||||||
Selling and distribution costs | (6027) | 29 | 2398 | 05 | (3595) | ||||||||||||||||
Research and development expenses | (2505) | 14 | 00 | 64 | (103) | (2530) | |||||||||||||||
Administrative expenses | (3667) | 1496 | 700 | 98 | 171 | 195 | (1007) | ||||||||||||||
Total costs | (16245) | 1614 | 700 | 3563 | 328 | (103) | 195 | (9948) | |||||||||||||
Check | -9948 | -11368 | |||||||||||||||||||
H118 | -00 | ||||||||||||||||||||
Reported | Exceptional costs | Share based payments | Amortisation of purchased intangible assets | Depreciation of property plant and equipment | Product development intangible costs capitalised | Foreign exchange gains | Included within AEBITDA | ||||||||||||||
Cost of sales | (4826) | 251 | 1320 | 108 | (3147) | ||||||||||||||||
Selling and distribution costs | (5741) | 120 | 2203 | 05 | (3413) | ||||||||||||||||
Research and development expenses | (2544) | 75 | 76 | (146) | (2539) | ||||||||||||||||
Administrative expenses | (4484) | 1508 | 250 | 101 | 152 | 204 | (2269) | ||||||||||||||
Total costs | (17595) | 1954 | 250 | 3624 | 341 | (146) | 204 | (11368) | |||||||||||||
CCY Impact | 376 | ||||||||||||||||||||
Total costs as reported | (10992) |
6 months to Oct-16 | 6 months to Apr-17 | 6 months to Oct-17 | 6 months to Apr-18 | Total incurred todate | FY18 | FY19 | FY20 | Total | ||||||||||||
Intergration costs | 14 | 20 | 20 | 54 | ||||||||||||||||
Property severance and legal | 2 | 10 | 50 | 62 | ||||||||||||||||
Exceptional CAPEX- FAST | 10 | 10 | 75 | 95 | ||||||||||||||||
Costs to come | 200 | 150 | 189 | |||||||||||||||||
Total | 750 | |||||||||||||||||||
Intergration costs | Property severance and legal | Exceptional CAPEX- FAST | To come | Total | ||||||||||||||||
6 months to Apr-17 | 14 | 2 | 10 | |||||||||||||||||
6 months to Oct-17 | 20 | 10 | 10 | |||||||||||||||||
6 months to Apr-18 | 20 | 50 | 75 | |||||||||||||||||
Total incurred todate | 54 | 62 | 95 | |||||||||||||||||
FY18 | 211 | 200 | ||||||||||||||||||
FY19 | 411 | 150 | ||||||||||||||||||
FY20 | 561 | 189 | ||||||||||||||||||
Total | 750 |
DRAFT full year databook Confidential and limited to restricted distribution list Numbers may be subject to change until document is finalised | ||||||||||||||||||||||||||||||||||||||||||||||
REVENUE - ACTUAL v CCY | ||||||||||||||||||||||||||||||||||||||||||||||
Twelve months to 31 Oct 2019 | Twelve months to 31 Oct 2018 | |||||||||||||||||||||||||||||||||||||||||||||
ACTUAL (REVISED) | CONSTANT CURRENCY | CHANGE | CHANGE | |||||||||||||||||||||||||||||||||||||||||||
Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | Licence | Maintenance | SaaS amp other recurring | Consulting | Total | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
AMC | 1709 | 3261 | 00 | 117 | 5087 | 1801 | 3281 | 00 | 119 | 5201 | (92) | (21) | 00 | (02) | (114) | -51 | -06 | 00 | -14 | -22 | ||||||||||||||||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | 1360 | 5019 | 956 | 313 | 7647 | (57) | (165) | (77) | (131) | (430) | -42 | -33 | -81 | -419 | -56 | ||||||||||||||||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | 2470 | 7260 | 141 | 1492 | 11364 | (95) | (802) | (31) | (217) | (1146) | -39 | -111 | -220 | -146 | -101 | ||||||||||||||||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | 2136 | 4406 | 352 | 619 | 7513 | (279) | (239) | (03) | (180) | (700) | -131 | -54 | -08 | -290 | -93 | ||||||||||||||||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | 857 | 1970 | 1700 | 234 | 4761 | (100) | (135) | (240) | (68) | (544) | -117 | -68 | -141 | -292 | -114 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | ||||||||||||||||||||||||||
Regional | ||||||||||||||||||||||||||||||||||||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 3833 | 11850 | 2334 | 1136 | 19154 | 24 | (1110) | (273) | (364) | (1723) | 06 | -94 | -117 | -321 | -90 | ||||||||||||||||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | 3614 | 7915 | 646 | 1285 | 13460 | (664) | (255) | (47) | (162) | (1128) | -184 | -32 | -73 | -126 | -84 | ||||||||||||||||||||||||||
Asia Pacific amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 1176 | 2172 | 169 | 356 | 3873 | 16 | 04 | (31) | (72) | (83) | 13 | 02 | -183 | -202 | -21 | ||||||||||||||||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | 8624 | 21937 | 3148 | 2777 | 36486 | (624) | (1361) | (351) | (598) | (2934) | -72 | -62 | -112 | -215 | -80 | ||||||||||||||||||||||||||
Haircut | 00 | (60) | (08) | (68) | 00 | (279) | (55) | (14) | (348) | 00 | 219 | 46 | 14 | 279 | 00 | -786 | -846 | -1000 | -804 | |||||||||||||||||||||||||||
Revenue after haircut | 8000 | 20516 | 2789 | 2179 | 33484 | 00 | 8624 | 21657 | 3094 | 2763 | 36139 | (624) | (1141) | (305) | (584) | (2655) | -72 | -53 | -99 | -211 | -73 | |||||||||||||||||||||||||
00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | 00 | (00) | 00 | 00 | (00) | 00 | (00) | 00 | 00 | (00) | |||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2023+ | Total | |||||||
000 | -1415206190 | -16549500 | -3509990000 | -330816557500 | -477502116581 | |||||||
-477502116581 | Check | |||||||||||
000 | ||||||||||||
0 | 1415 | 17 | 35 | 3308 | 477502 | |||||||
477500 | Per ARA | |||||||||||
-002 | Diff | |||||||||||
FY19 | ||||
Reported maintenance revenue | 20576 | |||
CCY change | (62) | |||
Adjustments | ||||
Atalla | 06 | |||
US Government | 09 | |||
15 | ||||
Adjusted maintenance revenue decline | (47) | |||
FY19 | CCY change to FY18 (restated) | ||||||||||||||||||||||
$m | Licence | Maintenance | SaaS and other recurring | Consulting | Total | Licence | Maintenance | SaaS and other recurring | Consulting | Total | |||||||||||||
AMC | 1709 | 3261 | - 0 | 117 | 5087 | (51) | (06) | 00 | (14) | (22) | |||||||||||||
ADM | 1303 | 4854 | 878 | 182 | 7217 | (42) | (33) | (81) | (419) | (56) | |||||||||||||
ITOM | 2375 | 6458 | 110 | 1275 | 10218 | (39) | (111) | (220) | (146) | (101) | |||||||||||||
Security | 1857 | 4167 | 350 | 439 | 6813 | (131) | (54) | (08) | (290) | (93) | |||||||||||||
IMampG | 756 | 1836 | 1459 | 166 | 4217 | (117) | (68) | (141) | (292) | (114) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
North America | 3858 | 10740 | 2061 | 772 | 17431 | 06 | (94) | (117) | (321) | (90) | |||||||||||||
International | 2950 | 7660 | 599 | 1123 | 12332 | (184) | (32) | (73) | (126) | (84) | |||||||||||||
Asia Pac amp Japan | 1192 | 2176 | 138 | 284 | 3789 | 13 | 02 | (183) | (202) | (21) | |||||||||||||
Revenue before haircut | 8000 | 20576 | 2797 | 2179 | 33552 | (72) | (62) | (111) | (215) | (80) | |||||||||||||
Haircut | 00 | (60) | (08) | 00 | (68) | na | (786) | (846) | (1000) | (804) | |||||||||||||
Revenue | 8000 | 20516 | 2789 | 2179 | 33484 | (72) | (53) | (99) | (211) | (73) | |||||||||||||
Net debt | Adjusted EBITDA | |||||||||
April 2016 | 1078 | 20x | 32 | 5325 | ||||||
April 2017 | 1411 | 22x | 32 | 6409 | ||||||
October 2017 | 4410 | 31x | 32 | 14401 | ||||||
April 2018 | 4200 | 29x | 32 | 1430 | ||||||
October 2018 | 4254 | 28x | 32 | 132938 | ||||||
April 2019 | 3807 | 27x | 32 | 118969 | ||||||
October 2019 | 4339 | 32x | 32 | 13625 | ||||||
Term loans | ||||||||||
FY20 | 0 | |||||||||
FY21 | 05 | |||||||||
FY22 | 1431 | |||||||||
FY23 | 35 | |||||||||
FY23+ | 3308 | |||||||||
477502 | ||||||||||
Cash |
FY19 | FY18 | |||||
$m | $m | |||||
Adjusted EBITDA | ||||||
- Continuing operations | 13625 | 14136 | ||||
- Discontinued operation | 40 | 116 | ||||
Total Adjusted EBITDA | 14025 | 15296 | ||||
Less Exceptional items (included in AEBITDA) | -2942 | -4397 | ||||
Adjusted EBITDA less exceptional items | 11083 | 10899 | ||||
Cash from operations | 1056 | 11516 | ||||
Adjusted Cash conversion ratio | 953 | 1057 |
FY19 | FY18 | |||||
Cash generated from operations before working capital | 11775 | 11912 | ||||
Movement in working capital | (1212) | (396) | ||||
Cash generated from operations | 10563 | 11516 | ||||
Interest payments | (2271) | (2195) | ||||
Bank loan costs | 00 | (108) | ||||
Tax payments | (1674) | (790) | ||||
Purchase of intangible assets | (293) | (565) | ||||
Purchase of property plant and equipment | (563) | (302) | ||||
Free cash flow | 5762 | 7556 | ||||
Adjusted cash conversion | 953 | 1057 | ||||
HPE Software related exceptional spend (at actual rates) | ||||||
System related spend | ||||||
Other | ||||||
Total |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (cont ops) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 096 | 008 | |||||||||||||||||
Adjusted EBITDA (SUSE) | 400 | 14025 | ERRORNA | 14025 | ERRORNA | 40 | ERRORNA | 14025 | 40 | ERRORNA | 088 | 008 | ||||||||||||||||||
Group adjusted EBITDA | x | 00 | 14025 | 14025 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 079 | 008 | |||||||||||||||||
Exceptional items | (2942) | 11083 | ERRORNA | ERRORNA | 11083 | ERRORNA | 2942 | 14025 | ERRORNA | 2942 | 071 | 008 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 00 | 11083 | 11083 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 063 | 008 | |||||||||||||||||
Change in working capital | (835) | 10248 | ERRORNA | ERRORNA | 10248 | ERRORNA | 835 | 11083 | ERRORNA | 835 | 054 | 008 | ||||||||||||||||||
Other non-cash items | 312 | 1056 | ERRORNA | 1056 | ERRORNA | 312 | ERRORNA | 1056 | 312 | ERRORNA | 046 | 008 | ||||||||||||||||||
Cash from operations | x | 00 | 1056 | 1056 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 038 | 008 | |||||||||||||||||
Interest payments | (2271) | 8289 | ERRORNA | ERRORNA | 8289 | ERRORNA | 2271 | 1056 | ERRORNA | 2271 | 029 | 008 | ||||||||||||||||||
Tax payments | (1674) | 6615 | ERRORNA | ERRORNA | 6615 | ERRORNA | 1674 | 8289 | ERRORNA | 1674 | 021 | 008 | ||||||||||||||||||
Capex and intangibles | (856) | 5759 | ERRORNA | ERRORNA | 5759 | ERRORNA | 856 | 6615 | ERRORNA | 856 | 013 | 008 | ||||||||||||||||||
Free cash flow | x | 00 | 5759 | 5759 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 004 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down |
100 | ||||||||||||||||||||||||||
H119 | Change on H118 at CCY | |||||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | |||||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | - | (35) | (01) | ||||||||||||||||
ADM | 630 | 2465 | 425 | 104 | 3624 | (14) | (23) | (127) | (388) | (51) | ||||||||||||||||
ITOM | 1080 | 3444 | 62 | 670 | 5256 | (169) | (24) | (127) | (126) | (72) | ||||||||||||||||
Security | 691 | 2100 | 192 | 244 | 3227 | (239) | (36) | 171 | (220) | (95) | ||||||||||||||||
IMampG | 316 | 940 | 757 | 87 | 2100 | 26 | (48) | (141) | (315) | (88) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | 00 | (37) | (05) | 00 | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
Americas | 1532 | 5572 | 1057 | 433 | 8594 | (06) | (50) | (96) | (278) | (63) | 100 | |||||||||||||||
EMEA | 1386 | 3897 | 306 | 584 | 6173 | (219) | (07) | (78) | (111) | (77) | ||||||||||||||||
Asia Pac amp Japan | 519 | 1111 | 73 | 143 | 1846 | (55) | 38 | (284) | (192) | (27) | ||||||||||||||||
Revenue before haircut | 3437 | 10580 | 1436 | 1160 | 16613 | (111) | (26) | (104) | (191) | (65) | ||||||||||||||||
Haircut | - | (37) | (05) | - | (42) | - | (824) | (884) | (1000) | (843) | ||||||||||||||||
Revenue | 3437 | 10543 | 1431 | 116 | 16571 | (111) | (10) | (83) | (183) | (53) | ||||||||||||||||
H119 | Change on H118 at CCY | ||||||||||||||||||||||
Licence | Maintanance | SaaS and other recurring | Consulting | Total | Licence | Maintanance | SaaS and other recurring | Consulting | Total | ||||||||||||||
AMC | 720 | 1631 | - | 55 | 2406 | 14 | (07) | na | (35) | (01) | |||||||||||||
ADM | 630 | 2466 | 426 | 104 | 3626 | (14) | (23) | (126) | (388) | (51) | |||||||||||||
ITOM | 1080 | 3445 | 62 | 670 | 5257 | (169) | (24) | (127) | (126) | (72) | |||||||||||||
Security | 691 | 2099 | 192 | 244 | 3226 | (239) | (36) | 164 | (223) | (95) | |||||||||||||
IMampG | 314 | 940 | 757 | 88 | 2099 | 16 | (48) | (140) | (302) | (88) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (839) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Americas | 1470 | 5577 | 1057 | 435 | 8539 | (126) | (99) | (123) | (297) | (120) | |||||||||||||
EMEA | 1425 | 3894 | 306 | 583 | 6208 | (128) | 82 | 32 | (86) | 07 | |||||||||||||
Asia Pac amp Japan | 540 | 1110 | 74 | 143 | 1867 | (17) | 37 | (275) | (192) | (17) | |||||||||||||
Haircut | - | (38) | (05) | - | (43) | na | (819) | (884) | (1000) | (842) | |||||||||||||
Revenue | 3435 | 10543 | 1432 | 1161 | 16571 | (111) | (10) | (82) | (182) | (53) | |||||||||||||
Six months | Six months | ||||||||
ended | ended | ||||||||
30-Apr-19 | 30-Apr-18 | ||||||||
$m | $m | ||||||||
Adjusted EBITDA | 7021 | 7105 | -1 | ||||||
Less | ERRORDIV0 | ||||||||
Exceptional items | -1614 | -1954 | -17 | ||||||
Movements in provisions | 23 | 140 | -84 | ||||||
Other non-cash items | 116 | 168 | -31 | ||||||
Cash generated from operations before working capital | 5753 | 6719 | -14 | ||||||
Movement in working capital | 473 | -1769 | -127 | ||||||
Cash generated from operations | 6226 | 495 | 26 | ||||||
Interest payments | -1177 | -1228 | -4 | ||||||
Bank loan costs | - | -107 | ERRORVALUE | ||||||
Tax payments | -391 | -71 | -45 | ||||||
Purchase of intangible assets | -128 | -539 | -76 | ||||||
Purchase of property plant and equipment | -231 | -22 | 5 | ||||||
Free cash flow | 4299 | 2137 | 101 |
copy 2015 Vertex42 LLC | ||||||||||||||||||||||||||||||
Waterfall Chart Template | ||||||||||||||||||||||||||||||
Instructions | ||||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | ||||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | ||||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | ||||||||||||||||||||||||||||||
a pillar should be zero | ||||||||||||||||||||||||||||||
To edit or format different parts of this chart select | ||||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | ||||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | ||||||||||||||||||||||||||||||
list then click on Format Selection | ||||||||||||||||||||||||||||||
See the Help worksheet for additional Help | ||||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | |||||||||||||||||
Adjusted EBITDA (continuing operations) | x | 13625 | 13625 | 13625 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 010 | |||||||||||||||||
Exceptional items | (2942) | 10683 | ERRORNA | ERRORNA | 10683 | ERRORNA | 2942 | 136250 | ERRORNA | 29420 | 085 | 010 | ||||||||||||||||||
Adjusted EBITDA less exceptionals | x | 10683 | 21366 | 21366 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 075 | 010 | |||||||||||||||||
Change in working capital | (803) | 20563 | ERRORNA | ERRORNA | 20563 | ERRORNA | 803 | 213660 | ERRORNA | 8030 | 065 | 010 | ||||||||||||||||||
Impact of SUSE | 680 | 21243 | ERRORNA | 21243 | ERRORNA | 680 | ERRORNA | 212430 | 6800 | ERRORNA | 055 | 010 | ||||||||||||||||||
Cash from operations | x | 10560 | 31803 | 31803 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 045 | 010 | |||||||||||||||||
Interest payments | (2271) | 29532 | ERRORNA | ERRORNA | 29532 | ERRORNA | 2271 | 318030 | ERRORNA | 22710 | 035 | 010 | ||||||||||||||||||
Tax payments | (1674) | 27858 | ERRORNA | ERRORNA | 27858 | ERRORNA | 1674 | 295320 | ERRORNA | 16740 | 025 | 010 | ||||||||||||||||||
Capex and intangibles | (856) | 27002 | ERRORNA | ERRORNA | 27002 | ERRORNA | 856 | 278580 | ERRORNA | 8560 | 015 | 010 | ||||||||||||||||||
Free cash flow | x | 5759 | 32761 | 32761 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
copy 2015 Vertex42 LLC | |||||||||||||||||||||||||||||
Waterfall Chart Template | |||||||||||||||||||||||||||||
Instructions | |||||||||||||||||||||||||||||
In the table edit the Label Pillar and Delta values | |||||||||||||||||||||||||||||
Place an x in the Pillar column to show a value as a | |||||||||||||||||||||||||||||
full column Except for the start value the Delta value for | |||||||||||||||||||||||||||||
a pillar should be zero | |||||||||||||||||||||||||||||
To edit or format different parts of this chart select | |||||||||||||||||||||||||||||
the Chart and go to Layout gt Current Selection and | |||||||||||||||||||||||||||||
choose the series you want to edit from the drop-down | |||||||||||||||||||||||||||||
list then click on Format Selection | |||||||||||||||||||||||||||||
See the Help worksheet for additional Help | |||||||||||||||||||||||||||||
Label | Pillar Vertex42 PillarsPlace a letter x in this column to display the Flow value as a full-length bar or column Except for the Start column the Delta for a pillar should be zero (0) | Delta Vertex42 DeltaEnter the positive and negative adjustments in this column or zero (0) for a pillar | Flow Vertex42 FlowThis column is labled Flow because in many waterfall charts this would represent Cash Flow | Pillars | Base+ | Base- | Delta+ | Delta- | Invisible | Label+ | Label- | Lines | LineY | ||||||||||||||||
Adjusted EBITDA | x | 7021 | 7021 | 7021 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 095 | 009 | ||||||||||||||||
Exceptional items | (1614) | 5407 | ERRORNA | ERRORNA | 5407 | ERRORNA | 1614 | 70210 | ERRORNA | 16140 | 086 | 009 | |||||||||||||||||
Adjusted EBITDA less exceptionals | x | 5407 | 5407 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 077 | 009 | |||||||||||||||||
Movements in provisions | 230 | 5637 | ERRORNA | 5637 | ERRORNA | 230 | ERRORNA | 56370 | 2300 | ERRORNA | 068 | 009 | |||||||||||||||||
Other non-cash items | 116 | 5753 | ERRORNA | 5753 | ERRORNA | 116 | ERRORNA | 57530 | 1160 | ERRORNA | 059 | 009 | |||||||||||||||||
Working capital | 473 | 6226 | ERRORNA | 6226 | ERRORNA | 473 | ERRORNA | 62260 | 4730 | ERRORNA | 050 | 009 | |||||||||||||||||
Cash from operations | x | 6226 | 6226 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 041 | 009 | |||||||||||||||||
Interest payments | (1177) | 5049 | ERRORNA | ERRORNA | 5049 | ERRORNA | 1177 | 62260 | ERRORNA | 11770 | 032 | 009 | |||||||||||||||||
Tax payments | (391) | 4658 | ERRORNA | ERRORNA | 4658 | ERRORNA | 391 | 50490 | ERRORNA | 3910 | 023 | 009 | |||||||||||||||||
Capex and intangibles | (359) | 4299 | ERRORNA | ERRORNA | 4299 | ERRORNA | 359 | 46580 | ERRORNA | 3590 | 014 | 009 | |||||||||||||||||
Free cash flow | x | 4299 | 4299 | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | ERRORNA | 005 | ERRORNA | larr Insert new rows ABOVE this one then copy formulas down | ||||||||||||||||
FY19 | FY18 | Change | ||||||
Reported | Reported | |||||||
Exceptional spend (at actual rates) | ||||||||
System related spend ($m) | 1263 | 1144 | 104 | |||||
Other integration costs ($m) | 1680 | 2935 | (428) | |||||
Total HPE Software related exceptional spend | 2943 | 4079 | (278) | |||||
Other ($m) | (01) | 318 | (1003) | |||||
Total (reported in operating profit) | 2942 | 4397 | (331) | |||||
Adjusted cash conversion | 953 | 1057 | (104)ppt | |||||
Free cash flow ($m) | 5762 | 7556 | (237) | |||||
Diluted adjusted EPS (cents) | 8553 | 7893 | 84 | |||||
Dividend per share (cents) | 583 | 583 | - | |||||
Net debt ($m) | 43385 | 42535 | 20 | |||||
Net debt to Adjusted EBITDA ratio | 32x | 28x | 04x | |||||
FY19 | FY18 | Change | |||||||||||
Reported | CCY | ||||||||||||
Licence | 8000 | 8624 | (72) | 624 | 17 | ||||||||
Maintenance | 20576 | 21937 | (62) | 1360 | 38 | ||||||||
SaaS and other recurring | 2797 | 3148 | (111) | 351 | 10 | ||||||||
Consulting | 2179 | 2777 | (215) | 598 | 17 | ||||||||
Constant currency revenue (before haircut) | 33552 | 36486 | (80) | ||||||||||
Deferred revenue haircut | (68) | (347) | (804) | -279 | -08 | ||||||||
Constant currency revenue | 33484 | 36139 | (73) | 73 | |||||||||
Total constant currency costs | (19859) | (22144) | (103) | ||||||||||
Constant currency adjusted EBITDA | 13625 | 13995 | (26) | ||||||||||
Constant currency adjusted EBITDA margin | 407 | 387 | 20 ppt | ||||||||||
Per share data presented at Actual rates | |||||||||||||
Diluted adjusted EPS (cents) | 19589 | 18751 | 45 | ||||||||||
Dividend per share (cents) | 11666 | 10084 | 157 | ||||||||||
HPE Software related exceptional spend (at actual rates) | |||||||||||||
System related spend | 809 | 448 | 806 | ||||||||||
Other | 823 | 144 | (428) | ||||||||||
Total | 1632 | 1888 | (136) |
12
$14025m
We continued to be a highly cash generative business in FY19
Improvement in collection of overdue trade receivables which de-risked the balance sheet offset by timing differences of exceptional cash costs and deferred revenue
Increase in tax payments of $884m in FY19 as we continue to utilise tax attributes acquired with HPE Software
Low capex since all RampD expensed through EBIDTA Underlying interest cover is c 45-50x before
dividend and after capex
Cash generation for twelve months ended 31 October 2019 Micro Focus International
Cash flow and Adjusted EBITDA includes results for SUSE for entire period in FY18 but for only 4 months in FY19
FY19 FY18
Cash generated from operations before working capital 11775 11912 Movement in working capital (1212) (396)Cash generated from operations 10563 11516 Interest payments (2271) (2195)Bank loan costs 00 (108)Tax payments (1674) (790)Purchase of intangible assets (293) (565)Purchase of property plant and equipment (563) (302)Free cash flow 5762 7556
Adjusted cash conversion 953 1057
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Medium term leverage target of 27x remains Actions resulting from Strategic and Operational
Review will mean leverage increasing in the short term before decreasing towards our medium-term target
Net debt is forecast to reduce by the end of FY21 Repayment totalling $200m in the period following
SUSE disposal No term loan amortisation payments until late FY21 $500m RCF remains undrawn and is not due until
2022 Cash on balance sheet was $3557m as at 31 October
2019
13
FY21 as the $200m was treated as a prepayment of amortisation and first term loan not due for repayment until FY22
4410
4200 4254
3807
4339 31x
29x
28x
27x
32x
20x
22x
24x
26x
28x
30x
32x
34x
2000
2500
3000
3500
4000
4500
5000
October 2017 April 2018 October 2018 April 2019 October 2019
Leverage profile
Net debt AEBITDA ratio
Capital discipline and balance sheet strength Micro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Strategic amp Operational ReviewStephen Murdoch
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Strategic amp Operational Review High Level Plan
ACCELERATE a targeted transition to Subscription amp SaaS
1
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
TRANSFORM GTM Function
4
COMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market Organisation and Approach
OBJECTIVE Deliver the platform for significantlyimproved execution and foundation for margin expansion
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
To drive the value creation potential we see in the business we need to
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Strategic amp Operational Review High Level Plan
1 TRANSFORM GTM FunctionCOMPLETE the Core Systems amp Operational Simplification work
1 2 TRANSFORM our Go-to-Market organisation and approach
In our Go-to-Market we will leverage these improvements but in parallel execute a very structured transformation plan tobull Improved productivity overall amp selling time specificallybull Improved cross-selling amp upselling within portfolio amp customer basebull Improved renewal rates ndash differentiated approach in top customers
OBJECTIVE Drive material increase in sales productivity to capture under-exploited opportunity to cross-sell and improve renewal rates
To drive the value creation potential we see in the business we need to
OBJECTIVE Deliver the platform for significantly improved execution and foundation for margin expansion
We need to complete the execution programmes in flight to deliver the foundation for bull Significantly improved execution levels through better
tooling and simpler processes bull Cost and operational efficiencies through organisational
efficiencies amp removal of duplication
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
OPPORTUNITY-BASED COVERAGETiered Resource Model
bull Consistent global operating plan built on a single sales methodology amp common tools
bull To deliver reduced complexity removal of duplication amp more predictable performance
bull Systematic amp targeted deployment of resources
bull To deliver resource assignment that is better optimized to our target opportunity
TRANSFORM ndash Go-to-Market
INSTALLED BASE SALES MODELSystematic Path to Revenue Improvement
bull Better alignment of the company to support our installed base of over 40000 customers
bull To deliver improved renewal rates and cross sell opportunities within our broad portfolio
GLOBAL STRATEGY amp PLANSingle Global Strategic Plan amp Execution Model
Selling time is ~30 below benchmark capturing this amp converting 50 of it into sales would beequivalent to adding 100-150 sales people
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
18
Increased cloud adoption amp move to hybrid We deliver capabilities to enable customers to exploit a mix of on-premise amp cloud deployment options to ensure that they can manage the balance of cost risk and availability
Proliferation of things apps and data
Growth of Agile amp DevOps
We deliver a full suite of solutions focused on protecting identities (things and people) applications (new amp existing) and data (structured amp unstructured) and capabilities to derive insights from the explosion of data
We enable faster deployment cycles through increased collaboration and adoption of development testing and security tools that can support this new ecosystem
InsightsSpeed Agility Security
Enterprise DevOps
Hybrid ITManagement
Security Riskamp Governance
Predictive Analytics
Ensuring Sky can meet growing demands by
providing a flexible and scalable
performance testing platform
Delivering production ready public and
private cloud infrastructure and IT
services for new build state of the art new
airport
Micro Focus enables government agencies
to protect govern and facilitate access to electronic records
Micro Focus powers a digital agriculture
platform to help drive sustainable and innovative farming
Micro Focus Enables
We have clear value propositions amp proven capabilities to help customers address the opportunities amp challenges they face in both running amp transforming their businesses
Key Market Trends
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Strategic amp Operational Review High Level PlanTo drive the value creation potential we see in the business we need to
ACCELERATE a targeted transition to Subscription amp SaaS
3 EVOLVE our Business Model to establish stronger positions in growth areas
OBJECTIVE Drive growth in our Security and Big Data solutions
4
OBJECTIVE Build Subscription amp SaaS revenues to capture relevant growth opportunities amp improve mix of recurring revenues
1 The Enterprise software market is growing amp the pace of change is accelerating
2 Micro Focus has existing strengths emerging capabilities amp strong customer bases from which to be able to participate more fully in targeted areas ofthis market growth
3 The review identified the key areas having a disproportionate impact on performance amp that our overall approach in Security amp Big Data needs to change more fundamentally
4 Corrective action plans with associated investment amp organisational changes have been established focused on
i Accelerating the delivery of new amp required capabilities in our IT Operations Management amp Application Delivery Management portfoliosii Expanding amp accelerating our SaaS and Subscription roadmaps amp plansiii Managing amp operating our Security amp Big Data (Vertica) portfolios much more autonomously following a modified version of our SUSE playbook
5 Our core propositions and approach continues to resonate with customers and address key market trends they need help with
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Security market is growing amp through specific focus Micro Focus can participate in that growth
20
0809 09
10
1213
00
02
04
06
08
10
12
14
2017 2018 2019 2020 2021 2022
TAM
(4BN
)
Year
A P P L I C A T I O N S E C U R I T Y T E S T I N G M A R K E T $ B N
+10
+10 1700+ developers using Fortify on a daily basis to scan 2bn+ lines of code
Fortify on Demand helps reduce risk in moving applications to the
Cloud
Large amp Growing Market Opportunity Micro Focus has Broad Domain Coverage Already Trusted by Customers
Micro Focus offers a unique portfolio of offerings covering a number of core use cases that span cybersecurity and data privacy Micro Focus has the opportunity to be both best-of-breed and to solve more complex use cases that focus on the intersection of security and privacy domains
For example Detecting advanced threats by combining Security Operations and Identity and Access Management
ArcSight is crucial to running the Cyber Security Intelligence amp Operations Center
+14
+12
2326
3034
3944
0005101520253035404550
2017 2018 2019 2020 2021 2022
TAM
($bn
)
Year
S E C U R I T Y amp E V E N T M A N A G E M E N T M A R K E T ( $ B N )
Source PWC and Gartner Strategic Analysis
Core Use Cases
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
bull Hadoop decline amp cloud storage growth leaves exabytes of data that cannot be unified analyzed and monetized without an engine like Vertica
bull Leverages the performance flexibility and scale of cloud-public private yet equally supports on-premise hybrid and embedded
bull Vertica moves ML and Data Science lab projects to fully operational in production at scale
powered by
Mapping drivers and riders for more than 14 million daily rides powering surge pricing globally
Verticarsquos exabyte scale analytics enables 10 million ad auctions
every second
Vertica personalizes 50 million online tax filing experiences at the peak of tax season
Massivedata
growth
Cloud economics and more
Machine Learning and Automation
Vertica analyzes 10 billion embedded RTMS timers per
month in milliseconds
Verticarsquos exabyte scale analytics are key to 50 billion personalized ad placements
daily spanning 30 countries
Verticarsquos Market Opportunity is driven by three new and current market demands
Performance Scale
Customers use Vertica at scale today to power new business models amp enable unique approaches
Vertica offers a differentiated platform that fills a market void combining operational reporting machine learning and robust predictive analytics at massive scale across the spectrum of on-premise cloud and embedded use cases
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
We are investing $70-$80m in key areas of our portfolio in which we see specific opportunity for revenue growth or accelerated moderation of revenue decline
22
The investments we are making
Security portfolio- Acceleration of SaaS roadmap in Identity Access Management - Additional language capability within Fortify- Specialist sales amp product marketing resources
Vertica (Big Data)- Acceleration of SaaS amp Subscription roadmaps- Investments in core RampD to accelerate product roadmap delivery- Dedicated Customer Success team
Increased investment to expand our Enterprise DevOps capabilities amp accelerated delivery of improvements in targeted areas within our IT Operations Management portfolio
Total Investment
Split across
Research and development
$45-50m
Go-to-Marketc $25- 30m
c $70 - $80m
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
FY20 Guidance and SummaryStephen Murdoch
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Based on the conclusions of the Strategic amp Operational Review we expect revenues for the 12 months ending 31 October 2020 to be in the range of minus 6 to minus 8 at constant currency when compared to the 12 months ended 31 October 2019
Within this we expect total revenues in the first half of FY20 to be broadly consistent with the trajectory achieved in the second half of FY19 with improvement in the second half of FY20 and progressive improvement thereafter
The investments we are announcing today are not expected to deliver revenue benefit in the current financial year with revenue returns expected to begin in FY21 and will therefore impact our Adjusted EBITDA margins in FY20 and FY21
By the end of FY21 we expect to be showing a demonstrable improvement in our growth prospects and revenue quality which in turn should flow through into higher returns thereafter This should also coincide with the delivery of the systems platform enabling cost and operational efficiencies to further contribute to margin expansion in line with our longer term objectives
Mid term leverage target remains 27x but investment will result in leverage increasing in the short term
We expect to reduce net debt in absolute terms through FY20 (excluding the impact of IFRS16) with our strong underlying cash flows from operations continuing to comfortably fund our remaining integration related exceptional costs and the additional investments
24
FY20 Outlook
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
25
Micro Focus Equity Story
The Strategic amp Operational initiatives being executed are directly linked to driving achievement of these objectives
bull Completion of the existing operational amp integration work especially systems to deliver platform for significantly improved execution and lower costs
bull Transformation of our Go-to-Market organization to deliver improved productivity to be deployed against growth opportunities or to further improve margins
bull Execution of differentiated approach to Security amp Big Data to capture available growth
bull Delivery of of the foundations for accretive portfolio actions to be executed
bull Value accretion through corporate development activities
bull Long term sustainable Adjusted EBITDA growth
bull Efficient allocation of capital
bull Strong and consistent cash flow to provide scope for continued shareholder returns
In support of this our execution plan aims to deliver by 2023 a business with
bull Stable Revenuesbull EBITDA margins in the mid-40s bull Generating more than $700M of free cash flow bull Built on a platform to enable further accretive portfolio actions
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
QampA
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Appendix 1 ndash Strategic Initiatives
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Assessment of key issues and progress to date The key issues that have emerged relating to overall execution and the complexities of the integration of the HPE Software acquisition are understood in detail progress has been made and there is clear visibility of what remains to be done
ISSUE Progress
Operational Systems and Business
processes
To enable this ldquocarve outrdquo of their software division HPE designed and built new IT systems new business processes and a standalone organisation
In reality the systems were not fit for purpose
A fully standalone IT hardware infrastructure was delivered on time and budget Organisational consolidation in each of the Finance and HR functions has
advanced and will consolidate operations from more than 60 locations into 5 global
Legal entity rationalisation progressing well with aim of reducing Group structure materially
Go-to-market organisation
A mix of regional and product orientated go-to-market models
Inconsistent approaches to customer engagement and the associated deployment of resources
Further impacted by system issues
Stabilisation of staff attrition On-boarding new people has been improved Investments made in better enablement and training
Product Portfolio MixRe-alignment
The operating model for product development drove ldquosiloedrdquo approaches
Product roadmaps did not fully exploit the advantages of significant customer installed bases and strong market positions
The operating model has been re-structured to drive collaboration and the leverage of innovation
Core product roadmaps have been re-shaped in every portfolio with the major remedial corrective actions in product design now complete
Revenue Composition amp
Alignment to Strategy
Professional services revenue has needed to be realigned to support the Micro Focus product strategy
Professional services revenue has been broadly stable for the last 3 quarters and is on track to be stable on a year-over-year basis by the end of FY20
The remedial product roadmap work for the impacted SaaS offerings is complete and the remaining activities will be completed within the next 6 months
29
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Products (eg Robotic Process Automation) or consumption models (eg cloud) that open
new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace
New Models
Products or enabling technology (eg Artificial
IntelligenceMachine Learning) with consistent growth
performance and market opportunity to build the future
revenue foundations of the Group
Growth Drivers
Products with declining revenue performance driven by the
market or execution Investments directed to correct trajectory to move back to the
core category or focused to optimise long-term returns
Optimize
Products that have maintained broadly flat revenue
performance but represent the current foundations of the
Group and must be protected and extended
Core
FOUR BOX
MODEL
ldquoFund of fundsrdquo approach to product portfolio
Investment and focus driven by four box model
High levels ofprofitability strong cash flow
Growth where achievable
Delivered through efficient and
focused investment across portfolio
The Micro Focus Business Model
30
Long term AEBITDA Growth
Efficient use of capital
Creation of shareholder
value through corporate
development
Our business model continues to be relevant and is the foundation of our strategy to achieve value creation
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
Appendix 2 ndash Financial analysis
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
32
The prior year comparatives have been restated to reflect the reorganisation of the LATAM operations from North America (previously named the ldquoAmericasrdquo) to International (previously named ldquoEMEArdquo) This restatement ensures consistent revenue trend reporting
$m Licence MaintenanceSaaS and
other recurring
Consulting Total Licence MaintenanceSaaS and
other recurring
Consulting Total
AMC 1709 3261 - 117 5087 (51) (06) 00 (14) (22)ADM 1303 4854 878 182 7217 (42) (33) (81) (419) (56)ITOM 2375 6458 110 1275 10218 (39) (111) (220) (146) (101)Security 1857 4167 350 439 6813 (131) (54) (08) (290) (93)IMampG 756 1836 1459 166 4217 (117) (68) (141) (292) (114)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
North America 3858 10740 2061 772 17431 06 (94) (117) (321) (90)International 2950 7660 599 1123 12332 (184) (32) (73) (126) (84)Asia Pac amp Japan 1192 2176 138 284 3789 13 02 (183) (202) (21)Revenue before haircut 8000 20576 2797 2179 33552 (72) (62) (111) (215) (80)Haircut 00 (60) (08) 00 (68) na (786) (846) (1000) (804)Revenue 8000 20516 2789 2179 33484 (72) (53) (99) (211) (73)
FY19 CCY change to FY18 (restated)
Revenue by product portfolio and regionMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
33
FY19
Reported maintenance revenue 20576 CCY change (62)
AdjustmentsAtalla 06US Government 09
15Adjusted maintenance revenue decline (47)
Underlying maintenance decline calculation (CCY)Micro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International
34
The weighting of revenue and costs across key currencies are shown below
Average exchange rate movements for the above currencies in the 12 months to October 19 vs the 12 months to October 18 show the following
110
120
130
140
150
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
GBP to USD
Pound Sterling 12m average
100105110115120125130
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
EUR to USD
Euro 12m average
065
070
075
080
085
Nov
-17
Jan-
18
Mar
-18
May
-18
Jul-1
8
Sep-
18
Nov
-18
Jan-
19
Mar
-19
May
-19
Jul-1
9
Sep-
19
CAD to USD
Canadian Dollar 12m average
EURUSD USD is stronger by 54GBPUSD USD is stronger by 53 CADUSD USD is stronger by 32
12 Months to 31 October 2019 12 Months to 31 October 2018
Revenue Cost Revenue Cost
USD 609 488 600 467EUR 190 135 196 146GBP 52 104 52 115CAD 30 18 32 18
Currency impactMicro Focus International