Micro Focus Lender Presentation April 2017 Disclaimer This - - PowerPoint PPT Presentation

Micro Focus

Lender Presentation

April 2017

Private & confidential

Disclaimer

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This presentation has been prepared solely to provide a basis for potential providers of finance to consider whether to assist Micro Focus International PLC (“Micro Focus”) and the software business segment of Hewlett Packard Enterprise Company and their respective subsidiaries (each a “Company” and together, the “Companies”) with their evaluation of raising new debt facilities in connection with a potential transaction, or a series of potential transactions, involving the Companies (the “Transaction”). The existence of this presentation, the information contained within it and any information otherwise made available, whether orally or in writing, in connection herewith is confidential and is being made on the basis that the recipients keep such information confidential and use such information solely for the purposes contemplated hereby. This presentation must not be copied, reproduced, published, distributed, disclosed or passed to any other person at any time except in accordance with the confidentiality agreement entered into by you with Micro Focus in relation to the Transaction. This presentation is being communicated in the United Kingdom only to persons who have professional experience in matters relating to investments, i.e. investment professionals falling within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended and to persons to whom it is otherwise lawful to distribute it. This presentation is not for publication, distribution or release, directly or indirectly, in or into or from Australia, Canada, New Zealand, Japan, South Africa, or any other state or jurisdiction in which the same would be restricted, unlawful or unauthorised. This presentation is for information purposes only and shall not constitute an offer to buy, sell, issue, or acquire, or the solicitation of an offer to buy, sell, issue, or acquire any securities. This presentation may include inside information under Regulation (EU) No 596/2014 (Market Abuse Regulation) and accordingly, recipients agree not to use all or any of the information contained in this presentation to deal, for its account or the account of any third party, directly or indirectly, in any securities of the Company (or engage in any other activity which would constitute an offence under the UK market abuse regime) before the information is made public. This presentation may include management projections and certain other matters that may be considered “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of the Companies and their management with respect to, among other things, future events and financial trends affecting the Companies. Forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives and

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• ther forward-looking statements are based on assumptions and estimates developed by management of the Companies, that any such forward-looking statements are not guarantees of future performance and

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Today’s Presenters

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• Kevin Loosemore
• Executive Chairman
• Mike Phillips
• Chief Financial Officer

Agenda

• Transaction Overview
• Micro Focus Philosophy
• Key Credit Highlights
• Syndication Overview
• Q&A
• Appendix

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Transaction Overview

Transaction Overview

Micro Focus Combination with HPE Software

Transaction

• On 7 September 2016 Micro Focus International plc (“Micro Focus”) entered into a merger agreement (the “Merger or “Transaction”)

to combine with the software business segment (“HPE Software”) of Hewlett Packard Enterprise Company (“HPE”)

• The Transaction is structured as a Reverse Morris Trust (“RMT”)
• The Transaction implies a current enterprise value for HPE Software of $8.6bn, an effective multiple of 11.7x1 As-Acquired

Underlying Adjusted EBITDA2 of $741m for the twelve months to 31 October 2016

6

Note: HPE Software financials prepared under US GAAP, Micro Focus financials prepared under IFRS;

1 Multiple calculated based on Enterprise Value of $8.6bn, accounting for assumed $500m RoV to existing Micro Focus shareholders prior to Completion, divided by HPE Software’s LTM 31-Oct-16 As-Acquired Underlying Adjusted

EBITDA of $741m;

2 As-Acquired Underlying Adjusted EBITDA excludes overhead costs of c.$92m that are expected to not transfer to Micro Focus as part of the Transaction; Underlying Adjusted EBITDA removes the impact of net

capitalisation/amortisation of development costs and foreign currency gains/losses from Adjusted EBITDA; Adjusted EBITDA is Adjusted Operating Profit before depreciation and amortisation; Adjusted Operating Profit and Adjusted Operating Costs being the relevant statutory measures, prior to exceptional items, amortisation of purchased intangibles and share based compensation; 3 US$6.1bn issuance of Micro Focus shares is based on 50.1% of the fully diluted share count of the Enlarged Group as at 29-Mar-17, adjusted for an assumed RoV to Micro Focus existing shareholders prior to Completion of US$500m in cash. The RoV is expected to be implemented by way of a B Share Scheme and a subsequent share consolidation; 4 Calculated using the Treasury Share Method and excluding any Micro Focus shares to be issued pursuant to a de minimis number of replacement awards to be granted to HPE Software employees at Completion under their existing employee incentive arrangements

Consideration and Sources of Financing

• Consideration to HPE shareholders in the Merger comprises the issuance of US$6.1bn3 of Micro Focus shares representing 50.1% of

the fully diluted issued share capital4 of the combined group (the “Enlarged Group”) on completion of the Merger (“Completion”) – Micro Focus shareholders will own 49.9% of the fully diluted share capital of the Enlarged Group following Completion, with HPE shareholders owning the remaining 50.1%4

• In addition, prior to Completion, Seattle SpinCo, Inc. will make a cash payment of US$2.5bn (subject to certain adjustments in limited

circumstances) to HPE which will be financed through newly incurred indebtedness of Seattle SpinCo, Inc.

• The proceeds from the $5.0bn Term Loans will be used to fund the cash payment by Seattle SpinCo, Inc. to HPE, a Return of Value

(“RoV”) to Micro Focus existing shareholders of no more than $500m, refinance existing facilities and transaction costs. The balance will be used for general corporate and working capital purposes – Pro forma for the Transaction and at Completion, net debt to Facility EBITDA multiple will be approximately 3.3x

Approval Process

• Approval by Micro Focus shareholders required, with shareholder vote expected late May 2017
• Approval by HPE shareholders not required
• Completion is subject amongst other things to regulatory clearances, SEC filings and receipt of certain tax opinions

Other Considerations

• Completion target of 1 September 2017
• Merger integration plan in place
• Micro Focus will run a long period of 18 months to October 2018 as part of changing its financial year end date from the end of April to

the end of October

Extension Opportunity Significant Efficiency Opportunities Available

• Create significantly greater scale and breadth of product portfolio covering largely adjacent areas of the software

infrastructure market

• Expected to become a global leader in infrastructure software by revenue and the seventh largest software business overall
• Add substantial recurring revenue base to existing portfolio, together with accessing new growth drivers and revenue models
• Accelerate operational effectiveness over the medium term, through alignment of best practices in areas such as product

development, support, product management, account management and sales force productivity

• Address areas of revenue decline and accelerate revenue growth where achievable, while enhancing operating margins
• Micro Focus believes it will be possible to improve the margin delivered by HPE Software's mature software assets

(approximately 80% of HPE Software revenue) to Micro Focus' level3 of c.46% by April 2021

Deal Consistent with Strategy

• Continues successful strategy of buying companies or assets that fit Micro Focus’ business profile:

› Infrastructure software; and › “Sticky” assets

• Proven track record of delivering value from operational improvements

› Total shareholder returns of >700% since 25 March 2011; Top 5 performing stock in the FTSE 3501 › Third “reverse takeover” since 2009

• Continued commitment to conservative financial policy, with a leverage target of 2.5x Facility EBITDA2 within two years

following Completion; Micro Focus do not intend, outside of regular dividend payments, to consider further RoVs or buybacks until the 2.5x Facility EBITDA2 target leverage is achieved

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Transaction Rationale

Source: Company,announcements and presentations; Note: HPE Software financials prepared under US GAAP, Micro Focus financials prepared under IFRS; 1 25-Mar-11 represents business day immediately prior to commencement of Micro Focus’ share buyback programme; Excludes companies not listed over entire period from 25-Mar-11 – 29-Mar-17; 2 “Facility EBITDA” is Adjusted EBITDA before Amortisation and impairment of capitalised development costs; 3 Twelve months to 30-Apr-16, excluding the SUSE division of Micro Focus

Micro Focus Revenue (FYE April) HPE Software Revenue (FYE October)

• As-Acquired basis (i.e. adjusted for a number of

divestments at various points during the last two fiscal years and the transfer of the Marketing Optimisation Business Unit (“MOBU”) in the fourth quarter of FYE 2015), unadjusted for currency

• FYE 31-October
• Pro forma basis, unadjusted for currency
• FYE 30-April

$1,500 $1,408 $1,410 367 336 335 849 763 741 216 249 275 67 60 58 Apr-15 Apr-16 LTM Oct-16 Licence Maintenance Subscriptions Consulting $3,188 $3,172 $3,126 896 896 853 1,628 1,596 1,583 265 277 294 399 403 396 Oct-15 LTM Apr-16 Oct-16 Professional Services SaaS Maintenance Licence

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The Combined Company Will Produce Revenues in Excess of $4.5bn…

Source: Company filings, announcements and presentations

1 Pro forma numbers for Apr-16 and LTM Oct-16 periods calculated as sum of standalone respective periods for Micro Focus and HPE Software

Combined Revenues1

$4,581 $4,536 1,232 1,189 2,358 2,324 526 569 464 454 Apr-16 LTM Oct-16 Licence Maintenance Subscription Consulting

…With a Diversified and Complementary Product Set…

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~140 Product Lines

IAS CDMS Host Con. Dev & ITOM C&N SUSE

~310 product lines

• Minimal product overlap
• Broadest portfolio of infrastructure solutions in the industry

80% mature 20% growth

~170 product lines

Software

80% mature 20% growth 80% mature 20% growth

Identity manager Sentinel COBOL Enterprise Rumba Reflection Silk AccuRev GroupWise CORBA Linux & Open Source

ITOM AT&DM Big Data SIG

OpsBridge Hybrid Cloud Management ALM AppPulse ArcSight Fortify Voltage IDOL Vertica APM UFT LR

Note: IAS = Identity Access and Security, CDMS = COBOL Development & Mainframe Solutions, C&N = Collaboration and Networking Solutions, ITOM = IT Operations Management; AT&DM = Applications Testing & Delivery Management; SIG = Security & Information Governance; Big Data = Big Data Platform Analytics

Source: Company filings, announcements and presentations

1 Pro forma numbers for Apr-16 and LTM Oct-16 periods calculated as sum of standalone respective periods for Micro Focus and HPE Software

666 650 649

123 102 92 789 752 741

Oct-15 LTM Apr-16 Oct-16

• Pro forma basis, unadjusted for currency
• FYE 30-April

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…and Considerable Scope to Improve Profitability

• As-Acquired basis (i.e. adjusted for a number of

divestments at various points during the last two fiscal years and the transfer of the Marketing Optimisation Business Unit (“MOBU”) in the fourth quarter of FYE 2015), unadjusted for currency

• FYE 31-October

Micro Focus Pro Forma UAEBITDA (FYE April) HPE Software Pro Forma UAEBITDA (FYE October) Pro forma Underlying Adjusted EBITDA1

1

592 613 634 Apr-15 Apr-16 LTM Oct-16 1,365 1,375 Apr-16 LTM Oct-16

39.5% 43.5% 24.8% 23.7% 45.0% 23.7% 29.8% 30.3%

x.x% Margin (%)

Horizontal costs expected to not transfer UAEBITDA

Micro Focus Philosophy

We Are a Software Company

We make software, we sell software and we support software

Everything is organised to help us do this:

• Our systems
• The way we interact with customers and

partners

• How we deliver consulting services
• We are building the company with sustainable

prospects for the ‘long’ term

• We have a relentless focus on delivering

sustainably high free cash flow

12

13

Internet

• f

Things (IoT)

z / OS PL / I COBOL CICS IMS

Public Cloud Private Cloud

IT has been an Evolutionary Journey Resulting in Great Complexity - All in the Last 40 Years!

Portfolio Positioning and Approach

Micro Focus is a software company focusing on operational efficiency and scale to lead consolidation in the mature infrastructure software market Product lifecycle Introduction Growth Maturity Decline Micro Focus area of primary focus – Customer Focused Innovation New tech models “Me too” models Potential change in trajectory (return to growth) Reduce rates of decline 14

Nature of software

• Innovative and often disruptive technologies
• High capex and R&D
• User base rapidly expanding, products repeatedly enhanced

Investment strategy and valuation

• Investing in growth = valuation and returns
• Rich valuations

Nature of software

• Infrastructure software: embedded products with high switching costs
• Limited growth capex
• Margin expansion and efficiency opportunities

Investment strategy and valuation

• Returns driven by maximising cash flow
• Lower valuations

Example of How Micro Focus Extends the Life of a Product Through Customer Focused Innovation

Visual COBOL case study

15 COBOL has been delivering strategic advantages for decades…

Heritage: 240bn lines of code Portable: 500 Platforms and rising Fit for purpose: 4 times cheaper to maintain than Java Easy to read: Cross-train in hours Future Proofed: Over $1.5bn annual investment by customer

• COBOL powers ~85% of all daily business transactions
• COBOL supports 90% of Fortune 500 companies
• 240+ billion lines of COBOL code today, and growing (77% of total)
• 95% of all ATM transactions use COBOL
• 200x more COBOL transactions than Google and YouTube searches

…with business facing increasing challenges… …Visual COBOL enables businesses to continue to re-use and extend life of existing code

• Increasing demand from users for applications which:

– Are easy to use – Have flexibility to be integrated with other business systems

• IT organisations being asked to:

– Deliver modern user interfaces and integrate multiple business

systems

– Whilst striving to reduce operational costs and risk by

standardizing on common platforms

• To deliver new innovation may have meant re-writing business

applications in new languages

• Visual COBOL provides IT organisations with the ability to create new

customer value from existing application investments

• Removes the risk associated with re-write or replacement strategies

which expose the business to uncertain cost and extended delivery time frames

• Allows organisations to quickly respond to new business

requirements and modern IT user needs with predictable and highly cost-effective results

• Customer-focused development of Visual COBOL has enabled

Micro Focus to extend COBOL lifecycle

13% 13%

Portfolio Positioning and Approach

Industry comparison

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Revenue growth3 (%) Micro Focus Group Selected Mature Software1

Source: Company filings, announcements and presentations Note: Peer financials based on latest full financial year per public filings; Selected Mature Software and Selected High-Growth Software sectors show median data points; Micro Focus financials based on the twelve months to 31-Oct-16;

1 Selected Mature Software peers include CA Inc, Progress Software, Citrix, Software AG, OpenText; 2 Selected High-Growth Software peers include Callidus Software, Fortinet, GoDaddy, Inovalon, LogMeIn, Match Group and Red Hat; 3 Respective revenue growth rates adjusted for impact of currency and acquisitions; 4 Micro Focus R&D costs pre-exceptionals, SBC and amortisation of acquired intangibles; Peers adjusted for SBC, exceptionals and amortisation of acquired intangibles; 5 Margins for Micro Focus and its corresponding Product Portfolios based on Underlying Adjusted EBITDA and adjusted for impact of currency and acquisitions 6 Micro Focus – Underlying Adjusted EBITDA basis; All peers based on adjusted EBITDA metrics 7 Recurring revenue defined as aggregate of Maintenance and Subscription revenues

(1%) (5%) 23% 3% 21%

EBITDA-Capex6 (% EBITDA) EBITDA5 margin (% Sales) R&D4 (% Sales) Selected High- Growth Software2

45% 48% 32% 37% 25% 14%

Micro Focus Product Portfolio SUSE Product Portfolio

Mix of revenue and mature assets Focused R&D investment Evidence of

• perational efficiency

High EBITDA-Capex conversion

Recurring revenue7 (%)

72% 66% 98% 69% 100%

Recurring revenue stream

94% 80% 98%

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Micro Focus Acquired A Highly Valuable Portfolio of Assets…All of Whom Lost Value Chasing Revenue Growth

Micro Focus

Attachmate 2014 @ $2.35bn Serena 2016 @ $540m HPE Software 2017 @ $8.6bn NetIQ 2006 @ $495m Novell 2010 @ $2.2bn SUSE Linux 2003 @ $210m iConclude 2007 @ $57m Compuware ASQ 2009 @ $80m Borland Software 2009 @ $113m Visigenic Software 2009 @ $80m TogetherSoft 2002 @ $185m Segue Software 2006 @ $100m

UNIX SYSTEM LABORITORIES

1992 @ $322m WordPerfect 1994 @ $1.4bn

Cambridge Technology Partners

2001 @ $266m Silverstream Software 2002 @ $212m e-Security 1994 @ $1.4bn PlateSpin 1994 @ $1.4bn Tower Software Engineering 2008 @ $109m Peregrine 2005 @ $425m Mercury 2006 @ $4.5bn Opsware 2007 @ $1.6bn ArcSight 2010 @ $1.5bn Autonomy 2011 @ $11bn Vertica 2011 @ $350m StorageApp 2001 @ $350m Bluestone Software 2000 @ $468m Freshwater Software 2001 @ $147m Kintana 2003 @ $225m Systinet 2006 @ $105m Interwoven 2009 @ $775m Verity 2005 @ $500m e-Talk 2005 @ $72m Zantaz 2007 @ $375m Microlink 2010 @ $55m Iron Mountain 2011 @ $380m Metacode Technologies 2003 @ $210m iManage 2003 @ $171m Optimost 2007 @ $52m Innovative Tech Systems 1998 @ $77m Tivoli’s Service Desk 2000 @ $105m Telco Research 2000 @ $105m Remedy 2001 @ $1.08bn Source: Equity research. Blue box denotes a key acquisition, dashed line denotes a subsequently-disposed-of business

Key Credit Highlights

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Significant scale in infrastructure software

2 1

Portfolio and Model driving visibility and stability of earnings

2 2

Significant potential for operational efficiencies

2 5

Strong track record of acquisitions

2 4

Key Credit Highlights

Proven history of predictable performance

2 3

History of sustained cash flow generation

2 6

Management team with a strong M&A track record

2 7

Combination Creates a Global Leader in Software…

Source: FactSet, Micro Focus and HPE Software company filings.; LTM as of Mar-2017; HPE Software and Micro Focus LTM revenues as at 31 October 2016

20 2 1

$95.3 $37.3 $24.2

$8.7 $6.3 $5.0 $4.5 $4.0 $3.4 $3.3 $3.1 $2.8 $2.7 $2.5 $2.2 $2.1 $2.0 $2.0 $2.0 $1.9 $1.8 $1.8 $1.6 $1.4 Microsoft Oracle SAP Salesforce Adobe Symantec Micro Focus + HPE Software CA Inc DassaultSystemes Gemalto HPE Software Citrix Red Hat Synopsys Constellation Software CDK Global AutoDesk Nuance Communications Asseco Open Text Cadence Design Systems Check Point Software Workday Micro Focus

#7 #23

…Broadening the Blue Chip Customer Base and Increasing Penetration Within Existing Customers

21 2 1

• 30,000+ HPE Software customers with 98 of the

Fortune 100 run on HPE Software products

• Top 20 customers make up only ~14% of total

revenues1

• 20,000+ customers including 91 of Fortune 100

companies

• Top 20 customers make up only ~10% of total

revenues

Micro Focus

TMT Financial services Industrials Consumer Retail Healthcare

HPE Software

1 LTM revenues to 31 October 2016 excluding revenues with HPE’s Enterprise Services Group.

Highly Diversified Revenue Streams…

22 2 2

Source: Company presentations, filings and announcements Note: Financials shown for the twelve months ended Oct-16; Micro Focus revenue breakdown adjusted for impact of currency and acquisitions; HPE Software revenue split by geography on As- Managed basis and shown under Micro Focus split of regions (FY Oct-16 revenue of $3,195m), HPE Software revenue split by product on As-Acquired basis, excluding $4m of unallocated revenue (FY Oct-16 revenue of $3,126m); Support = Maintenance; SaaS = Subscriptions; Professional services = Consultancy; ITOM = IT Operations Management; AT&DM = Applications Testing & Delivery Management; SIG = Security & Information Governance; Big Data = Big Data Platform Analytics

52% 38% 10% CDMS 20% SUSE 20% IAS 15% Host con. 13% C&N 10%

• Dev. and

ITOM 22% 53% 36% 11% ITOM 38% AT&DM 24% SIG 33% Big Data 5%

Micro Focus (LTM Oct-16A) HPE Software (FYE Oct-16A)

53% 37% 11%

Pro Forma (LTM Oct-16A) Geography Business

North America $735m International $539m APAC & Japan $136m North America $1,688m International $1,149m APAC & Japan $358m ITOM 33% AT&DM 16% SIG 23% CDMS 6% SUSE 6% IAS 5% Host Con. 4% Big Data 4% C&N 3% North America International APAC & Japan

…and Sticky Revenue Streams Driving Visibility and Stability of Earnings Base

23 2 2

Source: Company presentations, filings and announcements Note: Recurring revenue consists of Maintenance and Subscriptions (Micro Focus) or Support and SaaS (HPE Software); Micro Focus revenue breakdown adjusted for impact of currency and acquisitions HPE Software revenue breakdown on an As-Acquired basis

Breadth of product portfolio and revenue sources means that idiosyncratic risks are diversified away, providing highly predictable results at the group level

HPE Software Recurring revenue (FY Oct-16A) Micro Focus Recurring revenue (LTM Oct-16A)

Maintenance 53% Subscription 19% Licence 24% Consultancy 4% 72% recurring revenues Maintenance 51% Subscription 9% Licence 27% Consulting 13% 60% recurring revenues

Pro forma Recurring revenue (LTM Oct-16A)

Maintenance 51% Subscription 13% Licence 26% Consulting 10% 64% recurring revenues Total revenue: $1.4bn Total revenue: $3.1bn Total revenue: $4.5bn

Micro Focus Has Continually Delivered on Guidance

24 2 3 Historical Full Year Guidance FY2012-FY2017

Year Guidance at FY results Hit/Miss Guidance at Interim results Hit/Miss FY 2012

• Overall sales expected to decline



• Guidance on target margin for underlying adjusted EBITDA of

37% to 42%



FY 2013

• Overall revenue growth expected to be in the range of +1% to

(3)% on a constant currency basis for the full year

• Underlying adjusted EBITDA margin guidance remained at

previous range of 37% to 42%

 

• Overall revenues expected to be in the range of (2)% to (4)% on

a CCY basis for the full year

• Underlying adjusted EBITDA target margin range of 40% to 45%

 

FY 2014

• Revenue guidance of 0% to 5% growth on a constant currency

basis



• Full year revenue guidance of 3% to 6% on a constant currency

basis

• Underlying Adjusted EBITDA expected to be in line with current

market expectations

 

FY 2015

• Low single digit revenue growth expected in the medium term

On Track

• Provided guidance of combined pro-forma full year revenues of
• c. $1,330 million and combined pro-forma full year underlying

adjusted EBITDA of c. $500 million post Attachmate acquisition



FY 2016

• Anticipated revenues in the year declining between 2% and 4%
• n a constant currency basis



• Full year revenue guidance of (2)% to (4)% on a pro forma

constant currency basis post Serena acquisition



FY 2017

• (2)% to 0% revenue growth pro forma, constant currency

On Track

• Revenue guidance of (2)% to 0%, providing base for modest

growth in FY18 On Track

Source: Company filings, announcements and presentations

A Strong Track Record of Acquiring Businesses…

25

Summary Size ($m) 113 Funding Reverse takeover under Listing Rules. Cash consideration financed from funds drawn down under loan facility agreement up to a total of $108m Summary Size ($m) 2,350 Funding Acquired TAG for $1.5bn in stock from a consortium of private equity

• investors. Refinanced debt using

newly agreed loan facility Summary Size ($m) 540 Funding Acquired in cash for $288m with $252m in assumed liabilities. Funded through a mix of debt, existing cash and an equity placing (c.£158m)

2009 2016 2010 2011 2012 2013 2014 2015

Announced: 06 May 2009 Announced: 15 Sep 2014 Announced: 22 Mar 2016

• Micro Focus has been operating for 40 years and has a strong track record of acquisitions
• Since 2009, the company has undertaken two reverse takeover transactions (Borland and the Attachmate Group)
• In both instances Micro Focus has been able to expand margins to in excess of 40% within a short period of time and rapidly de-lever
• Micro Focus also has significant backing from equity investors regarding its ability to execute on smaller bolt-on acquisitions as evidenced by the multiple re-rating it has seen on

announcements

Commentary

Summary Serena transaction multiple (FY1) 7.4x Micro Focus transaction multiple (FY1) 10.6x Blended multiple at announcement 10.2x Blended multiple at transaction close 10.7x 17 Jul 2015 – Acquisition of Authasas for c.€9m 10 Dec 2013 – Acquisition

• f certain assets from

PrismTech 29 Nov 2013 – Micro Focus acquires AccuRev for $17m in cash 24 Dec 2012 – Acquisition of Progress Software for $15m in cash

Source: FactSet, Company filings, announcements and presentations Note: Pro forma financials for Borland calendarised to April FYE, pro forma financials for Attachmate as reported per Micro Focus merger announcement; FY16 financials not adjusted for Serena

1 Micro Focus EBITDA adjusted for SBC, amortisation of purchased intangibles and exceptional items 2 Micro Focus EBITDA reported on an underlying, adjusted basis

2

PF FY14 FY16 Combined Revenue 1,390 1,245 EBITDA 509 533 % margin 36.6% 42.8%

1

PF FY08 FY10 Combined Revenue 427 433 EBITDA 78 173 % margin 18.2% 40.1%

2 4

04 Oct 2016 – Acquisition of GWAVA

Micro Focus EBITDA evolution ($m)

Source: Company filings, announcements and presentations Note: Does not include acquisitions smaller than $10M: Authasas (’15), Openfusion (’13), Soforte (’13), Relativity (’09) and Liant (’08); Gwava (’16) Values for Borland, NetManage, Acucorp and Accurev are operating profit, not EBITDA

39 3 (2) 19 (11) 8 (2) 313 166 532 80 613

'06 EBITDA Acucorp ('07) NetManage ('08) Compuware ('09) Borland ('09) Orbix assets from Progresss SW ('12) Accurev ('13) TAG ('14) Op improvement Apr-16 EBITDA Serena ('16) Apr-16 EBITDA (PF Serena)

~34% of ~$490M total EBITDA growth driven by real net operational improvement Serena acquisition closed 2 May 2016

2 4 …Driving Operational Improvements Across the Portfolio

Net operational improvement accounts for ~34% of Micro Focus’s EBITDA growth over last 10 years

26

27

Significant Scope For Operational Improvements and Cost Savings

1

• Micro Focus believes it is possible to improve the margin delivered by

HPE Software's mature software assets to Micro Focus’ level by Apr- 2021

• In conjunction with achieving the above, Micro Focus expects to incur

certain costs throughout the same time period

• Historically Micro Focus has achieved operational efficiencies with

integration costs equivalent to c.70% of the total annual savings; and in addition up to $150m of costs to be incurred to implement certain IT system upgrades and migrate the Enlarged Group onto a single system

• Operational efficiencies expected to be achieved throughout SG&A,

COGS and R&D cost segments with headcount representing one of such opportunities, as evidenced by Revenue / Headcount of $273k2 at Micro Focus vs $185k2 at HPE Software

2 5 Commentary

Source: Company filings, announcements and presentations

1 As-Acquired Underlying Adjusted EBITDA for the twelve months to 30-Apr-16 including horizontal costs of $102m expected to not transfer as part of the Transaction 2 HPE Software’s total headcount comprises all full time employees, contractors, a headcount transfer from the HPE Global Marketing Team and estimates for staff transferring from central corporate functions. Micro

Focus total number of employees comprises the Full Time Equivalent (“FTE”) of both permanent and temporary staff as well as estimates for revenue generating contractors

21% 46% 43% HPE Software Micro Focus (Product Port.) Micro Focus (Group)

Operational improvements potential ($m) Micro Focus vs HPE Software UAEBITDA margins (Apr-16A)

$m Apr-16A “As-Acquired” HPE Software revenue 3,172 Revenue that is considered mature (c.80%) 2,538 Micro Focus Product Portfolio UAEBITDA (Apr-16A) 46% HPE Software UAEBITDA margin (%)¹ 21% Margin improvement potential on HPES mature assets(%) 25%

28 2 5

776 3,535 477 SUSE Micro Focus SUSE Micro Focus Serena + Gwava 470 4,177 SUSE Micro Focus SUSE Micro Focus

Example of Efficiencies Generated Across Headcount Locations Historically

Pro Forma Average Number of Employees for FY Apr-14 Number of Employees as at Oct-16

• 147 locations in November 2014
• ~120 Product Lines

– 12-24 month release cadence (TAG) – OEM dependencies in key products

• 97 locations in November 2016
• ~140 Product Lines

– 6-12 month release cadence (TAG) – Customer driven innovation – OEM dependencies removed

• Net reduction in Micro Focus of 642 (15%)
• Net increase in SUSE of 306 (65%)

HPE Software – Cash Conversion (%)

108% 111% 88% 90% Apr-14 Apr-15 Apr-16 LTM Oct-16

Average: 102% Micro Focus – Cash Conversion (%)

History of Sustained Cash Flow Generation

29 2 6

Source: Company filings, announcements and presentations Note: Conversion rate defined as Cash generated from operations divided by EBITDA post exceptionals; Micro Focus conversion rates on a reported basis, not historically adjusted for impact of acquisitions and currency; HPE Software on an As-Acquired basis; Micro Focus cash conversion for FY Apr-14 and FY Apr-15 not historically adjusted to include ‘provision utilisation’ within changes in working capital

1 Not adjusted for impact of Serena acquisition;

125% 68% 90% Oct-2014 Oct-2015 Oct-2016 90% LTM Oct-16

Average: 94% Pro Forma – Cash Conversion (%)

3.4x 2.7x 2.0x PF FY14 PF FY15 FY16

Micro Focus - Net Debt / Facility EBITDA Progression

1

Source: Company announcements and presentations

1 Underlying Adjusted EBITDA consists of $649m of Underlying Adjusted EBITDA , further adjusted for $92m of horizontal costs expected to not transfer as part of the Transaction 2 Capital expenditure figure based on US GAAP Carve out accounting, for reference depreciation & amortisation for FY Oct-16 was $68m, excluding amortisation of intangibles of $153m 3 Reported basis excludes the impact of acquisitions and currency

30

Historical Free Cash Flow Generation

Combined Free Cash Flow Generation ($m)

Micro Focus HPE Software Pro Forma Commentary Licence 335 853 1,189 Maintenance 741 1,583 2,324 Consultancy 58 396 454 Subscription 275 294 569 Revenue $1,410 $3,126 $4,536 Underlying Adjusted EBITDA $634 $7411 $1,375  Assumes no operational efficiencies Note (source, basis) LTM Oct-16, pro forma and constant currency, IFRS basis LTM Oct-16, “As acquired” basis, US GAAP basis Micro Focus HPE Software Pro Forma Commentary Less: Change in NWC (91) (84) (175)  Historic average change in NWC of 4% of revenue for the enlarged group Less: Capex (46) (28)2 (74)  Historic limited capex needs as customary for software Unlevered free cash flow $1,126 Note (source, basis) LTM Oct-16 reported3, IFRS basis LTM Oct-16 “As reported” basis, US GAAP basis

2 6

History of Disciplined Financial Practices and Uses of Cash

31 Rapid deleveraging

• Continued commitment to target a net reported leverage of 2.5x Facility EBITDA: leverage to return below 2.5x within two

years following Completion supported by EBITDA growth and strong free cash flow

• Voluntary Term Loan B repayment of $150m made in March 2015 due to conservative approach to cash generation and

strong cash generation capability

Strong liquidity position

• Incremental $200m of cash to balance sheet and $500m revolving credit facility
• Balanced maturity profile with no significant upcoming maturities

Capital allocation

• Micro Focus intends to continue its stated dividend policy post the Transaction of distributions that are equal to

approximately half of adjusted net income

• Following Completion the Company does not intend, outside of normal dividends, to consider further ROVs or buyback

programmes until the target of 2.5x Facility EBITDA target leverage has been achieved

• Micro Focus management has a proven track record in execution of M&A transactions and delivering on subsequent

integration processes and will continue to evaluate opportunities to drive growth and expand capabilities

Conservative leverage

• Estimated pro forma net leverage of c.3.3x Facility EBITDA at Completion of the Transaction, in line with leverage at the

time of TAG acquisition executed in 2014

• Moody’s and S&P have confirmed current ratings at B1/BB- and stable outlook

2 6

Name Role Experience Kevin Loosemore Executive Chairman (11 years)

• Appointed non-executive Chairman of the Company in 2005
• Appointed Executive Chairman in April 2011
• Previously non-executive Chairman of Morse plc
• Previously, Kevin has acted as Chief Operating Officer of Cable & Wireless plc, President of Motorola
• EMEA. Prior to this he was Chief Executive of IBM UK Limited

Mike Phillips CFO (6 years)

• Joined Micro Focus in September 2010
• Chief Executive Officer at Morse plc, following his initial role as Group Finance Director
• Left Morse plc in July 2010 following the turnaround and successful corporate sale to 2e2 in June 2010

Chris Hsu Executive VP, General Manager, HPE Software & Chief Operating Officer, HPE (joined in 2014)

• Joined HP in 2014 as Senior Vice President of Organisational Performance to drive operational

performance initiatives across the company. He also led the separation of HP into two companies

• Previously, was a Managing Director at the private equity firm Kohlberg Kravis Roberts (KKR). Drove
• perational performance in KKR’s portfolio companies, supported operational diligence during the deal

process and provided overall leadership to the KKR Capstone team

• Incoming CEO of the Enlarged Group following Completion

Stephen Murdoch CEO, Micro Focus division (4 years)

• Has held senior executive positions in general management, sales, and strategy with IBM and Dell
• Most recently, he was the General Manager of EMEA for Dell's Public Sector and Large Commercial

Enterprise business unit Nils Brauckmann CEO, SUSE (5 years)

• Previously served in cross-functional and international management positions at WRQ (acquired by

TAG in 2004), Novell and Siemens Nixdorf, where he started his technology career

Micro Focus Management Team post Completion

Source: Publicly available information, Company websites, BoardEx

32 2 7 Management Team With a Strong M&A Track Record

A Phased Approach to Delivery for HPE Software and Setting Market Expectations

33

Phase I: Assessment

• Deliver plans for FY17
• Detailed review of

combined businesses

• Invigorate product

management Actions

Phase II: Integration

Actions

• Standardise systems
• Rationalise properties
• Rationalise legal entities
• New Go to Market (GTM)

model

• Maintain/improve cash

conversion

• Rationalise

underperforming elements

• New market initiatives

Phase III: Stabilisation

• Stabilise top line
• Improve GTM

productivity

• Growth from new areas
• Improved profitability
• Standardise systems

Actions

Phase IV: Growth

• Top line growth
• Click and repeat!

Actions

FY17 FY18 FY19 FY20

2 7

Syndication Overview

Overview of Financing Structure

• Merger consideration will be funded through the issuance of c. $6.1bn1 of equity to HPE shareholders
• Debt financing includes $500m Revolving Credit Facility and $5.0bn Term Loans
• The Enlarged Micro Focus group expects net leverage of c.3.4x based on Oct-16 LTM Underlying Adj. EBITDA of $1,375m

‒ Consistent with Micro Focus leverage at the TAG transaction and overall financial policy

• The $5.0bn Term Loans consist of:

‒ Amendment & Repricing (A&R) of $1,515m existing Micro Focus Term Loans:

• $412m TLC due Nov-19 and $1,103m TLB-2 due Nov-21
• A&R is not conditional upon the Completion and will be effective immediately

‒ New $3,485m equivalent aggregate amount of Term Loans B’s maturing 7 years from funding

• Conditional upon Completion2 with proceeds placed into escrow subject to Completion
• The debt will be issued out of 2 separate borrowing entities

‒ $2.6bn will be incurred by Seattle SpinCo, Inc. and $2.4bn will be incurred by a subsidiary of Micro Focus ‒ Separate credit agreements are structured to be completely pari passu due to cross guarantees and identical collateral package

following Completion

• Corporate and facility rating of B1/BB-
• Completion of the transaction is expected on 1 September 2017

35

1 US$6.1bn issuance of Micro Focus shares is based on 50.1% of the fully diluted share count of the Enlarged Group, adjusted for an assumed RoV to Micro Focus existing shareholders prior to Completion of

US$500m in cash. The RoV is expected to be implemented by way of a B Share Scheme and a subsequent share consolidation

2 Subject to certain exceptions referred in the full form documentation

$m x Oct-16A UAEBITDA3 Maturity Current margin bps, floor % Expected pricing bps, floor % Cash (323)2 (0.3x) RCF (PF $500m)

• 5 years (2022)

L+350, 0.75% L+350, 0% Existing TLC (MA Finance Co, $) 412 Nov-19 L+375, 0.75% L+225, 0% Existing TLB-2 (MA Finance Co, $) 1,103 Nov-21 L+375, 0.75% L+250, 0% New TLB (MA Finance Co, $) 885 ($/€) 7 years (2024)

• L/E+300-325, 0%

New TLB (MA Finance Co, €) 7 years (2024)

• New TLB (Seattle Spinco, $)

2,600 7 years (2024)

• L+300-325, 0%

Gross 1st Lien and total debt 5,000 3.6x Net total debt 4,677 3.4x Micro Focus market cap1 (49.9%) 6,123 HPE shareholders equity stake1 (50.1%) 6,147 Pro forma equity value 12,270 Enterprise value 16,947 12.3x Micro Focus UAEBITDA 634 HPES UAEBITDA 741 Pro forma LTM UAEBITDA 1,375

Sources and Uses and Pro Forma Capitalisation

36

Sources ($m) Uses ($m) Equity issued to HPE shareholders 6,1471 Equity issued to HPE shareholders 6,1471 A&R of existing Term Loans (B-2 & C) 1,515 Cash payment to HPE by Seattle SpinCo, Inc. 2,500 New Term Loans B’s ($/€) 3,485 A&R of existing Term Loans (B-2 & C) 1,515

• Est. RoV to Micro Focus shareholders

500

• Est. transaction and financing costs

285 Incremental cash to balance sheet 200 Total Sources 11,147 Total Uses 11,147

Source: Company announcements and presentations

1 US$6.1bn issuance of Micro Focus shares is based on 50.1% of the fully diluted share count of the Enlarged Group as at 29-Mar-17, adjusted for an assumed RoV to Micro Focus existing shareholders

prior to Completion of US$500m in cash. The RoV is expected to be implemented by way of a B Share Scheme and a subsequent share consolidation; 2 Based on reported Micro Focus cash $123m as of Oct-16 and incremental cash to balance sheet of $200m; 3 Micro Focus LTM Oct-16 UAEBITDA of $634m (PF, constant currency), HPE Software Underlying Adjusted EBITDA of $741m, further adjusted for horizontal costs of $92m that are expected to not transfer to as part of Transaction

Sources and Uses Pro Forma Capitalisation

3,485

Pro Forma Organisational Structure

37

Due to cross guarantee and identical collateral package, credit facilities will be pari passu following Completion of the transaction

Tranches ($m) RCF ($500m)

• Existing TLC (A&R)

412 Existing TLB-2 (A&R) 1,103 New TLB (€) 885 New TLB ($) Total 2,400 Tranches ($m) New TLB ($) 2,600 Total 2,600

$2.6bn drawn debt $2.4bn drawn debt Micro Focus Shareholders HPE Shareholders Seattle SpinCo, Inc US (Borrower)

• inc. escrow borrower2

MA Finance Co, LLC US (Borrower)

• inc. escrow borrower2

50.1%1 49.9%1

Note: The structure is reflected pro forma for Completion of the Transaction

1 Percentages shown are approximate and indicative only, and the actual percentages will be determined in accordance with the merger agreement among Micro Focus, HPE and the other parties thereto. Prior to the Merger,

HPE will distribute on a pro rata basis all outstanding shares of Class A common stock of Seattle SpinCo, Inc. to HPE stockholders as of the close of business on the record date for the distribution. Immediately thereafter, a wholly owned subsidiary of Micro Focus will merge with and into Seattle SpinCo, Inc., and all shares of Seattle SpinCo, Inc. distributed to HPE stockholders will be converted into the right to receive a number of Micro Focus ADSs representing, in the aggregate, 50.1% of the fully diluted share capital of Micro Focus as of immediately following the Merger (excluding any Micro Focus shares to be issued pursuant to a de minimis number of replacement awards to be granted to HPE Software employees at Completion under their existing employee incentive arrangements). Pre‐Completion Micro Focus shareholders will own the balance of the outstanding Micro Focus ordinary shares at that time.

2 Escrow borrower established for the new money tranche, to be automatically merged into Borrower / incorporated into respective borrowers

Micro Focus International plc U.K.

Summary of Proposed Terms

38

Facilities Revolver Term Loan Borrower MA FinanceCo LLC Seattle Spinco, Inc Security First lien on substantially all assets and capital stock owned by the Borrower and the Guarantors in the US and the UK, with certain exceptions and limitations to be set forth in documentation1 Guarantees Micro Focus International plc and each material, wholly-owned restricted subsidiary in the US and the UK, with certain exceptions and limitations to be set forth in documentation2 Tenor 5 yrs from Completion (2022) Nov-19 Nov-21 7 yrs from escrow funding (2024) Amount ($m) $500m $412m $1,103m $885m equiv. ($/€) $2,600m Margin L+350bps L+225bps L+250bps L/E+300-325bps OID

• 99.5

Floor 0% 0% 0% 0% Amortization

• 10% p.a. + bullet

1% p.a.+ bullet Call protection

• 101 soft call for 6 months

Ticking fee and escrow

• Ticking fee from allocation 0-30d 0% margin, 31-60d

50% margin, 61d onwards full interest

• Funded into escrow with mandatory redemption at

OID if Completion does not occur by Mar 14, 2018 Financial covenant

• Springing (tested when 35% drawn)

set at first lien net leverage of 4.85x with 2 step downs

• None

Incremental facilities3

• $750m plus an amount equal to voluntary prepayments, plus unlimited up to 3.5x first lien net leverage
• 50bps MFN with 12 months sunset, applicable to pari passu term loans except for $350m carve-out of $750m basket

Negative covenants

• Usual and customary and broadly consistent with existing deal, including:
• General debt basket $300m / 20% EBITDA, incremental equivalent debt and unlimited up to 3.5x first lien net leverage
• Unlimited investments subject to 3.5x first lien net leverage + general investment basket of $225m / 15% EBITDA + Available Amount ($100m

starter basket)

• Unlimited RPs subject to 3.0x first lien net leverage + $250m general RP basket + Available Amount ($100m starter basket)

Affirmative covenants

• Customary for facilities of this type

Mandatory prepayment

• 100% of proceeds from debt issuances, 50% of ECF with step downs to 25% and 0% at first lien net leverage ratios of 3.30x and 3.00x, respectively
• 100% of proceeds from asset sales, with step-downs to 50% and 0% if first lien net leverage ratio is <3.00x and <2.50x, respectively

Governing law New York

Note: the enlarged Micro Focus group will have c. 52% of revenue and c. 52% of UAEBITDA generated by the guarantor subsidiaries (US, UK) calculated on the basis of twelve months ended Apr-16

1 Liens on Seattle SpinCo, Inc. assets are effective post Completion; 2 Guarantees from Micro Focus (and its relevant subsidiaries) of Seattle SpinCo., Inc. debt and guarantees from Seattle SpinCo., Inc

(and its relevant subsidiaries) of Micro Focus debt, in each case, are effective only post Completion; 3 Could be raised on secured or unsecured basis, if unsecured subject to same freebie size, other requirements and unlimited up to 3.5x net total leverage

Syndication Timeline

Key Debt Transaction Dates 39

Date Event 4 April 2017

• New York Lender Meeting

6 April 2017

• London Lender Meeting

18 April 2017

• Commitments due from Lenders (5PM ET)

Date Event Late May 2017

• Micro Focus shareholder meeting

1 September 2017

• Targeted Merger Completion

Key Anticipated Merger Transaction Dates

Note: The Transaction dates set out above are indicative and subject to change

Q&A

Appendix

Micro Focus At a Glance

42

Source: Company filings, announcements and presentations; Note: Financials shown on a pro forma basis, adjusting for impact of Attachmate and Serena Software acquisitions;

1 Restated to H1 17 exchange rates 2 Historical Revenue and Underlying Adjusted EBITDA on a pro forma basis, unadjusted for currency; 3 Micro Focus cash conversion on an as-reported basis; LTM Oct-16 not pro forma for impact of Serena acquisition. Defined as Cash generated from operations divided by Adjusted EBITDA post exceptionals 4 Recurring Micro Focus revenue comprises Maintenance and Subscription revenue types

Overview

• Product and service offerings
• Micro Focus includes the mature businesses and has five sub-portfolios

delivered via a traditional perpetual licence model. SUSE delivered via a subscription model

• Scale and profitability
• LTM Oct-16A revenue $1.4bn1, Underlying Adjusted EBITDA $634m1
• LTM Oct-16A constant currency, pro forma growth rate of c.(1)%
• Diversified GTM strategy – via direct and indirect channels
• Diverse, loyal customer base
• > 20,000 customers, with significant blue-chip customer base
• Top 20 customers represent c.10% of revenue
• International reach and footprint
• FY16 revenue split1 USD 63%; EUR 20%; GBP 5%; JPY 3%; other 8%
• Over 4,500 employees across more than 39 countries

Key financials – FYE Apr ($m)

1,500 1,408 1,410 2015A 2016A LTM Oct- 16A 592 613 634 2015A 2016A LTM Oct- 16A 111% 88% 90% 2015A 2016A LTM Oct- 16A North America 52% International 38% APAC & Japan 10%

Revenue2 Underlying Adjusted EBITDA2 Cash conversion (%)3

Revenue breakdown1 - LTM Oct-16A (%)

Licence 24% Maint. 53% Subsc. 19% Cons. 4%

72% recurring revenue

Geography Type4 Product

CDMS 20% SUSE 20% IAS 15% Host con. 13% C&N 10%

• Dev. and

ITOM 22%

Micro Focus Product Portfolio

43

Linux and Open Source

20%

COBOL Development and Mainframe Solutions

20%

COBOL Enterprise Identity, Access and Security Solutions

15%

Identity Manager Sentinel Development and IT Operations Management Tools

13%

Development and IT Operations Management Tools

22%

Silk AccuRev PlateSpin

10%

OES GroupWise CORBA Collaboration and Networking Solutions Host Connectivity Solutions

13%

MSS Reflection Rumba

Note: Percentages represent proportion of Micro Focus group revenue on a pro forma, restated to H1 17 Exchange rates for the twelve months to October 2016A

Micro Focus Structured Approach to Managing its Product Portfolio

Micro Focus approach ‘Fund of funds’ approach to product portfolio Investment and focus driven by four- box model Objective: modest growth over medium-term, high levels of profitability, strong cash flow Delivered through efficient and focused investment across portfolio 44 Four box model

New models

Products that are relatively new and unproven in the market but expected to be growth drivers

Growth Drivers

Products that have shown consistent potential for sales growth

Optimise

Products with declining sales over a period of time, and the strategy is to move back to core OR manage decline and optimise returns in the long run

Core

Products that have maintained ‘flat sales’ over time with limited growth, but are central to the company’s revenues

Optimise Core

Four Box Model In Action

LTM October 2016

45

Revenue profile (% growth) (0.5%) High Growth Growth Stable Decline R&D expenditure1 (% revenue) 14.5%   =  Sales & Marketing1 (% revenue) 23.1%     General & Admin1 (% revenue) 6.2% = = = = UAEBITDA margin (%) 45.0%     Cash conversion2 (%) 90.0%     Efficient and focused investment across portfolio Focus on product development and growth rather than margin Begin to focus on margin and profitability rather than growth Maximise renewal rates with heavy focus on cost control Arrest revenue decline where practical but primary focus on margins and cash flows

New models Growth Drivers

Criteria Actions Consequen- ces

Micro Focus

Source: Company announcements and presentations Note: Financials on a pro forma, constant currency basis for the twelve months ended 31 October 2016; UAEBITDA – Underlying Adjusted EBITDA;

1 Operating expenditure items excluding exceptionals, stock based compensation and amortisation of acquired intangibles 2 Cash conversion defined as cash generated from operations over Adjusted EBITDA post exceptionals; not pro forma for acquisition of Serena Software or adjusted for currency impact

Focus

ITOM 38% AT&DM 24% SIG 33% Big Data 5% North America 53% International 36% APAC & Japan 11%

Product and service offerings

• Provides enterprise software solutions for IT Operations Management,

Application Testing & Delivery Management, Security & Information Governance and Big Data Platform Analytics

• Products offered via term and perpetual licences (followed by

maintenance payments), SaaS model, professional services Scale and profitability

• October 2016A Revenue $3,126m1, Underlying Adjusted EBITDA

$649m1 (implied margin of 20.8%) Diverse, loyal customer base

• Engaging with over 30,000 customers across the world
• The company currently works with 98 of the Fortune 100 companies

International reach and footprint

• Revenue split2 USD 62%; EUR 15%; GBP 6%; Other 17%

Overview

3,391 3,188 3,126 3,172 2014A 2015A 2016A LTM Apr-16

Revenue1 Underlying Adjusted EBITDA1,3

Source: Company filings, announcements and presentations

1 As-Acquired basis; adjusting for a number of divestitures and the transfer of HPPA and the MOBU division to the HPE parent 2 FY Oct-16 Revenue split by currency and Geography on an As-Managed basis; geographic breakdown based on Micro Focus regions 3 As-Acquired Underlying Adjusted EBITDA including horizontal costs that are expected to not transfer as part of the Transaction 4 Recurring HPE revenue comprises Support and SaaS revenue types 5 Revenue split by product on As-Acquired basis, excluding $4m of unallocated revenue

46

HPE Software At a Glance

Key Financials – FYE Oct ($m) Revenue breakdown – FYE Oct-16A (%) Geography2 Type4 Product5

Licence 27% Support 51% SaaS 13% Consulting 9%

60% recurring revenue

694 666 649 650 2014A 2015A 2016A LTM Apr-16 Margin % 20.5% 20.9% 20.8% 20.5%

HPE Software Product Portfolio

47

Linux and Open Source Application Testing & Delivery Management

24%

IT Operations Management

38%

Linux and Open Source Big Data Platform Analytics

5%

Security and Information Governance

33%

Vertica IDOL Voltage ArcSight ALM AppPulse OpsBridge Hybrid Cloud Management UFT APM LR Fortify

Note: Revenue split by product for the twelve months ended 31 October 2016

48

Highly Complementary Nature of Two Businesses…

Revenue growth (%)

Micro Focus

Source: Public filings, announcements and investor presentations; Note: Financials shown for the twelve months to 31-Oct-16; Micro Focus on a constant currency, pro forma basis; HPE Software on an As-Acquired basis unless otherwise stated

1 Micro Focus R&D costs pre-amortisation of acquired intangibles; HPE Software adjusted for Corporate Global Functions, Corporate investments, stock based compensation, and other items (As-Managed basis); 2 HPE Software unadjusted for horizontal costs that are expected to not transfer as part of the Transaction 3 Defined as cash generated from operations divided by Adjusted EBITDA post exceptionals; Micro Focus on an as-reported basis; 4 Defined as aggregate of Maintenance and Subscription (Micro Focus), Support and SaaS (HPE Software)

(1%) 1%

Gross margin (%) Cash conversion (%)3 Recurring revenue4 % Underlying Adjusted EBITDA2 margin (%) R&D1 (% Sales)

45% 21% 90% 90% 72% 60% 14% 19%

HPE Software

89% 73%

Micro Focus Product Portfolio Details

49

Identity, Access and Security Solutions (IAS) COBOL Development and Mainframe solutions (CDMS) Host Connectivity Solutions Development and IT Operations Mgmt (Dev & ITOM1) Collaboration and Networking Solutions SUSE

$214m (15% of total)

• Facilitate secure access

by using identity information (identity management, access management, single- sign-on etc)

• Increased compliance /

regulation, expansion and diversity of cyber threats and resultant financial impact and virtualisation and cloud deployment are key trends driving industry growth

$278m (20% of total)

• CD products enable

programmers to develop applications written in COBOL across multiple platforms including Windows, UNIX, Linux and the cloud

• MS products let

customers maximise value out of their

• mainframe. These

technologies allow customers flexibility in deciding the platform choice for development, testing and deployment

• f their business

applications

$187m (13% of total)

• Enable use of

centralised applications (especially mainframes) to end-users across different environments and devices

• Enable use of mainframe

applications and data with modern development environments and business analytics

• Core products deliver

graphical user interfaces (GUI) for legacy applications

$304m (22% of total)

• Includes tools

(applications) that enable IT departments to better manage their datacenters, software development and testing as well as system monitor and support tools

• Source Code Change

Management, Application Lifecycle Management and Business Process Management software from the Serena acquisition

$147m (10% of total)

• Core products include

email, calendaring, contact management, solutions for file & print / storage of enterprise files

• Brings people, projects

and processes together in a secure environment

$280m (20% of total)

• Operating system built
• n top of the open

source Linux kernel that allows a computer and its various hardware and software components to interact

• Enterprise grade Linux

server, open stack, cloud and storage solutions

Description Revenue

Source: Micro Focus annual report and filings; company data Note: Revenue of $1,410m based on twelve months to 31 October 2016 on a pro forma basis, restated to H1 17 exchange rates

COBOL Enterprise Identity Manager Sentinel Rumba MSS Reflection Silk AccuRev PlateSpin OES GroupWise CORBA

Select products

Linux & Open Stack

2 1 2 2 2 3 2 4 2 5 2 6

50

HPE Software Product Portfolio Details

Application Testing & Delivery Management (AT&DM) IT Operations Management (ITOM) Big Data Platform Analytics (Big Data) Description Revenue Select products

• Provides software that

enables organizations to deliver high-performance applications, accelerating the application delivery life cycle and automating the testing processes to ensure the quality and scalability of desktop, web, mobile and cloud-based applications

• IT Operations Management

product group provides the software required to automate routine IT tasks and to pinpoint IT problems as they

• ccur, helping enterprises to

reduce operational costs and improve the reliability of applications running in a traditional, cloud or hybrid environment

• HPE Software’s Big Data

Platform Analytics product group provides a full suite of software designed to help

• rganizations capture, store,

explore, analyze, protect and share information and insights within and outside their

• rganizations to improve

business outcomes

$1,190m (38% of total)

OpsBridge Hybrid Cloud Management ALM IDOL AppPulse

$734m (24% of total) $166m (5% of total)

Security & Information Governance (SIG)

• Provides comprehensive

solutions that span security and risk management, with a focus on protecting users, applications and data, while also enabling customers to manage risks and meet legal

• bligations

$1,032m (33% of total)

Source: Company filings, announcements and presentations Note: HPE Software revenue split by product on As-Acquired basis, excluding $4m of unallocated revenue (FY Oct-16 revenue of $3,126m)

2 1 2 2 2 3 2 4

UFT APM LR

($m) FY1 FY2 ($m) FY1 FY2 ($m) FY1 FY2 Licence 50.0 50.0 Licence 33.3 33.3 Licence 20.0 20.0 New maintenance 10.0 New maintenance 6.7 New maintenance 4.0 Maintenance renewal 45.0 Maintenance renewal 60.0 Maintenance renewal 72.0 Maintenance Total 50.0 55.0 Maintenance Total 66.7 66.7 Maintenance Total 80.0 76.0 Revenue total 100.0 105.0 Revenue total 100.0 100.0 Revenue total 100.0 96.0 Revenue growth (%) 5.0% Revenue growth (%) 0.0% Revenue growth (%) (4.0%)

Highly Visible Revenue Streams – Worked Example

51 Licence : Maintenance revenue split

• f 50/50

Licence : Maintenance revenue split

• f 20/80

x20% Attach rate x90% Renewal rate 0% growth rate

Micro Focus currently operates a Licence : Maintenance revenue split of approximately 30/701

1 Based on LTM October-16A revenue; excludes revenues from Consulting and Subscription services

x20% Attach rate x90% Renewal rate 0% growth rate x20% Attach rate x90% Renewal rate 0% growth rate

Licence : Maintenance revenue split

• f 33/67

Micro Focus – Profitability by Portfolio

Pro Forma, Constant Currency Basis

Source: Company announcements and presentations;

1 On a pro forma, constant currency basis; restated to H1 2017 exchange rates

52

Twelve months ended 31-Oct-16 FYE Apr ($m) Micro Focus SUSE Total Licence 335 335 Maintenance 741 741 Consultancy 53 5 58 Subscription 275 275 Total revenue 1,130 280 1,410 Adjusted operating profit 550 91 641 Adjusted EBITDA 563 92 654 Underlying Adjusted EBITDA 544 91 634 margin % 48.1% 32.4% 45.0%

Key Financials – LTM 31-Oct-16

Twelve months ended 30-Apr-161 FYE Apr ($m) Micro Focus SUSE Total Licence 335 335 Maintenance 760 760 Consultancy 55 5 60 Subscription 247 247 Total revenue 1,150 252 1,402 Adjusted operating profit 537 79 616 Adjusted EBITDA 550 80 630 Underlying Adjusted EBITDA 536 80 615 margin % 47% 32% 44%

Key Financials – FYE 30-Apr-16

Source: Company announcements and presentations Note: Financials prepared under US GAAP and SEC carve out accounting rules; LTM Q2 2016 refers to the trailing twelve months for the period 1 May 2015 through 30 April 2016

1 As-Acquired basis for financials relates to the disposals of Tipping Point, iManage, Live Vault, HPPA Teleform as well as the transfer of the MOBU division to the HPE parent. Amounts shown for these divestitures are management's best estimate of

the amount of revenue and EBITDA generated by these divested businesses during the periods presented, adjusted for HPE management's estimate of horizontal costs that did not exit HPE Software on divestment of these businesses

2 Separation costs represent the allocation to HPE Software of a portion of HPE’s costs incurred in connection with the separation of HPE from its former parent on 1 November, 2015 and all of HPE’s costs incurred in connection with the spin-merge

with Micro Focus

3 Horizontal costs relate to HPE Software central overhead and corporate costs that are expected to not transfer to Micro Focus as part of the Transaction

53 Reconciliation From As-Managed Non-GAAP Operating Profit to As-Acquired1 Underlying Adjusted EBITDA

Selected Financial Information on HPE Software

FYE Oct, $m Oct-16A Oct-15A Oct-14A LTM Apr-16A HPE Software Non-GAAP Operating profit 749 788 871 800 Intangible asset amortization (153) (224) (248) (186) Stock-based compensation (70) (58) (60) (62) Restructuring charges (113) (35) (48) (74) Separation costs2 (Adjusted for SBC) (101) (91)

• (89)

Acquisition and other related charges (3) (5) (10) (3) Other expenses, net (74) (57) (93) (64) As-Managed Earnings before taxes $235 $318 $412 $322 Add back: net interest and other 3 3 3 2 Add back: depreciation and amortisation 221 336 363 277 As-Managed HPE Software EBITDA $459 $657 $778 $601 Add back: Separation costs2 101 91 89 Add back: Restructuring charges 113 35 48 74 Add back: Stock based compensation 70 58 60 62 Add back: Acquisition related charges 3 5 10 3 As-Managed HPE Software Underlying Adjusted EBITDA $746 $846 $896 $829 Less: MOBU transfer (33) (48) (13) Less: Disposals in the period (97) (147) (154) (166) As-Acquired Underlying Adjusted EBITDA $649 $666 $694 $650 Add back: Horizontal costs3 expected to not transfer 92 123 141 102 As-Acquired Underlying Adjusted EBITDA excluding horizontal costs $741 $789 $835 $752

54 Combined Income Statement, Before Taxes on an As-Managed Basis

Selected Financial Information on HPE Software

US GAAP Carve Out Accounting, As-Managed basis

FYE Oct, $m Oct-16A Oct-15A Oct-14A LTM Apr-16A Licence 884 1,008 1,163 969 Support 1,621 1,878 1,980 1,734 Professional Services 396 424 465 412 SaaS 294 312 325 297 As-Managed total revenue $3,195 $3,622 $3,933 $3,412 Costs and expenses: Cost of Sales (878) (971) (1,046) (926) Research and development (603) (670) (673) (653) Selling, general and administrative (1,101) (1,305) (1,493) (1,156) Amortization of intangible assets (153) (224) (248) (186) Restructuring charges (113) (35) (48) (75) Acquisition and other related charges (3) (5) (10) (3) Separation costs1 (106) (91) (89) Total costs and expenses (2,957) (3,301) (3,518) (3,088) As-Managed Operating profit $238 $321 $415 $324 Interest and other (net) (3) (3) (3) (2) As-Managed Earnings before taxes $235 $318 $412 $322

Source: Company announcements and presentations Note: Financials prepared under US GAAP and SEC carve out accounting rules; LTM Q2 2016 refers to the trailing twelve months for the period 1 May 2015 through 30 April 2016

1 Separation costs represent the allocation to HPE Software of a portion of HPE’s costs incurred in connection with the separation of HPE from its former parent on 1 November, 2015 and all of HPE’s costs incurred in connection with the spin-merge

with Micro Focus

Source: Micro Focus RNS Announcements Note: Financial information for HPE Software prepared on a US GAAP Carve Out Accounting, excluding taxes, As-Managed basis

55

Selected Financial Information on HPE Software

Unaudited Summary Cash Flow Information, Excluding Taxes

FYE Oct, $m Oct-16A Oct-15A Oct-14A Depreciation and amortization 221 336 363 Net cash provided by operating activities $483 $542 $991 Investment in property, plant and equipment (28) (17) Net cash provided by (used in) investing activities $211 $40 ($16) Net cash provided by (used in) financing activities ($714) ($629) ($1,096) Net increase / (decrease) in cash and cash equivalents (20) (47) (121) Opening cash balance 150 197 318 Closing cash balance $130 $150 $197

56

Basis of Preparation of US GAAP and SEC Carve Out Accounting

Basis of preparation for US GAAP carve out accounting The basis for US GAAP and SEC carve out accounting rules can be found below. The Combined Income Statement, before Taxes, Combined Statement of Assets and Liabilities, excluding Taxes and Combined Summary Cash Flow Information, excluding Taxes of HPE Software were derived from the Combined and Consolidated Financial Statements and accounting records of HPE as if HPE Software was operated on a standalone basis during the periods presented and were prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). Combined Statements of Earnings, before Taxes The Combined Statements of Earnings, before Taxes of HPE Software reflect allocations of general corporate expenses from HPE including, but not limited to, executive management, finance, legal, information technology, employee benefits administration, treasury, risk management, procurement and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, expenses, headcount or other relevant measures. Management of HPE Software and HPE consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, HPE Software. These allocations may not, however, reflect the expenses HPE Software would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if HPE Software had been a standalone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Combined Balance Sheets, excluding Taxes The Combined Balance Sheets, excluding Taxes of HPE Software include HPE assets and liabilities that are specifically identifiable or otherwise attributable to HPE Software, including subsidiaries and affiliates in which HPE has a controlling financial interest or is the primary beneficiary. HPE’s cash has not been assigned to HPE Software for any of the periods presented because those cash balances are not directly attributable to HPE Software. HPE Software reflects transfers of cash to and from HPE’s cash management system as a component of parent company investment in the Combined Balance Sheets, excluding Taxes. HPE’s long-term debt has not been attributed to HPE Software for any of the periods presented because HPE’s borrowings are not the legal obligation of HPE Software. HPE maintains various benefit and stock-based compensation plans. HPE Software’s employees participate in those programs and a portion of the cost of those plans is included in HPE Software’s Combined Statements of Earnings, before Taxes, Combined Statement of Assets and Liabilities, excluding Taxes and Combined Summary Cash Flow Information, excluding Taxes. However, HPE Software’s Combined Balance Sheets, Excluding Taxes do not include any net benefit plan obligations as no HPE benefit plan included only active, retired and other former HPE Software employees. HPE Software’s Combined Balance Sheets, Excluding Taxes also do not include any equity related to stock-based compensation plans.

57

Basis of Preparation of US GAAP and SEC Carve Out Accounting (Cont’d)

Intercompany transactions and accounts All intercompany transactions and accounts within the combined businesses of HPE Software have been eliminated. Intercompany transactions between HPE Software and HPE other than leases with HPE’s wholly-owned leasing subsidiary are considered to be effectively settled in the Combined Statements of Earnings, before Taxes, Combined Statement of Assets and Liabilities, excluding Taxes and Combined Summary Cash Flow Information, excluding Taxes at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Combined Summary Cash Flow Information, excluding Taxes within financing activities and in the Combined Balance Sheets, Excluding Taxes within parent company investment. Basis for As-Managed and As-Acquired financials information As part of the carve out process for HPE Software and the Transaction, unaudited historical financial information has been prepared under US GAAP and SEC carve out accounting rules, representing the perimeter of the HPE Software business as it existed at the time of the statements. Financial information prepared on this basis has been defined as the “As- Managed” basis. Additionally, further historical financial information derived from the As-Managed financial information but adjusted for various changes in the business’ perimeter and certain other items has also been prepared. The Micro Focus board believes these adjustments more accurately reflect the performance and business perimeter of HPE Software as it is being acquired. Financial information prepared on this basis has been defined as the “As-Acquired” basis. Since the announcement made on 7 September 2016, there have been certain amendments to the US GAAP financial information of HPE Software for the financial years ended 31 October 2014 and 31 October 2015. The independent audit of the 2016 carve out financial statements of Seattle SpinCo, Inc., for the Board of Directors and Stockholders of HPE is in process and is expected to be completed in the near term.

58

Differences between Micro Focus and HPE Software accounting policies

• Micro Focus prepares its consolidated financial statements in accordance with IFRS whereas HPE Software prepares its combined financial statements under US GAAP.
• As HPE Software is a reportable segment of HPE, Combined Statements of Earnings before Taxes, Combined Statements of Assets and Liabilities, Excluding Taxes and Combined

Summary Cash Flow Information, Excluding Taxes have been prepared for HPE Software for HPE's financial years ended October 31, 2014, 2015 and 2016 (collectively the "Carve Out Accounts").

• The Carve Out Accounts have been prepared under US GAAP and the process to convert the unaudited Carve Out Accounts to IFRS is in progress. Material differences between

Micro Focus' IFRS accounting policies and the US GAAP policies used to present the Carve Out Accounts have been identified on a pre-tax basis. Material differences identified include among others: (i) increase in the expense recognised for share based payments; (ii) recognition of a net defined benefit pension liability; and (iii) the presentation of certain income statement and balance sheet financial statement items being realigned to conform to Micro Focus’ presentation. As the conversion exercise from HPE Software’s accounting policies to Micro Focus’ accounting policies is not yet finalised, the quantification of these adjustments is not yet available. While the Company has identified what it believes to be the material differences between Micro Focus’ accounting policies and the policies used to present the unaudited Carve Out Accounts of HPE Software, there may be additional differences not noted below. a) Income Statement and Balance Sheet Presentation

• The presentation of certain income statement and balance sheet financial statement items may be realigned to conform to Micro Focus’ presentation.

b) IFRS first-time adoption (IFRS 1)

• For first-time adopters of IFRS, full retrospective application is subject to certain optional exemptions, designed to reduce the burden where the cost of retrospective application

might exceed the benefits. Below are optional exemptions which are applicable and may be applied to the Carve Out Accounts under IFRS.

• i) Business combinations: For business combinations that occurred prior to the date of transition to IFRS, IFRS 1 allows the first-time adopter to elect not to restate those

prior business combinations to comply with IFRS 3R.

• ii) Set cumulative translation adjustment to zero: An entity may elect to set the cumulative translation adjustment differences for all foreign operations to zero at the date of
• transition. The gain or loss on a subsequent disposal of any foreign operation would then include only translation differences that arose after the date of transition.

c) Revenue recognition

• HPE Software’s accounting policy for software revenue recognition follows the detailed and more prescriptive guidance under US GAAP, which could result in differences from the

policies applied by Micro Focus. Differences in timing and measurement of revenue recognition may occur between US GAAP and IFRS in allocating selling prices for multiple- element arrangements or for the revenue recognition of term licenses, amongst others. d) Share-based payments

• HPE issued stock awards to certain employees of HPE Software. As these awards are in substance for work performed for the benefit of HPE Software, stock-based compensation

expense and the related capital contribution is recorded for these awards. In accordance with HPE Software’s accounting policy, this expense is recognised over the vesting period using the straight line method. Under IFRS, such payments are required to be recognised using a graded-vesting schedule. Accordingly, HPE Software’s stock-based compensation expense may be required to be adjusted to reflect graded vesting.

59

Differences between Micro Focus and HPE Software accounting policies

e) Impairment of assets

• The following differences in the impairment models under HPE Software’s accounting policies and IFRS may result in different impairment conclusions in HPE Software’s Carve Out

Accounts.

• i) Level of testing: Under HPE Software’s accounting policy for fixed assets and finite-lived intangible assets, asset groups to be tested for impairment are generally

determined based on independent cash flows. That is, both cash inflows and outflows are considered. Under IFRS, the level of testing is generally at the cash-generating unit (“CGU”) which is determined solely based on cash inflows. This may result in different asset groups being tested for impairment.

• ii) Impairment model calculation: Under HPE Software’s accounting policy, the impairment analysis of long-lived assets is a two-step approach. First, impairment is

assessed on the basis of undiscounted cash flows. If less than carrying amount, the impairment loss is measured as the amount by which the carrying amount exceeds fair value. HPE Software’s accounting policy further stipulates that the impairment test is a one-step approach for indefinite-lived intangible assets. If the carrying amount exceeds the fair value, an impairment loss is recognised for the excess. Under IFRS, a single-step impairment testing approach is used for all non-financial assets. An asset or (grouping of) CGU(s) is impaired when its carrying amount exceeds its recoverable amount.

• iii) Reversal of impairment: Under HPE Software’s accounting policy, impairments cannot be reversed. Under IFRS, impairments recognised on non-financial assets other

than goodwill must be reversed up to amortised cost (i.e. original carrying amount less amortisation as if the impairment had never occurred) if the circumstances and/or estimates used to determine the recoverable amount have changed since impairment was recognised.

• iv) First-time adoption: Goodwill is tested for impairment at the date of transition to IFRS, and any resulting impairment at that date is recognised directly to retained

earnings. f) Capitalisation of development costs

• Under HPE Software’s accounting policy, costs incurred in development are expensed unless within the scope of guidance relating to development of software for internal or

external use, or website development costs. Under IFRS, there are no scope considerations. Accordingly, all development activities must be assessed for capitalisation. This difference may result in additional or different amounts of development costs being capitalised under IFRS. g) Restructuring

• Under US GAAP HPE Software recognises a liability for severance costs once it is probable and reasonably capable of being estimated. Under IFRS, recognition is not permitted

until irrevocable communication has occurred to the impacted employees. This could lead companies to record restructuring provisions in different periods under IFRS than they would under US GAAP. h) Pensions

• HPE Software accounted for pension plans in which its employees participated as multi-employer plans. Accordingly, the plans expenses are attributed to HPE Software combined

statement of earnings whereas the pension plans assets and obligations are not recorded on HPE Software’s balance sheet. Under UK carve out rules, financial statements may recognise the pension plan assets and liabilities attributed to its employees for plans in which they participate.

60

Differences between Micro Focus and HPE Software accounting policies

i) Discontinued Operations

• Under US GAAP, to qualify as a discontinued operation, a disposal must result in a strategic shift that has a major effect on its operations and financial results. IFRS does not

contain the concept of a strategic shift, rather, the significance of the line of business or geographical area of operations disposed will determine whether the disposal qualifies for discontinued operations presentation. j) Income taxes

• The Carve Out Accounts presented do not include a tax provision as it is still in the process of being prepared. Preparation of a tax provision prepared on a separate tax return basis

in accordance with IFRS for the Carve Out Accounts may reflect differences in comparison to HPE Software’s accounting policy related, but not limited, to the recognition and presentation of deferred taxes, tax bases, foreign exchange on non-monetary assets where the local currency is not the functional currency, unrealised profits on intercompany sales, deferred taxes on share-based payments and uncertain tax positions. k) Sale and leaseback

• Following US GAAP guidance, HPE Software defers the gain on sales of real estate which involve a leaseback and amortises the gain over the life of the lease. IFRS differs from

US GAAP on the recognition of gains and losses on sale-leaseback transactions. Micro Focus’ accounting policy would normally result in recognition of the gain immediately on sale

• f the asset where the lease is classified as an operating lease.

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