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March 4, 1994

BRIAN REYNOLDS RETURNS TO EXECUTIVE ROLE AS PROFITS SLIP AT MICRO FOCUS

By CBR Staff Writer

Cobol specialist Micro Focus Group Plc of Newbury, Berkshire saw revenues for the year to January 31 have increased 21.7% to UKP83.8m, however net profits were down slightly by 4.5% to UKP14.7m. Costs for the year were as planned, but as sales of products for the development of MVS applications on IBM Corp mainframes, which account for almost half the total revenue, were less than hoped for, this accounts for lower revenues than anticipated. Sale of products for personal computer and networked applications development grew and contributed around one third of revenues and the firm will be increasing investment in product development for the Windows operating systems. One fifth of revenue comes from the Unix market. Direct sales grew by 14% and now accounts for 83% of total revenue, while maintenance business grew 4% to 25% of this figure. The European market caused an overall decrease in OEM sales while those in Japan and the US increased on the year before. In total OEM sales contributed 17% of revenue, down 6% on the previous year. During the year the firm bought its Spanish agent and in June acquired Proximity Software Inc for $4.1m in shares. The cost of development for the year was up 34.8% to UKP18.6m, 46% of this being capitalised. For the coming year the company now sees reviving its presence in the MVS market as an urgent consideration and it will also concentrate more on tools for the development of personal computer applications and network operating systems. Co-founder Brian Reynolds is returning to active participation in the executive management of the company, and forms half of a new Executive Office with the other co-founder, Paul O’Grady as joint chief executives; he takes responsibility for products and business development while O’Grady looks after sales, marketing and investor relations. At present, Micro Focus has UKP57.5m in cash balances, an increase of UKP4.0m, but says it has no immediate plans for the money. The earnings per share were 104.3 pence, a fall of 5.4% on the previous year, and in accord with the firm’s policy, the directors do not plan to recommend a dividend.

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