Strong corporate governance principals lie at the heart of a range of comprehensive policies.

The principal corporate governance guidance that applies to companies listed with the UK Listing Authority during the year reported on is contained in the UK Corporate Governance Code 2014 (the “Corporate Governance Code”) published by the Financial Reporting Council in September 2014, which is available at www.frc.org.uk ___ .

Whistleblowing/Issue Reporting Policy and Procedure


Introduction

Micro Focus is committed to abiding by the law and maintaining the highest ethical standards in all areas of our work and practice. In particular, the Public Interest Disclosure Act 1998 (“PIDA”) creates a framework for workers who have genuine concerns about certain kinds of malpractice in connection with their workplace. As part of this commitment, we want to encourage Staff Members and Intermediaries to report any malpractice or illegal acts or omissions (whether in the UK or elsewhere) by other Staff Members and Intermediaries. Staff Members should use internal mechanisms for reporting and Intermediaries should contact their Micro Focus contact.

If a Staff Member or Intermediary is aware of suspected or actual examples of malpractice (as defined below) they have an obligation to report it. If a Staff Member or an Intermediary is aware of any circumstances which could lead to malpractice, such as a request received for an illegitimate payment, they must inform Micro Focus about it in accordance with this Policy.

Business Partners are requested to inform the Group Compliance Officer of any suspected or actual examples of malpractice relating to Micro Focus of which they are aware.

What constitutes malpractice?

The following list sets out some examples of malpractice:

  • unprofessional treatment of a customer by Staff Members or Intermediaries;
  • criminal offences including bribery;
  • defrauding any Micro Focus group company (a “company”);
  • a failure to comply with any legal or regulatory obligation;
  • any abuse or misuse of company inside information including any disclosure and/or dealing in Company shares or options while in possession of company inside information;
  • a miscarriage of justice;
  • endangering the health and safety of any individual;
  • damage to the environment;
  • breach of standing financial instructions;
  • a breach of the Micro Focus Worldwide Code of Business Conduct and Ethics;
  • and deliberate concealment of any of the above.

Personal concerns of Staff Members and Intermediaries

This policy is primarily for concerns where the interests of others or of the Company are at risk. If something is troubling a Staff Member or an Intermediary which they feel the Company should know about or investigate, they should use this procedure. If, however, Staff Members are aggrieved about their own personal position, the Grievance Procedure in the Employee Handbook should be followed.

Protection a whistleblower will get

If a Staff Member or Intermediary raises a genuine concern under this policy, they will not be at risk of losing their job or suffering any form of retribution as a result. Provided the Staff Member or Intermediary is acting in good faith, it would not matter if they were mistaken. Of course, if a Staff Member were maliciously to raise a matter which they knew to be untrue, it would be likely to constitute gross misconduct, and would be dealt with under the Disciplinary Procedure.

Micro Focus will take disciplinary action against any Staff Member or Intermediary who attempts improper retaliation (whether direct or indirect) against anyone speaking up about an instance of malpractice, up to and including termination of employment or engagement.

External contacts

Whilst we hope this policy gives you the reassurance you need to raise such matters internally, we recognise that there may be circumstances where you can properly report matters to outside bodies, such as the FSA, Inland Revenue and HSE. Usually disclosures to these bodies will also be protected if the worker meets the test for internal disclosure and honestly and reasonably believes the information is substantially true. Wider disclosures, e.g. to the police, media or MPs, are protected if, in addition to the tests for regulatory disclosures, they are reasonable in all the circumstances and they are not made for personal gain. If you have any concerns about protection issues, Public Concern at Work will be able to advise you on your options and on the circumstances in which you may be able to contact an outside body.

Confidentiality

We will not tolerate the harassment or victimisation of anyone raising a genuine concern. However, we recognise that Staff Members or Intermediaries may nonetheless want to raise a concern in confidence. We will not disclose a Staff Member or Intermediary's identity without their consent. If a situation arises where we are not able to resolve the concern or take the matter forward without revealing a Staff Member or Intermediary's identity (for example because evidence is needed in court) we will discuss with them whether and how we can proceed. However, if the Staff Member or Intermediary chooses to remain anonymous when they first report the matter, it will be much more difficult for us to look into it, protect the Staff Member or Intermediary's position or give feedback. Accordingly, while we will consider anonymous reports, this policy is not designed for concerns raised anonymously.

How we will deal with matters raised under this policy

Once a Staff Member or Intermediary has told us of their concern, we will look into it to assess initially what action should be taken. This may involve an internal inquiry or a more formal investigation. We will tell the Staff Member or Intermediary who will be handling the matter, how that person can be contacted and whether any further assistance may be required. If the Staff Member or Intermediary requests it, we will write to them summarising their concern and setting out how we propose to handle it or the steps we are taking. However, we may not be able to advise of the precise action we are to take if this infringes a duty of confidence owed by us to someone else.

When the initial concern is raised, we may ask the Staff Member or Intermediary raising it how they think the matter might best be resolved. If they have any personal interest in the matter, we ask that we are told at the outset. If the concern falls more properly within the grievance procedure it will be handled as set out therein.

After Micro Focus conducts an initial assessment, if it believes that there are grounds for further investigation, the Company will take steps to conduct a formal investigation. This may involve obtaining external legal and forensic assistance if required. Micro Focus will ensure that the person investigating the alleged malpractice will be completely independent of the alleged malpractice complained of and will usually be the Compliance Committee/Group Compliance Officer. Micro Focus will consider whether to make disclosures to state/other authorities after completing its investigation.

Staff Members or Intermediaries must co-operate with any investigations of any alleged malpractice.

How to raise a concern

Step one

If you have a concern about malpractice, we hope that you will feel able to raise it first with your manager. In the case of an Intermediary, this can be raised first with your Micro Focus contact. This may be done in person or in writing. If in writing, you should state clearly the nature of your concern, the reasons for making the disclosure and the details of the individual or parties under suspicion.

Step two

If you feel unable to raise the matter with your manager for any reason, or would prefer to escalate the matter, Staff Members should please raise the concern with the Head of your Department. Intermediaries should raise concerns with the Group Compliance Officer.

Step three

If these channels have been followed by Staff Members and Intermediaries and you still have concerns, or if you feel that you cannot discuss the matter with any of the above please contact either the HR Director or the Company Secretary. If you feel that none of these channels are appropriate then please contact the Chairman of the Audit Committee, Richard Atkins at compliance@microfocus.com.

Independent advice

If you are unsure whether to use this procedure or you want independent advice at any stage, you may wish to contact the independent charity Public Concern at Work on +44 (0)20 7404 6609. Their lawyers can give you free confidential advice at any stage.

Queries

If you have any queries about the whistleblowing policy, please contact the Company Secretary.

Auditor Independence Policy Summary


MICRO FOCUS INTERNATIONAL PLC
POLICY ON AUDITOR INDEPENDENCE
(approved by the Audit Committee at its meeting)

On 6th February 2006 External auditors' independence and use of the audit firm in a non-audit capacity

Introduction

In order to fulfil the Audit Committee's obligations under point 8.52 of its Terms of Reference approved on 27th April 2005, the Smith report published in January 2003 and the requirements of the Combined Code on Corporate Governance published in July 2003, it is recommended that the Audit Committee adopt a formal policy which addresses the independence of the external auditors ("the auditors") in the provision of both audit and non-audit services.

Policy objectives

The primary objective of this policy is to ensure that the auditors are, and are seen to be, independent as identified by the Institute of Chartered Accountants in England and Wales.

Provision of services

Services available from the auditors are classified into

  • audit services
  • audit-related services
  • non-audit services and
  • prohibited services.

Audit services

This comprises work undertaken to provide an audit or review opinion on Micro Focus' financial statements.

In order to ensure an appropriate scope of work, the auditors will present an audit plan annually to the Audit Committee, setting out the proposed audit activity considered necessary to deliver these opinions.

The fees relating to this work will also be presented and agreed by the Audit Committee at the same time. Fees will be assessed on the basis of providing fair value for the services undertaken.

The auditors will be expected to undertake their work effectively and efficiently, using an appropriate balance of junior and senior staff.

Audit-related services

This represents work, generally of an assurance nature, provided by the auditors as a result of their expert knowledge and experience of the Group. It includes reviews required by regulatory bodies, corporate governance reviews, assurance reviews of public documents and the audit of pension and share schemes.

In respect of these services, executive management has discretion to use the auditors without prior consultation with the Audit Committee. However, the nature of and fees associated with that work must be regularly reported to the Committee and, if there is any concern on the part of executive management as to a potential threat to the auditors' independence, the Chairman of the Audit Committee must be consulted at an early stage.

Non-audit services

The auditors must conscientiously consider, before taking on non-audit work, whether the work involves any threats to auditor independence and the appropriate safeguards to eliminate them or reduce them to clearly insignificant levels.

The fees levels payable for non-audit services, individually and in the aggregate, relative to the audit fee will be a material consideration in assessing any threat to the auditors' actual and perceived independence.

Non-audit services include tax advice, valuations, internal audit and consultancy services, corporate finance services, over and above those provided in conjunction with audit and audit-related services.

Executive management are required to select the most appropriate supplier of such services, having regard to the expertise and experience offered and fees charged by alternative suppliers.

All assignments involving a fee exceeding USD 30,000 must be tendered and the best supplier chosen as appropriate on each occasion. In addition, any contract for the provision of non-audit services involving a fee exceeding USD 100,000 shall be referred to the Audit Committee for prior approval.

The auditors and the Company will monitor the total fees charged and chargeable by the auditors in any financial year for non-audit services and collate this information for review by the Audit Committee at each of its meetings.

Prohibited services

The Company will not engage the auditors for services where there is an evident threat to independence or where the work is deemed to or should be carried out by other providers. In particular, the auditors should not:

  • prepare accounting records and financial statements except where this falls within the normal statutory audit mandate or where the work is carried out for Micro Focus subsidiaries and is deemed immaterial;
  • advise on any business decision or
  • be responsible for the design or implementation of changes to the company's infrastructure.

Rotation of audit partners

The auditors are required to adhere to a partner rotation policy in accordance with the requirements of the Institute of Chartered Accountants in England and Wales and which provides an appropriate balance between consistency and independence.

Appointment of the auditors

The Audit Committee will assess the performance of the auditors annually based on service level criteria determined in conjunction with the auditors in advance. Subject to satisfactory performance and the recommendation of the Audit Committee, the Board will recommend the re-appointment of the auditors to shareholders at the Annual General Meeting. If the Audit Committee does not recommend the incumbent audit firm, a tender process will be carried out by the Audit Committee and executive management to select a new firm.

Hiring policy

Micro Focus and the auditors agree that full consultation between the audit partner and Chief Financial Officer should take place before recruiting each other's staff, either on a permanent or temporary basis, and that such consultation should specifically consider the effect of such recruitment, both individually and cumulatively, on the actual or perceived independence of the auditors and relevant ethical guidance published by professional accountancy bodies.

Responsibilities of the auditors

The auditors will maintain a monitoring system that provides reasonable assurance that their independence will not be impaired. The auditors will report annually to the Audit Committee on all aspects concerning independence, including possible conflicts with this policy.

Responsibilities of the Audit Committee

The Audit Committee will determine annually, and report accordingly to the Board, whether it is satisfied that the independence of the auditors has been maintained, taking into account the auditors' statements on independence and the Committee's own enquiries.