IT CEO On £650K Bemoans State Of UK Tech Industry

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Micro Focus chief Stephen Kelly has called for tax incentives to help the IT industry despite his company claiming “20 percent growth in 2009”

UK software company Micro Focus has launched a manifesto calling for the government to support the tech industry and help it become more “prosperous” – despite the company claiming “another year of strong financial results”.

In a report released this week, Making BrITain Great Again, Micro Focus together with support from members from both sides of the house and business experts called on the government to support the UK IT industry and help increase the number of jobs in the sector. The report calls for the government to change tax incentives for investment in technology businesses, as well as other “fiscal incentives” to help UK tech companies increase research and development.

“The implementation of these recommendations, combined with the expertise and drive of UK entrepreneurs, would mean that, in 20 years’ time, our children would be able to boast that the UK’s technology industry was amongst the top five in the world, the source of high value employment, income, wealth, and national prosperity,” said Micro Focus chief executive Stephen Kelly in the report.

On the issue of “prosperity”, Micro Focus’ annual report for the year ending April 2008 reveals that Kelly received a package of around £651,000 made up of a basic salary of £300,000 and a bonus of £315,000 and pension and other renumeration. Together with two other directors, the total package paid out to Micro Focus’s executive team totaled over £1.3m for 2008.

But while Micro Focus’s management may be being compensated adequately, Kelly outlined his concern for the rest of the UK.

“UK plc is saddled with debt, decline, depleted industry and deteriorating employment, yet we have a great pedigree of innovation and IP-rich industries. Today, with a lack of hope for the future, and public cynicism with business and politics, it is exciting to be presenting a positive agenda for UK plc,” said kelly “Now more than ever, is the time for business, politics and academia to create more UK jobs by joining forces to implement a plan which fosters talent, encourages fiscal support and inward investment to produce a world class IP-rich technology industry which can truly make Britain great again.”

According to the company’s preliminary earnings report for 2009, Micro Focus continued to grow revenues despite an economic downturn that has seen unemployment rise to nearly 2.4 million in the UK. “Micro Focus has delivered another year of strong financial results against a difficult economic backdrop. The resilience of our business model, underpinned by our high proportion of predictable and recurring revenue, and the relevance of our customer proposition, have generated 20 percent revenue growth and record adjusted EBITDA margins. Double digit organic growth achieved in the core business was further enhanced by revenues from acquired companies,” Kelly said in a statement in June.

But despite the fact that Micro Focus appears to be weathering the downturn better than most, the company still believes that the UK government should be providing tax incentives and other financial help to the UK IT industry.

“We need further support to help energise the industry. specifically we would like to see a much simpler, hassle-free claims process that makes it easier for smaller firms to claim relief. We would also like to see a feasibility
study as to whether the small and medium-sized (sMes) company rate could be extended to companies of all sizes (£100m + turnover) in the technology sector for a minimum period of ten years,” the report states.

Micro Focus also received support for its manifesto from politicians from the three main parties, including Lord Harris of Haringey.

“I am similarly pleased to be adding my sponsorship to this cross-party panel which endorses the Micro Focus Technology Manifesto’s priorities for generating the extra employment desperately needed by the UK,” said Lord Harris of Haringey (Labour). “With the right encouragement, the UK technology industry has potential to nurture British talent and generate many more jobs over the coming years.”

Harris serves as treasurer of the Parliamentary Information Technology Committee (PITCOM).

The full Micro Focus manifesto can be found here.


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