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July 18, 1990

LONG ROAD TO RECOVERY GETS OFF TO SOLID START AT MICROGEN HOLDINGS

By CBR Staff Writer

Radlett, Hertfordshire-based Microgen Holdings Plc looks as though it is gradually overcoming its old management problems brought about by rapid growth, and was able to report mid-term pre-tax profits only marginally down to just under UKP3m on sales up UKP2m to UKP25m – profits for the last full year had fallen by around a third with the blame squarely put on an outdated senior management structure (CI 1,354). The new management drafted into the UK and Germany has apparently settled in well, and the merging of its sales forces for its core computer output microfilm and laser printer services has meant that now the percentage of its UK customers using both product ranges has doubled to 7%. Its Scandinavian operations continue to progress well, and the fierce price competition that halved profits in Germany last year has reportedly calmed down. As a whole, the UK accounts for 56% of sales, Scandinavia 36% and Germany the rest; in terms of products, group managing director John Thorpe estimated that Microgen was doing around two thirds of its business in computer output microfilm, and the remainder in laser printing. With the purchase of Hoskyns’ COM business in July, the May closure of its Imagen laser printing plant and the sale of Equipment and Supplies arm to Anacomp Ltd, Microgen’s COM activities are likely to dominate the next reported figures even more strongly. The seemingly inevitable shift to optical disk systems is not likely to happen for some time, with Thorpe counting on a sufficient market for microfilm at least for the rest of his lifetime; Thorpe added that the recently arranged optical disk system distributorship was still seen as a marginal business and was, as expected, not bringing in any significant revenues. Microgen has only recovered UKP219,000 of in respect of the fraud disclosed in 1989 and for which it made a provision of over UKP800,000 on last year’s figures; there may be some more to come in, but Thorpe accepted that it was probably a case of don’t hold your breath. The results were hit at the earnings per share level by the adversely effect of removal of certain tax concessions in Sweden: this has meant that Microgen is effectively paying tax at the 50% level compared with 23% previously; however, the Swedish corporate tax authorities are due to reduce this to 35% in 1992. The share dividend was held at 2.2 pence, and the figures sent the share price down tuppence on the 137 pence at which they closed on Tuesday.

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