Microgen Holdings Plc, the UK-based information archiving company has been forced to issue a profits warning alongside its downbeat interim results, and the markets consequently took the share price to the cleaners. Net profits for the six months to April 30 were down 13.8% at 2.7m pounds on revenue that fell 23.2% to 13.7m pounds. Chairman Douglas Lee attempted to forestall the inevitable reaction with a series of explanations about one-off charges, particularly the adverse effect of a strong pound. But the pleas for understanding fell on deaf ears, as the share price was slaughtered in early trading, falling over 20% to 116 pence. Microgen’s core business is the archiving of information on Microfilm, a market which is rapidly being eclipsed by a wealth of electronic alternatives. Fighting for customers in a declining market is an expensive business, and Microgen’s figures reflect the costs of downsizing together with the cash acquisition of smaller rivals to boost a flagging customer base. But Lee is convinced of the benefits of Microfilm in certain niche areas of long-term storage. The company is researching a new product called Axess which it hopes will overcome some of Microfilms shortcomings. Archive data (particularly invoices and similar documents) is stored electronically in the early stages of its life to facilitate retrieval. As the data ages and is less frequently accessed, it is transferred onto film. One consolation is the interim dividend remains unchanged at 2.4 pence per share.
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