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August 16, 1996

MICROVITEC YEAR SPOILED BY ESCOM FAILURE

By CBR Staff Writer

Microvitec Plc has had a reasonably strong start to the year with growth particularly in its display screen and networking divisions, although profits are virtually static. The Bradford, UK-based systems and services group saw revenue for the six months to June rise 28% to 33.8m pounds, although profits were pretty much as last year at 1.6m pounds. The display screen division saw the biggest increase, with sales up 33% to 21.6m pounds, due largely to the financial sector. Microvitec will, however, take a hit on the demise of Escom AG Group (CI No 2,956), since it expected a significant volume of sales from Escom’s Amiga Technologies GmbH. It said that there is still demand for the recently developed range of Microvitec Amiga products, but due to the level of stock it is left with, production levels will be down in the second half. The company’s networking division fared well, with an increase of 20% in sales on last year. It merged its two systems integration companies, Layer One and SCI into Microvitec Network Technologies, as part of its strategy to become one ot the top five network systems integrators in the UK by the end of 1997. The software division saw sales up 12%, in spite of accountancy software company CSM not having launched its full range under Windows95. More disappointing, the company lamented, were its multimedia results, with a shortfall in revenue for its encoding laboratory following completion of its work for the British Telecommunications Plc Video-On-Demand trial (CI No 2,570). Canadian subsidiary SilCom also let the side down with its worst performance in five years, partly caused by US companies de-stocking as a result of slower growth in the personal computer market. Overall, chairman James Bailey said that the results were in line with budgets, and he believed that the company had excellent future prospects with its range of products in growth technology markets. However, he warned that second – current – half profits were unlikely to increase due to increased costs for marketing, development of new products for SilCom and reduced Amiga sales. The company will pay an interim dividend of 0.43 pence, about the same as last year.

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