Microgen’s sell-side model enables the tangible benefits of e-business to be realised for both biller and buyer without requiring a change in business processes or document formats. While the viability and prospects of some e-business models have come under scrutiny during the past year, the transition from paper to electronic billing in a B2B environment is a natural evolution. As a result, we are experiencing significant growth in the number of biller-recipient transactions and the potential for Microgen’s model continues to be exciting.

Highlights

Transition of the Group initiated in 1998 successfully completed.

New businesses developed or acquired over past 2 years now account for 60% of

Group revenue.

Disciplined, self-funded, investment programme transitioning legacy service customers into e-services.

B2B e-billing accelerating

e-billing transaction volume ramping with quarter-on-quarter growth in excess of 100%.

15 billers now operational with 300 live recipients, making Microgen one of the leading independent

B2B transactional hosting services and the leading B2B e-billing service provider in the UK.

Added-value service enhancements increasing barriers to entry for potential competitors.

Strong performance from Microgen-Kaisha consultancy division

27% operating margin

Growth of 36% in strategic sectors of Customer Relationship Management,

Knowledge Management

and e-business systems implementation

Synergies between consultancy operations and transactional e-services business increasing

Solid operating performance continues to finance transition to e-services

Revenue from continuing operations : £22.6m (1999 : £19.6m)

Adjusted Profit Before Tax (PBT) from continuing operations (excluding exceptional items, goodwill

amortisation and charges related to share price movements) : £1.2m (1999 : £1.1m)

Adjusted eps of 1.7p (1999:5.8p)

Net loss per share of 5.4p (1999:eps of 3.7p)

Final dividend proposed to be maintained at 1.0p, following elimination of interim (1999 : 1.5p in total

including interim)

Strong balance sheet with net free cash of £8.4 m at 31 December 2000. Positive operating cash flow maintained