Following a series of profits warnings which have massacred the company’s share price, Microgen Holdings Plc, the UK-based information management and archiving company, has been forced to cut its dividend to preserve cash flows and is resorting to a share buy back program to reduce dividend costs. The shares fell a further 4 pence to 80 pence on the news, less than half their mid 1997 value. Net profits for the year to October 31 were down 41% at 3.5m pounds and revenue fell 10% to 66m pounds as the group’s revenue from its old core product of computer output to microfilm (COM) continues to dwindle. The strength of sterling took a chunk out of revenues and earnings again (50% of revenues derive from Germany and the Nordic countries) and Microgen is warning of a similar story for the current period with sterling up 10% to 15% on this time last year. But while COM revenues fell by 8m pounds, the groups successful Information Management Services division grew by 11% (in constant currency terms). And the newly developed Axess electronic document storage system, which the company has been pouring funds into, has now generated 650,000 pounds of revenues and is predicted to break even by 1999. Axess uses a browser front end to view high-volume documents converted to electronic format, such as invoices, which are stored on RAID drives for around three months. After this initial period, the need for access becomes less likely and the information is committed to the more traditional format of micro fiche. The system currently centers around invoice storage and circulation of internal company documents, but will be extended to cover other applications. Axess is live at only eight sites at present, and its uptake will be crucial to Microgen if the share price is ever to recover.
