Interim Results - Part 1

Microgen PLC
5 September 2000


PART 1


1/2
                          
5 SEPTEMBER 2000

MICROGEN plc ('Microgen')

Interim Results for the Six months ended 30 June 2000

HIGHLIGHTS

-    Results in line with Board's expectations and consistent 
     with the Group's disciplined investment program in 
     e-services. 'Sell-side' B2B e-business model developing 
     well.

-    Revenue from continuing operations of £11.0m (1999 : 
     £8.7m).

-    EBITDA for continuing operations £0.5m (1999 : £0.2m) 
     and adjusted PBT from continuing operations (excl 
     exceptional items, goodwill amortisation and charges 
     related to share price) of £0.5m (1999: £0.1m).

-    Adjusted earnings per share of 0.2p, including 
     discontinued operations which contributed an operating
     loss of £0.5m on turnover of £2.8m (1999 : eps of 2.5p
     including an operating profit of £1.7m on turnover of 
     £6.8m from discontinued operations).

-    Billing & Database Management : After completion of the
     substantial restructuring over the past two years, the 
     division is now focused on database management and billing 
     services using an ASP model. Over 70 corporate customers
     have now signed up to Microgen's ASP e-services for a total
     of over 100 applications, including over 30 adopting 
     business-to-business ('B2B') e-billing. The disciplined
     investment program in e-services has enabled operating 
     income (£0.3 million before Group overheads) to be 
     maintained whilst undergoing a major transformation of 
     the operations. Major recent customer wins for e-services
     include : 3-Com, Canon, Cisco Systems, Lafarge Redland 
     Aggregates, NHS Logistics Authority, Oyezstraker Office
     Supplies, Wolseley and Staples.

-    Microgen-Kaisha : The Group's consultancy division, 
     focused on the delivery of e-business, CRM and data 
     warehousing, had a good start to the year with revenue of
     £3.8m and operating profit before Group overhead and 
     goodwill amortisation of £0.9m, an operating margin of 24%.
     Major recent customer wins have included : 3i, First Group,
     UDV, Jigsaw (a consortium comprising Unilever, Kimberley 
     Clark and Cadbury) and BskyB. Additional projects have been 
     secured from existing clients including : Centrica,
     LloydsTSB Registrars, Thames Water and Vodafone.

-    Recent acquisition of Telesmart Developments Ltd 
     ('Telesmart') enables Microgen to provide a market-leading
     integrated e-billing and e-payment service solution for 
     the B2B sector, establishing Microgen at the forefront of
     'sell-side' B2B e-business services.

-    Exit from the declining COM business, disposal of Ireland
     operations and closure of Manchester print bureau completed 
     on schedule and on target (exceptional costs of £2 million).

Martyn Ratcliffe, Executive Chairman, commented : ' The Board 
are pleased with the organic and strategic progress, transforming
the Group into a leading position in 'sell-side' e-business 
services. While most B2B e-business activity in the market to 
date has focused on 'buy-side' e-procurement, the Board believes
that the potential of the 'sell-side' opportunity is far greater, 
since virtually all companies seek to enhance their customer 
relationships. Consistent with this sell-side strategy, the 
Group's consultancy division has very effectively repositioned
its core CRM skills into the e-business sector and is increasingly
delivering the synergies anticipated at the time of the Kaisha 
acquisition.'

Contacts
Martyn Ratcliffe, Executive Chairman              01753-847123
Mike Phillips, Group Finance Director
Steve Liebmann, Buchanan Communications           020-7466-5000

Interim Results and 'Sell-Side' e-Business presentation
will be available from www.microgen.co.uk from 2-00pm today


5 SEPTEMBER 2000

MICROGEN plc ('Microgen')

Interim Results for the Six months ended 30 June 2000

CHAIRMAN'S STATEMENT

During the first half of 2000, the Group has made substantial 
progress, successfully completing the two year transition 
program and further developing growth opportunities, both 
organic and strategic. The Microgen Group now comprises 
two operating divisions, both of which delivered a positive 
operating contribution, despite the investments being made 
in the e-services business where the Board continues to pursue
a self-funded, disciplined investment program to maximise the
potential of the e-business opportunities developed by the 
Group. The success of these activities has positioned Microgen
at the forefront of 'sell-side' e-services in the UK.

Financial Performance

In the six months ended 30 June 2000, Microgen generated 
EBITDA from continuing operations of £0.5 million (1999 : £0.2
million) from revenue of £11.0 million (1999 : £8.7 million).
Adjusted PBT for the continuing operations (excluding 
exceptional items, goodwill amortisation and charges related 
to share price movements) for the period ended 30 June 2000
was £0.5 million, compared with £0.1 million in 1999. Adjusted
earnings per share were 0.2p, including discontinued operations
which contributed an operating loss of £0.5m on turnover of 
£2.8m (1999 : eps of 2.5p including an operating profit of 
£1.7m on turnover of £6.8m from discontinued operations).

The Group produced a net loss after tax of £2.5 million 
equivalent to a loss per share of 4.9p, after exceptional
costs of £2 million related primarily to the transition 
program. (The exceptional costs for the year are still 
anticipated not to exceed £2.4 million.) Also included in 
the net loss were £0.2 million of costs associated with an 
aborted acquisition, an operating loss of £0.5 million from 
discontinued operations and goodwill amortisation of £0.6 
million. The 1999 profit after tax of £1.0 million (earnings
per share of included £0.2 million of goodwill amortisation 
costs but also a profit contribution of £1.7 million from 
the discontinued operations.

The Group maintained a positive operating cash flow, 
consistent with the self-funding of the e-services investment
program, and continues to have a robust balance sheet with net
free cash of £10.0 million at 30 June 2000, reducing to £7.4 
million following the acquisition of Telesmart Developments Ltd.
As notified in the annual report for 1999, consistent with the 
investment program, the Board has decided that dividends will 
be paid once per year in respect of the full year results. 
Accordingly no interim dividend has been declared.

Billing & Database Management

The core technology for Microgen's e-services is the 
application service provision ('ASP') infrastructure, 
developed to enable the management of high volume 
transactional databases. Microgen now has over 70 customers
signed up to over 100 ASP application services, all of which 
are based on the management and distribution of data. These
applications are being adopted across many industry sectors 
and are being deployed to satisfy a variety of database 
management applications, including business-to-business 
('B2B') e-billing, where Microgen now has over 30 companies
adopting its B2B e-billing model. The ongoing investment in 
developing Microgen's sell-side e-services supplier (Biller) 
to enhance its relationship with its customers
( enables the Recipient). Developments include :

-  The acquisition of Telesmart Developments Ltd ('Telesmart')
   enabling an integrated B2B payment solution to be provided  
   with the e-billing service. (Telesmart is one of the UK's 
   leading suppliers of payment solutions using the BACS system 
   whichis the primary medium for B2B payment transactions in  
   the UK and the Telesmart customer base
   provides compatible marketing opportunities for the Microgen 
   e-billing services. Post-acquisition integration 
   is progressing well.)

-  Expansion of bill output formats, including 'Sage-ready' 
   and XML, where Microgen has now received the Business and 
   Accounting Software Developers Association (BASDA) 
   eBIS-XML accreditation.

-  Biller-branded web pages to provide a seamless link 
   to/from the Biller's web site, enabling the Biller to 
   strengthen its brand,increase traffic to its web site and 
   enhance its customerrelationships.

-  Capability for bill Recipient aggregation from multiple 
   Billers

-  Capability for purchase order and/or forms integration

As billers transition from traditional printing of invoices 
to e-bill distribution, Microgen's ability to manage the 
transition and deliver a complete service across multiple 
media is a key differentiator. As this transition evolves 
and demand for print media declines, the Board believe that 
the print industry will experience excess capacity and service 
commoditisation, resulting in pressure on margins. As a result, 
and as highlighted earlier in the year, a pro-active strategy 
has been adopted to reduce the Group's exposure to this risk 
while maintaining the relevant customers and the ability to 
manage this strategic transition for those customers. This 
decision resulted in the closure of the Manchester facility 
and consolidation of print bureau operations, which has been 
completed on schedule. Furthermore, some of the early benefits 
of the investment in the Central Processing Facility are already
being realised with the establishment of outsource partners for 
excess print volumes and to provide disaster recovery capability,
enabling Microgen to maximise the opportunity while reducing the 
risk exposure associated with the transition.

Revenue from continuing operations in the division as a whole 
was £7.2 million (1999 : £7.5 million) producing operating profit
before Group overhead of £0.3 million (1999 : £0.3 million). The 
decline in revenue occurred in the print & mail services through 
the bureau consolidation and continued account rationalisation 
while the on-line e-services grew by over 80% compared with the 
first half of 1999. This continued success confirms the 
effectiveness of the Board's disciplined investment program, 
balancing profitability and growth through this period of 
transition.

The results for discontinued operations in note 1 highlight the
reason for the Board's decision to accelerate the final phase 
of the transition program. The exit from COM, which was 
successfully completed in June including the disposal of the 
Ireland operations, marks a major milestone in the history of 
Microgen, being the service on which the company was
first established.

Microgen -Kaisha

Microgen Kaisha : The Group's consultancy division, focused 
on the delivery of e-business, CRM and data warehousing, had 
a good start to the year with solid growth in the strategic 
sectors.  Revenue for the division was £3.8m producing an 
operating profit before Group overhead and goodwill amortisation
of £0.9m, equivalent to an operating margin of almost 24%. 
Revenue from legacy support services reduced to c.17% of
the division for the six months ended 30 June 2000, compared 
with 34% in the comparable period last year. Utilisation rates 
have significantly improved and average fee rates have increased
by 18% over the first half of 1999.

This success has been achieved through a positioning of the 
business at the forefront of the technology curve, utilising 
the core CRM and data warehousing skills to maximise e-business 
developments for Microgen's customers. This positioning is 
consistent with the evolution of the Microgen Database

Management business and the Group recently won a significant 
project to implement and then host and support a data warehouse 
and associated CRM applications for a major customer. This type 
of project, whereby the initial consultancy and project 
implementation can be enhanced by on-line database hosting 
and related services, confirms the synergies between the two 
operating divisions anticipated at the time of the Kaisha 
acquisition.

As demand for Microgen-Kaisha e-CRM services continues to 
increase, the business has developed a set of proven tools 
branded 'Equinox', to accelerate deployment of e-CRM and 
Business Intelligence solutions. The Equinox tools enable 
the rapid integration of legacy applications and data sources 
with the latest CRM and e-business front-end applications,
allowing customers to realise the inherent value of the data 
held in their existing systems by applying it through new 
customer-focused applications. Combined with the Microgen-Kaisha
software vendor independence and the proven track record of 
successful systems deployment, the Equinox tools have been 
well received by clients, enabling accelerated delivery 
schedules and improved return on investment.

Board of Directors

Len Crisp retired from the Board in May 2000 following the 
successful integration of Kaisha into the Microgen Group. 
The Board would like to thank Len for his contribution during 
this period.

Paul Davies joined the Board as Group Managing Director in 1999 
and has made a substantial contribution to the successful 
execution of the Group's strategy during the past year. After 
a successful career  Paul has now decided to retire from executive 
management but will remain on the Board of Microgen plc as 
non-executive Deputy Chairman. In this active role, Paul's 
experience and contribution to the strategic development of 
the Group will continue to be available to the executive team.

Following these changes the Board will comprise a majority of
non-executive directors, consistent with the Board's policy 
on corporate governance.

Prospects

Throughout the first half of the year, with its post-millennium 
and stock market unpredictability, the Board has maintained a 
disciplined, prudent approach which has continued to deliver
planned operating performance whilst managing a major 
transition and investment program. This approach will be 
maintained.

The demand experienced in the Consultancy division during the 
first half of the year is a result of positioning the business 
to provide leading technology services, a strategy that has 
proven very successful. Furthermore, the Board believe that 
the customer adoption rates for Microgen's  e-business ASP 
services are at the higher end of the market sector and consider
that the Group is well-positioned to benefit from increasing 
market acceptance of e-services. The acquisition of Telesmart 
provides an integrated e-billing and e-payment solution which 
should enhance the Microgen offering and the Board will
continue to explore additional strategic opportunities which 
could potentially accelerate the development of the Group.

In summary, the organic and strategic development of Microgen 
has produced an exciting opportunity at the forefront of 
'sell-side' e-business in the UK and the Board continues 
to be pleased with the progress and evolution of the Group.


Martyn Ratcliffe
Executive Chairman


MICROGEN PLC
Group Profit and Loss Account
for the Six Months ended 30 June 2000

                                Unaudited Unaudited  Restated
                          Notes  6 months  6 months      year 
                                    ended     ended     ended
                                  30 June   30 June    31 Dec 
                                     2000      1999      1999
                                    £'000     £'000     £'000
                                                                      
Turnover                    1                                 
  - continuing operations          10,994     8,713    19,608
  - discontinued operations         2,766     6,759    11,716
                                  -------   -------   -------
                                   13,760    15,472    31,324
Operating costs                  (14,877)  (14,509)  (29,776)
                                                                      
Operating (loss)/profit     1                                 
Continuing operations               (629)     (740)     (898)
Discontinued operations             (488)     1,703     2,446
                                                                      
Operating (loss)/profit     1     (1,117)       963     1,548
Loss on disposal of              
discontinued operations             (140)         -         -
Loss on disposal of fixed assets           
- discontinued operations         (1,024)         -         -
Restructuring costs -               (773)         -         -
discontinued operations
Goodwill previously written off              
relating to the disposal of                               
discontinued operations             (100)         -         -
                                  -------     -----     -----
(Loss)/profit on ordinary                  
activities before Interest 
and Tax                           (3,154)       963     1,548
                                                                      
Net interest                          346       553       862
                                  -------    ------    ------                  
         
(Loss)/profit on ordinary         (2,808)     1,516     2,410
activities before tax
                                                                      
Tax on (loss)/profit     2            351     (555)     (620)
on ordinary activities            -------    ------    ------
                                                                      
(Loss)/profit on ordinary                  
activities after taxation         (2,457)       961     1,790
                                                                      
Dividends                               -     (254)     (762)
                                  -------    ------    ------                  
         
Retained (loss)/profit            (2,457)       707     1,028
transferred to reserves           =======    ======    ======
                                                                      
Earnings per share 
(after exceptional                                            
items, goodwill
amortisation and 
charges related
to share price 
movements)               3 
                                                                      
Basic                              (4.9)p      2.1p      3.7p
Diluted                            (4.7)p      2.1p      3.6p
                                                                      
Adjusted earnings 
per share (before                                        
exceptional items,
goodwill amortisation 
and charges related 
to share price 
movements)               3

Basic                               0.2p       2.5p     5.8p
Diluted                             0.2p       2.5p     5.7p
                                                                      
Dividend per share                   Nil       0.5p     1.5p
                                                                      

MICROGEN PLC
Consolidated Balance Sheet



                                     Unaudited  Unaudited  Restated
                                         as at      as at     as at
                                      30  June    30 June    31 Dec 
                                          2000       1999      1999            
                                          
                               Notes     £'000      £'000     £'000
                                   
Fixed Assets                                                      
 - Tangible                              2,224      5,251     4,524
 - Intangible                           23,650     24,853    24,276
 - Investments                             312        432       372
                                       -------    -------   -------
                                        26,186     30,536    29,172
                                                                         
Current assets                                                    
 - Stocks - raw materials                  171        130       288
 - Debtors                      4        5,090      7,182     4,855
 - Cash at bank and in hand             18,091     22,252    18,824
                                       -------    -------   -------
                                        23,352     29,564    23,967
                                                                         
Creditors: due within one       5     (13,966)   (20,699)  (13,494)
year
                                                                         
Net current assets                       9,386      8,865    10,473
                                                                         
                                                                         
Total assets less current               35,572     39,401    39,645
liabilities
                                                                         
Creditors: due after more       6        (105)    (1,630)   (1,265)
than one year
                                                                         
Provisions for liabilities            (1,796)    (2,285)   (2,438)
and charges                           -------    -------   -------
                                                                         
Net assets                             33,671     35,486    35,942
                                      =======    =======   =======             
        
Equity capital and reserves                                       
 - Called up share capital      7       2,544      2,539     2,543
 - Share premium account        8      16,785     16,650    16,762
 - Other reserves               8         200        100       150
 - Profit and loss account      8      14,142     16,197    16,487
                                      -------    -------   -------             
       
Equity Shareholders' funds             33,671     35,486    35,942
                                                                         

MICROGEN PLC
Consolidated Cash Flow Summary
for the Six Months Ended 30 June 2000




                                  Unaudited Unaudited    Restated
                                   6 months  6 months  Year ended
                                      ended     ended      31 Dec 
                                    30 June   30 June        1999
                                       2000      1999
                                                            
                           Notes      £'000     £'000       £'000
                                        
                                                                            
Net cash flow from          9(i)         49     2,866       4,647
operating activities
                                                                            
                                                                            
Returns on investments and              305       553         839
servicing of finance
                                                                            
Taxation                                 89     (792)     (5,522)
                                                                            
Capital expenditure                    (71)     (678)     (1,001)
and financial investment
                                                                            
Acquisitions and disposals            (324)   (5,614)     (5,658)
                                                                 
Equity dividends paid to              (509)     (435)       (688)
shareholders
                                      -----   -------     -------
Cash (outflow) before use of          (461)   (4,100)     (7,383)
liquid resources and financing
                                                                            
Management of liquid resources        (766)     3,902       9,148
                                                                            
Financing                             (272)     (343)       (488)
                                     ------   -------     -------
(Decrease)/increase in cash 9(ii)   (1,499)     (541)       1,277
                                         
                                                                            
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