15th Sep 2005 07:01
Microgen PLC15 September 2005 microgenInformation Management Solutionswww.microgen.co.uk 15 September 2005 MICROGEN plc ("Microgen") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Microgen plc, the Information Management Solutions company which providessoftware, services and consultancy, reports a strong earnings performance forthe six months ended 30 June 2005 and provides an update on the strategicdevelopment of the Group. The results are reported under IFRS with 2004comparisons restated accordingly. HIGHLIGHTS • Adjusted eps (excl. intangible amortisation, exceptional items and with normalised taxation) increased by 25% to 2.5p (2004: 2.0p). Basic eps of 2.6p (2004: 2.3p) • Operating profit before intangible amortisation and exceptional items increased by 43% to £3.3 million (2004: £2.3 million). Operating profit increased by 40% to £3.2 million (2004: £2.3 million) • Profit before tax increased by 45% to £3.6 million (2004 : £2.5 million) • Operating margins before intangible amortisation increased significantly to 15.6% (2004: 10.9%.) • Revenue £21.2 million (2004: £21.1 million). Significant progress achieved in the strategic transition of the Group's revenue profile. o 57% now derived from Microgen software, compared to 32% in the prior year period. o 63% now derived from Financial Services sector compared to 46% in prior year period • Positive operating cash flow of £2.5 million (2004: £2.3 million) producing net funds at 30 June 2005 of £17.1 million, before recent acquisitions. • Investment in development and support of software products increased by 68% to £3.0 million (2004: £1.8 million). All costs expensed. • Integration of the acquisitions announced in July, progressing satisfactorily and on schedule, with relocation to freehold offices in Fleet, Hampshire, now completed. Contacts :Martyn Ratcliffe, Executive Chairman 01252-772312Mike Phillips, Group Finance Director Giles Sanderson, Financial Dynamics 020-7831-3113Ben Way microgenInformation Management Solutionswww.microgen.co.uk 15 September 2005 MICROGEN plc ("Microgen") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Chairman's Statement Microgen reports another strong operating performance despite market conditionswhich continue to be difficult to predict. This performance affirms the Group'sacquisition integration strategy and operational management approach. Theemphasis remains on profitable business activities, with significant progressmade in increasing the proportion of business derived from Microgen software andthe Financial Services sector. The integration of AFA Systems plc, acquired in September 2004, has beensuccessfully completed. The integration of the acquisitions announced in July2005, namely R/base Limited ("R/base") and Lynx Wealth Management SystemsLimited ("LWMS"), are now well advanced following the relocation of thesebusinesses to the Group's new office in Fleet, Hampshire. Group Financial Performance This is the Group's first report issued under International Financial ReportingStandards ("IFRS"). As such, the comparative prior year figures have beenrestated accordingly and a detailed reconciliation between IFRS and UK generallyaccepted accounting principles is provided in a separate announcement issuedtoday. The adoption of IFRS has stimulated a review of the Group's financialreporting format, to reflect the Group's operating model and approach toacquisition integration. One of the more relevant elements of IFRS for ITsoftware companies relates to the capitalisation of product development. TheBoard has reviewed the Group's development expenditure against the IFRScapitalisation criteria and also reviewed best practice of internationalsoftware and solutions companies and has determined that the amount to becapitalised is nil and therefore all costs have been expensed. In the six months ended 30 June 2005, Microgen generated operating profit beforeintangible amortisation and exceptional items of £3.3 million (2004: £2.3million) from revenue of £21.2 million (2004: £21.1 million). Operating marginsbefore intangible amortisation and exceptional items increased significantly to15.6% (2004: 10.9%). Headcount at 30 June 2005 was 431, of which approximately10% were associates, contractors or temporary staff. Operating profit for the period was £3.2 million (2004: £2.3 million). Profitbefore tax in the period was £3.6 million (2004: £2.5 million). Adjustedearnings per share increased by 25% to 2.5p (2004: 2.0p) with a basic earningsper share of 2.6p (2004: 2.3p). During the period, the Group produced positive operating cash flow of £2.5million (2004: £2.3 million) and continues to have a strong balance sheet withnet funds of £17.1 million at 30 June 2005, prior to the recent acquisitions.Consistent with the Group's acquisition strategy, Microgen does not at presentpay a dividend. Operational Overview There are two components to Microgen's strategy. Firstly, Microgen is anacquisitive IT services and solutions organisation. The Group continues to seekacquisition opportunities where there is a strategic fit and efficiencies can berealised through a combination. As each acquisition is made, the integrationstrategy adopted by Microgen focuses the business unit on sales, delivery andsupport for the customer while the internal and administrative functions areconsolidated into shared services, the costs of which are charged to thebusiness units. This model retains the emphasis on customer development whileminimising the cost of internal administration. Secondly, the organic development of the Group is based on : • Customer account management, actively cross-selling the Group's solutions and services offerings into the vertical market sectors, • Cross-training of consultants to maximise opportunities for deployment and to optimise utilisation, and, • Re-use of software technology, particularly Microgen Aptitude, to re-engineer existing products and to produce applications and solutions for vertical market sectors, thereby increasing the efficiency of new product development and reducing support costs in the medium term. One of the key features of the past year has been the increasing proportion ofbusiness derived from the Group's software, which now produces 57% of Grouprevenue (2004: 32%), including associated customer-funded development andconsultancy. This transition has significantly reduced the Group's exposure togeneral IT consultancy where market commoditisation continues. As a result,consultancy fee rates have increased over the prior year period by 16% and theaverage gross margin on consultants/associates has increased by over 20% asconsultants have been retrained and deployed on projects associated withMicrogen software and the Group has reduced the exposure to lower marginbusiness activities. As a result of these actions, Group operating marginsincreased to 15.6% before intangible amortisation and exceptional items (2004:10.9%), affirming the effectiveness of Microgen's evolution and the Group'sacquisition integration model. The Group's business units are now categorised as Financial Services (63%) andCommercial (37%), reflecting the appropriate business sector. The revenue ineach vertical business comprises software, consultancy and managed services andthe detailed breakdown of revenue, costs and margins is provided in note 1 ofthis report. The operating income figures referenced below for each business arebefore group overhead, intangible amortisation, exceptional items and tax. Financial Services : These businesses now contribute 63% of Group revenue (2004:46%) and comprise solutions for Banking, Derivatives Trading, Payment Solutionsand Asset & Wealth Management. Revenue in the period increased to £13.3 million(2004: £9.6 million), with an operating margin of 20.7% (2004: 14.8%), producingoperating income of £2.8 million (2004: £1.4 million). The improvement inoperating margin has been achieved by increasing the proportion of revenuederived from Microgen software solutions to over 80% (2004: 53%) and reducingexposure to the general IT consultancy sector. The margin increase in the firsthalf has also benefited from the migration of BACS payment solutions to theBACS-IP architecture. Commercial : While revenue in the period decreased to £7.9 million (2004: £11.5million), operating margin increased to 23.4% (2004: 17.2%) producing operatingincome of £1.8 million (2004: £2.0 million). The revenue decline is primarilydue to the 2004 revenue being inflated, as highlighted last year, due to the lowmargin contractor placement activity acquired with MMT Computing plc, which hasbeen progressively reduced, together with the scheduled completion of anMMT-related applications management contract in 2004 and the ongoing decline inthe legacy print operations. In addition, the Board has consciously reduced itsexposure to commoditising sectors of general IT consultancy and has maintainedits emphasis on profitability and cash flow as the primary business performancemetrics. Software Development Microgen continues to invest significantly in new software products, withdevelopment spend increasing by 68%, compared to the first half of 2004. In theperiod to 30 June 2005, Software development activities total £3.0 million(2004: £1.8 million), comprising customer-funded developments, investment in newproduct development and support of existing products. All the Group's software development activities are managed in a singleorganisation to ensure consistency and quality, with the costs being chargedinto the business units. This structure enables a variable investment model thatenables Microgen to respond to market sector dynamics and provide flexibility ofresourcing as development projects progress through the lifecycle stages.Increasingly, the rules-based Business Process Management product MicrogenAptitude is providing a core tool for the re-engineering of existing softwareproducts and development of applications/solutions for vertical market sectors.This re-use of technology is proving to be efficient in terms of the developmentprocess and should produce a reduction of ongoing support costs in the longerterm. Acquisitions and Financing In July 2005, Microgen announced the acquisition of R/base and LWMS. R/base is aUK provider of SAP applications management and consultancy services. Theaddition of SAP capability into the Group's offering has been a strategicobjective for some time and will enhance the skill base across several businesssectors. LWMS is a leading provider of solutions for the offshore trust, fundand banking sector and is being integrated into the Group's Asset Managementbusiness, increasing the scale and offerings in this area of Financial Services.The integration of both acquisitions is now well advanced and progressingsatisfactorily, with the operations relocated to the Group's new office facilityin Fleet. The Fleet freehold was acquired in July using cash from existing resources.Mortgage financing is now being negotiated for £6 million, repayable over 10years and secured on the Fleet property and the two long-leasehold propertiesthat the Group occupies in London. The Fleet facility now also houses staff fromthe former head office in Windsor, producing both cost and operational benefits.Exceptional charges in the current year from the integration of R/base and LWMS,together with the office relocations, are estimated to be £1.1 million. Prospects The Group's results once again demonstrate the Board's emphasis on profitabilityand cash flow, producing a strong performance despite a continuing unpredictablemarket environment. While market conditions appeared to be improving in late2004 and early 2005, more recently this recovery has become more erratic andless predictable. The Board is not anticipating a sustainable market recovery inthe near future and will therefore be maintaining its prudent approach. The benefits of scale achieved through the acquisition strategy continue to berealised, although the Board does consider that the Group's operating margin iscurrently at the upper end for companies of Microgen's size and sector. With thesuccess of the Group's integration model, the Board continues to explorestrategic opportunities for the further development of Microgen, includingmergers and acquisitions, that could enhance the Group's offerings and improveshareholder value. In summary, the Board considers the strong performance of the Group in the firsthalf to be affirmation of its strategy, but remains cautious in its outlook forthe year. Further opportunities to develop the Group through acquisitionopportunities are continuously explored, but there can be no certainty that anysuch transactions will be completed and the Board continues to evaluate eachopportunity in a prudent manner. Martyn RatcliffeExecutive Chairman Microgen plcCONSOLIDATED INTERIM INCOME STATEMENT For the six months to Unaudited six months Unaudited six months Unaudited year 30 June 2005 to 30 June 2005 to 30 June 2004 ended 31 Dec 2004 Before Intan- Before Intan- Before Intan- Intan- gibles Intan- gibles Intan- gibles gibles amorti- gibles amorti- gibles amorti- amorti- sation amorti- sation amorti- sation sation and sation and sation and and except- and except- and except- except- ional except- ional except- ional ional items ional items ional items items Total items Total items Total Note £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue 1 21,227 - 21,227 21,130 - 21,130 42,444 - 42,444 Operating costs (17,924) (54) (17,978) (18,817) - (18,817) (37,452) (1,665) (39,117) Operating profit 1 3,303 (54) 3,249 2,313 - 2,313 4,992 (1,665) 3,327Interest payable (50) - (50) (25) (25) (53) - (53)and similar chargesInterest receivable 362 - 362 163 - 163 479 - 479 Profit on ordinary 3,615 (54) 3,561 2,451 - 2,451 5,418 (1,665) 3,753activities before tax Taxation 3 (942) (471) (913) Profit for the period 2,619 1,980 2,840 Profit attributable to 2,619 1,980 2,815equity shareholdersProfit attributable to - - 25minority interests Retained profit 2,619 1,980 2,840transferred to reserves Earnings per shareBasic and Diluted 4 2.6p 2.3p 3.1p Adjusted earnings per shareBasic and Diluted 4 2.5p 2.0p 4.2p Microgen plcCONSOLIDATED BALANCE SHEET Unaudited Unaudited Unaudited30 JUNE 2005 as at as at as at 30 June 2005 30 June 2004 31 Dec 2004 £000 £000 £000ASSETSNon-current assetsProperty, plant and equipment 3,544 3,762 3,774Goodwill 53,272 44,775 53,272Other intangible assets 458 - 512Deferred tax asset 1,642 1,185 1,972Investments in other company - 2,678 - 58,916 52,400 59,530 Current assetsInventories 126 127 100Trade and other receivables 6,829 7,456 8,164Cash and cash equivalents 17,101 9,083 14,600 24,056 16,666 22,864Non-current assets classified as held for sale - 535 - 24,056 17,201 22,864 LIABILITIESCurrent liabilitiesTrade and other payables (12,615) (11,111) (14,769)Current tax liabilities (814) - (120)Provisions (680) (701) (1,244) (14,109) (11,812) (16,133) Net current assets 9,947 5,389 6,731 Non-current liabilitiesProvisions (1,039) (1,683) (1,200) NET ASSETS 67,824 56,106 65,061 SHAREHOLDERS' EQUITYOrdinary shares 5,079 4,347 5,079Share premium account 11,143 8,943 11,143Merger reserve 36,389 31,075 36,389Other reserves 334 334 334Retained earnings 14,879 11,218 12,116 EQUITY SHAREHOLDERS' FUNDS 7 67,824 55,917 65,061Minority interest - 189 -TOTAL EQUITY 67,824 56,106 65,061 CONSOLIDATED CASH FLOW STATEMENTFor the six months to 30 June 2005 Unaudited Unaudited six Unaudited six months months ended year ended ended 30 June 30 June 2004 31 Dec 2005 2004 Note £000 £000 £000 Cash flows from operating activitiesCash generated from operations 5 2,472 2,317 5,361Interest received 374 171 433Interest paid (50) (33) (21)Tax received/(paid) 82 140 (355) Net cash from operating activities 2,878 2,595 5,418 Cash flows from investing activitiesAcquisition of subsidiaries (net of cash acquired) - - (2,779)Repayment of subsidiary debt acquired during the period - - (250)Payment of deferred consideration - (49) (205)Purchase of property, plant and equipment (355) (365) (919)Proceeds from the sale of non current assets held for - - 480resalePurchase of investment in other company - (2,894) (2,894)Proceeds from the sale of investments in other company - - 3,500 Net cash used in investing activities (355) (3,308) (3,067) Cash flows from financing activitiesNet proceeds from issue of ordinary share capital - - 2,416Redemption of loan notes - (652) (652) Net cash used in financing activities - (652) 1,764 Effects of exchange rate changes (22) (9) 28 Net increase /(decrease) in cash and cash equivalents 2,501 (1,374) 4,143 Opening cash and cash equivalents 14,600 10,457 10,457 Closing cash and cash equivalents 17,101 9,083 14,600 Microgen plc Notes to consolidated interim statements 1 Segmental information The segmental information below reflects the divisional operating structure ofthe Group, which is the primary segmentation of the operating performancereviewed by the Board. Unaudited for the six months Unaudited for the six months Unaudited for the 31 Dec 2004 ended ended 30 June 2005 30 June 2004Revenue Financial Commercial Total Financial Commercial Total Financial Commercial Total Services Services Services £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Software Based 10,943 1,204 12,147 5,064 1,675 6,739 14,108 3,293 17,401Managed Services 799 4,101 4,900 913 5,080 5,993 1,613 9,513 11,126General consultancy 1,569 2,611 4,180 3,648 4,750 8,398 7,022 6,895 13,917Total Revenue 13,311 7,916 21,227 9,625 11,505 21,130 22,743 19,701 42,444 Development costs (2,501) (464) (2,965) (1,297) (467) (1,764) (3,189) (1,041) (4,230)Other operating costs (8,049) (5,604) (13,653) (6,904) (9,058) (15,962) (15,697) (15,163) (30,860)Total operating costs (10,550) (6,068) (16,618) (8,201) (9,525) (17,726) (18,886) (16,204) (35,090) Operating profit before group 2,761 1,848 4,609 1,424 1,980 3,404 3,857 3,497 7,354overheadsGroup overheads (1,306) (1,091) (2,362) Operating profit before 3,303 2,313 4,992intangible amortisation andexceptional items Intangible amortisation (54) - (32)Exceptional itemsExceptional costs - Property provision - - (627) - Restructuring costs - - (1,612)Exceptional profit - on disposal of investment - - 606in other company - - (1,633) Operating profit 3,249 2,313 3,327 2 Basis of preparation These interim financial statements have been prepared in accordance with theaccounting policies the Group expects to be applicable at 31 December 2005 andthe interpretation of those standards as set out in the separate announcementissued today on the impact of adoption of International Financial ReportingStandards ("IFRS"). The IFRS's and IFRICS interpretations that will beapplicable at 31 December 2005, including those that will be applicable on anoptional basis, are not known with certainty at the time of preparing theseinterim financial statements. These figures may therefore require amendment tochange the basis of accounting or presentation of certain financial information,before their inclusion in the IFRS financial statements for the year ended 31December 2005, which will be the Group's first full set of IFRS financialstatements. These interim financial statements have been prepared under thehistorical cost convention, except in respect of certain financial instruments. 3 Taxation The tax charge of £942,000 is at an effective tax rate of 26.5% (Yearended 2004 24.3%) of the profit before tax. 4 Earnings per share To provide an indication of the underlying operating performance per share theadjusted profit after tax figure used in the calculation of the adjustedearnings per share excludes intangible amortisation, exceptional items and has anormalised tax charge. Unaudited six Unaudited six Unaudited Year months ended 30 months ended 30 ended 31 Dec June 2005 June 2004 2004 Earnings per share Basic and diluted 2.6 2.3 3.1 Adjusted earnings per share Basic and diluted 2.5 2.0 4.2 Adjusted and basic earnings per share calculations are based on the weightedaverage number of shares in issue during the period of 100,966,606 shares (June2004: 86,302,670; Dec 2004: 90,599,424). Diluted earnings per sharecalculations are based on 102,133,393 (June 2004: 86,998,048; Dec 2004:91,303,621) ordinary shares being the weighted average number of shares in issueduring the period plus 1,166,787 (June 2004: 695,378; Dec 2004: 704,197)dilutive share options. The Company's authorised share capital at 1 January and30 June 2005 was 145,000,000 ordinary shares of 5 pence each with a nominalvalue of £7,250,000. At 1 January 2005 the issued, allotted and fully paid upshare capital was 101,585,739 ordinary shares and by 30 June 2005 this numberhad increased to 101,587,277. At both these dates the issued, allotted andfully paid up share capital included 620,544 shares held by the MicrogenEmployee Share Participation Scheme Trust. The table below shows a reconciliation of basic to adjusted earnings per share. Unaudited six Unaudited six Unaudited Year months ended 30 months ended 30 ended 31 Dec June 2005 June 2004 2004 pence Pence penceBasic earnings per share 2.6 2.3 3.1Adjustments to actual tax charge (0.1) (0.3) (0.7)Exceptional charge net of tax - - 1.5Prior years' tax charge - - 0.3 Adjusted earnings per share 2.5 2.0 4.2 5. Cash generated from operations Unaudited Unaudited Unaudited year six months six months ended 31 Dec ended 30 ended 30 2004 June 2005 June 2004 £000 £000 £000 Profit for the period 2,619 1,980 2,840Adjusted for:Taxation 942 471 913Depreciation 488 392 963Amortisation of other intangible assets 54 - 32Share based payments charge 75 44 107Exceptional profit on investing activities - - (606)Loss on disposal of tangible fixed assets 85 - 52Loss on disposal of non-current assets held for resale - - 52Interest income (362) (163) (479)Interest expense 50 25 53 Changes in working capital:Decrease in debtors 1,281 1,627 2,068(Increase)/decrease in stocks (26) (16) 11Decrease in creditors and provisions (2,734) (2,043) (645) Cash generated from operations 2,472 2,317 5,361 6. Reconciliation between UK GAAP and IFRS (i) Reconciliation of profit after tax for the period between UK GAAP and IFRS The following table summarises the impact of the adoption of IFRS on the Group'soperating profit for the six months ended 30 June 2004 and the year ended 31December 2004. Unaudited six Unaudited year months ended ended 31 Dec 30 June 2004 2004 £000 £000Profit after tax - UK GAAP 841 173Amortisation of goodwill 1,317 2,774Amortisation of other intangible assets - (32)Staff costs - share based payments (44) (107)Deferred tax credit on share based payments 13 32Staff costs - holiday pay (147) -Profit after tax - IFRS 1,980 2,840 (ii) Reconciliation of total equity between UK GAAP and IFRS The following table summarises the impact of the adoption of IFRS on total equity as at 1 January 2004, 30 June 2004 and 31 December 2004. Unaudited as Unaudited as Unaudited as at at 1 January at 30 June 31 Dec 2004 2004 2004 £000 £000 £000 Total equity - UK GAAP 54,081 54,923 62,287 Reversal of goodwill amortisation - 1,317 2,774Deferred tax in respect of share based payments - 13 32Other intangible assets amortisation - - (32)Staff costs - holiday pay - (147) - Total equity - IFRS 54,081 56,106 65,061 7. Statement of changes in Equity 1 January Share based Currency Profit for 30 June 2005 2005 award translation the period adjustment £'000 £'000 £'000 £'000 £'000 Share Capital 5,079 - - - 5,079Share premium 11,143 - - - 11,143Merger reserve 36,389 - - - 36,389Other reserves 334 - - - 334Profit and loss account 12,116 75 69 2,619 14,879Total equity 65,061 75 69 2,619 67,824 8. Post balance sheet events On 1 July 2005 Microgen acquired the entire share capital of R/base Limited, aUK provider of SAP applications management and consultancy services. Theconsideration paid in respect of the issued share capital of R/base was £1.22million, comprising £0.61 million in cash and £0.61 million by the issue of740,290 new Microgen shares. On acquisition, Microgen repaid an outstandingbank loan on behalf of R/base of £0.43 million. R/base will be integrated intoMicrogen's Commercial Division. On 13 July 2005 Microgen acquired the entire share capital of Lynx WealthManagement Systems (Guernsey) Limited, a leading provider of trust, fund andprivate banking systems. The cash consideration paid in respect of the issuedshare capital of LWMS was £2.1 million. On acquisition, Microgen repaid anoutstanding bank loan on behalf of LWMS of £1.6 million. LWMS will be integratedinto the Group's Financial Services division. On 26 July 2005, Microgen acquired a freehold property in Fleet, Hampshire for apurchase price of £5.25 million in cash. 9. Statement by the directors The financial information in this interim statement has been prepared on thebasis of the accounting policies set out in the Restatement of Financialinformation under International Financial Reporting Standards of Microgen plcfor the year ended 31 December 2004. The financial information does not constitute statutory accounts within themeaning of section 240 of the Companies Act 1985. This interim statement hasnot been audited by the company's Auditors. Statutory accounts for Microgen plcfor the year ended 2004, on which the Auditors gave an unqualified report, havebeen delivered to the Registrar of Companies. The directors of Microgen plcaccept responsibility for the information contained in this announcement. Tothe best of their knowledge and belief (having taken all reasonable care toensure that such is the case) the information contained in this announcement isin accordance with the facts and does not omit anything that is likely to affectthe import of such information. Copies of this statement are being posted to shareholders and will also beavailable on the investor relations page of our website (www.microgen.co.uk).Further copies are available from the Company Secretary at Fleet House, 3Fleetwood Park, Barley Way, Fleet GU51 2QJ. Independent review report to Microgen plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2005 which comprises consolidated interim balancesheet as at 30 June 2005 and the related consolidated interim income statementand cash flows for the six months then ended and related notes. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. As disclosed in note 2, the next annual financial statements of the group willbe prepared in accordance with accounting standards adopted for use in theEuropean Union. This interim report has been prepared in accordance with thebasis set out in Note 2. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. As explained in note 2, there is,however, a possibility that the directors may determine that some changes arenecessary when preparing the full annual financial statements for the first timein accordance with accounting standards adopted for use in the European Union.The IFRS standards and IFRIC interpretations that will be applicable and adoptedfor use in the European Union at 31 December 2005 are not known with certaintyat the time of preparing this interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. PricewaterhouseCoopers LLPChartered AccountantsLondon15 September 2005 Notes: (a) The maintenance and integrity of the Microgen plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Aptitude