Microgen PLC Strategic Update (8019T)
March 25 2019 - 3:01AM
UK Regulatory
TIDMMCGN
RNS Number : 8019T
Microgen PLC
25 March 2019
25 March 2019
MICROGEN plc ('Microgen' or 'Group')
STRATEGIC UPDATE
Microgen plc (LSE: MCGN) is a leading provider of
business-critical software and services through its two operating
businesses, Aptitude Software and Microgen Financial Systems. On
the day of the release of the Group's audited preliminary results
for the year ended 31 December 2018 it provides the following
strategic update.
Following the change in leadership of Microgen Financial Systems
in October 2018 the Board has been exploring a range of strategic
options with the objective of delivering maximum value to
shareholders.
The Board believes that greater value will be realised through a
simpler and more focused business targeted at the specialised
financial management software market served by Aptitude Software.
The Board has therefore concluded that a demerger of Microgen
Financial Systems on to AIM will enhance Microgen plc's ability to
allocate capital and management attention on the higher growth
Aptitude Software business whilst also providing Microgen Financial
Systems with the best ownership environment for it to successfully
focus on its specialist target market and service its international
customer base.
Historically both businesses benefitted from the combined
financial and organisational scale of the Group. Firstly, the
Aptitude Software business leveraged the more established corporate
credentials of the wider Group when securing new business contracts
with prospects for whom the corporate strength of a key supplier is
a material consideration. With the growth experienced by Aptitude
Software in recent years this benefit has reduced materially as
demonstrated by Aptitude Software's 2018 revenue of GBP52.3 million
being significantly ahead of the Group's total revenue in earlier
years (for example, in 2013 the Group's revenue was GBP29.8 million
of which Aptitude Software represented GBP14.7 million). The second
key historical benefit from the combined financial and
organisational scale of the Group were the operational synergies
focused principally on back office administration. In recent years
these synergies have largely been reduced as the finance, legal and
human resources functions have been embedded into each business
unit separately, to provide greater and more tailored support for
their growth.
In parallel with the reduction in synergies the Board
implemented a number of changes which would facilitate the eventual
demerger of Microgen Financial Systems in the future. These changes
include the establishment of strong management teams into each of
Microgen's two businesses, the separate branding adopted by the
Aptitude Software business, the devolution to each business of the
back-office administration functions, the recent disposal of the
non-core Payments business and finally the signing in 2018 of
material multi-year contract extensions with a number of Microgen
Financial Systems' Application Management clients. As Microgen
Financial Systems makes its final preparations for independence,
further investment is now being made focusing on product
development, business development and the further strengthening of
its management team.
The demerger is subject to shareholder approval and it is
expected that the demerged Microgen Financial Systems entity will
apply to be admitted to trading on AIM during the course of 2019.
It is intended that shareholders of Microgen plc will have a direct
shareholding in the demerged entity in proportion to their
respective shareholding in Microgen plc. The Board will provide
further information on the precise mechanics of the demerger and
listing in due course.
Once demerged and admitted to AIM, the newly independent
Microgen Financial Systems will become the total focus of its board
and shareholders. This focus is expected to facilitate the ability
to target acquisitions in Microgen Financial Systems' specialist
market space whilst also allowing highly targeted and effective
incentive schemes for its dedicated team.
It is expected that Peter Whiting, currently Senior Independent
Non-Executive Director of Microgen plc, will chair the Board of the
demerged Microgen Financial Systems. Peter's knowledge of the
business and extensive public company experience will be a key
asset for the business and its executive team. Shortly after
demerger it is expected that Peter will step down from the Board of
Microgen plc.
Robert Browning, currently leading Microgen Financial Systems'
management team in his role of Chief Operating Officer, is expected
to be appointed Chief Executive Officer of the demerged business
upon admission to AIM. Philip Wood, currently Acting Chief
Executive Officer of Microgen Financial Systems in addition to
Chief Financial Officer of the Group will continue with Microgen
plc in his longstanding role of Chief Financial Officer.
With the Aptitude Software business expected to be the total
focus of the Group in the near future, it is now considered
appropriate to change the name of Microgen plc to Aptitude Software
Group plc. The name change will be effective from early April
2019.
Commenting on the proposed demerger of Microgen Financial
Systems, Ivan Martin, Chairman, said:
'The proposed demerger and admission to trading on AIM of
Microgen Financial System will represent a significant milestone in
the strategic development of the Group. The Board believes the
demerger enhances the long-term prospects of both businesses for
the benefit of their shareholders, clients and employees. It will
simplify the Group allowing the higher growth Aptitude Software
business with its specialised financial management software
applications to be the sole focus going forwards whilst Microgen
Financial Systems looks forward positively to its future as a
focused independent software business based on its leading product,
Microgen 5Series. The precise mechanics of the demerger and listing
will be communicated in due course but is expected to be completed
in the current calendar year.'
Contacts
Ivan Martin, Chairman 020-3880-7100
Philip Wood, Chief Financial Officer
Junya Iwamoto / Henry Reast, Investec 020-7597-5970
Darius Alexander, FTI Consulting 020-3727-1063
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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