Trading & Business Update

Microgen PLC
04 December 2007


4 December 2007


                         Trading and Business Update

Microgen plc is issuing its regular fourth quarter trading and business update,
ahead of its close period.

Operating Performance of the Group

The Board considers the Group to be on track to achieve its expectations for the
current year ending 31 December 2007, with a significant contribution from
Microgen Aptitude based solutions. As a result, the Board anticipates reporting
Microgen's third consecutive year of operating margins (before goodwill and
intangible impairment/amortisation and exceptional items) in line or ahead of
the Group's 15% target, after expensing all product development costs. This
consistent strong profitability and corresponding cash flow is achieved by
balancing the contribution from the Group's more mature products and services
with the investment to drive the organic growth from the Microgen Aptitude
Business Process Management Suite (BPMS) and other growth opportunities.

Microgen Aptitude

The two material contracts for Microgen Aptitude ('Aptitude') that have been in
negotiation over the summer, have been signed and are now being implemented.
Both projects are anticipated to deliver in excess of £1 million each, including
licence and associated services, and should continue through to at least the
middle of 2008.

During 2007, good progress has been made on sales of Aptitude solutions to new
and existing customers.  While the majority of these solutions are currently
within the Financial Services sector, with deployments in the UK, Continental
Europe, South Africa and the USA, successes in the Commercial and Energy sectors
have also been achieved. Revenue from Aptitude solutions has increased
substantially in 2007 and the Board anticipate that the proportion of revenue
derived from Aptitude-based solutions will continue to increase in the future.

General IT Consultancy Market

In recent years, the Board has consistently reported its concerns regarding the
commoditisation of the general IT consultancy market and accordingly has
pro-actively been reducing its exposure to this sector, whilst managing to
maintain strong profitability throughout this period. The Commercial, Public and
Utilities Division is now making good progress in its transition to
Aptitude-based solutions, with a number of established reference sites and the
division is responsible for the Group's largest Aptitude licence sale to date.

As a result, the Board has now decided to complete the strategic transition of
this division and to exit the testing services consultancy segment in order to
focus resources on the Aptitude opportunities. The remaining general IT
consultancy activity in the division is principally related to business
intelligence which is a skill set applicable to a number of Aptitude solutions
and where consultants are being cross-trained.

Balance Sheet & Cash Flow

Microgen continues to be cash-generative with cash of £17.5 million at the end
of November 2007, equivalent to approximately 17.0 pence per share and net funds
of £13.2 million. In addition, the Board has now contracted to dispose of the
Group's long-leasehold property in London for £2.05 million, before costs, which
will further increase net funds by approximately 1.5 pence per share after tax.
The transaction is anticipated to be completed in the first half of 2008, when a
leased office facility will be taken in London. While some of the funds from
this disposal will be used to repay the mortgage on this property, additional
cash will be released and an exceptional profit after tax in the order of £0.5
million is anticipated from this transaction in 2008.

The strong cash position and consistent cash flow of Microgen provide the Board
with the potential to evaluate corporate development opportunities. While there
can be no certainty that any transactions will be undertaken, the current market
instability and possible CGT tax changes may provide increased opportunities for
consideration.

Summary

Microgen expects to report another year of strong profitability and cash flow,
while also investing in successfully gaining market momentum behind the Group's
flagship product Microgen Aptitude. This consistency is achieved by managing the
Group's portfolio of products and services, in-line with market sector
conditions and the maturity of the product or service offering. The Group's
operating model enables the stability derived from the high recurring revenues
to fund investment in the new products. As a result, the progress made over the
past year and the recognition and success being achieved for Aptitude should
provide a good platform for 2008.

With a consistent track record of solid profitability and cash flow, a flagship
product producing good organic growth and a strong balance sheet, the Board
continues to have confidence in the future of the Group and remains committed to
delivering both operational performance and value to shareholders.

Contact :

Martyn Ratcliffe, Chairman
Philip Wood, Group Finance Director                      01252-772300

Giles Sanderson, Financial Dynamics                      020-7831-3113
Haya Chelhot, Financial Dynamics




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