Aptitude Regulatory News (APTD)

24 Feb 2009 07:00



microgen

www.microgen.com

24 February 2009

MICROGEN plc ('Microgen')

Audited Preliminary Results for the Year ended

31 December 2008

HIGHLIGHTS

Strong performance despite market turmoil

Strong growth from Microgen Aptitude in both Europe and North America

Revenue of £33.0 million (2007 : £33.3 million). In line with the Board's strategic objectives, revenue derived from Microgen's software activities contributed 70% of the Group's revenues (2007: 65%).

Adjusted operating profit of £6.0 million (2007 : £5.9 million). All internal research and development costs are expensed as incurred with no capitalisation of development costs.

Profit before tax of £6.5 million (2007 : £4.2 million)

£8.9 million (2007 : £5.7 million) of cash generated from operations maintaining a strong year end balance sheet with cash of £14.7 million (2007 : £18.1 million) after distributing £10.0 million to shareholders via dividends and the tender offer

Adjusted diluted earnings per share 4.7p (2007 : 4.5p). Fully diluted earnings per share 5.5p (2007 : 2.5p). 

Proposed final dividend of 1.4p per share making a total of 2.1p for the year (2007: 2.0p) 

Contacts
Martyn Ratcliffe, Chairman	01252-772300
David Sherriff, Chief Operating Officer Philip Wood, Group Finance Director
Giles Sanderson, Financial Dynamics Haya Chelhot, Financial Dynamics	020-7831-3113

* Throughout this statement adjusted operating profit and margin excludes goodwill and intangible impairment/amortisation, exceptional items and discontinued operations, unless stated to the contrary

  24 February 2009

MICROGEN plc ("Microgen" or "Group")

Audited Preliminary Results for the Year ended

31 December 2008

Chairman's Statement

Microgen reports another year of strong operating performance for the 12 months ended 31 December 2008, despite the unprecedented turmoil in the markets during the year. The Group maintained its consistent operating profitability and cash flow while continuing to invest in the development and marketing of its products and services, all costs of which were expensed during the period. Microgen Aptitude and its associated solutions achieved considerable success in 2008 with strong revenue growth in both financial services and commercial sectors. Moreover the Group has maintained a robust balance sheet and during the year returned £10.0 million of cash to shareholders through dividends and the tender offer. 

As the momentum behind Microgen Aptitude increased, the Board decided to restructure the Group to increase the focus on this market leading Business Process Management Suite ("BPMS") and its associated application products. In particular, demand for the Microgen Accounting Hub ("MAH"), which is based on Microgen Aptitude, has been strong as companies, especially in the Financial Services sector, seek to improve the availability and integrity of their accounting data and information. This division is currently actively recruiting consultants to meet the anticipated demand in 2009. In 2008, Microgen Aptitude Solutions Division ("MASD") accounted for 23% of the Group revenue (2007 : 16%) and this proportion is anticipated to increase further in the year ahead. 

The Group's other two divisions have high levels of recurring revenue, providing resilience for these businesses to the market instability. The Billing Services Division continued its transition with 44% (2007 : 22%) of document distribution delivered electronically in the year and electronic services accounting for 46% (2007 : 40%) of the divisional revenue. The Financial Systems Division was more affected by the market downturn, but although the division experienced a decline in revenue in some areas, profit contribution increased with a very strong operating margin of 47% (2007 : 41%). 

With the economic environment anticipated to be difficult throughout 2009, the Board remains cautious in its outlook. However the progress made with Microgen Aptitude during 2008 provides a good platform for the Group in the year ahead, underpinned by the stable foundations in the Group's other operating divisions. Whilst the Group's consistent profitability, strong cash flow and significant cash resources enable the Board to explore strategic opportunities as they arise, the Board's prudent approach will continue in this period of economic instability. 

Overall, the Board is pleased with the solid performance of the Group in 2008 and its position as we start the new year. As a result, the Board is recommending a final dividend of 1.4 pence per share, making a total of 2.1 pence for the year (2007: 2.0 pence). The dividend will be payable on 6 May 2009 to shareholders on the register at the close of business on 3 April 2009.

Martyn Ratcliffe

Chairman

 

Group Financial Performance and Finance Director's Report

Revenue from continuing operations for the year ended 31 December 2008 was £33.0 million (2007 : £33.3 million) producing an adjusted operating profit of £6.0 million (2007 : £5.9 million). On a statutory basis the Group reported an operating profit of £5.9 million (2007 : £3.7 million).

Adjusted diluted earnings per share for the year ended 31 December 2008 was 4.7p (2007 : 4.5p) with diluted earnings per share of 5.5p (2007 : 2.5p). The Group's tax rate used in calculating adjusted earnings per share is 26.9% (2007: 29.6%). The total tax charge of £0.9 million (2007 : £1.5 million) represents 14% (2007 : 34.9%) of the Group's profit before tax of £6.5 million. The rate is lower than the UK corporate tax rate due principally to the recognition of previously unrecognised tax losses and the adjustment of tax in respect of prior periods.

After returning £10.0 million of cash to shareholders through dividends and the tender offer the Group continues to have a strong balance sheet with cash of £14.7 million (2007: £18.1 million) and net funds of £11.0 million (2007: £13.8 million) at 31 December 2008. Following the year end the Group has reduced the loan associated with its freehold property to £2.5 million (£3.7 million at 31 December 2008) with the interest rate hedged at 3.30% until 2015.

Cash generated from operations in the year was £8.9 million (2007 : £5.7 million). Whilst this strong performance reflects the Board's focus on cash flow management, the Group also benefitted in the year from a number of positive working capital movements including the prompt payment of a number of customer maintenance and annual licence fee renewals at the year end.

In accordance with IFRS, the Board has determined that all internal research and development costs incurred in the year are expensed and therefore the Group has no capitalisation of development expenditure. This is consistent with the Group's conservative accounting policies.

The exceptional items incurred during the year from continuing operations have produced net income of £0.3 million, including a profit of £1.0 million related to the disposal of a long-leasehold property in London.

Philip Wood

Group Finance Director

 Divisional Review and Chief Operating Officer's Report

Microgen is organised into three operating businesses, with the benefits of scale being achieved through shared central services which are charged into each business. The divisional operating profit and margin figures referenced below are from continuing operations and are reported before Group overhead, goodwill and intangible impairment/amortisation, exceptional items, discontinued operations, interest and tax.

In line with the Board's strategic objectives, revenue derived from Microgen's software activities contributed 70% of the Group's revenues (2007: 65%). The Board continues to promote software licence sales on multi-year annual licence contracts, with a conservative revenue recognition policy, although some customers do require traditional initial/perpetual software licensing models. 

The Group has maintained its disciplined approach to overhead and operating costs, while selectively investing in those areas which the Board anticipates will potentially deliver the best return for shareholders. Headcount at 31 December 2008 was 286 (31 December 2007: 323), including contractors and associates.

Microgen Aptitude Solutions Division ("MASD")

Throughout 2008, Microgen Aptitude, and its associated application products, continued to build on the success of 2007 and was therefore established as an independent operating division during the year. In addition to the core product, MASD achieved considerable success with the Microgen Accounting Hub ("MAH"), a product based on Microgen Aptitude, particularly in the Financial Services sector. Deployments in a number of financial services applications are ongoing and the interest in this solution continues to increase. Direct sales activities remain the primary driver behind the success of the product, coupled with third party relationships with major systems integration and technology organisations. The Microgen Aptitude product is also increasingly being recognised by industry analysts such as Gartner, Forrester and Butler Group.

MASD delivered strong organic growth of 39% in 2008 producing revenue of £7.6 million (2007 : £5.5 million). The Board continued to invest in both product development and sales & marketing throughout the year and the resulting loss of £2.4 million (2007 : £2.3 million) was in line with the Board's expectations.

Billing Services Division ("BSD")

BSD provides managed services to process, store and distribute billing and related documentation via electronic and print media. Several years ago the Board anticipated the decline in demand for print and reduced Microgen's capacity accordingly, while investing in e-billing and related value-added services. The migration to e-billing has again increased significantly during 2008 with 44% of all document output being distributed electronically in the year (2007 : 22%) and over 60% in December 2008. While BSD has a high proportion of contracted business, the revenue of the division is affected inevitably by variations in the underlying business activity of its customers, which is anticipated to reflect changes in the economic climate. The division continues to invest in the development of associated lines of business that reflect the current demands in the market.

Revenue in 2008 was £6.4 million (2007 : £6.4 million) producing an operating margin of 30% (2007: 31%).

Financial Systems Division ("FSD")

Following the reorganisation of the Group, all of Microgen's other business activities are now combined in the Financial Systems Division. 80% of the revenue of FSD is derived from financial systems software with the balance generated by the Group's remaining consultancy and applications management activities. Within the division's software product portfolio, Microgen is a leading provider of:

 

 

While FSD has a high proportion of recurring revenue at 69% (2007 : 58%) the downturn in the financial services sector resulted in a slowdown in new name business activity. Furthermore, as reported in recent years, the Board has continued to reduce its exposure to generic IT consultancy. As a result, revenue in 2008 declined to £19.0 million (2007 : £21.4 million) but with operating margin increasing to 47% (2007 : 41%).

Operations Summary

The Group has a strong portfolio of products and solutions, combining domain and industry expertise with leading technical capability. The benefits of scale are achieved through the use of shared services centres for support functions. This foundation provides an excellent platform from which to leverage the success being achieved with Microgen Aptitude and its associated application products. 

David Sherriff

Chief Operating Officer

 

 

MICROGEN PLC

Group Income Statement

for the year ended 31 December 2008

		Year Ended 31 Dec 2008	Year Ended 31 Dec 2008	Year Ended 31 Dec 2008	Year Ended 31 Dec 2007	Year Ended 31 Dec 2007	Year Ended 31 Dec 2007
	Notes	Before intangible amortisation and exceptional items	Intangible amortisation and exceptional items	Total	Before goodwill and intangible impairment/ amortisation and exceptional items	Intangible amortisation and exceptional items	Total
		£000	£000	£000	£000	£000	£000
Revenue	1	33,041	-	33,041	33,271	-	33,271
Operating costs	1	(26,997)	(95)	(27,092)	(27,326)	(2,281)	(29,607)
Operating profit/(loss)		6,044	(95)	5,949	5,945	(2,281)	3,664
Finance income		931	-	931	855	-	855
Finance cost		(380)	-	(380)	(290)	-	(290)
		551	-	551	565	-	565
Profit/(loss) on ordinary activities before tax		6,595	(95)	6,500	6,510	(2,281)	4,229
Income tax expense	2			(909)			(1,478)
Profit for the year from continuing operations				5,591			2,751
Loss for the year from discontinued operations				-			(121)
PROFIT FOR THE YEAR ATTRIBUTABLE TO SHAREHOLDERS				5,591			2,630
Earnings per share
Basic	3			5.6p			2.6p
Diluted	3			5.5p			2.5p
Dividends			pence per share	£000		pence per share	£000
Paid	4		2.1p	2,151		1.6p	1,640
Proposed	4		1.4p	1,217		1.4p	1,441

 

 

  

MICROGEN PLC

Statement of recognised income and expense

	Year ended 31 Dec 2008	Year ended 31 Dec 2007
	£000	£000
Cash flow hedges:
- net fair value (losses)/gains net of tax	(217)	81
- reclassified and reported in net profit	-	(7)
Deferred tax on share options	22	(4)
Deferred tax on financial instruments	(4)	-
Unrealised loss on investment	(354)	-
Exchange differences on translation of foreign operations	85	57
Net (expense)/income recognised directly in equity	(468)	127
Profit for the year	5,591	2,630
Total recognised income for the year attributable to equity shareholders	5,123	2,757

 

MICROGEN PLC

Group Balance Sheet

		As at 31 Dec 2008	As at 31 Dec 2007
	Notes	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		6,574	6,490
Goodwill		44,334	44,880
Intangible assets		881	1,292
Investments		916	-
Deferred income tax asset		1,360	1,419
		54,065	54,081
Current assets
Inventories - raw materials		46	61
Trade and other receivables	5	7,806	8,919
Financial assets - derivative financial instruments		48	248
Cash and cash equivalents		14,675	18,081
Non current assets held for sale		-	971
		22,575	28,280
LIABILITIES
Current liabilities
Financial liabilities
- borrowings associated with property		(525)	(533)
- derivative financial instruments		(182)	(16)
Trade and other payables	6	(15,773)	(14,949)
Current income tax liabilities		(378)	(1,694)
Provisions for other liabilities and charges	7	(104)	(130)
		(16,962)	(17,322)
Net current assets		5,613	10,958
Non-current liabilities
Financial liabilities - borrowings associated with property		(3,150)	(3,734)
Provisions for other liabilities and charges	7	(287)	(285)
		(3,437)	(4,019)
NET ASSETS		56,241	61,020
SHAREHOLDERS' EQUITY
Ordinary shares	8	4,341	5,143
Share premium account	9	11,285	11,277
Capital redemption reserve	9	804	-
Other reserves	9	37,256	37,536
Retained earnings	9	2,555	7,064
EQUITY SHAREHOLDERS' FUNDS		56,241	61,020

  MICROGEN PLC

Group Cash Flow Statement

for the Year Ended 31 December 2008

		Year ended	Year ended
		31 Dec 2008	31 Dec 2007
	Notes	£000	£000
Cash flows from operating activities
Cash generated from operations	10	8,885	5,651
Interest received		931	854
Interest paid		(244)	(332)
Tax paid		(2,216)	(1,105)
Net cash generated from operating activities		7,356	5,068
Cash flows from investing activities
Purchase of investments		(1,270)	(5,683)
Proceeds from sale of investments		-	5,741
Proceeds from sale of property, plant and equipment		1,980	2,068
Purchase of property, plant and equipment		(806)	(552)
Purchase of intangible assets		(11)	(576)
Net cash generated (used in)/from investing activities		(107)	998
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		10	74
Dividends paid		(2,151)	(1,640)
Repayment of mortgage		(592)	(1,733)
Purchase of own shares		(8,039)	-
Net cash used in financing activities		(10,772)	(3,299)
Net (decrease)/increase in cash and cash equivalents		(3,523)	2,767
Opening cash and cash equivalents		18,081	15,297
Effects of exchange rate changes		117	17
Closing cash and cash equivalents		14,675	18,081

Notes to the Audited preliminary results for the year ended 31 December 2008

1. Segmental analysis

Business segments

The segmental information below reflects the divisional operating structure of the Group which is the primary segmentation of the operating performance reviewed by the Board. The primary segmental analysis is split into Microgen Aptitude Solutions, Billing Services and Financial Systems. The principal activity of the Group is the provision of IT services and solutions, including software based activity, managed services and general consultancy. Software based activity includes revenue generated from software licences, maintenance, support, funded development and related consultancy.

During the year, the Board decided to restructure its trading divisions. The Board has now determined to establish a dedicated business unit, Microgen Aptitude Solutions Division to realise the potential of Microgen Aptitude. All of the Group's other software products, which are primarily financial services technology systems, have been consolidated into a single business, Financial Systems Division. The Group's Billing Services Division (formerly Billing & Database Management) remains unchanged.

The divisions and business categories are allocated central function costs in arriving at operating profit/(loss). Group overhead costs are not allocated into the divisions or business categories as the Board believes that these relates to Group activities as opposed to the division or business category.

 

 

(a) Revenue and operating profit by division

31 DECEMBER 2007		Microgen Aptitude Solutions	Billing Services	Financial Systems	Group	Total
		£000	£000	£000	£000	£000
Revenue		5,488	6,373	21,410	-	33,271
Operating costs		(7,776)	(4,410)	(12,676)	-	(24,862)
Operating (loss)/profit before Group overheads		(2,288)	1,963	8,734	-	8,409
Unallocated Group Overheads					(2,464)	(2,464)
Operating profit before goodwill and intangible amortisation/impairment and exceptional items						5,945
Goodwill impairment		(1,000)	-	(1,000)	-	(2,000)
Intangible amortisation		-	-	(305)	-	(305)
Exceptional income/(costs)
- Property provision		-	-	-	66	66
- Sale of property, plant & equipment		-	-	-	666	666
- Aborted acquisition costs		-	-	-	(629)	(629)
- Other		-	-	-	21	21
- Goodwill adjustment		-	-	-	(100)	(100)
		(1,000)	-	(1,305)	24	(2,281)
Operating (loss)/profit		(3,288)	1,963	7,429	(2,440)	3,664
Net finance income						565
Profit before tax						4,229
Taxation						(1,478)
Profit for the year						2,751
Loss for the year from discontinued operations						(121)
PROFIT FOR THE YEAR						2,630

  

1(b) Geographical analysis 

The Group's operations are located in two main geographical areas. The United Kingdom is the home country of the Company.

The following table provides an analysis of the Group's sales by origin and by destination.

	Sales revenue by origin		Sales revenue by destination
	Year ended	Year ended	Year ended	Year ended
	31 Dec 2008	31 Dec 2007	31 Dec 2008	31 Dec 2007
	£000	£000	£000	£000
United Kingdom and Ireland	30,297	31,014	22,431	25,340
Rest of World	2,744	2,257	10,610	7,931
	33,041	33,271	33,041	33,271

2. Taxation

	Year ended	Year ended
	31 Dec 2008	31 Dec 2007
Analysis of charge in the year	£000	£000
Current tax:
- current year charge	(1,258)	(1,736)
- prior year credit	455	379
	(803)	(1,357)
Deferred tax:
- current year credit/(charge)	32	(264)
- prior year credit/(charge)	(138)	143
	(106)	(121)
Taxation	(909)	(1,478)

The total tax charge of £909,000 (2007: £1,478,000) represents 14% (2007: 34.9%) of the Group's profit before tax of £6,500,000 (2007: £4,229,000). After adjusting for the impact of prior year tax charges and recognition of previously unrecognised tax losses, the tax charge for the year of £1,772,000 represents 26.9% of the profit before intangible amortisation and exceptional items (2007: 29.6% based on the profit before goodwill and intangible impairment/amortisation, exceptional items and discontinued operations), which is the tax rate used for calculating the adjusted earnings per share.

At the balance sheet date, the Group has unused tax losses from of £15,807,000 (2007: 19,020,000) available to offset against future profits. A deferred tax asset has been recognised in respect of £1,846,000 (2007: £2,790,000) of such losses. No deferred tax asset has been recognised in respect of the remaining £13,961,000 (2007: £16,230,000) due to the unpredictability of future profit streams.

  2. Taxation (continued)

With effect from 1 April 2008, the UK corporation tax rate changed to 28% from 30%. The difference between the total tax charge and the amount calculated by applying the effective United Kingdom corporation tax rate of 28.5% to the profit on ordinary activities before tax is as follows:

	Year ended	Year ended
	31 Dec 2008	31 Dec 2007
	£000	£000
Profit on ordinary activities before tax	6,500	4,229
Tax at the UK corporation tax rate of 28.5% (2007: 30%)	(1,853)	(1,269)
Effects of:
Adjustment to tax in respect of prior period	317	522
Adjustment in respect of foreign tax rates	(70)	(4)
Expenses not deductible for tax purposes
- Goodwill and intangibles impairment	-	(600)
- Income not taxable	292	203
- Changes in UK corporation tax rates	13	(74)
- Other	(154)	(355)
Recognition of previously unrecognised losses	546	99
Total taxation	(909)	(1,478)

  

3. Earnings per share

To provide an indication of the underlying performance per share the adjusted profit after tax figure shown below excludes goodwill and intangible impairment/amortisation, exceptional items, discontinued operations, change in tax rates and prior year tax charges and credits.

Basic earnings per share is based on the weighted average number of shares in issue during the year of 100,657,817 (2007: 102,215,520). Diluted earnings per share calculations are based on 102,227,908 (2007: 103,425,480) ordinary shares calculated as the basic weighted average number of ordinary shares plus 1,570,091 (2007: 1,209,860) dilutive share options.

	Year ended	Year ended
	31 Dec 2008	31 Dec 2007
	£000	£000
Profit on ordinary activities before tax, goodwill and intangibles impairment/amortisation, discontinued operations and exceptional items.	6,595	6,510
Tax charge at a rate of 26.9% (2007: 29.6%)	(1,774)	(1,927)
Adjusted profit on ordinary activities after tax	4,821	4,583
Discontinued operations	-	(121)
Exceptional items net of tax	236	(66)
Prior years' tax credit	317	522
Change in tax rates	-	(74)
Amortisation of intangibles net of tax	(308)	(214)
Goodwill impairment	-	(2,000)
Recognition of previously unrecognised tax losses	525	-
Profit/(loss) on ordinary activities after tax	5,591	2,630

	2008 Basic EPS	2008 Diluted EPS
	Pence	Pence
Profit on ordinary activities after tax	5.6	5.5
Amortisation of intangibles net of tax	0.3	0.3
Exceptional charge net of tax	(0.3)	(0.3)
Prior years' tax charge	(0.3)	(0.3)
Tax losses recognised	(0.5)	(0.5)
Adjusted profit on ordinary activities after tax	4.8	4.7

Adjusted earnings per share are calculated using adjusted profit after tax. 

   

4. Equity dividends on ordinary shares

	2008 pence per share	2007 pence per share	2008	2007
			£000	£000
Dividends paid:
Interim dividend	0.7	0.6	717	613
Final dividend	1.4	1.0	1,434	1,027
	2.1	1.6	2,151	1,640
Proposed but not recognised as a liability:
Final dividend	1.4	1.4	1,217	1,441

The proposed final dividend was approved by the Board on 23 February 2009 but was not included as a liability as at 31 December 2008, in accordance with IAS 10 'Events after the Balance Sheet date'. If approved by the shareholders at the General Meeting this final dividend will be payable on 6 May 2009 to shareholders on the register at the close of business on 3 April 2009.

5. Trade and other receivables

	31 Dec 2008	31 Dec 2007
	£000	£000
Trade receivables	7,206	8,187
Less: provision for impairment of receivables	(255)	(156)
Trade receivables - net	6,951	8,031
Other receivables	72	136
Prepayments and accrued income	783	752
	7,806	8,919

6. Trade and other payables - current

	31 Dec 2008	31 Dec 2007
	£000	£000
Trade payables	222	564
Other tax and social security payable	1,023	1,225
Other payables	585	373
Accruals	3,430	3,854
Deferred income	10,513	8,933
	15,773	14,949

 

  

7. Provisions

	Property provision
	31 Dec 2008	31 Dec 2007
	£000	£000
Group
At 1 January	415	1,028
Reclassified from accruals	-	156
Additions	100	-
Credited to profit and loss account	-	(138)
Charged to profit and loss account	126	208
Utilised in the year	(250)	(843)
Unwinding of discount	-	4
At 31 December	391	415

Provisions have been analysed between current and non-current as follows:

	Property provision
	31 Dec 2008	31 Dec 2007
	£000	£000
Current	104	130
Non-current	287	285
	391	415

8. Share Capital

The movement in authorised and issued Ordinary Share Capital of 5 pence each during the period is detailed below.

	Authorised		Issued and fully paid
	Number	Amount	Number	Amount
		£000		£000
At 1 January 2008	145,000,000	7,250	102,879,776	5,143
Issued under share option schemes	-	-	30,000	2
Shares repurchased and cancelled	-	-	(16,079,584)	(804)
At 31 December 2008	145,000,000	7,250	86,830,192	4,341

  

9. Movement on reserves

	Share Premium Account	Capital Redemption Reserve	Other Reserves	Retained Earnings
	£000	£000	£000	£000
At 1 January 2008	11,277	-	37,536	7 ,064
Profit for the year	-	-	-	5,591
Share options - value of employee service	-	-	-	282
Deferred tax on share options	-	-	-	22
Deferred tax on financial instruments	-	-	-	(4)
Shares repurchased and cancelled	-	804	-	(8,043)
Unrealised loss on investments	-	-	-	(354)
Exchange rate adjustments	-	-	-	85
Dividends	-	-	-	(2,151)
Cash flow hedges
- net fair value losses in the period	-	-	(217)	-
Shares issued under share option schemes	8	-	(63)	63
At 31 December 2008	11,285	804	37,256	2,555

10. Notes to the Group Cash Flow Statement

(i) Reconciliation of profit for the year to net cash inflow from operating activities

	Year ended 31 Dec 2008	Year ended 31 Dec 2007
	£000	£000
Profit for the year	5,591	2,630
Adjustments for:
Taxation	909	2,029
Depreciation	795	731
Profit on disposal of property, plant and equipment	(1,045)	(606)
Profit on disposal of investments	-	(58)
Amortisation of intangible assets	422	305
Goodwill and intangible impairment	-	2,000
Share-based payment expense	282	248
Change in value of goodwill	546	100
Finance income	(931)	(855)
Finance costs	380	290
Changes in working capital:
Decrease in inventories	15	12
Decrease/(increase) in receivables	1,113	(1,118)
Increase in payables	832	551
Decrease in provisions	(24)	(608)
Cash generated from operations	8,885	5,651

 

(ii) Reconciliation of Net Funds

	31 Dec 2008	31 Dec 2007
	£000	£000
Cash and cash equivalents	14,675	18,081
Borrowings	(3,675)	(4,267)
Net Funds	11,000	13,814

11. Statement by the directors

The preliminary results for the year ended 31 December 2008 and the results for the year ended 31 December 2007 are prepared under International Financial Reporting Standards as adopted for use in the EU ("IFRS"). The accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year ended 31 December 2007.

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2008 or 31 December 2007. The financial information for the year ended 31 December 2007 is derived from the Annual Report delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. 

The Board of Microgen approved the release of this audited preliminary announcement on 23 February 2009.

The Annual Report for the year ended 31 December 2008 will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company. The report will also be available on the investor relations page of our web site (www.microgen.com). Further copies will be available on request and free of charge from the Company Secretary at Fleet House, 3 Fleetwood Park, Barley Way, Fleet, Hampshire. GU51 2QJ.

ENDFR VXLFLKLBXBBQ