Aptitude Regulatory News (APTD)

21 Feb 2008 07:00

Microgen PLC21 February 2008 MICROGEN plcwww.microgen.com 21 February 2008 AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 HIGHLIGHTS • Operating performance slightly ahead of market expectations • Adjusted operating margin* remains strong at 17.9%, ahead of the Board's stated target. All internal research and development costs are expensed as incurred with no capitalisation of development costs. • Profit before tax from Continuing Operations of £4.2 million (2006 : loss of £10.0 million) • Revenue from Continuing Operations of £33.3 million (2006 : £32.7 million) • Microgen Aptitude gaining significant momentum and market recognition • Strong balance sheet with cash of £18.1 million (2006 : £15.3 million) • Fully diluted earnings per share 2.5p (2006 : loss per share 10.3p). Adjusted diluted earnings per share 4.5p (2006 : 3.0p) • Proposed dividend increase of 33% with final dividend of 1.4p per share making a total of 2.0p for the year (2006: 1.5p) reflecting the confidence of the Board ContactsMartyn Ratcliffe, Chairman 01252-772300David Sherriff, Chief Operating OfficerPhilip Wood, Group Finance Director Giles Sanderson, Financial Dynamics 020-7831-3113 * Throughout this statement adjusted operating profit and margin excludesgoodwill and intangible impairment/amortisation, exceptional items anddiscontinued operations, unless stated to the contrary 21 February 2008 MICROGEN plc ("Microgen") AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 Chairman's Statement Microgen reports another year of strong operating performance for the 12 monthsended 31 December 2007, maintaining excellent operating profitability and cashflow while continuing to invest in the development and marketing of its productsand services. This consistent performance, combined with a robust balance sheetand significant success for Microgen Aptitude, the Group's flagship product,means that the Board are pleased with the performance of the Group over the pastyear. Three of the Group's four operating divisions reported good organic revenuegrowth in the range of 5% to 14%. The other division, Commercial, Public &Utilities, has been undergoing a transition in recent years as the Board hasprogressively reduced the division's exposure to the general IT consultancysector. This transition was completed during 2007 with the closure of the SAPand Testing activities and the repositioning of the division to be more focusedon Microgen Aptitude and related solutions. The Group has a high level of recurring revenue and the majority of softwarelicence sales are on multi-year annual licence contracts, although somecustomers do demand initial/perpetual software licencing to comply with theirinternal capital budgeting. This model has enabled the Board to investsignificantly in recent years in Microgen Aptitude, while continuing to deliverstrong profitability and without any capitalisation of software developmentcosts. During 2007, Microgen Aptitude (and related solutions) accounted for 11%of the Group revenue (2006 : 3%) and this proportion is anticipated to increasefurther in the year ahead, following three large project (greater than £1million) wins in the second half of 2007. The progress made during 2007 provides a good platform for the Group in the yearahead and, having now completed the transition of the CPU business operations,the underlying organic growth will become more apparent. In addition, withconsistent profitability, strong cash flow and significant cash resources, theBoard continues to explore strategic opportunities for the further developmentof Microgen, including mergers and acquisitions, that could enhance the Group'sofferings and customer base, particularly related to Microgen Aptitude andassociated solutions. Reflecting confidence in the strength of the Group, theBoard is recommending an increase in the total dividend by 33% with a finaldividend of 1.4 pence per share, making a total of 2.0 pence for the year (2006:1.5 pence). Martyn RatcliffeChairman Group Financial Performance and Finance Director's Report Revenue from continuing operations for the year ended 31 December 2007 was £33.3million (2006 : £32.7 million) producing an adjusted operating profit of £5.9million (2006 : £4.7 million). Including the discontinued operations, revenuewas £35.9 million (2006 : £37.6 million) with an adjusted operating profit of£6.2 million (2006 : £5.8 million). On a statutory basis the Group reported anoperating profit from continuing operations of £3.7 million (2006 : loss of£10.2 million). Adjusted diluted earnings per share for the year ended 31 December 2007 was 4.5p(2006 : 3.0p) with diluted earnings per share of 2.5p (2006 : loss per share of10.3p). The Group's tax rate used in calculating adjusted earnings per share is29.6% (2006: 34.2%). Adjustment is made for goodwill and intangibles impairment/amortisation, exceptional items, discontinued operations and prior year tax. During the period the Group generated cash from operations of £5.7 million(2006: £5.6 million) and continues to have a strong balance sheet with cash of£18.1 million (2006: £15.3 million) and net funds of £13.8 million at 31December 2007 (2006: £9.3 million). In accordance with IFRS, the Board has determined that all development costsincurred in the year are expensed and therefore the Group has no capitalisationof development costs. This is consistent with the Group's conservativeaccounting policies. The exceptional items incurred during the year from continuing operations haveproduced net income of £0.02 million, including a profit of £0.7 million relatedto the disposal of one of the long-leasehold properties in London and a cost of£0.6 million associated with a potential acquisition. The Group's secondlong-leasehold property in London is now under contract to be sold in 2008.Furthermore, the Board has actively negotiated settlements on four surplusleasehold properties leaving just two properties within the group which are notcurrently used for operations. Following the completion of the transition of theCPU division the Board performed a review of the carrying value of goodwill inthe Group resulting in a £2.0 million impairment to the value of the goodwillallocated to the CPU division. If approved by shareholders at the Annual General Meeting a final dividend of1.4p per share will be payable on 6 May 2008 to shareholders on the register atthe close of business on 4 April 2008. Philip WoodGroup Finance Director Divisional Review and Chief Operating Officer's Report Microgen is organised into four operating businesses, with the benefits of scalebeing achieved through shared central services which are charged into eachbusiness. The divisional operating profit and margin figures referenced beloware from continuing operations and are reported before Group overhead, goodwilland intangibles impairment/amortisation, exceptional items, discontinuedoperations, interest and tax. In line with the Board's strategic objectives, revenue from continuingoperations derived from Microgen's software contributed 70% of the Group'scontinuing revenues (2006: 65%). The Board continues to promote software licencesales on multi-year annual licence contracts, with a conservative revenuerecognition policy, although some customers do demand traditional initial/perpetual software licensing models. The Group has maintained its disciplined approach to overhead and operatingcosts, while selectively investing in those areas which the Board anticipateswill deliver the best return for shareholders. Headcount within continuingoperations at 31 December 2007 was 323 (31 December 2006: 345), includingcontractors and associates. • Asset & Wealth Management The Asset & Wealth Management division has had another solid year, deliveringorganic growth of 5% and an operating margin of 27% (2006 : 22%). Revenue in2007 was £11.4 million (2006 : £10.9 million), although the division did benefitfrom a number of projects which completed in the year. The division's operationsare based in UK, Guernsey, South Africa and Grand Cayman although the divisionhas customers in most of the main offshore financial centres. Microgen is a leading provider of trust, fund and banking systems into thewealth management sector and has a significant presence within the assetmanagement market. Following the acquisition of the Oscar software from CronusConsultancy in July 2007, the division launched the next generation of Trust andFund application software and early reference customers have already beenestablished. The division has continued to extend the Microgen Aptitude customerbase, particularly where related to complex integration solutions, and has alsoinvested in the development of an Independent Pricing and Valuation solution forthe asset management market, based on Microgen Aptitude. • Banking The Banking division had a strong performance in 2007 with 10% organic revenuegrowth on a year-on-year basis and 23% organic growth in the second half of theyear compared to the equivalent period in 2006. Revenue in 2007 was £9.5 million(2006 : £8.6 million) producing an operating margin of 22% (2006 : 17%). While some legacy product terminations are anticipated in 2008, the divisionsigned two material contracts (greater than £1 million including licence,consultancy and support over the contract period) in the second half of 2007 forthe Microgen Accounting Hub, a solution derived from Microgen Aptitude, togetherwith a number of other Microgen Aptitude based solutions and OST-BR customerupgrades. The investment made in the Banking division in 2006 has been rewardedin 2007 and should provide a stronger platform for the division entering 2008. • Commercial, Public & Utilities ("CPU") In recent years, the Board has consistently highlighted the commoditisation ofthe UK consultancy market and has progressively reduced the Group's exposure inthis area. Throughout this period the Board has maintained its focus onprofitability, allowing revenue to decline rather than pursuing low marginbusiness. During 2007, the Board has exited the SAP support sector and also theTesting consultancy practice in order to transition the focus of the divisioninto software and services more aligned with the other divisions within theGroup. This improved focus has resulted in a number of Microgen Aptitudesuccesses in the Transport, Energy and Leisure sectors. The CPU division reported revenue in 2007 of £6.0 million (2006 : £7.6 million)on continuing operations, with an operating margin of 20% (2006 : 23%). However,having completed the transition of this division and with both contracted andpotential opportunities for Microgen Aptitude continuing to develop, the Boardanticipates that the division will benefit from this greater focus during 2008. • Billing & Database Management ("BDM") The BDM division provides managed services to process, store and distributebilling and related documentation via electronic and print media. The Boardanticipated the decline in demand for print several years ago and reducedcapacity accordingly, while investing in e-billing and related value-addedservices. The migration to e-billing has increased significantly during 2007with 28% of all document output being distributed electronically in December2007, compared with 13% in December 2006, 5% in 2005 and 3% in 2004. Organic revenue growth in 2007 was very strong at 14%. Revenue in 2007 was £6.4million (2006 : £5.6 million) producing an operating margin of 31% (2006: 25%). Microgen Aptitude The investment in the Microgen Aptitude product, together with related solutionsand applications, has continued throughout the year. In 2007 the Group won threecontracts which will each exceed £1 million in value over the life of thecontract in addition to numerous other new customer wins and upgrades. Thissuccess has been in both commercial and financial sectors and across mostgeographical areas, including UK, Europe, USA and South Africa. The progress made has been increasingly recognised by independent analysts andcopies of these reports can be downloaded at www.microgen.com. The independentresearch supports Microgen's view that Microgen Aptitude provides : • A Business Process Management Suite (BPMS) capable of supporting very high levels of transaction processing within a single, integrated environment for BPM, Business Rules, Integration, SOA, BAM and Simulation; • Event Driven Processing that can be used within a Service Oriented Architecture (SOA); • A single and transparent process-based development environment, enabling better collaboration between Business and IT users. Microgen Aptitude's high volume Transaction Process Management (TPM) capability,combined with workflow and the Group's extensive experience in business rulesbased solutions, enables the product to provide a platform for solutions intovertical markets, such as the Microgen Accounting Hub for financial services,Independent Pricing and Valuation for asset management and pricing/marginsolutions within the Energy sector. Operations Summary The Group has now established a strong product and portfolio of solutions,combining detailed industry expertise with leading technical capability. Thebenefits of scale have been sustained through the use of shared services centresfor support functions and development operations. Microgen has proven thesuccess of this business model, delivering consistently strong operatingprofitability and cash flow from each of its operating divisions. This solidfoundation provides an excellent platform from which to leverage the successbeing achieved with Microgen Aptitude. David SherriffChief Operating Officer MICROGEN PLC GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended 31 Dec 2007 31 Dec 2007 31 Dec 2007 31 Dec 2006 31 Dec 2006 31 Dec 2006 Restated Restated Restated BeforeCONTINUING OPERATIONS Notes Before Goodwill and goodwill goodwill intangibles and and impairment/ intangibles intangibles amortisation impairment/ Goodwill and impairment/ and amortisation intangibles amortisation exceptional and impairment/ and items exceptional amortisation exceptional items and items Total exceptional Total items £000 £000 £000 £000 £000 £000 Revenue 1 33,271 - 33,271 32,703 - 32,703Operating costs 1 (27,326) (2,281) (29,607) (28,002) (14,852) (42,854)Operating profit/(loss) 5,945 (2,281) 3,664 4,701 (14,852) (10,151) Finance income 855 - 855 579 - 579Finance cost (290) - (290) (426) - (426) 565 - 565 153 - 153Profit/(loss) on ordinaryactivities before tax 6,510 (2,281) 4,229 4,854 (14,852) (9,998) Taxation 3 (1,478) (1,623)Profit/(loss) for the yearfrom continuing operations 2,751 (11,621) DISCONTINUED OPERATIONS(Loss)/profit for the year 2from discontinued operations (121) 1,090 PROFIT/(LOSS) FOR THEYEAR ATTRIBUTABLE TOSHAREHOLDERS 2,630 (10,531) Earnings/(loss) per shareBasic 4 2.6p (10.3p)Diluted 4 2.5p (10.3p) Adjusted earnings per share(before goodwill andintangibles impairment/amortisation, exceptionalitems, discontinuedoperations andwith effective tax rate)Basic 4 4.6p 3.1pDiluted 4 4.5p 3.0p Dividend per share pence £000 pence £000Paid 5 1.6p 1,640 0.5p 513Proposed 5 1.4p 1,441 1.0p 1,027 MICROGEN PLC STATEMENT OF RECOGNISED INCOME AND EXPENSE Year ended Year ended 31 Dec 2007 31 Dec 2006 £000 £000Cash flow hedges:- net fair value gains net of tax 81 82- reclassified and reported in net profit (7) 4Deferred tax on share options (4) (43)Exchange differences on translation of foreign operations 57 (117)Net income/(expense) recognised directly in equity 127 (74)Profit/(loss) for the year 2,630 (10,531)Total recognised income and expense for the year attributable to equity 2,757 (10,605)shareholders MICROGEN PLC GROUP BALANCE SHEET As at As at 31 Dec 2007 31 Dec 2006 Notes £000 £000ASSETSNon-current assetsProperty, plant and equipment 6,490 9,104Goodwill 44,880 46,980Intangible assets 1,292 1,021Deferred tax asset 1,419 2,103 54,081 59,208Current assetsInventories - raw materials 61 73Trade and other receivables 6 8,919 7,801Financial assets - derivative financial instruments 248 151Cash and cash equivalents 18,081 15,297Non-current assets held for sale 971 - 28,280 23,322LIABILITIESCurrent liabilitiesFinancial liabilities- borrowings (533) (667)- derivative financial instruments (16) -Trade and other payables 7 (14,949) (14,445)Current tax liabilities (1,694) (1,476)Provisions for other liabilities and charges 8 (130) (503) (17,322) (17,091) Net current assets 10,958 6,231 Non-current liabilitiesFinancial liabilities - borrowings (3,734) (5,333)Provisions for other liabilities and charges 8 (285) (525) (4,019) (5,858) NET ASSETS 61,020 59,581 SHAREHOLDERS' EQUITYOrdinary shares 9 5,143 5,132Share premium account 10 11,277 11,214Other reserves 10 37,536 37,462Retained earnings 10 7,064 5,773 EQUITY SHAREHOLDERS' FUNDS 61,020 59,581 MICROGEN PLC GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 Year ended Year ended 31 Dec 2007 31 Dec 2006 Notes £000 £000Cash flows from operating activitiesCash generated from operations 11 5,651 5,631Interest received 854 606Interest paid (332) (352)Tax paid (1,105) (1,143)Net cash generated from operating activities 5,068 4,742 Cash flows from investing activitiesAcquisition of investment (5,683) -Proceeds from sale of investment 5,741 -Proceeds from sale of property, plant and equipment 2,068 -Purchase of property, plant and equipment (552) (552)Purchase of intangible assets (576) -Net cash generated from/(used in) investing activities 998 (552) Cash flows from financing activitiesNet proceeds from issue of ordinary share capital 74 59Dividends paid (1,640) (513)Repayment of mortgage (1,733) -Net cash used in financing activities (3,299) (454) Net increase in cash and cash equivalents 2,767 3,736Opening cash and cash equivalents 15,297 11,804Effects of exchange rate changes 17 (243)Closing cash and cash equivalents 18,081 15,297 Notes to the Audited preliminary results for the year ended 31 December 2007 1. Segmental analysis Business segments The segmental information below reflects the divisional operatingstructure of the Group which is the primary segmentation of the operatingperformance reviewed by the Board. The primary segmental analysis is split intoAsset & Wealth Management, Banking, Commercial Public & Utilities (merging theConsultancy & Applications Management and Energy divisions) and Billing &Database Management. The principal activity of the Group is the provision of ITservices and solutions. The divisions and business categories are allocated central functioncosts in arriving at operating profit/(loss). Group overhead costs are notallocated into the divisions or business categories as the Board believes thatthese relates to Group activities as opposed to the division or businesscategory. (a) Revenue and operating profit by division 31 DECEMBER 2007 CONTINUING Asset & Commercial, Billing &OPERATIONS Wealth Public & Database Management Banking Utilities Management Group Total £000 £000 £000 £000 £000 £000 Revenue 11,442 9,475 5,981 6,373 - 33,271Operating costs (8,317) (7,358) (4,777) (4,410) - (24,862)Operating profitbefore Groupoverheads 3,125 2,117 1,204 1,963 - 8,409Unallocated Groupoverheads (2,464) (2,464) Operating profitbefore intangiblesamortisation/impairmentand exceptional items 5,945 Goodwill impairment - - (2,000) - - (2,000)Intangibles amortisation (261) (44) - - - (305) Exceptionalincome/(costs)- Property provision - - - - 66 66- Sale of property, plantand equipment - - - - 666 666- Aborted acquisition - - - - (629) (629)costs- Other - - - - 21 21- Goodwill adjustment - - - - (100) (100) (261) (44) (2,000) - 24 (2,281)Operating profit/(loss) 2,864 2,073 (796) 1,963 (2,440) 3,664Net finance income 565Profit before tax 4,229Taxation (1,478)Profit for the year fromcontinuing operations 2,751 DISCONTINUEDOPERATIONSLoss for the year fromdiscontinued operations (121)PROFIT FOR THEYEAR 2,630 31 DECEMBER 2006RESTATED Asset & Commercial, Billing &CONTINUING Wealth Public & DatabaseOPERATIONS Management Banking Utilities Management Group Total £000 £000 £000 £000 £000 £000 Revenue 10,897 8,594 7,607 5,605 - 32,703Operating costs (8,452) (7,136) (5,881) (4,217) - (25,686)Operating profit 7,017before Group overheads 2,445 1,458 1,726 1,388 -Unallocated Groupoverheads (2,316) (2,316) Operating profitbefore goodwill andintangibleamortisation/impairment and exceptional items 4,701 Goodwill and intangiblesimpairment - - (14,000) - - (14,000)Intangibles amortisation (261) (44) (19) - - (324) Exceptionalincome/(costs)- Property provision - - - - 18 18- Goodwill adjustment - - - - (546) (546) (261) (44) (14,019) - (528) (14,852)Operating profit/(loss) 2,184 1,414 (12,293) 1,388 (2,844) (10,151) Net finance income 153Loss before tax (9,998)Taxation (1,623)Loss for the year (11,621)DISCONTINUEDOPERATIONSProfit for the year fromdiscontinued operations 1,090LOSS FOR THE YEAR (10,531) 1(b) Geographical analysis The Group's operations are located in two main geographical areas. The UnitedKingdom is the home country of the Company. The following table provides an analysis of the Group's sales by origin and bydestination. Sales revenue by origin Sales revenue by destination Year ended Year ended Year ended Year ended 31 Dec 2007 31 Dec 2006 31 Dec 2007 31 Dec 2006 Restated Restated £000 £000 £000 £000United Kingdom and Ireland 31,014 30,027 25,340 24,883Rest of World 2,257 2,676 7,931 7,820 33,271 32,703 33,271 32,703 2. Discontinued operations The Board have determined that the Group's SAP support and Testingconsultancy operations were sub-scale and the investment required to achieve thenecessary scale would be unlikely to deliver a satisfactory return forshareholders. Therefore, the Board determined to exit these activities during2007. The results for the SAP and Testing consultancy businesses are asfollows: 31 Dec 2007 31 Dec 2006 £000 £000 Revenue 2,674 4,929Operating costs (2,383) (3,872)Operating profit before exceptional items 291 1,057Exceptional income 139 94Profit from discontinued operations - before tax 430 1,151Tax (551) (61)Profit from discontinued operations - after tax (121) 1,090 The exceptional income in 2007 relates to the release of provisions ontermination of the businesses. The exceptional income in 2006 relates to the release of a propertyprovision. Included within the charge of £551,000 for the year ending 31 December2007 is £391,000 attributable to the impairment of a deferred tax asset inrespect of trading losses. In accordance with IFRS 5, Non current Assets Held for Sale andDiscontinued Operations, the prior year comparatives for the income statementand related notes have been restated to exclude discontinued operations. 3. Taxation Year ended Year ended 31 Dec 2007 31 Dec 2006 RestatedAnalysis of charge in the year £000 £000Current tax:- current year charge (1,736) (1,393)- prior year credit 379 56 (1,357) (1,337) Deferred tax:- current year charge (264) (266)- prior year credit/(charge) 143 (20) (121) (286) Taxation (1,478) (1,623) The total tax charge of £1,478,000 (2006: £1,623,000) represents 34.9% (2006:(16.2%)) of the Group's profit before tax of £4,229,000 (2006: loss of£9,998,000). The total charge in the year is increased due to expenses notdeductible for tax purposes, including goodwill and intangibles impairment/amortisation. After adjusting for the impact of goodwill and intangiblesimpairment/amortisation, goodwill adjustment, exceptional items, change in taxrates and prior year tax charges the tax charge for the year of £1,926,000represents 29.6% (2006: 34.2%), which is the tax rate used for calculating theadjusted earnings per share. At the balance sheet date, the Group has unused tax losses from continuingoperations of £19,020,000 (2006: 19,734,000) available to offset against futureprofits. A deferred tax asset has been recognised in respect of £2,790,000(2006: £3,071,000) of such losses. No deferred tax asset has been recognised inrespect of the remaining £16,230,000 (2006: £16,664,000) due to theunpredictability of future profit streams. The difference between the total tax charge and the amount calculated byapplying the United Kingdom corporation tax rate of 30% to the profit onordinary activities before tax is as follows: Year ended Year ended 31 Dec 2007 31 Dec 2006 Restated £000 £000Profit/(loss) on ordinary activities before tax 4,229 (9,998) Tax at the UK corporation tax rate of 30% (2006: 30%) (1,269) 2,999 Effects of:Adjustment to tax in respect of prior period 522 36Adjustment in respect of foreign tax rates (4) 13Expenses not deductible for tax purposes- Goodwill and intangibles impairment (600) (4,200)- Income not taxable 203 -- Changes in future tax rates (74) -- Other (355) (534)Movement in unrecognised deferred taxation 99 63Total taxation (1,478) (1,623) 4. Earnings per share To provide an indication of the underlying performance per share the adjustedprofit after tax figure shown below excludes goodwill and intangibles impairment/amortisation, exceptional items, discontinued operations, change in tax ratesand prior year tax charges and credits. Basic earnings per share is based on the weighted average number of shares inissue during the year of 102,215,520 (2006: 102,107,722). Diluted earnings pershare calculations are based on 103,425,480 (2006: 103,021,920) ordinary sharescalculated as the basic weighted average number of ordinary shares plus1,209,860 (2006: 914,198) dilutive share options. Year ended Year ended 31 Dec 2007 31 Dec 2006 Restated £000 £000Profit on ordinary activities before tax, goodwill and intangibles 6,510 4,854impairment/amortisation, discontinued operations and exceptional itemsTax charge at a rate of 29.6% (2006: 34.2%) (1,927) (1,660)Adjusted profit on ordinary activities after tax 4,583 3,194 Discontinued operations (121) 1,090Exceptional items net of tax (66) (624)Prior years' tax charge 522 36Change in tax rates (74) -Amortisation of intangibles net of tax (214) (227)Goodwill and intangibles impairment (2,000) (14,000)Profit/(loss) on ordinary activities after tax 2,630 (10,531) 2007 2007 2007 Earnings Basic Diluted EPS EPS £000 Pence PenceProfit on ordinary activities after tax 2,630 2.6 2.5 Discontinued operations 121 0.1 0.1Amortisation of intangibles net of tax 214 0.2 0.2Exceptional charge net of tax 66 0.1 0.1Prior years' tax charge (522) (0.5) (0.5)Change in tax rates 74 0.1 0.1Goodwill impairment 2,000 2.0 2.0 Adjusted profit on ordinary activities after tax 4,583 4.6 4.5 Adjusted earnings per share is calculated using adjusted profit after tax. 5. Equity dividends on ordinary shares 2007 pence 2006 pence 2007 2006 per share per share £000 £000 £000Dividends paid:Interim dividend 0.6 0.5 613 513Final dividend 1.0 - 1,027 - 1.6 0.5 1,640 513 Proposed but not recognised as a liability:Final dividend 1.4 1.0 1,441 1,027 The proposed final dividend was approved by the Board on 21 February 2008 butwas not included as a liability as at 31 December 2007, in accordance with IAS10 'Events after the Balance Sheet date'. If approved by the shareholders at theAnnual General Meeting this final dividend will be payable on 6 May 2008 toshareholders on the register at the close of business on 4 April 2008. 6. Trade and other receivables 31 Dec 2007 31 Dec 2006 £000 £000Trade receivables 8,187 7,112Less: provision for impairment of receivables (156) (366)Trade receivables - net 8,031 6,746Other receivables 136 249Prepayments and accrued income 752 806 8,919 7,801 7. Trade and other payables - current 31 Dec 2007 31 Dec 2006 £000 £000Trade payables 564 484Other tax and social security payable 1,225 1,378Other payables 373 510Accruals 3,854 3,347Deferred income 8,933 8,726 14,949 14,445 8. Provisions for other liabilities and charges Property provision 31 Dec 2007 31 Dec 2006 £000 £000GroupAt 1 January 1,028 1,475Reclassified from accruals 156 -Credited to income statement (138) (361)Charged to income statement 208 249Utilised in the year (843) (406)Unwinding of discount 4 71At 31 December 415 1,028 Provisions have been analysed between current and non-current as follows: Property provision 31 Dec 2007 31 Dec 2006 £000 £000Current 130 503Non-current 285 525 415 1,028 9. Share Capital The movement in authorised and issued Ordinary Share Capital of 5 penceeach during the period is detailed below. Authorised Issued and fully paid Number Amount Number Amount £000 £000At 1 January 2007 145,000,000 7,250 102,651,776 5,132Issued under share option schemes - - 228,000 11 At 31 December 2007 145,000,000 7,250 102,879,776 5,143 10. Movement on reserves Share Premium Other Retained Account Reserves Earnings £'000 £'000 £'000At 1 January 2007 11,214 37,462 5,773 Profit for the year - - 2,630Share options - value of employee service - - 248Deferred tax on share options - - (4)Exchange rate adjustments - - 57Dividends - - (1,640)Cash flow hedges- transfers to net income - (7) -- net fair value gains in the period net of tax - 81 -Premium on shares issued under share option schemes 63 - - At 31 December 2007 11,277 37,536 7,064 11. Notes to the Group Cash Flow Statement (i) Reconciliation of profit/(loss) for the year to net cash inflow fromoperating activities Year ended Year ended 31 Dec 2007 31 Dec 2006 £000 £000Profit/(loss) for the year 2,630 (10,531) Adjustments for:Taxation 2,029 1,684Depreciation 731 777(Profit)/loss on disposal of property, plant and (606) 11equipmentProfit on disposal of investments (58) -Amortisation of intangible assets 305 324Goodwill and intangible impairment 2,000 14,000Share-based payment expense 248 251Change in value of goodwill 100 546Finance income (855) (579)Finance expense 290 426 Changes in working capital:Decrease in inventories 12 2(Increase)/decrease in receivables (1,118) 655Decrease/(increase) in payables 551 (1,559)Decrease in provisions (608) (376) Cash generated from operations 5,651 5,631 (ii) Reconciliation of Net Funds 31 Dec 2007 31 Dec 2006 £000 £000Cash and cash equivalents 18,081 15,297Borrowings (4,267) (6,000)Net Funds 13,814 9,297 12. Statement by the directors The preliminary results for the year ended 31 December 2007 and the results forthe year ended 31 December 2006 are prepared under International FinancialReporting Standards as adopted for use in the EU ("IFRSs") and in accordancewith the Listing Rules of the Financial Services Authority. The accountingpolicies adopted in this preliminary announcement are consistent with the AnnualReport for the year ended 31 December 2006. The financial information set out in this preliminary announcement does notconstitute the Company's statutory accounts for the years ended 31 December 2007or 31 December 2006. The financial information for the year ended 31 December2006 is derived from the Annual Report delivered to the Registrar of Companies.The auditors reported on those accounts; their report was unqualified and didnot contain a statement under either section 237(2) or section 237(3) of theCompanies Act 1985. The Board of Microgen approved the release of this preliminary announcement on21 February 2008. The Annual Report for the year ended 31 December 2007 will be posted toshareholders in due course and will be delivered to the Registrar of Companiesfollowing the Annual General Meeting of the Company. The report will also beavailable on the investor relations page of our web site (www.microgen.com) uponposting to shareholders. Further copies will be available on request and freeof charge from the Company Secretary at Fleet House, 3 Fleetwood Park, BarleyWay, Fleet, Hampshire. GU51 2QJ. This information is provided by RNS The company news service from the London Stock Exchange