Aptitude Regulatory News (APTD)

RNS Number : 3184H

Microgen PLC

18 February 2010

 

microgen

 

18 February 2010

MICROGENplc ("Microgen")

Audited Preliminary Results for the Year ended

31 December 2009

 

Microgen reports a strong operating performance for the twelve months ended 31 December 2009.

HIGHLIGHTS

·; Revenue from continuing operations of £29.1m (2008: £26.7m) representing 9% growth overall with revenue growth of 55% from the Microgen Aptitude Solutions Division

·; Adjusted operating profit from continuing operations of £5.9m (2008: £4.1m). All internal research and development costs have been expensed as incurred with no capitalisation of development costs.

·; Adjusted diluted earnings per share increases to 5.0p (2008: 3.4p)

·; £9.8m (2008: £8.9m) of cash generated from operations with year end cash of £24.2m (2008: £14.7m)

·; Disposal of the Billing Services Division for £7.5m completes the transition of Microgen into a software-based group

·; Proposed final dividend of 1.5p per share making a total of 2.3p for the year (2008: 2.1p) in addition to the 4.0p special dividend paid in December (£5.5m in total for the year)

STATUTORY RESULTS

·; Profit for the year attributable to equity shareholders of £8.5m (2008: £5.6m) including exceptional gain on disposal of Billing Services Division of £6.2m less £2.9m goodwill and property impairment. 2008 includes benefit of £1.0m on property disposal.

·; Diluted earnings per share of 9.6p (2008: 5.5p)

 

Contacts

Martyn Ratcliffe, Chairman	01252-772300
David Sherriff, Chief Operating Officer
Philip Wood, Group Finance Director
James Melville-Ross, Financial Dynamics	020-7831-3113
Haya Herbert-Burns, Financial Dynamics

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

18 February 2010

MICROGEN plc ("Microgen")

Audited Preliminary Results for the Year ended

31 December 2009

Chairman's Statement

Microgen reports another year of strong operating performance for the 12 months ended 31 December 2009. Revenue growth from continuing operations of 9%; operating margins from continuing operations of 20% (2008: 16%) while expensing all research and development costs; strong growth of 55% from the Microgen Aptitude Solutions Division ("MASD"); and excellent cash flow; summarise the performance in 2009.

The past year has seen considerable change in the Group. The continued success of Microgen Aptitude and its associated application products validates the considerable investment made in this business and, despite a weak market environment, forecasts for the Group were upgraded twice during 2009 as demand for these products and associated consultancy services increased. As a result, MASD reported a profit in the year, ahead of the Board's plans for this business.

The disposal of the Billing Services Division in November completed the transformation of Microgen into a software-based Group and enabled the Board to return £3.5 million to shareholders. In total, over the past three years, Microgen has now returned £17.2 million to shareholders through dividends and the 2008 tender offer, while continuing to invest in the Group's business operations and retaining a robust balance sheet with £24.2 million cash and £22.0 million net funds at 31 December 2009.

Following the disposal, Microgen now comprises two divisions, with different investment characteristics but with operating synergies.

·; Microgen Aptitude Solutions Division is anticipated to continue to deliver growth in 2010 as the global customer base expands and existing customers undertake additional projects using the Microgen Aptitude technology. As the business scales, and with all research and development costs having been expensed as incurred, the profitability of MASD should increase accordingly.

·; Financial Systems Division ("FSD") provides software products and services in mature market sectors where, in the current economic climate, growth is more limited. However, by having fully integrated the operations of the acquisitions that formed FSD, the division is highly profitable producing operating margins of 48% in 2009 (47% in 2008) with strong cash flow and high recurring revenues. The Board anticipates the market and business characteristics of FSD to continue in 2010.

In summary, the Board is pleased with the performance of the Group in 2009 and satisfied with the position as we start the New Year. Whilst remaining cautious on the economic outlook for 2010, the success of MASD during 2009 and the stable foundations of FSD provide a good platform for the Group in the year ahead and enable the Board to explore strategic opportunities as they arise. Reflecting this performance, the Board is maintaining its progressive dividend policy and recommending a final dividend of 1.5 pence per share, making a total of 2.3 pence for the year (2008: 2.1 pence) in addition to the special dividend of 4.0 pence per share paid in December 2009. The final dividend will be payable on 1 April 2010 to shareholders on the register at the close of business on 19 March 2010.

 

Martyn Ratcliffe

Chairman

Group Financial Performance and Finance Director's Report

Revenue from continuing operations for the year ended 31 December 2009 was £29.1 million (2008: £26.7 million) producing an adjusted operating profit of £5.9 million (2008: £4.1 million). (Throughout this statement adjusted operating profit and margin from continuing operations excludes goodwill, property and intangible impairment/amortisation, exceptional items and discontinued operations, unless stated to the contrary.)

The Group reported a profit for the year attributable to equity shareholders of £8.5m (2008: £5.6m) including the exceptional gain on disposal of the Billing Services Division of £6.2 million less a £2.9 million goodwill and property impairment. 2008 includes a benefit of £1.0 million on property disposal.

As advised in the Group's November Interim Management Statement, the Board has decided to end-of-life a number of smaller product lines within FSD. The revenue in 2009 from these products was £0.5 million and the Board has subsequently reviewed the associated goodwill, resulting in a £2.0 million impairment for the year. The exceptional costs incurred during the year also include an impairment of £0.9 million associated with the freehold property in Fleet to reflect the decline in commercial property valuations.

In accordance with IFRS, the Board has continued to determine 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 overall group expenditure on research, development and support activities in 2009 was £4.9 million (2008: £5.1 million) of which £2.8 million (2008: £2.7 million) was incurred by the Microgen Aptitude Solutions Division.

Adjusted diluted earnings per share for the year ended 31 December 2009 was 5.0p (2008: 3.4p) with diluted earnings per share of 9.6p (2008: 5.5p). The Group's tax rate used in calculating adjusted earnings per share is 26.4% (2008: 25.1%). The total tax charge of £1.0 million (2008: £0.4 million) represents 43% (2008: 8%) of the Group's profit before tax of £2.3 million. The rate of 43% in 2009 (2008: 8%) is higher than the UK corporate tax rate due principally to the goodwill (£2.0 million) and property (£0.9 million) impairments which are not deductible for corporation tax purposes.

Cash generated from operations in the year was £9.8 million (2008: £8.9 million). After returning £5.4 million of cash to shareholders through dividends (including the special dividend), the disposal of the Billing Services Division and the disposal of 79% of Microgen's shareholding in Scisys plc (realising £1.1m and a profit of £0.2m), the Group continues to have a strong balance sheet with cash of £24.2 million (2008: £14.7 million) and net funds of £22.0 million (2008: £11.0 million) at 31 December 2009. The remainder of Microgen's shareholding in Scisys plc was disposed of subsequent to the year end realising further proceeds of £0.3 million.

 

Philip Wood

Group Finance Director

 

Divisional Review and Chief Operating Officer's Report

Following the disposal of the Group's Billing Services Division, Microgen is now organised into two operating divisions, with the benefits of scale being achieved through shared central services which are charged into each business.

Approximately 95% of the continuing revenue of the Group is now derived from Microgen's software activities, comprising software licence, maintenance, support and associated consultancy. The Board continues to promote software licence sales on multi-year annual licence contracts, with a conservative revenue recognition policy, although some customers with capital budgets 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 2009 was 259 including 18 contractors and associates (31 December 2008: 286, including 45 in the Billing Services Division and 9 contractors and associates).

·; Microgen Aptitude Solutions Division ("MASD")

Microgen Aptitude, the Group's Business Process Management Suite enables organisations to implement and manage change without compromising control and is designed to meet the demand for high volume transaction processing. In a single integrated platform Microgen Aptitude delivers Business Process Management, Business Rules, Data Management/Extract Transform & Load ("ETL"), Integration, Services Orchestration and Simulation/Optimisation. The software suite has been designed to support and deliver transparency through collaboration between business and IT users by the use of a common graphical language that is used across all the modules.

Combining the capability of Microgen Aptitude with the Group's business domain knowledge and experience, Microgen provides products and solutions for markets including: commercial, energy, financial services, media and transport & logistics. As an example, the Microgen Accounting Hub is increasingly being recognised by blue-chip clients for its capability in the areas of finance integration, product line P&L and financial control. Microgen also provides additional Microgen Aptitude-based solutions around invoice management, digital rights management and charge allocation to the commercial sector.

In 2009, MASD transitioned from its investment phase into a profitable business. Demand for Microgen Aptitude was in-line with the Board's growth target while the Microgen Accounting Hub experienced particularly strong demand with a number of complex financial projects on-going. Revenue in MASD increased by 55% to £11.8 million (2008: £7.6 million) and the division reported an operating profit of £0.3 million (2008: loss of £2.4 million). While the Board planned for the business to become profitable on a monthly basis during 2009, it is pleasing to report a profit for the year as a whole.

As a result of the high level of innovation that has been, and continues to be, applied to the development of Microgen Aptitude, a number of patent applications have now been filed in order to protect the intellectual property and investment in Microgen Aptitude.

·; Financial Systems Division ("FSD")

The Financial Systems Division operates within mature market sectors where growth is more limited, especially in the current market environment. However, FSD has a well-established customer base with 83% of divisional revenue being derived from financial systems software. Recurring revenues account for approximately 79% of the divisional revenue. FSD also markets Microgen Aptitude into the division's customer base with 15 customers of the division now using the Microgen Aptitude software.

The Financial Systems Division delivers :

·; Wealth Management software and solutions;

·; Banking software and solutions;

·; Asset Management software and solutions; and

·; Energy software and Application Management.

While underpinned by the high recurring revenue, FSD did experience slower market conditions for new systems and major enhancements during 2009. Furthermore, the Board completed the transition from generic IT consultancy during the year and also determined to end-of-life a number of smaller product categories, although some of these will have a "tail" through 2010 as Microgen supports its customers through the transition process. As a result, revenue in 2009 declined to £17.3 million including £0.5 million from the products being discontinued, (2008: £19.0 million) but with operating margins maintained at a very high 48% (2008: 47%). The Board anticipate conditions within the FSD market sectors remaining similar in 2010.

Operations Summary

The Group has a strong portfolio of products and solutions, combining domain and industry expertise with leading technical and functional capability. The benefits of scale are achieved through the use of shared services centres for support functions. This foundation provides a good platform from which to leverage the success of Microgen Aptitude and its associated application products. The underlying stability of the FSD financial services customer base provides a very profitable and established operation for potential add-on acquisitions.

 

David Sherriff

Chief Operating Officer

MICROGEN PLC

Group Income Statement

for the year ended 31 December 2009

 

		Year Ended 31 Dec 2009	Year Ended 31 Dec 2009	Year Ended 31 Dec 2009	Year Ended 31 Dec 2008 Restated	Year Ended 31 Dec 2008 Restated	Year Ended 31 Dec 2008 Restated
	Notes	Before goodwill, property and intangible impairment / amortisation and exceptional items	Goodwill, property and intangible impairment / amortisation and exceptional items	Total	Before intangible amortisation and exceptional items	Intangible amortisation and exceptional items	Total
Continuing operations		£000	£000	£000	£000	£000	£000
Revenue		29,060	-	29,060	26,660	-	26,660
Operating costs	1	(23,116)	(3,635)	(26,751)	(22,526)	(95)	(22,621)
Operating profit		5,944	(3,635)	2,309	4,134	(95)	4,039
Finance income		162	-	162	931	-	931
Finance cost		(198)	-	(198)	(380)	-	(380)
		(36)	-	(36)	551	-	551
Profit before income tax		5,908	(3,635)	2,273	4,685	(95)	4,590
Income tax expense	3			(974)			(365)
Profit for the year from continuing operations				1,299			4,225
Discontinued operations
Profit for the year from discontinued operations	2			7,243			1,366
PROFIT FOR THE YEAR				8,542			5,591
Earnings per share
Basic	4			9.8p			5.6p
Diluted	4			9.6p			5.5p
Dividends			pence per share	£000		pence per share	£000
Paid	5		2.2p	1,900		2.1p	2,151
Proposed	5		1.5p	1,303		1.4p	1,209
Special Dividend
Paid	5		4.0p	3,472		-	-

 

 

MICROGEN PLC

Group Statement of Comprehensive Income

 

 

 

	Year ended 31 Dec 2009	Year ended 31 Dec 2008
	£000	£000
Profit for the year	8,542	5,591
Other comprehensive income
Fair value gain/(loss) on investment	70	(354)
Reversal of prior year impairment	354	-
Cash flow hedges, net of tax	37	(217)
Currency translation difference	39	85
Other comprehensive income for the period, net of tax	500	(486)
Total comprehensive income for the period	9,042	5,105

 

 

 

 

MICROGEN PLC

Group Balance Sheet

 

		As at 31 Dec 2009	As at 31 Dec 2008
	Notes	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		5,224	6,574
Goodwill		41,774	44,334
Intangible assets		490	881
Investments		336	916
Deferred income tax asset		1,350	1,360
		49,174	54,065
Current assets
Inventories - raw materials		-	46
Trade and other receivables	6	7,627	7,806
Financial assets - derivative financial instruments		87	48
Cash and cash equivalents		24,178	14,675
		31,892	22,575
TOTAL ASSETS		81,066	76,640
LIABILITIES
Current liabilities
Financial liabilities
- borrowings associated with property		(370)	(525)
- derivative financial instruments		(74)	(182)
Trade and other payables	7	(17,537)	(15,773)
Current income tax liabilities		(648)	(378)
Provisions for other liabilities and charges	8	(43)	(104)
		(18,672)	(16,962)
Net current assets		13,220	5,613
Non-current liabilities
Financial liabilities - borrowings associated with property		(1,852)	(3,150)
Provisions for other liabilities and charges	8	(179)	(287)
		(2,031)	(3,437)
NET ASSETS		60,363	56,241
SHAREHOLDERS' EQUITY
Ordinary shares	9	4,344	4,341
Share premium account	10	11,285	11,285
Capital redemption reserve	10	804	804
Other reserves	10	37,293	37,256
Retained earnings	10	6,637	2,555
EQUITY SHAREHOLDERS' FUNDS		60,363	56,241

MICROGEN PLC

Group Cash Flow Statement

for the Year Ended 31 December 2009

 

		Year ended	Year ended
		31 Dec 2009	31 Dec 2008
	Notes	£000	£000
Cash flows from operating activities
Cash generated from operations	11	9,788	8,885
Interest received		162	931
Interest paid		(205)	(244)
Tax paid		(1,057)	(2,216)
Net cash flows generated from operating activities		8,688	7,356
Cash flows from investing activities
Purchase of investments		-	(1,270)
Proceeds from sale of investments		1,118	-
Proceeds from sale of property, plant and equipment		-	1,980
Proceeds from disposal of subsidiary		6,928	-
Purchase of property, plant and equipment		(541)	(806)
Purchase of intangible assets		-	(11)
Net cash generated from/(used in) investing activities		7,505	(107)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		153	10
Dividends paid		(5,372)	(2,151)
Repayment of mortgage		(1,453)	(592)
Purchase of own shares		-	(8,039)
Net cash used in financing activities		(6,672)	(10,772)
Net increase/(decrease) in cash and cash equivalents		9,521	(3,523)
Opening cash and cash equivalents		14,675	18,081
Effects of exchange rate changes		(18)	117
Closing cash and cash equivalents		24,178	14,675

 

 

Notes to the Audited preliminary results for the year ended 31 December 2009

 

1. Segmental analysis

 

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 segmental analysis is split into Microgen Aptitude Solutions Division ("MASD") and Financial Systems Division ("FSD").

The principal activity of the Group is the provision of IT services and solutions, generating the majority of its revenue from software licences, maintenance, support, funded development and related consultancy.

 

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.

 

1(a) Revenue and operating profit by division

Year ended 31 December 2009		MASD	FSD	Group	Total
		£000	£000	£000	£000
CONTINUING OPERATIONS
Revenue		11,806	17,254	-	29,060
Operating costs		(11,476)	(9,042)	-	(20,518)
Operating profit before Group overheads		330	8,212	-	8,542
Unallocated Group overheads				(2,598)	(2,598)
Operating profit before goodwill, property and intangible impairment/ amortisation and exceptional items					5,944
Goodwill impairment		-	(2,000)	-	(2,000)
Property impairment		-	-	(896)	(896)
Intangible amortisation		-	(391)	-	(391)
Exceptional items
- Gain on sale of shares held in investments				205	205
- Other				7	7
- Goodwill adjustment				(560)	(560)
		-	(2,391)	(1,244)	(3,635)
Operating profit/(loss)		330	5,821	(3,842)	2,309
Net finance cost					(36)
Profit before income tax					2,273
Income tax expense					(974)
Profit for the year from continuing operations					1,299
DISCONTINUED OPERATIONS
Profit for the year from discontinued operations					7,243
PROFIT FOR THE YEAR					8,542

 

Year ended 31 December 2008 - restated			MASD	FSD	Group	Total
			£000	£000	£000	£000
CONTINUING OPERATIONS
Revenue			7,614	19,046	-	26,660
Operating costs			(10,004)	(10,157)	-	(20,161)
Operating (loss)/profit before Group overheads			(2,390)	8,889	-	6,499
Unallocated Group overheads					(2,365)	(2,365)
Operating profit before intangible amortisation and exceptional items						4,134
Intangible amortisation			-	(422)	-	(422)
Exceptional items
- Property provision			-	-	(139)	(139)
- Sale of property, plant and equipment			-	-	1,025	1,025
- Other			-	-	(13)	(13)
- Goodwill adjustment			-	-	(546)	(546)
			-	(422)	327	(95)
Operating (loss)/profit			(2,390)	8,467	(2,038)	4,039
Net finance income						551
Profit before income tax						4,590
Income tax expense						(365)
Profit for the year from continuing operations						4,225
DISCONTINUED OPERATIONS
Profit for the year from discontinued operations						1,366
PROFIT FOR THE YEAR						5,591

 

1(b) Geographical analysis

 

The Group's operations are located in two main geographical areas, the United Kingdom & Ireland and the Rest of the World.

 

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 2009	31 Dec 2008 Restated	31 Dec 2009	31 Dec 2008 Restated
	£000	£000	£000	£000
United Kingdom and Ireland	21,732	20,306	11,760	11,798
Rest of World	7,328	6,354	17,300	14,862
	29,060	26,660	29,060	26,660

 

 

 

2. Discontinued operations

 

The Billing Services Division was disposed of on 30 November 2009.

 

The results for Billing Services Division are as follows:

 

	11 months ended	Year ended
	30 Nov 2009	31 Dec 2008
	£000	£000
Revenue	5,257	6,381
Operating costs	(3,796)	(4,471)
Operating profit before exceptional items	1,461	1,910
Exceptional income	6,189	-
Profit from discontinued operations - before income tax	7,650	1,910
Income tax	(407)	(544)
Profit from discontinued operations - after income tax	7,243	1,366

 

The exceptional income relates to the consideration received for the business of £7,531,000 less all associated costs of £537,000 and the net assets of the Billing Services Division as at the time of disposal £805,000, which included cash of £172,000.

 

Operating costs include employee benefits of £1,805,000 (2008: £1,882,000), depreciation of £72,000 (2008: £106,000) and other operating costs of £1,919,000 (2008: £2,483,000).

 

Income tax expense has been calculated using the standard corporation tax rate of 28% (2008: 28.5%).

 

 

 

3. Income tax expense

 

	Year ended	Year ended
	31 Dec 2009	31 Dec 2008 Restated
Analysis of charge in the year	£000	£000
Current tax:
- current year charge	(1,105)	(769)
- prior year (charge)/credit	(44)	455
	(1,149)	(314)
Deferred tax:
- current year credit	264	87
- prior year charge	(89)	(138)
	175	(51)
Income tax expense	(974)	(365)

 

 

The total tax charge of £974,000 (2008: £365,000) on continuing operations represents 42.9% (2008: 7.9%) of the Group's profit before tax of £2,273,000 (2008: £4,590,000).

 

After adjusting for the impact of goodwill, property and intangible impairment/amortisation, goodwill adjustment, exceptional items, tax impact of share options, change in tax rates and prior year tax charges the tax charge for the year of £1,569,000 represents 26.4% of the profit before goodwill, property and intangible impairment/amortisation and exceptional items (2008: 25.1%), 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 £13,399,000 (2008: £15,807,000) available to offset against future profits. A deferred tax asset has been recognised in respect of £1,642,000 (2008: £1,846,000) of such losses. No deferred tax asset has been recognised in respect of the remaining £11,757,000 (2008: £13,961,000) due to the unpredictability of future profit streams.

3. Taxation (continued)

 

The difference between the total tax charge and the amount calculated by applying the effective United Kingdom corporation tax rate of 28% to the profit on ordinary activities before tax is as follows:

 

	Year ended	Year ended
	31 Dec 2009	31 Dec 2008 Restated
	£000	£000
Profit on ordinary activities before tax	2,273	4,590
Tax at the UK corporation tax rate of 28% (2008: 28.5%)	(636)	(1,308)
Effects of:
Adjustment to tax in respect of prior period	(133)	317
Adjustment in respect of foreign tax rates	5	(70)
Expenses not deductible for tax purposes
- Goodwill and intangibles impairment	(560)	-
- Income not taxable	56	292
- Share based payment expenses	84	(55)
- Revaluation of property	(251)	-
- Goodwill adjustment	(157)	(156)
- Changes in UK corporation tax rates	-	13
- Other	(26)	56
Movement in unrecognised deferred taxation	560	546
Utilisation of losses not previously recognised	84	-
Total taxation	(974)	(365)

 

 

 

4. Earnings per share

 

To provide an indication of the underlying performance per share the adjusted profit after tax figure shown below excludes goodwill, property and intangibles impairment/amortisation, exceptional items and discontinued operations and has a tax charge using the effective rate of 26.4% (2008: 25.1%).

 

	Year ended	Year ended
	31 Dec 2009	31 Dec 2008 Restated
	£000	£000
Profit on ordinary activities before tax, goodwill and intangible impairment/amortisation, discontinued operations and exceptional items.	5,908	4,685
Tax charge at a rate of 26.4% (2008: 25.1%)	(1,560)	(1,176)
Adjusted profit on ordinary activities after tax	4,348	3,509
Discontinued operations	7,243	1,366
Exceptional items net of tax	(1,401)	182
Prior years' tax charge	(133)	317
Share options	129	-
Amortisation of intangibles net of tax	(288)	(308)
Goodwill impairment	(2,000)	-
Recognition of tax losses	644	525
Profit on ordinary activities after tax	8,542	5,591

 

 

 

	2009 Basic EPS	2009 Diluted EPS
	Pence	Pence
Profit on ordinary activities after tax	9.8	9.8
Amortisation of intangibles net of tax	0.3	0.3
Discontinued operations	(8.3)	(8.3)
Exceptional charge net of tax	1.6	1.6
Prior years' tax charge	0.2	0.2
Share options	(0.1)	(0.1)
Goodwill impairment	2.3	2.3
Tax losses recognised	(0.7)	(0.7)
Impact of dilutive securities	-	(0.1)
Adjusted profit on ordinary activities after tax	5.1	5.0

 

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

 

5. Dividends

 

	2009 pence per share	2008 pence per share	2009	2008
			£000	£000
Dividends paid:
Interim dividend	0.8	0.7	691	717
Final dividend (prior year)	1.4	1.4	1,209	1,434
Special dividend	4.0	-	3,472	-
	6.2	2.1	5,372	2,151
Proposed but not recognised as a liability:
Final dividend	1.5	1.4	1,303	1,209

 

 

The proposed final dividend was approved by the Board on 17 February 2010 but was not included as a liability as at 31 December 2009, 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 1 April 2010 to shareholders on the register at the close of business on 19 March 2010.

 

 

 

6. Trade and other receivables

 

	31 Dec 2009	31 Dec 2008
	£000	£000
Trade receivables	6,462	7,206
Less: provision for impairment of receivables	(112)	(255)
Trade receivables - net	6,350	6,951
Other receivables	68	72
Prepayments and accrued income	1,209	783
	7,627	7,806

 

7. Trade and other payables - current

 

	31 Dec 2009	31 Dec 2008
	£000	£000
Trade payables	817	222
Other tax and social security payable	618	1,023
Other payables	405	585
Accruals	3,691	3,430
Deferred income	12,006	10,513
	17,537	15,773

 

 

8. Provisions

 

	Property provision
	31 Dec 2009	31 Dec 2008
	£000	£000
Group
At 1 January	391	415
Additions	93	100
(Credited)/charged to income statement	(42)	126
Utilised in the year	-	(250)
Disposal of Billing Services Division	(220)	-
At 31 December	222	391

 

 

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

 

	Property provision
	31 Dec 2009	31 Dec 2008
	£000	£000
Current	43	104
Non-current	179	287
	222	391

 

 

 

9. 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 2009	145,000,000	7,250	86,830,192	4,341
Issued under share option schemes	-	-	67,085	3
At 31 December 2009	145,000,000	7,250	86,897,277	4,344

 

 

 

10. Movement on reserves

 

	Share Premium Account	Capital Redemption Reserve	Other Reserves	Retained Earnings
	£'000	£'000	£'000	£'000
At 1 January 2009	11,285	804	37,256	2,555
Profit for the year	-	-	-	8,542
Share options - value of employee service	-	-	-	158
Corporation tax on share options	-	-	-	73
Deferred tax on financial instruments	-	-	-	18
Reversal of impairment of investment	-	-	-	354
Unrealised gain on Scisys revaluation	-	-	-	70
Share options issued from Microgen Employee Share Participation Scheme Trust	-	-	-	160
Exchange rate adjustments	-	-	-	39
Dividends	-	-	-	(5,332)
Cash flow hedges at net fair value in the period	-	-	37	-
At 31 December 2009	11,285	804	37,293	6,637

 

 

11. 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 2009	Year ended 31 Dec 2008
	£000	£000
Profit for the year	8,542	5,591
Adjustments for:
Taxation	1,381	909
Depreciation	841	795
Profit on disposal of property, plant and equipment	-	(1,045)
Profit on disposal of subsidiary	(6,189)	-
Trading assets of Billing Services Division on disposal	(552)	-
Profit on disposal of investments	(205)	-
Amortisation of intangible assets	391	422
Property impairment	896	-
Goodwill impairment	2,000	-
Share-based payment expense	158	282
Change in value of goodwill	560	546
Finance income	(162)	(931)
Finance costs	198	380
Changes in working capital:
Decrease in inventories	46	15
Decrease in receivables	179	1,113
Increase in payables	1,873	832
Decrease in provisions	(169)	(24)
Cash generated from operations	9,788	8,885

 

(ii) Reconciliation of Net Funds

 

	31 Dec 2009	31 Dec 2008
	£000	£000
Cash and cash equivalents	24,178	14,675
Borrowings	(2,222)	(3,675)
Net Funds	21,956	11,000

 

 

 

12. Statement by the directors

 

The preliminary results for the year ended 31 December 2009 and the results for the year ended 31 December 2008 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 2008.

 

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2009 or 31 December 2008. The financial information for the year ended 31 December 2008 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 17 February 2010.

 

The Annual Report for the year ended 31 December 2009 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.

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