Aptitude Regulatory News (APTD)

4 Dec 2007 07:01

Microgen PLC04 December 2007 4 December 2007 Trading and Business Update Microgen plc is issuing its regular fourth quarter trading and business update,ahead of its close period. Operating Performance of the Group The Board considers the Group to be on track to achieve its expectations for thecurrent year ending 31 December 2007, with a significant contribution fromMicrogen Aptitude based solutions. As a result, the Board anticipates reportingMicrogen's third consecutive year of operating margins (before goodwill andintangible impairment/amortisation and exceptional items) in line or ahead ofthe Group's 15% target, after expensing all product development costs. Thisconsistent strong profitability and corresponding cash flow is achieved bybalancing the contribution from the Group's more mature products and serviceswith the investment to drive the organic growth from the Microgen AptitudeBusiness Process Management Suite (BPMS) and other growth opportunities. Microgen Aptitude The two material contracts for Microgen Aptitude ("Aptitude") that have been innegotiation over the summer, have been signed and are now being implemented.Both projects are anticipated to deliver in excess of £1 million each, includinglicence and associated services, and should continue through to at least themiddle of 2008. During 2007, good progress has been made on sales of Aptitude solutions to newand existing customers. While the majority of these solutions are currentlywithin the Financial Services sector, with deployments in the UK, ContinentalEurope, South Africa and the USA, successes in the Commercial and Energy sectorshave also been achieved. Revenue from Aptitude solutions has increasedsubstantially in 2007 and the Board anticipate that the proportion of revenuederived from Aptitude-based solutions will continue to increase in the future. General IT Consultancy Market In recent years, the Board has consistently reported its concerns regarding thecommoditisation of the general IT consultancy market and accordingly haspro-actively been reducing its exposure to this sector, whilst managing tomaintain strong profitability throughout this period. The Commercial, Public andUtilities Division is now making good progress in its transition toAptitude-based solutions, with a number of established reference sites and thedivision is responsible for the Group's largest Aptitude licence sale to date. As a result, the Board has now decided to complete the strategic transition ofthis division and to exit the testing services consultancy segment in order tofocus resources on the Aptitude opportunities. The remaining general ITconsultancy activity in the division is principally related to businessintelligence which is a skill set applicable to a number of Aptitude solutionsand where consultants are being cross-trained. Balance Sheet & Cash Flow Microgen continues to be cash-generative with cash of £17.5 million at the endof November 2007, equivalent to approximately 17.0 pence per share and net fundsof £13.2 million. In addition, the Board has now contracted to dispose of theGroup's long-leasehold property in London for £2.05 million, before costs, whichwill further increase net funds by approximately 1.5 pence per share after tax.The transaction is anticipated to be completed in the first half of 2008, when aleased office facility will be taken in London. While some of the funds fromthis disposal will be used to repay the mortgage on this property, additionalcash will be released and an exceptional profit after tax in the order of £0.5million is anticipated from this transaction in 2008. The strong cash position and consistent cash flow of Microgen provide the Boardwith the potential to evaluate corporate development opportunities. While therecan be no certainty that any transactions will be undertaken, the current marketinstability and possible CGT tax changes may provide increased opportunities forconsideration. Summary Microgen expects to report another year of strong profitability and cash flow,while also investing in successfully gaining market momentum behind the Group'sflagship product Microgen Aptitude. This consistency is achieved by managing theGroup's portfolio of products and services, in-line with market sectorconditions and the maturity of the product or service offering. The Group'soperating model enables the stability derived from the high recurring revenuesto fund investment in the new products. As a result, the progress made over thepast year and the recognition and success being achieved for Aptitude shouldprovide a good platform for 2008. With a consistent track record of solid profitability and cash flow, a flagshipproduct producing good organic growth and a strong balance sheet, the Boardcontinues to have confidence in the future of the Group and remains committed todelivering both operational performance and value to shareholders. Contact : Martyn Ratcliffe, ChairmanPhilip Wood, Group Finance Director 01252-772300 Giles Sanderson, Financial Dynamics 020-7831-3113Haya Chelhot, Financial Dynamics This information is provided by RNS The company news service from the London Stock Exchange