Aptitude Regulatory News (APTD)

7 Jul 2009 07:00



microgen

www.microgen.com

 7 July 2009

M icrogen plc

Trading Update

Microgen plc ('Microgen' or 'the Group') provides an update on trading ahead of the Group's Interim Results, for the six months ended 30 June 2009, which are anticipated to be released in late July. 

During the first half of 2009, Microgen Aptitude Solutions Division ("MASD") has seen considerable success. In addition to the multi-million pound contract reported in the April Interim Management Statement, the division is also now engaged on three significant new customer projects :

Major UK Bank : MASD has recently signed a contract for Microgen Accounting Hub and Microgen Aptitude. This project is anticipated to produce revenue in excess of £1 million in the coming year.

US Manufacturer : In parallel with final contract negotiations, MASD is commencing the initial design phase of a project for Microgen Aptitude which is also anticipated to produce revenue in excess of £1 million in the coming year.

Major US Financial Institution : MASD is currently undertaking a significant customer-funded proof-of-concept which may or may not lead to a major contract for Microgen Aptitude and/or Microgen Accounting Hub.

As a result of these projects and additional prospects, the Board anticipates MASD delivering a strong second half of the year. The operating loss for MASD in the first-half has significantly reduced compared to the prior year. Microgen expenses all development costs as incurred and has no R&D capitalisation on its balance sheet. This results in a high correlation between operating income and cash flow for the Group as a whole and, as the revenue increases within MASD, profitability of this division should scale accordingly.

As anticipated, the Group's Billing Services Division and Financial Systems Division have reflected the economic climate but are trading in line with the Board's expectations. These divisions have high recurring revenue and hence remain profitable, high margin businesses with strong cash flow.

Cash at 30 June 2009 was £15.2 million, compared to £14.7 million at 31 December 2008, after repayment of £1.3 million of the loan associated with the freehold property and payment of the final dividend of £1.2 million.

Overall, despite the continuing difficult market environment, the first half of 2009 is anticipated to be in line with the Board's expectations, but, as a result of the strong MASD performance, and subject to contracts being finalised for the two projects noted above, earnings for the year are anticipated to be ahead of current market expectations.