Final Results

RNS Number : 7528B

Microgen PLC

24 February 2011

 



microgen

24 February 2011

MICROGEN plc ("Microgen")

Audited Preliminary Results for the Year ended

31 December 2010

Microgen reports a strong operating performance for the twelve months ended 31 December 2010.

HIGHLIGHTS

·           Revenue from continuing operations of £33.7 million (2009: £29.1 million) representing 16% growth overall with revenue growth of 44% from the Microgen Aptitude Solutions Division.

·           Adjusted operating profit from continuing operations increased by 36% to £8.1 million (2009: £5.9 million)*.  All internal research and development costs have been expensed as incurred with no capitalisation of development costs.

·           Adjusted diluted earnings per share increased by 36% to 6.8 pence (2009: 5.0 pence)*.

·           £11.3 million (2009: £9.8 million) of cash generated from operations with year end cash of £25.4 million (2009: £24.2 million) after returning a total of £8.2 million to shareholders during 2010 via dividends and the tender offer completed in September. 

·           Proposed final dividend of 2.1 pence per share (2009: 1.5 pence) increasing the full year dividend by 30% to 3.0 pence (2009: 2.3 pence).

STATUTORY RESULTS

·           Profit for the year attributable to equity shareholders of £6.5 million (2009: £8.5 million with 2009 including exceptional gain of £3.3 million).

·           Diluted earnings per share of 7.5 pence (2009: 9.6 pence).

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.

24 February 2011

MICROGEN plc ("Microgen")

Audited Preliminary Results for the Year ended

31 December 2010

Chairman's Statement

Microgen reports another year of strong operating performance for the 12 months ended 31 December 2010. Revenue growth from continuing operations was 16%, led by strong growth of 44% from the Microgen Aptitude Solutions Division ("MASD"). Operating margins from continuing operations increased to 24% (2009: 20%) while continuing to expense all research and development costs. As a result of cash generated from operations of £11.3 million (2009: £9.8 million) the Group has increased its year end cash to £25.4 million (2009: £24.2 million) after returning £8.2 million to shareholders during the year through dividends and the tender offer which completed in September.

Microgen is organised in two operating divisions, with different investment characteristics but with operating synergies through the use of a shared service model for staff and support functions.

·        Microgen Aptitude Solutions Division ("MASD") is now the larger of the Group's two operating businesses and is anticipated to continue to grow in 2011 as the global customer base expands, opportunities in new sectors develop and existing customers undertake additional projects using the Microgen Aptitude technology. The operating leverage was demonstrated in 2010 with MASD reporting an operating margin of 15% (2009: 3%) as the business increased in scale.  With all research and development costs having been expensed as incurred, the profitability of MASD should increase accordingly, although some further investment in global infrastructure and sales capability is anticipated in 2011 to support the continued growth.

·       Financial Systems Division ("FSD") provides software products and services in mature financial market sectors where growth is more limited. The division is highly profitable producing operating margins of 48% in 2010 (2009: 48%) with strong cash flow and high recurring revenues. The Board anticipates the market and business characteristics of FSD to continue in 2011.

In summary, the Board is pleased with the performance of the Group in 2010 and satisfied with the position as we start the New Year. The success of MASD during 2010 and the stability of FSD provide a good platform for the Group in the year ahead and enable the Board to explore strategic opportunities as they arise.

The Board also recognises the need for operational performance to convert into shareholder value and to this end introduced the Value Enhancement and Realisation Bonus Scheme ("VERBS") in October 2008.  At that time, the market capitalisation of Microgen was £37.0 million with a share price of 36 pence.  Since the introduction of this bonus scheme, the Board have returned £21.5 million through tender offers and dividends, representing 58% of the market capitalisation prior to the introduction of VERBS.  Furthermore, at 31 December 2010, Microgen had a market capitalisation of £86.5 million including net funds of £23.6 million.

Reflecting the strong operating performance and consistent with delivering attractive returns to shareholders, the Board is recommending a final dividend of 2.1 pence per share (2009: 1.5 pence) increasing the full year dividend by 30% to 3.0 pence (2009: 2.3 pence in addition to the special dividend of 4.0 pence per share paid in December 2009). The final dividend will be payable on 6 May 2011 to shareholders on the register at the close of business on 15 April 2011.

Martyn Ratcliffe
Chairman

Group Financial Performance and Finance Director's Report

Revenue from continuing operations for the year ended 31 December 2010 was £33.7 million (2009: £29.1 million) producing an adjusted operating profit of £8.1 million (2009: £5.9 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 £6.5 million (2009: £8.5 million with 2009 including the exceptional gain on disposal of the Billing Services Division of £6.2 million less a £2.9 million goodwill and property impairment).

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 2010 was £4.9 million (2009: £4.9 million) of which £2.8 million (2009: £2.8 million) was incurred by the Microgen Aptitude Solutions Division.

Headcount at 31 December 2010 was 264 including 21 contractors and associates (31 December 2009: 259 including 18 contractors and associates). At the year end there were 154 individuals (2009: 145) working within the Microgen Aptitude Solutions Division ("MASD") and 84 individuals (2009: 91) within the Financial Systems Division ("FSD"). In addition 26 individuals (2009: 23) were working at the year end within Group and Central Functions which includes both Group headcount together with individuals working for shared service departments whose costs are recharged to MASD and FSD.

Adjusted diluted earnings per share for the year ended 31 December 2010 was 6.8 pence (2009: 5.0 pence) with diluted earnings per share of 7.5 pence (2009: 9.6 pence). The Group's tax rate used in calculating adjusted earnings per share is 27.4% (2009: 26.4%). The total tax charge of £1.3 million (2009: £1.0 million) represents 17% of the Group's profit before tax (2009: 43%, a higher rate than 2010 due to £3.6 million of exceptional costs in 2009 which were not deductible for tax purposes).

Cash generated from operations in the year was £11.3 million (2009: £9.8 million) enhanced by excellent year end cash collections and some client payments in advance. (The seasonal cash flow peaks towards the end of the financial year with a number of payments, including the 2010 final dividend and management bonuses, payable in the first half of 2011). After returning £8.2 million (2009: £5.4 million) of cash to shareholders through dividends and the tender offer the Group continues to have a strong balance sheet with cash of £25.4 million (2009: £24.2 million) and net funds of £23.6 million (2009: £22.0 million) at 31 December 2010.

Philip Wood

Group Finance Director

Divisional Review and Chief Operating Officer's Report

Microgen's two operating divisions performed well in 2010 with the Microgen Aptitude Solutions Division reporting strong growth and increasing profitability as the business achieves scale and the Financial Systems Division maintaining very strong operating margins and high recurring revenues.

The Group 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/maintenance software licensing models. The Group has also maintained its disciplined approach to overhead and operating costs, while selectively investing in key areas to support growth in new geographies and market sectors.

·       Microgen Aptitude Solutions Division ("MASD")

Combining the capability of Microgen Aptitude, a very high performance Business Process Platform, with the Group's business domain knowledge and experience, Microgen currently provides products and solutions for the financial services (primarily investment banking and insurance), digital media/entertainment and commercial markets. In addition MASD is currently developing new name opportunities in a number of new sectors. Growth during 2010 was generated from existing clients extending their use of Microgen software and the addition of new clients commencing their first implementations. In particular the functionally-rich Microgen Accounting Hub ("MAH"), which is based on Microgen Aptitude, continues to provide strong differentiation against the large global providers of software in both the financial services and digital media/entertainment sectors.

Revenue in MASD increased by 44% to £17.0 million (2009: £11.8 million) and the division reported an operating profit of £2.6 million (2009: £0.3 million). MASD is now the larger of the Group's two operating divisions. With a number of projects continuing into 2011, together with a number of new business opportunities, the strong performance demonstrated in 2010 is anticipated to continue in 2011.

The MASD software development operation, based in Poland, continues to deliver innovative, market-leading functionality and in 2010 MASD launched Version 3 of Microgen Aptitude, significantly extending the transaction processing performance of the core product. Furthermore, innovative and functionally rich enhancement modules were launched in September offering even greater transaction processing performance and graphical in-database analytics. Following the release MAH was also released on the Teradata EDW Platform enabling greater levels of transaction and data processing. 

·       Financial Systems Division ("FSD")

The Financial Systems Division has a well-established customer base with 86% (2009: 83%) of divisional revenue being derived from financial systems software.  Recurring revenues account for approximately 80% of the divisional revenue.

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.

Revenue in 2010 decreased to £16.7 million (2009: £17.3 million including £0.3 million from previously announced end-of-life products). Operating margins have been maintained at the high level of 48% (2009: 48%). The Board anticipate conditions within the FSD market sectors remaining similar in 2011.

Operations Summary

The Group has a strong and established portfolio of products and solutions, combining proven 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 continue to leverage the success of Microgen Aptitude and its associated application products and to integrate acquisition opportunities, if appropriate, into FSD.

David Sherriff

Chief Operating Officer

MICROGEN PLC

Group Income Statement

for the year ended 31 December 2010

		Year Ended 31 December 2010				Year Ended 31 December 2009
	Notes	Before intangible amortisation	Intangible amortisation		Total	Before goodwill, property and intangible impairment / amortisation and exceptional items	Goodwill, property and intangible impairment / amortisation and exceptional items	Total
Continuing operations		£000	£000		£000	£000	£000	£000
Revenue	1	33,669	-		33,669	29,060	-	29,060
Operating costs	1	(25,576)	(255)		(25,831)	(23,116)	(3,635)	(26,751)
Operating profit		8,093	(255)		7,838	5,944	(3,635)	2,309
Finance income		140	-		140	162	-	162
Finance cost		(126)	-		(126)	(198)	-	(198)
		14	-		14	(36)	-	(36)
Profit before income tax		8,107	(255)		7,852	5,908	(3,635)	2,273
Income tax expense	3				(1,341)			(974)
Profit for the year from continuing operations					6,511			1,299
Discontinued operations
Profit for the year from discontinued operations	2				-			7,243
Profit for the year					6,511			8,542
Earnings per share
Basic	4				7.7p			9.8p
Diluted	4				7.5p			9.6p
Dividends			pence per share		£000		pence per share	£000
Paid	5		2.4p		2,084		2.2p	1,900
Proposed	5		2.1p		1,698		1.5p	1,303
Special Dividend			pence per share		£000		pence per share	£000
Paid	5		-	-			4.0p	3,472

MICROGEN PLC

group statement of comprehensive income

For the year ended 31 December 2010

	Year ended 31 Dec 2010	Year ended 31 Dec 2009
	£000	£000
Profit for the year	6,511	8,542
Other comprehensive income
Fair value gain on investment	-	70
Reversal of prior year impairment	-	354
Cash flow hedges, net of tax	(36)	37
Currency translation difference	95	39
Other comprehensive income for the period, net of tax	59	500
Total comprehensive income for the period	6,570	9,042

MICROGEN PLC

Group Balance Sheet

For the year ended 31 December 2010

		As at 31 Dec 2010	As at 31 Dec 2009
	Notes	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		5,157	5,224
Goodwill		41,774	41,774
Intangible assets		235	490
Investments		-	336
Deferred income tax asset		1,402	1,350
		48,568	49,174
Current assets
Trade and other receivables	6	5,971	7,627
Financial assets  - derivative financial instruments		56	87
Cash and cash equivalents		25,412	24,178
		31,439	31,892
TOTAL ASSETS		80,007	81,066
LIABILITIES
Current liabilities
Financial liabilities
- borrowings associated with property		(370)	(370)
- derivative financial instruments		(115)	(74)
Trade and other payables	7	(18,205)	(17,537)
Current income tax liabilities		(408)	(648)
Provisions for other liabilities and charges	8	(150)	(43)
		(19,248)	(18,672)
Net current assets		12,191	13,220
Non-current liabilities
Financial liabilities - borrowings associated with property		(1,482)	(1,852)
Provisions for other liabilities and charges	8	(139)	(179)
		(1,621)	(2,031)
NET ASSETS		59,138	60,363
SHAREHOLDERS' EQUITY
Ordinary shares	9	4,041	4,344
Share premium account		11,531	11,285
Capital redemption reserve		1,146	804
Other reserves		37,066	37,293
Retained earnings		5,354	6,637
TOTAL EQUITY		59,138	60,363

MICROGEN PLC

Group Statement of changes in shareholders' equity

for the Year Ended 31 December 2010

		Ordinary Shares £000		Share Premium Account £000		Retained Earnings £000		Capital Redemption Reserve £000		Other Reserves £000	Total Equity £000
At 1 January 2010		4,344		11,285		6,637		804		37,293	60,363
Comprehensive Income
Shares issued under share option schemes		39		246		191		-		(191)	285
Cash flow hedges - net fair value losses in the period		-		-		-		-		(36)	(36)
Exchange rate adjustments		-		-		95		-		-	95
Share options - value of employee services		-		-		215		-		-	215
Deferred tax on financial instruments		-		-		(18)		-		-	(18)
Corporation tax on share options		-		-		93		-		-	93
Shares repurchased and cancelled		(342)		-		(6,288)		342		-	(6,288)
Share options issued from Microgen Employee Share Participation Scheme Trust		-		-		2		-		-	2
Dividends paid		-		-		(2,084)		-		-	(2,084)
Retained profit for the year		-		-		6,511		-		-	6,511
Total comprehensive income		(303)		246		(1,283)		342		(227)	(1,225)
At 31 December 2010		4,041		11,531		5,354		1,146		37,066	59,138

Group Cash Flow Statement

for the Year Ended 31 December 2010

		Year ended	Year ended
		31 Dec 2010	31 Dec 2009
	Notes	£000	£000
Cash flows from operating activities
Cash generated from operations	10	11,348	9,788
Interest received		140	162
Interest paid		(94)	(205)
Tax paid		(1,506)	(1,057)
Net cash flows generated from operating activities		9,888	8,688
Cash flows from investing activities
Proceeds from sale of investments		336	1,118
Proceeds from disposal of subsidiary		-	6,928
Purchase of property, plant and equipment		(586)	(541)
Net cash (used in)/generated from investing activities		(250)	7,505
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		285	153
Dividends paid	5	(2,084)	(5,372)
Repayment of mortgage		(370)	(1,453)
Purchase of own shares		(6,288)	-
Net cash used in financing activities		(8,457)	(6,672)
Net increase in cash and cash equivalents		1,181	9,521
Opening cash and cash equivalents		24,178	14,675
Effects of exchange rate changes		53	(18)
Closing cash and cash equivalents		25,412	24,178

Notes to the Audited preliminary results for the year ended 31 December 2010

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 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 2010			MASD	FSD	Group	Total
			£000	£000	£000	£000
Revenue			16,995	16,674	-	33,669
Operating costs			(14,386)	(8,590)	-	(22,976)
Operating profit before Group overheads			2,609	8,084	-	10,693
Unallocated Group overheads					(2,600)	(2,600)
Operating profit before intangible amortisation						8,093
Intangible amortisation			-	(255)	-	(255)
Operating profit/(loss)			2,609	7,829	(2,600)	7,838
Net finance income						14
Profit before tax						7,852
Income tax expense						(1,341)
Profit for the year						6,511

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

1(b) Geographical analysis

The Group has two geographical segments for reporting purposes, 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 2010	31 Dec 2009	31 Dec 2010	31 Dec 2009
	£000	£000	£000	£000
United Kingdom and Ireland	26,848	21,732	17,398	11,760
Rest of World	6,821	7,328	16,271	17,300
	33,669	29,060	33,669	29,060

2.   Discontinued operations

      The Billing Services Division was disposed of on 30 November 2009. There were no discontinued operations in 2010.

The results for Billing Services Division for 2009 are as follows:

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

The exceptional income in 2009 relates to the consideration received for the business of £7,531,000 less  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.

For 2009 operating costs include employee benefits of £1,805,000, depreciation of £72,000 and other operating costs of £1,919,000.

3.   Income tax expense

	Year ended	Year ended
	31 Dec 2010	31 Dec 2009
Analysis of charge in the year	£000	£000
Current tax:
- current year charge	(1,526)	(1,105)
- prior year credit/(charge)	160	(44)
	(1,366)	(1,149)
Deferred tax:
- current year (charge)/credit	(11)	264
- prior year credit/(charge)	36	(89)
	25	175
Income tax expense	(1,341)	(974)

The total tax charge of £1,341,000 (2009: £974,000) on continuing operations represents 17.1% (2009: 42.9%) of the Group's profit before tax of £7,852,000 (2009: £2,273,000). 

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 £2,221,000 (2009: £1,560,000) represents 27.4% of the profit before goodwill, property and intangible impairment/amortisation and exceptional items (2009: 26.4%), 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 £10,172,000 (2009: £13,399,000) available to offset against future profits.  A deferred tax asset has been recognised in respect of £1,284,000 (2009: £1,642,000) of such losses.  No deferred tax asset has been recognised in respect of the remaining £8,888,000 (2009: £11,757,000) due to the unpredictability of future profit streams.

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 2010	31 Dec 2009
	£000	£000
Profit on ordinary activities before tax	7,852	2,273
Tax at the UK corporation tax rate of 28% (2009: 28%)	(2,199)	(636)
Effects of:
Adjustment to tax in respect of prior period	196	(133)
Adjustment in respect of foreign tax rates	24	5
Expenses not deductible for tax purposes
- Goodwill and intangibles impairment	-	(560)
- Income not taxable	-	56
- Share based payment expenses	13	84
- Revaluation of property	-	(251)
- Changes in goodwill	-	(157)
- Other	(11)	(26)
Changes in UK corporation tax rates	(30)	-
Movement in unrecognised deferred taxation	360	560
Utilisation of losses not previously recognised	306	84
Total taxation	(1,341)	(974)

4.   Earnings per share

To provide an indication of the underlying operating performance per share the adjusted profit after tax figure shown below excludes goodwill impairment, property and intangibles impairment/amortisation, exceptional items and discontinued operations and has a tax charge using the effective rate of 27.4% (2009: 26.4%).

	Year ended	Year ended
	31 Dec 2010	31 Dec 2009
	£000	£000
Profit on ordinary activities before tax, goodwill and intangibles impairment/amortisation, discontinued operations and exceptional items.	8,107	5,908
Tax charge at a rate of 27.4% (2009: 26.4%)	(2,221)	(1,560)
Adjusted profit on ordinary activities after tax	5,886	4,348
Discontinued operations	-	7,243
Exceptional items net of tax	-	(1,401)
Prior years' tax charge	196	(133)
Share options	13	129
Amortisation of intangibles net of tax	(185)	(288)
Goodwill impairment	-	(2,000)
Recognition of tax losses	631	644
Change in UK Corporation Tax Rates	(30)	-
Profit on ordinary activities after tax	6,511	8,542

	2010 Basic EPS	2010 Diluted EPS
	Pence	Pence
Basic earnings per share	7.7	7.5
Amortisation of intangibles net of tax	0.2	0.2
Prior years' tax charge	(0.2)	(0.2)
Tax losses recognised	(0.7)	(0.7)
Adjusted earnings per share	7.0	6.8

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

5.    Dividends

	2010 pence per share	2009 pence per share	2010 £000	2009 £000
Dividends paid:
Interim dividend	0.9	0.8	781	691
Final dividend (prior year)	1.5	1.4	1,303	1,209
Special dividend	-	4.0	-	3,472
	2.4	6.2	2,084	5,372
Proposed but not recognised as a liability:
Final dividend (current year)	2.1	1.5	1,698	1,303

The proposed final dividend was approved by the Board on 23 February 2011 but was not included as a liability as at 31 December 2010, in accordance with IAS 10 'Events after the Balance Sheet date'. If approved by shareholders at the General Meeting this final dividend will be payable on 6 May 2011 to shareholders on the register at the close of business on 15 April 2011.

6.   Trade and other receivables

	31 Dec 2010	31 Dec 2009
	£000	£000
Trade receivables	5,321	6,462
Less: provision for impairment of receivables	(78)	(112)
Trade receivables - net	5,243	6,350
Other receivables	66	68
Prepayments and accrued income	662	1,209
	5,971	7,627

7.   Trade and other payables - current

	31 Dec 2010	31 Dec 2009
	£000	£000
Trade payables	132	817
Other tax and social security payable	1,175	618
Other payables	157	405
Accruals	2,622	3,691
Deferred income	14,119	12,006
	18,205	17,537

8.   Provisions for other liabilities and charges

	Property provision
	31 Dec 2010	31 Dec 2009
	£000	£000
Group
At 1 January	222	391
Additions	-	93
Charged/(credited) to income statement	66	(42)
Reclassified to accruals	(4)	-
Foreign Exchange	5	-
Disposal of Billing Services Division	-	(220)
At 31 December	289	222

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

	Property provision
	31 Dec 2010	31 Dec 2009
	£000	£000
Current	150	43
Non-current	139	179
	289	222

9.   Ordinary shares

      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 2010	145,000,000	7,250	86,897,277	4,344
Issued under share option schemes	-	-	779,321	39
Tender offer	-	-	(6,837,339)	(342)
At 31 December 2010	145,000,000	7,250	80,839,259	4,041

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 2010	Year ended 31 Dec 2009
	£000	£000
Profit for the year	6,511	8,542
Adjustments for:
Taxation	1,341	1,381
Depreciation	649	841
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	255	391
Property impairment	-	896
Goodwill impairment	-	2,000
Share-based payment expense	215	158
Change in value of goodwill	-	560
Finance income	(140)	(162)
Finance costs	126	198
Changes in working capital:
Decrease in inventories	-	46
Decrease in receivables	1,656	179
Increase in payables	668	1,873
Increase/(decrease) in provisions	67	(169)
Cash generated from operations	11,348	9,788

(ii)  Reconciliation of Net Funds

	31 Dec 2010	31 Dec 2009
	£000	£000
Cash and cash equivalents	25,412	24,178
Borrowings	(1,852)	(2,222)
Net Funds	23,560	21,956

11.  Statement by the directors

The preliminary results for the year ended 31 December 2010 and the results for the year ended 31 December 2009 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 2009.

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 31 December 2009.  The financial information for the year ended 31 December 2009 is derived from the Annual Report delivered to the Registrar of Companies.  The Annual report and accounts for 2010 will be delivered to the Registrar of Companies in due course. The auditors' report on those accounts was unqualified and neither drew attention to any matters by way of emphasis nor contained a statement under either section 498(2) of Companies Act 2006 (accounting records or returns inadequate or accounts not agreeing with records and returns), or section 498(3) of Companies Act 2006 (failure to obtain necessary information and explanations).

The Board of Microgen approved the release of this audited preliminary announcement on 23 February 2011.

The Annual Report for the year ended 31 December 2010 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.

 

END

 

 

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