Preliminary Results

RNS Number : 1296Y

Microgen PLC

27 February 2012

 



27 February 2012

MICROGEN plc ("Microgen" or "the Group")

Audited Preliminary Results for the Year ended

31 December 2011

Microgen reports a strong operating performance for the twelve months ended 31 December 2011.

SUMMARY

·        Revenue growth of 15% to £38.8 million (2010: £33.7 million) with growth in the Microgen Aptitude Solutions
          Division of 28%.

·        Adjusted operating profit increased by 19% to £9.6 million (2010: £8.1 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 24% to 8.4 pence (2010: 6.8 pence)*.

·        £12.5 million (2010: £11.3 million) of cash generated from operations with year end net funds of £27.0 million 
         (2010: £23.6 million) after returning a total of £6.6 million to shareholders during 2011. 

·        Proposed final dividend of 2.2 pence per share (2010: 2.1 pence) increasing the full year dividend by 10% to 3.3
          pence (2010: 3.0 pence).

STATUTORY RESULTS

·        Profit for the year attributable to equity shareholders of £7.3 million (2010: £6.5 million).

·        Diluted earnings per share of 8.7 pence (2010: 7.5 pence).

Contacts

Martyn Ratcliffe, Chairman                                                        020-7496-8100

David Sherriff, Chief Executive Officer

Philip Wood, Group Finance Director

James Melville-Ross / Clare Thomas, FTI Consulting                   020-7831-3113

* Throughout this statement adjusted operating profit and operating margin exclude intangible amortisation unless stated to the contrary.

Chairman's Statement

Microgen reports a strong operating performance for the year ended 31 December 2011, with revenue growth of 15% for the Group. Operating margins increased to 25% (2010: 24%) while continuing to expense all research and development costs. As a result of good cash generation, the Group had net funds of £27.0 million at 31 December 2011 (2010: £23.6 million) after returning £6.6 million to shareholders during the year through dividends, including the special dividend in December.

The Microgen Aptitude Solutions Division ("MASD") reported revenue growth of 28% and an increased operating margin of 19% in 2011 (2010: 15%). The division continues to see good demand for its technology, although the Board remains cautious in the macro-economic environment, the effects of which became progressively more apparent in the second half of 2011, particularly in the financial services sector. In 2012, a new 3D version of Microgen Aptitude is scheduled for launch, which is anticipated to further extend Microgen's product leadership in a market where the challenges of "Big Data" and related project complexity are becoming increasingly recognised.  

The 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 47% in 2011 (2010: 48%) with strong cash flow and high recurring revenues. The Board anticipates the market and business characteristics of FSD to continue in 2012.

The Board has always recognised the need for operational performance to convert into shareholder value and 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 VERBS and up to 31 December 2011, the Board has now returned £28.2 million through tender offers and dividends, representing 76% of the market capitalisation prior to the introduction of VERBS. Furthermore, despite this substantial return of capital to shareholders, at 31 December 2011, Microgen had a market capitalisation of £105.2 million.

Reflecting the strong operating performance in 2011 and the Group's robust balance sheet, the Board is recommending a final dividend of 2.2 pence per share (2010: 2.1 pence), thereby increasing the full year dividend by 10% to 3.3 pence (2010: 3.0 pence), in addition to the special dividend of 5.0 pence per share paid in December 2011. Subject to shareholder approval, the final dividend will be payable on 11 May 2012 to shareholders on the register at the close of business on 20 April 2012.

The past year has seen an evolution of the Microgen Board, with Mr David Sherriff being appointed Chief Executive Officer in April and an effective transition of the non-executive Directors following the decision of Mr Ralph Kanter and Mr Paul Davies to retire from the Board. The Board would like to thank Mr Kanter and Mr Davies for their long service to Microgen and their contribution to the transition of the Group from a microfiche and printing company to the technology leading organisation that is Microgen today. Replacing the retiring directors, Ms Vanda Murray OBE joined the Board as a non-executive Director in September 2011, also becoming Chairman of the Remuneration Committee in January 2012, and Mr Peter Whiting was appointed as a non-executive Director in February 2012. The senior independent non-executive Director of the Board remains Mr Peter Bertram who also chairs the Audit Committee.

In summary, the Board is pleased with the performance of the Group in 2011. However, consistent with other suppliers having material exposure to the financial services sector, Microgen did experience contract deferrals and increasing pressure on consultant utilisation in the second half of the year. While the Group's high level of recurring revenue provides resilience against the full effects of the market deterioration, the macro-economic uncertainty will impact the Group in the first half of 2012. However, some deferred deals are now starting to progress and overall, due to Microgen's annual licensing business model and conservative operational approach, the Board anticipates that the impact on revenue in 2012 will not translate into a material impact on the Group's profit performance for the year ahead. Furthermore, the continued investment (fully expensed) in Microgen Aptitude should maintain the market leadership position of this high performance product in an increasingly technically demanding environment, a competitive position that the Board believe is sustainable in the foreseeable future.

Martyn Ratcliffe

Chairman

Group Financial Performance and Finance Director's Report

Revenue for the year ended 31 December 2011 was £38.8 million (2010: £33.7 million) producing an adjusted operating profit of £9.6 million (2010: £8.1 million). (Throughout this statement adjusted operating profit and operating margin exclude intangible amortisation unless stated to the contrary.) The Group reported a profit for the year attributable to equity shareholders of £7.3 million (2010: £6.5 million).

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 2011 was £5.4 million (2010: £4.9 million) of which £3.2 million (2010: £2.8 million) was incurred by the Microgen Aptitude Solutions Division.

Headcount at 31 December 2011 was 273 including 15 contractors and associates (31 December 2010: 264 including 21 contractors and associates). At the year end there were 162 employees (2010: 154) within the Microgen Aptitude Solutions Division ("MASD") and 85 employees (2010: 84) within the Financial Systems Division ("FSD"). In addition there were 26 employees (2010: 26) within Group and Central Functions.

Adjusted diluted earnings per share for the year ended 31 December 2011 increased by 24% to 8.4 pence (2010: 6.8 pence) with diluted earnings per share of 8.7 pence (2010: 7.5 pence). The Group's tax rate used in calculating adjusted earnings per share is 28.0% (2010: 27.4%). The total tax charge of £2.3 million (2010: £1.3 million) represents 24% of the Group's profit before tax (2010: 17%).

Cash generated from operations in the year was £12.5 million (2010: £11.3 million) benefitting once again from good year end cash collections and some advance client payments. After returning £6.6 million (2010: £8.2 million including the 2010 tender offer) of cash to shareholders through dividends and the special dividend, the Group continues to have a strong balance sheet with net funds at 31 December 2011 of £27.0 million (2010: £23.6 million) with no debt at the year end following the repayment of the £1.6 million loan associated with the Group's Fleet freehold property in September.

Philip Wood

Group Finance Director

Chief Executive Officer's Report

Microgen's two operating divisions performed well in 2011. The Microgen Aptitude Solutions Division reported continued growth and increased profitability as the business continued to scale and the Financial Systems Division maintained its strong operating margins and high levels of recurring revenues.

In order to build the long-term recurring revenue base, the Group continues to promote software licence sales on multi-year annual licence contracts, with a conservative revenue recognition policy, although a minority of 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 target geographies and market sectors.

·      Microgen Aptitude Solutions Division ("MASD")

MASD provides enterprise level application products and solutions to some of the world's largest financial and digital media organisations, typically where the business requires high volume processing of complex, business-event driven transactions. Through the combination of Microgen Aptitude (both in its native form and as the core technology platform for the Microgen Accounting Hub) and the extensive business domain knowledge of the division's consultants, MASD has extended its customer base into the treasury and retail banking sectors in addition to building on its success in the investment banking, insurance and digital media sectors. During 2011, MASD has been investing in the division's USA operation, a market that is proving to be comparatively more resilient in the economic environment, and also exploring new sectors and business opportunities where the high performance and functionality of the Microgen Aptitude technology can be deployed.

Revenue in MASD increased in the year by 28% to £21.8 million (2010: £17.0 million) and the division reported an operating profit of £4.2 million (2010: £2.6 million), an increase of 61%, while continuing to expense all research and development costs. As reported by other software companies who serve the financial services sector, MASD experienced the effect of the market deterioration in the second half of the year, with existing customers reducing their consultancy expenditure due to internal budget constraints and sales cycles extending. However, while the market remains unpredictable, the sales pipeline remains strong, with the majority of prospects having been deferred rather than lost or cancelled, and a number of these key sales opportunities have progressed subsequent to the year end.

Product developments during the year have further enhanced Microgen Aptitude's ability to deliver the market-leading levels of transaction processing performance increasingly required as the growth in transaction data volume continues and the challenge of "Big Data" is more widely recognised. (The Big Data term is currently applied to data sets whose size is beyond the ability of commonly used software tools to capture, manage, and process the data within an acceptable elapsed time.) Microgen Aptitude has been designed to address the challenges of processing exceptionally large volumes of data and complex transactions in a timescale to meet demanding operational and reporting requirements. This high performance together with the ability to integrate complex technology environments enables Microgen to successfully compete against some of the world's largest software vendors.

The continued investment in product development has also resulted in the recent launch of DBClarity Developer which, by using the same graphical user interface as Microgen Aptitude, enables business and IT users to collaboratively and rapidly define and implement SQL queries and procedures. In addition, recognising that our customers and prospects are faced with increasingly complex business processes within highly technical environments, Microgen has focused development of the core Microgen Aptitude technology on accelerating the solution design and implementation capability whilst enabling business users to be engaged in a collaborative and transparent development process. As a result a new product is anticipated to be launched in the summer to provide a 3 Dimensional Graphical User Interface that will further enhance the usability of the Microgen Aptitude technology. Microgen believes that this technology is highly innovative and will address many of the issues facing organisations seeking to automate complex, large and, often, enterprise wide processes. Microgen has filed patents in the UK and USA related to this new technology, further increasing the intellectual property protection associated with Microgen Aptitude.

MASD has continued to actively increase the proportion of software revenue and reduce the dependency on implementation consultancy. This strategy is consistent with ensuring the long term scalability of the business. Consequently, whilst the market deterioration is anticipated to result in revenue in the first half of 2012 being below that of the comparative period in 2011, the increase in the division's recurring software revenues pursuant to the above strategy provides resilience for the division's profitability.

·      Financial Systems Division ("FSD")

The Financial Systems Division has a well-established customer base with 86% (2010: 86%) of divisional revenue being derived from financial systems software. Recurring revenues account for 78% of the divisional revenue, providing good forward visibility.

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.

Benefitting from unusually strong consultancy demand and some one-off benefits, FSD's revenue increased by 2% in the year to £17.0 million (2010: £16.7 million). The division is highly profitable producing operating margins of 47% in 2011 (2010: 48%) with strong cash flow and high recurring revenues. The Board anticipates the market and business characteristics of FSD to continue in 2012 during which period it is anticipated consultancy demand will return to more normal levels.

Whilst FSD continues to review the future viability of a number of its smaller product offerings, the Group's strong balance sheet affords the division the capability to evaluate add-on acquisitions in financial back office processing to complement its current market offerings.

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 service 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, if appropriate, to integrate acquisition opportunities into the Financial Systems Division. Furthermore, the Group's significant recurring revenue base and predominantly annual licensing model provide resilience against the macro-economic environment and corresponding market uncertainty.

David Sherriff

Chief Executive Officer

MICROGEN PLC

Group Income Statement

for the year ended 31 December 2011

		Year Ended 31 Dec 2011			Year Ended 31 Dec 2010
	Notes	Before intangible amortisation	Intangible amortisation	Total	Before intangible amortisation	Intangible amortisation	Total
		£000	£000	£000	£000	£000	£000
Revenue	1	38,776	-	38,776	33,669	-	33,669
Operating costs	1	(29,177)	(117)	(29,294)	(25,576)	(255)	(25,831)
Operating profit		9,599	(117)	9,482	8,093	(255)	7,838
Finance income		258	-	258	140	-	140
Finance cost		(142)	-	(142)	(126)	-	(126)
		116	-	116	14	-	14
Profit before income tax		9,715	(117)	9,598	8,107	(255)	7,852
Income tax expense	2			(2,348)			(1,341)
Profit for the year				7,250			6,511
Earnings per share
Basic	3			8.9p			7.7p
Diluted	3			8.7p			7.5p
Dividends			Pence per share	£000		Pence per share	£000
Paid	4		3.2p	2,575		2.4p	2,084
Proposed	4		2.2p	1,791		2.1p	1,701
Special Dividend			Pence per share	£000		Pence per share	£000
Paid	4		5.0p	4,070		-	-

MICROGEN PLC

group statement of comprehensive income

For the year ended 31 December 2011

	Year ended 31 Dec 2011	Year ended 31 Dec 2010
	£000	£000
Profit for the year	7,250	6,511
Other comprehensive income
Cash flow hedges, net of tax	(367)	(36)
Currency translation difference	(142)	95
Other comprehensive income for the year, net of tax	(509)	59
Total comprehensive income for the year	6,741	6,570

MICROGEN PLC

Group Balance Sheet

For the year ended 31 December 2011

		As at 31 Dec 2011	As at 31 Dec 2010
	Notes	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		5,521	5,157
Goodwill		41,774	41,774
Intangible assets		118	235
Deferred income tax assets		1,324	1,402
		48,737	48,568
Current assets
Trade and other receivables	5	5,611	5,971
Financial assets  - derivative financial instruments		-	56
Cash and cash equivalents		26,971	25,412
		32,582	31,439
TOTAL ASSETS		81,319	80,007
LIABILITIES
Current liabilities
Financial liabilities
- borrowings associated with property		-	(370)
- derivative financial instruments		(353)	(115)
Trade and other payables	6	(19,981)	(18,205)
Current income tax liabilities		(768)	(408)
Provisions for other liabilities and charges	7	(107)	(150)
		(21,209)	(19,248)
Net current assets		11,373	12,191
Non-current liabilities
Financial liabilities - borrowings associated with property		-	(1,482)
Provisions for other liabilities and charges	7	(135)	(139)
		(135)	(1,621)
NET ASSETS		59,975	59,138
SHAREHOLDERS' EQUITY
Share capital	8	4,069	4,041
Share premium account		11,842	11,531
Capital redemption reserve		1,146	1,146
Other reserves		36,619	37,066
Retained earnings		6,299	5,354
TOTAL EQUITY		59,975	59,138

MICROGEN PLC

Group Statement of changes in shareholders' equity

for the Year Ended 31 December 2011

		Share capital £000	Share premium £000	Retained earnings £000	Capital redemption reserve £000	Other reserves £000	Total equity £000
At 1 January 2011		4,041	11,531	5,354	1,146	37,066	59,138
Profit for the year		-	-	7,250	-	-	7,250
Cash flow hedges - net fair value losses in the year		-	-	-	-	(367)	(367)
Exchange rate adjustments		-	-	(142)	-	-	(142)
Total comprehensive income for the year		-	-	7,108	-	(367)	6,741
Shares issued under share option schemes		28	311	80	-	(80)	339
Share options - value of employee service		-	-	115	-	-	115
Deferred tax on financial instruments		-	-	93	-	-	93
Deferred tax on share options		-	-	56	-	-	56
Corporation tax on share options		-	-	82	-	-	82
Share options issued from Microgen Employee Share Participation Scheme Trust		-	-	56		-	56
Dividends to equity holders of the Company		-	-	(6,645)	-	-	(6,645)
Total Contributions by and distributions to owners of the company recognised directly in equity income		28	311	(6,163)	-	(80)	(5,904)
At 31 December 2011		4,069	11,842	6,299	1,146	36,619	59,975

Group Cash Flow Statement

for the Year Ended 31 December 2011

		Year ended	Year ended
		31 Dec 2011	31 Dec 2010
	Notes	£000	£000
Cash flows from operating activities
Cash generated from operations	9	12,542	11,348
Interest paid		(156)	(94)
Income tax paid		(1,758)	(1,506)
Net cash flows generated from operating activities		10,628	9,748
Cash flows from investing activities
Proceeds from sale of investments		-	336
Purchase of property, plant and equipment		(1,171)	(586)
Interest received		186	140
Net cash used in from investing activities		(985)	(110)
Cash flows from financing activities
Net proceeds from issuance of ordinary share capital		395	285
Dividends paid to company's shareholders	4	(6,645)	(2,084)
Repayment of mortgage		(1,852)	(370)
Purchase of own shares		-	(6,288)
Net cash used in financing activities		(8,102)	(8,457)
Net increase in cash and cash equivalents		1,541	1,181
Cash, cash equivalents and bank overdrafts at beginning of year		25,412	24,178
Exchange rate gains on cash and cash equivalents		18	53
Cash and cash equivalents at end of year		26,971	25,412

Notes to the Audited preliminary results for the year ended 31 December 2011

1.     Segmental analysis

Business segments

        The Board has determined the operating segments based on the reports it receives from management to make strategic decisions. 

        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, including software based activity 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 relate to Group activities as opposed to the division or business category.

1 (a) Revenue and operating profit by division

Year ended 31 December 2011		MASD	FSD	Group	Total
		£000	£000	£000	£000
Revenue		21,799	16,977	-	38,776
Operating costs		(17,590)	(8,983)	-	(26,573)
Operating profit before Group overheads		4,209	7,994	-	12,203
Unallocated Group overheads				(2,604)	(2,604)
Operating profit before intangible amortisation					9,599
Intangible amortisation		-	(117)	-	(117)
Operating profit/(loss)		4,209	7,877	(2,604)	9,482
Net finance income					116
Profit before tax					9,598
Income tax expense					(2,348)
Profit for the year					7,250

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

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 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010
	£000	£000	£000	£000
United Kingdom and Ireland	30,876	26,848	22,434	17,398
Rest of World	7,900	6,821	16,342	16,271
	38,776	33,669	38,776	33,669

2.     Income tax expense

	Year ended	Year ended
	31 Dec 2011	31 Dec 2010
Analysis of charge in the year	£000	£000
Current tax:
- current year charge	(2,269)	(1,526)
- prior year credit	75	160
	(2,194)	(1,366)
Deferred tax:
- current year charge	(165)	(11)
- prior year credit	11	36
	(154)	25
Income tax expense	(2,348)	(1,341)

The total tax charge of £2,348,000 (2010: £1,341,000) on continuing operations represents 24.5% (2010: 17.1%) of the Group's profit before tax of £9,598,000 (2010: £7,852,000). 

After adjusting for the impact of amortisation, change in tax rates, share based payment charge and prior year tax charges, the tax charge for the year of £2,687,000 (2010: £2,221,000) represents 28.0% of the profit before intangible amortisation (2010: 27.4%), which is the tax rate used for calculating the adjusted earnings per share.

At the balance sheet date, the Group has unused tax losses of £8,518,000 (2010: £10,172,000) available to offset against future profits.  A deferred tax asset has been recognised in respect of £822,000 (2010: £1,284,000) of such losses which is the maximum the Group anticipates being able to utilise in the year ending 31 December 2012.  No deferred tax asset has been recognised in respect of the remaining £7,696,000 (2010: £8,888,000) 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 26.5% (2010: 28%) to the profit on ordinary activities before tax is as follows:

	Year ended	Year ended
	31 Dec 2011	31 Dec 2010
	£000	£000
Profit on ordinary activities before tax	9,598	7,852
Tax at the UK corporation tax rate of 26.5% (2010: 28%)	(2,543)	(2,199)
Effects of:
Adjustment to tax in respect of prior period	86	196
Adjustment in respect of foreign tax rates	39	24
Adjustment in respect of foreign exchange on intercompany balances	(126)	90
Research and development tax credit	53	-
Expenses not deductible for tax purposes
- Share based payment expenses	(1)	13
- Other	(15)	(101)
Changes in UK corporation tax rates	(97)	(30)
Movement in unrecognised losses	209	360
Utilisation of losses not previously recognised	47	306
Total taxation	(2,348)	(1,341)

3.     Earnings per share

To provide an indication of the underlying operating performance per share the adjusted profit after tax figure shown below excludes intangibles amortisation has a tax charge using the effective rate of 28.0% (2010: 27.4%).

	Year ended	Year ended
	31 Dec 2011	31 Dec 2010
	£000	£000
Profit on ordinary activities before tax and intangibles amortisation	9,715	8,107
Tax charge at a rate of 28.0% (2010: 27.4%)	(2,720)	(2,221)
Adjusted profit on ordinary activities after tax	6,995	5,886
Prior years' tax charge	86	196
Share options	(1)	13
Amortisation of intangibles net of tax	(86)	(185)
Recognition of tax losses	256	631
Change in UK Corporation tax rates	-	(30)
Profit on ordinary activities after tax	7,250	6,511

	2011 Number (thousands)	2010 Number ( thousands)
Weighted average number of shares	81,144	84,606
Effect of dilutive share options	2,205	2,014
	83,349	86,620

	2011 Basic EPS	2011 Diluted EPS
	pence	pence
Basic earnings per share	8.9	8.7
Amortisation of intangibles net of tax	0.1	0.1
Prior years' tax charge	(0.1)	(0.1)
Tax losses recognised	(0.3)	(0.3)
Adjusted earnings per share	8.6	8.4

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

4.    Dividends

	2011 pence per share	2010 pence per share	2011 £000	2010 £000
Dividends paid:
Interim dividend	1.1	0.9	874	781
Final dividend (prior year)	2.1	1.5	1,701	1,303
Special dividend	5.0	-	4,070	-
	8.2	2.4	6,645	2,084
Proposed but not recognised as a liability:
Final dividend (current year)	2.2	2.1	1,791	1,701

The proposed final dividend was approved by the Board on 24 February 2012 but was not included as a liability as at 31 December 2011, in accordance with IAS 10 'Events after the Balance Sheet date'. If approved by shareholders at the Annual General Meeting this final dividend will be payable on 11 May 2012 to shareholders on the register at the close of business on 20 April 2012.

5.     Trade and other receivables

	31 Dec 2011	31 Dec 2010
	£000	£000
Trade receivables	5,146	5,321
Less: provision for impairment of receivables	(64)	(78)
Trade receivables - net	5,082	5,243
Other receivables	42	66
Prepayments and accrued income	487	662
	5,611	5,971

6.     Trade and other payables

	31 Dec 2011	31 Dec 2010
	£000	£000
Trade payables	247	132
Other tax and social security payable	1,097	1,175
Other payables	253	157
Accruals	3,345	2,622
Deferred income	15,039	14,119
	19,981	18,205

7.     Provisions for other liabilities and charges

	Property provision
	31 Dec 2011	31 Dec 2010
	£000	£000
Group
At 1 January	289	222
Charged to income statement	55	66
Utilised	(93)	-
Reclassified to accruals	-	(4)
Foreign exchange	(9)	5
At 31 December	242	289

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

	Property provision
	31 Dec 2011	31 Dec 2010
	£000	£000
Current	107	150
Non-current	135	139
	242	289

8.     Share capital

        The movement in authorised and issued Ordinary Share Capital of 5 pence each during the year is detailed below.

	Authorised		Issued and fully paid
	Number	Amount	Number	Amount
		£000		£000
At 1 January 2011	145,000,000	7,250	80,839,259	4,041
Issued under share option schemes	-	-	556,418	28
At 31 December 2011	145,000,000	7,250	81,395,677	4,069

9.     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 2011	Year ended 31 Dec 2010
	£000	£000
Profit before tax	9,598	7,852
Adjustments for:
Depreciation	739	649
Amortisation of intangible assets	117	255
Share-based payment expense	115	215
Finance income	(258)	(140)
Finance costs	142	126
Changes in working capital:
Decrease in receivables	360	1,656
Increase in payables	1,776	668
(Decrease)/ increase in provisions	(47)	67
Cash generated from operations	12,542	11,348

(ii)   Reconciliation of Net Funds

	31 Dec 2011	31 Dec 2010
	£000	£000
Cash and cash equivalents	26,971	25,412
Borrowings	-	(1,852)
Net Funds	26,971	23,560

10.  Statement by the directors

The preliminary results for the year ended 31 December 2011 and the results for the year ended 31 December 2010 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 2010.

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 31 December 2010.  The financial information for the year ended 31 December 2010 is derived from the Annual Report delivered to the Registrar of Companies.  The Annual report and accounts for 2011 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 24 February 2012.

The Annual Report for the year ended 31 December 2011 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 Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ.

 

END

 

 

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