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REG - Microgen PLC - Interim Results <Origin Href="QuoteRef">MCGN.L</Origin> - Part 1

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RNS Number : 7887M
Microgen PLC
21 July 2014 
 
21 July 2014 
 
MICROGEN plc ('Microgen' or 'Group') 
 
INTERIM RESULTS FOR THE SIX MONTHS ENDED 
 
30 JUNE 2014 
 
Microgen reports its unaudited results for the six months ended 30 June 2014. 
 
Highlights 
 
Aptitude Software 
 
·     Satisfactory progress on strategic direction set out in 2013 Strategic
Review 
 
·     Software revenue growth of 13% to £4.5 million (H1, 2013: £4.0 million)
with overall revenue increasing to £7.6 million (H1, 2013: £7.4 million) 
 
·     Increase in sales activity with paid proof of concept and scoping
exercises underway in the telecommunications and other sectors 
 
Financial Systems 
 
·     Substantial increase in ROCE following capital restructuring in 2013
Strategic Review 
 
·     Consolidation of minor product lines into Application Management group 
 
·     Revenue of £7.2 million (H1, 2013: £7.6 million) in line with Board
expectations 
 
·     Operating margin 50% (H1, 2013: 54%) 
 
Group 
 
·     Strong balance sheet with cash of £37.9 million (H1, 2013: £26.8
million) and net funds of £20.2 million (H1, 2013: £26.8 million) following
the return of £12.5 million in the last twelve months to shareholders by way
of tender offer and dividends 
 
·     Group adjusted operating profit reduced to £3.7 million (H1, 2013: £4.4
million)* in line with investment strategy in the Aptitude Software business.
Group operating profit on a statutory basis of £3.3 million (H1, 2013: £4.4
million) 
 
·     Basic earnings per share 3.2 pence (H1, 2013: 4.2 pence) 
 
·     Interim dividend of 1.1 pence per share (2013: 1.1 pence per share) 
 
Contacts 
 
Martyn Ratcliffe, Chairman                                                    
     020-7496-8100 
 
Philip Wood, Group Finance Director 
 
Lucy Delaney, FTI Consulting                                                  
  020-3727-1131 
 
* Throughout this statement adjusted operating profit and margin excludes
exceptional and other items, unless stated to the contrary. 
 
The Group reports satisfactory progress on the strategic direction set out in
the review which was completed in October 2013 ("Strategic Review"). The
Strategic Review detailed that the Group strategy is to "Acquire, Enhance and
Realise Value" for Microgen shareholders. As a result Microgen plc is now the
corporate parent of technology businesses operated as independent business
units. Pursuant to the Strategic Review, investment has been significantly
increased in the Aptitude Software business in order to pursue the developing
Big Data opportunity. In parallel, the Financial Systems business is focussing
resources on the wealth management sector and reported a substantial increase
in return on capital employed ("ROCE") following the change in capital
structure. 
 
Microgen maintains a strong balance sheet with significant cash resources,
after returning £12.5 million of cash to shareholders in the last twelve
months by way of tender offer and dividends. The interim dividend is
maintained at 1.1 pence per share (2013: 1.1 pence). The interim dividend will
be payable on 22 August 2014 to shareholders on the register at the close of
business on 1 August 2014. 
 
Aptitude Software Report 
 
Benefitting from the previously announced new European and North American
clients, software revenue has increased by 13% to £4.5 million (H1, 2013: £4.0
million) with recurring revenue now representing 55% of total revenue (H1,
2013: 54%). Overall revenue increased to £7.6 million (H1, 2013: £7.4
million). The increased investment in the business pursuant to the Strategic
Review has led to operating margins being lowered to 11% (H1, 2013: 20%)
delivering an operating profit of £0.8 million (H1, 2013: £1.5 million). 
 
There have been a number of important product developments in the period with
the latest version of the Aptitude software being launched in April 2014 in
line with the timetable set out in the Strategic Review. This release provided
Aptitude customers with the ability to incorporate Hadoop into Aptitude-based
Big Data solutions, consistent with the Aptitude multi-platform product
strategy. Following the release in January of the Aptitude Allocation Engine
the business further announced, in May, the Aptitude Revenue Recognition
Engine which provides a solution to the new IFRS 15 accounting requirements
which apply to a number of industry sectors including telecommunications.
Benefitting from these product developments and the investments made in direct
sales and partnerships, sales activity has increased with a number of
opportunities well advanced with paid proof of concept and scoping exercises
underway in the telecommunication and other sectors. 
 
Tangible results from the Aptitude investment programme will take time and in
the short term will be partially offset by the conclusion of the legacy OST-BR
transition programme.  Nevertheless, the new European and North American
clients, together with the sales and product development activities, continue
to provide exciting opportunities for the future. 
 
Financial Systems Report 
 
Revenue from wealth management products of £3.9 million (H1, 2013: £3.9
million) represents 54% (H1, 2013: 52%) of Financial Systems revenue. The
wealth management product for trust and fund administration, 5Series,
continues to be well received by the market with a number of new business
wins. Revenue from the payment software products remains stable whilst the
Application Management business, now incorporating the minor financial
services product categories, continued to decline as anticipated. Overall
reported revenue was £7.2 million (H1, 2013: £7.6 million), in line with the
Board's expectations. 
 
The Financial Systems business continues to report strong operating profits of
£3.6 million (H1, 2013: £4.1 million) representing an operating margin of 50%
in 2013 (H1, 2013: 54%). The reduction is due to the decline in the
Application Management business and the effect of some previous
corporate/central costs having been transferred into the business operations
in accordance with the Group strategy of independent business units. 
 
Following the capital reorganisation of the Financial Systems business last
year, the six month Return on Capital Employed ("ROCE") for H1 2014 increased
to 24% (H1, 2013: 10%). For the purposes of calculating ROCE, capital is
defined as being the average of the consolidated net assets of the business at
the beginning and end of each period. The interest cost in the period was £0.3
million (H1, 2013: £nil). The loan outstanding at 30 June 2014 was £17.8
million (H1, 2013: £nil). 
 
In pursuing the major strategic objective of the business, namely to increase
the proportion of revenues generated from the wealth management sector, the
business is progressing a number of add-on acquisitions. However, the Board
remains prudent and there can be no certainty that any acquisitions will be
completed in the near future. 
 
Group Activities 
 
Microgen continues to identify and appraise technology businesses and
strategic investments which the Board believes, based on the Group's
capabilities, may benefit from being operated as a business unit under
Microgen's stewardship. The businesses and investments evaluated to date have
been predominantly UK based across a broad technology spectrum. The Group's
balance sheet, with cash of £37.9 million at 30 June 2014 (H1, 2013: £26.8
million) and net funds of £20.2 million (H1, 2013: £26.8 million), provides
the Group with the cash resources to be a credible acquirer. However, the
Board will maintain its prudent approach and there can be no certainty that
any acquisition will be completed. 
 
Group Financial Performance 
 
Aggregating the business units, revenue for the six months ending 30 June 2014
was £14.7 million (H1, 2013: £14.9 million). Including Group costs of £0.8
million (H1, 2013: £1.1 million), adjusted operating profit was in line with
expectations at £3.7 million (H1, 2013: £4.4 million). Whilst the majority of
the Group's revenue is invoiced in Pounds Sterling, the Group has revenue
exposure to US Dollars and South African Rand. Relative to the first half of
2013, due to the strengthening of Sterling, the Group had a negative revenue
variance of £0.3 million and a net negative profit impact of £0.1 million. 
 
Operating profit on a statutory basis was £3.3 million (H1, 2013: £4.4
million). The Group reported a profit for the period attributable to equity
shareholders of £2.4 million (H1, 2013: £3.5 million). In accordance with
IFRS, the Board has continued to determine that all internal research and
development costs are expensed as incurred and therefore the Group has no
capitalisation of development expenditure. 
 
A profit and loss charge of £0.4 million was incurred in the period in respect
of options approved by shareholders in November 2013. This cost is included in
'exceptional and other items'. The total tax charge of £0.7 million (H1, 2013:
£1.0 million) represents 21.5% of the Group's profit before tax (H1, 2013:
23.0%). 
 
The Group continues to have a strong balance sheet with net assets at 30 June
2014 of £55.5 million (H1, 2013: £62.2 million), including cash at 30 June
2014 of £37.9 million (H1, 2013: £26.8 million), and net funds at 30 June 2014
of £20.2 million (H1, 2013: £26.8 million) following the return of £12.5
million in the last twelve months to shareholders by way of tender offer and
dividends. 
 
Statement on Principal Risks and Uncertainties 
 
Pursuant to the requirements of the Disclosure and Transparency Rules the
Group provides the following information on its principal risks and
uncertainties.  The Group considers strategic, operational and financial risks
and identifies actions to mitigate those risks.  These risk profiles are
updated at least annually.  The principal risks and uncertainties detailed
within the Group's 2013 Annual Report remain applicable for the first six
months of the financial year.  The Group's 2013 Annual Report is available
from the Microgen website: www.microgen.com. 
 
Related party transactions during the period are disclosed in Note 14. 
 
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT 
 
For the six months ended 30 June 2014 
 
                                 Unaudited six months ended 30 Jun 2014    Unaudited six months ended 30 Jun 2013    Audited year ended 31 Dec 2013  
                           Note  Beforeexceptional and other items         Exceptional and other items               Total                             Beforeexceptional and other items    Exceptional and other items    Total       Beforeexceptional and other items    Exceptional and other items    Total     
                                 £000                                      £000                                      £000                              £000                                 £000                           £000        £000                                 £000                           £000      
 Revenue                   5     14,711                                    -                                         14,711                            14,945                               -                              14,945      29,824                               -                              29,824    
 Operating costs                 (11,014)                                  (427)                                     (11,441)                          (10,502)                             -                              (10,502)    (20,755)                             (381)                          (21,136)  
 Operating profit          5     3,697                                     (427)                                     3,270                             4,443                                -                              4,443       9,069                                (381)                          8,688     
 Finance income            5     82                                        -                                         82                                67                                   -                              67          119                                  -                              119       
 Finance costs             5     (304)                                     -                                         (304)                             -                                    -                              -           (119)                                -                              (119)     
 Profit before income tax        3,475                                     (427)                                     3,048                             4,510                                -                              4,510       9,069                                (381)                          8,688     
 Income tax expense        5/6                                                                                       (656)                                                                                                 (1,037)                                                                         (2,250)   
 Profit for the period                                                                                               2,392                                                                                                 3,473                                                                           6,438     
                                                                                                                                                                                                                                                                                                                     
 Earnings per share                                                                                                                                                                                                                                                                                                  
 Basic                     7                                                                                         3.2p                                                                                                  4.2p                                                                            7.9p      
 Diluted                   7                                                                                         3.0p                                                                                                  4.2p                                                                            7.7p      
                                                                                                                                                                                                                                                                                                                     
 
 
4.2p 
 
7.7p 
 
All results derive from continuing operations. 
 
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME 
 
For the six months ended 30 June 2014 
 
                                                                  Unauditedsix monthsended    Unauditedsix monthsended    Auditedyearended  
                                                                  30 Jun 2014                 30 Jun 2013                 31 Dec 2013       
                                                                  £000                        £000                        £000              
                                                                                                                                            
 Profit for the period                                            2,392                       3,473                       6,438             
 Other comprehensive income                                                                                                                 
 Items that may subsequentlybe reclassified to profit or loss:                                                                              
 Fair value loss on hedged financial instruments                  (69)                        (71)                        (7)               
 Currency translation difference                                  (32)                        (23)                        75                
 Other comprehensive income for the period, net of tax            (101)                       (94)                        68                
 Total comprehensive income for the period                        2,291                       3,379                       6,506             
 
 
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET 
 
As at 30 June 2014 
 
                                                      Note  Unauditedas at30 Jun 2014    Unauditedas at30 Jun 2013    Auditedas at31 Dec 2013  
 ASSETS                                                     £000                         £000                         £000                     
 Non-current assets                                                                                                                            
 Property, plant and equipment                        10    4,964                        5,277                        5,022                    
 Goodwill                                                   41,774                       41,774                       41,774                   
 Deferred income tax assets                                 742                          1,016                        752                      
                                                            47,480                       48,067                       47,548                   
 Current assets                                                                                                                                
 Trade and other receivables                                3,308                        4,178                        5,049                    
 Current income tax assets                                  30                           159                          -                        
 Financial assets - derivative financial instruments        104                          51                           94                       
 Cash and cash equivalents                                  37,923                       26,783                       40,200                   
                                                            41,365                       31,171                       45,343                   
 Total assets                                               88,845                       79,238                       92,891                   
                                                                                                                                               
 LIABILITIES                                                                                                                                   
 Current liabilities                                                                                                                           
 Financial liabilities                                                                                                                         
 - borrowings                                         11    (3,000)                      -                            (3,000)                  
 - derivative financial instruments                         (125)                        (67)                         (47)                     
 Trade and other payables                                   (14,415)                     (15,416)                     (18,186)                 
 Current income tax liabilities                             (767)                        (1,305)                      (701)                    
 Provisions for other liabilities and charges         12    (32)                         (38)                         (33)                     
                                                            (18,339)                     (16,826)                     (21,967)                 
 Net current assets                                         23,026                       14,345                       23,376                   
                                                                                                                                               
 Non-current liabilities                                                                                                                       
 Financial liabilities - borrowings                   11    (14,750)                     -                            (16,250)                 
 Provisions for other liabilities and charges         12    (266)                        (255)                        (269)                    
                                                            (15,016)                     (255)                        (16,519)                 
 NET ASSETS                                                 55,490                       62,157                       54,405                   
                                                                                                                                               
 SHAREHOLDERS' EQUITY                                                                                                                          
 Share capital                                        13    3,727                        4,129                        3,724                    
 Share premium account                                13    12,040                       12,015                       12,037                   
 Capital redemption reserve                                 1,558                        1,152                        1,558                    
 Other reserves                                             36,952                       36,957                       37,021                   
 Retained earnings                                          1,213                        7,904                        65                       
 TOTAL EQUITY                                               55,490                       62,157                       54,405                   
                                                                                                                                               
 
 
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY 
 
For the six months ended 30 June 2014 
 
                                                                                                      Share capital  Sharepremium account  Retainedearnings  Capitalredemptionreserve  Otherreserves  Total    
                                                                                                      £000           £000                  £000              £000                      £000           £000     
                                                                                                                                                                                                               
 Balance at 1 January 2014                                                                            3,724          12,037                65                1,558                     37,021         54,405   
 Comprehensive income                                                                                                                                                                                          
 Profit for the period                                                                                -              -                     2,392             -                         -              2,392    
 Cash flow hedges - net fair value losses                                                             -              -                     -                 -                         (69)           (69)     
 Exchange rate adjustments                                                                            -              -                     (32)              -                         -              (32)     
 Total comprehensive income for the period                                                            -              -                     2,360             -                         (69)           2,291    
 Shares issued under share option schemes                                                             3              3                     -                 -                         -              6        
 Share options - value of employee service                                                            -              -                     427               -                         -              427      
 Dividends to equity holders of the company                                                           -              -                     (1,639)           -                         -              (1,639)  
 Total contributions by and distributions to owners of the company recognised directly into equity    3              3                     (1,212)           -                         -              (1,206)  
 Balance at 30 June 2014(unaudited)                                                                   3,727          12,040                1,213             1,558                     36,952         55,490   
                                                                                                                                                                                                               
 
 
                                                                                                      Share capital  Sharepremium account  Retainedearnings  Capitalredemptionreserve  Otherreserves  Total    
                                                                                                      £000           £000                  £000              £000                      £000           £000     
                                                                                                                                                                                                               
 Balance at 1 January 2013                                                                            4,078          11,885                10,529            1,152                     37,028         64,672   
 Comprehensive income                                                                                                                                                                                          
 Profit for the period                                                                                -              -                     3,473             -                         -              3,473    
 Cash flow hedges - net fair value losses                                                             -              -                     -                 -                         (71)           (71)     
 Exchange rate adjustments                                                                            -              -                     (23)              -                         -              (23)     
 Total comprehensive income for the period                                                            -              -                     3,450             -                         (71)           3,379    
 Shares issued under share option schemes                                                             51             130                   -                 -                         -              181      
 Share options - value of employee service                                                            -              -                     33                -                         -              33       
 Dividends to equity holders of the company                                                           -              -                     (6,108)           -                         -              (6,108)  
 Total contributions by and distributions to owners of the company recognised directly into equity    51             130                   (6,075)           -                         -              (5,894)  
 Balance at 30 June 2013(unaudited)                                                                   4,129          12,015                7,904             1,152                     36,957         62,157   
 
 
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW 
 
For the six months ended 30 June 2014 
 
                                                                          Unauditedas at30 Jun 2014    Unauditedas at30 Jun 2013    Auditedas at31 Dec 2013  
                                                                    Note  £000                         £000                         £000                     
 Cash flows from operating activities                                                                                                                        
 Cash generated from operations                                     8     2,037                        1,416                        8,103                    
 Interest paid                                                            (304)                        -                            (119)                    
 Income tax paid                                                          (630)                        (633)                        (1,728)                  
 Net cash flows generated from operating activities                       1,103                        783                          6,256                    
                                                                                                                                                             
 Cash flows from investing activities                                                                                                                        
 Purchase of property, plant and equipment                          10    (336)                        (282)                        (427)                    
 Interest received                                                        82                           67                           119                      
 Net cash used in  investing activities                                   (254)                        (215)                        (308)                    
                                                                                                                                                             
 Cash flows from financing activities                                                                                                                        
 Proceeds from bank loan                                                  -                            -                            20,000                   
 Net proceeds from issuance of ordinary shares                      13    6                            181                          204                      
 Dividends paid to company's shareholders                           9     (1,639)                      (6,108)                      (7,016)                  
 Repayments of loan                                                       (1,500)                      -                            (750)                    
 Purchase of own shares                                                   -                            -                            (10,269)                 
 Net cash (used in)/ generated from financing activities                  (3,133)                      (5,927)                      2,169                    
                                                                                                                                                             
 Net (decrease)/ increase in cash and cash equivalents                    (2,284)                      (5,359)                      8,117                    
                                                                                                                                                             
 Cash, cash equivalents and bank overdrafts at beginning of period        40,200                       32,134                       32,134                   
 Exchange rate gains/ (losses) on cash and cash equivalents               7                            8                            (51)                     
 Cash and cash equivalents at end of period                               37,923                       26,783                       40,200                   
 
 
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 
 
1.         General information 
 
Microgen plc (the 'Company') and its subsidiaries (together, the 'Group')
provide software and services to the global financial services, digital media
and commercial sectors. 
 
The Company is a public limited company incorporated and domiciled in England
and Wales with a primary listing on the London Stock Exchange. The address of
its registered office is Old Change House, 128 Queen Victoria Street, London,
England, EC4V 4BJ. 
 
These condensed consolidated interim financial statements were approved for
issue on 18 July 2014. 
 
These condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2013 were approved by
the Board of directors on 25 February 2014 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006. 
 
These condensed consolidated interim financial statements have been reviewed,
not audited. 
 
2.         Basis of preparation 
 
These condensed consolidated interim financial statements for the six months
ended 30 June 2014 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS 34,
'Interim financial reporting' as adopted by the European Union. These
condensed consolidated interim financial statements should be read in
conjunction with the annual financial statements for the year ended 31
December 2013, which have been prepared in accordance with IFRSs as adopted by
the European Union. 
 
After making enquiries, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. The Group therefore continues to adopt the going concern
basis in preparing its condensed consolidated interim financial statements. 
 
3.         Accounting policies 
 
The accounting policies adopted are consistent with those of the previous
financial statements, except as described below. 
 
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual profits. 
 
New and amended standards and interpretations need to be adopted in the first
interim financial statements issued after their effective date. There are no
new IFRSs or IFRS ICs that are effective for the first time for this interim
period that would be expected to have a material impact on the group. 
 
4.         Estimates 
 
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expense. Actual results may differ from these estimates. 
 
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements for the year ended 31
December 2013, with the exception of changes in estimates that are required in
determining the provision for income taxes. 
 
5.         Segmental information 
 
The Board of Microgen plc (the "Board") has been identified as the chief
operating decision maker of Microgen. Management has determined the operating
segments of the group based on the reports provided to the Board of Microgen
plc. 
 
                                                      Unaudited six months ended 30 Jun 2014  
                                                                                              AptitudeSoftware    FinancialSystems    Group      Total     
                                                                                              £000                £000                £000       £000      
                                                                                                                                                           
 Revenue                                                                                      7,560               7,151               -          14,711    
 Operating costs                                                                              (6,722)             (3,541)             -          (10,263)  
                                                                                                                                                           
 Operating profit before group overheads                                                      838                 3,610               -          4,448     
                                                                                                                                                           
 Unallocated group overheads                                                                                                          (751)      (751)     
                                                                                                                                                           
 Operating profit before exceptional and other items                                                                                             3,697     
                                                                                                                                                           
 Exceptional and other items                                                                  -                   -                   (427)      (427)     
                                                                                                                                                           
 Operating profit/ (loss)                                                                     838                 3,610               (1,178)    3,270     
                                                                                                                                                           
 Finance income                                                                                                                                  82        
 Finance costs                                                                                                                                   (304)     
                                                                                                                                                           
 Profit before tax                                                                                                                               3,048     
                                                                                                                                                           
 Income tax expense                                                                                                                              (656)     
                                                                                                                                                           
 Profit for the period                                                                                                                           2,392     
                                                                                                                                                           
 
 
5.         Segmental information (continued) 
 
                                            Unaudited six months ended 30 Jun 2013  
                                            AptitudeSoftware                          FinancialSystems    Group      Total    
                                            £000                                      £000                £000       £000     
                                                                                                                              
 Revenue                                    7,376                                     7,569               -          14,945   
 Operating costs                            (5,871)                                   (3,498)             -          (9,369)  
                                                                                                                              
 Operating profit before group overheads    1,505                                     4,071               -          5,576    
                                                                                                                              
 Unallocated group overheads                                                                              (1,133)    (1,133)  
                                                                                                                              
 Operating profit/ (loss)                   1,505                                     4,071               (1,133)    4,443    
                                                                                                                              
 Finance income                                                                                                      67       
                                                                                                                              
 Profit before tax                                                                                                   4,510    
                                                                                                                              
 Income tax expense                                                                                                  (1,037)  
                                                                                                                              
 Profit for the period                                                                                               3,473    
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                                
 
 
5.         Segmental information (continued) 
 
                                                        Audited year ended 31 Dec 2013  
                                                        AptitudeSoftware                  FinancialSystems    Group      Total     
                                                        £000                              £000                £000       £000      
                                                                                                                                   
 Revenue                                                14,676                            15,148              -          29,824    
 Operating costs                                        (11,839)                          (7,042)             -          (18,881)  
                                                                                                                                   
 Operating profit before group overheads                2,837                             8,106               -          10,943    
                                                                                                                                   
 Unallocated group overheads                                                                                  (1,874)    (1,874)   
                                                                                                                                   
 Operating profit before exceptional and other items                                                                     9,069     
                                                                                                                                   
 Exceptional and other items                            -                                 (285)               (96)       (381)     
                                                                                                                                   
 Operating profit/ (loss)                               2,837                             7,821               (1,970)    8,688     
                                                                                                                                   
 Finance income                                                                                                          119       
 Finance costs                                                                                                           (119)     
                                                                                                                                   
 Profit before tax                                                                                                       8,688     
                                                                                                                                   
 Income tax expense                                                                                                      (2,250)   
                                                                                                                                   
 Profit for the year                                                                                                     6,438     
 
 
6.         Income tax expense 
 
Income tax expense is recognised based on management's estimate of the
weighted average income tax rate expected for the full financial year of 21.5%
(the estimated tax rate for the six months ended 30 June 2013 was 23%). 
 
7.         Earnings per share 
 
                                Unauditedsix monthsended30 Jun 2014    Unauditedsix monthsended30 Jun 2013    Auditedyear ended31 Dec2013  
                                pence                                  pence                                  Pence                        
                                                                                                                                           
 Earnings per share                                                                                                                        
 Basic                          3.2                                    4.2                                    7.9                          
                                                                                                                                           
 Diluted                        3.0                                    4.2                                    7.7                          
                                                                                                                                           
 Adjusted earnings per share                                                                                                               
 Basic                          3.6                                    4.2                                    8.3                          
                                                                                                                                           
 Diluted                        3.4                                    4.2                                    8.1                          
 
 
To provide an indication of the underlying operating performance the adjusted
earnings per share calculation above excludes intangible amortisation and
exceptional and other items, and has a tax charge based on the effective
rate. 
 
                                                               Unauditedsix monthsended30 Jun 2014    Unauditedsix monthsended30 Jun 2013    Auditedyear ended31 Dec 2013  
                                                               pence                                  pence                                  pence                         
                                                                                                                                                                           
 Basic earnings per share                                      3.2                                    4.2                                    7.9                           
 Prior years' tax charge                                       -                                      -                                      0.1                           
 Exceptional and other items net of tax                        0.4                                    -                                      0.3                           
 Foreign exchange gains on intercompany balances tax charge    -                                      -                                      0.1                           
 Tax losses recognised                                         -                                      -                                      (0.1)                         
                                                                                                                                                                           
 Adjusted earnings per share                                   3.6                                    4.2                                    8.3                           
 
 
8.         Cash generated from operations 
 
                                        Unauditedsix monthsended30 Jun 2014    Unauditedsix monthsended30 Jun 2013    Auditedyear ended31 Dec 2013  
                                        £000                                   £000                                   £000                          
                                                                                                                                                    
 Profit before tax                      3,048                                  4,510                                  8,688                         
 Adjustments for:                                                                                                                                   
 Depreciation                           374                                    389                                    790                           
 Loss on disposal of fixed assets       -                                      -                                      9                             
 Share-based payment expense            427                                    33                                     157                           
 Finance income                         (82)                                   (67)                                   (119)                         
 Finance cost                           304                                    -                                      119                           
                                                                                                                                                    
 Changes in working capital:                                                                                                                        
 Decrease/ (increase) in receivables    1,741                                  (1,015)                                (1,886)                       
 (Decrease)/ increase in payables       (3,771)                                (2,429)                                341                           
 (Decrease)/ increase in provisions     (4)                                    (5)                                    4                             
                                                                                                                                                    
 Cash generated from operations         2,037                                  1,416                                  8,103                         
 
 
9.         Dividends 
 
The interim dividend of 1.1 pence per share (2013: 1.1 pence per share) was
approved by the Board on 18 July 2014. It is payable on 22 August 2014 to
shareholders on the register at 1 August 2014. 
 
This interim dividend, amounting to £820,000 (2013: £908,000), has not been
included as a liability in this interim financial information.  It will be
recognised in shareholders' equity in the year to 31 December 2014. 
 
The dividend that relates to the period to 31 December 2013 and that amounted
to £1,639,000 (2012: final dividend £1,816,000 and special dividend of
£4,292,000) was paid in May 2014. 
 
10.       Property, plant and equipment 
 
 Six months ended 30 June 2014                           Property, plant and equipment  
                                                         £000                           
 Opening net book amount as at 1 January 2014            5,022                          
 Additions                                               336                            
 Exchange movements                                      (20)                           
 Depreciation                                            (374)                          
 Closing net book amount as at 30 June 2014 (unaudited)  4,964                          
                                                                                        
 Six months ended 30 June 2013                           Property, plant and equipment  
                                                         £000                           
 Opening net book amount as at 1 January 2013            5,391                          
 Additions                                               282                            
 Exchange movements                                      (7)                            
 Depreciation                                            (389)                          
 Closing net book amount as at 30 June 2013 (unaudited)  5,277                          
 
 
The Group has not placed contracts for any future capital expenditure which
has not been provided for in the financial statements. 
 
11.       Financial liabilities 
 
                                                                                                                          
                                                                                     Unauditedsix monthsended30 Jun 2014    
                                                                                     £000                                   
 At 1 January                                                                        19,250                                 
 Loan repayments                                                                     (1,500)                                
                                                                                                                            
 At 30 June                                                                          17,750                                 
                                                                                                                            
 The borrowings are repayable as follows:                                                                                   
 Within one year                                                                     3,000                                  
 In the second year                                                                  3,000                                  
 In the third to fifth year inclusive                                                11,750                                 
                                                                                     17,750                                 
 Less: Amount due for settlement with 12 months (shown under current liabilities)    (3,000)                                
 Amount due for settlement after 12 months                                           14,750                                 
 
 
14,750 
 
11.       Financial liabilities (continued) 
 
On 28 October 2013 Microgen Financial Systems Limited, a wholly owned
subsidiary of Microgen plc, entered into a loan agreement with Royal Bank of
Scotland plc for £20,000,000. The loan is secured solely against the assets of
the Financial Systems operating business of the Group. Operating covenants are
limited to the performance of the Financial Systems business only and are
based on net debt leverage, interest cover and a minimum cash balance of
£3,000,000 held within the Financial Systems business. In the event of a
default of the loan, Microgen plc has the option, but not the obligation, to
remedy. The loan is repayable over five years with an annual capital repayment
of £3,000,000 and a final repayment of £5,000,000 on the fifth anniversary of
the loan agreement. The loan is denominated in Pound Sterling and carries
interest at LIBOR plus 1.75%. The Group entered into an interest swap on 28
October 2013, effectively fixing the interest rate at 3.24% over the five year
period. 
 
12.       Provisions for other liabilities and charges 
 
                     Unauditedsix monthsended30 Jun 2014    Unauditedsix monthsended30 Jun 2013  
                     £000                                   £000                                 
 At 1 January        302                                    298                                  
 Foreign exchange    (4)                                    (5)                                  
                                                                                                 
 At 30 June       

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