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

Aptitude SoftwareAnnouncement

25/02/2015 07:11

RNS Number : 7775F
Microgen PLC
25 February 2015
25 February 2015
MICROGEN plc ("Microgen")
Audited Preliminary Results for the Year Ended
31 December 2014
Microgen reports its audited preliminary results for the year ended 31 December 2014.
Summary
Group
 Proposed return of approximately 20 million in cash to shareholders (equivalent to 27 pence per share), subject to shareholder approval.
 Cash of 40.9 million (2013: 40.2 million). Net funds of 24.6 million (2013: 20.9 million).
 Adjusted earnings per share 7.2 pence (2013: 8.3 pence) in accordance with defined strategy and Board expectations. Basic earnings per share 5.5 pence (2013: 7.9 pence).
 Proposed final dividend of 2.2 pence per share (2013: 2.2 pence) representing a full year dividend of 3.3 pence (2013: 3.3 pence in addition to a special dividend of 5.2 pence). 
Aptitude Software
 Continued progress on strategic objectives.
 Software revenue growth of 12% to 8.8 million (2013: 7.9 million) with overall revenue increasing to 15.4 million (2013: 14.7 million). 
 Contract with top tier North American telecommunications company opens new sector.
Financial Systems
 Acquisition of Jersey-based provider of wealth management software for the offshore finance industry completed in December 2014. 
 Substantial increase in ROCE to 42% (2013: 30%) following capital restructuring in 2013.
 Overall revenue of 14.4 million (2013: 15.1 million) in line with Board expectations. 
 Operating margin 49% (2013: 52%)
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 non-underlying operating costs, unless stated to the contrary. Further detail in respect of the non-underlying operating costs can be found within note 2 of this statement.


MICROGEN plc ("Microgen")
Audited Preliminary Results for the Year ended 31 December 2014
Chairman's Statement
The Group reports results in line with the Board's expectations together with satisfactory progress by the Group's two operating businesses on their strategic plans. With continued strong cash generation and very high cash balances, the Board has decided to return a further 20 million to shareholders. Since the cash return programme was started in October 2008, upon approval/completion of this capital distribution, Microgen will have returned a total of 70 million to shareholders by a variety of mechanisms representing 190% of the October 2008 market capitalisation. 
In accordance with the strategy for the Aptitude Software business, investment was significantly increased during the course of 2014 in order to pursue the evolving Big Data opportunity. Product investments included new applications and Hadoop capability while sales and marketing infrastructure was increased in both the UK and the USA. Benefitting from this investment, Aptitude broadened its market penetration into the telecoms sector with a large North American telecommunications company contracting for the Aptitude Accounting Hub and, subsequent to the year end, the Aptitude Revenue Recognition Engine. 
The Financial Systems business focussed its resources on the wealth management sector in line with its defined strategic objectives. The business continues to experience good demand for Microgen 5Series, its leading wealth management product for trust and fund administration, signing 10 contracts with new customers in 2014. Furthermore, towards the end of the year, the business extended its presence in the sector through the acquisition of Unity Software Limited, a Jersey-based provider of similar wealth management software. The business also maintained its position within the payments market whilst the applications management operations declined in line with management expectations. Overall, Financial Systems delivered a substantial increase in return on capital employed following the change in capital structure in 2013. 
The Board is recommending a final dividend of 2.2 pence per share (2013: 2.2 pence) representing a full year dividend of 3.3 pence (2013: 3.3 pence in addition to a special dividend of 5.2 pence). Subject to shareholder approval, the proposed final dividend will be payable on 15 June 2015 to shareholders on the register at the close of business on 14 May 2015.
Capital Return
At 31 December 2014, the Group had gross cash of 40.9 million (2013: 40.2 million) and net funds of 24.6 million (2013: 20.9 million). During 2014, in addition to the add-on acquisition completed in the Financial Systems business, a number of potential larger opportunities were evaluated. However, while the Board continues to evaluate add-on acquisitions, in the current market environment it is not anticipated that attractive larger opportunities to deploy the Group's substantial cash resources will arise in the immediate future. Furthermore, as a company listed on the main market of the London Stock Exchange, the UKLA class tests mean that any material transaction is likely to require shareholder approval and the Board now consider that, if required, it would be more appropriate to raise funds for major acquisitions at that time. 
As a result, the Board is proposing to return to shareholders approximately 20 million in cash, equivalent to 27 pence per share, ("Return of Value") by way of a B and C share scheme ("Scheme"). The Scheme provides shareholders (other than certain overseas shareholders) with a choice of receiving the cash in the form of income or capital provided that the Return of Value is completed prior to 6 April 2015. The Return of Value will be accompanied by a proportional share consolidation to maintain broad comparability of the share price and return per share of the ordinary shares before and after the creation of the B and C shares. An announcement providing further details of the Return of Value has been released today and a circular will be sent to shareholders shortly outlining the terms of the return. It is anticipated that the Return of Value will be completed by 1 April 2015.  
Board Succession
In October 2015 Peter Bertram will have completed nine years' service as a non-executive Director and will therefore be retiring from the Board at the Annual General Meeting ("AGM") in 2016. A new non-executive director to chair the Audit Committee will be appointed in due course. Mr Bertram will be standing for re-election at the AGM in 2015 and this will be for the one year period.
Martyn Ratcliffe has advised the Board that, following the further substantial return of cash proposed to shareholders and with the strategies and management of the two operating businesses now well established, he will be retiring from the Board by the end of the year. Mr Ratcliffe has been chairman of Microgen for 16 years and wishes to pursue a new challenge. Over the coming months, the Board will consider appropriate succession to enable a smooth transition later in the year.
Martyn Ratcliffe
Chairman


Aptitude Software Report
The Aptitude Software business provides an enterprise level Application Platform to deliver solutions, typically where customers require very rapid processing of very high volume (often referred to as "Big Data") complex, business event-driven transactions. The Aptitude software continues to be developed at the Aptitude Technology Centre in Wroclaw, Poland. The business generates revenue from this software through a combination of licence fees (primarily annual recurring licences), software maintenance/support and professional services. 
The Board's objective of increasing software revenue, both in absolute terms and as a proportion of revenue, is the leading performance metric for the business. Aptitude's software revenue increased in 2014 by 12% to 8.8 million (2013: 7.9 million). (Software revenue includes annual and initial licence fees, software maintenance and support). Services revenue, the growth of which is not a strategic objective, was 6.6 million (2013: 6.8 million). This includes 0.6 million (2013: 0.1 million) of revenue generated by Aptitude Software's recently established application development team based at the Aptitude Technology Centre in Wroclaw, Poland. This application development team enables Microgen to provide a broader and lower-cost resource pool facilitating the increased adoption of the Aptitude software.
Overall revenue increased to 15.4 million (2013: 14.7 million). Whilst the majority of revenues are invoiced in Pounds Sterling, the Aptitude Software business does have exposure to US Dollars and due to the exchange rate volatility during 2014, this had a negative revenue variance of 0.2 million compared to the prior year. The strategic investment programme in the Aptitude business has led to operating margins being lowered to 8% (2013: 19%) delivering an operating profit of 1.2 million (2013: 2.8 million); both parameters are in line with management expectations and consistent with the defined strategy.
During the course of 2014 the business signed seven software contracts with new and existing customers. These included a strategic entry into the telecommunications sector with a contract for the Aptitude Accounting Hub, anticipated to generate revenues in excess of $5 million over its expected term and, subsequent to the year end, a further contract for the Aptitude Revenue Recognition Engine, an Aptitude-based finance application which addresses the new IFRS 15 accounting requirement. 
Since the 2013 strategic review, investment has also been increased in product development and the latest version of the Aptitude technology platform, released in October 2014, further extends the Aptitude Big Data processing capabilities enabling users to build data-driven applications deploying Aptitude's in-memory, in-database and in-Hadoop processing. In addition, three Aptitude-based applications were released in 2014: Aptitude Allocation Engine currently being implemented by a major financial services client; Aptitude Revenue Recognition Engine with a charter client contracted; and the Compact Edition of the Aptitude Accounting Hub, a pre-configured Aptitude-based divisional accounting hub and sub-ledger. Pursuant to the increased product investment, research and development has increased to 4.3 million (2013: 3.5 million). All research and development costs are expensed as incurred.
In summary, while the full benefits of the Aptitude investment programme will take time, good strategic progress was achieved in 2014 and operating performance was in line with management expectations. 
Tom Crawford
Managing Director, Aptitude Software


Financial Systems Report
The Financial Systems business has a well-established customer base with an increasing focus on the wealth management sector. Revenues are generated through a combination of software licence fees (primarily annual recurring licences), software maintenance/support and professional services. The strategy of the business is to increase the proportion of revenue derived from the wealth management sector through both organic growth and add-on acquisitions while continuing to explore opportunities in other financial services sectors.
Revenue from wealth management products represents 55% (2013: 53%) of overall revenue at 8.0 million (2013: 8.0 million). The Microgen 5Series product continues to be well received by the market with 10 new business wins in the year. Revenue from the payment software product remains in line with last year at 1.3 million whilst the Application Management business, now incorporating the other financial services product categories, reported revenue in line with management expectations at 5.1 million (2013: 5.8 million). 
Overall reported revenue was 14.4 million (2013: 15.1 million), in line with expectations. Recurring revenue accounts for 81% (2013: 79%) of total revenue, with 24% being generated by the top 5 clients (2013: 28%). Benefitting from continued tight cost control, the business reported strong adjusted operating profits of 7.5 million (2013: 8.1 million) representing an adjusted operating margin of 52% (2013: 54%). Operating profit on a statutory basis was 7.1 million (2013: 7.8 million). Non-underlying operating costs in 2014 include 0.2 million related to acquisition and associated restructuring costs, together with a cost of 0.2 million related to the planned closure of the Financial Systems' Cape Town support office in 2015. 
The acquisition of Unity Software Limited ("Unity") was completed in December. Unity is a Jersey-based provider of wealth management software for the offshore finance industry whose product provides similar functionality to Financial Systems' leading trust and fund administration product, Microgen 5Series. The acquisition provides the Financial Systems business with an increased client and recurring revenue base in one of its core sectors together with an office in Jersey, a key geographical market for its products. The consideration for Unity was 1.3 million payable on completion. Due to the timing of the acquisition there is minimal impact on Financial Systems' 2014 financial performance. 
Benefitting from the loan and capital reorganisation established in 2013, the Return on Capital Employed ("ROCE") increased to 42% (2013: 30%) as the business received the full year benefit from the more efficient capital structure. The loan outstanding at 31 December 2014 was 16.3 million (2013: 19.3 million). 
In summary, the Financial Systems business continues to benefit from its high level of recurring revenues and the business is confident the adoption of the Microgen 5Series wealth management product will continue to progress in 2015. A number of further add-on acquisitions in the wealth management sector continue to be evaluated, although the Board remains prudent and, as always, there can be no certainty that any acquisitions will be completed.
Simon Baines
Managing Director, Financial Systems


Group Financial Performance and Finance Director's Report
Value to shareholders is derived from the aggregation of the performance of the operating businesses. The Group results are therefore provided for statutory purposes but in isolation provide minimal additional perspective. Throughout this statement adjusted operating profit and margin excludes non-underlying operating costs, unless stated to the contrary. 
Revenue for the year ended 31 December 2014 was 29.8 million (2013: 29.8 million) producing a reduced adjusted operating profit of 7.4 million (2013: 9.1 million) in line with the investment strategy in the Aptitude Software business. Operating profit on a statutory basis was 6.2 million (2013: 8.7 million). Group overhead costs are 1.3 million (2013: 1.9 million).The Group reported a profit for the year attributable to equity shareholders of 4.1 million (2013: 6.4 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. The overall group expenditure on research, development and support activities in 2014 was 6.5 million (2013: 5.7 million) reflecting the investment in the Aptitude Software business. Headcount at 31 December 2014 was 257 including contractors and associates (31December 2013: 228). 
On a constant currency basis overall revenue increased to 30.2 million (2014 reported: 29.8 million; 2013 reported: 29.8 million). Whilst the majority of the Group's revenue is invoiced in Pounds Sterling, 3.7 million of the revenue was invoiced in US Dollars at an average exchange rate of 1.64 (2013: 4.1 million at 1.56) and 1.0 million was invoiced in South African Rand at an average exchange rate of 17.85 (2013: 1.3 million at 15.22). It is Microgen's policy to hedge foreign exchange cash flows once the size and timing of transactions can be predicted with sufficient certainty. To date only the costs in relation to the Aptitude Technology Centre in Poland are hedged but in light of the changes in the business the Board continues to monitor whether it is appropriate to hedge other currencies. 
Non-underlying operating costs of 1.2 million include 0.8 million in respect of share options granted in 2013 and 0.4 million in respect of the Financial Systems business. Details of Financial Systems' non-underlying operating costs are summarised in the relevant section. The total tax charge of 1.7 million (2013: 2.3 million) includes a non-underlying tax cost of 0.4 million in relation to the planned closure of the Financial Systems' Cape Town support office in 2015. The Group's tax charge benefitted from the recognition of 0.2 million (2013: 0.1 million) tax losses in the year. The deferred tax asset in relation to taxable trading losses represents only 0.2 million (2013: 0.1 million) of the overall deferred tax asset of 0.8 million (2013: 0.8 million). After adjusting for the effect of non-underlying and other items, the Group's tax charge represents 22.5% of the Group's adjusted profit before tax (2013: 25.2%) which is the tax rate used for calculating the adjusted earnings per share. Adjusted earnings per share for the year ended 31 December 2014 was 7.2 pence (2013: 8.3 pence) with basic earnings per share 5.5 pence (2013: 7.9 pence).
The Group has a strong balance sheet with net assets at 31 December 2014 of 56.5 million (2013: 54.4 million), including cash at 31 December 2014 of 40.9 million (2013: 40.2 million), and net funds at 31 December 2014 of 24.6 million (2013: 20.9 million). Continuing to be a focus of the Group, cash conversion (measured by cash generated from operations as a percentage of operating profit adjusted for the non-underlying cost of share based payments) was 142% in the year (2013: 92%). 
Philip Wood 
Group Finance Director 


Group Income Statement
for the year ended 31 December 2014


 Year Ended 31 Dec 2014
Year Ended 31 Dec 2013

Notes
Before 
non-underlying 
items
Non-underlying items
Total
Before non-underlying items
Non-underlying items
Total


000
000
000
000
000
000
Revenue
1
29,814
-
29,814
29,824
-
29,824
Operating costs
1, 2
(22,435)
(1,218)
(23,653)
(20,755)
(381)
(21,136)
Operating profit

7,379
(1,218)
6,161
9,069
(381)
8,688
Finance income

196
-
196
119
-
119
Finance cost

(591)
-
(591)
(119)
-
(119)
Net finance cost

(395)
-
(395)
-
-
-
Profit before income tax

6,984
(1,218)
5,766
9,069
(381)
8,688
Income tax expense
3
(1,394)
(259)
(1,653)
(2,250)
-
(2,250)
Profit for the year

5,590
(1,477)
4,113
6,819
(381)
6,438








Earnings per share







Basic
4


5.5p


7.9p
Diluted
4


5.1p


7.7p


















group statement of comprehensive income
For the year ended 31 December 2014
Year ended
31 Dec 2014
Year ended
31 Dec 2013
000
000
Profit for the year
4,113
6,438
Other comprehensive income
Items that will or may be reclassified to profit or loss:
Fair value loss on hedged financial instruments
(474)
(7)
Currency translation difference
(139)
75
Other comprehensive income for the year, net of tax
(613)
68
Total comprehensive income for the year
3,500
6,506


Group Balance Sheet
For the year ended 31 December 2014
As at
31 Dec 2014
As at
31 Dec 2013
Notes
000
000
ASSETS
Non-current assets
Property, plant and equipment
4,863
5,022
Goodwill
41,774
41,774
Intangible assets
1,290
-
Deferred income tax assets
771
752
48,698
47,548
Current assets
Trade and other receivables
6
3,155
5,049
Financial assets - derivative financial instruments
-
94
Cash and cash equivalents
40,896
40,200
44,051
45,343
Total assets
92,749
92,891
LIABILITIES
Current liabilities
Financial liabilities
- borrowings
8
(3,000)
(3,000)
- derivative financial instruments
(427)
(47)
Trade and other payables
7
(18,812)
(18,186)
Current income tax liabilities
(499)
(701)
Provisions for other liabilities and charges
9
(15)
(33)
(22,753)
(21,967)
Net current assets
21,298
23,376
Non-current liabilities
Financial liabilities - borrowings
8
(13,250)
(16,250)
Provisions for other liabilities and charges
9
(261)
(269)
(13,511)
(16,519)
NET ASSETS
56,485
54,405
SHAREHOLDERS' EQUITY
Share capital
10
3,730
3,724
Share premium account
12,049
12,037
Capital redemption reserve
1,558
1,558
Other reserves
36,547
37,021
Retained earnings
2,601
65
TOTAL EQUITY
56,485
54,405


Group Statement of changes in shareholders' equity
for the Year Ended 31 December 2014
Share
capital
000
Share premium
000
Retained earnings
000
Capital redemption reserve
000
Other reserves
000
Total
equity
000
At 1 January 2014
3,724
12,037
65
1,558
37,021
54,405
Profit for the year
-
-
4,113
-
-
4,113
Cash flow hedges - net fair value losses in the year
-
-
-
-
(474)
(474)
Exchange rate adjustments
-
-
(139)
-
-
(139)
Total comprehensive income for the year
-
-
3,974
-
(474)
3,500
Shares issued under share option schemes
6
12
-
-
-
18
Share options - value of employee service
-
-
830
-
-
830
Deferred tax on financial instruments
-
-
76
-
-
76
Deferred tax on share options
-
-
92
-
-
92
Corporation tax on share options
-
-
23
-
-
23
Dividends to equity holders of the company
-
-
(2,459)
-
-
(2,459)
Total contributions by and distributions to owners of the company recognised directly in equity income
6
12
(1,438)
-
-
(1,420)
At 31 December 2014
3,730
12,049
2,601
1,558
36,547
56,485


Group Cash Flow Statement
for the Year Ended 31 December 2014
Year ended
Year ended
31 Dec 2014
31 Dec 2013
Notes
000
000
Cash flows from operating activities
Cash generated from operations
11
9,960
8,103
Interest paid
(591)
(119)
Income tax paid
(1,454)
(1,728)
Net cash flows generated from operating activities
7,915
6,256
Cash flows from investing activities
Purchase of property, plant and equipment
(612)
(427)
Acquisition of subsidiary, net of cash acquired
(1,230)
-
Interest received
169
119
Net cash used in investing activities
(1,673)
(308)
Cash flows from financing activities
Proceeds from bank loan
-
20,000
Net proceeds from issuance of ordinary share capital
18
204
Dividends paid to company's shareholders
5
(2,459)
(7,016)
Repayment of loan
(3,000)
(750)
Purchase of own shares
-
(10,269)
Net cash (used in)/generated from financing activities
(5,441)
2,169
Net increase in cash and cash equivalents
801
8,117
Cash, cash equivalents and bank overdrafts at beginning of year
40,200
32,134
Exchange rate losses on cash and cash equivalents
(105)
(51)
Cash and cash equivalents at end of year
40,896
40,200

Notes to the Audited preliminary results for the year ended 31 December 2014
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 the Aptitude Software and Financial Systems operating businesses.
The principal activity of the Group throughout 2013 and 2014 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 operating businesses are allocated central function costs in arriving at operating profit/(loss). Group overhead costs are not allocated into the operating businesses as the Board believes that these relate to Group activities as opposed to the operating businesses.
1(a) Revenue and operating profit by operating business
Year ended 31 December 2014
Aptitude Software
Financial Systems
Group
Total


000
000
000
000
Revenue

15,395
14,419
-
29,814
Operating costs

(14,193)
(6,969)
-
(21,162)
Operating profit before Group overheads

1,202
7,450
-
8,652
Unallocated Group overheads



(1,273)
(1,273)
Operating profit before non-underlying operating costs 



7,379
Non-underlying operating costs

-
(388)
(830)
(1,218)
Operating profit/(loss)

1,202
7,062
(2,103)
6,161
Net finance cost




(395)
Profit before tax




5,766
Income tax expense




(1,653)
Profit for the year




4,113


Year ended 31 December 2013
Aptitude Software
Financial Systems
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 non-underlying operating costs 




9,069
Non-underlying operating costs

-
(285)
(96)
(381)
Operating profit/ (loss)

2,837
7,821
(1,970)
8,688
Net finance income




-
Profit before tax




8,688
Income tax expense




(2,250)
Profit for the year




6,438
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 2014
31 Dec 2013
31 Dec 2014
31 Dec 2013
000
000
000
000
 United Kingdom and Ireland
18,871
19,686
11,223
11,666
 Rest of World
10,943
10,138
18,591
18,158
29,814
29,824
29,814
29,824
2. Non-underlying operating costs
31 Dec 2014
31 Dec 2013
000
000
Share based payments on share options issued in 2013
830
96
Arrangement costs for loan establishment
12
285
Acquisition and associated restructuring costs
209
-
South African reorganisation costs
167
-
1,218
381


3. Income tax expense
Year ended
Year ended
31 Dec 2014
31 Dec 2013
Analysis of charge in the year
000
000
Current tax:
- current year tax charge on underlying items
(1,388)
(1,860)
- current year tax charge on non-underlying items
(110)
-
- prior year charge
(17)
(143)
(1,515)
(2,003)
Deferred tax:
- current year credit/ (charge) on underlying items
14
(327)
- current year tax charge on non-underlying items
(149)
-
- prior year (charge)/ credit
(3)
80
(138)
(247)
Income tax expense
(1,653)
(2,250)
The total tax charge of 1,653,000 (2013: 2,250,000) represents 28.7% (2013: 25.9%) of the Group profit before tax of 5,766,000 (2013: 8,688,000).
After adjusting for the impact of non-underlying items, change in tax rates, share based payment charge and prior year tax charges the tax charge for the year of 1,568,000 (2,286,000) represents 22.45 % (2013: 25.21%), 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 5,978,000 (2013: 6,797,000) available for offset against future profits. A deferred tax asset has been recognised in respect of 777,000 (2013: 484,000) of such losses which is the maximum the Group anticipates being able to utilise in the year ending 31 December 2015. No deferred tax has been recognised in respect of the remaining 5,201,000 (2013: 6,313,000) 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 21.5% (2013: 23.25%) to the profit on ordinary activities before tax is as follows:      
Year ended
Year ended
31 Dec 2014
31 Dec 2013
000
000
Profit on ordinary activities before tax
5,766
8,688
Tax at the UK corporation tax rate of 21.5% (2013: 23.25%)
(1,240)
(2,020)
Effects of:
Adjustment to tax in respect of prior period
(20)
(63)
Adjustment in respect of foreign tax rates
(63)
(63)
Foreign exchange gains on intercompany balances
(20)
(111)
Research and development tax credit
-
10
Tax payable on restructuring of South African business
(139)
-
Deferred tax charge on restructuring of South African business
(228)
-
Expenses not deductible for tax purposes
- Share based payment expenses
-
(51)
- Non-underlying costs not deductible
(154)
-
- Other
(3)
(18)
Changes in UK Corporation Tax Rates
-
(55)
Recognition of tax losses
214
121
Total taxation
(1,653)
(2,250)
4. Earnings per share
To provide an indication of the underlying operating performance per share, the adjusted profit after tax figure shown below excludes non-underlying items and has a tax charge using the effective rate of 22.45% (2013: 25.21%)
Year ended
Year ended
31 Dec 2014
31 Dec 2013
000
000
Profit on ordinary activities before tax and intangibles amortisation
6,984
9,069
Tax charge at a rate of 22.45% (2013: 25.21%)
(1,568)
(2,286)
Adjusted profit on ordinary activities after tax
5,416
6,783
Prior years' tax charge
(20)
(63)
Non-underlying items net of tax
(1,477)
(292)
Foreign exchange gains on intercompany balances tax charge
(20)
(111)
Recognition of tax losses
214
121
Profit on ordinary activities after tax
4,113
6,438


2014
Number
(thousands)
2013
Number
( thousands)
Weighted average number of shares
74,554
81,649
Effect of dilutive share options
5,954
1,535
80,508
83,184
2014
Basic
EPS
2014
Diluted
EPS
pence
pence
Earnings per share
5.5
5.1
Non-underlying items net of tax
1.9
1.8
Tax losses recognised
(0.2)
(0.2)
Adjusted earnings per share
7.2
6.7
Adjusted earnings per share are calculated using adjusted profit after tax.
5. Dividends
2014 pence per share
2013 pence per share
2014
000
2013
000
Dividends paid:
Interim dividend
1.1
1.1
820
908
Final dividend (prior year)
2.2
2.2
1,639
1,816
Special dividend (prior year)
-
5.2
-
4,292
3.3
8.5
2,459
7,016
Proposed but not recognised as a liability:
Final dividend (current year)
2.2
2.2
1,641
1,639
The proposed final dividend was approved by the Board on 24 February 2015 but was not included as a liability as at 31 December 2014, in accordance with IAS 10 'Events after the Balance Sheet date'. If approved by shareholders at the Annual General Meeting the proposed final dividend will be payable on 15 June 2015 to shareholders on the register at the close of business on 14 May 2015.


6. Trade and other receivables
31 Dec 2014
31 Dec 2013
000
000
Trade receivables
2,214
4,286
Less: provision for impairment of receivables
(7)
(60)
Trade receivables - net
2,207
4,226
Other receivables
91
101
Prepayments and accrued income
857
722
3,155
5,049
7. Trade and other payables
31 Dec 2014
31 Dec 2013
000
000
Trade payables
406
532
Other tax and social security payable
1,163
991
Other payables
171
55
Accruals
1,866
1,259
Deferred income
15,206
15,349
18,812
18,186
8. Financial liabilities
31 Dec 2014
31 Dec 2013
000
000
Bank Loan
16,250
19,250
The borrowings are repayable as follows:
Within one year
3,000
3,000
In the second year
3,000
3,000
In the third to fifth years inclusive
10,250
13,250
16,250
19,250
Less: Amount due for settlement within 12 months (shown under current liabilities)
(3,000)
(3,000)
Amount due for settlement after 12 months
13,250
16,250


9. Provisions for other liabilities and charges
Provisions
31 Dec 2014
31 Dec 2013
000
000
At 1 January
302
298
Charged to income statement
-
13
Foreign exchange
(26)
(9)
At 31 December
276
302
Provisions have been analysed between current and non-current as follows:
Provisions
31 Dec 2014
31 Dec 2013
000
000
Current
15
33
Non-current
261
269
276
302
10. 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 2014
145,000,000
7,250
74,498,502
3,724
Issued under share option schemes
-
-
112,167
6
At 31 December 2014
145,000,000
7,250
74,610,669
3,730


11. Notes to the Group Cash Flow Statement
Reconciliation of profit for the year to net cash generated from operations
Year ended
31 Dec 2014
Year ended
31 Dec 2013
000
000
Profit before tax
5,766
8,688
Adjustments for:
 Depreciation
747
790
 Loss on disposal of fixed assets
-
9
 Research and development credit
(200)
-
 Share-based payment expense
830
157
 Finance income
(196)
(119)
 Finance costs
591
119
Changes in working capital (excluding the effects of acquisition):
 Decrease/ (increase) in receivables
1,937
(1,886)
 Increase in payables
511
341
 (Decrease)/ increase in provisions
(26)
4
Cash generated from operations
9,960
8,103
12. Statement by the directors
The preliminary results for the year ended 31 December 2014 and the results for the year ended 31 December 2013 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 2013.
The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2014 or 31 December 2013. The financial information for the year ended 31 December 2013 is derived from the Annual Report delivered to the Registrar of Companies. The Annual Report for 2014 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 2015.
The Annual Report for the year ended 31 December 2014 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.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
FR USVWRVWAUUAR