Preliminary Results

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 (31 December 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

 

-

-

(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
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