Microgen ups the profit
Bullish consultancy firm reports a strong 2005 and is quietly confident for year ahead
Software, services and consultancy firm Microgen has seen profits jump 55 per cent over the past year.
The Hampshire-based company, which is comprised of two divisions – Financial Services and Commercial - revealed its unaudited preliminary results for the year ended 31 December 2005, which showed profit of £5.2m compared to £3.3m the previous year. Turnover dropped four per cent to £40.8m compared to £42.4m in 2004.
Over the past year the firm made three acquisitions – SAP specialist R/base and banking specialists Lynx Wealth Management Systems and Milvus Software.
In a statement the company said: “Microgen reports another strong operating performance for the year, with strong earnings growth and significant investment in new products. The Group has continued to evole, with an increasing proportion of business derived from Microgen software, particularly within the financial services sector. In addition the Group completed three acquisitions during 2005 and these have been successfully integrated.”
Looking forward, the statement said the Board is not anticipating a market recovery in the short term and will “maintain its prudent approach”, but the firm is “determined” to increase investment in organic growth.
“The Board is optimistic regarding the medium term prospects for the Group,” the statement added.
Samad Masood, analyst at Ovum said: “This year has been all about profitability for Microgen, and the company has proved once again that an aggressive acquisition strategy does not have to result in low profitability.
“But Microgen’s impressive margins have come at the cost of top line growth. The company is ruthless in divesting itself of any low-margin revenue streams that come attached to its acquired businesses – and that is one reason that overall revenue has declined in a year in which Microgen spent £8m on three acquisitions.
“Profits do please investors, but to really convince the markets that it is set on the long term, Microgen has to prove it can grow the business organically over the coming two year – and it knows it.”