The expectation that performance in 2012 would prove much tougher to predict than usual for software and consultancy group, Microgen, was illustrated by these figures. The company's recurring revenue streams are defensive, but the uncertainty that's gripping financial services – particularly the banks – is putting a tight cap on profits. That backdrop leaves few reasons to snap-up the shares.
Financial market woes are forcing banks to delay procurement decisions and Microgen is having trouble converting its preferred bidder status into actual contracts. That's forcing the company to rely more on recurring revenue to maintain its top-line sales through the extension of existing software agreements. This is particularly true for the Microgen Aptitude Solutions Division (MASD) where recurring sales jumped to 40 per cent of divisional revenues, from 25 per cent. However, that wasn't enough to prevent a 17 per cent fall in MASD's sales to £9m, although it does show some improved defensiveness. The mature financial services division fared slightly better, with sales only 4 per cent lower at £8m, as more than 80 per cent of the division's revenues there are recurring. The segment also improved its profit margin to 50 per cent, from 46 per cent.
Broker Investec Securities expects flat full-year pre-tax profit of £9.7m, giving an unchanged EPS figure of 8.4p.
MICROGEN (MCGN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 120p | MARKET VALUE: | £98.0m | |
| TOUCH: | 118-122p | 12-MONTH HIGH: | 170p | LOW: 120p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 76p* | NET CASH: | £27.1m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 19.0 | 4.57 | 4.20 | 1.1 |
| 2012 | 17.0 | 4.47 | 4.20 | 1.1 |
| % change | -11 | -2 | - | - |
Ex-div: 1 Aug Payment: 24 Aug *Includes intangible assets of £41.8m, or 51p a share | ||||
