Microgen’s (MCGN) sharply improved top line was buoyed by solid organic growth across both of its core businesses in 2017. Alongside contributions from recent acquisitions and solid cash conversion, the market was suitably impressed with the attendant rise in earnings and investors marked the shares up on the publication of preliminary numbers.
Revenues in Microgen's larger division, Aptitude Software, rose 68 per cent to £44.3m, including a 53 per cent increase in recurring revenues. In turn, operating profit jumped from £3.8m to £7.1m. All of this was aided by the August acquisition of cloud-based revenue management software provider RevStream, although exclude that effect and Aptitude’s sales were still up 58 per cent organically. The outlook for this year has already been boosted by the first major sale of the Aptitude Insurance Calculation Engine to an Asian insurer, well ahead of a 2021 change in reporting standards.
Meanwhile, Microgen Financial Systems is increasingly focused on the trust and fund administration (T&FA) market, demonstrated by its acquisition of Primacy Corporation last February. While sales here rose by a relatively meagre 10 per cent to £18.3m, more than three-quarters of sales were made to repeat buyers. The adjusted operating margin fell slightly, reflecting the shift towards T&FA and away from the higher-margin Aptitude business.
Analysts at Investec forecast pre-tax profits of £15.9m and EPS of 18.6p in 2018, up from £13.3m and 16.3p last year.
| MICROGEN (MCGN) | ||||
| ORD PRICE: | 509p | MARKET VALUE: | £ 310m | |
| TOUCH: | 504-514p | 12-MONTH HIGH: | 514p | LOW: 233p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 88.5p* | NET CASH: | £9.1m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 29.8 | 8.7 | 7.9 | 3.3 |
| 2014 | 29.8 | 5.8 | 5.5 | 3.3 |
| 2015 | 32.0 | 4.9 | 6.0 | 4.2 |
| 2016 | 43.0 | 7.9 | 10.6 | 5.0 |
| 2017 | 62.6 | 10.8 | 16.4 | 6.25 |
| % change | +46 | +37 | +55 | +25 |
| Ex-div: | 03 May | |||
| Payment: | 25 May | |||
| *Includes intangible assets of £68.9m, or 113p per share | ||||
