Microgen margins expand despite falling top line

22nd Jul 2013 16:10

London-listed business software firm Microgen said that trading in its first half was 'satisfactory' as it made no change to its interim dividend after a fall in revenues.The company, which develops software to automate complex business processes, control accounting data and process financial transactions, said that revenue in the six months to June 30th fell to £14.9m, from £17m the year before, "as anticipated".However, the company said that recurring revenues now account for 67% of the top line, up from 59% the year before. This, together with a growing proportion of higher-margin annual software licences, meant that pre-tax profit was maintained at £4.5m despite the fall in revenue. Operating margins were helped by the improvement in revenue mix, rising from 26% to 30% year-on-year.Microgen maintained its balance sheet with net funds flat at around £27m despite returning £7.2m to shareholders over the last year via dividends and share buybacks.The interim dividend was let at 1.1p per share.Analyst Robert Sanders from Westhouse Securities labelled the results as "solid" but maintained his 'neutral' rating on the stock."However, we view the on-going consolidation in the software sector as likely to lead to an increase in shareholder value for Microgen investors in due course," he said.BC