Red-letter day for Microgen
Losses down, growth up
Microgen, a billing software and consulting services company, has reported a reduced net loss for 2003 of £1.9m from £2.6m in 2002, on revenue that grew 4 per cent to £26m. Continued growth should not be taken for granted, but the outlook is good for its consultancy business.
Microgen's revenue growth was due mainly to a £3.2m contribution in the last quarter of the year from its acquisitions of MMT Computing and Imago QA, and the UK-based company is preparing for a positive, if cautious, year ahead in which it hopes to double in size.
Revenues could reach £40m by the end of 2004, thanks to MMT and Imago, according to analysts at UBS. The company has already almost doubled its staff count through the acquisitions, and it now employs 529 people, up from 289 at the end of 2002.
Growth is by no means assured however. Over 2003, the company's only growth came from its managed services division, which comprises the company's transactional billing and payment services, as well as its hosted database service. This division grew revenue 71 per cent to £7.6m, with only a minor contribution of £71,000 from the acquired companies.
The three other divisions did not fare as well: consultancy services sales fell 11.3 per cent to £8.8m, despite a £1.6m contribution from MMT and Imago; software and maintenance revenue fell almost 6 per cent to £4.2m; and legacy services, which comprises the company's print and mail services, fell 10 per cent to £5.8m.
Nevertheless, Microgen's finance director, Mike Philips, said further revenue growth is expected from a new upgrade cycle occurring in 2004 for its BACS payment software, for which it is the second largest supplier in the UK.
The scope for consulting sales has also increased, with the addition of several blue-chip financial services clients from Imago, including Northern Rock and LIFFE the financial futures exchange, and insurance sector coverage from MMT. Consultancy fees and utilisation rates were both about 16 per cent higher than at the end of 2002, a sign that the sector is picking up.