UK-based software and services company Microgen is reporting earnings above expectations on the back of a strong market for financial sector consultancy services and a positive contribution from AFA Systems, which was acquired in September last year.
Microgen says second half operating margins have remained strong "due to high consultant utilisation and increasing average fee rates", particularly in the financial sector. The company has strengthened its focus on the sector in the past year, to the extent that it accounted for 60% of fourth quarter sales.
The firm says that a rapid integration programme for AFA Systems has resulted in a positive profit contribution from the business in both November and December, ahead of schedule.
As a result, it is now anticipated that full year revenue will be in line with expectations and profit before tax, goodwill and exceptional items will be ahead of expectations.
By mid-morning Microgen shares had reached their highest level for nearly three years, rising 11% to 68.5 pence, as the markets respondend positively to the news. With the AFA acquisition behind it, and its solid showing in financial services, Microgen enters 2005 as a strong player in the mid-market systems and services sector. Further acquisitions of undervalued or cash-strapped fintech firms should not be discounted.