Generics Group boosted by public sector work; returns to the black, order book 'strong'
Integrated technology consulting, development and investment vehicle The Generics Group (GEN.L) turned a pre-tax profit from continuing operations of £1.1m in 2005 after several years of losses.
It was achieved on revenue that increased by 25% to reach £21.9m, due primarily to growth within its technology consulting services.
Group MD Martin Frost (pictured) said consulting and IP activities were restored to growth and profitability in 2005, growing fee income by 24% over 2004 to £16.9m and revenues by 25% to £20.3m.
"Top-line growth was driven by a robust sales performance in industrial, public sector and medical markets continuing into the first quarter of 2006," he said. "The UK market for the Group's technology consulting services recovered significantly from 2004 strongly influenced by the public sector. Turnover in the UK grew by 100% year on year."
Overall Group operations were still in the red, however, before gains from venture disposals and 'fair value' adjustments in the books pushed the pre-tax result into profit. But the better performance in consulting operations and reduced losses in venture subsidiaries cut the deficit for the year in half to £1.5m.
CMR Fuels Cells successful listing
Chairman Johan Bjorklund said the group had had an excellent final quarter and that improvements had been made in all parts of the business. He highlighted the December successful listing on AIM of its CMR Fuel Cells spinout - now valued at £46m, almost four times as much as its parent. Generics' remaining holding in CMR is worth around £5.1m.
"This year has thereby confirmed that Generics' unique business model works," he said.
"The founding team in CMR came out of [subsidiary] Scientific Generics, operating within an environment where the original patent applications and first prototypes were supported and developed. The same factors were key to the formation and development of Sphere Medical Ltd with our partner, Siemens Technology Accelerator."
He said that fundamental to the success of Generics' business model is a growing and profitable international technology consulting activity and that since the period 2001-2003, Scientific Generics has recovered its position in the market place.
"The performance of the business is now robust on a quarter by quarter basis, and the organisation is growing well in the UK, Germany and Hong Kong", Mr Borklund said.
"Our technology development and IP exploitation business continues to make solid progress into H1 2006. The order book and sales processes are strong and will sustain ongoing growth and profitability… Within the portfolio, the prospects for CMR and Sphere are particularly strong and various funding and disposal opportunities continue to be progressed."
The stock market hardly reacted to the result, indicating there were no surprises. The share price gained 0.25p to reach 11.25p, about midway between its year high and low.
7th March 2006
