LONDON (Alliance News) - Murgitroyd Group PLC Monday reported revenue growth in its most recent financial year, but said the rise failed to translate into higher pretax profit due to lower margins, and added that it expects profit to be constrained in the current financial year and the next.
The European patent and trademark attorney also said that results were hurt by the strength of the pound.
In a statement, Murgitroyd said it made a GBP4.1 million pretax profit in the year ended May 31, compared with GBP4.6 million a year earlier. Although revenue increased to GBP38.4 million from GBP36.0 million, gross margin contracted to 57.6% from 61.5%, due to changes in client and sales mixes, as well as price pressure in the market for professional intellectual property advisory services.
Administrative expenses increased to GBP18.0 million from GBP17.4 million. The non-repeat of a GBP115,000 property revaluation uplift in 2013, which is included in the administrative expenses figure, also contributed to lower operating profit.
"The reduction in earnings, caused in part by unfavourable foreign exchange rate movements, is disappointing, but we remain encouraged by our ability to win new business and committed to the investment required to ensure future growth of earnings as well as revenues in the longer term. In the meantime, the price pressure we have seen in the market continues to impact the group and, we expect, will constrain profits progression both this year and next," Chairman Ian Murgitroyd said in a statement.
Murgitroyd also said the group will remain focused on growing its current businesses but said that the board believes "appropriate" acquisitions to be complementary to its long-term objective of sustainable growth where they are assessed to be immediately earnings enhancing.
"2015 will see us focus on the European market with the aim of reversing the recent contraction of revenues in this market, alongside our continued drive to pursue growth in the US," he said.
Murgitroyd increased its full-year dividend by 6.0% to 13.25 pence per share from 12.5p.
The company's shares were Monday quoted down 7.5% at 495.00p.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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