MUR.L Regulatory News (MUR)

30 Aug 2005 07:00

Murgitroyd Group PLC30 August 2005 30 August 2005 Murgitroyd Group PLC ("Murgitroyd" or "the Group") Preliminary Results for the year ended 31 May 2005 Highlights • Turnover increased 18% to £14.5m (2004: £12.3m) • Profit before tax, excluding goodwill, rose by 42% to £1,376,000 (2004: £970,000) • Basic earnings per share is 6.20p increasing 73% (2004: 3.59p) • Dividend up 67% to 3.32p per share (2004: 1.99p) • Successful completion and integration of Castles acquisition • Murgitroyd has increased the number of qualified Attorneys from 22 to 32 Ian Murgitroyd, Chairman, said: "I am very pleased to announce the results of another successful year withturnover increasing by 18%, and profits exceeding expectations. The successfulintegration of Castles into our core business together with our continuedorganic growth has further strengthened Murgitroyd's strong client portfolio. Weare continuing to build on our strengths and deliver a growth rate that is bothcontinuous and sustainable." For further information, please contact: Keith Young, Murgitroyd Group PLC T: 07802 951 913Alasdair Robinson, Noble & Company Limited T: 0131 225 9677Nadja Vetter/Emma Consett, Cardew Group T: 020 7930 0777 Notes: Murgitroyd Group PLC, the holding company of Murgitroyd & Company Limited("Murgitroyd & Company"), a European Patent and Trade Mark Attorney practice,was floated on the Alternative Investment Market of the London Stock Exchange ("AIM") on 30 November 2001. The practice has offices in Aberdeen, Belfast,Dublin, Glasgow, London, Muenster, Munich and Nice. Murgitroyd Group PLC specialises in the provision of Intellectual Propertyservices, including filing, prosecuting, litigating, licensing, assigning andrenewing Patents, Trade Marks and Designs and advising on Copyright. Patentservices span the major sectors of the global economy including technology,engineering, electronics, chemistry and biotechnology with clients ranging fromlarge multi-national corporations to individual inventors and both in-house andexternal Patent Attorneys. The practice services major Trade Mark clients fromthe personal care, clothing, food and drinks, tobacco, pharmaceuticals,chemicals and oil industries together with service sector, sport andentertainment and retail industry clients. Trade Mark services are alsoprovided to other private practice Trade Mark Attorneys. Murgitroyd Group PLC Chairman's Statement Financial and operating review I am delighted to report on another successful year for the Group for thefinancial year ending 31 May 2005.Our stated aim of sustained growth has, onceagain, been achieved. Group turnover increased by 18% to £14.5m (2004: £12.3m). Turnover for thesecond half of the financial year to 31 May 2005 rose by 26% year on year to£8.2m (six months to 31 May 2004: £6.5m), an increase boosted by the acquisitionof Castles. Profit before tax, excluding goodwill, increased by 42% to £1,376,000 (2004:£970,000), which exceeded expectations. The Group's basic earnings per sharewere up by 73% to 6.20p (2004: 3.59p). During the period under review, the grossmargin was 66.9%, increasingly slightly on the previous year (2004: 66.7%). The client base has been expanded both through the acquisition of Castles,adding a number of significant new clients to the portfolio, and throughincreased organic growth. The Group has seen a number of client wins throughoutthe year, including Jordans Cereals, Baxter's Food Group and Rohm & Haas, whichhave added further strength to our existing portfolio of clients. Theacquisition of Castles and subsequent Trade Mark client wins continues to bringbetter balance to the group's activities across a wide range of industrysectors. Following the success of the pilot scheme of Attorney secondments last year, theGroup has continued to develop this programme. The scheme allows Attorneys towork in a quasi in-house capacity for clients and has provided a high degree offlexibility for the Group. The Group's clients enjoy representation rights in the UK, Ireland, Germany,France, Monaco and the Netherlands. It is the Group's aim to remain focused onthe expansion programme in order to maintain our position as the leadingpan-European Patent and Trade Mark Attorney practice. Acquisition The Group's second half figures reflect the acquisition of Castles, whichoccurred in January 2005. Turnover rose from £6.26m in the first half to £8.2min the second half. The integration of Castles has been successful in terms ofcost and income generation. The economies of scale gained through theacquisition have enabled more efficient utilisation of central overheads andcontributed to the increased bottom line for the Group. The success of theintegration means that what was the Castles practice has been fully absorbedinto the Group and its facility operates as Murgitroyd & Company's principalLondon Office. The success is also reflected by the fact we have not lost anystaff in London since acquiring Castles and, in fact, have expanded the staffcomplement based there, both fee earning and support. The market The market continues to show signs of healthy growth. The European Patent Officeand Community Trade Mark Office statistics are used as benchmarks for the numberof new filings for Intellectual Property Rights. Between 2001 and 2003, Patentgrowth was flat; 2004 saw an increase of 10%. 2004 also saw a 1% rise in thenumber of Community Trade Marks filed. These are encouraging signs that aresupported by the increase in organic growth experienced by the Group. We believethis positive trend will continue. Demand for qualified Attorneys still exceeds supply and this is compounded bythe continuing poor average age demographic in the European Patent and TradeMark profession. Our pan-European strategy has effectively countered this and wecontinue to avoid the demographic problem facing the industry while using it toour advantage. People As at 31 May 2005 the Group employed 32 qualified Attorneys (2004: 22). Thisincrease in qualified Attorneys reflects both our internal staff-trainingprogrammes and our continuing recruitment programme. The total number ofemployees as at 31 May 2005 was 165 (2004: 142). As is evident, the Group's internal training programmes continue to produceexcellent results, with six staff achieving full qualification as Attorneys thisyear. The Belfast and Nice offices have seen some further recruitment over the lastyear. The Aberdeen office is still growing and we continue to look to expand ourMuenster office. The expansion in Belfast led to our moving to larger officeaccommodation in July 2005. I would like to take this opportunity to thank all our staff for their continuedcommitment to the Group. Share price During the period, the middle market price of the company's shares fluctuatedbetween 193.75p and 110p. The current middle market price is 180p. Thiscompares with the flotation price of 121p in November 2001. Dividend As in previous years, the Board did not award an interim dividend. However, afinal dividend of 3.32p per share (2004: 1.99p) is being proposed. Subject toapproval at the Annual General Meeting, the dividend will be paid on 6 October2005 to shareholders on the register on 9 September 2005. Outlook The acquisition of Castles has significantly helped the development of theGroup. Its successful integration, following the similarly successfulintegration of Cabinet Bonneau, gives the Group the confidence to look at otherpossible acquisitions as they present themselves. Healthy growth in earningshas, therefore, been organically and acquisition driven. The current financialyear has had an encouraging start and we expect first half trading to be in linewith the Board's optimistic expectations. Ian G. MurgitroydChairman 30 August 2005 Consolidated Profit and Loss Accountfor the years ended 31 May 2005 and 31 May 2004 2005 2004 Before Goodwill Year Before Goodwill Year ending goodwill amortisation ending 31 goodwill amortisation 31 May 2004 amortisation May 2005 amortisation £'000 £'000 £'000 £'000 £'000 £'000 Turnover 14,456 - 14,456 12,287 - 12,287 Cost of sales (4,784) - (4,784) (4,087) - (4,087) Gross profit 9,672 - 9,672 8,200 - 8,200 Administrative expenses (8,170) (430) (8,600) (7,168) (360) (7,528) Operating profit 1,502 (430) 1,072 1,032 (360) 672 Interest receivable and 4 - 4 3 - 3similar incomeInterest payable and (130) - (130) (65) - (65)similar charges Profit on ordinary 1,376 (430) 946 970 (360) 610activities beforetaxation Tax on profit on ordinary (434) - (434) (313) - (313)activities Profit on ordinary 942 (430) 512 657 (360) 297activities after taxationand for the financial year Dividends - equity (275) - (275) (165) - (165) Retained profit for the 667 (430) 237 492 (360) 132year Earnings per 10p ordinaryshare Basic - 6.20p - 3.59pDiluted - 6.19p - 3.58pAdjusted, basic before 11.39p - 7.95p -goodwill amortisationAdjusted, diluted before 11.38p - 7.93p -goodwill amortisation There were no discontinued operations in the current or previous year. Balance Sheetsat 31 May 2005 and 31 May 2004 2005 2004 Group Company Group Company £'000 £'000 £'000 £'000 Fixed assetsIntangible assets 9,211 - 6,340 -Tangible assets 2,180 - 2,075 -Investments - 8,056 - 8,056 11,391 8,056 8,415 8,056 Current assetsWork in progress 434 - 265 -Debtors 5,340 1,780 4,621 1,670Cash at bank and in hand 477 - 344 - 6,251 1,780 5,230 1,670 Creditors: amounts falling due within (4,702) (275) (3,677) (165)one year Net current assets 1,549 1,505 1,553 1,505 Total assets less current liabilities 12,940 9,561 9,968 9,561 Creditors: amounts falling due after (2,857) - (162) -more than one year Provisions for liabilities and charges - - (1) - Net assets 10,083 9,561 9,805 9,561 Capital and reservesCalled up share capital 828 828 828 828Share premium account 2,258 2,258 2,258 2,258Merger reserve 6,436 6,436 6,436 6,436Revaluation reserve 103 - 62 -Profit and loss account 458 39 221 39 Shareholders' funds - all equity 10,083 9,561 9,805 9,561 Consolidated Cash Flow statementfor the years ended 31 May 2005 and 31 May 2004 Year ending Year ending 31 May 2005 31 May 2004 £'000 £'000 Net cash inflow from operating activities 1,331 846 Returns on investments and servicing of financeInterest received 4 15Bank interest paid (96) (61)Interest element of hire purchase repayments (5) (3) Net cash outflow from returns on investments and servicing of finance (97) (49) Taxation (432) (284) Capital expenditure and financial investmentPurchase of tangible fixed assets (160) (191)Proceeds from sale of tangible fixed assets - 1 Net cash outflow from capital expenditure and financial investment (160) (190) AcquisitionsPurchase of subsidiary undertaking (1,730) -Purchase of trade and assets - (194)Cash at bank and in hand acquired with subsidiary undertaking 631 - Cash outflow from acquisitions (1,099) (194) Equity dividends paid (165) (130) Net cash outflow before financing (622) (1) FinancingIncrease in bank loans due within one year 43 15Increase/(decrease) in bank loans due outwith one year 1,363 (60)Repayment of capital element of hire purchase obligations (46) (29) Net cash outflow from financing 1,360 (74) Increase/(decrease) in cash in the year 738 (75) Notes to the announcement: 1. Accounting policies The Financial Statements have been prepared in accordance with applicableAccounting Standards, and under the historical cost accounting rules, modifiedto include the revaluation of buildings. The premium on the shares issued inexchange for shares in Murgitroyd & Company Limited qualified for merger reliefunder section 131 of the Companies Act 1985 and therefore that premium has beentransferred from the share premium account to the merger reserve. The prior yearfigures have been restated accordingly. 2. Basis of preparation The financial information set out in this announcement does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thebalance sheet, consolidated profit and loss account and consolidated cash flowstatement at 31 May 2005 for Murgitroyd Group PLC have been extracted from thestatutory accounts upon which the auditor's opinion was unqualified and does notcontain a statement under section 237(2) of the Companies Act 1985. Thestatutory accounts for the year ended 31 May 2005 will be filed with theRegistrar of Companies. 3. Earnings per share Earnings per 10p ordinary share is calculated by dividing the earningsattributable to ordinary shareholders by the weighted average number of ordinaryshares in issue during the period. For diluted earnings per share, the weightedaverage number of ordinary shares in issue is adjusted to assume conversion ofall potential dilutive shares. 2005 2004 Profit for Weighted Earnings Profit for Weighted Earnings the average per share the average per share financial number of financial number of year shares year £'000 shares £'000 Number p Number p Basic earnings per share 512 8,277,887 6.20 297 8,277,887 3.59Dilutive share options - 7,516 (0.01) - 18,669 (0.01) Diluted earnings per share 512 8,285,403 6.19 297 8,296,556 3.58Amortisation of goodwill 430 8,285,403 5.19 360 8,296,556 4.35 Adjusted, diluted earnings per 942 8,285,403 11.38 657 8,296,556 7.93share Adjusted, basic earnings per share 942 8,277,887 11.39 657 8,277,887 7.95 4. Annual General Meeting The Annual General Meeting of the company will be held at Scotland House,165-169 Scotland Street, Glasgow G5 8PL at 11am on 28 September 2005. 5. Further copies Further copies of the Annual Report and Accounts will be available, free ofcharge, for a period of one month following posting to shareholders from thecompany's Nominated Adviser and Broker, Noble & Company Limited, 120 Old BroadStreet, London, EC2N 1AR, tel: 020 7763 2200. Copies of the full FinancialStatements will be posted to shareholders as soon as practicable. This information is provided by RNS The company news service from the London Stock Exchange