1 Feb 2011 07:00
1 February 2011
Murgitroyd Group PLC ("Murgitroyd" or "the Group")
Unaudited Interim Results for the six months ended 30 November 2010
Murgitroyd (AIM:MUR), the European Patent and Trade Mark Attorney group, is pleased to announce its unaudited interim results for the six months ended 30 November 2010.
Highlights
·; Revenue up 12% to £16.0 million (six months ended 30 November 2009: £14.3 million) representing ninth consecutive reporting of record interim sales
·; Record interim pre-tax profit, up 7% to £1.79 million (six months ended 30 November 2009: £1.68 million)
·; Record interim basic EPS of 14.43p (six months ended 30 November 2009: 13.88p)
·; Proposed interim dividend of 3.5p per share, an increase of 16.7% (30 November 2009: 3p per share)
·; Investment in increased staff numbers, geographical spread and investment in business development fuelling organic growth
Ian Murgitroyd, Group Chairman, commented:
"I am pleased to report that Murgitroyd has continued to deliver strong organic growth and shown resilience in a challenging economic environment. We have delivered record turnover and profits and have reaped the rewards from strategic and controlled investment in business development throughout the recession.
Murgitroyd operates worldwide with fifteen offices in eight countries and the development of our network is ongoing. In the course of 2011, we plan to continue our expansion in the US and open a new business development office on the west coast, as well as appointing additional staff throughout our office network.
The Board is cautiously optimistic as we see demand recovering and we believe that Murgitroyd remains well positioned to take advantage of current and future opportunities in the market."
For further information, please contact:
Keith Young, Murgitroyd Group PLC 07802 951913
Sandy Fraser, Brewin Dolphin Limited (NOMAD) 0845 213 2072
Catherine Maitland, Cardew Group 020 7930 0777
Notes to Editors
Murgitroyd Group PLC, the holding company of Murgitroyd & Company Limited ("Murgitroyd & Company"), a European Patent and Trade Mark Attorney practice, was floated on AIM on 30 November 2001. The practice has European offices in Aberdeen, Belfast, Dublin, Edinburgh, Glasgow, Helsinki, London, Milan, Muenster, Munich, Newcastle, Nice and York, and Sales Offices in Durham, North Carolina and Tokyo, Japan. Murgitroyd Group PLC specialises in the provision of Intellectual Property services, including filing, prosecuting, litigating, licensing, assigning and renewing Patents, Trade Marks and Designs, advising on Copyright and generally assisting clients with the management of their Intellectual Property. Patent services span the major sectors of the global economy including engineering, electronics, chemistry and biotechnology with clients ranging from large multi-national corporations to individual inventors and both in-house and external Patent Attorneys. The practice services major Trade Mark clients from the personal care, clothing, food and drinks, tobacco, pharmaceuticals, chemicals and oil industries together with service sector, sport and entertainment and retail industry clients. Trade Mark services are also provided to other private practice Trade Mark Attorneys.Murgitroyd Group PLC ("the Group")
Chairman's Statement
Financial and operating review
Murgitroyd has continued to show strong organic growth for the six months ended 30 November 2010, against the continued challenging macro-economic backdrop. Group revenue increased by 12% to a record £16.0 million (six months ended 30 November 2009: £14.3 million) due to increased activity levels and new client wins following continued investment in business development and fee earning capacity throughout the recession. Profit before tax increased by 7% year on year to £1.79 million (six months ended 30 November 2009: £1.68 million). Basic earnings per share were 14.43p for the period (six months ended 30 November 2009: 13.88p).
Gross profit was up 8% at £9.6 million (six months ended 30 November 2009: £8.9 million), with the gross margin percentage falling to 60.1% (six months ended 30 November 2009: 62.5%), reflecting ongoing market pricing pressures. Operating profit rose by 5% to £1.87 million (six months ended 30 November 2009: £1.77 million). Interest charges for the six months under review were down by 18% compared to the same period last year amounting to £80,000 (six months ended 30 November 2009: £98,000), as debt is paid down and base rates remain at historically low levels. The Group also continued to successfully manage its exposure to foreign exchange movements. Foreign exchange gains of £195,000 were recognised in the period (six months ended 30 November 2009: £118,000).
The Group benefits from competitively priced banking facilities and continues to trade comfortably within its trading and cash flow banking covenants. Management continued to exercise tight costs control across the business which has allowed us to invest in our business development activities throughout the recession.
Murgitroyd's worldwide operation had fifteen offices in eight countries during the period and the development of our network is ongoing. In September we added to our Attorney base in our recently opened Helsinki office and in the current financial year we have recruited two Attorneys to our Milan office. We are also in the process of consolidating our German operations into an expanded Munich office and the staff from Muenster are due to transfer in early 2011. Our business development office in Tokyo, replicating the model of our US office, is now up and running.
The Group's US business development office in North Carolina, remains of key strategic importance and Ian Murgitroyd is now in position as head of global business development there. In the autumn, the team based in Raleigh relocated to larger offices in Durham. We plan to continue our expansion in the US in the course of 2011 and open a new business development office on the west coast reflecting the importance of the US market to the Group. Sales to US clients continue to grow and were up by 12% year on year.
The market
The European Patent Office ("EPO") has reported that there had been a 10% increase in European Patent filings in 2010, with 26% and 18% of filings coming form the US and Japan respectively. In announcing the increase, the EPO noted that it expected a further increase in filings in 2011. The European Community Trade Mark Office, based in Alicante, has reported a record high number of Trade Mark applications in 2010. Both offices' statistics are used as benchmarks for the number of new filings for Intellectual Property Rights and are considered good indicators of current market conditions which we feel have recovered to some extent.
People
At 30 November 2010 the Group had 84 fee earners (30 November 2009: 81). The total number of employees as at 30 November 2010 was 225 (30 November 2009: 222). Since the period end two new Italian Attorneys have started in our Milan office.
I would like to take this opportunity to thank all our staff for their continued hard work and commitment to the Group, in particular Deputy Chairman David Castle, who retired at the AGM in October, for his considerable contribution since he joined us in 2005.
Share price
During the period, the middle market share price fluctuated between 230p and 340p. The current middle market price is 325p.
Dividend
The Board is proposing an interim dividend of 3.5p per share, an increase of 16.7% (30 November 2009: 3p) that will be paid on 11 March 2011 to shareholders on the register at 11 February 2011 and will have an ex-dividend date of 9 February 2011. The Board also intends, subject to trading results, economic outlook and the availability of distributable reserves, to recommend a final dividend.
Outlook
Despite a continuing challenging economic background, Murgitroyd has produced a strong set of results reflecting the strength of its brand and people. The Group continues to invest in business development activities and geographical expansion to drive organic growth, as well as in the scalable IT infrastructure that underpins much of the service delivery to clients.
In addition to pursuing organic growth, Murgitroyd continues to look for suitable acquisition opportunities. As we have stated previously, strict assessment criteria remain paramount and we will only consider acquisitions that will be immediately earnings enhancing and complementary to the Group's existing offering.
Given the Group's prudent management and robust performance in difficult markets, the Board believes that Murgitroyd is well positioned to take advantage of current and future opportunities. We remain confident of our ability to generate long-term growth and value for shareholders.
Ian G Murgitroyd
Chairman
31 January 2011
This interim announcement was approved by the Board of Directors on 31 January 2011.
MURGITROYD GROUP PLC
Unaudited Condensed Consolidated Income Statement
For the six months ended 30 November 2010
Six months ended 30 November 2010 £'000 | Six months ended 30 November 2009 £'000 | Year ended 31 May 2010 £'000 | |
Revenue | 15,965 | 14,286 | 29,429 |
Cost of sales | (6,366) | (5,359) | (11,095) |
Gross profit | 9,599 | 8,927 | 18,334 |
Administrative expenses (including property revaluation uplift of £156,000 in year ended 31 May 2010) |
(7,729) |
(7,153) |
(14,326) |
Operating profit before property revaluation uplift |
1,870 |
1,774 |
3,852 |
Property revaluation uplift | - | - | 156 |
Operating profit | 1,870 | 1,774 | 4,008 |
Financial income | 2 | 2 | 4 |
Financial expense | (80) | (98) | (187) |
Profit before income tax | 1,792 | 1,678 | 3,825 |
Income tax | (564) | (500) | (1,123) |
Profit for the period attributable to equity holders of the parent | 1,228 | 1,178 |
2,702 |
Earnings per share | |||
Basic | 14.43p | 13.88p | 31.83p |
Diluted | 14.13p | 13.62p | 31.23p |
MURGITROYD GROUP PLC
Unaudited Condensed Consolidated Balance Sheet
At 30 November 2010
30 November 2010 £'000 | 30 November 2009 £'000 | 31 May2010 £'000 | ||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 1,960 | 1,859 | 1,941 | |
Intangible assets | 14,824 | 14,815 | 14,820 | |
Total non-current assets | 16,784 | 16,674 | 16,761 | |
Current assets | ||||
Work in progress | 660 | 563 | 618 | |
Trade and other receivables | 11,347 | 11,007 | 10,780 | |
Cash and cash equivalents | 1,572 | 2,268 | 2,012 | |
Total current assets | 13,579 | 13,838 | 13,410 | |
Total assets | 30,363 | 30,512 | 30,171 | |
| ||||
Current liabilities | ||||
Bank overdraft | (732) | (1,801) | (1,096) | |
Other interest-bearing loans and borrowings |
(1,797) |
(1,719) |
(1,768) | |
Trade and other payables | (5,400) | (5,467) | (5,585) | |
Tax payable | (271) | (278) | (141) | |
Total current liabilities | (8,200) | (9,265) | (8,590) | |
Non-current liabilities | ||||
Other interest-bearing loans and borrowings |
(4,402) |
(5,539) |
(4,977) | |
Other payables | - | - | - | |
Provisions for liabilities | (60) | (41) | (52) | |
Deferred tax liabilities | (9) | (16) | (9) | |
Total non-current liabilities | (4,471) | (5,596) | (5,038) | |
Total liabilities | (12,671) | (14,861) | (13,628) | |
Net assets | 17,692 | 15,651 | 16,543 | |
Equity | ||||
Share capital | 853 | 849 | 850 | |
Share premium | 2,629 | 2,570 | 2,582 | |
Merger reserve | 6,436 | 6,436 | 6,436 | |
Revaluation reserve | - | - | - | |
Retained earnings | 7,774 | 5,796 | 6,675 | |
Total equity attributable to equity holders of the parent |
17,692 |
15,651 |
16,543 | |
MURGITROYD GROUP PLC
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 November 2010
| Six months ended 30 November 2010 £'000 | Six months ended 30 November 2009 £'000 | Year ended 31 May2010 £'000 | |
Cash flows from operating activities | ||||
Profit for the period | 1,228 | 1,178 | 2,702 | |
Adjustments for: | ||||
Depreciation | 103 | 115 | 222 | |
Gain on disposal of property, plant and equipment | - | - | - | |
Provision for "Onerous Lease" | (7) | (4) | (38) | |
Provision for leasehold property dilapidations | 15 | - | 45 | |
Property revaluation surplus | - | - | (156) | |
Financing costs | 78 | 96 | 183 | |
Equity settled share-based payment expense | 41 | 22 | 63 | |
Income tax expense | 564 | 500 | 1,123 | |
2,022 | 1,907 | 4,144 | ||
Increase in trade and other receivables | (567) | (851) | (624) | |
Increase in work in progress | (42) | (84) | (139) | |
(Decrease)/increase in trade and other payables | (352) | (255) | 411 | |
1,061 | 717 | 3,792 | ||
Interest paid | (75) | (90) | (164) | |
Interest received | 2 | 2 | 4 | |
Income tax paid | (434) | (357) | (1,130) | |
Net cash from operating activities | 554 | 272 | 2,502 | |
Cash flows from investing activities | ||||
Acquisition of property, plant and equipment | (122) | (53) | (86) | |
Proceeds from disposal of property, plant and equipment |
- |
- |
- | |
Acquisition of subsidiary, net of cash acquired | (4) | (9) | (314) | |
Net cash used in investing activities | (126) | (62) | (400) | |
Cash flows from financing activities | ||||
Proceeds from exercise of share options | 50 | 14 | 27 | |
Loans received | - | - | 300 | |
Repayment of borrowings | (554) | (514) | (1,038) | |
Payment of finance lease liabilities | - | - | - | |
Dividends paid | - | - | (1,232) | |
Net cash used in financing activities | (504) | (500) | (1,943) | |
Net (decrease)/increase in cash and cash equivalents | (76) | (290) | 159 | |
Cash and cash equivalents at start of period | 916 | 757 | 757 | |
Cash and cash equivalents at period end | 840 | 467 | 916 | |
MURGITROYD GROUP PLC
Unaudited Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 November 2010
| Six months ended 30 November 2010 £'000 | Six months ended 30 November 2009 £'000 | Year ended 31 May2010 £'000 | |
Opening total equity | 16,543 | 14,986 | 14,986 | |
Profit for the period | 1,228 | 1,178 | 2,702 | |
Dividends | (170) | (552) | (1,232) | |
Share based payments | 41 | 22 | 63 | |
Deferred tax on share options | - | 3 | (3) | |
Share options exercised | 50 | 14 | 27 | |
Revaluation in period | - | - | - | |
Deferred tax on revaluation in period | - | - | - | |
Closing total equity | 17,692 | 15,651 | 16,543 | |
NOTES:
1 Basis of preparation
Murgitroyd Group PLC ("the Group") is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of the Group for the six months ended 30 November 2010 comprise those of Murgitroyd Group PLC and its subsidiaries (together referred to as "the Group").
The interim statement is prepared applying the recognition and measurement requirements of IFRSs as adopted by the EU. The Group has elected not to prepare the interim statement in accordance with IAS 34 as adopted by the EU.
The interim statement does not include all the information required for full annual financial statements and should be read in conjunction with the financial statements of the Group as at and for the year ended 31 May 2010 which were prepared in accordance with IFRS as adopted by the EU.
The preparation of the interim statement requires the Directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results differ from these estimates. The accounting policies applied by the Group in this interim statement are the same as those applied in its financial statements as at and for the year ended 31 May 2010. The following standards and amendments to existing standards and interpretations were effective for the first time in the financial period commencing on 1 June 2010 but did not have a material impact on the condensed interim statement of the Group.
IAS 27 (Revised) Consolidated and separate financial statements makes a number of amendments to the standard, dealing primarily with the accounting for changes in ownership interest in subsidiaries after control is obtained, the accounting for the loss of control of subsidiaries and the allocation of profit or loss to controlling and non-controlling interests in a subsidiary.
IFRS 3 (Revised) Business combinations requires acquisition costs incurred in a business combination to be expensed as incurred rather than included in the cost of acquisition and determination of goodwill. It also brings about changes to the current accounting in relation to contingent consideration and various other aspects of accounting for business combinations. This will affect any future acquisitions by the Group.
Amendment to IAS 39 Financial instruments: recognition and measurement: eligible hedged items clarifies two hedge accounting issues: inflation in a financial hedged item and a one sided risk in a hedged item.
IFRIC 17 Distribution of non-cash assets to owners requires distributions within the scope of IFRIC 17 to be measured at the fair value of the assets to be distributed. Any gain or loss on settlement of the liability for the dividend payable is to be recognised in profit or loss.
Improvements to IFRSs 2008 and 2009 incorporates a number of amendments to IFRSs. The Group has reviewed the impact of these amendments and concluded that there is no impact in the current period.
Amendment to IAS 32 Financial instruments: presentation - classification of rights issues deals with the classification of rights, options and warrants.
The comparative figures for the financial year ended 31 May 2010 are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Group's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The interim statement was approved by the Board of Directors on 31 January 2011.
2 Taxation
A charge for taxation has been included at the effective rate likely to be applied to the UK result for the full year to 31 May 2011. Deferred tax is recognised at 27%.
3 Earnings per share
The earnings per share of Murgitroyd Group PLC are calculated by reference to the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during each period, as follows:
Six months ended 30 November 2010 £'000 | Six months ended 30 November 2009 £'000 | Year ended 31 May 2010 £'000 | |
Profit for the period attributable to equity holders of the parent |
1,228 |
1,178 |
2,702 |
________ | ________ | ________ | |
Basic weighted average number of shares | 8,511,752 | 8,484,612 | 8,489,485 |
Diluted weighted average number of shares | 8,688,616 | 8,646,595 | 8,653,401 |
Basic earnings per share | 14.43p | 13.88p | 31.83p |
Diluted earnings per share | 14.13p | 13.62p | 31.23p |
4 Dividend
The Directors propose to pay an interim dividend of 3.5p per share (2009: 3p) on 11 March 2011 to shareholders on the register at 11 February 2011 that will have an ex-dividend date of 9 February 2011. In addition the Directors intend, subject to trading results, economic outlook and the availability of distributable reserves, to recommend a final dividend to shareholders in respect of the financial year ending 31 May 2011.
Copies of this announcement and the full interim statement will be available, free of charge for a period of one month, from the Group's Nominated Adviser:
Brewin Dolphin 12 Smithfield Street London EC1A 9BD |
Brewin Dolphin 7 Drumsheugh Gardens Edinburgh EH3 7QH
|
KPMG Audit Plc
191 West George Street
Glasgow
G2 2LJ
United Kingdom
Independent review report to Murgitroyd Group PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly report for the six months ended 30 November 2010 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Cash Flows, the Condensed Consolidated Statement of Changes in Equity and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 November 2010 is not prepared, in all material respects, in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU and the AIM Rules.
P Galloway
for and on behalf of KPMG Audit Plc
Chartered Accountants
31 January 2011