MUR.L Regulatory News (MUR)

3 Sep 2007 07:01

Murgitroyd Group PLC03 September 2007 3 September 2007 Murgitroyd Group PLC ("Murgitroyd" or "the Group") Preliminary Results for the year ended 31 May 2007 Highlights • Turnover increased 21% to £22.8m (2006: £18.8m) • Operating profit rose by 66% to £2.57m (2006: £1.55m) and, before goodwill amortisation (EBITA) rose by 56% to £3.22m (2006: £2.07m) • Profit on ordinary activities before taxation (excluding goodwill amortisation) rose by 58% to £2.95M (2006: £1.87M) • Basic earnings per share are 16.41p up 110% (2006: 7.83p) • Proposed dividend increased 94% to 9p per share (2006: 4.65p) • Successful acquisition and integration of Fitzpatricks • New offices in Milan and Edinburgh opened and fully operational Ian Murgitroyd, Chairman, said: "I am delighted to announce yet another strong performance by the Group. Bothturnover and EBITA, exceeded market expectations. Synergies are still beinggenerated from our latest acquisition and the enlarged Group has retained itsability to deliver good organic growth. Murgitroyd has delivered steady growthfor the sixth consecutive year and I believe the company is well placed tocontinue this performance." For further information, please contact: Keith Young, Murgitroyd Group PLC T: 07802 951 913 David Ovens, Noble & Company Limited T: 0131 225 9677 Nadja Vetter/Emma Consett, Cardew Group T: 07941 340436/ 07971 468308 Notes: 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 offices in Aberdeen,Belfast, Dublin, Edinburgh, Glasgow, London, Milan, Muenster, Munich, Nice andYork. Murgitroyd Group PLC specialises in the provision of Intellectual Propertyservices, including filing, prosecuting, litigating, licensing, assigning andrenewing Patents, Trade Marks and Designs, advising on Copyright and generallyassisting clients with the management of their Intellectual Property. 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 Group turnover increased 21.3% to £22.8 million (2006: £18.8 million).Operating profit rose by 66.2% to £2.57 million (2006: £1.55 million) and,before goodwill amortisation (EBITA) rose by 55.5% to £3.22 million (2006: £2.07million), exceeding market expectations. These results are due to theintegration of Fitzpatricks filtering through, continued organic growth,economies of scale, and a proportionate reduction in overheads for the secondconsecutive year. The Group's basic earnings per share increased 110% to 16.41p (2006: 7.83p)during the period under review, and net cash flow after financing for the periodwas positive at £435,000. Profit before tax increased by 70.8% to £2.30 million (2006: £1.35 million). At the time of the Interim results in January 2007, Murgitroyd highlighted animproved gross margin of 65.8% for the Group, for the six months ended 30November 2006. This was a direct result of a move towards increased time-basedcharging, and reflected improved time recording systems. During the second halfof the year, the Group continued to benefit from this and, with continuingsystems improvements, the gross margin for the current year improved to 65.8%(2006: 62.8%). The company anticipates the adoption of International Financial ReportingStandards for the financial year ended 31 May 2008. The Directors are currentlyassessing the likely areas of financial impact following transition and thesewill be reported at the time of announcement of the 2008 interim results. Operating review At the beginning of the current financial year, the Group announced theacquisition of Fitzpatricks, one of the UK's longest established and leadingproviders of Patent and Trade Mark services, for a consideration of £1.3 million(excluding costs), in addition to approximately £270,000 for net assets. Theacquisition was immediately earnings enhancing, strengthening the corporateclient base and extending the service offering for the Group. The integrationof Fitzpatricks continues and the stringent cost controls adopted by the Groupare generating the anticipated post acquisition synergies. No significantclient losses have occurred since the acquisition and all fee earners employedby Fitzpatricks at acquisition have been retained. As part of the integrationprocess the Group plans to sublet the leasehold property previously occupied byFitzpatricks, and a number of third parties are actively interested in doing so. Murgitroyd's agreement with Coats plc ("Coats"), a global leader in sewing,thread and needlecraft products, continues to prove extremely successful. Underthe terms of the agreement, the Group has taken over the functions of Coats'Intellectual Property department at a fixed annual fee, a service that the Groupis looking to replicate. The Group continues with its Attorney secondment programmes, both to and fromkey clients. This is an excellent way of cementing relationships and has provedsuccessful over the past few years. The new offices in Milan and Edinburgh, and a sales office in Raleigh, NorthCarolina, USA, are now fully operational, bringing the Group's network to twelveoffices in eight countries. All three offices have recruited additional newstaff and Milan and Edinburgh are already contributing to earnings while the USsales office has further raised the Group's profile in that important market.Additionally, trainee Attorneys will be brought into the new Italian officeduring the current financial year. Murgitroyd's clients now enjoy directrepresentation rights before Patent and Trade Mark Offices in the UK, Ireland,Germany, France, Italy, Monaco, the Netherlands, Austria and Switzerland. The market The market continues to remain buoyant. The European Patent Office ("EPO") andCommunity Trade Mark ("CTM") Office statistics are used as benchmarks for thenumber of new filings for Intellectual Property Rights. For the calendar year2006 the EPO showed a 7% year-on-year increase in the number of European Patentsfiled while the CTM office demonstrated a considerable 20% increase in newCommunity Trade Marks filed. These statistics are reflected by the Group's ownnew business pipeline. The demographic, market-wide, problem of a lack of qualified Patent Attorneys isever present. Murgitroyd's internal training programme, combined with itsexpansion strategy, continues to counteract this. The Group continues to bewatchful of this imbalance and investment in "in-house" training remains aprimary focus for the Group. People The total number of employees as at 31 May 2007 was 194 (2006: 167). Thisfigure includes a total of 46 qualified Attorneys (2006: 37). During the period,25 people, including eight qualified Attorneys, joined the Group as a result ofthe acquisition of Fitzpatricks. Our recruitment programme, which identifiesexperienced, qualified staff as well as candidates for Attorney training, hascontinued successfully. Our internal training is an integral part of theGroup's culture. The success of the internal training and exam preparation hasbecome more and more evident, with an increasing number of newly qualifiedAttorneys being retained. The year saw a number of Attorneys gaining secondAttorney qualifications, either as European Attorneys or as nationally qualifiedAttorneys. Training currently occurs in each of the Group's four principallegal jurisdictions: the UK, Ireland, France and Germany. In October 2006, Graham Murnane was appointed as an Executive Director to theBoard, following Roisin McNally's resignation in September 2006. Mr Murnanepossesses a wealth of expertise and his experience is already proving a valuableasset to the Board. I am pleased to announce that David Castle has agreed to stay with the Groupafter the end of his three-year contract, following the acquisition of Castlesin January 2005. David will become Deputy Chairman and continue in aclient-facing capacity, based in the Group's South London office. He will alsocontinue to chair the Business Development Management Group, a key driving forcebehind the Group's organic growth. Edward Murgitroyd has moved from a fee-earning role to a role as head of GroupOperations. Group Operations consolidates strategic IT development andimplementation; internal control, quality and auditing; and translation supportservices. Edward also retains a focus on business development in the US. 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 257.5p and 529p. The current middle market price is 460p. Thiscompares with the flotation price of 121p in November 2001. Dividend As in previous years, the Board did not recommend an interim dividend. However,a final dividend of 9p per share (2006: 4.65p) is being proposed. Subject toapproval at the Annual General Meeting, the dividend will be paid on 30 October2007 to shareholders on the register on 12 October 2007. Outlook Murgitroyd has delivered sustainable growth and increased its market share forthe sixth consecutive year since its flotation. The Group's aim is to continueto achieve predictable long term growth, both organically and, whereappropriate, through selective acquisitions. Although acquisition opportunitiespresent themselves on a regular basis, our stringent assessment criteria requireany potential acquisition to be immediately earnings enhancing and have a longterm additional fee earning capacity as well as a range of good quality newclients. The market remains strong with a healthy number of existing new businessopportunities to tender for meaningful Intellectual Property portfolios and wehave no reason to believe that this positive trend will not continue. Murgitroyd's clear strategy and the current market environment provide the solidplatform upon which the Group can consolidate whilst continuing to deliverpredictable returns for shareholders. In the wake of a promising start to thefirst half, the Board looks at the current financial year with confidence. Ian G. Murgitroyd Chairman 31 August 2007 Consolidated Profit and Loss Account for the years ended 31 May 2007 and 31 May 2006 2007 2006 Before Goodwill Year ended Before Goodwill Year ended goodwill amortisation goodwill amortisation amortisation 31 May amortisation 31 May 2007 (restated*) 2006 (restated)* £'000 £'000 £'000 £'000 £'000 £'000 Turnover 22,843 - 22,843 18,837 - 18,837Cost of sales (7,814) - (7,814) (7,012) - (7,012) Gross profit 15,029 - 15,029 11,825 - 11,825 Administrative expenses (11,806) (652) (12,458) (9,752) (527) (10,279) Operating profit 3,223 (652) 2,571 2,073 (527) 1,546 Interest receivable and 11 - 11 5 - 5similar incomeInterest payable and (284) - (284) (206) - (206)similar charges Profit on ordinary 2,950 (652) 2,298 1,872 (527) 1,345activities beforetaxation Tax on profit on ordinary (934) - (934) (697) - (697)activities Profit for the financial 2,016 (652) 1,364 1,175 (527) 648year Earnings per 10p ordinaryshare Basic 16.41p 7.83pDiluted 15.90p 7.67p * See Note 1. There were no discontinued operations in the current or previous year. There is no difference between the profit for the financial year and thehistorical cost equivalent. Consolidated Balance Sheet at 31 May 2007 and 31 May 2006 2007 2006 £'000 £'000Fixed assetsIntangible assets 9,757 8,695Tangible assets 2,570 2,252 12,327 10,947 Current assetsWork in progress 481 317Debtors 7,334 5,981Cash at bank and in hand 453 298 8,268 6,596 Creditors: amounts falling due within (4,971) (4,136)one year Net current assets 3,297 2,460 Total assets less current liabilities 15,624 13,407 Creditors: amounts falling due after (3,531) (2,499)more than one year Provisions for liabilities and charges (101) (73) Net assets 11,992 10,835 Capital and reservesCalled up share capital 834 828Share premium account 2,337 2,258Merger reserve 6,436 6,436Revaluation reserve 222 166Profit and loss account 2,163 1,147 Shareholders' funds 11,992 10,835 Consolidated Cash Flow statement for the years ended 31 May 2007 and 31 May 2006 Year ended 31 Year ended 31 May 2007 May 2006 £'000 £'000 Net cash inflow from operating activities 2,559 1,740 Returns on investments and servicing of financeInterest received 11 5Bank interest paid (194) (121)Interest element of hire purchase repayments (4) (5) Net cash outflow from returns on investments and servicing of finance (187) (121) Taxation (822) (578) Capital expenditure and financial investmentPurchase of tangible fixed assets (356) (203)Proceeds from sale of tangible fixed assets - - Net cash outflow from capital expenditure and financial investment (356) (203) AcquisitionsPurchase of subsidiary undertaking (856) (692)Cash at bank and in hand acquired with subsidiary undertaking 47 - Cash outflow from acquisitions (809) (692) Equity dividends paid (386) (275) Net cash outflow before financing (1) (129) FinancingIssue of ordinary share capital for cash 85 -Increase in bank loans due within one year 101 45Increase in bank loans due outwith one year 796 102Repayment of capital element of hire purchase obligations (46) (51)Repayment of Loan Notes (500) (300) Net cash inflow/(outflow) from financing 436 (204) Increase/(decrease) in cash in the year 435 (333) Notes to the announcement: 1. Basis of preparation 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 accounting policies have beenapplied consistently in dealing with items which are considered material inrelation to the Group's Financial Statements except for a change in accountingpolicy for the valuation of share options in accordance with FRS20 "Share-basedpayments". The comparative figures for the year ended 31 May 2006 have also beenrestated on adoption of FRS20 "Share-based payments". The impact of introducingFRS20 on the company's financial position has been to recognise a cumulativecharge of £92,000 (2006: £54,000). The impact of the change on the Profit andLoss Account has been to reduce the profit before tax for the year ended 31 May2007 by £38,000 (2006: £41,000). The financial information set out in this announcement does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985 but isderived from the full Financial Statements for the year ended 31 May 2007.Group Financial Statements for the year ended 31 May 2006 have been delivered tothe Registrar of Companies and those for 2007 will be delivered in due course.The report of the Auditors was (i) unqualified, (ii) did not include referencesto any matters to which the Auditors drew attention by way of emphasis withoutqualifying their report and (iii) did not contain statements under section 237(2) or (3) of the Companies Act 1985. 2. 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. 2007 2006 Earnings Earnings Profit for Weighted per share Profit for Weighted per share the average the average (restated*) financial number of financial number of year shares year shares (restated*) (restated*) £'000 Number p £'000 Number p Basic earnings per share 1,364 8,307,012 16.41 648 8,277,887 7.83Dilutive share options - 266,787 (0.51) - 169,975 (0.16) Diluted earnings per share 1,364 8,573,799 15.90 648 8,447,862 7.67Amortisation of goodwill 652 8,573,799 7.60 527 8,447,862 6.24 Adjusted, diluted earnings per 2,016 8,573,799 23.50 1,175 8,447,862 13.91share Adjusted, basic earnings per 2,016 8,307,012 24.26 1,175 8,277,887 14.19share * See Note 1. Adjusted earnings per share have been shown in order to demonstrate theperformance of the Group before goodwill amortisation. 3. 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 25 October 2007. 4. 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. A copy of this announcement will be made available on the company's website:http://www.murgitroyd.com/plc/announcements.htm This information is provided by RNS The company news service from the London Stock Exchange