MUR.L Regulatory News (MUR)

4 Sep 2006 07:01

Murgitroyd Group PLC04 September 2006 4 September 2006 Murgitroyd Group PLC ("Murgitroyd" or "the Group") Preliminary Results for the year ended 31 May 2006 Highlights • Turnover increased 30% to £18.8m (2005: £14.5m) • Operating profit rose by 48% to £1.59m (2005: £1.07m) and, before goodwill amortisation (EBITA) rose by 41% to £2.11m (2005: £1.50m) • Basic earnings per share are 8.32p up 34% (2005: 6.20p) • Proposed dividend increased 40% to 4.651p per share (2005: 3.322p) • First full year contribution from the former Castles practice • Outsourcing Agreement signed with Coats plc • New office opened in York • Acquisition of Fitzpatricks Group Limited announced Ian Murgitroyd, Chairman, said: "I am delighted to announce another strong performance by the Group. Turnoverhas increased by 30% and EBITA rose 41%. The recent acquisition of Fitzpatricksrepresents a further extension to our offering of fully rounded pan-EuropeanIntellectual Property services and will provide benefits to clients, employeesand investors alike. Over the last five years Murgitroyd has deliveredsustainable growth and increased its market share through organic growth andselective acquisitions. We believe that Murgitroyd has a clear strategy and isstrongly positioned to continue this success." 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 AIM on 30 November 2001. The practice has offices in Aberdeen,Belfast, Dublin, Glasgow, London, Muenster, Munich, Nice and York. 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 I am pleased to report excellent results for the Group. These resultsincorporate the first full year contribution of Castles and demonstrate that theenlarged business has maintained the Group's ability to produce strongunderlying organic growth. Group turnover increased by 30% to £18.8m (2005: £14.5m). Profit before tax,excluding goodwill, rose 39% to £1.91m (2005: £1.38m), exceeding expectations.This is partly due to continued economies of scale following the Castlesacquisition and tight cost controls. The Group's basic earnings per share were up by 34% to 8.32p (2005: 6.20p).During the period under review, the gross margin decreased slightly asanticipated due to price alignment following the Castles acquisition. In March 2006, the Group announced that Coats plc ("Coats") had decided tooutsource the administration of its Trade Marks to Murgitroyd. Coats, is aglobal leader in sewing, thread and needlecraft products and has a renownedtradition of landmark innovations, many of which have become global industrystandards. Murgitroyd has taken over the functions of Coats' Intellectual Propertydepartment, which included two Trade Mark Attorneys and two support staff withapproximately 7,000 active Trade Mark files. A fixed fee is being paid per annumin addition to costs. It is hoped this agreement will lead the way for furtheroutsourcing projects. Discussions are currently ongoing with regards to Murgitroyd opening an Italianoffice. During the period under review, representation rights were establishedin Austria and Switzerland. The Group already had offices in the UK, Ireland,Germany and France, as well as representation rights in Monaco and theNetherlands. Murgitroyd's continuing expansion, both organic and throughacquisitions, has helped the Group maintain its position as one of the leadingpan-European Patent and Trade Mark Attorney practice. Recent developments Since the year end, Murgitroyd has completed the acquisition of FitzpatricksGroup Limited ("Fitzpatricks") for a consideration of £1.3 million, in additionto approximately £240,000 of net assets. Fitzpatricks is one of the UK's longestestablished and leading providers of Patent and Trade Mark services. Thisacquisition has strengthened the Group's corporate client base, thus furtherenhancing the scope of Murgitroyd's existing Patent and Trade Mark practices andwill immediately be earnings enhancing and cash positive. The market The market continues to show signs of healthy growth. The European Patent Office("EPO") and Community Trade Mark ("CTM") Office statistics are used asbenchmarks for the number of new filings for Intellectual Property Rights. Thelatest available statistics for the calendar year 2005 saw the number of Patentsfiled at the EPO increase by just over 7% whilst the CTM Office handled almostexactly the same number of CTM applications as in 2004. These remain marketindicators that are supported by the increase in organic growth experienced bythe Group. We believe this positive trend will continue. Demand for qualified Attorneys continues to exceed supply, which is exacerbatedby the high average age in the European Patent and Trade Mark profession. Ourexpansion strategy however has so far counteracted this trend and with continuedinvestment in 'in-house' training, we are confident to circumvent thedemographic problem facing the industry. Internal training is an integral part of the Group's culture and during theperiod under review we have started to train Attorneys in Germany in addition tothe UK, Ireland and France. People The total number of employees as at 31 May 2006 was 167 (2005: 165). This figureincludes a total of 37 qualified Attorneys (2005: 32) and is a result of ourcontinued recruitment programme and our internal training programmes. Since theyear-end, when 24 people joined the Group as a result of the acquisition ofFitzpatricks, the number of qualified Attorneys has risen to 45. In November 2005 a new office was opened in York to service the Midlands and theNorth of England. I would like to take this opportunity to thank all our staff for their continuedcommitment to the Group. Roisin McNally has intimated she will resign as a Director in September aftereleven years with the Group to pursue other interests both in the UK andelsewhere. We would like to thank Roisin for her considerable contribution andcommitment over the past years and wish her the very best for the future. Share price During the period, the middle market price of the company's shares fluctuatedbetween 160p and 288p. The current middle market price is 293p. This compareswith 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 4.65p per share (2005: 3.32p) is being proposed. Subject toapproval at the Annual General Meeting, the dividend will be paid 4 October 2006to shareholders on the register on 15 September 2006. Outlook Over the last five years Murgitroyd has delivered sustainable growth andincreased its market share through organic growth and selective acquisitions. Webelieve that Murgitroyd has a clear strategy and is strongly positioned tocontinue this success. Ian G. MurgitroydChairman 4 September 2006 Consolidated Profit and Loss Accountfor the years ended 31 May 2006 and 31 May 2005 2006 2005 Before Goodwill Year Before Goodwill Year goodwill amortisation ending goodwill amortisation ending amortisation 31 May amortisation 31 May 2006 2005 (restated*) £'000 £'000 £'000 £'000 £'000 £'000 Turnover 18,837 - 18,837 14,456 - 14,456Cost of sales (7,012) - (7,012) (4,784) - (4,784) Gross profit 11,825 - 11,825 9,672 - 9,672Administrative expenses (9,711) (527) (10,238) (8,170) (430) (8,600) Operating profit 2,114 (527) 1,587 1,502 (430) 1,072 Interest receivable and 5 - 5 4 - 4similar incomeInterest payable and (206) - (206) (130) - (130)similar charges Profit on ordinary 1,913 (527) 1,386 1,376 (430) 946activities beforetaxation Tax on profit on ordinary (697) - (697) (434) - (434)activities Profit on ordinary 1,216 (527) 689 942 (430) 512activities after taxationand for the financialyear Earnings per 10p ordinary share Basic 8.32p 6.20pDiluted 8.16p 6.19p * See Note 1 There were no discontinued operations in the current or previous year. Balance Sheetsat 31 May 2006 and 31 May 2005 2006 2005 Group Company Group Company (restated *) (restated*) £'000 £'000 £'000 £'000 Fixed assetsIntangible assets 8,695 - 9,211 -Tangible assets 2,252 - 2,180 -Investments - 8,056 - 8,056 10,947 8,056 11,391 8,056 Current assetsWork in progress 317 - 434 -Debtors 5,981 1,505 5,340 1,505Cash at bank and in hand 298 - 477 - 6,596 1,505 6,251 1,505 Creditors: amounts falling due within (4,136) - (4,427) -one year Net current assets 2,460 1,505 1,824 1,505 Total assets less current liabilities 13,407 9,561 13,215 9,561 Creditors: amounts falling due after (2,499) - (2,857) -more than one year Provisions for liabilities and charges (73) - - - Net assets 10,835 9,561 10,358 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 166 - 103 -Profit and loss account 1,147 39 733 39 Shareholders' funds - all equity 10,835 9,561 10,358 9,561 * See Note 1 Consolidated Cash Flow statementfor the years ended 31 May 2006 and 31 May 2005 Year ending Year ending 31 May 2006 31 May 2005 £'000 £'000 Net cash inflow from operating activities 1,740 1,331 Returns on investments and servicing of financeInterest received 5 4Bank interest paid (121) (96)Interest element of hire purchase repayments (5) (5) Net cash outflow from returns on investments and servicing of finance (121) (97) Taxation (578) (432) Capital expenditure and financial investmentPurchase of tangible fixed assets (203) (160)Proceeds from sale of tangible fixed assets - - Net cash outflow from capital expenditure and financial investment (203) (160) AcquisitionsPurchase of subsidiary undertaking (692) (1,730)Cash at bank and in hand acquired with subsidiary undertaking - 631 Cash outflow from acquisitions (692) (1,099) Equity dividends paid (275) (165) Net cash outflow before financing (129) (622) FinancingIncrease in bank loans due within one year 45 43Increase in bank loans due outwith one year 102 1,363Repayment of capital element of hire purchase obligations (51) (46)Repayment of Loan Notes (300) - Net cash (outflow)/inflow from financing (204) 1,360 (Decrease)/increase in cash in the year (333) 738 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. FRS 21 "Events after the balance sheetdate" and FRS 28 "Corresponding amounts" have been adopted in the FinancialStatements for the first time. Under FRS 21, dividends which are declared afterthe relevant Balance Sheet date cannot be accrued for, as was the casepreviously. As a result, the Balance Sheets and Profit and Loss Accounts for thecomparative period have been restated to reflect this, with the prior year enddividends of £275,000 (2005) and £165,000 (2004) being removed from those yearsand instead treated as dividends in the current period and comparative yearsrespectively. FRS 28 "Corresponding amounts" has had no material effect as itimposes the same requirements for comparatives as hitherto required by theCompanies Act 1985. 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 2006 for Murgitroyd Group PLC have been extracted from thestatutory accounts upon which the Auditor's reported. The report of theAuditors was (i) unqualified, (ii) did not include references to any matters towhich the Auditors drew attention by way of emphasis without qualifying theirreport and (iii) did not contain statements under section 237(2) or (3) of theCompanies 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. 2006 2005 Profit for Weighted Earnings Profit for Weighted Earnings the average the average financial number of per share financial number of per share year shares year shares £'000 Number p £'000 Number p Basic earnings per share 689 8,277,887 8.32 512 8,277,887 6.20Dilutive share options - 161,140 (0.16) - 7,516 (0.01) Diluted earnings per share 689 8,439,027 8.16 512 8,285,403 6.19Amortisation of goodwill 527 8,439,027 6.24 430 8,285,403 5.19 Adjusted, diluted earnings per 1,216 8,439,027 14.40 942 8,285,403 11.38share Adjusted, basic earnings per 1,216 8,277,887 14.68 942 8,277,887 11.39share 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 12 Suffolk Street,London SW1Y 4HQ at 11am on 26 September 2006. 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. This information is provided by RNS The company news service from the London Stock Exchange