MUR.L Regulatory News (MUR)

12 Jan 2005 07:00

Murgitroyd Group PLC12 January 2005 12 January 2005 Murgitroyd Group PLC ("the Group") Unaudited Interim Results for the six months ended 30 November 2004 Highlights • Turnover increased by 7.4% to £6.3 million (2003: £5.8 million) • EBITA rose by 22% to £550,000 (2003: £448,000) • Profit before tax increased by 38% to £336,000 (2003: £243,000) • Adjusted basic earnings per share of 4.44p (2003: 3.12p) Recent developments • Acquisition of David W.J. Castle & Co. Limited completed Ian Murgitroyd, Group Chairman, commented: "I am delighted to report solid organic growth by the Group with a rise inturnover of almost 8% and a considerable increase in profitability. We havecontinued to attract new clients as well as retain existing clients, and arecontinuing to strengthen the financial base of the Group. The Group's expansionplans in Europe continue to progress and I believe we remain in position tocontinue the growth of the business. Furthermore, clients now enjoy fullrepresentation rights in the UK, Ireland, France, Germany, Monaco and TheNetherlands. Overall, the Group's pan-European expansion strategy, involvingthe establishment of offices in key European locations, is progressing well." For further information, please contact: Keith Young, Murgitroyd Group PLC, 07802 951913Alasdair Robinson, Noble & Company Limited, 0131 225 9677Nadja Vetter, Cardew Group, 020 7930 0777 Notes to Editors Murgitroyd Group PLC, the holding company of Murgitroyd & Company Limited, aEuropean Patent and Trade Mark Attorney practice, was floated on the AlternativeInvestment Market of the London Stock Exchange ("AIM") on 30 November 2001. TheCompany is based in Glasgow with offices in Aberdeen, Belfast, Dublin, London,Muenster, Munich and Nice. Murgitroyd Group PLC specialises in the provision of Intellectual Property("IP") services, including filing, prosecuting, litigating, licensing, assigningand renewing Patents, Trade Marks and Designs and advising on Copyright.Services span the major sectors of the global economy including technology,engineering, electronics, chemistry and biotechnology. Clients range from largemulti-national corporations to individual inventors and both in-house andexternal Patent and Trade Mark Attorneys. Murgitroyd Group PLC ("the Group")Chairman's Statement Financial Review I am pleased to report an encouraging performance by the Group for the sixmonths ended 30 November 2004. Revenues rose by 7.4% from £5.8 million to £6.3million and the Group's profitability increased considerably with profit beforetax at £336,000, an increase of 38%. This was predominantly the result ofcontinuing economies of scale, improvements in credit control and the managementof foreign exchange risks, as well as strong control of overheads. During the period under review, the gross margin increased by 1.3% to 68.2%. Wefurther achieved greater harmonisation of prices across the Group following theacquisition of EURL Cabinet Bonneau in France in July 2003. Net cash flow in the period was positive by £20,000, a figure which rose to£84,000 after accounting for financing. The improvement in foreign currencymanagement continued with a net foreign exchange loss in the six-month period of£17,000 comparing very favourably to a £42,000 loss in the comparative period. Operating Review As a result of acquisition activity and organic growth, the Group's clients nowbenefit from representation rights in the UK, Ireland, Germany, France, Monacoand the Netherlands. The Group's new Muenster office was opened in June 2004and is now fully operational. In addition, the London and Munich "virtual"offices were relocated to premises offering better and more flexible facilities.Further "virtual" offices were opened in Newcastle in the north-east ofEngland and Miami in the US to serve as a "hubs" for ongoing businessdevelopment activity. The Group remains focused on its strategy of establishing itself as the leadingpan-European Patent and Trade Mark Attorney practice through its ongoingexpansion programme. Our relationship with US law firm, Drinker Biddle & ReathLLP ("DrinkerBiddle"), remains strong and serves as a high-quality conduitbetween Europe and the US. The relationship with DrinkerBiddle continues toprosper with sales to them more than doubling in the six-month period to 30November 2004 as compared to in the comparative period to 30 November 2003.Turnover from DrinkerBiddle represented 3.3% of sales (2003: 1.8%) and makesthem the Group's second largest client by sales value in the period. We are clearly delighted to have augmented our client base and to have receivedextended mandates from current clients, such as our re-appointment as Attorneysto Queen's University Belfast ("Queen's") following a formal tender process.Queen's is one of the Group's top ten clients by sales value. The Group wasalso formally appointed as Patent and Trade Mark Attorneys to Pursuit Dynamicsplc, an AIM listed company developing revolutionary, steam-based fluids handlingtechnology. The Group further decided to invest in updating our IT hardware and networkinfrastructure. It is anticipated that this upgrade will be completed in thefirst quarter of 2005, resulting in future cost savings in relation to systemmanagement and maintenance costs. Following a formal tender process, the Group has decided to change its banker toClydesdale Bank ("the Bank"). The Group will benefit from the agreed, enhancedterms with regards the cost of banking facilities and improved borrowingconditions as a consequence. The Marketplace European Patent applications have continued to show growth, with the number ofapplications rising in the European Patent Office's most recently publishedAnnual Report. In our opinion, market indicators demonstrate no sign of aslowdown in spending by key players in the Patent marketplace. Key indicatorssuggest that our pan-European strategy remains robust in the face of thecontinued demand/supply imbalance with regard to qualified Attorneys. Thissituation is compounded by the continuing poor average age of professionals inthe European Intellectual Property profession as a whole, a demographic problemthat we do not have. People The total number of employees as at 30 November 2004 was 141 (2003: 137). Murgitroyd's in-house training programme continues to produce encouragingresults in the development of existing personnel. In addition, we havemaintained our success in supporting our employees in the process of gainingtheir professional qualifications, thereby adding to our qualified Attorney"pool". We have further continued our recruitment strategy of hiring Attorneysas well as part-qualified professional staff from other practices. Twoqualified Attorneys have been recruited for the Nice and Dublin officesrespectively. They will start with the Group in February. The Group's principal operating company, Murgitroyd & Company, appointed two newDirectors, Keith Jones and Malcolm Main, to its Board as of 1 December 2004. I would like to take this opportunity to thank all our staff for their continuedcommitment to the Group. Dividend In common with previous years the Directors do not propose to pay an interimdividend. The Directors do intend, subject to the availability of distributablereserves, to recommend a final dividend. Share Price During the period, the middle market price of Murgitroyd's shares fluctuatedbetween 110p and 175p. The current middle market price is 160p. This compareswith the Group's flotation price of 121p in November 2001. Recent developments The Group has today completed the acquisition of the entire issued share capitalof David W.J. Castle & Co. Limited ("Castles"), a Patent and Trade Mark Attorneypractice founded by David Castle in 1986 and based in South London. Theacquisition follows an extensive period of due diligence undertaken by the Groupand our advisers. For the year to 31 December 2003, Castles' turnover amounted to £3.5 million,with profit before tax totalling £221,000 and net assets amounting to £366,000. We are also delighted to welcome David Castle to the board of Murgitroyd GroupPLC with effect from today and look forward to working with him, hisco-directors and staff. Further details on the acquisition of Castles and the appointment of DavidCastle to the board of Murgitroyd are contained in a separate announcementreleased today. Outlook Our organic business has continued to grow and we believe that the Group is in astrong position to continue its expansion into Europe. The Group continues towin new clients and we remain positive with regard to our strategy ofestablishing "Murgitroyd" as the leading pan-European Patent and Trade MarkAttorney practice through our expansion programme. Your Board's goal is tocontinue to build on the progress made in the first six months of the currentfinancial year thereby ensuring increased profitability in 2005. We look forward to the remainder of the year with confidence. Ian G MurgitroydChairman 11 January 2005 This interim announcement was approved by the Board of Directors on 11 January2005. MURGITROYD GROUP PLC Unaudited Consolidated Profit and Loss AccountFor the six months ended 30 November 2004 (six months ended 30 November 2003) Six months ended Six months ended 30 November 2004 30 November 2003 £'000 £'000 (unaudited) (unaudited) Turnover 6,264 5,834 Cost of sales (1,993) (1,931) ________ ________Gross Profit 4,271 3,903 Administrative expenses (3,721) (3,455)Goodwill amortisation (181) (176) ________ ________Operating profit 369 272 Other interest receivable and similar income 0 2Interest payable and similar charges (33) (31) ________ ________Profit on ordinary activities before taxation 336 243 Taxation on profit on ordinary activities (149) (160) ________ ________Profit on ordinary activities retained for the period 187 83 ________ ________ Earnings per 10p ordinary share Basic 2.26p 1.00pDiluted 2.25p 1.00pAdjusted, basic before goodwill amortisation 4.44p 3.12pAdjusted, diluted before goodwill amortisation 4.43p 3.12p MURGITROYD GROUP PLC Unaudited Consolidated Balance Sheet At 30 November 2004 2004 2003 £'000 £'000 £'000 £'000 (unaudited) (unaudited)Fixed assetsTangible fixed assets 2,172 2,009Goodwill 6,160 6,540 ________ ________ 8,332 8,549Current AssetsWork in progress 305 309Debtors 4,563 4,692Cash at bank and in hand 286 90 ________ ________ 5,154 5,091 Creditors: amounts falling due within one year (3,328) (3,672) ________ ________Net current assets 1,826 1,419 ________ ________Total assets less current liabilities 10,158 9,968 Creditors: amounts falling due after more than one year (165) (218) Provision for liabilities and charges (1) (10) ________ ________Net Assets 9,992 9,740 ________ ________Capital and reservesCalled up share capital 828 828Share premium account 2,258 2,258Merger reserve 6,437 6,437Revaluation reserve 62 46Profit and loss account 407 171 ________ ________Shareholders funds - equity 9,992 9,740 ________ ________ NOTES: 1. The accounting policies that have been applied to the unaudited interim results are consistent with the latest published audited accounts of Murgitroyd & Company Limited. 2. These interim results are unaudited and do not comprise full accounts within the meaning of section 240 of the Companies Act 1985. Full accounts for the year ended 31 May 2004, on which the auditors gave an unqualified report, have been delivered to the Registrar of Companies. 3. A charge for taxation has been included at the effective rate likely to be applied to the UK result, excluding the goodwill amortisation, for the full year to 31 May 2005. 4. The earnings per share of Murgitroyd Group PLC is 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 Six months ended 30 November 2004 30 November 2003 Profit after taxation 186,686 82,884Amortisation of goodwill 180,696 175,689 ________ ________ 367,382 258,573 ________ ________ Basic weighted average number of shares 8,277,887 8,277,887Diluted weighted average number of shares 8,299,201 8,288,803 Basic earnings per share 2.26p 1.00pDiluted earnings per share 2.25p 1.00pAdjusted basic earnings per share 4.44p 3.12pAdjusted diluted earnings per share 4.43p 3.12p 5. The Directors do not propose to pay an interim dividend at this time. The Directors do intend, subject to the availability of distributable reserves, to recommend a final dividend to shareholders in respect of the financial year ending 31 May 2005. 6. A copy of the interim statement for the six months ended 30 November 2004 is due to be sent to all shareholders on or about 12 January 2005. 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: Noble & Company Limited Noble & Company Limited 76 George Street 120 Old Broad Street Edinburgh EH2 3BU London EC2N 1AR Independent review report by KPMG Audit Plc to Murgitroyd Group PLC Introduction We have been engaged by the company to review the financial information set outon pages 5 to 7 and we have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to thecompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the AIMRules which require that the interim report must be presented and prepared in aform consistent with that which will be adopted in the company's annual accountshaving regard to the accounting standards applicable to such annual accounts. Review work performed We conducted our review having regard to the guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review is substantially lessin scope than an audit performed in accordance with Auditing Standards andtherefore provides a lower level of assurance than an audit. Accordingly we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 November 2004. KPMG Audit PlcChartered Accountants 11 January 2005 191 West George StreetGlasgowG2 2LJ This information is provided by RNS The company news service from the London Stock Exchange