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Murgitroyd Group PLC - Interim Results

Mon 2nd February, 2015 7:00am
RNS Number : 6878D
Murgitroyd Group PLC
02 February 2015

2 February 2015

Murgitroyd Group PLC ("the Group")

Unaudited Interim Results for the six months ended 30 November 2014

The Group (AIM: MUR) is pleased to announce its unaudited interim results for the six months ended 30 November 2014.

Highlights

Revenue marginally up at 19.28m (2013: 19.22m)

Interim profit before income tax in line with expectations at 1.98m (2013: 2.28m)

Basic EPS of 16.2p (2013: 18.6p)

Proposed interim dividend of 4.25p per share (2013: 3.75p per share), an increase of 13.3%

Continuing growth in US markets with revenue from this region increasing by 22% to 7.5m

Ian Murgitroyd, Group Chairman, commented:

"We are pleased to confirm that the Group remains on track to meet its revenue and earnings targets for the full year, in line with expectations. Our operating companies' focus on business development, as well as improvements in systems, processes and people provides the catalyst for them to continue to win new business and ensure the delivery of high quality services to clients. The strong growth achieved in the US is testament to the investment in this market. As illustrated by the increase in the interim dividend, the Board remains committed to delivering attractive returns to shareholders, whilst at the same time generating cash and strengthening the balance sheet. Although markets remain challenging, we are confident that the investments made will enable us to deliver long-term and sustainable growth."

For further information, please contact:

Keith Young, Group Chief Executive, Murgitroyd Group PLC 07802 951913

Sandy Fraser, N+1 Singer (NOMAD and Broker) 0131 529 0272

Georgina Hall, Cardew Group 0207 930 0777



Murgitroyd Group PLC

Chairman's Statement

Financial review

In the six months to 30 November 2014, revenue increased marginally from 19.22m to 19.28m. Profit before income tax decreased to 1.98m (six months ended 30 November 2013: 2.28m) reflecting on-going investment in new business and a greater proportion of revenue from the US where margins are currently lower. This performance is however in line with market expectations and represents an improvement on the six month period ended 31 May 2014 (1.82m). We expect a further improvement in the second half of the current financial year. Basic earnings per share were 16.2p (2013: 18.6p).

Administrative expenses decreased marginally in the period under review as we continued to exercise tight cost control.

Continuing strong cash flow resulted in net cash of 288,000 as at 30 November 2014 (30 November 2013: net debt of 827,000).As a result interest charges were down to 13,000 from 21,000 as the Group continued to pay down its debt.

Operating review

Murgitroyd continues to service clients from fifteen offices in eight countries and the Group's operating businesses were rebranded as simply "Murgitroyd" on 1 July 2014. Led by Edward Murgitroyd and his management team, the operating businesses saw increased revenues driven by continued investment in business development, particularly in the US, and a focus on evolving the product offering enabling the better servicing of the demands of clients. The IP Portal filing service has proven increasingly popular amongst clients and there are adequate resources in place to provide for the growing number of larger corporate users. The investments made in internal, as well as client-facing, systems continue to deliver cost reductions in a market facing pricing pressures.

Business from the US saw significant growth of 22% in Sterling terms. In line with strategy, the US remains a key focus for investment and an increasingly important growth market, with revenue from this region contributing to circa 38% of Group revenue. The US is the largest source of European Patent applications and the growing presence in this market is helping to offset the effects of a stagnating market in Europe. Going forward our operating businesses will also be addressing the contraction in European revenues on a country by country basis.

The European Community Trade Mark Office ("OHIM") has shown that there has been an increase in Community Trade Mark ("CTM") applications. Their figures reveal that in 2014, more than 117,000 (2013: 114,000) CTM applications were filed. This is the fifth consecutive year of growth and set a new record, although the rate of growth has slowed over the past two years.

The European Patent Office ("EPO") has also reported a 3% year on year increase in Patent filings for 2014, the number of applications rising to more than 273,000, an all-time high. The composition of these filings very much reflect Murgitroyd's experience, with applications from the US increasing by 6.7%, Japanese applications falling by 3.8% and European applications remaining virtually unchanged.

OHIM's and EPO's statistics are considered good indicators of the current state of the European Intellectual Property market.



People

As at 30 November 2014 the Group employed 254 staff (2013: 244) including 62 (2013: 67) qualified Attorneys reflecting the continuing evolution in the composition of Group companies' staff complements, that sees a greater proportion of revenue being generated by formalities and paralegal staff.

Dividend

The Board is proposing an interim dividend of 4.25p per share (2013: 3.75p) that will be paid by 13 March 2015 to shareholders on the register at 13 February 2015. The ex-dividend date will be 12 February 2015. This increase reflects our previous announcement that the Group intends to adopt a higher payout ratio, reflecting the consistently cash generative nature of our business. The Board intends, subject to trading results, the availability of distributable reserves and economic outlook at that time, to recommend an increased final dividend.

Outlook

In a fairly difficult trading environment, these results are encouraging and the Board is confident in the Group's ability through ongoing investment and an established market presence to deliver sustainable, long-term growth and value to shareholders. We continue to seek earnings enhancing acquisitions and we are pleased to report that trading is in line with market expectations.

Ian G Murgitroyd

Group Chairman

2 February 2015

This interim announcement was approved by the Board of Directors on 2 February 2015.



MURGITROYD GROUP PLC

Unaudited consolidated statement of comprehensive income

for the six months ended 30 November 2014


Six months ended

30 November 2014

'000

Six months ended

30 November 2013

'000

Year

ended

31 May

2014

'000





Revenue

19,276

19,215

38,353





Cost of sales

(8,579)

(8,143)

(16,268)





Gross profit

10,697

11,072

22,085





Administrative expenses

(8,704)

(8,771)

(17,952)





Operating profit

1,993

2,301

4,133





Financial income

2

2

4

Financial expense

(13)

(21)

(37)





Profit before income tax

1,982

2,282

4,100





Income tax

(533)

(632)

(1,150)





Profit for the period attributable to

equity holders of the parent

1,449

1,650

2,950





Other comprehensive income








Items that will not be reclassified to

profit or loss:




Revaluation of property, plant and

equipment

-

-

50

Items that are or may be reclassified

subsequently to profit or loss:




Foreign exchange translation

differences - equity accounted

investments

76

-

(118)





Profit for the financial period and

total comprehensive income all

attributable to equity holders of

the parent

1,525

1,650

2,882





Earnings per share








Basic

16.23p

18.58p

33.16p

Diluted

16.00p

18.31p

32.67p



MURGITROYD GROUP PLC

Unaudited consolidated balance sheet

at 30 November 2014



30 November

2014

'000

30 November

2013

'000

31 May
2014

'000

Assets





Non-current assets





Property, plant and equipment


2,407

2,392

2,462

Intangible assets


14,927

14,969

14,936

Deferred tax asset


28

99

28






Total non-current assets


17,362

17,460

17,426






Current assets





Work in progress


707

731

671

Trade and other receivables


14,989

13,908

14,515

Tax recoverable


-

-

125

Cash and cash equivalents


1,652

1,518

1,457






Total current assets


17,348

16,157

16,768






Total assets


34,710

33,617

34,194





Current liabilities





Bank overdraft


-

(4)

-

Other interest-bearing loans

and borrowings


(523)

(953)

(795)

Trade and other payables


(6,180)

(5,786)

(5,998)

Tax payable


(133)

(132)

-






Total current liabilities


(6,836)

(6,875)

(6,793)






Non-current liabilities





Other interest-bearing loans

and borrowings


(841)

(1,388)

(1,045)

Provisions for liabilities


-

(55)

-






Total non-current liabilities


(841)

(1,443)

(1,045)






Total liabilities


(7,677)

(8,318)

(7,838)






Net assets


27,033

25,299

26,356






Equity





Share capital


893

891

893

Share premium


3,368

3,322

3,368

Merger reserve


6,436

6,436

6,436

Revaluation reserve


47

-

47

Foreign currency translation

reserve


(42)

-

(118)

Retained earnings


16,331

14,650

15,730






Total equity attributable to equity

holders of the parent


27,033

25,299

26,356








MURGITROYD GROUP PLC

Unaudited consolidated statement of cash flows

for the six months ended 30 November 2014


Six months ended

30 November

2014

'000

Six months ended

30 November

2013

'000

Year

ended

31 May
2014

'000

Cash flows from operating activities





Profit for the period


1,449

1,650

2,950

Adjustments for:





Depreciation


142

120

255

Amortisation


31

32

65

Loss on disposal of property, plant and equipment


-

-

(15)

Other reserves movements


76

-

(118)

Financing costs


11

19

33

Income tax expense


533

632

1,150








2,242

2,453

4,320

Increase in trade and other receivables


(474)

(40)

(647)

Increase in work in progress


(36)

(108)

(48)

Increase in trade and other payables


180

87

302

Decrease in provision for liabilities


-

-

(55)








1,912

2,392

3,872

Interest paid


(11)

(24)

(43)

Interest received


2

2

4

Income tax paid


(275)

(321)

(947)






Net cash from operating activities


1,628

2,049

2,886






Cash flows from investing activities





Acquisition of property, plant and equipment


(87)

(198)

(320)

Acquisition of intangible assets


(22)

(87)

(87)

Proceeds from disposal of property, plant and equipment


-

-

15






Net cash used in investing activities


(109)

(285)

(392)






Cash flows from financing activities





Proceeds from exercise of share options


-

97

145

Repayment of borrowings


(476)

(553)

(1,054)

Dividends paid


(848)

(779)

(1,113)






Net cash used in financing activities


(1,324)

(1,235)

(2,022)






Increase in cash and cash equivalents


195

529

472

Cash and cash equivalents at start of period


1,457

985

985






Cash and cash equivalents at period end


1,652

1,514

1,457








MURGITROYD GROUP PLC

Unaudited consolidated statement of changes in equity

for the six months ended 30 November 2014










Share

capital

'000

Share

premium

'000

Profit

and

loss

account

'000

Foreign currency translation reserve

'000

Revaluation

reserve

'000

Merger

reserve

'000

Total

'000









At 1 June 2013

886

3,230

13,779

-

-

6,436

24,331

Total comprehensive income for the year:








Profit for the year

-

-

2,950

-

-

-

2,950

Exchange rate differences

-

-

-

(118)

-

-

(118)

Revaluation in year

-

-

-

-

83

-

83

Transfer between reserves

-

-

33

-

(33)

-

-

Transactions with owners recorded directly in equity:








Dividends

-

-

(1,113)

-

-

-

(1,113)

Deferred tax on share options

-

-

81

-

-

-

81

Share options exercised

7

138

-

-

-

-

145

Deferred tax on revaluation in year

-

-

-

-

(3)

-

(3)

















Total equity at 31 May 2014

893

3,368

15,730

(118)

47

6,436

26,356

















At 1 June 2013

886

3,230

13,779

-

-

6,436

24,331

Total comprehensive income for the period:








Profit for the period

-

-

1,650

-

-

-

1,650

Transactions with owners recorded directly in equity:








Dividends

-

-

(779)

-

-

-

(779)

Share options exercised

5

92

-

-

-

-

97

















Total equity at 30 November 2013

891

3,322

14,650

-

-

6,436

25,299

















At 1 June 2014

893

3,368

15,730

(118)

47

6,436

26,356

Total comprehensive income for the period:








Profit for the period

-

-

1,449

-

-

-

1,449

Exchange rate differences

-

-

-

76

-

-

76

Transactions with owners recorded directly in equity:








Dividends

-

-

(848)

-

-

-

(848)

















Total equity at 30 November 2014

893

3,368

16,331

(42)

47

6,436

27,033



















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 2014 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 2014 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 2014. The following amendments to existing standards were effective for the first time in the financial period commencing on 1 June 2014 but did not have a material impact on the condensed interim statements of the Group.

IFRS 10 Consolidated Financial Statements and IAS 27 (2011) Separate Financial Statements (Mandatory for year commencing on or after 1 January 2014.) This is part of a new suite of standards that replaces the existing accounting for subsidiaries and joint ventures.

IFRS 12 Disclosure of Interests in Other Entities (Mandatory for year commencing on or after 1 January 2014.) This standard contains the disclosure requirements for entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities.

IAS 27 Separate Financial Statements (Mandatory for year commencing on or after 1 January 2014.) This standard carries forward the existing accounting and disclosure requirements of IAS 21 (2008) for separate financial statements with minor clarifications.

Amendments to IAS 32 "Offsetting Financial Assets and Financial Liabilities" (Mandatory for year commencing on or after 1 January 2014.)

Amendments to IAS 36 - "Recoverable amount disclosures for non-financial assets" (Mandatory for year commencing on or after 1 January 2014.)

Amendments to IAS 39 "Novation of Derivatives and Continuation of Hedge Accounting" (Mandatory for year commencing on or after 1 January 2014.)

IFRIC Interpretation 21 Levies (Mandatory for year commencing on or after 1 January 2014.)

The comparative figures for the financial year ended 31 May 2014 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 2 February 2015.



2 Taxation

A charge for taxation has been included at the effective rate likely to be applied to the Group result for the full year to 31 May 2015. Deferred tax is recognised at 20%.

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 2014

'000

Six months ended

30 November 2013

'000

Year

ended

31 May

2014

'000

Profit for the period attributable to equity

holders of the parent

1,449

1,650

2,950


________

________

________





Basic weighted average number of shares

8,926,847

8,876,579

8,897,617

Diluted weighted average number of shares

9,057,367

9,010,322

9,030,610





Basic earnings per share

16.23p

18.58p

33.16p

Diluted earnings per share

16.00p

18.31p

32.67p

4 Dividend

The Board is proposing an interim dividend of 4.25p per share (30 November 2013: 3.75p) that will be paid on 13 March 2015 to shareholders on the register at 13 February 2015 and will have an ex-dividend date of 12 February 2015.

The Board intends, subject to trading results, the availability of distributable reserves and economic outlook at that time, to recommend an increased final dividend.

5 Further copies

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 Broker, Nplus1 Singer Capital Markets Limited, Time Central, Gallowgate, Newcastle, NE1 4SR.



KPMG LLP

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 2014 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows, the 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 2014 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.

Bruce Marks

for and on behalf of KPMG LLP

Chartered Accountants

2 February 2015


This information is provided by RNS
The company news service from the London Stock Exchange
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