RNS Number:1036I
Murgitroyd Group PLC
28 February 2003
28 February 2003
Murgitroyd Group PLC ("the Group")
Unaudited Interim Results for the six months ended 30 November 2002
Pro-forma highlights
* Turnover increased by 24% to #5.13m (2001: #4.15m)
* Profit before tax and exceptional items rose by 9% to #284,700 (2001:
#261,200)
* Further progress of European expansion
* High profile new client wins
Ian Murgitroyd, the Group's Chairman, commented:
"I am pleased to report a solid performance by the Group during the period under
review, despite global economic uncertainty, with an increase in turnover of
24%. The Group's pan-European expansion plans are progressing well and I am
encouraged that high profile clients such as Kyndal Spirits Limited and Queen's
University, Belfast have been attracted and retained respectively. I believe we
are in a strong position to move the business forward and achieve the objectives
we set ourselves at flotation."
For further information, please contact:
Keith Young, Murgitroyd Group PLC T: 0141 307 8400
Alasdair Robinson, Noble & Company Limited T: 0131 225 9677
Nadja Vetter/Richard Fallowfield, Cardew Chancery T: 020 7930 0777
Notes to Editors
Murgitroyd Group PLC, the holding company of Murgitroyd & Company Limited, a
European Patent and Trade Mark Attorney practice, was floated on the Alternative
Investment Market of the London Stock Exchange ("AIM") on 30 November 2001. The
Company is based in Glasgow with further offices in Aberdeen, Belfast, Dublin,
London, Munich and Nice.
Murgitroyd Group PLC specialises in the provision of Intellectual Property ("IP
") services, including filing, prosecuting, litigating, licensing, assigning and
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 large
multi-national corporations to individual inventors and both in-house and
external Patent Attorneys.
Murgitroyd Group PLC ("the Group")
Chairman's Statement
I am pleased to be able to report a solid performance by the Group for the six
months to 30 November 2002. Pro-forma revenues rose by 24% from #4.15m to
#5.13m and the level of new business development by the Group since the end of
the last financial year has resulted in the Group winning new contracts with
clients such as Kyndal Spirits Limited as well as retaining clients of the
calibre of Queen's University, Belfast.
The Group was incorporated on 1 August 2001 in advance of its purchase of the
entire share capital of Murgitroyd & Company Limited ("Murgitroyd") in November
2001. Therefore, by the end of the period under review, the Group had only been
trading for one full year. This means that the provision of any performance
comparisons for the Group remains difficult. In order to offer a year-on-year
comparison, this report provides pro-forma results for the six months to 30
November 2002 for the Group's wholly-owned operating subsidiary company,
Murgitroyd. The latter underwent fundamental restructuring prior to its
acquisition by the Group. This should continue to be taken into account when
looking at the comparative period's performance.
Operating and Financial Review
Murgitroyd's turnover was up by 24% to #5.13 million (2001: #4.15 million).
Operating profit before exceptional items rose by 9% to #284,700 (2001:
#261,200) and profit before tax excluding exceptional items increased by 26% to
#256,900 (2001: #203,800). The gross margin percentage stands at 67.6% (2001:
64.4%). During this period overheads increased by 32% to #3.18 million (2001:
#2.41 million).
The trading performance of the Group during the period under review has been
encouraging, particularly with regard to turnover growth and the increase in
gross margin, despite the global economic uncertainty. Whilst profit before tax
for the period is lower than originally expected, the factors which have caused
this have been recognised and addressed. The principal factor recognised in
this regard was the increase in overhead costs during the period, many of which
can be considered non-recurring. These include recruitment costs for new
Attorneys, associated relocation expenses and set up costs for new offices in
Nice and Munich. It is also worth noting that tendering for and taking over an
IP portfolio the size and complexity of that of Kyndal Spirits Limited's
involved a significant and mainly irrecoverable upfront investment of both time
and direct cost.
In addition, it was unfortunate that one of the Group's largest customers in
recent years, Artlite Limited, went into receivership in January 2003 owing the
Group approximately #88,000 net of VAT. The company was put into receivership
by Sericol Limited. Artlite is believed to be controlled by the Stakis family
and had been part-funded by Sericol (the printing division of BP plc subsidiary,
Burmah Castrol). It is believed that one of Artlite's Directors was also a
Director of Sericol International Limited when appointed to Artlite's Board.
Sericol holds security over Artlite's Intellectual Property and, it is
understood, has recently been the subject of a management participation purchase
by Saratoga Partners. Whilst it is possible that the Group will be able to
recover some of the sum due through legal process, substantially all of this
debt has been written off for the purpose of these interim results.
The Board is encouraged by the fact that the Group has continued to attract a
number of new clients. We have however noted that income from existing clients
has been relatively flat. We believe this is principally due to a general
cutback in new research and development expenditure in light of global economic
conditions. Therefore, the increase in turnover for the period can be largely
attributed to work from new clients. Indeed, informal discussions with the
European Patent Office lead us to believe there has been a drop of perhaps as
much as 10% in the filing of European Patent Applications in 2002 as compared to
2001.
Strategy
In our prospectus issued at the time of our flotation in November 2001 we stated
that, inter alia, two of the reasons for seeking a capital market quotation were
to facilitate the offering of a pan-European service involving the establishment
of offices in key European locations and the ability to attract, retain and
incentivise new staff, particularly Patent and Trade Mark Attorneys.
The Group's pan-European expansion plans are progressing well with the new
larger Dublin Office now operating well. The Nice Office now has a full
complement of professional staff contracted to start at the beginning of April.
The recruitment of staff for the Munich Office is ongoing and negotiations
continue with interested Attorneys. New medium term office accommodation is
occupied.
The total number of staff as at 30 November 2002 was 144 compared to 113 at 30
November 2001. In the period under review Murgitroyd has recruited four
European Patent Attorneys; two UK Patent Attorneys, a French Patent Attorney and
a Dutch Patent Attorney. In addition two of its part-qualified Attorneys gained
fully-qualified European Patent Attorney status. The Group has also recruited
six new trainees to its Attorney training programme; three new graduates and
three part-qualified Attorneys including a qualified South African Solicitor.
Our in-house training program continues to produce encouraging results in
developing existing personnel.
Share Price
During the Interim Period, the middle market price of our shares varied from
115p to 150p. The current middle market price is 125p. This compares with our
flotation price of 121p.
Recent developments
In January 2003, the Group undertook a review of its cost base in order to
identify and eliminate any costs which we felt were contributing to the
unexpectedly high level of overheads and which we did not deem to be strictly
necessary. We are pleased to report that following this review, we have
introduced cost savings that we believe will amount to #300,000 on an annualised
basis. The benefits of these savings should start to become apparent in the
second half of the current financial year.
In addition, we continue to develop relationships with other professional
organisations that we believe will be able to develop the expansion of our
services. An example of this is the previously announced alliance with US law
firm, Drinker, Biddle & Reath LLP, that has generated more than #125,000 of
sales in the period, up from #57,000 in the comparative period in 2001.
Outlook
As we mention above, unofficially the European Patent Office reports an
unprecedented drop of perhaps up to 10% in the filing of European Patent
Applications in 2002 as compared to 2001. In the Directors' view, this is
partly due to the uncertainty in the world economy. Another possible reason is
a change in the procedural rules of the Patent Co-operation Treaty which has
extended by ten months the period for the non-European phase of international
Patent applications. This latter factor would be a one-off effect.
Despite the uncertain political and macro-economic conditions, we believe we are
in a strong position to move the business forward and fulfil the objectives we
set out on our flotation prospectus.
Ian G Murgitroyd
Chairman
28 February 2003
This interim announcement was approved by the Board of Directors on 27 February
2003.
MURGITROYD GROUP PLC
Unaudited Consolidated Profit and Loss Account
For the six months ended 30 November 2002 (period from 1 August 2001 to 30 November 2001)
Six months ended Period from
30 November 2002 1 August 2001 to
30 November 2001
#'000 #'000
(unaudited) (unaudited)
Turnover 5,130.2 -
Cost of sales (1,662.9) -
________ ________
Gross Profit 3,467.3 -
Administrative expenses (3,183.5) (0.4)
Exceptional bad debt write-off (73.4) -
Goodwill amortisation (175.7) -
________ ________
Operating profit/(loss) 34.7 (0.4)
Other interest receivable and similar income 1.9 2.2
Interest payable and similar charges (29.6) -
________ ________
Profit on ordinary activities before taxation 7.0 1.8
Taxation on profit on ordinary activities (5.8) -
________ ________
Profit on ordinary activities retained for the period 1.2 1.8
________ ________
Earnings per 10p ordinary share
Basic 0.01p 0.02p
Diluted 0.01p 0.02p
Adjusted, basic before goodwill amortisation 2.14p 0.02p
Adjusted, diluted before goodwill amortisation 2.09p 0.02p
MURGITROYD GROUP PLC
Unaudited Consolidated Balance Sheet
At 30 November 2002
30 November 30 November
2002 2001
#'000 #'000 #'000 #'000
(unaudited) (unaudited)
Fixed assets
Tangible fixed assets 1,891.3 1,743.4
Goodwill 6,676.2 7,027.5
________ ________
8,567.5 8,770.9
Current Assets
Work in progress 262.8 240.2
Debtors 4,195.1 3,364.3
Cash at bank and in hand 135.8 1,826.4
________ ________
4,593.7 5,430.9
Creditors: amounts falling due
within one year (3,289.8) (4,296.3)
________ ________
Net current assets 1,303.9 1,134.6
________ ________
Total assets less current liabilities 9,871.4 9,905.5
Creditors: amounts falling due
after more than one year (247.1) (289.2)
Provision for liabilities and charges (8.7) (77.6)
________ ________
Net Assets 9,615.6 9,538.7
________ ________
Capital and reserves
Called up share capital 827.8 827.8
Share premium account 8,694.6 8,709.1
Revaluation reserve 36.2 -
Profit and loss account 57.0 1.8
________ ________
Shareholders funds - equity 9,615.6 9,538.7
________ ________
MURGITROYD & COMPANY LIMITED
Unaudited Profit and Loss Account
For the six months ended 30 November 2002 (six months ended 30 November 2001)
2002 2001
#'000 #'000
(unaudited) (unaudited)
Turnover 5,130.2 4,148.4
Cost of sales (1,662.9) (1,475.6)
________ ________
Gross Profit 3,467.3 2,672.8
Administrative expenses (3,182.6) (2,411.6)
Exceptional bad debt write-off (73.4) -
________ ________
Operating profit 211.3 261.2
Other interest receivable and similar income 1.9 16.3
Interest payable and similar charges (29.6) (73.7)
________ ________
Profit on ordinary activities before taxation 183.6 203.8
Taxation on profit on ordinary activities (5.8) (75.4)
________ ________
Profit on ordinary activities after taxation 177.8 128.4
Dividends - -
________ ________
Retained profit for the period 177.8 128.4
________ ________
MURGITROYD & COMPANY LIMITED
Unaudited Consolidated Balance Sheet
At 30 November 2002
30 November 30 November
#'000 2002 #'000 2001
#'000 #'000
(unaudited) (unaudited)
Fixed assets
Tangible fixed assets 1,891.3 1,743.4
Current assets
Work in progress 262.8 240.2
Debtors 4,194.5 3,364.3
Cash at bank and in hand 135.8 826.4
________ ________
4,593.1 4,430.9
Creditors: amounts falling due
within one year (4,795.3) (4,778.7)
________ ________
Net current liabilities (202.2) (347.8)
________ ________
Total assets less current liabilities 1,689.1 1,395.6
Creditors: amounts falling due
after more than one year (247.1) (289.2)
Provision for liabilities and charges (8.7) (77.6)
________ ________
Net Assets 1,433.3 1,028.8
________ ________
Capital and reserves
Called up share capital 265.0 265.0
Revaluation reserve 273.6 237.5
Profit and loss account 894.7 526.3
________ ________
Shareholders' funds - equity 1,433.3 1,028.8
________ ________
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 2002 for Murgitroyd & Company Limited, on which the
auditors gave an unqualified report, have been delivered to the Registrar of
Companies.
3. 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:
6 months ended Period 1 August 2001 to 30
30 November 2002 November 2001
Basic earnings for period 1,200 1,800
Weighted average number of shares in issue 8,277,887 8,277,887
Basic earnings per share 0.01p 0.02p
Basic earnings for period 1,200 1,800
Weighted average number of shares in issue 8,463,051 8,441,267
(including share options)
Fully diluted earnings per share 0.01p 0.02p
The pro-forma earnings per share of Murgitroyd & Company Limited is
calculated by reference to the pro-forma earnings attributable to ordinary
shareholders divided by the weighted average number of shares in issue during
each period, as follows:
6 months ended 6 months ended
30 November 2002 30 November 2001
Pro-forma earnings for period 177,800 128,400
Weighted average number of shares in issue 265,000 265,000
Pro-forma earnings per share 67.1p 48.5p
4. The Directors do not propose to pay an interim dividend at this time.
The Directors do intend, subject to the availability of distributable reserves,
that dividends will be paid to shareholders following the announcement of the
annual report and accounts. The Directors aim to continue to distribute 25% of
post-tax profits of Murgitroyd & Company Limited by way of dividend.
5. A copy of the interim trading statement for the six months ended 30
November 2002 is due to be sent to all shareholders on or about 1 March 2003.
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 1 Frederick's Place
Edinburgh EH2 3BU London EC2R 8AB
Murgitroyd Group PLC
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 out
on pages 5 to 9 and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. 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 interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 November 2002.
KPMG Audit Plc 28 February 2002
Chartered Accountants
24 Blythswood Square
Glasgow
G2 4QS
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VDLFLXLBBBBV