Murgitroyd's shares rose nearly 6 per cent on the back of these figures after the patent and trademark attorney reported profits ahead for the eleventh successive year. While, with broker N+1 Brewin having revised its 2013 estimates upwards by 7 per cent - it now expects pre-tax profit of £4.6m and adjusted EPS to 34.8p - the shares remain attractive.
Demand for patent and trade mark-related services remained solid, notably in the US where sales grew 20.3 per cent in the period and contributed just under 60 per cent of the total sales increase. Although, where possible, customers are choosing cheaper paralegal processes over highly technical and costlier legal advice. Consequently this, and strong competition, drove the gross margin down from 59.9 per cent to 58.4 per cent - although cost savings and higher volumes helped the operating margin up from 12.4 per cent to 12.6 per cent.
Murgitroyd is also preparing for growing demand from patent work following the government's proposed Patent Box initiative - this could mean a 10 per cent corporation tax rate on income earned from selling goods with UK patents. Significantly, the lower tax rate would apply to the whole product; not just the patented segment.
| MURGITROYD (MUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 410p | MARKET VALUE: | £35.3m | |
| TOUCH: | 400-420p | 12-MONTH HIGH: | 410p | LOW: 303p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 247p* | NET DEBT: | 15% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 25.7 | 2.88 | 24.0 | 9.50 |
| 2009 | 28.9 | 3.09 | 24.2 | 9.50 |
| 2010 | 29.4 | 3.83 | 31.8 | 10.0 |
| 2011 | 33.2 | 4.04 | 31.1 | 10.8 |
| 2012 | 35.7 | 4.43 | 36.8 | 12.0 |
| % change | +8 | +10 | +18 | +11 |
Ex-div: 10 Oct Payment: 23 Nov *Includes intangible assets of £14.8m, or 172p a share | ||||
