Murgitroyd proves it is patently successful

MURGITROYD, the patent attorney company, shrugged off economic woes yesterday, declaring it is still seeking to grow through acquisition as it reported a rise in first-half revenue and profits.

Glasgow-based Murgitroyd, which is listed on the Aim, reported a 17 per cent rise in revenue in the six months to 30 November to 14.2 million.

It said the increase was due to a mixture of organic growth as well as a full year's contribution from Kennedys, a rival Glasgow-based firm which it bought for 3.4m last February.

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Pre-tax profits rose by 28 per cent to 1.7m and Murgitroyd promised it would maintain its interim dividend of 3p a share.

Founder Ian Murgitroyd said the company was still pursuing a strategy

of growth, but it would consider taking on more acquisitions if they would enhance earnings immediately.

The company has been one of Scotland's most active acquirers in recent years, buying five rival firms since its flotation in 2001, the most recent coming last month when it bought Croydon-based Raworth Moss & Cook, for 500,000.

Chief executive Keith Young said the company was unlikely to take on any more large acquisitions in the near future unless there was a rally in the group's share price.

"We're quite happy with our gearing but we're probably getting up to the level where we wouldn't want to take on too much more bank debt."

Murgitroyd had more than 7m in bank borrowings at the end of November, a figure which will have increased since the acquisition of Raworth, and while Young said lenders Clydesdale remained supportive, the company would be cautious about taking on "multi million" deals through a bank loan.

Young added that it was "quite inconceivable" that the company would seek to raise cash through a share placement, with Murgitroyd's shares now trading around 60 per cent below highs hit in 2007, despite rallying by more than 9 per cent yesterday.

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Murgitroyd had considered placing shares in the market to cover the cost of previous acquisitions and Young said if they had declined to do so when shares were above 400p, logic said they would continue to turn away from that option at the current levels.

Young added: "It is quite frustrating that you deliver to plan and yet your share price halves, so at a time that more opportunities (for acquisitions] are available, there is less scope to achieve them."

Despite indicating large acquisitions were unlikely, Young said Murgitroyd was receiving an increasing number of approaches from companies seeking to negotiate a sale and its appetite for considering deals is undiminished.

Young said the company had seen no obvious decline in trading during the first half or the two months since, but he was aware clients would inevitably be suffering because of the recession and seeking to cut costs.

"In no way am I complacent because of the results, because I know how hard the guys have been working to achieve those numbers."

Shares in Murgitroyd rose 20p, or 9.1 per cent, to 240p.

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