Shares in Murgitroyd slump following profit alert

Murgitroyd, the Glasgow-based firm of patent attorneys, saw its shares slump by almost a fifth today after warning that its full-year results will fall short of City hopes.

The City reacted negatively to Murgitroyd's profit warning. Picture: Peter Macdiarmid/Getty Images

The firm told investors that earnings for the first half of the year were “always expected to be lower than last year” following its acquisition in June of parts of Dallas-based MDB Capital Group and Nicaragua’s Patentvest for just over $2.4 million (£1.9m).

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However, it warned today that the combination of the acquisition, along with a “significant” increase in the level of investment in business development, sales and marketing, and lower-than-expected revenue growth means that first-half earnings “are also behind management’s budgeted level”.

Murgitroyd added: “The board, cognisant of current macro-economic uncertainty, has also concluded that the implied improvement in operating performance during the remainder of the financial year necessary to meet current market forecasts is unlikely to be delivered and, as a result, that the outcome for the full year will fall short of market forecasts, and likely see reduced full-year 2017 earnings.”

Following the alert, shares tumbled 100p, or 19.7 per cent, to 407.5p.

Despite the profit warning, the firm said that operating cash flow “remains strong” and it expects to announce a “modest” increase in its interim dividend when it publishes its half-year results on Monday.