2nd Feb 2015 14:06
LONDON (Alliance News) - N+1 Singer thinks Murgitroyd Group's interim results make encouraging reading, noting that while pretax profit fell, it was an improvement on the profit in the previous half, and the big dividend increase signal's the board's confidence in it's long-term prospects.
Murgitroyd said it is on track to meet its full-year expectations after it reported higher revenue but lower pretax profit for the first half of the year, in line with its hopes. The company reported revenue of GBP19.3 million for the six months to November 30, up slightly from GBP19.2 million a year earlier, but its pretax profit fell to GBP2.0 million, from GBP2.3 million, as it invested in new business and made a greater proportion of its revenue in the US where margins are currently lower. Its US revenue rose 22% on the year to GBP7.5 million.
"The interims strengthen our confidence that Murgitroyd will return to earnings growth this
year and that the long term growth story is intact. It should not be forgotten that the
recent growth in US patent filings effectively paves the way for higher margin prosecution work in the fullness of time," the broker wrote in a note to clients.
The pretax profit was up on the GBP1.8 million the company made in the second half of its last financial year.
"One slight surprise in the results is the 13.3% interim dividend increase. This is in keeping with the plan to reduce dividend cover as trailed with the FY14 prelims, but a touch more progressive than we had anticipated. This a positive signal, marking the board?s confidence in longer term prospects," N+1 Singer wrote.
The broker is increasing its full-year dividend forecast by 3% for the next three full years, to 15.0 pence, 16.0p, and 17.0p.
It also notes that the company is on the look out for acquisitions, another potential earnings catalyst. It thinks the shares are now attractively valued at 14.5 times full-year 2015 price to earnings.
N+1 is forecasting full-year 2015 revenue at GBP40.3 million and adjusted pretax profit ay GBP4.2 million, which would be up from GBP38.4 million and GBP4.1 million in 2014, respectively, in 2014.
Murgitroyd shares are down 2.1% at 480.00 pence Monday.
N+1 Singer is the company's corporate broker and nominated adviser.
By Steve McGrath; [email protected]; @stevemcgrath1
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