US demand leads Scots law firm to record revenue

CONTINUALLY growing demand from the United States has led Glasgow patent and trademark law firm Murgitroyd to post record revenue in a market sector its chief executive Keith Young called “recession proof”.

The company also said its geographic spread would protect it from the possible impact of Brexit.

Alternative investment market-listed Murgitroyd, which carries out 45 per cent of its work in the US, saw revenue grow to £42.2 million from £39.8m for the year-ending May 31. Its US business grew 20 per cent over this period.

Pre-tax profit of £4.3m led the company to increase its dividend by 8.5 per cent to 16p, which Mr Young said illustrated how successful the company was at delivering on its progressive dividend strategy.

“We’ve been able to deliver not only the results people were expecting but increase the dividend,” he said. “That’s attractive for obviously the return it gives shareholders but also, two years ago we made a specific point of returning to [shareholders] more of the cash we generated.”

While the company acknowledged a weaker demand for its services in the UK and Europe, Mr Young said its geographic spread made individual market strength less relevant.

“When we talk about demand, we’re talking about US demand for UK and European services, so to some extent it doesn’t matter where the demand for the European services is coming from. Whether Glasgow or San Francisco, it doesn’t matter because of our footprint.”

Geography was again the reason cited for its “strong comparative market position” ahead of Brexit.

“Because our footprint sees us in most EU countries, [Brexit] doesn’t affect our ability to service our clients,” said Mr Young. “To that extent we think we’ve got a competitive advantage over UK firms.”

Mr Young also said IP law had proven to be “robust” no matter the predominant economic conditions.

“If you look back over time, whether national of international recessions the marketplaces for IP are pretty much recession proof and that’s been the case again this year with patents and trademarks in Europe both are at a record high.”

In 2015 there was an 11 per cent increase in Community Trade Mark (CTM) applications – now known as EU Trade Mark – filed to a record 130,000.

Meanwhile, The European Patent Office reported a 1.6 per cent year on year increase in patent filings, with the number rising to an all-time high of 278,000; a quarter of these originated in the US.

Murgitroyd has dual-coast coverage in the US and its positive cash-flow enabled its June acquisition for $2.4m of part of Dallas-based MDB Capital Group to be completed without raising debt.

The company had net funds of £2.75m with group debt of £546,000 as of May 31.

“We’ve seen two uses of that cash – increased dividends and also the ability of making acquisitions without taking on more debt,” noted Mr Young.

Mr Young said the company continued to look at acquisitions, but was not on “an acquisition trail”.

“We’re always in the market for acquisitions but at the same time we’re not desperate… because our business is fundamentally about sustainable long-term earnings growth.”

Staff numbers grew to 262 with the MDB deal. More than 100 of these employees are based in Glasgow.

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