Final Results

Lawrence PLC 05 September 2002 Lawrence plc Preliminary Results for the year ended 31 March 2002 HIGHLIGHTS • Sales grow 7 per cent to £34 million • Total dividend for the year raised 11 per cent to 13.85 pence • Share bonus issue to increase liquidity • £4.1 million raised during year from share placing • Strong cash flow from operations • Ringpress Books acquisition integrating very well • Eco Animal Health gains further important drug registrations Peter Lawrence, Chairman of Lawrence plc, commented: 'I am pleased to report that our businesses have again delivered a sound performance. Although industrial markets remain nervous and the economic and financial position of many countries is uncertain, we are confident that growth across Lawrence can be maintained. We have an excellent, committed and experienced team, which will continue to concentrate on delivering value to shareholders.' Contacts: Lawrence plc Peter Lawrence 020 8336 2900 Charles Stanley & Co Ltd 020 7739 8200 Robert Corden Simon Wharmby Spiro Financial Anthony Spiro 020 8949 0428 Lawrence plc is a leader in the development, manufacture and distribution of principally specialist chemical and pharmaceutical products for the animal health, farming, fish and domestic pet markets worldwide. Our products for these growth markets incorporate natural ingredients to promote well-being and sustainability. We achieve our financial goals through the careful and responsible application of science to generate value for our shareholders. CHAIRMAN'S STATEMENT I am pleased to report that our businesses have stood up well to the pressures of international economic uncertainty and the company has again delivered a sound performance. Although the financial year has been a bumpy ride with peaks and troughs, sales rose almost 7 per cent to £34 million and profit before tax, exceptional item, amortisation of goodwill and minority interest reached £3.5 million. Earnings per share before amortisation of goodwill and exceptional item were 29 pence. Last December I wrote to you about our investments in Amberley Group plc and Idatchi Group Ltd. We are still recovering from those experiences and have learned a great deal in the process, not least being the understanding and continuing support shown by our shareholders. Thank you! We note that Amberley is conducting a tender offer which will generate some return for that company's long suffering shareholders and we will watch events with interest. Our balance sheet and cash position remain strong and shareholder approval will be sought at the Annual General Meeting to declare a final dividend of 10.75p (net) per ordinary share, making a total for the year of 13.85p (net) per share, an increase of 11 per cent over 2001. The dividend will be paid on 2nd November 2002 to shareholders on the register on 13th September 2002. In March 2002, together with our nominated advisor and broker, Charles Stanley & Co. Ltd., we raised £4.1 million (net of expenses) through the placing of 1,350,000 new ordinary shares. This issue attracted support from both new and existing investors. The funds have been used principally to acquire Ringpress Publishing Ltd, a pet book business, which complements and significantly enlarges our Interpet Publishing division. In the current year, sales of Ringpress book titles are in line with our expectations and should make a significant contribution to profits. The Board recognises that in these nervous markets sometimes a small trade in our shares can have a disproportionate impact on our share price. In order to create more liquidity in our shares and to make it easier for investors to deal, shareholders will be asked at the AGM to approve the capitalisation of part of our share premium account and also the issue of new bonus shares. The effect of these resolutions will be to triple the number of shares in issue and should lead to greater marketability in Lawrence plc shares. As part of our policy of maintaining good communications with investors, our corporate website www.lawrenceplc.com was redesigned and expanded. Please visit it and register if you would like to receive announcements electronically. ECO GROUP ECO Animal Health, which is a leading producer of pharmaceuticals to the farming industry worldwide, delivered another solid performance. The company continues to gain important registrations and market share in Europe, the USA and the rest of the world. In recent months we have gained registrations for our ECOMECTIN Products (endectocides) range in the USA, Japan and China. We have also registered AIVLOSIN FG 50 and water-soluble sachet products (patented macrolide antibiotic) in China. This should add substantially to sales commencing in the second half of the current financial year. Our office in Shanghai continues to grow as we have now added a sales and marketing team to complement the work of our registration staff serving that vast and important market. China remains the world's largest pig and poultry producer and we hope will become one of our most important markets. We are excited about receiving these important new registrations, which after some years of tough testing and documentation now give us the opportunity to commercialise our products. New registrations, reflecting the success of our past research and development work, are now being granted at regular intervals; each new registration should make a significant contribution to our sales growth. The new drug registrations gained recently by ECO Animal Health represent real milestones for that business and future sales should contribute significantly to future profit. Further important registrations are expected in the coming months. AIVLOSIN, ECO's patented product for the treatment of respiratory and dysentery type diseases in pigs and poultry and ECOMECTIN, for the treatment of internal and external parasites, continue to enjoy good sales. The unique performance of AIVLOSIN has been well recognised by customers, who are also extending its use to improve animal health in the production processes. Each year I express my frustration at the length of the registration process in each country as the nature and extent of enquiries and testing demands from the certification bodies become ever more complex. We remain steadfast and patient in the face of these delays, confident that our products are safe and reliable. We are encouraged by the approvals already granted and know that it is only a matter of time before more are received. We shall continue to work relentlessly on the growth and success of ECO Animal Health. The company continues to expand and we are steadily adding to and strengthening its team around the world. AGIL Agil remains in the forefront of the animal feed additive business with its unique approach, utilising natural means of providing bio security and growth performance to the farmed animal food industry. The combination of natural materials and harnessing natural digestion processes provides a realistic viable alternative to the use of antibiotics as growth promoters. We are encouraged that these antibiotics are progressively being banned in Europe and also in an increasing number of overseas countries, which export meat to the European Union. Agil's export growth has remained steady despite unfounded concerns early in the year resulting from the outbreak of foot and mouth disease in Britain. As 94 per cent of Agil sales are exported, currency fluctuations have an impact but the strategy of a strong product portfolio selling to a wide range of countries has maintained the development of the business, despite the strength of the pound. The economic weakness in important markets such as Argentina, Mexico and Turkey has not damaged overall sales; we are encouraged that some of these weaker markets are improving. The South East Asian markets, which are particularly important for Agil products, have largely recovered from the problems of five years ago. Latin America has been a target for development and markets such as Brazil, Chile and Peru are now delivering returns from the foundation work in which we have been investing for some years. Agil's traditional feed range has recently been supplemented by the addition of a non-chemical pesticide effective against insects infesting poultry houses and stored grain. This is a very exciting new area, pioneered by us in the UK and the product has rapidly gained an excellent reputation. The rollout to export markets is being undertaken simultaneously and is expected to contribute strongly to Agil's growth. Details of Agil products and updates on technical news, together with our worldwide distribution network, may be found on the company's web site www.agil.com. INTERPET Interpet continues to develop and grow both organically through its core branded business and by acquisition. The year under review saw improved profits with particular success in UK sales and Aquatic/Pond products. During 2002 Interpet celebrates its 50th Anniversary. It is a company founded on innovation - using science to develop products to care for ponds and aquariums. In March 2002 we launched Airvolution, our new airpump, which is not only revolutionary in appearance but also uses the latest sound proofing engineering techniques to produce an extremely quiet yet powerful unit. Sales of pet products continue to expand and we have opened many new accounts. The final stage in the re-packaging and upgrading of our Mikki grooming products has now been completed and has been met with an enthusiastic response from the trade and consumers. The acquisition of Ringpress Publications in mid March 2002, virtually at the end of the financial year, is very significant as it enables Interpet Publishing to offer a range of over 800 pet and aquatic titles with complete exclusivity. Interpet Publishing is now the largest UK publisher of pet and aquatic titles. We know that pet owners are enthusiastic book buyers and we are dedicated to fulfilling their requirements by producing high-quality, authoritative reference books packed with in-depth information and superb graphics. Our American subsidiary, which trades locally as Aquarium Products, is based in Baltimore. While the company had a difficult year with an overall sales decline of 12 per cent, this masked a strong second half recovery from the depressed levels of Autumn 2001 following the terrorist attacks. Our trade customers believed that their consumers would stay at home and therefore reduced their buying orders accordingly. In the event this did not happen and monthly sales revenue from December onwards exceeded that of the same period 12 months earlier and continues to grow. Newly launched product ranges include; AP Plus - a line of fish medications targeting the general - not the specialist - fish keeper. AP Pro - medication for retailers in store use; books on fish keeping and water gardening; AP Pond - medication and water conditioner for the fast growing US pond market. Sales of all these products have made a good start. We are investing about $250,000 in new plant and equipment for liquid medication production giving us sufficient capacity to meet growing demand. The USA is the market with the greatest potential for pet products and by adding carefully to our range each year we intend to increase sales significantly. Our website at www.info@aq-products.com gives detailed information about our products. BLACKFAST Blackfast Chemicals is a small but usefully profitable division of Lawrence plc. Its overall efficiency and profit performance have improved this year following investment in new blending capacity and further computerisation of the sales department. Significant growth has come from overseas sales with an increase of 12 per cent. For the first time, export sales now comprise the majority by sales value. Faced with a continuing sluggishness in the UK manufacturing sector, Blackfast has focused on the development of business in new manufacturing countries. We now have three distribution centres in China, managed by our own office in Guangzhou, and further new distributors have been appointed in three Eastern European countries. Contributions from these new distributors will become evident in the coming months. European countries generally have embraced the concept of the environmentally friendly Blackfast range where sales have increased across the board. Two new large automatic process lines have been commissioned in Scandinavia. New product development continues apace and we shall launch a range of ferrous and non-ferrous metal antiquing products for the Middle East and Far East markets later this year. Blackfast has the potential to increase sales significantly over the coming years and we remain committed to this target. Our website at www.blackfast.com demonstrates our system process and gives information on our product range and network of distributors. DIRECTOR In June 2002 Gavin Casey joined our Board as a non-executive director; he was Chief Executive of the London Stock Exchange until 2000 and is a director of a number of other companies. Gavin's experience and clear thinking are already contributing to our Board discussions and I am confident that he is an asset to the company. EMPLOYEES We employ a total of 187 people at our offices, warehouse and factories and I would like to express my thanks to them and everyone associated with the company without whose hard work and loyalty we could not continue to flourish. OUTLOOK Industrial markets remain nervous and the economic and financial position of many countries is uncertain. Despite these factors, our financial performance has been sound and exports remain strong, representing some 30 per cent of total sales. The emergence of the USA and China as two entirely new markets for ECO Animal Health and the possibility of further important drug registrations are encouraging signs. We are confident that growth across Lawrence can be maintained; we have an excellent, committed and experienced team, which will continue to concentrate on delivering value to shareholders. Peter Lawrence Chairman 5th September 2002 PROFIT AND LOSS ACCOUNT For the year ended 31 March 2002 2002 2001 £ £ (as restated) TURNOVER 34,037,236 31,908,503 Cost of sales (20,840,817) (19,418,295) GROSS PROFIT 13,196,419 12,490,208 Net operating expenses (9,482,794) (8,333,635) OPERATING PROFIT 3,713,625 4,156,573 Share of profits of associate - 40,000 Income from listed fixed asset investments 38,622 18,622 Exceptional item (amounts written off (2,640,842) (475,349) investments) Net interest (350,782) (280,212) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 760,623 3,459,634 Tax on profit on ordinary activities (669,958) (880,395) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 90,665 2,579,239 Minority interest - equity (286,663) (549,822) (LOSS)/PROFIT FOR THE FINANCIAL YEAR (195,998) 2,029,417 Dividends - equity (1,182,973) (895,040) RETAINED (LOSS)/PROFIT TRANSFERRED TO RESERVES (1,378,971) 1,134,377 EARNINGS PER SHARE ( 2.70)p 28.34 p DILUTED EARNINGS PER SHARE (2.67)p 27.95 p ADJUSTED EARNINGS PER SHARE 28.99 p 37.22 p BALANCE SHEET 31 March 2002 2002 2001 £ £ (as restated) FIXED ASSETS Intangible assets 5,636,429 2,962,274 Tangible assets 1,565,898 1,661,691 Investments 1,107,774 1,107,774 Investment in associate - 1,080,178 8,310,101 6,811,917 CURRENT ASSETS Stocks 7,590,363 8,086,322 Debtors 12,421,819 11,340,519 Cash at bank and in hand 1,464,083 400,710 21,476,265 19,827,551 CREDITORS:AMOUNTS FALLING DUE WITHIN ONE YEAR (11,478,055) (11,695,573) NET CURRENT ASSETS 9,998,210 8,131,978 TOTAL ASSETS LESS CURRENT LIABILITIES 18,308,311 14,943,895 CREDITORS:AMOUNTS FALLING DUE AFTER ONE YEAR (1,309,897) (1,176,815) PROVISIONS FOR LIABILITIES AND CHARGES (570,707) (45,437) 16,427,707 13,721,643 CAPITAL AND RESERVES Called up share capital 854,132 716,032 Share premium account 7,251,818 3,246,228 Capital redemption reserve 105,829 105,829 Profit and loss account 7,950,928 9,571,579 EQUITY SHAREHOLDERS' FUNDS 16,162,707 13,639,668 Minority interest - equity 265,000 81,975 16,427,707 13,721,643 CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 March 2002 2002 2001 £ £ NET CASH INFLOW FROM OPERATING ACTIVITIES 4,588,125 2,049,622 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 28,944 64,869 Interest paid (379,726) (345,081) Dividends received 38,622 18,622 NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (312,160) (261,590) TAXATION (694,781) (998,963) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of intangible fixed assets (1,402,832) (786,270) Purchase of tangible fixed assets (258,088) (447,699) Purchase of investments (1,047,719) - Sale of tangible fixed assets 41,115 27,334 NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (2,667,524) (1,206,635) ACQUISITIONS Purchase of businesses (1,477,130) - NET CASH OUTFLOW FROM ACQUISITIONS (1,477,130) - EQUITY DIVIDENDS PAID (894,661) (815,658) FINANCING Issue of shares 4,143,689 - (Repayment of)/Increase in borrowing (net) (410,645) 2,405 NET CASH INFLOW FROM FINANCING 3,733,044 2,405 Increase/(Decrease) in cash 2,274,913 (1,230,819) STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year Ended 31 March 2002 2002 2001 £ £ (as restated) (LOSS)/PROFIT FOR THE FINANCIAL PERIOD (1,378,971) 1,134,377 Exchange differences (241,674) 8,472 Total recognised gains and losses for the period (1,620,645) 1,142,849 NOTES 1.NET OPERATING EXPENSES Total Total 2002 2001 £ £ Distribution costs 513,291 453,298 Administrative expenses 9,093,388 8,426,005 Other operating income (123,885) (545,668) 9,482,794 8,333,635 2.PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2002 2001 £ £ Hire of plant and machinery 32,989 27,197 Gain on foreign currency transactions (363,345) (287,281) Depreciation - owned assets 304,622 275,593 Amortisation of intangible assets 425,807 319,070 Loss/(profit) on disposal of fixed assets 8,144 (5,174) Auditors' remuneration - audit services 25,000 38,000 - non audit services 38,164 34,920 3.DIVIDENDS 2002 2001 £ £ Equity dividends: Ordinary shares Interim dividend of 3.1p per Ordinary 10p share (2001: 2.8p) 264,781 200,489 Proposed final dividend of 10.75p per Ordinary 10p share (2001: 9.7p) 918,192 694,551 1,182,973 895,040 4.EARNINGS PER SHARE The calculation of earnings per share is based upon the profit for the financial year dividend by the weighted average number of ordinary shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. 2002 2001 Weighted Weighted average Per average Per number of share Earnings number of share Earnings shares amount (as restated) shares amount £'000 '000 (pence) £'000 '000 (pence) Basic earnings per share Earnings attributable to ordinary shareholders (196) 7,250 (2.70) 2,029 7,160 28.34 Dilutive effect of securities Options - 96 0.03 - 96 0.39 (196) 7,346 (2.67) 2,029 7,256 27.95 An adjusted earnings per share has also been presented, based on profit after tax excluding amortisation, exceptional and non-recurring items. This basis has been used to show the underlying performance of the continuing business and the directors consider that this gives a useful additional indicator. 2002 2001 Weighted Weighted average Per average Per number of share Earnings number of share Earnings shares amount (as restated) shares amount £'000 '000 (pence) £'000 '000 (pence) Basic earnings per share Earnings attributable to ordinary shareholders (196) 7,250 (2.70) 2,029 7,160 28.34 Adjustments Goodwill amortisation 66 0.91 56 1 0.78 Exceptional item (amounts written off investments 2,641 36.43 475 6.63 Less tax effects (409) (5.64) - - Non-recurring business relocation expenses - - 105 1.47 Adjusted basic earnings per share 2,102 7,250 28.99 2,665 7,160 37.22 5.NET CASH INFLOW FROM OPERATING ACTIVITIES 2002 2001 £ £ Operating profit 3,713,625 4,156,573 Exchange loss (226,048) (4,612) Depreciation 304,622 275,593 Amortisation charge 425,807 319,070 Loss/(Profit) on disposal of fixed assets 8,144 5,174 Decrease/(Increase) in stocks 795,959 (837,551) (Increase) in debtors (1,394,245) (1,775,336) (Decrease)/Increase in creditors 960,261 (78,941) --------- --------- Net cash inflow from operating activities 4,588,125 2,049,622 6. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2002 2001 £ £ Increase/(Decrease) in cash in the year 2,274,913 (1,230,819) Decrease/(Increase) in debt 410,645 (2,405) --------- --------- Change in net debt resulting from cash flows 2,685,558 (1,233,224) Effect of foreign exchange differences (119,264) (10,615) --------- --------- Movement in net debt in the year 2,566,294 (1,243,839) Net debt at 1 April 2001 (5,050,201) (3,806,362) --------- --------- Net debt at 31 March 2002 (2,483,907) (5,050,201) 7.REPORT & FINANCIAL INFORMATION The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The summarised balance sheet at 31 March 2002 and the summarised profit and loss account, summarised cash flow statement and associated notes for the year then ended have been extracted from the Group's 2002 statutory financial statements upon which the auditors opinion is unqualified and does not include any statement under section 237 of the Companies Act 1985. Copies of the financial statements for the Group for the year ended 31 March 2002 for a period of one month will be available from the offices of Charles Stanley & Company Limited, 25 Luke Street, London EC2A 4AR and will be posted to shareholders within the next 14 days. This information is provided by RNS The company news service from the London Stock Exchange

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