Interim Results - Pre-tax Profit Up 31%

Lawrence PLC 17 December 1999 LAWRENCE PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999 Lawrence plc, traded on AIM, comprises a group of companies specialising in pet care accessories and high quality chemical products within niche areas of animal feed, animal health and metal finishing. HIGHLIGHTS * Another good start to the year despite the strength of Sterling. * Profit before tax and exceptional item increased 31% to £1.83 m (1998: £1.40m) * Earnings per share up 8% to 16.6p (1998: 15.4p) before exceptional charge and goodwill amortisation * Interim dividend up 14% to 2.50p (net) per share * Purchase of Aquarium Products, USA in September * Gearing 17% - down from 22% in March Commenting on the results Peter Lawrence, Chairman, said: 'The second half has started well and we look forward with confidence. We expect to generate continued growth from our existing group of businesses while remaining on the look out for further suitable acquisitions, at the right price, to compliment our product portfolio. I hope to report further progress in this area soon. The outlook for Lawrence is excellent and we will continue to develop the business in order to generate shareholder value and deliver results in line with the demanding expectations of our loyal shareholders.' Enquiries: Peter Lawrence, Lawrence plc 0208-336 2900 Robin Dunham, Charles Stanley & Company Limited 0207-739 8200 ______________________________________________________________________________ NOTES 1. The summarised results of the half year to 30th September 1999, which are unaudited, have been prepared in accordance with the accounting policies in the Accounts for the period ended 31st March 1999. 2. Earnings per share are based on the weighted average number of shares in issue for each period. The average number in issue was 7,070,256 (1998: 7,052,849). 3. Copies of the Interim Report and Accounts will be posted to shareholders and will be available to members of the general public from the Company's registered office: Lawrence plc, 78 Coombe Road, New Malden, Surrey, KT3 4QS. 4. Copies of this announcement will be available for a period of 14 days from Charles Stanley and Company Limited, 25 Luke Street, London EC2A 4AR. CHAIRMAN'S STATEMENT I am pleased to report that in the six months to 30th September 1999, the Group made further good progress. Pre-tax profit before the exceptional item, which arose from the disposal of a freehold in Petworld (which business was sold in 1996) increased 31 per cent to £1.83 million (1998 £1.40million). Earnings per share, before amortisation of goodwill and the exceptional item were 16.6 pence, 8 per cent ahead of last year. This strong performance was achieved in very competitive markets characterised by low rates of inflation and our businesses did well to raise turnover by 13 per cent to £13.2 million. The Board has declared an interim dividend of 2.50 pence (net) per share (1998 2.20 pence (net)) which will be paid on 6th April 2000 to shareholders on the register on 6th January 2000. Acquisition: At the end of September we acquired Aquarium Products for approximately £1.3 million, the consideration was satisfied in cash from our existing bank facilities. This company, which is based in Baltimore, has a long association with us having been Interpet's American distributor for many years. The retiring owners have built the business to be a key national supplier to pet retailers across the USA while also including WalMart, the world's largest retailer, among its customer base. We have identified a significant opportunity to expand Aquarium's product ranges and have already relocated a senior member of Interpet's management to Baltimore to work with the existing, experienced and successful team. Shareholders: In my September statement in the Annual Report I referred to the frustration that we all felt regarding the share price performance. It is disappointing that the stock market is failing to recognise the achievements of smaller companies (often being defined as those with a market capitalisation below £300 million). Businesses of our size have always been a fashion item among stock markets and while many smaller companies like us have consistently delivered growth ahead of the average of their larger counterparts, this has not been reflected in valuations. I hope that the new Millennium brings a welcome change in this situation as we continue to deliver growth. We are committed to maintaining the profitable growth of Lawrence and building on our many years of experience and success in our specialist markets. The Board has always recognised the importance of developing our businesses and has recently approved a record level of investment for the current year. This will be spent on a number of expansion programmes and product and market development opportunities, which, while inevitably incurring some short-term costs, offer very attractive returns. Agil: Agil has performed most creditably to maintain its position supplying the global agricultural industry. Sales in Europe continue to be affected by the strength of Sterling and our distributors have fought hard to expand market share. We have been particularly successful with products at the top end of our range; PRE-FECT, the new concept drug-free growth enhancer has been very well received. Ongoing trials with this product are giving very encouraging results and we believe that sales opportunities world-wide are most promising. We expect demand for our drug free products to accelerate as the remaining antibiotic growth promoter formulations are phased out under new EC regulations. We have well-established marketing and distribution operations in Asia, Central and South America and each of these territories has performed in line with expectations. Blackfast Chemicals: Blackfast's policy of focusing sales effort away from the beleaguered UK manufacturing industry toward more active overseas markets has been rewarded by ahead of target sales on the American continents and the Middle East. Similar results in South East Asia and China indicate that future sales in the Pacific Rim area have turned the corner and will continue to return growth. Safety features of our product range have been enhanced this year by the development of several innovations, which not only have a cost saving element for the customer, but also anticipate the tightening of environmental legislation. Blackfast's environmentally friendly finishing process is now accepted in those countries with the strictest of environmental laws and is a convenient and cost effective addition to any production line. Eco Group: In September ECO Animal Health was granted some of the European registration for its own brand of Ivermectin products, ECOMECTIN, for which applications were made in December 1997. Registrations for Ivermectin are a major importance to the development of ECO as it is the world's largest selling animal health ingredient, used to eliminate internal and external parasites. Following extensive work for the registration of AIVLOSIN, ECO's patented macrolide antibiotic used for the treatment of respiratory and dysentery type diseases in pigs and poultry, we have now obtained animal and human safety clearance and registration throughout Europe is now expected during the year 2000. Once granted, AIVLOSIN will make a significant contribution to the profitability of the Group. In addition to the registration achievements mentioned before, the European registrations for CHLORTET FG which is ECO's successful broad spectrum therapeutic antibiotic, have now been obtained and sales will commence this autumn. These valuable registrations and permissions to sell in the heavily regulated European market signal the start of a big step forward in ECO's sales and profits. Interpet: Further consolidation of the Blagdon water garden products and Salamander book businesses has been an important feature of Interpet's first six months. Trading in Blagdon has been well up to expectations and already nearly 50 new products have been added to the range. Investment in new books has been heavy but given that many months are necessary to move from conception and writing to receiving finished books, contributions from the first of the new titles will be reflected in the second half of the year. Both the London and Frankfurt Book Fairs were attended and significant forward orders booked. Interpet's Pond and Aquatic business in Europe continues to be affected adversely by a strong pound but UK sales have grown to make up for the shortfall. The Pet Division continues to grow and the work done in our China office, forging closer ties with our Far East partners, is beginning to benefit the growth of Interpet. Outlook: The second half has started well and we look forward with confidence. We expect to generate continued growth from our existing group of businesses while remaining on the look out for further suitable acquisitions, at the right price, to compliment our product portfolio. I hope to report further progress in this area soon. The outlook for Lawrence is excellent and we will continue to develop the business in order to generate shareholder value and deliver results in line with the demanding expectations of our loyal shareholders. Peter A Lawrence Chairman 17 December 1999 CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months Six months Year ended ended ended 30.09.99 30.09.98 31.03.99 £000 £000 £000 ------- ------- ------- TURNOVER Continuing operations 13,232 11,398 24,498 ------- ------- ------- Cost of sales -8,059 -6,989 -15,059 ------- ------- ------- GROSS PROFIT 5,173 4,409 9,439 Administrative expenses -3,382 -3,036 -6,318 ------- ------- ------- OPERATING PROFIT 1,791 1,373 3,121 Share of profit (losses) of associated undertakings 60 40 57 and provisions ------- ------- ------- 1,851 1,413 3,178 Interest and income from investments 122 76 54 ------- ------- ------- 1,973 1,489 3,232 EXCEPTIONAL ITEMS loss on sale of fixed asset -94 - - Interest payable -139 -92 -204 ------- ------- ------- PROFIT ON ORDINARY 1,740 1,397 3,028 ACTIVITIES BEFORE TAXATION Taxation -510 -462 -1,202 ------- ------- ------- PROFIT AFTER TAX 1,230 935 1,826 Minority interest -128 152 303 ------- ------- ------- PROFIT FOR PERIOD 1,102 1,087 2,129 Dividends -179 -155 -728 ------- ------- ------- RETAINED PROFIT 923 932 1,401 EARNINGS PER SHARE PRIOR TO GOODWILL AMORTISATION 16.6p 15.4p 30.2p AND EXCEPTIONAL ITEMS BASIC EARNINGS PER SHARE 15.6p 15.4p 30.2p FULLY DILUTED EARNINGS PER SHARE 15.3p 15.0p 29.4p CONSOLIDATED BALANCE SHEET Six months Six months Year ended Ended 30.09.99 ended 30.09.98 31.03.99 (unaudited) (unaudited) (audited) £000 £000 £000 ------- ------- ------- FIXED ASSETS Intangible Assets 2,148 43 989 Tangible Assets 1,432 2,480 1,873 Investments 2,410 2,428 2,431 ------- ------- ------- 5,990 4,951 5,293 CURRENT ASSETS Stock 6,676 5,412 6,343 Debtors 7,932 5,958 8,507 Cash at Bank and in Hand 178 640 1,692 ------- ------- ------- 14,786 12,010 16,542 CREDITORS Amounts falling due within one year -7,649 -6,674 -10,840 ------- ------- ------- NET CURRENT ASSETS 7,137 5,336 5,702 TOTAL ASSETS LESS 13,127 10,287 10,995 CURRENT LIABILITIES CREDITORS Amounts falling due after more than one year 1,557 - 518 Provision for liabilities and charges - ------- ------- ------- NET ASSETS 11,570 10,287 10,477 ======= ======= ======= CAPITAL AND RESERVES Called up share capital 710 706 707 Share Premium 3,196 3,131 3,157 Capital Redemption Reserve 106 105 106 Profit and Loss Account 8,110 6,796 7,187 Minority Interest -552 -451 -680 ------- ------- ------- SHAREHOLDERS' FUNDS 11,570 10,287 10,477 ======= ======= ======= CONSOLIDATED CASH FLOW STATEMENT Six months ended Year ended Note 30.09.99 31.03.99 £000 £000 ------- ------- NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES (1) 2,380 -655 RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest Received 117 12 Interest Paid -168 -217 Dividends Received 5 54 ------- ------- NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND SERVICING OF FINANCE -46 -151 ------- ------- TAXATION -548 -930 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of Intangible Fixed Assets -303 -403 Purchase of Tangible Fixed Assets -146 -777 Sales of Investments 26 Sale of Tangible Fixed Assets 386 30 ------- ------- NET CASH (OUTFLOW) FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT -63 -1,124 ------- ------- ACQUISITIONS Purchase of business -1,226 -397 Net cash balances acquired with subsidiary undertaking 42 ------- ------- NET CASH OUTFLOW FROM ACQUISITIONS -1,226 -355 ------- ------- EQUITY DIVIDENDS PAID -155 -513 FINANCING Issue of shares 42 106 Repayment of borrowing -46 ------- ------- NET CASH INFLOW FROM FINANCING 42 60 ------- ------- ------- ------- INCREASE IN CASH (2) 384 -3,668 ------- ------- Notes (1) RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES Operating Profit 1,820 3,121 Depreciation charge 130 276 Amortisation charge 76 105 Profit on disposal of fixed asset investments -20 (Increase)/Decrease in stocks. -20 -1,407 Decrease in debtors 929 1,242 (Decrease)/increase in creditors -555 -3,972 ------- ------- 2,380 -655 ------- ------- (2) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (Decrease)/increase in cash in the year 384 -3,688 Cash outlfow from financing 46 ------- ------- Change in net debt resulting from cashflow 384 -3,622 Effect of foreign exchange changes 138 ------- ------- 384 -3,484 Net Debt at 1st April 1999 -2,379 1,105 ------- ------- -1,995 -2,379 ======= ======= (3) RECONCILIATION ANALYSIS OF CHANGES IN NET DEBT At 1.4.99 Cash flow At 30.9.99 £000 £000 £000 Cash at Bank and in Hand 1,691 -1,513 178 Overdrafts -3,293 2,677 -616 ------- ------- ------- -1,602 1,164 -438 Debt -777 -780 -1,557 ------- ------- ------- -2,379 384 -1,995 ======= ======= ======= NOTES TO THE INTERIM REPORT The summarised results of the half year to 30th September 1999, which are unaudited, have been prepared in accordance with the accounting policies in the Accounts for the period ended 31st March 1999. The results for the first half of the 1999/00 financial year have not been audited. The summary of results for the year ended 31st March 1999 does not constitute full financial statements within the meaning of Section 240 of the Companies Act 1985. The full financial statements for that year have been reported on by the company's auditors and delivered to the Registrar of Companies. The audit report was unqualified and did not contain a statement under Section 237 (2) or Section 237 (3) of the Companies Act 1985. The directors have declared an interim dividend of 2.50p per share (1998: 2.20p), payable on 6th April 2000 to shareholders on the register on 6th January 1999. The calculation of earnings per ordinary share is based on the profit for the period and 7,070,256 ordinary shares (1998: 7,052,849) being the weighted average number of shares in issue during the half year. The weighted average number of shares in issue during the year ended 31st March 1999 was 7,058,337. The exceptional item arises from the sale of the freehold of a Petworld store, which business was sold in 1996. The interim report was issued to the Stock Exchange and the press on 17th December 1999 and will be posted to shareholders. Further copies of the Interim Report are available at the Company's Registered Office.

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