Interim Results

Lawrence PLC 12 December 2005 Lawrence plc Interim Results for the six months to 30 September 2005 HIGHLIGHTS - EBITDA on continuing businesses increased 51 per cent to £1.43 million (2004: £0.95 million) - Sales on continuing businesses grew 15 per cent to £9.2 million (2004: £8.0 million) - Interim dividend raised 11 per cent to 1.55 pence (net) per share (2004: 1.4 pence) - Aivlosin sales well ahead of same period last year - Agil increasing global market share of its natural feed additives - Continued group focus on core animal health and feed businesses - Strong start to second half of financial year Peter Lawrence, Chairman of Lawrence plc, commented: 'The results for the first half of the year have highlighted the transition that the Group is undergoing. The full benefit of these changes will be felt increasingly over the coming months. The second half has started strongly with further advances in sales of our animal pharmaceutical products. This growth, coupled with further Aivlosin registration approvals for Europe anticipated before the end of our current financial year, underpins the exciting potential for the Group'. Contacts: Lawrence plc Peter Lawrence 020 8336 2900 Spiro Financial Anthony Spiro 020 8336 6196 Charles Stanley & Co Ltd Philip Davies 020 7739 8200 CHAIRMAN'S STATEMENT I am pleased to report that the Group made further good progress in the six months ended 30 September 2005. The current year continues to be one of transition for the Group following the disposal of Interpet and Blackfast Chemicals. In October 2004 we purchased the 50 per cent of ECO Animal Health that we did not already own. This transaction reflected our confidence in ECO and the Group's increasing focus on animal pharmaceutical and feed products worldwide. As a result of the ECO purchase we can now take the full benefit of consolidating ECO and no longer have to subtract the minority element. The minority in the equivalent period last year was £151,000; this year on the same basis it would have been close to £370,000. The elimination of the ECO minority is very positive for the Group but makes direct comparison between this year and last at the pre tax level somewhat confusing, particularly in view of the impact of the amortisation of goodwill resulting from the acquisition. Comparison with last year is more meaningful at the EBITDA level (earnings before interest, tax, depreciation and amortisation). EBITDA on continuing operations for the six months to 30 September 2005 was £1.43 million, which is some 51 per cent ahead of last year's level of £948,000. Sales were ahead by 14.5 per cent to £9.2 million for the period and earnings per share, before amortisation of goodwill were 2.26 pence. The Board has continued its progressive dividend policy and declared an interim dividend of 1.55 pence (net) per share, 10.7 per cent above the level of last year. The dividend will be paid on 7 April 2006 to shareholders on the register on 17 March 2006. Marc Loomes, Managing Director of ECO Animal Health, was appointed to the Board of Lawrence plc on 1 December 2005. Marc has worked in the animal pharmaceutical industry for many years and joined ECO in 2004. I am pleased to welcome Marc, his knowledge and experience will complement that of the existing Board and I am confident that he will be a great asset to the Group. ECO GROUP: Sales of ECO Animal Health's pharmaceutical products were in line with our expectations for the first six months of the year and thirty per cent above the level of the equivalent period last year. I am pleased to report that sales of Aivlosin have continued to grow apace and this has continued beyond the period end. The third quarter of our financial year has started well and we are expecting to receive further Aivlosin marketing authorisations early in 2006 from the European Agency for the Evaluation of Medicinal Products (EMEA). These approvals should lead to further substantial orders for Aivlosin which we have built in to our budget for the current financial year. In October we announced the receipt of a positive opinion from the EMEA allowing ECO to include its new manufacturing facility on the registration for Aivlosin for swine pneumonia in Europe. Schering-Plough Animal Health's marketing launch of Aivlosin across the seventeen European countries where they represent ECO, took longer than we would have wanted. The logistics of combining the most important pig vets and experts in one conference was understandably time consuming. The product has been well received and repeat orders already taken; this bodes well for the future. We have continued to expand the registration and sales management departments of ECO in anticipation of the sales growth, which will follow the grant of further drug registrations. As always, the delays we face from the regulatory authorities around the world continue to frustrate us but in the longer term they provide us with greater security via higher barriers to entry to these profitable and growing markets. Good progress has been made in Japan where we have received new Ecomectin licences. In addition outline terms have been agreed for ECO to take over the sales and marketing effort for Aivlosin in Japan from our previous supplier, who has ceased production. Worldwide sales will be channelled through ECO Animal Health from our new manufacturing facility. China continues to represent one of the largest opportunities to expand our business and the joint venture at ECO Biok has made significant progress. It currently employs a sales and management team of 18 people who are setting up distributors throughout China and as I have mentioned before, with mandatory Good Manufacturing Practice being imposed on all animal health medication products in China, we should enjoy a more rapid expansion in this exciting and fast growing market. Registration work continues at full speed in our North American office where we remain optimistic Aivlosin should receive approval within the next two years. In Latin America, we have been granted marketing approval for Venezuela and similar permission for Chile is expected before the year end. The continuing expansion in the meat production industries of Latin America is making this region a most important market for ECO. Avian flu has been the subject of media speculation and comment over recent weeks. If there is a downturn in poultry consumption in Europe, consumers may switch to alternatives such as beef, lamb and pork. This would be beneficial for ECO as it already holds Aivlosin and Ecomectin drug registrations for these species. Registration applications for Aivlosin for poultry in Europe have been filed but approvals are not expected for some time. Agil: Agil performed at a similar level to last year even though its global marketplace is being affected by the repercussions from the outbreak of avian flu in Asia. Competitor activity in our natural feed additive market is also growing as suppliers seek to benefit from the opportunities resulting from the abolition of antibiotic growth promoters for livestock in Europe. Agil is in a strong position to capitalise on this new situation as one of few companies accredited by FEMAS (Feed Materials Assurance Scheme), the principal regulatory authority, to supply antibiotic free animal feed. As the new regulations come into force, Agil should benefit from the intensive trial work undertaken and the proven efficacy of its range of antibiotic growth promoter replacements. In addition, Agil has embarked on a focused research and development programme to ensure that its pipeline of new products will generate future growth in sales and contribution. Outlook: The results for the first half of the year have highlighted the transition that the Group is undergoing. The full benefit of these changes will be felt increasingly over the coming months. The second half has started strongly with further advances in sales of our animal pharmaceutical products. This growth, coupled with further Aivlosin registration approvals for Europe anticipated before the end of our current financial year, underpins the exciting potential for the Group. Peter A Lawrence Chairman 12 December 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months Six months Year Year ended ended ended ended 30.09.05 30.09.04 31.03.05 31.03.05 (unaudited) (unaudited) (audited) (audited) £000 £000 £000 £000 TURNOVER Continuing operations 9,162 8,000 17,031 Discontinued operations* - 399 767 17,798 ------------- Cost of sales (6,090) (5,352) (11,310) ------------- ------------- ------------- GROSS PROFIT 3,072 3,047 6,488 Administrative expenses (1,642) (1,494) (3,470) Depreciation (599) (406) (921) Goodwill amortisation (511) (12) (534) ------------- ------------- ------------- OPERATING PROFIT Continuing operations 320 1,038 1,374 Discontinued operations* 97 189 1,563 ------------- Exceptional items - - 1,754 Interest received/(payable) (126) 128 136 1,890 ------------- ------------- ------------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 194 1,263 3,453 Taxation (3) (310) (505) ------------- ------------- ------------- PROFIT AFTER TAX 191 953 2,948 Minority interest - (151) (38) ------------- ------------- ------------- PROFIT FOR PERIOD 191 802 2,910 Dividends (482) (375) (1,924) ------------- ------------- ------------- RETAINED PROFIT TRANSFERRED TO RESERVES (291) 427 986 ------------- ------------- ------------- BASIC EARNINGS PER SHARE 0.62p 3.00p 10.25p FULLY DILUTED EARNINGS PER SHARE 0.62p 2.96p 10.22p BASIC EARNINGS PER SHARE BEFORE AMORTISATION OF GOODWILL 2.26p 3.04p 12.13p * Blackfast Chemicals BALANCE SHEET Six months Six months Year ended ended 30.09.05 ended 30.09.04 31.03.05 (unaudited) (unaudited) (audited) £000 £000 £000 FIXED ASSETS Intangible assets 27,544 6,312 26,818 Tangible assets 904 873 881 Investments 1,283 1,252 1,283 --------------- --------------- --------------- 29,731 8,437 28,982 CURRENT ASSETS Stock 4,260 3,284 3,375 Debtors 9,170 8,236 10,228 Cash at bank and in hand 1,451 11,530 1,324 --------------- --------------- --------------- 14,881 23,050 14,927 CREDITORS Amounts falling due within one year (7,629) (7,485) (6,865) --------------- --------------- --------------- NET CURRENT ASSETS 7,252 15,565 8,062 TOTAL ASSETS LESS CURRENT LIABILITIES 36,983 24,002 37,044 CREDITORS Amounts falling due after more than one year (2,047) (1,292) (2,047) --------------- --------------- --------------- NET ASSETS 34,936 22,710 34,997 ======== ======== ======== CAPITAL AND RESERVES Called up share capital 1,554 1,341 1,548 Share premium 21,224 7,987 21,037 Capital redemption reserve 106 106 106 Profit and loss account 12,050 11,915 12,304 Minority interest 2 1,361 2 --------------- --------------- --------------- SHAREHOLDERS' FUNDS 34,936 22,710 34,997 ======== ======== ======== CASH FLOW STATEMENT Six months Year ended ended 30.09.05 31.03.05 (unaudited) (audited) £000 £000 NET CASH INFLOW FROM OPERATING ACTIVITIES 276 15,170 --------------- --------------- RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest received 41 318 Interest paid (167) (182) --------------- --------------- NET CASH (OUTFLOW)/INFLOW FROM RETURNS ON INVESTMENT AND SERVICING OF FINANCE (126) 136 --------------- --------------- TAXATION 27 (705) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of intangible fixed assets (1,775) (4,705) Purchase of tangible fixed assets (85) (119) Purchase of investments - (6,969) Sale of tangible fixed assets - 14 --------------- --------------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (1,860) (11,779) --------------- --------------- DISPOSALS 1,300 - EQUITY DIVIDENDS PAID (434) (1,870) FINANCING Issue of shares 193 1,311 Increase in borrowing (net) 751 728 --------------- --------------- NET CASH INFLOW FROM FINANCING 944 2,039 --------------- --------------- INCREASE IN CASH 127 2,991 ======== ======== Notes 30.09.05 31.03.05 31.03.05 31.03.05 (1) RECONCILIATION OF OPERATING PROFIT TO NET Continued Discontinued Total CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES £000 £000 £000/ £000 Operating profit 321 1,374 189 1,563 Exchange gains/(losses) 36 (173) - (173) Depreciation charge 599 79 6 85 Amortisation charge 511 1,369 - 1,369 Increase in stocks (885) (1,126) (20) (1,146) (Increase)/decrease in debtors (319) 14,849 (11) 14,838 Increase/(decrease) in creditors 13 (1,394) 28 (1,366) ----------------- ----------------- ----------------- ----------------- Net cash inflow from operating activities 276 14,978 192 15,170 ========= ========= (2) RECONCILIATION OF NET CASH FLOW TO MOVEMENT 30.09.04 31.03.05 IN NET DEBT £000 £000 Increase in cash in the period 127 2,991 Increase in debt (751) (728) ----------------- ----------------- Change in net debt resulting from cash flows (624) 2,263 Effect of foreign exchange (losses) - (27) ----------------- Movement of net debt in the period (624) 2,236 ----------------- ----------------- Net debt at 1st April 2005 (1,514) (3,750) ========= ========= Net debt at 30th September 2005 (2,138) (1,514) ========= ========= (3) RECONCILIATION ANALYSIS OF CHANGES IN NET DEBT At 1.4.05 Cash flow At 30.9.05 At 30.9.04 £000 £000 £000 £000 Cash at bank and in hand 1,324 127 1,451 11,530 Overdrafts (791) (751) (1,542) - ----------------- ----------------- ----------------- ----------------- 533 (624) (91) 11,530 Debt (2,047) - (2,047) (1,550) ----------------- ----------------- ----------------- ----------------- (1,514) (624) (2,138) 9,980 ========= ========= ========= ========= Notes The summarised results of the half year to 30 September 2005, which are unaudited, have been prepared in accordance with the accounting policies in the Accounts for the period ended 31 March 2005. The summary of results for the year ended 31 March 2005 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 1.55p per share (2004: 1.40p), payable on 7 April 2006 to shareholders on the register on 17 March 2006. The calculation of basic earnings per ordinary share is based on the profit for the period and 30,975,704 ordinary shares (2004: 26,785,450) 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 31 March 2005 was 28,388,913. There are currently 31,080,227 shares in issue. A claim has been submitted to the Inland Revenue in respect of our enhanced expenditure on research and development costs in Eco Animal Health and therefore no tax charge has been applied to this subsidiary in the consolidation of these results. The interim report was issued to the Stock Exchange and the press on 12 December 2005 and will be posted to shareholders. Further copies of the interim report are available at the Company's Registered Office. This information is provided by RNS The company news service from the London Stock Exchange

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