Interim Results

Lawrence PLC 28 November 2006 28 November 2006 Lawrence plc Interim Results for the six months ended 30 September 2006 HIGHLIGHTS • EBITDA increased 17 per cent to £1.67 million (2005: £1.43 million) • Interim dividend raised 10 per cent to 1.70 pence (net) per share (2005: 1.55 pence) • Agil disposal completed after period end • Group now focused principally on veterinary pharmaceutical products • Aivlosin sales well ahead of same period last year • Important further drug registrations granted during period Peter Lawrence, Chairman of Lawrence plc, commented: 'Our drug development and registration programme, which is expected to peak in 2007, will benefit from the application of the Agil consideration. Our heightened focus on our animal health business, coupled with the exciting potential of our development programmes, should result in the creation of significant shareholder value' Contacts: Lawrence plc Peter Lawrence 020 8336 6190 Spiro Financial Anthony Spiro 020 8336 6196 Charles Stanley Securities Philip Davies 020 7149 6224 Lawrence plc is a leader in the development, manufacture and distribution of principally specialist chemical and pharmaceutical products for the animal health and farming markets worldwide. 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 the Group continued to make good progress in the six months ended 30 September 2006. Sales increased to £9.7 million, almost 6 per cent above the equivalent period last year. Profit comparison with last year is more meaningful at the EBITDA level (earnings before interest, tax, depreciation and amortisation). EBITDA for the six months to 30 September 2006 was £1.67 million, an increase of nearly 17 per cent from last year's level of £1.43 million. The continuing weakness of the US dollar, which had fallen by over ten per cent against sterling since the beginning of the year, has once again masked the underlying performance, particularly at ECO Group, which invoices predominately in dollars. The Board has maintained its progressive dividend policy and declared an interim dividend of 1.7 pence (net) per share, some ten per cent above the level of the equivalent period last year. The dividend will be paid on 7 April 2007 to shareholders on the register on 16 March 2007 Agil On 3 November 2006 we announced that agreement had been reached with AIM quoted Kiotech International plc (Kiotech) to sell our Agil Division to Kiotech. This is a further step towards our goal to focus completely on our core animal health businesses. We purchased Agil in 1990 and it has developed strongly under our ownership but it is now no longer compatible with our strategy and we are confident that it will benefit from the new opportunities offered by Kiotech. I am pleased to report that at an Extraordinary General Meeting, held on 27 November 2006, Kiotech's shareholders approved the transaction, which, subject to admission today of the new ordinary shares in Kiotech, will complete today, 28 November 2006. The total consideration of £5.5 million is made up of £5.25 million in cash with the balance in Kiotech new ordinary shares issued at three pence per share. Kiotech is a British biotechnology company working in partnership with the UK Government Agency CEFAS (the Centre for Environment, Fisheries & Aquaculture Science). This partnership has developed innovative pheromone technology, which Kiotech believes can improve both production in fish farming and also the sustainability of worldwide commercial fishing. About a year ago, we entered into an agreement with Kiotech to exclusively market its technology worldwide in aquaculture, which is a market already well serviced by Agil. The combination of these two companies is logical and provides a natural fit. ECO Group Sales of ECO Animal Health's pharmaceutical products were ahead of the level of the equivalent period last year with EBITDA more than eight percent up and gross margins ahead by over 11 per cent, reflecting an improved product mix and further investment in sales management. Sales of Aivlosin, our patented macrolide antibiotic, have continued to grow strongly boosted in part through the launch by Schering- Plough Animal Health in Europe of two new Aivlosin indications (diseases) in September 2006. These new indications are for ileitis and dysentery, enteric diseases of swine. The product is now available in presentations, which meet the regulatory requirements for premixes and oral doses, including a three kilogram oral powder in all EU countries. The international marketing of Aivlosin continues apace with approvals in Chile and Venezuela completing our coverage of Latin and Central America. A further distributor was appointed to increase our coverage and penetration of the important Brazilian market. The first orders for Aivlosin were received from Schering-Plough, our distributor in Japan, under the recently signed agreement for Japan and Korea. Furthermore, a new marketing authorization for China for a water-soluble presentation of Aivlosin has also recently been granted. Good progress continues with our registration work in the USA and submissions are still currently on schedule. ECO maintains an active product development programme and has close relations with leading research centres. ECO's sponsored research, in partnership with the University of Cambridge, has indicated that Aivlosin, may be suitable for treating certain additional diseases in pigs and poultry. ECO has entered into a licensing agreement with Cambridge Enterprise and has also entered into a collaborative research agreement so that the Department of Pathology at Cambridge can investigate these new indications for Aivlosin. Although this research is at an early stage, it does indicate that Aivlosin may have a significantly wider reach than was previously thought, but much trial work still remains to be done. Ecomectin, ECO's anti-parasitic endectocide, is also penetrating new market segments. An additional approval was received for Ecomectin Injection in Europe now for cattle, sheep and swine. Ecomectin Pig Premix was approved in Japan. After the period end, the Irish Medicines Board approved Ecomectin Horse Paste, used for deworming. We are using the accelerated application process under the European Mutual Recognition Procedure (MRP) to apply for further marketing authorisations for Horse Paste throughout the European Union. The preferential consideration embodied in the MRP should shorten the time to market in those countries. Outlook Our drug development and registration programme, which is expected to peak in 2007, will benefit from the application of the Agil consideration. This should over time drive strong Aivlosin sales as we enter new markets with additional licenses for more diseases. Our heightened focus on our animal health business, coupled with the exciting potential of our development programmes, should result in the creation of significant shareholder value. Peter Lawrence 28 November 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months Six months Year ended ended ended 30.09.06 30.09.05 31.03.06 (unaudited) (unaudited) (audited) £000 £000 £000 TURNOVER Continuing operations 9,698 9,162 20,333 Cost of sales (6,535) (6,090) (13,753) ----------------- ----------------- ----------------- GROSS PROFIT 3,163 3,072 6,580 Administrative expenses (1,555) (1,703) (3,341) Amortisation of intangible assets (741) (538) (1,185) Amortisation of goodwill (511) (511) (1,021) ----------------- ----------------- ----------------- OPERATING PROFIT 356 320 1,033 Net interest (206) (126) (283) Write off of investment - (713) ----------------- ----------------- ----------------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 150 194 37 Taxation - (3) 25 ----------------- ----------------- ----------------- PROFIT AFTER TAX 150 191 62 ----------------- ----------------- ----------------- RETAINED PROFIT 150 191 62 TRANSFERRED TO RESERVES ================= ================= ================= BASIC EARNINGS PER SHARE 0.482p 0.62p 0.197p FULLY DILUTED EARNINGS PER SHARE 0.479p 0.62p 0.195p BASIC EARNINGS PER SHARE BEFORE 4.505p 4.003p 7.303p AMORTISATION CONSOLIDATE BALANCE SHEET As at As at As at 30.09.06 30.09.05 31.03.06 (unaudited) (unaudited) (audited) £000 £000 £000 FIXED ASSETS Intangible assets 29,699 27,544 28,800 Tangible assets 1,354 904 1,376 Investments 569 1,283 569 ----------------- ----------------- ----------------- 31,622 29,731 30,745 CURRENT ASSETS Stock 4,337 4,260 3,626 Debtors 10,178 9,170 10,627 Cash at bank and in hand 1,483 1,451 1,299 ----------------- ----------------- ----------------- 15,998 14,881 15,552 CREDITORS Amounts falling due within one year (11,896) (7,629) (8,025) ----------------- ----------------- ----------------- NET CURRENT ASSETS 4,102 7,252 7,527 TOTAL ASSETS LESS CURRENT LIABILITIES 35,724 36,983 38,272 CREDITORS Amounts falling due after more than one year (2,399) (2,047) (3,421) ----------------- ----------------- ----------------- NET ASSETS 33,325 34,936 34,851 ----------------- ----------------- ----------------- CAPITAL AND RESERVES Called up share capital 1,558 1,554 1,556 Share premium 21,331 21,224 21,272 Capital redemption reserve 106 106 106 Revaluation reserve 429 - 429 Profit and loss account 9,899 12,050 11,486 Minority interest 2 2 2 ----------------- ----------------- ----------------- SHAREHOLDERS' FUNDS 33,325 34,936 34,851 ----------------- ----------------- ----------------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS FOR THE PERIOD TO 30TH SEPTEMBER 2006 Share Share Capital Revaluation Profit & Minority Total Capital Premium Redemption Reserves Loss Interest Shareholders' Account Account Reserves Account Funds £000 £000 £000 £000 £000 £000 £000 At 31 March 2006 1556 21,272 106 429 11,486 2 34,851 Profit for the year - - - 150 - 150 Dividends declared - - - (1,698) - (1,698) Exchange differences - - - (39) - (39) Share premium on 2 59 - - - - 61 shares issued during the year ------------ ------------ ------------- ------------- ------------ ----------- ------------- At 30 September 2006 1,558 21,331 106 429 9,899 2 33,325 ============ ============ ============= ============= ============ =========== ============= CONSOLIDATED CASH FLOW STATEMENT Year ended 30.09.06 31.03.06 (unaudited) (audited) £000 £000 NET CASH INFLOW FROM OPERATING ACTIVITIES 1,418 2,969 -------------- -------------- RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest received 20 65 Interest paid (226) (348) -------------- -------------- NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND (206) (283) SERVICING OF FINANCE -------------- -------------- TAXATION - 27 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of intangible fixed assets (2,151) (4,188) Purchase of tangible fixed assets (37) (188) -------------- -------------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND (2,188) (4,376) FINANCIAL INVESTMENT -------------- -------------- EQUITY DIVIDENDS PAID (482) (1,983) FINANCING Issue of shares 61 243 (Decrease)/increase in borrowing (net) (1,022) 1,036 -------------- -------------- NET CASH (OUTFLOW)/INFLOW FROM FINANCING (961) 1,279 -------------- -------------- DECREASE IN CASH (2,419) (2,367) -------------- -------------- Notes 30.09.05 31.03.06 (1) RECONCILIATION OF OPERATING PROFIT TO NET Total Total CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES £000 £000 Operating profit 356 1,033 Actuarial pension losses - (16) Depreciation charge 59 122 Amortisation charge 1,252 2,206 Increase in stocks (711) (251) (Increase)/decrease in debtors 449 (401) Increase/(decrease) in creditors 13 276 --------------- --------------- Net cash inflow from operating activities 1,418 2,969 --------------- --------------- (2) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN 30.09.06 31.03.06 NET DEBT £000 £000 Decrease in cash in the period (2,419) (2,367) Decrease/(increase) in debt 1,021 (1,036) --------------- --------------- Change in net debt resulting from cash flows (1,398) (3,403) Effect of foreign exchange (losses) (39) 11 --------------- --------------- Movement of net debt in the period (1,437) (3,392) --------------- --------------- Net debt at 1st April 2006 (4,906) (1,514) --------------- --------------- Net debt at 30th September 2006 (6,343) (4,906) --------------- --------------- (3) RECONCILIATION ANALYSIS OF CHANGES IN NET DEBT At 01.04.06 Cash flow At 30.9.06 At 30.9.05 £000 £000 £000 £000 Cash at bank and in hand 1,299 184 1,483 1,451 Overdrafts (3,123) (2,642) (5,765) (1,542) ----------- ----------- ----------- ----------- (1,824) (2,458) (4,282) (91) Debt (3,082) 1,021 (2,061) (2,047) ----------- ----------- ----------- ----------- (4,906) (1,437) (6,343) (2,138) ----------- ----------- ----------- ----------- NOTES TO THE INTERIM REPORT 1. The summarised results of the half year to 30 September 2006, which are unaudited, have been prepared in accordance with the accounting policies in the Accounts for the period ended 31 March 2006. 2. The summary of results for the year ended 31 March 2006 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. 3. The directors have declared an interim dividend of 1.7p per share (2005: 1.55p), payable on 7 April 2007 to shareholders on the register on 16 March 2007. 4. The calculation of basic earnings per ordinary share is based on the profit for the period and 31,122,358 ordinary shares (2005: 30,975,704) 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 2006 was 31,041,855. There are currently 31,150,227 shares in issue. 5. 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 in the consolidation of these results. 6. The sale of the Agil Division of Lawrence plc to Kiotech International plc is due to complete on 28 November 2006, subject to admission of the new ordinary shares in Kiotech on 28 November 2006. 7. The interim report was issued to the Stock Exchange and the press on 28 November 2006 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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