Final Results
15 July 2003
Lawrence plc
Unaudited Preliminary Results for the year ended 31 March 2003
HIGHLIGHTS
Profit before tax, amortisation and minority interest rises 34% to £4.7m (2002:
£3.4m)
Adjusted earnings per share increases 23% to 11.9 pence (2002: 9.7 pence)
Turnover up 7% to £36m (2002: £34m)
£5.2 million cash generated from operations
Improved liquidity due to share split and bonus issue and successful placing of
family shares with institutions
Peter Lawrence, Chairman of Lawrence plc, commented:
'I am pleased to report record results after another sound trading performance.
We are confident that the group is at the threshold of a period of significant
and exciting growth and we look forward to reporting progress to shareholders'.
Contacts:
Lawrence plc
Peter Lawrence
020 8336 2900
Charles Stanley & Co Ltd
020 7739 8200
Philip Davies
Robert Corden
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 a record pre tax profit for the year of £4.7 million
before amortisation of goodwill and minority interest. This is an increase of
34% over the previous year, which was stated before an exceptional item.
Turnover in the period of £36.3 million was 7% higher than the previous year.
The strength of sterling against the US dollar, particularly in the second
half, continues to mask the underlying performance of Eco Group, which invoices
principally in dollars. Earnings per share, before amortisation of goodwill,
were 11.9 pence, a rise of 23% from last year's level of 9.7 pence, which was
stated before an exceptional item. Our balance sheet and cash position remain
strong and shareholder approval will be sought at the Annual General Meeting on
30 September to declare a final dividend of 3.95 pence (net) per share to be
paid on 3 November 2003 to shareholders on the register on 8 August 2003. This
is an increase of 10% over last year's final dividend, making a total for the
year of 5.10 pence (net) per share, an uplift of 10.5% for the year.
The improved liquidity in our shares, which resulted from the share split and
bonus issue last October, has made a significant contribution to the increase
in trading activity in our stock. This was boosted in December when two of our
original substantial shareholders and family members each sold most of their
holding; that stock was immediately placed with a number of leading financial
institutions and consequently has now lowered the family holding by over 16% to
46%. I am delighted that this increased liquidity has benefited our patient and
loyal supporters who have seen their investment perform well. We greatly
appreciate your support and invite you to register on our new, improved web
site so that you can choose to receive our announcements promptly by email.
In December, I referred to the discussions we were having regarding the
demerger of Interpet, which would enable us to focus on our animal health and
feed products businesses. Much work has been done and discussions with our
advisors continue, although investors' valuations are still some distance from
ours. Interpet is a sound business, which is trading well. The final decision
and its timing will be driven by shareholder value considerations. We will
continue discussions to achieve a price level that fairly reflects the true
value of the business and which is also in the best interest of our
shareholders.
ECO GROUP:
Eco Animal Health continued to make steady progress. This year's highlight
being the substantial sales in the USA from our new Ecomectin registrations,
which started last December and have continued at an increasing rate since the
spring. Overall this was another good year although sales in March were
affected by the Iraq war and SARS. Fortunately these issues have now subsided
and sales are back on track with Aivlosin and our Ecomectin and Ecotraz
antiparasitic range leading the way.
The European registration of Eco's patented antibiotic blockbuster drug,
Aivlosin, has moved significantly closer. Following our original submission,
all the sections received approval, with the exception of environmental safety,
where newly introduced guidelines meant that we had to carry out a Phase 2 test
lasting a further 18 months, in addition to the previously acceptable Phase 1
testing which was included in the original dossier. This extensive testing
programme has now been completed and, as expected, Aivlosin meets all the
required standards. The results will be delivered to the European registration
agency (EMEA) on 29 July 2003 and it is required to respond within a rigid
predetermined timetable. Our original registration application for Aivlosin
covered its use for the treatment of respiratory infections in pigs. The delay
resulting from the request for additional environmental testing has given us
the opportunity to broaden the application to include the important market of
digestive infections in pigs. The inclusion of the treatment of poultry
respiratory and digestive infections will follow shortly after the granting of
the initial registration. This will enable us to extend our sales coverage
once the registration is approved.
As shareholders are aware, forecasting the precise timing of the grant of drug
registrations is extremely difficult. In December 2002, I stated in the Interim
Statement that we expected Aivlosin sales in Europe to be delayed until the end
of 2003, unless there was further slippage in the registration process. Nothing
has happened to alter that view. If we receive the European marketing
authorisation in, say, autumn 2003 then we would anticipate delivering initial
orders in spring 2004.
The EMEA marketing authorization, once it is received, will automatically
extend to cover the ten countries joining the EU next year. This significantly
widens our accessible markets and could be particularly valuable as many of the
new member countries enjoy low cost poultry and pig production, which may at
last offer Europe a real competitive alternative to counter cheap imports from
Thailand, Brazil, Indonesia etc where the control of both the quality and use
of antibiotics is still slack.
In addition to the submission of the Aivlosin registration applications, we are
also seeking further approvals under the European Mutual Recognition Procedure
(MRP), for Ecomectin injection for cattle, sheep and pigs. Last month we
delivered over 600 dossiers in multiple languages and under MRP, applications
for registration in the new EU member states will receive preferential
consideration, which should shorten the time to market.
Registration of Aivlosin in the USA, now directly under the control of our own
new registration office in New Jersey, should be completed by the end of next
year, with sales beginning in early 2005. Outside these territories, Aivlosin
continues to sell well; it is an exceptionally effective and thoroughly tested
product.
AGIL:
Agil had another satisfactory year with sales continuing to develop well across
our product ranges. Business in South America has continued to grow
following the final registrations of our products in Brazil and also the
appointment of a new distributor in Peru. New business was secured in Ecuador
and interest from Colombia looks promising while sales in Mexico have improved
following the appointment of a new distributor. Technical seminars were held in
Brazil, Japan, Mexico, Switzerland and Turkey. We exhibited at the important
VIV Asia show in Bangkok, which was well attended and resulted in a high level
of enquiries.
Sales of Mitex, our new non-pesticide insect control product for poultry and
stored grains, have grown steadily and are expected to accelerate in the next
12 months now that traditional organophosphate treatments have been banned by
most governments. Agil continues to be ready with new product replacement
ideas, where its expertise delivers natural solutions, whenever competitors'
traditional chemical treatments have to be withdrawn as a result of
increasingly stringent legislation.
Towards the end of our financial year, the agricultural industry worldwide was
affected by a combination of SARS, the Iraq war and Avian Influenza. In Asia,
SARS hit the tourist industry causing hotel bookings to fall and the knock on
effect impacted demand from local meat suppliers. Travel restrictions to the
Far East also frustrated our ability to offer direct technical support to our
distributors. Additionally in Europe, Avian Influenza restricted movement
within the agricultural sector and sales and technical visits were almost
impossible. The situation has now improved and business is returning to former
levels.
However, during these periods of restricted travel, we benefited from the time
it gave us to develop new products and sales distribution channels, which have
already paid dividends. Reformulation of some existing products has improved
their handling characteristics and efficacy. More efficient use of inclusion
rates of our Mitex insect control products should now enable us to enter the
lucrative baking and brewing sectors. Our new cost-effective antioxidant,
Oxihold, has proved successful in trials and a revamped wet feeding product for
pigs, Fosplus 50, is now also under trial.
Close links have recently been forged with additional supply companies to
expand our product range into the companion animal sector, with 'organic'
producers and others to apply immunostimulant technology. We also have plans
to break into the pre-ruminant and ruminant rations markets within the next 12
months; these are two very important new sectors for Agil products.
In 2004, all animal feed mills that are members of UKASTA (United Kingdom
Agricultural Supply Trade Association), will be required to source their feed
ingredients solely from UKASTA Feed Assured Suppliers. UKASTA represents some
80% of UK feed mills and this development is part of its programme of
continuously raising food standards. Agil has already completed the first two
audits towards accreditation to this demanding supplier standard and expects to
be among the very first companies to achieve full certification by the middle
of 2003.
INTERPET:
Interpet delivered a strong performance with sales and profit well ahead of the
previous year. This encouraging result has been achieved through steady organic
growth with added impetus from regular new product launches and also the first
full contribution from the Ringpress book publishing business, acquired just
prior to the start of the financial year.
Customer response to our new ranges launched at GLEE, the principal UK trade
show for the garden and leisure industry, held annually in September, was very
encouraging. The sell-in of our new pond products is now complete and repeat
orders are already coming through. The new Cyclone and Torrent pumps, coupled
with our market-leading pond treatments, give a powerful sales opportunity and
round off our Blagdon range of outdoor aquatic products. A restructuring of
our pre season deals delivered very strong sales in our core pond treatment
lines and this momentum has been maintained, aided by the warm early spring
weather.
Among our other core businesses, growth has been maintained in the aquarium
treatment and accessories areas as well as in the pet division. The publishing
division continues to go from strength to strength with the launch of more
definitive titles, many in superb colour and packed with key information for
pet owners. Last year our total sales exceeded 1.2 million books extending to
over 50 countries and 26 languages. As an example of the international reach of
our publishing business, one of our best selling books 'Breaking Bad Habits in
Dogs' is now available in 18 languages!
In America, Aquarium Products closed the year on a high note with the placement
of its new pond treatment range in PETsMART, one of the leading US pet product
retailers with over 600 outlets across the country. We will shortly commence
distributing our Mikki pet grooming products in the US; the first containers
have already been dispatched. This development will benefit from the sourcing
and purchasing expertise of our China Office, which has been an excellent
investment since we established it over five years ago.
BLACKFAST:
Blackfast Chemicals specialises in the manufacture and sale of environmentally
beneficial metal finishing products. Blackfast products have a strong
international presence and export sales have grown year on year since they were
launched in 1992 and this year was no exception - up a further 5%. The
majority of Blackfast sales are now overseas which demonstrates the
international attractions of our product range but also emphasises the
difficulties of our home market - the UK manufacturing sector.
Blackfast's unique room temperature blacking products, which can be applied to
various metals and alloys, continue to replace older traditional and more
hazardous processes, wherever they are encountered.
The demand for products that satisfy the increasingly rigorous legislation
controlling the use of chemicals worldwide is particularly strong within the
European Union. To meet this demand, Blackfast has launched Koldphos, a new
low energy treatment for preparing metal surfaces for painting. This new clean
formulation has many environmental advantages over traditional pre treatments
including lower temperature application and much higher efficiency, thus
significantly reducing pollution from chemical waste. Applications include
industrial machinery, automotive parts and white goods. Trials of Koldphos
have been conducted very successfully over the last 12 months and a new range
of products is ready for sale.
EMPLOYEES:
We employ over 200 people at our offices, warehouses and factories around the
world and I would like to express my thanks to all of them and everyone
associated with the company without whose hard work and loyalty we could not
continue to flourish.
OUTLOOK:
Demand for our products remains firm and the current year has started
satisfactorily. Although this year's sales of Aivlosin in Europe, if any, may
be small because there can be a procedural delay between the grant of a
registration and sales commencing, we are hopeful that the highlight of the
year will be the receipt of the registration for Europe. We believe Eco's
existing business, which had a record year, will continue to deliver a strong
performance from its core products. We also anticipate that Interpet, which
also had a record year, will be demerged once we achieve a satisfactory price
level.
We are confident that the group is at the threshold of a period of significant
and exciting growth and we look forward to reporting progress to shareholders.
Peter Lawrence
Chairman
15 July 2003
PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2003
Note 2003 2002
£ £
TURNOVER 36,264,380 34,037,236
Cost of sales (21,397,465) ( 20,840,817)
GROSS PROFIT 14,866,915 13,196,419
Net operating expenses 1 (10,179,006) (9,482,794)
OPERATING PROFIT 4,687,909 3,713,625
Income from listed fixed asset investments 64,115 38,622
Exceptional item (amounts written off investments) - (2,640,842)
Net interest (204,961) (350,782)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2 4,547,063 760,623
Tax on profit on ordinary activities (1,170,167) (669,958)
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 3,376,896 90,665
Minority interest - equity (459,789) (286,663)
PROFIT/(LOSS) FOR THE FINANCIAL YEAR 2,917,107 (195,998)
Dividends - equity 3 (1,414,208) (1,182,973)
RETAINED PROFIT/(LOSS) TRANSFERRED TO RESERVES 1,502,899 (1,378,971)
EARNINGS PER SHARE 4 11.33p (0.90)p
DILUTED EARNINGS PER SHARE 4 11.17p (0.89)p
ADJUSTED EARNINGS PER SHARE 4 11.86p 9.66p
BALANCE SHEET
As at 31 March 2003
Note 2003 2002
£ £
FIXED ASSETS
Intangible assets 7,314,157 5,636,429
Tangible assets 1,455,979 1,565,898
Investments 805,324 1,107,774
9,575,460 8,310,101
CURRENT ASSETS
Stocks 7,829,666 7,590,363
Debtors 12,762,407 12,421,819
Cash at bank and in hand 581,463 1,464,083
21,173,536 21,476,265
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (10,955,051) (11,478,055)
NET CURRENT ASSETS 10,218,485 9,998,210
TOTAL ASSETS LESS CURRENT LIABILITIES 19,793,945 18,308,311
CREDITORS: AMOUNTS FALLING DUE AFTER
MORE THAN ONE YEAR (1,204,819) (1,309,897)
PROVISIONS FOR LIABILITIES AND CHARGES - (570,707)
18,589,126 16,427,707
CAPITAL AND RESERVES
Called up share capital 1,300,948 854,132
Share premium account 7,199,240 7,251,818
Capital redemption reserve 105,829 105,829
Profit and loss account 9,141,128 7,950,928
EQUITY SHAREHOLDERS' FUNDS 17,747,145 16,162,707
Minority interest - equity 841,981 265,000
18,589,126 16,427,707
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2003
Note 2003 2002
£ £
2003 2002
£ £
NET CASH INFLOW FROM OPERATING ACTIVITIES 5 5,167,786 4,588,125
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 59,221 28,944
Interest paid (264,182) (379,726)
Dividends received 64,115 38,622
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE (140,846) (312,160)
TAXATION (1,546,256) (694,781)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of intangible fixed assets (2,461,966) (1,402,832)
Purchase of tangible fixed assets (211,096) (258,088)
Purchase of investments - (1,047,719)
Sale of tangible fixed assets 18,120 41,115
Sale of Investments 244,211 -
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE
AND FINANCIAL INVESTMENT (2,410,731) (2,667,524)
ACQUISITIONS
Purchase of businesses - (1,477,130)
NET CASH OUTFLOW FROM ACQUISITIONS - (1,477,130)
EQUITY DIVIDENDS PAID (1,144,979) (894,661)
FINANCING
Issue of shares 394,238 4,143,689
(Repayment of)/Increase in borrowing (net) (199,744) (410,645)
NET CASH INFLOW FROM FINANCING 194,494 3,733,044
Increase in cash 6 119,468 2,274,913
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Year ended 31 March 2003
2003 2002
£ £
PROFIT/(LOSS) FOR THE FINANCIAL PERIOD 1,449,041 (1,378,971)
Exchange differences (312,699) (241,674)
TOTAL RECOGNISED GAINS AND LOSSES FOR THE PERIOD 1,136,342 (1,620,645)
NOTES:
1. NET OPERATING EXPENSES
Total Total
2003 2002
£ £
Distribution costs 550,964 513,291
Administrative expenses 9,921,571 9,093,388
Other operating income (293,529) (123,885)
10,179,006 9,482,794
2.PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
The profit on ordinary activities before taxation is stated after:
2003 2002
£ £
Hire of plant and machinery 39,720 32,989
Loss/(Gain) on foreign currency transactions 96,935 (363,345)
Depreciation - owned assets 303,194 304,622
Amortisation of intangible assets 784,238 425,807
Loss/(Profit) on disposal of fixed assets (299) 8,144
Auditors' remuneration
- audit services 25,000 25,000
- non audit services 15,888 38,164
3.DIVIDENDS
2,003 2002
£ £
Equity dividends:
Ordinary shares
Interim dividend of 1.15p per Ordinary 5p share
(2002 (on equivalent basis): 0.93p) 386,459 264,781
Proposed final dividend of 3.95p per Ordinary 5p share
(2002 (on equivalent basis): 3.58p) 1,027,749 918,192
1,414,208 1,182,973
4.EARNINGS PER SHARE
The calculation of earnings per share is based upon the profit for the
financial year divided 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.
2003 2002
Weighted Weighted
average Per average Per
number of share Earnings number of share
Earnings shares amount shares amount
£'000 000 (pence) £'000 000 (pence)
Basic earnings per share
Earnings attributable to
ordinary shareholders 2,917 25,748 11.33 (196) 21,750 (0.90)
Dilutive effect of securities
options - 372 (0.16) - 288 0.01
2,917 26,120 11.17 (196) 22,038 (0.89)
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.
2003 2002
Weighted Weighted
average Per average Per
number of share Earnings number of share
Earnings shares amount shares amount
£'000 000 (pence) £'000 000 (pence)
Basic earnings per share
Earnings attributable to
ordinary shareholders 2,917 25,748 11.33 (196) 21,750 (0.90)
Adjustments
Goodwill amortisation 137 0.53 66 0.30
Exceptional item (amounts
written off investments - - 2.641 12.14
Less tax effects - - (409) (1.88)
Adjusted basic
earnings per share 3,054 25,748 11.86 2,102 21,750 9.66
5.NET CASH INFLOW FROM OPERATING ACTIVITIES
2003 2002
£ £
Operating profit 4,687,909 3,713,625
Exchange gain/(loss) 140,123 (226,048)
Depreciation 303,194 304,622
Amortisation charge 784,238 425,807
Loss on disposal of fixed assets and investments 57,940 8,144
Decrease/(Increase) in stocks (239,303) 795,959
(Increase) in debtors (337,437) (1,394,245)
(Decrease)/Increase in creditors (228,878) 960,261
Net cash inflow from operating activities 5,167,786 4,588,125
6.RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2003 2002
£ £
Increase/(Decrease) in cash in the year 119,468 2,274,913
Decrease/(Increase) in debt 199,744 410,645
Change in net debt resulting from cash flows 319,212 2,685,558
Effect of foreign exchange differences (335,630) (119,264)
Movement in net debt in the year (16,418) 2,566,294
Net debt at 1 April 2002 (2,483,907) (5,050,201)
Net debt at 31 March 2003 (2,500,325) (2,483,907)
7.REPORT AND FINANCIAL INFORMATION
The financial information set out in this preliminary announcement does not
constitute accounts as defined in section 240 of the Companies Act 1985.
The summarised balance sheet at 31 March 2003 and the summarised profit and
loss account, summarised cash flow statement and summarised statement of total
recognized gains and losses and associated notes for the year then ended have
been extracted from the Group's 2003 unaudited statutory financial statements.
Copies of the financial statements for the Group for the year ended 31 March
2003 will be available from the offices of Charles Stanley & Company Limited,
25 Luke Street, London, EC2A 4AR and will be posted to shareholders in due
course.
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