Eco Animal Regulatory News (EAH)

29 Jul 2005 07:00

Lawrence PLC29 July 2005 LAWRENCE plc29 July 2005 Lawrence plc Preliminary Results for the year ended 31 March 2005 HIGHLIGHTS - Turnover on continuing operations £17m (2004: £16.1m) - Final dividend raised 13 per cent to 5.0 pence per share - EBITDA £4.7m - Strong cash generation - Corporate activity during the year included: - purchase of the 50% of ECO Animal Health not already owned - disposal of Blackfast Chemicals - Enhanced focus on core animal health and feed businesses - Aivlosin sales doubled - Positive start to the current financial year Peter Lawrence, Chairman of Lawrence plc, commented: "Lawrence plc has continued to transform itself from a small group of diversebusinesses to one focused on serving animal pharmaceutical and feed marketsworldwide. With Aivlosin sales gathering momentum and further importantregistrations expected this year, we are in good heart and remain confident thatthese strategic changes will be of long lasting benefit to our shareholders." Contacts: Lawrence plcPeter Lawrence 020 8336 2900 Spiro FinancialAnthony Spiro 020 8336 6196 Charles Stanley & Co LtdPhilip Davies 020 7739 8200 CHAIRMAN'S STATEMENT Over the past eighteen months Lawrence plc has transformed itself from a smallgroup of diverse businesses to one focused on serving animal pharmaceutical andfeed markets worldwide. I am pleased to report a profit before tax and goodwilladjustments of £4.0 million for the year to 31 March 2005. Our increased focus was achieved through a series of transactions. In March 2004we sold our Interpet pet products business; in October 2004 we purchased the 50per cent of ECO Group, which we did not already own, and in March 2005 reachedagreement to sell our Blackfast Chemicals operation. The ECO transaction is ofparticular importance as it eliminates the minority element from our accountsand gives us the full benefit of the exciting growth potential of that business. Turnover in the year from continuing operations reached £17.0 million, up from£16.1 million in the previous year; some 90 per cent of our turnover isgenerated overseas. Operating profit was lower, influenced by the timing of thecorporate activity and reflecting the transition within the company. Theweakness of the US dollar, which fell an average of eight per cent againststerling during the year, has once again masked an impressive sales advanceparticularly at ECO Group, which invoices predominately in dollars.Nevertheless, with the huge amount of drug registration work that we have doneand which will secure the licence authorisations in both Europe and America forour Aivlosin and Ecomectin products, we are confident that our salesexpectations for those products will deliver the growth in earnings that willjustify the structural changes we have made. Earnings per share before amortisation of goodwill were 12.13 pence. We proposeraising the final dividend by 13.0 per cent to 5.0 pence (net) per share makinga total dividend for the year of 6.4 pence (net) per share, an increase of 12.3per cent over last year's payment of 5.7 pence (net) per share. Last year'sfigure comparative excludes the one-off special dividend of 1.3 pence (net) pershare which related to the disposal of Interpet. Shareholder approval will besought at the Annual General Meeting on 29 September 2005 to pay the finaldividend on 1 November 2005 to shareholders on the register on 12 August 2005. It is still our intention to sell Aquarium Products, our US based pet accessorybusiness, and discussions continue. The business increased sales during theyear, boosted by the successful launch of a range of ornamental fish medication. Some ten years ago, in September 1995, Lawrence plc was one of the firstcompanies to list on the new AiM market in London. The market has been a greatsuccess and today it has over 1,200 members. We are proud to be part of AiM andas one of the largest companies on the market we have been included in the newFTSE AiM 50 index. AiM has encouraged us to grow Lawrence plc financially and inshare price terms within an appropriate regulatory discipline. ECO Group: Sales of ECO products were significantly ahead of last year. I ampleased to report that our distributor, Schering-Plough Animal Health, has nowlaunched Aivlosin in Europe following the delay caused by the regulatoryauthorities' labelling requirements. The product is being sold in most EUcountries although there is a delay in France, Germany and Poland where thenational authorities require different strength and dosage registrationapplications. These have now been submitted and will in due course allow usaccess to these important markets. We continue to receive positive feedback from veterinarians who are prescribingAivlosin for swine pneumonia. Repeat orders are already being processed, whichis encouraging. Much work has been done to complete the registration dossiersrequired for Aivlosin authorisations for further pig indications and also forpoultry. We are optimistic that many of these licences will be granted by theend of the calendar year and we expect to launch Aivlosin for these newindications before the end of the current financial year. Nevertheless we havelearned from experience to take a cautious approach regarding the timing ofauthorisations. Global sales of Aivosin have more than doubled in the last year, which is veryencouraging and underlines our optimistic expectations for Europe and America.Production of Aivlosin at our new plant has been excellent and it has thecapacity to produce all our future requirements for both Europe and the USA whenour registrations are granted. Sales outside Europe have been fulfilled fromthe plant since December 2004. Approval has been sought from the Europeanregulatory authorities to add our plant to the current Aivlosin licence for pigsand this should be granted later in the year. Aivlosin sales in Latin Americacontinue to increase and new registrations are now expected in Chile andVenezuela, which will add significant growth to sales and profit in thoseterritories in the second half of the current year. The registration authorities worldwide are rightly taking an increasingly strictapproach to ensure that products licensed for animal health and in particularfor food table animals are thoroughly tested and investigated before granting alicence. We support this development, which mirrors the testing disciplinestandard in drugs for human application. These barriers to entry into the animalhealth markets worldwide strengthen our position as a supplier of high quality,rigorously tested pharmaceuticals for animals. The US Food and Drug Administration is aligning itself with the latestinternational regulatory guidelines and the regulatory hurdles remain inconstant flux, which has further burdened an already busy authority andcontinues to delay the registration process in that country. The shorterregistration times for pet products has encouraged us to develop a newgeneration of remedies for that market and we hope to launch these within twoyears. We still have over three hundred registrations outstanding for ourcurrent product range and our registration department now exceeds twenty-fivefull time specialists located at our facilities in England, China, South Africaand the United States. Our investment in drug registrations has never beenhigher. During the year ECO strengthened its management team with a number of keyappointments. A new managing director was recruited in view of the incumbent'spending retirement. He is a qualified veterinarian and comes with a strongrecord of experience and success in the industry. His responsibilities willinclude spearheading the sales and marketing campaign for the coming years. Anew appointment of general manager was made at our ECO-Biok Animal Health jointventure in China; the new manager has considerable experience of the animalantibiotics industry in China. Another important appointment was the head ofnew product development who brings extensive experience of the animal healthindustry and regulatory environments worldwide. China is expected to become the fastest growing and largest market for ouranimal health range of treatments. In 2006, only some 25 per cent of Chinesecompanies in that market will be permitted to continue to produce now that thedemanding GMP manufacturing standard is mandatory. This, combined withagricultural intensification and changes to consumer preferences now that meathas become more affordable, should put ECO-Biok in a very strong position. Agil: Agil has continued to make good progress in sales with an increase ofmore than eight per cent over last year. This has been achieved despite theoutbreak of avian influenza in South East Asia, which decimated poultry stocksin Malaysia and Thailand and consequently affected sales of our salmonellacontrol additives. An increase in the awareness and willingness of poultry and pig producers aroundthe world to reduce antibiotic consumption for growth promotion has benefitedAgil and sales of its natural additives have increased. These products providemonogastric species with bio-security to the feed and a unique bacterial controlsystem within their digestive system. Agil will continue to benefit from theongoing changes in farming methods and is working closely with its distributorsaround the world by training their salesmen. Recent successes include newdistribution agreements in Bulgaria, Peru and Vietnam as more producers switchto natural products. Agil's markets in Latin America have continued to improvewith sales now growing strongly. Eastern European countries have also startedto buy Agil products, notably in Bulgaria, Croatia, eastern Germany and Hungary.In western Europe new products for young pigs have stimulated sales in Denmarkand Germany, two traditionally strong markets for Agil. Credence, our new waterdisinfectant, has been successfully registered by a number of our distributorsand sales are growing. Employees: I would like to express my thanks to all employees and everyoneassociated with the company. Currently we employ some 100 people around theworld and it is their hard work, enthusiasm and loyalty, which enable thebusiness to continue to flourish. Outlook: The new financial year has started well with sales comfortably aheadof last year. Our budgets reflect the growing importance of Aivlosin, whichshould make a progressively increasing contribution through the year as salesgather momentum. Overall we are in good heart and remain confident that thestrategic changes and increased focus of the past year will be beneficial forthe company and its shareholders. Peter LawrenceChairman 29 July 2005 PROFIT AND LOSS ACCOUNTFor the year ended 31 March 2005 2005 2004 £ £ TURNOVER 17,797,369 33,330,767Continuing Operations 17,030,853 16,128,118Discontinued Operations 766,516 17,202,649 ========== ==========Cost of sales (11,309,637) (19,876,277) ----------------- -----------------GROSS PROFIT 6,487,732 13,454,490 Net operating expenses (4,924,624) (10,787,836) ----------------- -----------------OPERATING PROFIT 1,563,108 2,666,654Continuing Operations 1,374,421 770,215Discontinued Operations 188,687 1,896,439 ========== ==========Exceptional writeback/(down) of goodwill 674,644 (674,488)Loss on sale of listed investments - (5,901)Exceptional bonus provisions - (1,080,504)Income from listed fixed asset investments - 64,115Profit on sale of fixed assets 8,351 -Profit on sale of a division and sale of fixedassets 1,070,819 4,543,826Net interest 136,339 1,890,153 (158,957) ----------------- -----------------PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 3,453,261 5,354,745 Tax on profit on ordinary activities (505,587) (677,199) ----------------- -----------------PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 2,947,674 4,677,546 Minority interest - equity (37,785) (382,545) ----------------- -----------------PROFIT FOR THE FINANCIAL YEAR 2,909,889 4,295,001 Dividends - equity (1,923,582) (1,753,491) ----------------- -----------------RETAINED PROFIT TRANSFERRED TO RESERVES 986,307 2,541,510 ----------------- ----------------- EARNINGS PER SHARE 10.25p 16.26p DILUTED EARNINGS PER SHARE 10.22p 15.97p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESYear Ended 31 March 2005 2005 2004 £ £ PROFIT FOR THE FINANCIAL PERIOD 2,909,889 4,295,001Exchange differences (200,404) (164,371) ----------------- -----------------TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR 2,709,485 4,130,630 ----------------- ----------------- BALANCE SHEETAs at 31 March 2005 2005 2004 £ £FIXED ASSETSIntangible assets 26,818,044 5,660,510Tangible assets 880,933 864,669Investments 1,282,565 713,252 ---------------- ---------------- 28,981,542 7,238,431CURRENT ASSETSStocks 3,374,837 2,316,261Debtors 10,228,333 23,924,648Cash at bank and in hand 1,324,159 524,265 ---------------- ---------------- 14,927,329 26,765,174 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (6,864,503) (10,596,031) ---------------- ---------------- NET CURRENT ASSETS 8,062,826 16,169,143 ---------------- ---------------- TOTAL ASSETS LESS CURRENT LIABILITIES 37,044,368 23,407,574 CREDITORS: AMOUNTS FALLING DUE AFTERMORE THAN ONE YEAR (2,047,120) (1,291,989) ---------------- ---------------- 34,997,248 22,115,585 ---------------- ----------------CAPITAL AND RESERVESCalled up share capital 1,547,997 1,337,368Share premium account 21,036,776 7,936,115Capital redemption reserve 105,829 105,829Profit and loss account 12,304,171 11,518,267 ---------------- ----------------EQUITY SHAREHOLDERS' FUNDS 34,994,773 20,897,579 Minority interest - equity 2,475 1,218,006 ---------------- ---------------- 34,997,248 22,115,585 ---------------- ---------------- CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 March 2004 2005 2004 £ £ NET CASH INFLOW FROM OPERATING ACTIVITIES 15,170,339 3,381,368 RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 318,498 95,343Interest paid (182,159) (254,300)Dividends received - 64,115 ---------------- ----------------NET CASH INFLOW/(OUTFLOW) FROM RETURNS ON INVESTMENTS ANDSERVICING OF FINANCE 136,339 (94,842) ---------------- ----------------TAXATION (705,190) (801,672) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPurchase of intangible fixed assets (4,705,047) (2,870,852)Purchase of tangible fixed assets (118,912) (246,671)Purchase of investments (6,969,417)Sale of tangible fixed assets 14,254 20,773Sale of investments - 86,170 ---------------- ----------------NET CASH OUTFLOW FROM CAPITAL EXPENDITUREAND FINANCIAL INVESTMENT (11,779,122) (3,010,580) ---------------- ----------------ACQUISITIONS AND DISPOSALS - (59,139) ---------------- ----------------EQUITY DIVIDENDS PAID (1,870,206) (1,333,684) FINANCINGIssue of shares 1,311,289 773,295Increase in/(repayment of) borrowing (net) 728,101 (17,434) ---------------- ----------------NET CASH INFLOW FROM FINANCING 2,039,390 755,861 ---------------- ----------------Increase/(decrease) in cash 2,991,550 (1,162,688) ---------------- ---------------- NOTES 1. NET OPERATING EXPENSES Total Total 2005 2004 £ £ Distribution costs 134,376 499,961Administrative expenses 5,102,106 10,350,278Other operating income (311,858) (62,403) ------------------- ------------------- 4,924,624 10,787,836 ------------------- ------------------- 2. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION The profit on ordinary activities before taxation is stated after: 2005 2004 £ £Hire of plant and machinery - 38,901Loss on foreign currency transactions 108,166 170,684Depreciation - owned assets 84,797 307,776Amortisation of intangible assets 1,368,944 922,794Auditors' remuneration- audit services 25,000 28,000- non audit services 20,035 17,475 ------------------ ------------------ Discontinued operations Details relating to the operations that were discontinued during the year are asfollows: 2005 2004 £ £ Turnover 766,516 17,202,649Cost of sales (273,847) (9,033,395)Net operating expenses (303,982) (6,272,815) ------------------ ------------------Operating profit 188,687 1,896,439 ========== ========== 3. DIVIDENDS 2005 2004 £ £Equity dividends: Ordinary sharesInterim dividend of 1.4p per Ordinary 5p share(2004 : 1.275p) 375,586 337,364 Proposed final dividend of 5.0p per Ordinary 5p share(2004 : 4.425p) 1,547,996 1,187,235 Proposed exceptional dividend of 1.3p per Ordinary 5p share - 347,716 Over-provision in 2003 - (118,824) ------------- ------------- 1,923,582 1,753,491 ------------- ------------- The final dividend of 5p per Ordinary Share will be paid on 1 November 2005, toshareholders on the register as at close of business on 12 August 2005. 4. EARNINGS PER SHARE The calculation of earnings per share is based upon the profit for the financialyear divided by the weighted average number of ordinary shares in issue duringthe year. The calculation of diluted earnings per share is based on the basic earnings pershare, adjusted to allow for the issue of shares and the post tax effect ofdividends, on the assumed conversion of all dilutive options and other dilutivepotential ordinary shares. 2005 2004 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 shareEarnings attributable toordinary shareholders 2,910 28,389 10.25 4,295 26,420 16.26 Dilutive effect ofsecuritiesoptions 85 (0.03) 469 (0.29) ------------ ------------ ------------ ------------ ------------ ------------ 2,910 28,474 10.22 4,295 26,889 15.97 ------------ ------------ ------------ ------------ ------------ ------------ 5. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Group 2005 2004 £ £ Profit for the financial year 2,909,889 4,295,001Dividends (1,923,582) (1,753,491) --------------- --------------- 986,307 2,541,510Exchange differences (200,404) (164,371)Increase in shares 13,311,290 773,295 --------------- ---------------Net increase in shareholders' funds 14,097,193 3,150,434Shareholders' funds at 1 April 2004 20,897,579 17,747,145 --------------- ---------------Shareholders' funds at 31 March 2005 34,994,773 20,897,579 --------------- --------------- 6. NET CASH INFLOW FROM OPERATING ACTIVITIES 2005 2005 2005 2004 Continuing Discontinued Total £ £ £ £Operating profit 1,374,421 188,687 1,563,108 2,666,654Exchange loss (173,374) - (173,374) (66,287)Depreciation 79,220 5,577 84,797 307,776Amortisation charge 1,368,944 - 1,368,944 922,794Increase in stocks (1,125,659) (20,081) (1,145,740) (1,467,878)Decrease/(Increase) in debtors 14,848,641 (10,338) 14,838,303 1,113,848(Decrease)/Increase in creditors (1,394,208) 28,509 (1,365,699) (95,539) --------------- --------------- --------------- ---------------Net cash inflow from continuingoperating activities 14,977,985 Net cash inflow from discontinuedactivities 192,354 --------------- ---------------Net cash inflow from operating 15,170,339 3,381,368activities ========= ========= 7. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2005 2004 £ £ Increase/(Decrease) in cash in the year 2,991,550 (1,162,688)(Increase)/Decrease in debt (728,101) 17,434 ------------------ ------------------Change in net debt resulting from cash flows 2,263,449 (1,145,254)Effect of foreign exchange differences (27,030) (104,602) ------------------ ------------------Movement in net debt in the year 2,236,419 (1,249,856)Net debt at 1 April 2004 (3,750,181) (2,500,325) ------------------ ------------------Net debt at 31 March 2005 (1,513,762) (3,750,181) ========== ========== 8. REPORT AND FINANCIAL INFORMATION The financial information set out in this preliminary announcement does notconstitute accounts as defined in section 240 of the Companies Act 1985. The summarised balance sheet at 31 March 2005 and the summarised profit and lossaccount, summarised cash flow statement and summarised statement of totalrecognised gains and losses and associated notes for the year then ended havebeen extracted from the Group's 2005 audited statutory financial statements. Copies of the financial statements for the Group for the year ended 31 March2005 will be available from the Company's registered office and will be postedto shareholders in due course. This information is provided by RNS The company news service from the London Stock Exchange