Eco Animal Regulatory News (EAH)

12 Dec 2005 07:01

Lawrence PLC12 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 thatthe Group is undergoing. The full benefit of these changes will be feltincreasingly over the coming months. The second half has started strongly withfurther advances in sales of our animal pharmaceutical products. This growth,coupled with further Aivlosin registration approvals for Europe anticipatedbefore the end of our current financial year, underpins the exciting potentialfor the Group". Contacts: Lawrence plcPeter Lawrence 020 8336 2900 Spiro FinancialAnthony Spiro 020 8336 6196 Charles Stanley & Co LtdPhilip Davies 020 7739 8200 CHAIRMAN'S STATEMENT I am pleased to report that the Group made further good progress in the sixmonths ended 30 September 2005. The current year continues to be one oftransition for the Group following the disposal of Interpet and BlackfastChemicals. In October 2004 we purchased the 50 per cent of ECO Animal Healththat we did not already own. This transaction reflected our confidence in ECOand the Group's increasing focus on animal pharmaceutical and feed productsworldwide. As a result of the ECO purchase we can now take the full benefit ofconsolidating ECO and no longer have to subtract the minority element. Theminority in the equivalent period last year was £151,000; this year on the samebasis it would have been close to £370,000. The elimination of the ECO minorityis very positive for the Group but makes direct comparison between this year andlast at the pre tax level somewhat confusing, particularly in view of the impactof the amortisation of goodwill resulting from the acquisition. Comparison withlast year is more meaningful at the EBITDA level (earnings before interest, tax,depreciation and amortisation). EBITDA on continuing operations for the sixmonths to 30 September 2005 was £1.43 million, which is some 51 per cent aheadof last year's level of £948,000. Sales were ahead by 14.5 per cent to £9.2million for the period and earnings per share, before amortisation of goodwillwere 2.26 pence. The Board has continued its progressive dividend policy and declared an interimdividend of 1.55 pence (net) per share, 10.7 per cent above the level of lastyear. The dividend will be paid on 7 April 2006 to shareholders on the registeron 17 March 2006. Marc Loomes, Managing Director of ECO Animal Health, was appointed to the Boardof Lawrence plc on 1 December 2005. Marc has worked in the animal pharmaceuticalindustry 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 amconfident that he will be a great asset to the Group. ECO GROUP: Sales of ECO Animal Health's pharmaceutical products were in linewith our expectations for the first six months of the year and thirty per centabove the level of the equivalent period last year. I am pleased to report thatsales of Aivlosin have continued to grow apace and this has continued beyond theperiod end. The third quarter of our financial year has started well and we areexpecting to receive further Aivlosin marketing authorisations early in 2006from the European Agency for the Evaluation of Medicinal Products (EMEA). Theseapprovals should lead to further substantial orders for Aivlosin which we havebuilt in to our budget for the current financial year. In October we announcedthe receipt of a positive opinion from the EMEA allowing ECO to include its newmanufacturing facility on the registration for Aivlosin for swine pneumonia inEurope. Schering-Plough Animal Health's marketing launch of Aivlosin across theseventeen European countries where they represent ECO, took longer than we wouldhave wanted. The logistics of combining the most important pig vets and expertsin one conference was understandably time consuming. The product has been wellreceived and repeat orders already taken; this bodes well for the future. Wehave continued to expand the registration and sales management departments ofECO in anticipation of the sales growth, which will follow the grant of furtherdrug registrations. As always, the delays we face from the regulatoryauthorities around the world continue to frustrate us but in the longer termthey provide us with greater security via higher barriers to entry to theseprofitable and growing markets. Good progress has been made in Japan where we have received new Ecomectinlicences. In addition outline terms have been agreed for ECO to take over thesales and marketing effort for Aivlosin in Japan from our previous supplier, whohas ceased production. Worldwide sales will be channelled through ECO AnimalHealth from our new manufacturing facility. China continues to represent one of the largest opportunities to expand ourbusiness and the joint venture at ECO Biok has made significant progress. Itcurrently employs a sales and management team of 18 people who are setting updistributors throughout China and as I have mentioned before, with mandatoryGood Manufacturing Practice being imposed on all animal health medicationproducts in China, we should enjoy a more rapid expansion in this exciting andfast growing market. Registration work continues at full speed in our North American office where weremain optimistic Aivlosin should receive approval within the next two years. InLatin America, we have been granted marketing approval for Venezuela and similarpermission for Chile is expected before the year end. The continuing expansionin the meat production industries of Latin America is making this region a mostimportant market for ECO. Avian flu has been the subject of media speculation and comment over recentweeks. If there is a downturn in poultry consumption in Europe, consumers mayswitch to alternatives such as beef, lamb and pork. This would be beneficial forECO as it already holds Aivlosin and Ecomectin drug registrations for thesespecies. Registration applications for Aivlosin for poultry in Europe have beenfiled but approvals are not expected for some time. Agil: Agil performed at a similar level to last year even though its globalmarketplace is being affected by the repercussions from the outbreak of avianflu in Asia. Competitor activity in our natural feed additive market is alsogrowing as suppliers seek to benefit from the opportunities resulting from theabolition of antibiotic growth promoters for livestock in Europe. Agil is in astrong position to capitalise on this new situation as one of few companiesaccredited by FEMAS (Feed Materials Assurance Scheme), the principal regulatoryauthority, to supply antibiotic free animal feed. As the new regulations comeinto force, Agil should benefit from the intensive trial work undertaken and theproven efficacy of its range of antibiotic growth promoter replacements. Inaddition, Agil has embarked on a focused research and development programme toensure that its pipeline of new products will generate future growth in salesand contribution. Outlook: The results for the first half of the year have highlighted thetransition that the Group is undergoing. The full benefit of these changes willbe felt increasingly over the coming months. The second half has startedstrongly with further advances in sales of our animal pharmaceutical products.This growth, coupled with further Aivlosin registration approvals for Europeanticipated before the end of our current financial year, underpins the excitingpotential for the Group. Peter A LawrenceChairman 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 TURNOVERContinuing operations 9,162 8,000 17,031Discontinued operations* - 399 767 17,798 -------------Cost of sales (6,090) (5,352) (11,310) ------------- ------------- ------------- GROSS PROFIT 3,072 3,047 6,488Administrative expenses (1,642) (1,494) (3,470)Depreciation (599) (406) (921)Goodwill amortisation (511) (12) (534) ------------- ------------- -------------OPERATING PROFITContinuing operations 320 1,038 1,374Discontinued operations* 97 189 1,563 -------------Exceptional items - - 1,754Interest received/(payable) (126) 128 136 1,890 ------------- ------------- -------------PROFIT ON ORDINARY ACTIVITIESBEFORE TAXATION 194 1,263 3,453 Taxation (3) (310) (505) ------------- ------------- -------------PROFIT AFTER TAX 191 953 2,948Minority interest - (151) (38) ------------- ------------- -------------PROFIT FOR PERIOD 191 802 2,910Dividends (482) (375) (1,924) ------------- ------------- -------------RETAINED PROFITTRANSFERRED TO RESERVES (291) 427 986 ------------- ------------- ------------- BASIC EARNINGS PER SHARE 0.62p 3.00p 10.25p FULLY DILUTED EARNINGSPER SHARE 0.62p 2.96p 10.22p BASIC EARNINGS PER SHAREBEFORE AMORTISATIONOF 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 ASSETSIntangible assets 27,544 6,312 26,818Tangible assets 904 873 881Investments 1,283 1,252 1,283 --------------- --------------- --------------- 29,731 8,437 28,982 CURRENT ASSETSStock 4,260 3,284 3,375Debtors 9,170 8,236 10,228Cash at bank and in hand 1,451 11,530 1,324 --------------- --------------- --------------- 14,881 23,050 14,927 CREDITORSAmounts falling due within one year (7,629) (7,485) (6,865) --------------- --------------- --------------- NET CURRENT ASSETS 7,252 15,565 8,062 TOTAL ASSETS LESSCURRENT LIABILITIES 36,983 24,002 37,044 CREDITORSAmounts falling due after more thanone year (2,047) (1,292) (2,047) --------------- --------------- ---------------NET ASSETS 34,936 22,710 34,997 ======== ======== ======== CAPITAL AND RESERVESCalled up share capital 1,554 1,341 1,548Share premium 21,224 7,987 21,037Capital redemption reserve 106 106 106Profit and loss account 12,050 11,915 12,304Minority 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 FINANCEInterest received 41 318Interest paid (167) (182) --------------- ---------------NET CASH (OUTFLOW)/INFLOW FROM RETURNS ON INVESTMENT ANDSERVICING OF FINANCE (126) 136 --------------- --------------- TAXATION 27 (705) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPurchase 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 EXPENDITUREAND FINANCIAL INVESTMENT (1,860) (11,779) --------------- --------------- DISPOSALS 1,300 - EQUITY DIVIDENDS PAID (434) (1,870) FINANCINGIssue of shares 193 1,311Increase 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 TotalCASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES £000 £000 £000/ £000Operating profit 321 1,374 189 1,563Exchange gains/(losses) 36 (173) - (173)Depreciation charge 599 79 6 85Amortisation charge 511 1,369 - 1,369Increase in stocks (885) (1,126) (20) (1,146)(Increase)/decrease in debtors (319) 14,849 (11) 14,838Increase/(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 31.03.05IN NET DEBT £000 £000 Increase in cash in the period 127 2,991Increase in debt (751) (728) ----------------- -----------------Change in net debt resulting from cash flows (624) 2,263Effect 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 NETDEBT At 1.4.05 Cash flow At 30.9.05 At 30.9.04 £000 £000 £000 £000Cash at bank and in hand 1,324 127 1,451 11,530Overdrafts (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 areunaudited, have been prepared in accordance with the accounting policies in theAccounts for the period ended 31 March 2005. The summary of results for the year ended 31 March 2005 does not constitute fullfinancial statements within the meaning of Section 240 of the Companies Act1985. The full financial statements for that year have been reported on by thecompany's auditors and delivered to the Registrar of Companies. The auditreport was unqualified and did not contain a statement under Section 237 (2) orSection 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 March2006. The calculation of basic earnings per ordinary share is based on the profit forthe period and 30,975,704 ordinary shares (2004: 26,785,450) being the weightedaverage number of shares in issue during the half year. The weighted averagenumber 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 enhancedexpenditure on research and development costs in Eco Animal Health and thereforeno tax charge has been applied to this subsidiary in the consolidation of theseresults. The interim report was issued to the Stock Exchange and the press on 12 December2005 and will be posted to shareholders. Further copies of the interim reportare available at the Company's Registered Office. This information is provided by RNS The company news service from the London Stock Exchange