Final Results (part 2 of 2)

AstraZeneca PLC 30 January 2003 Consolidated Profit & Loss Account For Continuing Operations 2002 2001 For the year ended 31 December $m (Restated) $m Sales 17,841 16,222 Cost of sales (4,520) (4,198) Distribution costs (141) (122) Research and development (3,069) (2,687) Selling, general and administrative expenses (5,998) (5,427) Other operating income 243 368 Operating profit before exceptional items 4,356 4,156 Exceptional items charged to operating profit (350) (202) Operating profit 4,006 3,954 Share of joint ventures' and associates' operating profits - - Profit on sale of fixed assets - 10 Net interest and dividend income 31 113 Profit on ordinary activities before taxation 4,037 4,077 Profit before taxation before exceptional items 4,387 4,269 Exceptional items charged to profit before taxation (350) (192) Taxation (1,177) (1,160) Profit on ordinary activities after taxation 2,860 2,917 Attributable to minorities (24) (11) Net profit for the year 2,836 2,906 Dividends to Shareholders (1,206) (1,225) Earnings per Ordinary Share before exceptional items $1.84 $1.73 Earnings per Ordinary Share $1.64 $1.65 Diluted earnings per Ordinary Share $1.64 $1.65 Weighted average number of Ordinary Shares in issue (millions) 1,733 1,758 Diluted average number of Ordinary Shares in issue (millions) 1,735 1,761 Consolidated Profit & Loss Account For Continuing Operations 2002 2001 For the quarter ended 31 December $m (Restated) $m Sales 4,901 4,366 Cost of sales (1,253) (1,132) Distribution costs (39) (33) Research and development (892) (732) Selling, general and administrative expenses (1,661) (1,443) Other operating income 18 64 Operating profit before exceptional items 1,074 1,090 Exceptional items charged to operating profit (350) (76) Operating profit 724 1,014 Share of joint ventures' and associates' operating profits - - Profit on sale of fixed assets - - Net interest and dividend income 7 12 Profit on ordinary activities before taxation 731 1,026 Profit before taxation before exceptional items 1,081 1,102 Exceptional items charged to profit before taxation (350) (76) Taxation (291) (296) Profit on ordinary activities after taxation 440 730 Attributable to minorities (12) (4) Net profit for the period 428 726 Dividends to Shareholders (808) (820) Earnings per Ordinary Share before exceptional items $0.45 $0.45 Earnings per Ordinary Share $0.25 $0.42 Diluted earnings per Ordinary Share $0.25 $0.42 Weighted average number of Ordinary Shares in issue (millions) 1,723 1,750 Diluted average number of Ordinary Shares in issue (millions) 1,725 1,752 Consolidated Balance Sheet 2002 2001 At 31 December $m (Restated) $m Fixed assets Tangible fixed assets 6,597 5,409 Goodwill and intangible assets 2,807 2,700 Fixed asset investments 46 23 9,450 8,132 Current assets Stocks 2,593 2,402 Debtors 4,845 4,139 Cash and short-term investments 4,688 3,823 12,126 10,364 Total assets 21,576 18,496 Creditors due within one year Short-term borrowings and current instalments of loans (516) (321) Other creditors (7,699) (6,159) (8,215) (6,480) Net current assets 3,911 3,884 Total assets less current liabilities 13,361 12,016 Creditors due after more than one year Loans (328) (635) Other creditors (34) (152) Provisions for liabilities and charges (1,773) (1,600) (2,135) (2,387) Net assets 11,226 9,629 Capital and reserves Shareholders' funds - equity interests 11,172 9,586 Minority equity interests 54 43 Shareholders' funds and minority interests 11,226 9,629 Statement of Total Recognised Gains and Losses 2002 2001 For the year ended 31 December $m (Restated) $m Net profit for the financial year 2,836 2,906 Exchange adjustments on net assets 1,106 (502) Translation differences on foreign currency borrowings 6 18 Tax on translation differences on foreign currency borrowings (2) (6) Total recognised gains and losses for the financial year 3,946 2,416 Prior Year adjustment (FRS 19 Deferred Tax) (200) Total gains and losses recognised since last Annual Report 3,746 Consolidated Cash Flow Statement 2002 2001 For the year ended 31 December $m $m Cash flow from operating activities Operating profit before exceptional items 4,356 4,156 Depreciation and amortisation 960 860 Decrease/(increase) in working capital 305 (1,006) Other non-cash movements 65 120 Net cash inflow from operating activities before exceptional items 5,686 4,130 Outflow related to exceptional items (93) (368) Net cash inflow from operating activities 5,593 3,762 Returns on investments and servicing of finance 35 156 Tax paid (795) (792) Capital expenditure and financial investment (1,543) (1,543) Acquisitions and disposals - (44) Equity dividends paid to Shareholders (1,234) (1,236) Net cash inflow before management of liquid resources and financing 2,056 303 Management of liquid resources Movement in short-term investments and fixed deposits (net) (806) 260 Financing (1,272) (959) Decrease in cash in the year (22) (396) Reconciliation of Cash Flow to Net Cash Funds 2002 2001 For the year ended 31 December $m $m Net funds at 1 January 2,867 3,605 Net cash flows before management of liquid resources and financing 2,056 303 Net cash flows from share issues and repurchases (1,154) (994) Exchange 75 (47) Net funds at 31 December 3,844 2,867 Notes to the Preliminary Announcement 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES The results for the full year ended 31 December 2002 have been prepared in accordance with UK generally accepted accounting principles. The accounting policies applied are those set out in AstraZeneca PLC's 2001 Annual Report and Form 20-F except that, in the current period, AstraZeneca adopted Financial Reporting Standard No. 19 'Deferred Tax'. Prior periods have been restated and the effects of this restatement were to reduce profits for the full year ended 31 December 2001 by $61m and reduce net assets at that date by $193m. The table below illustrates the effect on EPS before exceptional items of this restatement. The results for the year ended 31 December 2002 presented in this preliminary announcement are extracted from, and are consistent with, those in the Group's audited financial statements for the year ended 31 December 2002 and those financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 2001 TAXATION AND EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS Q1 2001 Q2 2001 Q3 2001 Q4 2001 Year Tax charge before adoption of FRS 19 ($m) (316) (269) (286) (282) (1,153) Tax charge after adoption of FRS 19 ($m) (315) (289) (295) (315) (1,214) Published EPS before adoption of FRS 19 ($) 0.45 . 0.42 0.43 0.47 1.77 Adjusted EPS after adoption of FRS 19 ($) 0.45 0.41 0.42 0.45 1.73 As part of AstraZeneca's objective to align with accounting best practice, cash discounts arising from prompt payment of invoices have been reclassified from cost of sales to sales. Comparatives have also been reclassified for consistency of presentation. Both sales and cost of sales have been reduced by $74m in the fourth quarter 2002 and $287m in the current year (2001 $258m, 2000 $221m). Furthermore, neither profits nor net assets have been affected. The change has minimal impact on previously stated sales growth rates. The reclassified quarterly sales figures are presented below. Additional detail at the product and territorial level are available on the AstraZeneca website. 2002 Sales and Cost of Sales reclassified for cash discounts Q1 2002 Q2 2002 Q3 2002 Sales as previously reported ($m) 4,421 4,382 4,350 Reclassified Sales ($m) 4,346 4,312 4,282 Cost of Sales as previously reported ($m) 1,169 1,130 1,181 Reclassified Cost of Sales ($m) 1,094 1,060 1,113 Operating margin as reported 29.3% 24.3% 21.2% Adjusted operating margin 29.8% 24.7% 21.5% 2001 Sales and Cost of Sales reclassified for cash discounts Q1 2001 Q2 2001 Q3 2001 Q4 2001 Year Sales as previously reported ($m) 3,991 4,099 3,950 4,440 16,480 Reclassified Sales ($m) 3,933 4,035 3,888 4,366 16,222 Cost of Sales as previously reported ($m) 1,074 1,112 1,064 1,206 4,456 Reclassified Cost of Sales ($m) 1,016 1,048 1,002 1,132 4,198 Operating margin as previously reported 26.4% 24.3% 25.7% 24.5% 25.2% Adjusted operating margin 26.8% 24.7% 26.1% 25.0% 25.6% Information in this preliminary announcement does not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2001 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain any statement under Section 237 of the Companies Act 1985. 2 JOINT VENTURES AND ASSOCIATES The Group's share of joint ventures' sales for the year ended 31 December 2002 amounted to $191m and $183m for the comparative period. Share of joint ventures' operating profits for the year ended 31 December 2001 and 2002 amounted to nil. 3 ANALYSIS OF EXCEPTIONAL ITEMS CHARGED TO OPERATING PROFIT 2002 2001 $m $m Accrual related to Zoladex investigations 350 - Synergy and integration charge - 202 350 202 4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2002 2001 For the year ended 31 December $m (Restated) $m Shareholders' funds at beginning of year (originally $9,786m before deducting prior period adjustment of $200m) 9,586 9,382 Net profit for the year 2,836 2,906 Dividends to Shareholders (1,206) (1,225) 1,630 1,681 Issue of AstraZeneca PLC Ordinary Shares 36 86 Repurchase of AstraZeneca PLC Ordinary Shares (1,190) (1,080) Foreign currency adjustment 1,110 (483) Net addition to Shareholders' funds 1,586 204 Shareholders' funds at end of year 11,172 9,586 5 NET CASH FUNDS The table below provides an analysis of net cash funds and a reconciliation of net cash flow to movement in net cash funds. At 31 Dec Cash Other Exchange At 31 Dec 2001 flow non-cash movements 2002 $m $m $m $m $m Loans due after 1 year (635) 28 279 - (328) Current instalments of loans (107) 77 (279) (5) (314) Total loans (742) 105 - (5) (642) Short-term investments 3,118 806 - 38 3,962 Cash 705 (18) - 39 726 Overdrafts (195) (4) - (3) (202) Short-term borrowings, excluding overdrafts (19) 13 - 6 - 3,609 797 - 80 4,486 Net cash funds 2,867 902 - 75 3,844 Issue of AstraZeneca PLC Ordinary Shares (36) Repurchase of AstraZeneca PLC Ordinary Shares 1,190 Net cash inflow before management of liquid resources and financing 2,056 6 FULL YEAR TERRITORIAL SALES ANALYSIS % Growth Full Year Full Year 2002 2001 Constant $m $m Actual Currency USA 9,351 8,483 10 10 Canada 570 525 9 10 North America 9,921 9,008 10 10 France 1,140 967 18 13 UK 623 759 (18) (20) Germany 699 682 2 (2) Italy 765 638 20 16 Sweden 285 263 8 3 Europe others 2,183 1,929 13 8 Total Europe 5,695 5,238 9 5 Japan 977 851 15 21 Rest of World 1,248 1,125 11 15 Total 17,841 16,222 10 9 7 FOURTH QUARTER TERRITORIAL SALES ANALYSIS % Growth 4th 4th Quarter Quarter 2002 2001 Constant $m $m Actual Currency USA 2,564 2,219 16 16 Canada 147 142 4 5 North America 2,711 2,361 15 15 France 320 266 20 12 UK 147 219 (33) (37) Germany 196 179 9 2 Italy 214 181 18 10 Sweden 75 64 17 - Europe others 576 530 9 2 Total Europe 1,528 1,439 6 (1) Japan 314 260 21 27 Rest of World 348 306 14 19 Total 4,901 4,366 12 10 8 FULL YEAR PRODUCT SALES ANALYSIS World US Full Year Full Year Constant Full Year 2002 2001 Actual Currency 2002 Actual $m $m Growth Growth $m Growth % % % Gastrointestinal: Losec 4,623 5,578 (17) (18) 2,847 (21) Nexium 1,978 568 n/m n/m 1,525 n/m Others 63 44 43 38 20 n/m Total Gastrointestinal 6,664 6,190 8 7 4,392 8 Cardiovascular: Zestril 877 1,067 (18) (18) 467 (24) Seloken 901 711 27 27 617 43 Atacand 569 410 39 36 206 37 Plendil 489 463 6 5 209 6 Tenormin 370 404 (8) (7) 52 (2) Others 363 428 (15) (18) 13 (82) Total Cardiovascular 3,569 3,483 2 1 1,564 3 Respiratory: Pulmicort 812 766 6 5 361 35 Rhinocort 299 265 13 13 211 19 Symbicort 299 83 n/m n/m - - Accolate 144 143 1 2 104 5 Oxis 120 127 (6) (9) - - Others 144 155 (7) (9) - - Total Respiratory 1,818 1,539 18 16 676 24 Oncology: Zoladex 794 718 11 12 212 7 Casodex 644 561 15 15 180 (23) Nolvadex 480 618 (22) (21) 337 (27) Arimidex 331 188 76 75 134 127 Iressa 67 - n/m n/m - - Faslodex 35 - n/m n/m 35 n/m Others 18 26 (31) (31) - - Total Oncology 2,369 2,111 12 12 898 (6) CNS: Seroquel 1,145 685 67 67 927 67 Zomig 328 273 20 19 177 20 Others 32 22 45 40 7 17 Total CNS 1,505 980 54 53 1,111 57 Pain, Infection and Other Pharma: Diprivan 443 456 (3) (3) 216 3 Merrem 285 227 26 26 59 9 Local anaesthetics 432 434 - - 113 (12) Other Pharma Products 258 379 (32) (31) 75 (32) Total Pain, Infection and Other Pharma 1,418 1,496 (5) (5) 463 (8) Salick Health Care 233 194 20 20 233 20 Astra Tech 151 126 20 14 11 38 Marlow Foods 114 103 11 8 3 - Total 17,841 16,222 10 9 9,351 10 n/m not meaningful 9 FOURTH QUARTER PRODUCT SALES ANALYSIS World US 4th 4th Constant 4th Quarter Quarter Actual Currency Quarter Actual 2002 2001 Growth Growth 2002 Growth $m $m % % $m % Gastrointestinal: Losec 1,115 1,372 (19) (20) 684 (17) Nexium 686 278 n/m n/m 521 n/m Others 18 14 29 15 7 n/m Total Gastrointestinal 1,819 1,664 9 7 1,212 14 Cardiovascular: Zestril 144 256 (44) (44) 46 (68) Seloken 263 165 59 60 182 107 Atacand 160 124 29 24 55 15 Plendil 139 136 2 - 63 (6) Tenormin 95 104 (9) (8) 10 - Others 93 115 (19) (29) (1) n/m Total Cardiovascular 894 900 (1) (3) 355 (7) Respiratory: Pulmicort 237 203 17 14 120 62 Rhinocort 76 74 3 3 54 2 Symbicort 105 49 n/m n/m - - Accolate 52 30 73 73 41 128 Oxis 29 33 (12) (18) - - Others 38 40 (5) (10) - - Total Respiratory 537 429 25 21 215 48 Oncology: Zoladex 206 205 - - 55 8 Casodex 184 173 6 5 46 (35) Nolvadex 138 181 (24) (24) 99 (27) Arimidex 92 51 78 75 32 167 Iressa 41 - n/m n/m - - Faslodex 16 - n/m n/m 16 n/m Others 4 4 - - - n/m Total Oncology 681 614 11 11 248 (8) CNS: Seroquel 357 170 110 109 292 130 Zomig 94 67 40 39 52 63 Others 9 6 50 33 2 100 Total CNS 460 243 89 87 346 116 Pain, Infection and Other Pharma: Diprivan 117 133 (12) (13) 58 (13) Merrem 69 65 6 8 8 (53) Local anaesthetics 121 102 19 19 37 3 Other Pharma Products 68 104 (35) (33) 18 (36) Total Pain, Infection and Other Pharma 375 404 (7) (7) 121 (18) Salick Health Care 63 50 26 26 63 26 Astra Tech 43 36 19 2 3 - Marlow Foods 29 26 12 4 1 - Total 4,901 4,366 12 10 2,564 16 n/m not meaningful Convenience Translation of Key Financial Information 2001 2001 2001 2002 (restated) 2002 (restated) 2002 (restated) For the three months ended 31 $m $m £m £m SEKm SEKm December Total Sales 4,901 4,366 3,045 2,713 42,982 38,290 Operating profit before exceptional items (EI) 1,074 1,090 667 677 9,419 9,559 Profit before tax on continuing operations before EI 1,081 1,102 672 685 9,480 9,665 Net profit for the period 428 726 266 451 3,754 6,367 Earnings per Ordinary Share pre EI $0.45 $0.45 £0.28 £0.28 SEK3.95 SEK3.95 2001 2001 2001 2002 (restated) 2002 (restated) 2002 (restated) For the year ended 31 December $m $m £m £m SEKm SEKm Total Sales 17,841 16,222 11,086 10,080 156,466 142,267 Operating profit before exceptional items (EI) 4,356 4,156 2,707 2,582 38,202 36,448 Profit before tax on continuing operations before EI 4,387 4,269 2,726 2,653 38,474 37,439 Net profit for the year 2,836 2,906 1,762 1,806 24,872 25,486 Basic earnings per Ordinary Share $1.64 $1.65 £1.02 £1.03 SEK14.38 SEK14.47 Earnings per Ordinary Share pre EI $1.84 $1.73 £1.14 £1.08 SEK16.14 SEK15.17 Dividend per Ordinary Share $0.70 $0.70 43.2p 49.3p SEK6.20 SEK7.45 Net cash inflow from operating activities 5,593 3,762 3,475 2,338 49,051 32,993 Decrease in cash (22) (396) (14) (246) (193) (3,473) Shareholders' funds - equity interests 31 December 11,172 9,586 6,942 5,957 97,978 84,069 Sterling (£) and Swedish Kronor equivalents are shown for convenience and have been calculated using the current period end rates of $1=£0.621388 and $1= SEK8.77, respectively. Dividend per Ordinary Share is shown as the actual amount payable using the rates at the date of declaration of the dividend. Information for US Investors RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES The Group profit and loss account and Group balance sheet set out on pages 9, 10 and 11 are prepared in accordance with generally accepted accounting principles in the United Kingdom (UK GAAP) which differ in certain material respects from those generally accepted in the United States (US GAAP). The differences as they apply to AstraZeneca PLC are explained in the Group's 2001 Annual Report and Form 20-F except that, in the current year, AstraZeneca adopted SFAS No141 ' Business Combinations' and SFAS No142 'Goodwill and Other Intangible Assets'. As a result goodwill is no longer amortised but tested annually for impairment. The effect has been to increase profit by approximately $755m. The approximate effects on Group income and shareholders' equity of the GAAP differences are shown below. 2002 2001 Income attributable to Shareholders $m $m Net income for the year under UK GAAP (2001 restated) 2,836 2,906 Adjustments to conform to US GAAP Purchase accounting adjustments, (including goodwill and intangibles); - deemed acquisition of Astra - amortisation and other acquisition adjustments (864) (1,514) - others 55 - Capitalisation, less disposals and amortisation of interest 46 57 Deferred taxation - on fair value of Astra 239 249 - others (99) (198) Pension expense (50) (33) Post-retirement benefits/plan amendment 4 4 Software costs capitalised (46) (10) Restructuring costs - (22) Share based compensation 33 (7) Fair value of derivative financial instruments 93 18 Deferred income recognition 61 (75) Unrealised losses on foreign exchange and others (1) (10) Net income before cumulative effect of change in accounting policy 2,307 1,365 Cumulative effect of change in accounting policy, net of tax, on adoption - 32 of SFAS No. 133 Net income in accordance with US GAAP 2,307 1,397 Net income per Ordinary Share under US GAAP (basic) $1.33 $0.79 Net income per Ordinary Share under US GAAP (diluted) $1.33 $0.79 RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES 31 Dec 31 Dec 2002 2001 Shareholders' equity $m $m Shareholders' equity under UK GAAP (2001 restated) 11,172 9,586 Adjustment to conform to US GAAP Purchase accounting adjustments, (including goodwill and intangibles); - deemed acquisition of Astra - goodwill 12,692 11,062 - tangible and intangible fixed assets 7,707 8,139 - others 86 31 Capitalisation, less disposals and amortisation of interest 238 192 Deferred taxation - on fair value of Astra (2,305) (2,313) - others (159) (68) Dividend 808 820 Pension expense (271) (162) Post-retirement benefits/plan amendment (24) (28) Software costs capitalised 64 110 Fair value of derivative financial instruments 99 50 Deferred income recognition (14) (75) Others 90 58 Shareholders' equity in accordance with US GAAP 30,183 27,402 Shareholder Information ANNOUNCEMENTS AND MEETINGS Announcement of first quarter 2003 results 30 April 2003 Annual General Meeting 2003 30 April 2003 Announcement of second quarter and half year 2003 24 July 2003 results Annual Business Review 2003 2 October 2003 Announcement of third quarter and nine months 2003 23 October 2003 results DIVIDENDS The record date for the first interim dividend paid on 7 October 2002 (in the UK, Sweden and the US) was 23 August 2002. Ordinary Shares traded ex-dividend on the London and Stockholm Stock Exchange from 21 August 2002. ADRs traded ex-dividend on the New York Stock Exchange from the same date. The record date for the second interim dividend for 2002 payable on 7 April 2003 (in the UK, Sweden and the US) will be 21 February 2003. Ordinary Shares will trade ex-dividend on the London and Stockholm Stock Exchange from 19 February 2003. ADRs will trade ex-dividend on the New York Stock Exchange from the same date. Future dividends will normally be paid as follows: First interim Announced in July and paid in October Second interim Announced in January and paid in April. TRADE MARKS The following brand names used in this interim report are trade marks of the AstraZeneca group of companies: Accolate Arimidex Astra Tech Atacand Atacand HCT Casodex Crestor Diprivan Exanta Faslodex Iressa Losec Merrem Nexium Nolvadex Oxis Plendil Prilosec Pulmicort Pulmicort Respules Pulmicort Turbuhaler Rhinocort Rhinocort Aqua Seloken Seroquel Symbicort Tenormin Toprol-XL Zestril Zoladex Zomig Zomig ZMT Zomig Rapimelt ADDRESSES FOR CORRESPONDENCE Registrar and Depositary Registered Office Swedish Securities Register Centre Transfer Office for ADRs VPC AB The AstraZeneca Registrar JPMorgan Chase Bank 15 Stanhope Gate PO Box 7822 Lloyds TSB Registrars PO Box 43013 London S-103 97 Stockholm The Causeway Providence, W1K 1LN Sweden Worthing RI 02940-3013 UK West Sussex US BN99 6DA Tel: +44 (0)121 433 8000 Tel: +1 (781) 575 4328 Tel: +44 (0)20 7304 5000 Tel: +46 (0)8 402 9000 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS In order to utilise the 'Safe Harbor' provisions of the United States Private Securities Litigation Reform Act of 1995, AstraZeneca is providing the following cautionary statement. This Preliminary Report contains forward-looking statements with respect to the financial condition, results of operations and businesses of AstraZeneca. By their nature, forward-looking statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from that expressed or implied by these forward-looking statements. These factors include, among other things, exchange rate fluctuations, the risk that research and development will not yield new products that achieve commercial success, the impact of competition, price controls and price reductions, the risk of loss or expiration of patents or trade marks, difficulties of obtaining and maintaining governmental approvals for products, the risk of substantial product liability claims and exposure to environmental liability. 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