Interim Results - Part 2
AstraZeneca PLC
25 July 2002
PART 2
Consolidated Profit & Loss Account
2002 2001
For the six months ended 30 June (restated)
$m $m
Sales 8,803 8,090
Cost of sales (2,299) (2,186)
Distribution costs (65) (60)
Research and development (1,420) (1,341)
Selling, general and administrative expenses (2,869) (2,660)
Other operating income 211 208
Operating profit before exceptional items 2,361 2,051
Exceptional items charged to operating profit - (81)
Operating profit 2,361 1,970
Profit on sale of fixed assets - 10
Net interest and dividend income 22 78
Profit on ordinary activities before taxation 2,383 2,058
Taxation (644) (584)
Profit on ordinary activities after taxation 1,739 1,474
Attributable to minorities (6) (5)
Net profit for the period 1,733 1,469
Dividends to shareholders (398) (405)
Retained profit for the period 1,335 1,064
Earnings per Ordinary Share before exceptional items $1.00 $0.86
Earnings per Ordinary Share $1.00 $0.83
Diluted earnings per Ordinary Share $1.00 $0.83
Weighted average number of Ordinary Shares in issue (millions) 1,741 1,764
Diluted average number of Ordinary Shares in issue (millions) 1,743 1,766
Consolidated Profit & Loss Account
2002 2001
For the quarter ended 30 June (restated)
$m $m
Sales 4,382 4,099
Cost of sales (1,130) (1,112)
Distribution costs (35) (30)
Research and development (723) (669)
Selling, general and administrative expenses (1,485) (1,339)
Other operating income 55 47
Operating profit before exceptional items 1,064 996
Exceptional items charged to operating profit - (56)
Operating profit 1,064 940
Profit on sale of fixed assets - -
Net interest and dividend income 1 23
Profit on ordinary activities before taxation 1,065 963
Taxation (288) (275)
Profit on ordinary activities after taxation 777 688
Attributable to minorities (2) (2)
Net profit for the period 775 686
Dividends to shareholders (398) (405)
Retained profit for the period 377 281
Earnings per Ordinary Share before exceptional items $0.45 $0.41
Earnings per Ordinary Share $0.45 $0.39
Diluted earnings per Ordinary Share $0.45 $0.39
Weighted average number of Ordinary Shares in issue (millions) 1,736 1,762
Diluted average number of Ordinary Shares in issue (millions) 1,738 1,764
Consolidated Balance Sheet
30 June 30 June
2002 2001
(restated)
$m $m
Fixed assets
Tangible fixed assets 6,079 4,925
Goodwill and intangible assets 2,748 2,661
Fixed asset investments 22 16
8,849 7,602
Current assets
Stocks 2,460 2,063
Debtors 4,648 4,396
Cash and short-term investments 4,247 4,233
11,355 10,692
Total assets 20,204 18,294
Creditors due within one year
Short-term borrowings and current instalments of loans (476) (263)
Other creditors (6,646) (5,980)
(7,122) (6,243)
Net current assets 4,233 4,449
Total assets less current liabilities 13,082 12,051
Creditors due after more than one year
Loans (337) (638)
Other creditors (153) (258)
Provisions for liabilities and charges (1,547) (1,691)
(2,037) (2,587)
Net assets 11,045 9,464
Capital and reserves
Shareholders' funds - equity interests 10,994 9,428
Minority equity interests 51 36
Shareholders' funds and minority interests 11,045 9,464
Statement of Total Recognised Gains and Losses
2002 2001
For the six months ended 30 June $m $m
Net profit for the period 1,733 1,469
Exchange adjustments on net assets 797 (783)
Translation differences on foreign currency borrowings (5) 43
Tax on translation differences on foreign currency borrowings - (5)
Other movements 3 3
Total recognised gains and losses relating to the period 2,528 727
Prior year adjustment (200)
Total gains and losses recognised since last annual report 2,328
Consolidated Cash Flow Statement
2002 2001
For the six months ended 30 June $m $m
Cash flow from operating activities
Operating profit before exceptional items 2,361 2,051
Depreciation 328 296
Amortisation 131 128
Decrease/(Increase) in working capital 251 (254)
Other non-cash movements 78 6
Net cash inflow from operating activities before exceptional
Items 3,149 2,227
Outflow related to exceptional items (55) (181)
Net cash inflow from operating activities 3,094 2,046
Returns on investments and servicing of finance 3 71
Tax paid (415) (522)
Capital expenditure and financial investment
Net cash expenditure on fixed assets (632) (628)
New fixed asset investments (1) (5)
(633) (633)
Acquisitions and disposals - (45)
Equity dividends paid to Shareholders (820) (830)
Net cash inflow before management of liquid
resources and financing 1,229 87
Management of liquid resources
Movement in short-term investments and fixed deposits (net) (428) (451)
Financing (815) (169)
Decrease in cash in the period (14) (533)
Net cash funds
Net cash inflow before management of liquid resources and 1,229 87
financing
AstraZeneca PLC Ordinary Shares
Issued for cash 26 55
Repurchased for cash (748) (344)
Inflow/(outflow) of net cash funds in the period 507 (202)
Independent Review Report by KPMG Audit Plc to AstraZeneca PLC
Introduction
We have been instructed by the Company to review the financial information for
the six month period ended 30 June 2002 set out on pages 9 and 11 to 15 and we
have read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts, in which case any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
(Review of Interim Financial Information) issued by the Auditing Practices
Board. A review consists principally of making enquiries of group management
and applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A
review is substantially less in scope than an audit performed in accordance with
Auditing Standards and therefore provides a lower level of assurance than an
audit. Accordingly, we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
KPMG Audit Plc
Chartered Accountants
London
25 July 2002
Notes to the Interim Financial Statements
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited financial statements for the six months ended 30 June 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
six months ended 30 June 2001 by $19m and reduce net assets at that date by
$126m. On adoption net assets at 1 January 2002 were reduced by $193m. The
table below illustrates the effect on EPS before exceptional items of this
restatement.
The financial statements are unaudited but have been reviewed by the auditors
and their report is set out above. The statements do not constitute statutory
accounts of the group within the meaning of Section 240 of the Companies Act
1985. Statutory accounts for the year ended 31 December 2001 have been filed
with the Registrar of Companies. The auditor's report on those accounts was
unqualified and did not contain any statement under Section 237 of the Companies
Act 1985.
2001 TAXATION AND EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Year
Tax charge before adoption of FRS 19 ($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
2 JOINT VENTURES AND ASSOCIATES
The group's share of joint ventures' sales for the half year to 30 June 2002
amounted to $173m and $163m for the comparative period. Share of joint
ventures' operating profits for the half year to 30 June 2002, and for the
comparative period were $nil.
3 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2001
For the six months ended 30 June 2002 (restated)
$m $m
Shareholders' funds at beginning of period, (originally $9,786
million before deducting prior period adjustment of $200m) 9,586 9,395
Net profit for the period 1,733 1,469
Dividends to Shareholders (398) (405)
1,335 1,064
Issue of AstraZeneca PLC Ordinary Shares 26 55
Repurchase of AstraZeneca PLC Ordinary Shares (748) (344)
Foreign currency adjustment 792 (745)
Other movements 3 3
Net addition to Shareholders' funds 1,408 33
Shareholders' funds at end of period 10,994 9,428
4 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 30 June
2001 flow non-cash Movements 2002
$m $m $m $m $m
Loans due after 1 year (635) 14 284 - (337)
Current instalments of loans (107) 64 (284) (5) (332)
Total loans (742) 78 - (5) (669)
Short-term investments 3,118 428 - 33 3,579
Cash 705 (67) * - 30 668
Overdrafts (195) 53 * - (2) (144)
Short-term borrowings, excluding
overdrafts (19) 15 - 4 -
3,609 429 - 65 4,103
Net cash funds 2,867 507 - 60 3,434
Issue of AstraZeneca PLC Ordinary
Shares (26)
Repurchase of AstraZeneca PLC
Ordinary Shares 748
Net cash inflow before
management of liquid resources
and financing 1,229
* Movement of $(14)m on cash and overdrafts corresponds to decrease in cash
during period as defined under UK GAAP.
5 LEGAL PROCEEDINGS
Further to note 36 to the Financial Statements found on page 94 in the
AstraZeneca 2001 Annual Report and Form 20-F wherein reference is made to
various investigations into drug marketing and pricing practices in the US, the
US Department of Justice has been conducting an investigation into the sales and
marketing of Zoladex (goserelin acetate implant). The Company has been informed
that the investigation was prompted by the filing of a qui tam complaint by a
private party and involves allegations of improper submission of claims to the
Medicare program. The Company is cooperating with the investigation, which is
ongoing. While it is not possible to predict the outcome of the investigation,
management is of the opinion that the ultimate disposition should not have a
material adverse effect on AstraZeneca's financial position or results.
6 HALF YEAR TERRITORIAL SALES ANALYSIS
% Growth
1st 1st
Half Half
2002 2001 Constant
$m $m Actual Currency
USA 4,719 4,259 11 11
Canada 273 254 7 9
Japan 412 389 6 17
France 537 482 11 13
Germany 335 348 (4) (2)
Italy 379 337 12 14
Sweden 138 142 (3) 2
UK 330 370 (11) (10)
Rest of World 1,680 1,509 11 14
Total 8,803 8,090 9 10
7 SECOND QUARTER TERRITORIAL SALES ANALYSIS
% Growth
2nd 2nd
Quarter Quarter
2002 2001 Constant
$m $m Actual Currency
USA 2,271 2,120 7 7
Canada 144 126 14 15
Japan 240 211 14 23
France 272 244 11 13
Germany 168 180 (7) (6)
Italy 207 187 11 13
Sweden 74 75 (1) (1)
UK 150 198 (24) (24)
Rest of World 856 758 13 14
Total 4,382 4,099 7 8
8 HALF YEAR PRODUCT SALES ANALYSIS
World US
1st 1st Constant 1st
Half Half Actual Currency Half Actual
2002 2001 Growth Growth 2002 Growth
$m $m % % $m %
Gastrointestinal:
Losec 2,355 2,866 (18) (17) 1,423 (24)
Nexium 830 127 n/m n/m 653 n/m
Others 30 21 43 43 9 -
Total Gastrointestinal 3,215 3,014 7 8 2,085 7
Cardiovascular:
Zestril 559 644 (13) (12) 351 (15)
Seloken 446 350 27 28 306 46
Plendil 206 212 (3) (2) 75 (3)
Tenormin 190 213 (11) (7) 37 6
Atacand 281 196 43 45 117 54
Others 181 220 (18) (16) 11 (67)
Total Cardiovascular 1,863 1,835 2 3 897 7
Respiratory:
Pulmicort 430 409 5 6 194 37
Rhinocort 146 130 12 13 100 23
Accolate 67 95 (29) (28) 47 (35)
Oxis 61 65 (6) (4) - -
Symbicort 122 14 n/m n/m - -
Others 72 81 (11) (9) - -
Total Respiratory 898 794 13 14 341 16
Oncology:
Zoladex 387 344 13 16 105 3
Nolvadex 262 286 (8) (6) 193 (8)
Casodex 274 244 12 16 65 (33)
Arimidex 146 92 59 61 63 97
Faslodex 8 - n/m n/m 8 n/m
Others 11 15 (27) (27) - -
Total Oncology 1,088 981 11 14 434 (2)
CNS:
Seroquel 604 357 69 70 507 68
Zomig 168 154 9 10 98 (2)
Others 15 3 n/m n/m 3 -
Total CNS 787 514 53 54 608 50
Pain, Infection and Other
Pharma:
Diprivan 226 215 5 7 113 30
Merrem 142 106 34 35 33 50
Local anaesthetics 156 196 (20) (17) 33 (34)
Other Pharma Products 189 225 (16) (15) 56 (13)
Total Pain, Infection and Other
Pharma 713 742 (4) (2) 235 5
Salick Health Care 113 95 19 19 113 19
Astra Tech 71 62 15 20 5 67
Marlow Foods 55 53 4 6 1 -
Total 8,803 8,090 9 10 4,719 11
n/m not meaningful
9 SECOND QUARTER PRODUCT SALES ANALYSIS
World US
2nd Quarter 2nd Quarter Constant 2nd
2002 2001 Actual Currency Quarter Actual
Growth Growth 2002 Growth
$m $m % % $m %
Gastrointestinal:
Losec 1,137 1,371 (17) (17) 679 (22)
Nexium 474 46 n/m n/m 360 n/m
Others 17 9 89 89 5 -
Total Gastrointestinal 1,628 1,426 14 14 1,044 17
Cardiovascular:
Zestril 276 350 (21) (20) 168 (27)
Seloken 210 199 6 6 140 11
Plendil 98 106 (8) (7) 30 (14)
Tenormin 96 115 (17) (14) 15 (32)
Atacand 130 113 15 16 44 (10)
Others 92 117 (21) (19) 5 (71)
Total Cardiovascular 902 1,000 (10) (9) 402 (16)
Respiratory:
Pulmicort 201 209 (4) (4) 87 10
Rhinocort 82 74 11 12 56 19
Accolate 34 46 (26) (26) 24 (33)
Oxis 30 33 (9) (6) - -
Symbicort 68 11 n/m n/m - -
Others 37 40 (8) (8) - -
Total Respiratory 452 413 9 10 167 3
Oncology:
Zoladex 197 184 7 10 57 8
Nolvadex 119 147 (19) (18) 82 (22)
Casodex 150 129 16 19 34 (29)
Arimidex 80 49 63 65 36 125
Faslodex 8 - n/m n/m 8 n/m
Others 6 8 (25) (25) - -
Total Oncology 560 517 8 10 217 (2)
CNS:
Seroquel 268 168 60 61 214 55
Zomig 75 88 (15) (14) 38 (37)
Others 8 1 n/m n/m 1 -
Total CNS 351 257 37 38 253 27
Pain, Infection and Other
Pharma:
Diprivan 113 108 5 6 58 32
Merrem 75 57 32 32 18 38
Local anaesthetics 60 92 (35) (34) 11 (54)
Other Pharma Products 118 121 (2) (3) 38 6
Total Pain, Infection and Other
Pharma 366 378 (3) (3) 125 7
Salick Health Care 59 50 18 18 59 18
Astra Tech 37 32 16 16 3 n/m
Marlow Foods 27 26 4 8 1 -
Total 4,382 4,099 7 8 2,271 7
n/m not meaningful
Information for US Investors
RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES
The profit and loss accounts and balance sheet set out on pages 9 to 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 2001 Annual Report and Form 20-F,
except that, with effect from 1 January 2002, goodwill amortisation has been
prohibited. The effect has been to increase income for the six months under US
GAAP by approximately $383m. The adoption of FRS19 under UK GAAP has not
affected income or shareholders' equity under US GAAP although it has had a
consequential impact on the relevant UK to US GAAP adjustment. Software and
application costs of $13m arising on two infrastructure projects have been
capitalised under UK GAAP in the first half of the year. The approximate
effects on income and shareholders' equity of the GAAP differences are shown
below.
1st 1st
Half Half
2002 2001
Income attributable to Shareholders (restated)
$m $m
Net income for the period under UK GAAP from continuing
Operations 1,733 1,469
Adjustments to conform to US GAAP
Purchase accounting adjustments, (including goodwill &
intangibles):
- deemed acquisition of Astra (goodwill amortisation and other
acquisition adjustments) (419) (767)
Capitalisation less amortisation of interest - 19
Capitalisation less amortisation of software costs (42) 10
Deferred taxation 32 142
Pension expense (27) (22)
Post-retirement benefits/plan amendment 2 2
Restructuring costs - (22)
Unrealised gains on foreign exchange and others 52 (21)
Net income in accordance with US GAAP 1,331 810
Net income / (loss) per Ordinary Share under US GAAP - basic and
diluted $0.77 $0.46
RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
30 June 30 June
Shareholders' equity 2002 2001
(restated)
$m $m
Shareholders' equity under UK GAAP 10,994 9,428
Adjustments to conform to US GAAP
Purchase accounting adjustments (including goodwill and
intangibles):
- deemed acquisition of Astra
- goodwill 11,961 11,409
- tangible and intangible fixed assets 8,131 8,404
- others 31 31
Capitalisation of interest 192 154
Deferred taxation
- on fair value of Astra (2,310) (2,390)
- others (156) (96)
Dividend 398 405
Pension expense (189) (151)
Post-retirement benefits / plan amendment (26) (30)
Software costs capitalised 68 130
Others 84 52
Shareholders' equity in accordance with US GAAP 29,178 27,346
Shareholder Information
ANNOUNCEMENTS AND MEETINGS
Announcement of third quarter and nine month results 24 October 2002
Annual Business Review 7 November 2002
DIVIDENDS
The record date for the first interim dividend payable on 7 October 2002 (in the
UK, Sweden and the US) is 23 August 2002. Ordinary Shares will trade
ex-dividend on the London and Stockholm Stock Exchange from 21 August 2002.
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 end of July and paid in October.
Second interim Announced in January and paid in April.
TRADEMARKS
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 Atacand Plus 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 Rapimelt
ADDRESSES FOR CORRESPONDENCE
Registrar and Depositary Registered Office Swedish Securities Register Centre
Transfer Office for ADRs
The AstraZeneca Registrar JPMorgan Chase Bank 15 Stanhope Gate VPC AB
Lloyds TSB Registrars PO Box 43013 London PO Box 7822
The Causeway Providence, W1K 1LN S-103 97 Stockholm
Worthing RI 02940-3013 Sweden
West Sussex
BN99 6DA
Tel: (0870) 600 3956 Tel: (781) 575 4328 Tel: (020) 7304 5000 Tel: (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 Interim 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, exposure to environmental liability.
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