Interim Results - Part 2 of 2
AstraZeneca PLC
26 July 2001
PART 2
Consolidated Profit & Loss Account For Continuing Operations
2001 2000
For the six months ended 30 June $m $m
Sales 8,090 7,863
Cost of sales (2,186) (2,084)
Distribution costs (60) (120)
Research and development (1,341) (1,210)
Selling, general and administrative expenses (2,660) (2,474)
Other operating income 208 71
Operating profit before exceptional items 2,051 2,046
Exceptional items charged to operating profit (81) (179)
Operating profit 1,970 1,867
Share of joint ventures' and associates' operating - 19
profits
Profit on sale of fixed assets 10 -
Net interest and dividend income 78 34
Profit on ordinary activities before taxation 2,058 1,920
Profit before taxation before exceptional items 2,129 2,099
Exceptional items charged to profit before taxation (71) (179)
Taxation (565) (575)
Profit on ordinary activities after taxation 1,493 1,345
Attributable to minorities (5) (5)
Net profit for the period 1,488 1,340
Dividends to Shareholders (405) (406)
Profit retained for the period 1,083 934
Earnings per Ordinary Share before exceptional items $0.87 $0.84
Earnings per Ordinary Share $0.84 $0.75
Diluted earnings per Ordinary Share $0.84 $0.75
Weighted average number of Ordinary Shares in issue 1,764 1,771
(millions)
Diluted average number of Ordinary Shares in issue 1,766 1,773
(millions)
The interim financial statements on pages 9 to 19 were approved by the Board
on 26 July 2001.
Consolidated Profit & Loss Account For Continuing Operations
2001 2000
For the quarter ended 30 June $m $m
Sales 4,099 3,971
Cost of sales (1,112) (1,012)
Distribution costs (30) (57)
Research and development (669) (613)
Selling, general and administrative expenses (1,339) (1,256)
Other operating income 47 37
Operating profit before exceptional items 996 1,070
Exceptional items charged to operating profit (56) (96)
Operating profit 940 974
Share of joint ventures' and associates' operating - (3)
profits
Profit on sale of fixed assets - -
Net interest and dividend income 23 15
Profit on ordinary activities before taxation 963 986
Profit before taxation before exceptional items 1,019 1,082
Exceptional items charged to profit before taxation (56) (96)
Taxation (255) (305)
Profit on ordinary activities after taxation 708 681
Attributable to minorities (2) (3)
Net profit for the period 706 678
Dividends to Shareholders (405) (406)
Profit retained for the period 301 272
Earnings per Ordinary Share before exceptional items $0.42 $0.43
Earnings per Ordinary Share $0.40 $0.37
Diluted earnings per Ordinary Share $0.40 $0.37
Weighted average number of Ordinary Shares in issue 1,762 1,769
(millions)
Diluted average number of Ordinary Shares in issue 1,764 1,771
(millions)
Consolidated Balance Sheet
30 June 30 June
2001 2000
$m $m
Fixed assets
Tangible fixed assets 4,925 6,015
Goodwill and intangible assets 2,661 3,503
Fixed asset investments 16 187
7,602 9,705
Current assets
Stocks 2,063 2,370
Debtors 3,932 4,930
Cash and short-term investments 4,233 2,953
10,228 10,253
Total assets 17,830 19,958
Creditors due within one year
Short-term borrowings and current instalments of (263) (444)
loans
Other creditors (5,980) (6,356)
(6,243) (6,800)
Net current assets 3,985 3,453
Total assets less current liabilities 11,587 13,158
Creditors due after more than one year
Loans (638) (749)
Other creditors (258) (451)
Provisions for liabilities and charges (1,101) (1,278)
(1,997) (2,478)
Net assets 9,590 10,680
Capital and reserves
Shareholders' funds - equity interests 9,560 10,636
Minority equity interests 30 44
Shareholders' funds and minority interests 9,590 10,680
Statement of Total Recognised Gains and Losses
2001 2000
For the six months ended 30 June $m $m
Net profit for the period - from continuing operations 1,488 1,340
- from discontinued operations - 208
Exchange adjustments on net assets (796) (432)
Translation differences on foreign currency borrowings 43 (5)
Tax on translation differences on foreign currency (5) 1
borrowings
Other movements 3 (6)
Total recognised gains and losses relating to the 733 1,106
period
Consolidated Cash Flow Statement
2001 2000
For the six months ended 30 June $m $m
Cash flow from operating activities
Operating profit before exceptional items:
- from continuing operations 2,051 2,046
- from discontinued operations - 343
Depreciation 296 354
Amortisation 128 159
Increase in working capital (254) (655)
Other non-cash movements 6 32
Net cash inflow from operating activities before
exceptional items 2,227 2,279
Outflow related to exceptional items (181) (445)
Net cash inflow from operating activities 2,046 1,834
Returns on investments and servicing of finance 71 27
Tax paid (522) (419)
Capital expenditure and financial investment
Net cash expenditure on fixed assets (628) (636)
New fixed asset investments (5) (3)
(633) (639)
Acquisitions and disposals (45) -
Equity dividends paid to Shareholders (830) (820)
Net cash inflow/(outflow) before management of liquid 87 (17)
resources and financing
Management of liquid resources
Movement in short-term investments and fixed deposits (451) 667
(net)
Financing (169) (274)
(Decrease)/increase in cash in the period (533) 376
Net cash funds
Net cash inflow/(outflow) before management of
liquid resources and financing 87 (17)
AstraZeneca PLC Ordinary Shares
Issued for cash 55 5
Repurchased for cash (344) (353)
Outflow of net cash funds in the period (202) (365)
Independent Review Report to AstraZeneca PLC by KPMG Audit Plc
Introduction
We have been instructed by the Company to review the financial information for
the six month period ended 30 June 2001 set out on pages 9 and 11 to 19 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 Listing
Rules of the Financial Services Authority 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 2001.
KPMG Audit Plc
Chartered Accountants
London
26 July 2001
Notes to the Interim Financial Statements
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited results for the six months ended 30 June 2001 have been prepared
in accordance with UK generally accepted accounting principles. The
accounting policies applied are those set out in AstraZeneca PLC's 2000 Annual
Report and Form 20-F. In 2001, the continued standardisation of accounting
treatments across AstraZeneca has led certain subsidiaries to classify as cost
of sales some elements of expense recorded as distribution costs in previous
periods. The effect of this change in the current half year period is to
reclassify approximately $60m of costs. Previous periods have not been
restated.
Continuing operations comprises the ongoing business of AstraZeneca and the
comparative Profit and Loss Account figures for 2000 exclude the results of
the Agrochemicals business which was demerged on 13 November 2000. The full
comparative Profit and Loss Account for first half 2000 is detailed in note 3
below.
The statements are unaudited but have been reviewed by the auditors and their
report is set out above. The statements do not comprise the statutory
accounts of the group. Statutory accounts for AstraZeneca PLC for the year
ended 31 December 2000 have been filed with the Registrar of Companies. The
auditors' 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 half year to 30 June 2001
amounted to $163m and $158m for the comparative period. Share of joint
ventures' operating profits for the half year to 30 June 2001 amounted to nil,
and for the comparative period $19m.
3 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30
JUNE 2000
Continuing Discontinued Total
Operations Operations
$m $m $m
Sales 7,863 1,681 9,544
Cost of sales (2,084) (913) (2,997)
Distribution costs (120) (54) (174)
Research and development (1,210) (132) (1,342)
Selling, general and (2,474) (260) (2,734)
administrative expenses
Other operating income 71 21 92
Operating profit before 2,046 343 2,389
exceptional items
Exceptional items charged to (179) - (179)
operating profit
Operating profit 1,867 343 2,210
Share of joint ventures' and 19 - 19
associates' operating profits
Net interest 34 - 34
Profit on ordinary activities 1,920 343 2,263
before taxation
Taxation (575) (133) (708)
Profit on ordinary activities 1,345 210 1,555
after taxation
Attributable to minorities (5) (2) (7)
Net profit for the period 1,340 208 1,548
Dividends to Shareholders (406) - (406)
Profit retained for the period 934 208 1,142
Earnings per Ordinary Share $0.84 $0.12 $0.96
before exceptional items
Earnings per Ordinary Share $0.75 $0.12 $0.87
Diluted earnings per Ordinary $0.75 $0.12 $0.87
Share
4 ANALYSIS OF EXCEPTIONAL ITEMS CHARGED TO OPERATING PROFIT
The following are the components of the exceptional charges to operating
profits from continuing operations which relate to the integration and synergy
programme commenced after the AstraZeneca merger:
2001 2000
For the six months ended 30 June $m $m
Cost of sales 5 3
Research and development 22 26
Selling, general and administrative expenses 54 150
81 179
5 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2001 2000
For the six months ended 30 June $m $m
Shareholders' funds at beginning of period 9,521 10,302
Net profit for the period - from continuing operations 1,488 1,340
- from discontinued operations - 208
Dividends to Shareholders (405) (406)
1,083 1,142
Issue of AstraZeneca PLC Ordinary Shares 55 5
Repurchase of AstraZeneca PLC Ordinary Shares (344) (353)
Foreign currency adjustment (758) (436)
Minority interest buy out - (18)
Other movements 3 (6)
Net addition to Shareholders' funds 39 334
Shareholders' funds at end of period 9,560 10,636
6 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
2000 flow Non-cash Movements 2001
$m $m $m $m $m
Loans due after (631) (8) - 1 (638)
1 year
Current (88) (111) - 1 (198)
instalments of
loans
Total loans (719) (119) - 2 (836)
Short-term 3,429 451 (1) (69) 3,810
investments
Cash 1,021 (582) - (16) 423
Overdrafts (113) 49 - 13 (51)
Short-term
borrowings,
excluding (13) (1) - - (14)
overdrafts
4,324 (83) (1) (72) 4,168
Net cash funds 3,605 (202) (1) (70) 3,332
Issue of
AstraZeneca PLC (55)
Ordinary Shares
Repurchase of
AstraZeneca PLC 344
Ordinary Shares
Net cash inflow
before management of
liquid resources
and financing 87
7 HALF YEAR PRODUCT SALES ANALYSIS
World US
1st 1st Constant 1st
Half Half Actual Currency Half Actual
2001 2000 Growth Growth 2001 Growth
$m $m % % $m %
Gastrointestinal:
Losec 2,866 2,967 (3) - 1,876 (4)
Nexium 127 - n/m n/m 80 n/m
Others 21 22 (5) 4 - -
Total 3,014 2,989 1 4 1,956 -
Gastrointestinal
Cardiovascular:
Zestril 644 661 (3) - 412 1
Seloken 350 261 34 39 209 73
Plendil 212 233 (9) (3) 77 (5)
Tenormin 213 253 (16) (9) 35 (29)
Atacand 196 124 58 67 76 69
Imdur 45 49 (8) - 6 (14)
Others 175 203 (14) (7) 27 (27)
Total 1,835 1,784 3 8 842 13
Cardiovascular
Respiratory:
Pulmicort 409 353 16 23 142 141
Rhinocort 130 114 14 18 81 29
Accolate 95 114 (17) (15) 72 (27)
Oxis 65 56 16 27 - -
Bricanyl 55 66 (17) (9) - -
Symbicort 14 - n/m n/m - -
Others 26 26 - 15 - -
Total
Respiratory 794 729 9 15 295 34
Oncology:
Zoladex 344 364 (5) 2 102 -
Nolvadex 286 275 4 7 210 9
Casodex 244 220 11 18 97 (11)
Arimidex 92 82 12 19 32 (3)
Others 15 15 - 7 - -
Total
Oncology 981 956 3 9 441 1
CNS:
Seroquel 357 204 75 77 301 61
Zomig 154 132 17 21 100 15
Other CNS 3 18 (83) (83) 3 (63)
Total CNS 514 354 45 48 404 43
7 HALF YEAR PRODUCT SALES ANALYSIS (CONTINUED)
World US
1st 1st Constant 1st
Half Half Actual Currency Half Actual
2001 2000 Growth Growth 2001 Growth
$m $m % % $m %
Pain, Infection
and Other Pharma:
Diprivan 215 284 (24) (19) 87 (36)
Merrem 106 78 36 45 22 340
Xylocaine 103 117 (12) (5) 26 (10)
Marcaine 41 45 (9) (2) 12 (14)
Naropin 29 27 7 14 5 (17)
Other 248 295 (16) (9) 71 (16)
Pharma
Products
Total
Pain,
Infection 742 846 (12) (6) 223 (19)
and Other Pharma
Salick 95 90 6 6 95 6
Health
Care
Astra 62 58 7 17 3 50
Tech
Marlow 53 47 13 24 - -
Foods
Other - 10 - - - -
210 205 2 7 98 7
Total 8,090 7,863 3 8 4,259 6
n/m not meaningful
8 SECOND QUARTER PRODUCT SALES ANALYSIS
World US
2nd 2nd Constant 2nd
Quarter Quarter Actual Currency Quarter Actual
2001 2000 Growth Growth 2001 Growth
$m $m % % $m %
Gastrointestinal:
Losec 1,371 1,379 (1) 3 873 -
Nexium 46 - n/m n/m 17 n/m
Others 9 11 (18) - - -
Total 1,426 1,390 3 7 890 2
Gastrointestinal
Cardiovascular:
Zestril 350 385 (9) (6) 230 (8)
Seloken 199 155 28 32 126 52
Plendil 106 118 (10) (4) 35 (13)
Tenormin 115 134 (14) (7) 22 (12)
Atacand 113 68 66 73 49 96
Imdur 24 26 (8) - 4 -
Others 93 104 (11) (5) 13 (24)
Total 1,000 990 1 6 479 8
Cardiovascular
8 SECOND QUARTER PRODUCT SALES ANALYSIS (CONTINUED)
World US
2nd 2nd Constant 2nd
Quarter Quarter Actual Currency Quarter Actual
2001 2000 Growth Growth 2001 Growth
$m $m % % $m %
Respiratory:
Pulmicort 209 179 17 24 79 114
Rhinocort 74 73 1 4 47 2
Accolate 46 59 (22) (20) 36 (28)
Oxis 33 29 14 24 - -
Bricanyl 27 32 (16) (10) - -
Symbicort 11 - n/m n/m - -
Others 13 12 8 25 - -
Total 413 384 8 14 162 22
Respiratory
Oncology:
Zoladex 184 197 (7) - 53 (2)
Nolvadex 147 136 8 12 105 17
Casodex 129 105 23 32 48 12
Arimidex 49 45 9 16 16 (16)
Others 8 8 - 13 - -
Total 517 491 5 12 222 8
Oncology
CNS:
Seroquel 168 122 38 40 138 23
Zomig 88 67 31 35 60 40
Other CNS 1 10 (90) (90) 1 (80)
Total CNS 257 199 29 32 199 24
Pain, Infection
and Other Pharma:
Diprivan 108 120 (10) (5) 44 -
Merrem 57 42 36 46 13 160
Xylocaine 56 63 (11) (3) 15 (6)
Marcaine 22 24 (8) - 7 (13)
Naropin 14 14 - 7 2 (33)
Other
Pharma 121 153 (21) (11) 36 (25)
Products
Total Pain,
Infection378 416 (9) (1) 117 (6)
and Other Pharma
Salick 50 45 11 11 50 11
Health Care
Astra
Tech 32 30 7 17 1 -
Marlow
Foods 26 22 18 27 - -
Other - 4 n/m n/m - -
108 101 7 12 51 11
Total 4,099 3,971 3 8 2,120 7
n/m not meaningful
9 HALF YEAR TERRITORIAL SALES ANALYSIS
% Growth
1st 1st
Half Half
2001 2000 Constant
$m $m Actual Currency
USA 4,259 4,010 6 6
Japan 389 374 4 18
France 482 450 7 18
Germany 348 353 (1) 8
Italy 337 319 6 16
Sweden 142 172 (17) (5)
UK 370 391 (5) 3
Rest of World 1,763 1,794 (2) 7
Total 8,090 7,863 3 8
10 SECOND QUARTER TERRITORIAL SALES ANALYSIS
% Growth
2nd 2nd
Quarter Quarter
2001 2000 Constant
$m $m Actual Currency
USA 2,120 1,989 7 7
Japan 211 218 (3) 12
France 244 219 11 22
Germany 180 178 1 11
Italy 187 166 13 21
Sweden 75 85 (12) 4
UK 198 207 (4) 5
Rest of World 884 909 (3) 6
Total 4,099 3,971 3 8
Information for US Investors
RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES
The profit and loss accounts and balance sheet set out on pages 9, 11 and 14
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 2000 Annual Report and Form
20-F. The approximate effects on income and shareholders' equity of the GAAP
differences are shown below.
1st 1st
Half Half
Income attributable to Shareholders 2001 2000
$m $m
Net income for the period under UK GAAP from 1,488 1,340
continuing operations
Adjustments to conform to US GAAP
Purchase accounting adjustments, (including goodwill &
intangibles):
- deemed acquisition of Astra (goodwill amortisation (767) (878)
and other acquisition adjustments)
- others - (6)
Capitalisation less amortisation of interest 19 19
Capitalisation less amortisation of software costs 10 73
Deferred taxation 123 5
Pension expense (22) (17)
Post-retirement benefits/plan amendment 2 2
Restructuring costs (22) (25)
Unrealised gains on foreign exchange and others (21) 5
Net income in accordance with US GAAP from continuing
operations 810 518
Net income in accordance with US GAAP from
discontinued operations - 185
Net income in accordance with US GAAP 810 703
Net income / (loss) per Ordinary Share under US GAAP
from continuing operations - basic and diluted $0.46 $0.29
Net income / (loss) per Ordinary Share under US GAAP
from discontinued operations - basic and diluted - $0.11
RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
30 30
June June
Shareholders' equity 2001 2000
$m $m
Shareholders' equity under UK GAAP 9,560 10,636
Adjustments to conform to US GAAP
Purchase accounting adjustments (including goodwill
and intangibles):
- deemed acquisition of Astra
- goodwill 11,409 13,374
- tangible and intangible fixed assets 8,404 10,244
- others 31 481
Capitalisation of interest 154 164
Deferred taxation
- on fair value of Astra (2,390) (2,904)
- others (228) (388)
Dividend 405 406
Pension expense (151) (191)
Post-retirement benefits / plan amendment (30) (29)
Software costs capitalised 130 105
Restructuring costs - 94
Others 52 88
Shareholders' equity in accordance with US GAAP 27,346 32,080
Shareholder Information
ANNOUNCEMENTS AND MEETINGS
Announcement of third quarter and nine month results 24 October 2001
Annual Business Review - London 3 December 2001
- New York 5 December 2001
Announcement of 2001 Full Year Results 31 January 2002
DIVIDENDS
The record date for the first interim dividend payable on 5 October 2001 (in
the UK, Sweden and the US) is 24 August 2001. Ordinary Shares will trade
ex-dividend on the London and Stockholm Stock Exchanges from 22 August 2001.
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.
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 Atacand Plus Bricanyl
Casodex Crestor Diprivan Exanta Faslodex Imdur Iressa Losec Marcaine
Merrem Naropin Nexium Nolvadex Oxis Plendil Prilosec Pulmicort
Pulmicort Respules Rhinocort Rhinocort Aqua Seloken Seroquel Symbicort
Tenormin Toprol-XL Viozan Zestril Zoladex Zomig Zomig Rapimelt Zomig
ZMT
ADDRESSES FOR CORRESPONDENCE
Registrar and Depositary
Transfer Office for ADRs
The AstraZeneca Morgan Guaranty
Registrar Trust
Lloyds TSB Company of New
Registrars York
The Causeway ADR Service Center
Worthing PO Box 842006
West Sussex Boston, MA 02284-2006
BN99 6DA
Tel: (0870) 600 3956 Tel: (781) 575 4328
Registered Office Swedish Securities Register Centre
15 Stanhope Gate VPC AB
London Box 7822
W1K 1LN S-103 97 Stockholm
Sweden
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 and
the risks related to the difficulty of completing the integration of Astra's
and Zeneca's large and complex businesses on a timely basis and realising
synergies.
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