Revenues from continuing operations for the year to December 31, 2006 increased by 12% to $1,796.5 million (2005: $1,599.3 million).
Income from continuing operations (before income taxes and equity in earnings/(losses) of equity method investees) for the year to December 31, 2006 was $316.8 million (2005: loss of $491.7 million, as restated (see page 4)). The difference is primarily due to the write-off in 2005 of in-process R&D of $815.0 million following the TKT acquisition.
Cash inflow from operating activities for the year to December 31, 2006 increased by 38% to $531.9 million (2005: $384.3 million). The net increase resulted mainly from favourable movements in working capital, in particular the timing of sales within the final quarter of 2006 coupled with a reduction in the net tax paid of $48.5 million.
Cash and cash equivalents, restricted cash and short-term investments at December 31, 2006 totaled $1,156.7 million (December 31, 2005: $694.0 million). The increase in cash and cash equivalents during the year of $470.4 million was primarily due to positive cash flows from Shire’s operations, the sale of product rights to Duramed for $63.0 million and proceeds from loans repaid by IDB of $70.6 million, offset by purchases of property, plant and equipment ($100.3 million) and a milestone payment to Noven Pharmaceuticals Inc. (Noven) on DAYTRANA’s approval ($50.0 million).
Revenues from continuing operations for the three months to December 31, 2006 increased by 7% to $497.0 million (2005: $464.9 million) with ELAPRASE and DAYTRANA contributing $34.5 million to Q4 2006 sales.
Income from continuing operations (before income taxes and equity in earnings/(losses) of equity method investees) for the three months to December 31, 2006 was $90.3 million (2005: $101.0 million).
Cash inflow from operating activities for the three months to December 31, 2006 was $188.8 million (2005: $155.0 million). This increase primarily resulted from favourable movements in working capital.
For the year to December 31, 2006 product sales increased by 16% to $1,535.8 million (2005: $1,327.7 million) and represented 86% of total revenues (2005: 83%).
ADDERALL XR for the treatment of ADHD
ADDERALL XR is the leading brand in the US ADHD market with an average market share of 26% in 2006 (2005: 25%). US ADHD market growth of 4% and the 1% increase in average market share contributed to an 8% increase in US prescriptions for ADDERALL XR for year to December 31, 2006 compared to the same period in 2005.
Sales of ADDERALL XR for the year to December 31, 2006 were $863.6 million, an increase of 18% compared to the same period in 2005 (2005: $730.8 million). Product sales growth was significantly higher than prescription growth due primarily to price increases in August 2005 and April 2006.
During October 2005 Shire filed a Citizen Petition with the FDA requesting that the FDA require more rigorous bioequivalence testing or additional clinical testing for generic or follow-on drug products that reference ADDERALL XR before they can be approved. Shire received correspondence from the FDA in April 2006 stating that, due to the complex issues raised requiring extensive review and analysis by the FDA’s officials, a decision cannot yet be reached by the FDA. The FDA did not provide any guidance as to when that decision may be reached.
On August 14, 2006 Shire and Barr announced that all pending litigation in connection with Barr’s Abbreviated New Drug Application (ANDA) and its attempt to market generic versions of Shire’s ADDERALL XR had been settled. As part of the settlement, Barr entered into consent judgments and agreed to permanent injunctions confirming the validity and enforceability of Shire’s US Patents Nos. 6,322,819 (the “‘819 Patent”), 6,601,300 (the “‘300 Patent”) and 6,913,768 (the “‘768 Patent”). Barr has also admitted that any generic product made under its ANDA would infringe the ‘768 patent. Under the terms of the settlement, Barr will not be permitted to market a generic version of ADDERALL XR in the US until April 1, 2009, except in certain limited circumstances, such as the launch of another party’s generic version of ADDERALL XR. No payments to Barr are involved in the settlement agreement.
In January 2006, Shire settled its ADDERALL XR patent infringement lawsuits with Impax. Under the terms of the settlement, Impax will be permitted to market generic versions of ADDERALL XR in the US no later than January 1, 2010 and will pay the Company a royalty from those sales. In certain situations, such as the launch of another generic version of ADDERALL XR, Impax may be permitted to enter the market as the Company’s authorized generic. No payments to Impax are involved in the settlement agreement.
Litigation proceedings concerning Shire’s ADDERALL XR patents are ongoing. Further information can be found in our filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the year to December 31, 2005 and our most recent Quarterly Report on Form 10-Q for the period ended September 30, 2006.
DAYTRANA for the treatment of ADHD
Following its launch in June 2006, DAYTRANA achieved a 2% share of the US ADHD market by December 31, 2006. Sales for the year to December 31, 2006 were $25.1 million, a level of sales which triggered the first of three potential $25.0 million sales milestone payments to Noven. This milestone, which was paid on February 14, 2007, has been capitalized as at December 31, 2006 and will be amortized over 10 years. Net sales for 2006 were impacted by the redemption of $14 million of coupons issued to support the product launch.
The addition of DAYTRANA, combined with growth in ADDERALL XR market share has helped Shire grow its total share of the US ADHD market to 28% at December 31, 2006 compared to 26% (which included a 1% share relating to ADDERALL) at December 31, 2005.
CARBATROL for the treatment of Epilepsy
US prescriptions for the year ending December 31, 2006 were down 9% compared to the same period in 2005. This was primarily due to a 6% decline in the US extended release carbamazepine prescription market. CARBATROL’s US market share remained at 42%.
Sales of CARBATROL for the year ending December 31, 2006 were $68.3 million, a decrease of 5% compared to the same period in 2005 (2005: $72.1 million). The fall in sales is due to the decrease in the extended release carbamezapine market and a reduction of pipeline inventory in 2006 compared to stocking in 2005, offset by price increases in October 2005 and July 2006.
In July 2006 Impax deployed a sales force to begin promotion of CARBATROL under a promotional services agreement for the US market signed in January 2006.
|
 | 10 |
Patent litigation proceedings with Nostrum Pharmaceuticals, Inc. and Corepharma LLC relating to CARBATROL are ongoing. Further information about the ongoing proceedings relating to the Company’s CARBATROL patents can be found in our filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the period ended December 31, 2005 and our most recent Quarterly Report on Form 10-Q for the period ended September 30, 2006.
PENTASA for the treatment of Ulcerative Colitis
US prescriptions for the year ending December 31, 2006 were up 2% compared to the same period in 2005 primarily due to a 4% increase in the US oral mesalamine prescription market. PENTASA’s US market share remained at 18%.
Sales of PENTASA for the year ending December 31, 2006 were $137.8 million, an increase of 1% compared to the same period in 2005 (2005: $136.1 million). Sales growth is marginally lower than prescription growth due to the lower levels of pipeline stocking in 2006, partly offset by the impact of price increases in January 2006 and November 2006.
REPLAGAL for the treatment of Fabry Disease
Sales for the year ending December 31, 2006 were $117.7 million, of which 88% were in Europe and 12% in the rest of the world. Sales for REPLAGAL for the year ending December 31, 2005 were $94.6 million, including pre-acquisition sales of $53.3 million. This represents a like-for-like increase in sales of 24% which was due to greater European coverage by an increased number of sales representatives and strong growth in the rest of the world market (excluding the US).
ELAPRASE for the treatment of Hunter Syndrome
ELAPRASE was launched in the US in August 2006 and has had a strong start with over 110 patients receiving treatment by the end of December 2006. In addition, through the pre-approval process, over 100 patients were receiving treatment in Europe by the end of the year. Sales reached $23.6 million by December 31, 2006.
XAGRID for the treatment of Thrombocythemia
Sales for the year ended December 31, 2006 were $53.3 million, an increase of 14% compared to the same period in 2005 (2005: $46.8 million). Expressed in transaction currencies (XAGRID is primarily sold in Euros), sales increased by 13% due mainly to strong growth in France and Spain. In addition there was a benefit of 1% from favorable exchange rate movements against the US dollar.
AGRYLIN sales in North America (US and Canada) were $7.5 million for the year ended December 31, 2006 (2005: $46.0 million). This reduction was expected following the approval of generic versions of AGRYLIN in the US market in April 2005.
FOSRENOL for the treatment of Hyperphosphatemia
US prescriptions for the year ending December 31, 2006 were up 34% compared to 2005 due to FOSRENOL increasing its average share of the total US phosphate binding market to 9% (2005: 7%) and market growth of 9% over the same period. FOSRENOL was launched in the US in January 2005.
US sales of FOSRENOL for the year ending December 31, 2006 were $40.2 million (2005: $53.0 million). The decrease in net sales of 16% compared to prescription growth of 34% is primarily due to destocking in 2006 compared to significant stocking of higher strength formulations at the end of 2005.
An agreement with Abbott was signed in December 2006 for the co-promotion of FOSRENOL in the US. Abbott's US renal care sales team will co-promote FOSRENOL with its own renal product ZEMPLAR. Shire’s US sales force will also continue to promote FOSRENOL. This agreement began in Q1 2007, and will continue for a term of five years.
European sales of FOSRENOL for the year ending December 31, 2006 were $4.6 million (2005: $0.5 million), giving total FOSRENOL sales worldwide of $44.8 million (2005: $53.5 million).
FOSRENOL has now been launched in Germany, France and a number of other European countries. Launches will continue throughout 2007 in the EU including the UK, Italy and Spain, subject to finalization of national licensing and conclusion of pricing and reimbursement negotiations.
On October 18, 2006 Health Canada granted a marketing license application for FOSRENOL. The Canadian launch is planned for Q2 2007.
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| 11 |
3. Royalties
Royalty revenue remained constant at $242.9 million for the year to December 31, 2006 (2005: $242.9 million).
| | | Royalty(1) | Worldwide sales |
| Product | Royalties to Shire | Growth | by licensee(2)in 2006 |
| | $M | % | $M |
|
|
|
|
| 3TC | 150.9 | -6% | 1,138 |
| ZEFFIX | 34.8 | 14%(3) | 301 |
| Other | 57.2 | 9% | n/a |
|
|
|
|
| Total | 242.9 | 0% | |
| (1) | Compared with 2005. |
| (2) | GSK |
| (3) | The impact of foreign exchange movements has contributed +1% to the reported growth. |
3TC
Royalties from sales of 3TC for the year to December 31, 2006 were $150.9 million, a decrease of 6% compared to the prior year (2005: $159.8 million).
Shire receives royalties from GSK on worldwide 3TC sales. GSK’s worldwide sales of 3TC for the year to December 31, 2006 were $1,138 million, a decrease of 6% compared to prior year (2005: $1,211 million). The nucleoside analogue market for HIV has continued to grow, however competitive pressures within the market have increased, leading to a decline in 3TC sales.
ZEFFIX
Royalties from sales of ZEFFIX for the year to December 31, 2006 were $34.8 million, an increase of 14% compared to the prior year (2005: $30.5 million).
Shire receives royalties from GSK on worldwide ZEFFIX sales. GSK’s worldwide sales of ZEFFIX for the year to December 31, 2006 were $301 million, an increase of 13% compared to prior year (2005: $266 million). This increase was mainly due to strong growth in the Korean, Japanese and Chinese markets.
OTHER
Other royalties are primarily in respect of REMINYL and REMINYL ER (known as RAZADYNE and RAZADYNE ER in the US), a product marketed worldwide (excluding the UK and the Republic of Ireland) by Janssen Pharmaceutical N.V. (Janssen), an affiliate of Johnson & Johnson. Shire has the exclusive marketing rights in the UK and the Republic of Ireland.
Sales of the REMINYL/ RAZADYNE range, for the symptomatic treatment of mild to moderately severe dementia of the Alzheimer’s type, continue to grow.
In June 2006 Janssen and Synaptech, Inc. filed a law suit against Barr for infringement of their patent rights relating to RAZADYNE ER as a result of Barr filing an ANDA with the FDA for a generic version of RAZADYNE ER. No court date has been set.
Barr and other companies have filed ANDAs with the FDA for generic versions of RAZADYNE and Janssen and Synaptech Inc. have filed law suits against some of those ANDA filers. The court date for the first of these proceedings is May 2007.
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| 12 |
4. Financial details
Cost of product sales
For the year to December 31, 2006 the cost of product sales was 16% of product sales (2005: 16%). The cost of product sales for REPLAGAL in 2006 included a $47.0 million adjustment in respect of acquired inventories (2005: $41.9 million). This fair value adjustment increased Shire’s cost of product sales as a percentage of sales for the year ended December 31, 2006 by 3% (2005: 3%).
For the year to December 31, 2006 cost of product sales included a charge of $3.2 million for share based compensation under SFAS 123R (2005: $1.5 million).
Research and development (R&D)
R&D expenditure increased from $339.1 million in the year to December 31, 2005 to $386.9 million in the year to December 31, 2006, an increase of 14%. The increase was primarily due to:
- The addition of two significant R&D projects following the acquisition of TKT (ELAPRASE and GA-GCB); and
- Upfront payments made to Duramed and Warren of $25.0 million and $5.5 million, respectively.
Expressed as a percentage of total revenues, R&D expenditure was 22% for the year to December 31, 2006 (2005: 21%). In both periods payments were made to New River of $50 million for in-licensing VYVANSE. These payments have both been expensed in accordance with Shire’s accounting policy. The payments to New River, Duramed and Warren in the year to December 31, 2006 totalled $80.5 million, equivalent to 5% of total revenues. In the year to December 31, 2005 the $50.0 million payment to New River was equivalent to 3% of total revenues.
For the year to December 31, 2006 R&D included a charge of $5.4 million for share based compensation under SFAS 123R (2005: $2.9 million).
Selling, general and administrative (SG&A)
SG&A expenses increased from $655.5 million in the year to December 31, 2005 to $835.4 million in the year to December 31, 2006, an increase of 27%. As a percentage of product sales, SG&A expenses were 54% (2005: 49%).
The increase in SG&A expenses was expected, with additional expenditure required for:
- The promotion and launch of DAYTRANA (including an increase in the ADHD sales force);
- The recruitment of a new GI sales force in the US;
- The recruitment of new US and European sales forces to launch ELAPRASE; and
- Pre-launch activities relating to the 2007 launches of DYNEPO, LIALDA and VYVANSE.
For the year to December 31, 2006 SG&A included a charge of $34.4 million for share based compensation under SFAS 123R (2005: $24.8 million), representing 2% of total revenue (2005: 1%).
Depreciation and amortization
The depreciation charge for the year to December 31, 2006 was $43.3 million (2005: $29.2 million, including $6.5 million for impairments of property, plant and equipment). The amortization charge for the year to December 31, 2006 was $56.3 million (2005: $45.2 million). The increase in both depreciation and amortization is primarily due to the inclusion of a full year’s amortization and depreciation charge in respect of assets acquired through the TKT acquisition, together with the amortization of capitalized milestone payments for DAYTRANA following its launch in June 2006.
Intangible asset impairment
The charge for intangible asset impairments for the year to December 31, 2006 was $1.1 million (2005: $5.6 million). The impairment charge for the year to December 31, 2006 resulted from the decision to stop selling a non-core product.
The impairment charge for the year to December 31, 2005 resulted from the approval of generic versions of AGRYLIN and the decision not to support and promote certain non-core products.
Integration costs
|
| 13 |
For the year to December 31, 2006 the Company incurred $5.6 million of costs associated with the integration of the TKT business into the Shire group (2005: $9.7 million). This included retention payments for key staff of $3.0 million, IT costs of $1.2 million and other costs of $1.4 million.
Gain on sale of product rights
For the year to December 31, 2006 the Company recognized a pre-tax gain of $63.0 million (2005: $nil) on the disposal of ADDERALL to Duramed for $63.0 million in cash.
Interest income
For the year to December 31, 2006 the Company received interest income of $50.5 million (2005: $35.3 million). This income primarily related to interest received on Shire’s cash balances. Interest income for the year ending December 31, 2006 is higher than for the year ending December 31, 2005 primarily as a result of increases in US dollar interest rates.
Interest expense
For the year to December 31, 2006 the Company incurred interest expense of $26.4 million (2005: $12.0 million).
In both years this expense primarily relates to a provision for interest, which may be awarded by the Court in respect of amounts due to those ex-TKT shareholders who have requested appraisal of the acquisition consideration payable for their TKT shares. The trial date for the appraisal rights litigation has been set for April 23, 2007. Further information can be found in our filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the year to December 31, 2005 and our most recent Quarterly Report on Form 10-Q for the period ended September 30, 2006.
Other income, net
For the year to December 31, 2006 other income totaled $9.5 million. This included $4.6 million of investment income, foreign exchange gains of $3.2 million and $3.8 million of other income, offset by impairments of long-term investments of $2.1 million.
For the year to December 31, 2005 other income totaled $9.9 million. This included $4.3 million of investment income, a gain on sale of available-for-sale securities of $3.9 million, a gain on sale of the drug formulation business of $3.6 million and $1.5 million of other income, offset by impairments of long-term investments of $2.0 million and foreign exchange losses of $1.4 million.
Taxation
The effective rate of tax for the year to December 31, 2006 was 26.8% (2005: 27.5%, after excluding the impact of the $815.0 million write-off of in-process R&D in respect of the TKT acquisition). The effective rate has fallen by 0.7% as a result of a reduction in deferred taxes offset by an increase in current taxes as a result of additional tax contingencies of $187 million recognized in relation to ongoing tax audits. The reduction in deferred taxes was primarily due to the reversal of valuation allowances following changes in estimates as to the realization of certain deferred tax assets. Following this reversal of valuation allowances the net deferred tax asset has increased to $261.0 million at December 31, 2006 (December 31, 2005: $116.2 million). Realization of deferred tax assets is dependent upon generating sufficient taxable income to utilize such assets. Although realization of these assets is not assured, it is more likely than not that the amount recognized will be realized.
Equity in earnings/(losses) of equity method investees
Net earnings of equity method investees of $5.7 million were recorded for the year to December 31, 2006 (2005: net losses of $1.0 million). This comprised earnings of $6.2 million from the 50% share of the antiviral commercialization partnership with GSK in Canada (2005: $5.3 million), offset by losses of $0.5 million being the Company’s share of losses in the GeneChem and EGS Healthcare Funds (2005: losses of $6.3 million).
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| 14 |
FINANCIAL INFORMATION
TABLE OF CONTENTS
| | | Page |
| | | |
| Unaudited US GAAP Consolidated Balance Sheets | | 16 |
| | | |
| Unaudited US GAAP Consolidated Statements of Operations | | 18 |
| | | |
| Unaudited US GAAP Consolidated Statements of Cash Flows | | 20 |
| | | |
| Selected Notes to the Unaudited US GAAP Financial Statements | | 23 |
| | | |
| (1) Earnings per share | | 23 |
| | | |
| (2) Analysis of revenues | | 24 |
| | | |
| Non GAAP reconciliation of income/(loss) from ongoing operations, net income and numerator for diluted EPS | | 26 |
| | | |
| Non GAAP reconciliation of reported EPS | | 27 |
|
| 15 |
Unaudited US GAAP results for the years to December 31, 2006 and 2005
Consolidated Balance Sheets
| | | | | 1 Adjusted |
| | | | | and restated |
| | | December 31, | | December 31, |
| | | 2006 | | 2005 |
| | $M | | $M |
| |
| |
|
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | 1,126.9 | | 656.5 |
| Restricted cash | | 29.8 | | 30.6 |
| Short-term investments | | - | | 6.9 |
| Accounts receivable, net | | 310.8 | | 329.9 |
| Inventories | | 131.1 | | 136.0 |
| Deferred tax asset | | 105.7 | | 54.2 |
| Prepaid expenses and other current assets | | 106.0 | | 98.1 |
| |
| |
|
| | | | | |
| Total current assets | | 1,810.3 | | 1,312.2 |
| | | | | |
| Non current assets: | | | | |
| Investments | | 55.8 | | 50.2 |
| Property, plant and equipment, net | | 292.8 | | 234.0 |
| Goodwill | | 237.4 | | 225.6 |
| Other intangible assets, net | | 762.4 | | 729.3 |
| Deferred tax asset | | 155.3 | | 62.0 |
| Other non-current assets | | 12.4 | | 42.9 |
| |
| |
|
| | | | | |
| Total assets | | 3,326.4 | | 2,656.2 |
| |
| |
|
| | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable and accrued expenses | | 566.1 | | 431.8 |
| Liability to dissenting shareholders | | 452.3 | | 427.6 |
| Other current liabilities | | 313.6 | | 106.0 |
| |
| |
|
| | | | | |
| Total current liabilities | | 1,332.0 | | 965.4 |
| | | | | |
| Non-current liabilities | | 52.1 | | 43.5 |
| |
| |
|
| | | | | |
| Total liabilities | | 1,384.1 | | 1,008.9 |
| |
| |
|
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
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| 16 |
Unaudited US GAAP results for the years to December 31, 2006 and 2005
Consolidated Balance Sheets (continued)
| | | | | | 1Adjusted | |
| | | | | | and restated | |
| | | December 31, | | | December 31, | |
| | | 2006 | | | 2005 | |
| | | $M | | | $M | |
| |
| | |
| |
| Shareholders’ equity: | | | | | | |
| Common stock of 5p par value: 750 million shares | | | | | | |
| authorized; and 506.7 million shares issued and | | | | | | |
| outstanding (2005: 750 million shares authorized; and | | | | | | |
| 495.7 million shares issued and outstanding) | | 43.7 | | | 42.7 | |
| Exchangeable shares: 1.3 million shares issued and | | | | | | |
| outstanding (2005: 2.2 million) | | 59.4 | | | 101.2 | |
| Treasury stock | | (94.8 | ) | | (2.8 | ) |
| Additional paid-in capital | | 1,493.2 | | | 1,327.5 | |
| Accumulated other comprehensive income | | 87.8 | | | 71.5 | |
| Retained earnings | | 353.0 | | | 107.2 | |
| |
|
| |
|
|
| | | | | | | |
| Total shareholders’ equity | | 1,942.3 | | | 1,647.3 | |
| |
|
| |
|
|
| | | | | | | |
| Total liabilities and shareholders’ equity | | 3,326.4 | | | 2,656.2 | |
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
|
| 17 |
Unaudited US GAAP results for the 3 months and years to December 31, 2006 and 2005
Consolidated Statements of Operations
| | | | | | | | | | | 1Adjusted and | |
| | | | | 1Adjusted | | | | | | restated | |
| | 3 months to | | | 3 months to | | | 12 months to | | | 12 months to | |
| | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| | $M | | | $M | | | $M | | | $M | |
| |
|
| |
|
| |
|
| |
|
|
| Revenues: | | | | | | | | | | | | |
| Product sales | | 427.6 | | | 397.5 | | | 1,535.8 | | | 1,327.7 | |
| Royalties | | 61.1 | | | 61.8 | | | 242.9 | | | 242.9 | |
| Other revenues | | 8.3 | | | 5.6 | | | 17.8 | | | 28.7 | |
| |
|
| |
|
| |
|
| |
|
|
| Total revenues | | 497.0 | | | 464.9 | | | 1,796.5 | | | 1,599.3 | |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | | |
| Cost of product sales | | 62.4 | | | 79.1 | | | 247.7 | | | 215.5 | |
| Research and development | | 82.9 | | | 85.9 | | | 386.9 | | | 339.1 | |
| Selling, general and administrative | | 241.3 | | | 171.9 | | | 835.4 | | | 655.5 | |
| Depreciation and amortization | | 27.3 | | | 24.3 | | | 99.6 | | | 74.4 | |
| Intangible asset impairment | | 1.1 | | | 2.6 | | | 1.1 | | | 5.6 | |
| Reorganization costs | | - | | | - | | | - | | | 9.4 | |
| Integration costs | | 1.7 | | | 6.2 | | | 5.6 | | | 9.7 | |
| In-process R&D write-off | | - | | | - | | | - | | | 815.0 | |
| Gain on sale of product rights | | - | | | - | | | (63.0 | ) | | - | |
| |
|
| |
|
| |
|
| |
|
|
| Total operating expenses | | 416.7 | | | 370.0 | | | 1,513.3 | | | 2,124.2 | |
| |
|
| |
|
| |
|
| |
|
|
| Operating income/(loss) | | 80.3 | | | 94.9 | | | 283.2 | | | (524.9 | ) |
| | | | | | | | | | | | | |
| Interest income | | 13.7 | | | 7.4 | | | 50.5 | | | 35.3 | |
| Interest expense | | (7.3 | ) | | (7.3 | ) | | (26.4 | ) | | (12.0 | ) |
| Other income, net | | 3.6 | | | 6.0 | | | 9.5 | | | 9.9 | |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Total other income, net | | 10.0 | | | 6.1 | | | 33.6 | | | 33.2 | |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Income/(loss) from continuing | | | | | | | | | | | | |
| operations before income taxes | | | | | | | | | | | | |
| and equity in earnings /(losses) of | | | | | | | | | | | | |
| equity method investees | | 90.3 | | | 101.0 | | | 316.8 | | | (491.7 | ) |
| Income taxes | | (21.9 | ) | | (29.9 | ) | | (84.9 | ) | | (88.8 | ) |
| Equity in earnings/(losses) of | | | | | | | | | | | | |
| equity method investees | | 0.2 | | | (1.1 | ) | | 5.7 | | | (1.0 | ) |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Income/(loss) from continuing | | | | | | | | | | | | |
| operations | | 68.6 | | | 70.0 | | | 237.6 | | | (581.5 | ) |
| Gain/(loss) from discontinued | | | | | | | | | | | | |
| operations (net of income tax | | | | | | | | | | | | |
| expense of $nil and $nil) | | - | | | (1.0 | ) | | 40.6 | | | 3.1 | |
| |
|
| |
|
| |
|
| |
|
|
| Net income/(loss) | | 68.6 | | | 69.0 | | | 278.2 | | | (578.4 | ) |
| |
|
| |
|
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
|
| 18 |
Unaudited US GAAP results for the 3 months and years to December 31, 2006 and 2005
Consolidated Statements of Operations (continued)
| | | | | | | | | | | | 1Adjusted and | |
| | | | | | 1Adjusted | | | | | | restated | |
| | | 3 months to | | | 3 months to | | | 12 months to | | | 12 months to | |
| | | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| |
|
| |
|
| |
|
| |
|
|
| Earnings per share - basic | | | | | | | | | | | | |
| Income/(loss) from continuing | | | | | | | | | | | | |
| operations | | 13.6 | c | | 14.0 | c | | 47.2 | c | | (116.2 | c) |
| Gain/(loss) on disposition of | | | | | | | | | | | | |
| discontinued operations | | - | | | (0.2 | c) | | 8.1 | c | | 0.6 | c |
| |
|
| |
|
| |
|
| |
|
|
| Earning/(loss) per ordinary share - | | | | | | | | | | | | |
| basic | | 13.6 | c | | 13.8 | c | | 55.3 | c | | (115.6 | c) |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Earnings per share – diluted | | | | | | | | | | | | |
| Income/(loss) from continuing | | | | | | | | | | | | |
| operations | | 13.4 | c | | 13.9 | c | | 46.6 | c | | (116.2 | c) |
| Gain/(loss) on disposition of | | | | | | | | | | | | |
| discontinued operations | | - | | | (0.2 | c) | | 8.0 | c | | 0.6 | c |
| |
|
| |
|
| |
|
| |
|
|
| Earnings/(loss) per ordinary share | | | | | | | | | | | | |
| - diluted | | 13.4 | c | | 13.7 | c | | 54.6 | c | | (115.6 | c) |
| |
|
| |
|
| |
|
| |
|
|
| Earnings/(loss) per ADS - diluted | | 40.2 | c | | 41.1 | c | | 163.8 | c | | (346.8 | c) |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Weighted average number of | | No. of shares | | | No. of shares | | | No. of shares | | | No. of shares | |
| shares: | | Millions | | | Millions | | | Millions | | | Millions | |
| Basic | | 502.5 | | | 501.7 | | | 503.4 | | | 500.2 | |
| Diluted | | 510.3 | | | 504.1 | | | 509.3 | | | 500.2 | |
| |
|
| |
|
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
|
| 19 |
Unaudited US GAAP results for the 3 months and years to December 31, 2006 and 2005
Consolidated Statements of Cash Flows
| | | | | | | | | | | 1Adjusted | |
| | | | | 1Adjusted | | | | | | and restated | |
| | 3 months to | | | 3 months to | | | 12 months to | | | 12 months to | |
| | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| | $M | | | $M | | | $M | | | $M | |
| |
|
| |
|
| |
|
| |
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net income/(loss) | | 68.6 | | | 69.0 | | | 278.2 | | | (578.4 | ) |
| Adjustments to reconcile net | | | | | | | | | | | | |
| income/(loss) to net cash provided by | | | | | | | | | | | | |
| operating activities: | | | | | | | | | | | | |
| Depreciation and amortization: | | | | | | | | | | | | |
| - in cost of product sales | | 1.3 | | | 0.8 | | | 4.8 | | | 3.5 | |
| - in other costs and expenses | | 26.8 | | | 23.9 | | | 99.1 | | | 68.0 | |
| Share based compensation | | 17.2 | | | 8.4 | | | 43.0 | | | 29.2 | |
| In-process R&D write-off | | - | | | - | | | - | | | 815.0 | |
| Write-down of long-term assets | | 2.0 | | | 3.1 | | | 3.8 | | | 14.1 | |
| Gain on sale of long-term assets | | (0.5 | ) | | - | | | (0.3 | ) | | (3.9 | ) |
| Gain on sale of drug formulation | | | | | | | | | | | | |
| business | | - | | | (3.6 | ) | | - | | | (3.6 | ) |
| Equity in (earnings)/losses of equity | | | | | | | | | | | | |
| method investees | | (0.2 | ) | | 1.1 | | | (5.7 | ) | | 1.0 | |
| Gain on sale of product rights | | - | | | - | | | (63.0 | ) | | - | |
| Loss/(gain) on disposition of | | | | | | | | | | | | |
| discontinued operations | | - | | | 1.1 | | | (40.6 | ) | | (3.1 | ) |
| Changes in operating assets and | | | | | | | | | | | | |
| liabilities, net of acquisitions: | | | | | | | | | | | | |
| Decrease/(increase) in accounts | | | | | | | | | | | | |
| receivable | | 9.0 | | | (46.0 | ) | | 27.6 | | | (79.9 | ) |
| Increase in sales deduction accrual | | 7.2 | | | 4.2 | | | 24.8 | | | 18.6 | |
| (Increase)/decrease in inventory | | (3.5 | ) | | 9.9 | | | 7.2 | | | 8.6 | |
| Decrease/(increase) in prepayments | | | | | | | | | | | | |
| and other current assets | | 4.2 | | | (15.7 | ) | | (6.2 | ) | | (40.1 | ) |
| (Increase)/decrease in other assets | | (2.3 | ) | | 0.1 | | | 0.7 | | | (0.7 | ) |
| Movement in deferred taxes | | (147.4 | ) | | (12.0 | ) | | (142.4 | ) | | 22.3 | |
| Increase in accounts and notes | | | | | | | | | | | | |
| payable and other liabilities | | 201.9 | | | 114.8 | | | 297.0 | | | 122.9 | |
| Increase/(decrease) in deferred | | | | | | | | | | | | |
| revenue | | 4.5 | | | (3.0 | ) | | (1.9 | ) | | (13.5 | ) |
| Returns on investments from joint | | | | | | | | | | | | |
| ventures | | - | | | - | | | 5.8 | | | 4.7 | |
| Cash flows used in discontinued | | | | | | | | | | | | |
| operations | | - | | | (1.1 | ) | | - | | | (0.4 | ) |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Net cash provided by operating | | | | | | | | | | | | |
| activities(A) | | 188.8 | | | 155.0 | | | 531.9 | | | 384.3 | |
| |
|
| |
|
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
|
| 20 |
Unaudited US GAAP results for the 3 months and years to December 31, 2006 and 2005
Consolidated Statements of Cash Flows
| | | | | | 1Adjusted | | | | | | 1Adjusted | |
| | | 3 months to | | | 3 months to | | | 12 months to | | | 12 months to | |
| | | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| | | $M | | | $M | | | $M | | | $M | |
| |
|
| |
|
| |
|
| |
|
|
| CASH FLOWS FROM INVESTING | | | | | | | | | | | | |
| ACTIVITIES: | | | | | | | | | | | | |
| Movements in short-term investments | | - | | | 15.4 | | | 6.9 | | | 366.7 | |
| Movements in restricted cash | | (0.3 | ) | | (0.5 | ) | | 0.7 | | | (0.8 | ) |
| Purchase of subsidiary undertaking, | | | | | | | | | | | | |
| net of cash acquired | | - | | | (14.4 | ) | | (0.8 | ) | | (1,114.0 | ) |
| Expenses of acquisitions | | - | | | (13.4 | ) | | - | | | (37.5 | ) |
| Purchase of long-term investments | | (0.2 | ) | | - | | | (9.8 | ) | | (7.7 | ) |
| Purchase of property, plant and | | | | | | | | | | | | |
| equipment | | (29.1 | ) | | (28.6 | ) | | (100.3 | ) | | (86.2 | ) |
| Purchase of intangible assets | | (6.0 | ) | | (0.4 | ) | | (58.8 | ) | | (20.5 | ) |
| Proceeds from sale of long-term | | | | | | | | | | | | |
| investments | | - | | | - | | | - | | | 10.1 | |
| Proceeds from sale of property, plant | | | | | | | | | | | | |
| and equipment | | - | | | - | | | 0.9 | | | 0.1 | |
| Proceeds from sale of intangible | | | | | | | | | | | | |
| assets | | 0.4 | | | - | | | 0.4 | | | - | |
| Proceeds from sale of drug | | | | | | | | | | | | |
| formulation business | | - | | | 0.6 | | | - | | | 0.6 | |
| Proceeds from sale of product rights | | - | | | - | | | 63.0 | | | - | |
| Proceeds from loan repaid by IDB | | - | | | - | | | 70.6 | | | - | |
| Loans made to IDB | | | | | - | | | - | | | (43.2 | ) |
| Proceeds from sale of the vaccines | | | | | | | | | | | | |
| business | | - | | | - | | | - | | | 92.2 | |
| | | | | | | | | | | | | |
| Returns of equity investments | | - | | | - | | | 0.3 | | | 3.8 | |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Net cash used in investing activities(B) | | (35.2 | ) | | (41.3 | ) | | (26.9 | ) | | (836.4 | ) |
| |
|
| |
|
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R.
|
| 21 |
Unaudited US GAAP results for the 3 months and years to December 31, 2006 and 2005
Consolidated Statements of Cash Flows
| | | | | | 1Adjusted | | | | | | 1Adjusted | |
| | | 3 months to | | | 3 months to | | | 12 months to | | | 12 months to | |
| | | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| | | $M | | | $M | | | $M | | | $M | |
| |
|
| |
|
| |
|
| |
|
|
| CASH FLOWS FROM FINANCING | | | | | | | | | | | | |
| ACTIVITIES: | | | | | | | | | | | | |
| Redemption of 2% convertible loan | | | | | | | | | | | | |
| notes | | - | | | - | | | (0.1 | ) | | - | |
| Proceeds from exercise of options | | 48.7 | | | 6.7 | | | 81.9 | | | 37.1 | |
| Excess tax benefit of share based | | | | | | | | | | | | |
| compensation, charged directly to | | | | | | | | | | | | |
| equity | | - | | | 0.4 | | | - | | | 0.2 | |
| Payment of dividend | | (9.8 | ) | | (9.4 | ) | | (32.4 | ) | | (28.5 | ) |
| Payments to acquire treasury stock | | (23.6 | ) | | (2.5 | ) | | (92.0 | ) | | (2.5 | ) |
| |
|
| |
|
| |
|
| |
|
|
| Net cash provided by/(used in) | | | | | | | | | | | | |
| financing activities(C) | | 15.3 | | | (4.8 | ) | | (42.6 | ) | | 6.3 | |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Effect of foreign exchange rate | | | | | | | | | | | | |
| changes on cash and cash | | | | | | | | | | | | |
| equivalents(D) | | 2.8 | | | (2.2 | ) | | 8.0 | | | (9.2 | ) |
| |
|
| |
|
| |
|
| |
|
|
| | | | | | | | | | | | | |
| Net increase/(decrease) in cash and | | | | | | | | | | | | |
| cash equivalents(A)+(B) +(C) +(D) | | 171.7 | | | 106.7 | | | 470.4 | | | (455.0 | ) |
| Cash and cash equivalents at | | | | | | | | | | | | |
| beginning of period | | 955.2 | | | 549.8 | | | 656.5 | | | 1,111.5 | |
| |
|
| |
|
| |
|
| |
|
|
| Cash and cash equivalents at end of | | | | | | | | | | | | |
| period | | 1,126.9 | | | 656.5 | | | 1,126.9 | | | 656.5 | |
| |
|
| |
|
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R.
|
| 22 |
US GAAP results for the 3 months and years to December 31, 2006 and 2005
Selected Notes to the Unaudited US GAAP Financial Statements
(1) Earnings per share
| | | | | | | | | | 1Adjusted | |
| | | | | 1 Adjusted | | | | | and restated | |
| | | 3 months to | | 3 months to | | | 12 months to | | 12 months to | |
| | | December 31, | | December 31, | | | December 31, | | December 31, | |
| | | 2006 | | 2005 | | | 2006 | | 2005 | |
| | | $M | | $M | | | $M | | $M | |
| |
| |
| | |
| |
| |
| Income/(loss) from continuing | | | | | | | | | | |
| operations | | 68.6 | | 70.0 | | | 237.6 | | (581.5 | ) |
| Gain/(loss) on disposition of | | | | | | | | | | |
| discontinued operations | | - | | (1.0 | ) | | 40.6 | | 3.1 | |
| |
| |
| | |
| |
| |
| Numerator for basic and diluted | | | | | | | | | | |
| EPS | | 68.6 | | 69.0 | | | 278.2 | | (578.4 | ) |
| |
| |
| | |
| |
| |
| | | | | | | | | | | |
| Weighted average number of | | No. of shares | | No. of shares | | | No. of shares | | No. of shares | |
| shares: | | Millions | | Millions | | | Millions | | Millions | |
| |
| |
| | |
| |
| |
| | | | | | | | | | | |
| Basic | | 502.5 | | 501.7 | | | 503.4 | | 500.2 | |
| Effect of dilutive shares: | | | | | | | | | | |
| Stock options | | 7.1 | | 2.0 | | | 5.3 | | - | |
| Warrants | | 0.7 | | 0.4 | | | 0.6 | | - | |
| |
| |
| | |
| |
| |
| | | | | | | | | | | |
| Diluted | | 510.3 | | 504.1 | | | 509.3 | | 500.2 | |
| |
| |
| | |
| |
| |
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
The share options and warrants not included in the calculation of the diluted weighted average number of shares are shown below:
| | | (1)3 months to | | (1)3 months to | | (1)12 months to | | (2)12 months to |
| | | December 31, | | December 31, | | December 31, | | December 31, |
| | | 2006 | | 2005 | | 2006 | | 2005 |
| | | No. of shares | | No. of shares | | No. of shares | | No. of shares |
| | | Millions | | Millions | | Millions | | Millions |
| |
| |
| |
| |
|
| Stock options | | 2.6 | | 11.2 | | 7.7 | | 20.7 |
| Warrants | | - | | - | | - | | 1.3 |
| |
| |
| |
| |
|
| | | 2.6 | | 11.2 | | 7.7 | | 22.0 |
| |
| |
| |
| |
|
| (1) | Not included as the exercise price exceeded the Company’s average share price during the calculation period. |
| |
| (2) | Not included as the Company made a loss during the calculation period. |
| |
|
| 23 |
Unaudited US GAAP results for the 3 months to December 31, 2006 and 2005
Selected Notes to the US GAAP Financial Statements (continued)
(2) Analysis of revenues
| | | | | | | | | | 3 months to | |
| | | 3 months to | | 3 months to | | 3 months to | | | December 31, | |
| | | December 31, | | December 31, | | December 31, | | | 2006 | |
| | | 2006 | | 2005 | | 2006 | | | % of total | |
| | | $M | | $M | | % change | | | revenue | |
| |
| |
| |
|
| |
|
|
| Net product sales: | | | | | | | | | | |
| CNS | | | | | | | | | | |
| ADDERALL XR | | 229.2 | | 214.0 | | +7 | % | | 46 | % |
| ADDERALL | | - | | 12.1 | | n/ | a | | - | |
| DAYTRANA | | 15.2 | | - | | n/ | a | | 3 | % |
| CARBATROL | | 17.6 | | 17.3 | | +2 | % | | 5 | % |
| |
| |
| |
|
| |
|
|
| | | 262.0 | | 243.4 | | +8 | % | | 54 | % |
| |
| |
| |
|
| |
|
|
| GI | | | | | | | | | | |
| PENTASA | | 38.3 | | 42.3 | | -9 | % | | 8 | % |
| COLAZIDE | | 2.4 | | 2.1 | | +14 | % | | - | |
| |
| |
| |
|
| |
|
|
| | | 40.7 | | 44.4 | | -8 | % | | 8 | % |
| |
| |
| |
|
| |
|
|
| GP | | | | | | | | | | |
| XAGRID | | 13.8 | | 10.4 | | +33 | % | | 3 | % |
| FOSRENOL | | 18.7 | | 29.0 | | -36 | % | | 4 | % |
| CALCICHEW | | 12.3 | | 10.4 | | +18 | % | | 2 | % |
| REMINYL/REMINYL XL | | 6.5 | | 4.1 | | +59 | % | | 1 | % |
| SOLARAZE | | 3.4 | | 3.8 | | -11 | % | | 1 | % |
| VANIQA | | 2.2 | | 2.0 | | +10 | % | | - | |
| LODINE | | 3.1 | | 3.1 | | - | | | 1 | % |
| |
| |
| |
|
| |
|
|
| | | 60.0 | | 62.8 | | -4 | % | | 12 | % |
| |
| |
| |
|
| |
|
|
| HGT | | | | | | | | | | |
| REPLAGAL | | 31.2 | | 25.4 | | +23 | % | | 6 | % |
| ELAPRASE | | 19.3 | | - | | n/ | a | | 4 | % |
| |
| |
| |
|
| |
|
|
| | | 50.5 | | 25.4 | | n/ | a | | 10 | % |
| |
| |
| |
|
| |
|
|
| | | | | | | | | | | |
| Other product sales | | 14.4 | | 21.5 | | -33 | % | | 3 | % |
| |
| |
| |
|
| |
|
|
| Total product sales | | 427.6 | | 397.5 | | +8 | % | | 87 | % |
| |
| |
| |
|
| |
|
|
| Royalty income: | | | | | | | | | | |
| 3TC | | 36.6 | | 40.4 | | -9 | % | | 7 | % |
| ZEFFIX | | 9.4 | | 8.5 | | +11 | % | | 2 | % |
| Others | | 15.1 | | 12.9 | | +17 | % | | 3 | % |
| |
| |
| |
|
| |
|
|
| | | 61.1 | | 61.8 | | -1 | % | | 12 | % |
| |
| |
| |
|
| |
|
|
| Other | | 8.3 | | 5.6 | | +48 | % | | 1 | % |
| |
| |
| |
|
| |
|
|
| | | | | | | | | | | |
| Total revenues | | 497.0 | | 464.9 | | +7 | % | | 100 | % |
| |
| |
| |
|
| |
|
|
|
| 24 |
Unaudited US GAAP results for the years to December 31, 2006 and 2005
Selected Notes to the US GAAP Financial Statements (continued)
| (2) Analysis of | | | | | | | | | 12 months to | |
| revenues (continued) | | 12 months to | | 12 months to | | 12 months to | | | December 31, | |
| | | December 31, | | December 31, | | December 31, | | | 2006 | |
| | | 2006 | | 2005 | | 2006 | | | % of total | |
| Net product sales | | $M | | $M | | % change | | | revenue | |
| |
| |
| |
|
| |
|
|
| CNS | | | | | | | | | | |
| ADDERALL XR | | 863.6 | | 730.8 | | +18 | % | | 48 | % |
| ADDERALL | | 23.6 | | 43.1 | | -45 | % | | 1 | % |
| DAYTRANA | | 25.1 | | - | | n/ | a | | 1 | % |
| CARBATROL | | 68.3 | | 72.1 | | -5 | % | | 5 | % |
| |
| |
| |
|
| |
|
|
| | | 980.6 | | 846.0 | | 16 | % | | 55 | % |
| |
| |
| |
|
| |
|
|
| GI | | | | | | | | | | |
| PENTASA | | 137.8 | | 136.1 | | +1 | % | | 8 | % |
| COLAZIDE | | 9.2 | | 8.6 | | +7 | % | | 1 | % |
| |
| |
| |
|
| |
|
|
| | | 147.0 | | 144.7 | | +2 | % | | 9 | % |
| |
| |
| |
|
| |
|
|
| GP | | | | | | | | | | |
| AGRYLIN/XAGRID | | | | | | | | | | |
| N AMERICA | | 7.5 | | 46.0 | | -84 | % | | - | |
| ROW | | 53.3 | | 46.8 | | +14 | % | | 3 | % |
| FOSRENOL | | 44.8 | | 53.5 | | -16 | % | | 2 | % |
| CALCICHEW | | 45.5 | | 38.7 | | +18 | % | | 3 | % |
| REMINYL/REMINYL XL | | 21.5 | | 13.5 | | +59 | % | | 1 | % |
| SOLARAZE | | 13.2 | | 12.5 | | +6 | % | | 1 | % |
| VANIQA | | 7.9 | | 6.3 | | +25 | % | | - | |
| LODINE | | 12.6 | | 12.6 | | - | | | 1 | % |
| |
| |
| |
|
| |
|
|
| | | 206.3 | | 229.9 | | -10 | % | | 11 | % |
| |
| |
| |
|
| |
|
|
| HGT | | | | | | | | | | |
| REPLAGAL* | | 117.7 | | 41.3 | | n/ | a | | 7 | % |
| ELAPRASE | | 23.6 | | - | | n/ | a | | 1 | % |
| |
| |
| |
|
| |
|
|
| | | | | | | | | | | |
| | | 141.3 | | 41.3 | | n/ | a | | 8 | % |
| |
| |
| |
|
| |
|
|
| Other product sales | | 60.6 | | 65.8 | | -8 | % | | 3 | % |
| |
| |
| |
|
| |
|
|
| Total product sales | | 1,535.8 | | 1,327.7 | | +16 | % | | 86 | % |
| |
| |
| |
|
| |
|
|
| Royalty income: | | | | | | | | | | |
| 3TC | | 150.9 | | 159.8 | | -6 | % | | 8 | % |
| ZEFFIX | | 34.8 | | 30.5 | | +14 | % | | 2 | % |
| Others | | 57.2 | | 52.6 | | +9 | % | | 3 | % |
| |
| |
| |
|
| |
|
|
| | | 242.9 | | 242.9 | | - | | | 13 | % |
| |
| |
| |
|
| |
|
|
| Other | | 17.8 | | 28.7 | | -38 | % | | 1 | % |
| |
| |
| |
|
| |
|
|
| Total revenues | | 1,796.5 | | 1,599.3 | | 12 | % | | 100 | % |
| |
| |
| |
|
| |
|
|
*REPLAGAL was acquired in the acquisition of TKT which was completed in July 2005. Total sales for REPLAGAL, including pre-acquisition sales for the year to December 31, 2005 were $94.6 million. Including pre-acquisition sales for the year to December 31, 2005, product sales growth was 24% for REPLAGAL.
|
| 25 |
Non GAAP reconciliation of income/(loss) from ongoing operations, net income and numerator for
diluted EPS for the 3 months and years to December 31, 2006 and 2005
| | | | | | | | | | | | 1Adjusted and | |
| | | | | | 1Adjusted | | | | | | restated | |
| | | 3 months to | | | 3 months to | | | 12 months to | | | 12 months to | |
| | | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| | | $M | | | $M | | | $M | | | $M | |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP reconciliation of | | | | | | | | | | | | |
| income/(loss) from ongoing | | | | | | | | | | | | |
| operations(2) | | | | | | | | | | | | |
| Income/(loss) from ongoing | | 90.3 | | | 101.0 | | | 316.8 | | | (491.7 | ) |
| operations(2) | | | | | | | | | | | | |
| Add back: | | | | | | | | | | | | |
| TKT in-process R&D write-off | | - | | | - | | | - | | | 815.0 | |
| TKT cost of product sales fair | | | | | | | | | | | | |
| value adjustment | | - | | | 24.7 | | | 47.0 | | | 41.9 | |
| New River milestone payment | | - | | | - | | | 50.0 | | | - | |
| New River upfront payment | | - | | | - | | | - | | | 50.0 | |
| Warren upfront payment | | - | | | - | | | 5.5 | | | - | |
| Duramed upfront payment | | - | | | - | | | 25.0 | | | - | |
| New listed holding company costs | | - | | | - | | | - | | | 4.5 | |
| Reorganization costs | | - | | | - | | | - | | | 9.4 | |
| TKT integration costs | | 1.7 | | | 6.2 | | | 5.6 | | | 9.7 | |
| Gain on disposal of drug | | | | | | | | | | | | |
| formulation business | | - | | | (3.6 | ) | | - | | | (3.6 | ) |
| Gain on sale of product rights | | - | | | - | | | (63.0 | ) | | - | |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP adjustment to | | | | | | | | | | | | |
| income/(loss) from ongoing | | | | | | | | | | | | |
| operations | | 1.7 | | | 27.3 | | | 70.1 | | | 926.9 | |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP income from ongoing | | | | | | | | | | | | |
| operations(2) | | 92.0 | | | 128.3 | | | 386.9 | | | 435.2 | |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP reconciliation of | | | | | | | | | | | | |
| net income and numerator | | | | | | | | | | | | |
| for diluted EPS | | | | | | | | | | | | |
| Net income/(loss) | | 68.6 | | | 69.0 | | | 278.2 | | | (578.4 | ) |
| Non GAAP adjustment to | | | | | | | | | | | | |
| income/(loss) from ongoing | | | | | | | | | | | | |
| operations(2) | | 1.7 | | | 27.3 | | | 70.1 | | | 926.9 | |
| Taxes on above adjustments | | (0.5 | ) | | (7.7 | ) | | (18.8 | ) | | (31.4 | ) |
| (Gain)/loss on disposition of | | | | | | | | | | | | |
| discontinued operations | | - | | | 1.0 | | | (40.6 | ) | | (3.1 | ) |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP adjustment to net | | | | | | | | | | | | |
| income/(loss) and numerator for | | | | | | | | | | | | |
| diluted EPS | | 1.2 | | | 20.6 | | | 10.7 | | | 892.4 | |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP net income and | | | | | | | | | | | | |
| numerator for non GAAP diluted | | | | | | | | | | | | |
| EPS | | 69.8 | | | 89.6 | | | 288.9 | | | 314.0 | |
| |
|
| |
|
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
2Income/(loss) from continuing operations before income taxes and equity in earnings/ (losses) of equity method investees.
|
| 26 |
Non GAAP reconciliation of reported EPS for the 3 months and the years
to December 31, 2006 and 2005
| | | | | | | | | | | | 1Adjusted and | |
| | | | | | 1Adjusted | | | | | | restated | |
| | | 3 months to | | | 3 months to | | | 12 months to | | | 12 months to | |
| | | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
| |
|
| |
|
| |
|
| |
|
|
| Earnings/(loss) per ordinary share- | | | | | | | | | | | | |
| diluted | | 13.4 | c | | 13.7 | c | | 54.6 | c | | (115.6 | c) |
| (Gain)/loss on disposition of | | | | | | | | | | | | |
| discontinued operations | | - | | | 0.2 | c | | (8.0 | c) | | (0.6 | c) |
| |
|
| |
|
| |
|
| |
|
|
| Diluted EPS from continuing | | | | | | | | | | | | |
| operations | | 13.4 | c | | 13.9 | c | | 46.6 | c | | (116.2 | c) |
| Change in denominator due to | | | | | | | | | | | | |
| effect on dilution of non GAAP | | | | | | | | | | | | |
| adjustments(2) | | - | | | - | | | - | | | 0.3 | c |
| |
|
| |
|
| |
|
| |
|
|
| | | 13.4 | c | | 13.9 | c | | 46.6 | c | | (115.9 | c) |
| | | | | | | | | | | | | |
| Add back: | | | | | | | | | | | | |
| TKT in-process R&D write-off | | - | | | - | | | - | | | 162.5 | c |
| TKT cost of product sales fair | | | | | | | | | | | | |
| value adjustment | | - | | | 4.9 | c | | 9.3 | c | | 8.4 | c |
| New River milestone payment | | - | | | - | | | 9.8 | c | | - | |
| New River upfront payment | | - | | | - | | | - | | | 10.0 | c |
| Warren upfront payment | | - | | | - | | | 1.1 | c | | - | |
| Duramed upfront payment | | - | | | - | | | 4.9 | c | | - | |
| New listed holding company costs | | - | | | - | | | - | | | 0.9 | c |
| Reorganization costs | | - | | | - | | | - | | | 1.8 | c |
| TKT integration costs | | 0.3 | c | | 1.2 | c | | 1.1 | c | | 1.9 | c |
| Gain on disposal of drug | | | | | | | | | | | | |
| formulation business | | - | | | (0.7 | c) | | - | | | (0.7 | c) |
| Gain on sale product rights | | - | | | - | | | (12.4 | c) | | - | |
| Taxes on above adjustments | | (0.1 | c) | | (1.5 | c) | | (3.7 | c) | | (6.3 | c) |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP – diluted EPS per | | | | | | | | | | | | |
| ordinary share | | 13.6 | c | | 17.8 | c | | 56.7 | c | | 62.6 | c |
| |
|
| |
|
| |
|
| |
|
|
| Non GAAP – diluted EPS per ADS | | 40.8 | c | | 53.4 | c | | 170.1 | c | | 187.8 | c |
| |
|
| |
|
| |
|
| |
|
|
| Total non GAAP adjustments – | | | | | | | | | | | | |
| diluted EPS per ordinary share | | 0.2 | c | | 4.1 | c | | 2.1 | c | | 178.2 | c |
| |
|
| |
|
| |
|
| |
|
|
1Retrospectively adjusted following the adoption of SFAS 123R, and restated for the correction to the value ascribed to IPR&D acquired with the acquisition of TKT, as explained on page 4.
2As the items added back to the net loss for the year to December 31, 2005 result in non GAAP net income for the year to December 31, 2005, the options and warrants become dilutive under this measure and are therefore included in the calculation of the denominator for non GAAP EPS.
- ENDS -
|
| 27 |
