Shire Pharmaceuticals Group plc
Hampshire International Business Park,
Chineham, Basingstoke RG24 8EP UK
Tel +44 1256 894000 Fax +44 1256 894708
http://www.shire.com
[COMPANY'S LOGO]
11:00 am GMT - 06:00 am EDT
Under Embargo until 6th November 2002
Third quarter 2002 results in line with expectations
Revenues up 18% and EPS up 8%
Basingstoke, UK - 6 November 2002 - Shire Pharmaceuticals Group plc (LSE: SHP,
NASDAQ: SHPGY, TSX: SHQ) announces results for the third quarter ended 30
September 2002.
Results Highlights
- --------------------------------------------------------------------------------
US GAAP / US $m Q3-02 Q3-01
($m) ($m) %
Revenues 256.3 216.8 +18
Operating income 83.8 74.5 +12
Income before tax 87.6 77.9 +12
Diluted EPS:
- - per ordinary share 12.4c 11.4c +8
- - per ADS 37.2c 34.4c +8
- --------------------------------------------------------------------------------
USD:GBP average exchange rate Q3 2002 1.56
Q3 2001 1.45
There is no material impact from stock option compensation or one time charges
in either period. See supplemental information on page 12 for further details.
Product Highlights
ADDERALL XR(TM) sales were $78.0 million in Q3 2002. ADDERALL XR achieved a
29.1% share of US Attention Deficit Hyperactivity Disorder (ADHD) dollar
sales1 in September 2002 and a 21% share of US share prescriptions1 in
September 2002, representing the latest monthly figures available from IMS
ADDERALL XR and ADDERALL(R) combined sales of $96.1 million, up 11% on Q3
2001, together achieved 27% market share of the ADHD prescription market1
in September 2002. Q3 2002 prescription volume in the ADHD market was up
17% on Q3 2001
AGRYLIN(R) sales of $28.7 million, up 45% on Q3 2001, with 27% share1 of
the combined US AGRYLIN, Hydrea and generic hydroxyurea prescription market
in September 2002
PENTASA(R) sales of $21.6 million, up 8% compared with Q3 2001, with 18%
share1 of the US oral mesalamine/olsalazine market in September 2002
CARBATROL(R) sales of $10.9 million, up 38% on Q3 2001, with a 36% share1
of the US extended release carbamazepine market in September 2002
REMINYL* marketed in the US by Johnson and Johnson; achieved 15.7% share of
the US Alzheimer's new prescription market, week ending 27 September 2002
ZEFFIX** Q3 2002 royalties of $5.5 million with 19% underlying sales
growth2
3TC** (Epivir**, Combivir**, and Trizivir**) Q3 2002 royalties of $32.5
million with 6% underlying sales growth2
Overview of Recent Business Activities
Shire announced, at the Company's R&D day, plans to progress five projects
to Phase III development in 2003
Shire and partner Janssen presented a favourable one year head to head
study of REMINYL versus donepezil at the 6th Congress of the European
Federation of Neurological Sciences (EFNS) in Vienna Austria
As previously announced by Shire, it is increasingly likely that first
approval will not now be granted for FOSRENOL(R) during 2002. Strong Phase
III data on FOSRENOL was presented at the 35th ASN Annual Meeting and
Scientific Exposition in Philadelphia, Pennsylvania, USA
Shire presented strong additional analysis of its LADD.CAT study for
ADDERALL XR at the 14th CHADD International Conference in Miami, Florida,
USA
Shire signed an alliance with Swiss-based Berna Biotech to commercialise
influenza and hepatitis B vaccines in key marketing territories outside the
US
Shire acquired US manufacturer Atlantic Pharmaceutical Services Inc (APS)
to support future and current franchises, including ADDERALL XR, CARBATROL
and PENTASA
Shire in-licensed a 5-ASA foam project for the treatment of Ulcerative
Colitis from Giuliani, strengthening its GastroIntestinal (GI) franchise
Shire's sales and marketing subsidiary, CADx (diagnositics), merged with
long time technology partner Qualia Computing Inc. and Shire retains a 50%
share in the reorganised Qualia
Outlook for 2002 / 2003
In the third quarter, exciting growth in ADDERALL XR continued. The launch of
ADDERALL XR represents the most successful switch to date in the history of
ADHD. In addition, the overall ADHD market has continued to grow strongly.
Shire remains comfortable with its prior revenue and earnings guidance, which is
repeated below:
Full year 2002: Shire is currently likely to deliver total revenue growth in the
mid to high teens and mid to high single digit earnings growth compared to 2001.
Operating margin is still forecast to be at the upper end of Shire's stated
target range of 25-30%.
Assuming the anticipated continued success of ADDERALL XR and the potential
launch and roll out of FOSRENOL in European and US markets, subject to
regulatory approvals, as well as growth from other significant sources of
revenue, Shire continues to remain confident that it can deliver good growth in
2003.
Commenting on the results, Rolf Stahel, Chief Executive of Shire, said:
"I am pleased with our Q3 performance which has met expectations and which
gives us confidence in our full year performance and beyond to 2003. We remain
on track to reach our year end revenue, earnings and operating margin targets.
"With 22 projects in development, of which five are planned to enter Phase III
next year, and good progress being made with in-licensing, we are successfully
building our portfolio supported by a strong balance sheet."
Management Succession
Dr James Cavanaugh, Chairman of Shire, said:
"Shire has a clear strategy to build a leading and global specialty
pharmaceutical company, which is unanimously supported by the Board. The Group
is well positioned to grow, reflecting the experienced management team,
established marketing expertise, a sound R&D pipeline and a strong balance
sheet. The Company will continue to be headquartered in the UK and intends to
develop a leading position in the major pharmaceutical markets of the world.
"Rolf Stahel stepping down from the Board and the Company is not related to any
specific transaction, but is part of succession planning. The timing takes
account of the current strong performance of the Company following six
successful mergers and acquisitions, the outstanding results from the switch of
ADDERALL to ADDERALL XR, as well as the need to plan for the next five to ten
years of growth. We are commencing our global search for a new Chief Executive
with Rolf continuing in his role until his successor is in place, ensuring a
smooth transfer of management responsibilities"
1 Monthly prescription market share (IMS) 2002
2 Underlying sales growth expressed in constant exchange rates
(TM), (R) Unless otherwise indicated, all product names set out in this
document are trademarks of Shire or companies within the Shire Group,
many of which are the subject of trademark registrations in certain
territories.
* Registered trademark of Johnson & Johnson
** Registered trademark of GlaxoSmithKline
For further information please contact:
Global (outside US & Canada)
Clea Rosenfeld - Investor Relations +44 7768 503151
Jessica Mann - Media +44 7787 127907
US & Canada
Gordon Ngan - Investor Relations +1 450 978 7942
Michele Roy - Media +1 450 978 7938
Notes to editors
Shire Pharmaceuticals Group plc
Shire Pharmaceuticals Group plc (Shire) is a rapidly growing international
specialty pharmaceutical company with a strategic focus on four therapeutic
areas - central nervous system disorders (CNS), gastro intestinal (GI), oncology
and anti-infectives. Shire also has two platform technologies: advanced drug
delivery and biologics. Shire's core strategy is based on research and
development combined with in-licensing and a focus on eight key pharmaceutical
markets.
For further information on Shire, please visit the Company's website:
www.shire.com
THE "SAFE HARBOUR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. The statements made in this press release that are not historical facts
are forward-looking statements. Such forward-looking statements involve a number
of risks and uncertainties and are subject to change at any time. In the event
that such risks or uncertainties materialise, Shire's results could be
materially affected. The risks and uncertainties include, but are not limited
to, risks associated with the inherent uncertainty of pharmaceutical research,
product development and commercialisation, the impact of competitive products,
including but not limited to the impact of same on Shire's ADHD franchise of
patents, government regulation and approval, including but not limited to the
expected approval date of lanthanum carbonate (FOSRENOL/FOSNOL) and other risks
and uncertainties detailed from time to time in periodic reports produced by
Shire, including the Annual Report filed on Form 10K by Shire with the
Securities and Exchange Commission.
INTRODUCTION
Strategic direction
Shire's strategy, unanimously endorsed by the Board, is to build a leading and
global specialty pharmaceutical company. The Group expects to achieve this by
researching, developing and marketing products for the prevention and treatment
of serious diseases, which are treated by medical specialists. Any acquisition
of companies or products and R&D development will clearly match this strategy.
The Company's headquarters are, and will continue to be, in the UK and Shire
intends to build leading positions in the major pharmaceutical markets of the
world. This is supported by a deep and capable management team.
The Board believes that Shire has a strong independent future based on:
Established marketing expertise
Experienced management
A sound balance sheet
A strong R&D pipeline with a total of 22 projects including five
projected to enter phase III trials in 2003
By the end of the current year, Shire anticipates delivering revenues of $1
billion and the Board expects the Company to develop even further in the next
decade. Given this ambition and recognising Mr Stahel's age (58), the
acquisitions achieved to date and the successful launch of ADDERALL XR, both Mr
Stahel and the Board agreed that now was an appropriate time to embark on a
global search for his successor. Mr Stahel will continue as chief executive
until his replacement joins the Board and the Company, which will ensure a
smooth transfer of management responsibilities.
Overview of Financial Results
Group results
Group revenues for the third quarter were $256.3 million, an 18% increase over
Q3 2001 ($216.8 million). The Group recorded income before tax of $87.6 million,
up 12% (Q3 2001: $77.9 million).
Net income was up 9% to $63.6 million (Q3 2001: $58.1 million). Diluted earnings
per ordinary share were 12.4 cents or 37.2 cents per ADS, up 8% (Q3 2001: 11.4c
cents per ordinary share or 34.4 cents per ADS).
Stock option compensation or one time charges do not impact materially the
results in either period.
Sales and marketing
Third quarter product sales were $212.0 million, a 20% increase over Q3 2001.
Combined sales of ADDERALL XR and ADDERALL were $96.1 million, representing an
increase of 11% in ADDERALL franchise sales over the comparative period in 2001.
ADDERALL XR recorded sales of $78.0 million in Q3 2002 and had a prescription
market(1) share of 21% in September 2002, up from 17% in June 2002 (ADDERALL XR
was not yet launched in Q3 2001). ADDERALL XR also achieved 29% share of ADHD
dollar sales(1) in September 2002. Sales for the quarter included $2 million in
respect of the launch and wholesaler stocking of a new 5mg dose.
Sales of ADDERALL XR reflect both volume growth in scrip market share but also
minor increases in wholesaler and retail pipeline levels to support the growing
demand.
ADDERALL XR and ADDERALL had a 27% share of the growing prescription market1 for
ADHD in the US in September 2002. The prescription market was 17% larger in Q3
2002 compared to the equivalent period last year.
In September 2002, ADDERALL had a market share1 of 6% (September 2001: 32%). The
decrease in ADDERALL sales during the third quarter reflects our continued
success in switching patients from ADDERALL to the once a day treatment
(ADDERALL XR), the impact of generic competition throughout the quarter and
further de-stocking of ADDERALL by wholesalers.
Sales of AGRYLIN, for the treatment of thrombocythaemia, were $28.7 million, a
45% increase on Q3 2001 sales of $19.8 million. Sales growth in markets outside
the US grew from $3.9 million to $7.5 million. In the US, market sales growth of
34% exceeded the scrip growth of 23% during the quarter, due to a price increase
in January 2002, and a lower Q3 2001 comparative quarter caused by some
wholesaler de-stocking following an earlier price increase. Shire achieved 27%
of the total US AGRYLIN, Hydrea and generic hydroxyurea prescription market1 in
September 2002, compared to 24% for the month of September 2001.
Sales of PENTASA, for the treatment of ulcerative colitis, were $21.6 million,
8% higher than the comparable period last year (Q3 2001: $20.0 million). Sales
growth was marginally above prescription growth due to a price increase earlier
in the year. PENTASA sales represented 18% of the US oral mesalamine/olsalazine
prescription market1 in September 2002, consistent with September 2001.
Sales of PROAMATINE(R), for the treatment of postural hypotension, were
$14.4 million, 62% higher than Q3 2001 sales of $8.9 million. Sales growth
significantly exceeded scrip growth of 16% due to price increases in January and
May 2002, the launch and subsequent stocking of $1.6 million in respect of the
new 10mg strength during the quarter, and a low sales base in Q3 2001, which
resulted from wholesaler de-stocking. The US prescription market1 for PROAMATINE
and Florinef prescriptions1 indicates that PROAMATINE had a 25% share1 for the
month of September 2002 compared to 24% in September 2001.
Sales of CARBATROL, containing carbamazepine for the treatment of epilepsy, were
$10.9 million, 38% higher than Q3 2001 sales of $7.9 million. Sales growth was
33% above scrip growth due to partial re-stocking of wholesaler pipelines
following an easing of supply constraints which have limited the underlying
scrip growth. CARBATROL held 36% of the US extended release carbamazepine
prescription market1 in September 2002, compared to 35% in September 2001. With
enhanced supply capability, including the recent acquisition of APS, Shire plans
to re-launch CARBATROL in the US market early in 2003.
Licensing
Licensing and development fees in respect of Shire Laboratories Inc. (SLI) drug
delivery contracts were $0.7 million, a small decrease over Q3 2001, which
resulted from the phasing of receipts from third parties.
Royalties
Royalties increased by $5.7 million, up 15% to $43.5 million (Q3 2001:
$37.8 million).
Shire receives royalties from GlaxoSmithKline (GSK) on the worldwide sales of
3TC, for the treatment of HIV infection / AIDS, and ZEFFIX, an oral treatment
for chronic hepatitis B, with the exception of Canada where a commercialisation
partnership with GSK exists.
In December 2001, Shire and GSK agreed a legal settlement with Emory University
relating to worldwide patent disputes. Under the terms of this settlement, Shire
pays a royalty on sales of 3TC and ZEFFIX to Emory University. The 3TC and
ZEFFIX royalties are negatively impacted by this in Q3 2002 but not in the
comparative quarter of 2001.
3TC royalties for Q3 2002 were $32.5 million, an increase of 3% over Q3 2001.
The underlying sales growth rate, expressed at constant exchange rates was 6%.
The variance in royalty growth versus sales growth is due to the Emory
settlement and currency movements.
ZEFFIX royalties were $5.5 million in Q3 2002, an increase of 17% over Q3 2001.
The underlying sales growth rate expressed at constant exchange rates was 19%.
The variance in royalty growth versus sales growth is due to the Emory
settlement and currency movements.
The Company also receives royalties from J&J on sales of REMINYL for the
treatment of Alzheimer's disease.
Cost of revenues
Gross margin on product sales was 84% in Q3 2002 compared to 85% in Q3 2001 due
to a slight change in sales mix.
Research and development
Research and development (R&D) expenditure for the third quarter increased by 2%
over the same period in 2001 to $42.0 million. R&D expenditure expressed as a
percentage of total revenues was 16% in the current quarter (Q3 2001: 19%) and
18% for the nine months to September 2002.
The low relative spend in the quarter is related to the completion of certain
Phase III trials, such as FOSRENOL, and the discontinuation of Dirame. Spending
is anticipated to increase in Q4 2002, as Phase II trials are initiated for
SPD754 (HIV).
Selling, general and administrative
Selling, general and administrative (S,G&A) expenses increased by 40% to $84.5
million (Q3 2001: $60.2 million). This increase reflects the sustained high
level of promotional spend associated with the ADDERALL XR launch. As a
percentage of product sales, S,G&A expenses were 40% in Q3 2002 (Q3 2001: 34%).
Depreciation and amortisation
Depreciation and amortisation increased by 7% to $12.5 million (Q3 2001:
$11.7 million).
Interest income and expense
For the three months ended 30 September 2002, the Company received interest
income of $5.1 million (Q3 2001: $4.6 million). Interest expense of $2.3 million
was up 130% on the comparative period last year (Q3 2001: $1.0 million)
primarily because the Q3 2002 expense reflects a full quarter of interest
incurred in respect of the $400 million convertible notes issued in August 2001.
Other income (net)
Other income (net) was $0.9 million compared to a $0.2 million expense in Q3
2001. The prior year quarter was impacted by a $1.8 million mark to market loss
on the fully funded ex Roberts SERP fund, reflecting changes in US stock market
conditions.
Taxation
The effective rate of tax on the profits for the quarter was 27% (Q3 2001: 25%).
The Company has recorded net deferred tax assets of approximately $26.8 million
at 30 September 2002 (30 September 2001: $23.4 million).
Cash flow
Cash, cash equivalents, marketable securities and other current asset
investments at 30 September 2002 amounted to $963.3 million (30 September 2001:
$776.0 million). After deduction of borrowings, this gives a net cash position
of $554.4 million (30 September 2001: $378.1 million).
During Q3 2002, the Company generated $51.0 million of cash from operating
activities. A total of $67.9 million was used in investing activities with $42.9
million being placed on short-term deposit and a total of $25.0 million being
used to purchase fixed assets, long-term investments and the APS manufacturing
facility. Together with a small inflow from financing activities ($0.8 million)
and foreign exchange movements ($3.8 million), the cash and cash equivalents
balance decreased by $19.9 million during the quarter.
In Q3 2001, there was a $442.0 million increase in cash and cash equivalents.
This increase was primarily due to cash provided by the issuance of the $400
million convertible notes. As in the current quarter, cash generated through
operating activities was invested in short-term deposits or used to fund
purchases of fixed assets.
R&D ACTIVITIES JULY 2002 TO NOVEMBER 2002
R&D reviews for investors and analysts were recently conducted in New York and
in London. Near-term highlights:
Reaffirmation that ADDERALL XR will be filed in the US for the treatment of
ADHD in adults at the end of this year;
Three projects (SPD503 for ADHD, SPD476 for ulcerative colitis, and
TROXATYL(TM) for acute myelogenous leukaemia) ready to enter phase III
trials during H1 2003;
TROXATYL for pancreatic cancer to move to phase III during Q2 or Q3 2003;
SPD421 for epilepsy targeted to enter phase III in Q4 2003;
SPD754 for HIV infection entering phase II by the end of 2002;
Re-prioritisation of SPD473, a mixed monoamine reuptake inhibitor,
non-stimulant for ADHD with start of phase II anticipated Q1 2003;
Two vaccine projects (SPD703 for pneumococcal infections and SPD705 for
Pseudomonas aeruginosa) have entered phase I clinical trials this year;
The option for SPD474, the potential Parkinson's Disease treatment licensed
from a Japanese company, is not being exercised due to disappointing
pre-clinical results.
Recent activities
Attention Deficit and Hyperactivity Disorder
Strong additional analyses of the LADD.CAT trial for ADDERALL XR were presented
at the 14th CHADD International Conference in Miami, Florida, USA on 17 October
2002.
Results of this 3,000 patient clinical experience trial showed significant
improvement when children with ADHD taking conventional treatment regimens,
including short-acting methylphenidate, short-acting ADDERALL or Concerta*, were
switched to ADDERALL XR.
ADDERALL XR, a once-daily extended-release ADHD medication, significantly
improved the hallmark symptoms of ADHD and Quality-of-Life Scores, compared to
their prior ADHD treatment regime. These results with ADDERALL XR were
consistent, even when relative dosage was held constant. Quality-of-life
assessments showed significant improvements over prior treatments in social
relationships with friends and family, as well as scholastic, emotional, and
physical functioning of the child.
In a highly regarded and commonly used rating scale of ADHD symptoms (Conners
Global Index Scale - Parent, or CGIS-P), parents rated ADHD symptom control with
ADDERALL XR as significantly better than with their prior medication.
In addition, parents and physicians were significantly more satisfied and
preferred ADDERALL XR over their previous treatment regime.
Ulcerative Colitis
In October 2002, Shire in-licensed rights to a mesalamine rectal foam
formulation (SPD480) for the treatment of ulcerative colitis (UC). The foam
offers the potential to be a more acceptable method of rectal delivery than
conventional liquid enema treatments. This project expands Shire's development
efforts in the field of gastrointestinal diseases, where three other projects
are currently ongoing. Development of SPD480 is currently at Phase II.
Alzheimer's Disease
On 27 October Shire and Janssen-Cilag presented a 12 month head to head,
rater-blinded, randomised study of REMINYL versus donepezil at the 6th Congress
of the European Federation of Neurological Sciences (EFNS) in Vienna, Austria.
Patients treated with Reminyl and donepezil performed equally well in the
primary end point, Bristol Activities of Daily Living (BrADL) rating.
Furthermore, Reminyl was comparable to donepezil in terms of safety and
tolerability, with similar discontinuation rates during the study, and similar
numbers of patients continuing on therapy after the end of the study.
The study demonstrated that over one year, REMINYL (galantamine) had a superior
treatment effect on Mini Mental State Examination (MMSE) compared to donepezil
when treating patients with Alzheimer's Disease (AD).
Hyperphosphataemia
On 2 November 2002, FOSRENOL was discussed at a number of poster presentations
and a satellite symposium at the American Society of Nephrology's 35th Annual
Meeting and Scientific Exposition in Philadelphia, USA. The data supported the
growing body of existing data on FOSRENOL's efficacy and safety profile. In
particular, an interim view of a two year study suggested significant reduction
in both phosphate and calcium levels in the blood maintained over this period.
Interim data from a 1,200 patient long-term safety3 study showed fewer serious
adverse events and deaths in the FOSRENOL group compared with those receiving
standard therapies. In the European study4, calcium x phosphate product, known
to be associated with increased mortality and morbidity in dialysis patients,
was reduced to a greater extent by FOSRENOL treatment compared with calcium
treatment. Further data collection and analyses are ongoing.
3"Fosrenol, a novel non-calcium, non-aluminium phosphate binder, has a good
safety and efficacy profile in the long-term treatment of hyperphosphataemia in
hemodialysis patients". WF Finn & MS Joy for the Fosrenol(TM) Study Group,
Department of Medicine, University of North Carolina, Chapel Hill, NC, USA.
Poster presented at the annual meeting of the American Society of Nephrology,
Philadelphia, USA, 1-4 November.
4"The novel, non-aluminium, non-calcium phosphate binder, lanthanum carbonate
(Fosrenol(TM) ), is an effective treatment for hyperphosphataemia and has a good
safety profile". AJ Hutchison, Manchester Royal Infirmary, Manchester, UK.
Poster presented at the annual meeting of the American Society of Nephrology,
Philadelphia,USA,1-4November2002.
Unaudited consolidated results for the quarter ended 30 September 2002
US GAAP
Unaudited consolidated balance sheets
30 September 30 September
2002 2001
$'000 $'000
ASSETS -------------- --------------
Current assets:
Cash and cash equivalents 694,615 514,998
Marketable securities and other current asset investments 268,665 260,964
Accounts receivable, net 171,493 142,650
Inventories, net 61,485 50,032
Deferred tax asset 24,116 8,288
Prepaid expenses and other current assets 51,124 24,389
-------------- --------------
Total current assets 1,271,498 1,001,321
Investments 76,639 61,276
Property, plant and equipment, net 127,639 112,577
Intangible assets, net 574,197 560,010
Deferred tax asset 2,726 15,108
Net assets transferred under contractual arrangements - 3,831
Other assets 23,530 18,983
-------------- --------------
Total assets 2,076,229 1,773,106
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current instalments of long-term debt 946 4,393
Accounts payable and accrued expenses 160,744 158,145
Other current liabilities 9,511 15,016
-------------- --------------
Total current liabilities 171,201 177,554
Long-term debt, excluding current instalments 407,922 393,491
Other long-term liabilities 11,803 11,188
-------------- --------------
Total liabilities 590,926 582,233
-------------- --------------
Shareholders' equity:
Common stock of 5p par value; 800,000,000 shares authorised; and
483,688,065 (2001: 477,927,959) shares issued and outstanding
respectively 39,980 36,702
Shares to be issued 272,618 277,328
Additional paid-in capital 1,025,899 993,460
Accumulated other comprehensive losses (56,843) (77,197)
Accumulated surplus/(deficit) 203,649 (39,420)
-------------- --------------
Total shareholders' equity 1,485,303 1,190,873
-------------- --------------
Total liabilities and shareholders' equity 2,076,229 1,773,106
-------------- --------------
Unaudited consolidated income statements
3 months to 3 months to 9 months to 9 months to
30 September 30 September 30 September 30 September
2002 2001 2002 2001
$'000 $'000 $'000 $'000
--------------- --------------- --------------- ---------------
Total revenues 256,257 216,812 753,588 612,998
Cost of revenues (33,337) (27,037) (91,022) (82,081)
--------------- --------------- --------------- ---------------
Gross profit 222,920 189,775 662,566 530,917
Operating expenses (139,100) (115,318) (428,297) (516,171)
--------------- --------------- --------------- ---------------
Operating income 83,820 74,457 234,269 14,746
Interest income 5,142 4,640 14,693 14,251
Interest expense (2,280) (989) (6,053) (5,671)
Other income, net 904 (182) 3,734 3,497
--------------- --------------- --------------- ---------------
Total other income, net 3,766 3,469 12,374 12,077
--------------- --------------- --------------- ---------------
Income before income taxes 87,586 77,926 246,643 26,823
Income taxes (24,001) (19,815) (66,949) (51,439)
--------------- --------------- --------------- ---------------
Net income/(loss) (see below) 63,585 58,111 179,694 (24,616)
--------------- --------------- --------------- ---------------
Net income/(loss) per share:
Basic 12.7c 11.8c 35.9c (5.0c)
Diluted 12.4c 11.4c 35.1c (5.0c)
Weighted average number of shares:
Basic 501,026,581 493,790,267 500,394,452 490,750,414
Diluted 524,130,078 503,914,740 524,058,558 490,750,414
Supplemental information
Net income/(loss) as above 63,585 58,111 179,694 (24,616)
Stock option compensation (credit)/charge (16) 51 (166) 2,403
One time charges * - - - 177,015
--------------- --------------- --------------- ---------------
Net income before stock option
compensation and one time charges
63,569 58,162 179,528 154,802
--------------- --------------- --------------- ---------------
Weighted average number of shares:
Diluted 524,130,078 503,914,740 524,058,558 503,184,800
Net income before stock option
compensation and one time charges per
ADS **
Basic 38.1c 35.3c 107.6c 94.6c
Diluted *** 37.2c 34.4c 105.2c 92.3c
--------------- --------------- --------------- ---------------
* One time charges for the 9 months to 30 September 2001 were in respect of
the BioChem merger.
** 1 ADS = 3 ordinary shares.
*** The diluted earnings per share calculation requires the interest charged on
convertible debt (as disclosed in note 2 to the financial statements) to be
added to the numerator, as the number of shares to be issued on conversion
of the debt are included in the diluted weighted average number of shares.
The above supplemental information does not form part of the US GAAP financial
statements.
Unaudited consolidated statements of cash flows
3 months to 3 months to 9 months to 9 months to
30 September 2002 30 September 30 September 2002 30 September 2001
$'000 2001 $'000 $'000
$'000
--------------- --------------- --------------- ---------------
Cash flows from operating activities:
Net income/(loss) 63,585 58,111 179,694 (24,616)
Adjustments to reconcile net income/(loss) to net
cash provided by operating activities:
Depreciation and amortisation 12,548 11,726 34,860 33,753
Stock option compensation (16) 51 (166) 2,403
Tax benefit of stock option compensation, charged
directly to equity - - 687 3,307
Non cash exchange gains and losses 1,261 (10,137) 2,935 (15,167)
Loss on sale of fixed assets 37 14 153 8,112
Loss on sale of intangible assets - 2,014 - 2,014
Other movements in long term assets 3,000 - 5,500 24,937
Changes in assets and liabilities:
(Increase)/decrease in accounts receivable (28,372) (16,184) 25,032 1,551
Increase in inventory (5,719) (2,091) (15,706) (420)
Decrease/(increase) in deferred tax asset 9,895 (3,631) 5,462 10,137
(Increase)/decrease in prepayments and other
current assets (13,874) 410 (9,546) (13,004)
Decrease/(increase) in other assets 2,069 6,272 2,638 8,500
Increase/(decrease) in accounts payable 9,169 9,742 (15,374) 44,699
Decrease in unearned income - - (17,409) -
Decrease in other current liabilities (1,507) (10,391) (28,116) (17,577)
Decrease in other long term liabilities (1,051) (1,251) (1,841) (3,008)
Write-down of intangible assets - - - 20,890
Write-down of net assets of business transferred
under contractual arrangements - - - 30,811
--------------- --------------- --------------- ---------------
Net cash provided by operating activities 51,025 44,655 168,803 117,322
--------------- --------------- --------------- ---------------
Cash flows from investing activities:
Investment in marketable securities, net - (57,204) - (18,450)
(Increase)/decrease in short-term deposits (42,907) 29,569 455,114 127,911
Purchase of long term investments (3,835) (2,109) (6,921) (13,216)
Purchase of subsidiary undertakings (17,000) - (17,000) -
Purchase of intangible assets (187) (1,484) (19,227) (33,519)
Purchase of fixed assets (3,965) (261) (11,613) (6,305)
Purchase of other assets - (547) - -
Proceeds from sale of fixed assets - 5,843 - 7,043
Proceeds from sale of intangible assets - 4,556 - 4,556
--------------- --------------- --------------- ---------------
Net cash (used in)/provided by investing
activities (67,894) (21,637) 400,353 68,020
--------------- --------------- --------------- ---------------
Cash flows from financing activities:
Proceeds from issue of long-term debt, net - 391,000 - 391,000
Payments on long term debt and notes (145) (5,114) (2,728) (206,990)
Proceeds from issue of common stock, net - 1,543 - 1,526
Proceeds from exercise of options 903 27,313 4,455 50,514
--------------- --------------- --------------- ---------------
Net cash provided by/(used in) financing
activities 758 414,742 1,727 236,050
--------------- --------------- --------------- ---------------
3 months to 3 months to 9 months to 9 months to
30 September 2002 30 September 2001 30 September 2002 30 September 2001
$'000 $'000 $'000 $'000
--------------- --------------- --------------- ---------------
Effect of foreign exchange rate changes on cash
and cash equivalents (3,797) 4,250 5,692 340
--------------- --------------- --------------- ---------------
Net increase/(decrease) in cash and cash
equivalents (19,908) 442,010 576,575 421,732
Cash and cash equivalents at beginning of period 714,523 72,988 118,040 93,266
--------------- --------------- --------------- ---------------
Cash and cash equivalents at end of period 694,615 514,998 694,615 514,998
--------------- --------------- --------------- ---------------
Notes to the US GAAP financial statements
1. Analysis of revenue, operating income and reportable segments
The Company has disclosed segment information for the individual operating areas
of the business, based on the way in which the business is managed and
controlled. The Company evaluates performance based on operating income/(loss)
before interest and income taxes.
Three months to 30 September 2002 US International R&D Total
$'000 $'000 $'000 $'000
-------------- -------------- -------------- --------------
Product sales 173,532 38,509 - 212,041
Licensing and development 726 - - 726
Royalties - 43,485 - 43,485
Other revenues - 5 - 5
-------------- -------------- -------------- --------------
Total revenue 174,258 81,999 - 256,257
-------------- -------------- -------------- --------------
Cost of revenues 13,103 20,234 - 33,337
Research and development - - 42,026 42,026
Selling, general and administrative 47,353 37,136 - 84,489
Loss on dispositions of assets 37 - - 37
-------------- -------------- -------------- --------------
Total operating expenses 60,493 57,370 42,026 159,889
-------------- -------------- -------------- --------------
Earnings before interest, tax, depreciation and
amortisation 113,765 24,629 (42,026) 96,368
Depreciation and amortisation (7,548) (5,000) - (12,548)
-------------- -------------- -------------- --------------
Operating income/(loss) 106,217 19,629 (42,026) 83,820
-------------- -------------- -------------- --------------
Three months to 30 September 2001 US International R&D Total
$'000 $'000 $'000 $'000
-------------- -------------- -------------- --------------
Product sales 149,853 27,422 - 177,275
Licensing and development 943 - - 943
Royalties 44 37,766 - 37,810
Other revenues - 784 - 784
-------------- -------------- -------------- --------------
Total revenue 150,840 65,972 - 216,812
-------------- -------------- -------------- --------------
Cost of revenues 13,264 13,773 - 27,037
Research and development - - 41,327 41,327
Selling, general and administrative 34,968 25,269 - 60,237
Loss on dispositions of assets 2,014 14 - 2,028
-------------- -------------- -------------- --------------
Total operating expenses 50,246 39,056 41,327 130,629
-------------- -------------- -------------- --------------
Earnings before interest, tax, depreciation and
amortisation 100,594 26,916 (41,327) 86,183
Depreciation and amortisation (3,000) (8,726) - (11,726)
-------------- -------------- -------------- --------------
Operating income/(loss) 97,594 18,190 (41,327) 74,457
-------------- -------------- -------------- --------------
Nine months to 30 September 2002 US International R&D Total
$'000 $'000 $'000 $'000
-------------- -------------- -------------- --------------
Product sales 527,005 100,669 - 627,674
Licensing and development 1,929 402 - 2,331
Royalties 221 123,352 - 123,573
Other revenues - 10 - 10
-------------- -------------- -------------- --------------
Total revenue 529,155 224,433 - 753,588
-------------- -------------- -------------- --------------
Cost of revenues 46,044 44,978 - 91,022
Research and development - - 138,557 138,557
Selling, general and administrative 161,096 93,631 - 254,727
Loss on dispositions of assets 153 - - 153
-------------- -------------- -------------- --------------
Total operating expenses 207,293 138,609 138,557 484,459
-------------- -------------- -------------- --------------
Earnings before interest, tax, depreciation and
amortisation 321,862 85,824 (138,557) 269,129
Depreciation and amortisation (21,027) (13,833) - (34,860)
-------------- -------------- -------------- --------------
Operating income/(loss) 300,835 71,991 (138,557) 234,269
-------------- -------------- -------------- --------------
Nine months to 30 September 2001 US International R&D Total
$'000 $'000 $'000 $'000
-------------- -------------- -------------- --------------
Product sales 418,305 79,061 - 497,366
Licensing and development 3,272 957 - 4,229
Royalties 224 109,649 - 109,873
Other revenues - 1,530 - 1,530
-------------- -------------- -------------- --------------
Total revenue 421,801 191,197 - 612,998
-------------- -------------- -------------- --------------
Cost of revenues 48,756 33,325 - 82,081
Research and development - - 120,838 120,838
Selling, general and administrative 116,951 65,586 - 182,537
Asset impairments and restructuring charges - 85,447 - 85,447
Merger transaction expenses - 83,470 - 83,470
Loss on dispositions of assets 2,014 8,112 - 10,126
-------------- -------------- -------------- --------------
Total operating expenses 167,721 275,940 120,838 564,499
-------------- -------------- -------------- --------------
Earnings before interest, tax, depreciation
and amortisation 254,080 (84,743) (120,838) 48,499
Depreciation and amortisation (12,870) (20,883) - (33,753)
-------------- -------------- -------------- --------------
Operating income/(loss) 241,210 (105,626) (120,838) 14,746
-------------- -------------- -------------- --------------
2. Net income/(loss) per share
Basic net income/(loss) per share is based upon the net income/(loss) available
to common stockholders divided by the weighted-average number of common shares
outstanding during the period. Diluted net income/(loss) per share is based upon
the net income/(loss) available to common stockholders divided by the
weighted-average number of common shares outstanding during the period and
adjusted for the effect of all dilutive potential common shares that were
outstanding during the period.
The following table sets forth the computation for basic and diluted net
income/(loss) per share:
3 months to 3 months to 9 months to 9 months to
30 September 30 September 30 September 30 September
2002 2001 2002 2001
$'000 $'000 $'000 $'000
---------------- ---------------- ---------------- ----------------
Numerator for basic net
income/(loss) per share 63,585 58,111 179,694 (24,616)
Interest charged on convertible
debt, net of tax 1,380 22 4,188 -
---------------- ---------------- ---------------- ----------------
Numerator for diluted net
income/(loss) per share 64,965 58,133 183,882 (24,616)
---------------- ---------------- ---------------- ----------------
No. of shares No. of shares No. of shares No. of shares
------------------ ------------------ ------------------ ------------------
Weighted average no. of shares:
Basic 501,026,581 493,790,267 500,394,452 490,750,414
Effect of dilutive shares:
- - share options 1,993,136 9,543,434 2,553,745 -
- - warrants 1,263,184 298,595 1,263,184 -
- - convertible debt 19,847,177 282,444 19,847,177 -
------------------ ------------------ ------------------ ------------------
Diluted 524,130,078 503,914,740 524,058,558 490,750,414
------------------ ------------------ ------------------ ------------------
Basic net income/(loss) per share 12.7c 11.8c 35.9c (5.0c)
------------------ ------------------ ------------------ ------------------
Diluted net income/(loss) per
share 12.4c 11.4c 35.1c (5.0c)
------------------ ------------------ ------------------ ------------------
The weighted average number of shares for the diluted net loss per share
calculation for the nine months ended September 30, 2001 does not include share
options, warrants or convertible debt because their inclusion would be
anti-dilutive in a loss making period.
3. Analysis of revenues
3 months to 3 months to 3 months to 3 months to
30 September 30 September 30 September 30 September
2002 2001 2002 2002
$'000 $'000 % change % of total
--------------- --------------- --------------- ---------------
Net product sales:
ADDERALL XR 78,000 - N/a 30%
ADDERALL 18,128 86,661 -79% 7%
AGRYLIN 28,725 19,782 +45% 11%
PENTASA 21,619 19,992 +8% 8%
CARBATROL 10,944 7,909 +38% 4%
Calciums 6,126 5,494 +12% 2%
PROAMATINE 14,398 8,901 +62% 6%
DEXTROSTAT 1,027 2,258 -55% 1%
OTC 6,537 7,060 -7% 3%
Others 26,537 19,218 +38% 11%
--------------- --------------- --------------- ---------------
212,041 177,275 +20% 83%
--------------- --------------- --------------- ---------------
Royalty income:
3TC 32,501 31,643 +3% 13%
ZEFFIX 5,547 4,759 +17% 2%
Others 5,437 1,408 +286% 2%
--------------- --------------- --------------- ---------------
43,485 37,810 +15% 17%
--------------- --------------- --------------- ---------------
Licensing 726 943 -23% -
Other 5 784 -99% -
--------------- --------------- --------------- ---------------
Total revenues 256,257 216,812 +18% 100%
--------------- --------------- --------------- ---------------
9 months to 9 months to 9 months to 9 months to
30 September 30 September 30 September 30 September
2002 2001 2002 2002
$'000 $'000 % change % of total
--------------- --------------- --------------- ---------------
Net product sales:
ADDERALL XR 215,696 - N/a 29%
ADDERALL 92,619 226,237 -59% 12%
AGRYLIN 81,596 62,715 +30% 11%
PENTASA 60,645 53,475 +13% 8%
CARBATROL 35,090 27,430 +28% 5%
Calciums 16,528 15,268 +8% 2%
PROAMATINE 34,839 26,989 +29% 5%
DEXTROSTAT 3,974 6,824 -42% 1%
OTC 18,802 20,363 -8% 3%
Others 67,885 58,065 +17% 9%
--------------- --------------- --------------- ---------------
627,674 497,366 +26% 83%
--------------- --------------- --------------- ---------------
Royalty income:
3TC 93,857 91,561 +3% 12%
ZEFFIX 15,350 12,983 +18% 2%
Others 14,366 5,329 +170% 2%
--------------- --------------- --------------- ---------------
123,573 109,873 +12% 16%
--------------- --------------- --------------- ---------------
Licensing 2,331 4,229 -45% 1%
Other 10 1,530 -99% -
--------------- --------------- --------------- ---------------
Total revenues 753,588 612,998 +23% 100%
--------------- --------------- --------------- ---------------
Unaudited consolidated results for the quarter ended September 30, 2002
UK GAAP
Unaudited consolidated profit and loss accounts
Restated Restated
3 months to 3 months to 9 months to 9 months to Year to
30 September 30 September 30 September 30 September 31 Dec
2002 2001 2002 2001 2001
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
--------------- --------------- --------------- --------------- ---------------
Turnover 166,033 151,639 515,623 395,382 580,369
Cost of sales (22,087) (19,423) (63,502) (57,348) (83,149)
--------------- --------------- --------------- --------------- ---------------
Gross profit 143,946 132,216 452,121 338,034 497,220
Other operating expenses (124,524) (109,508) (395,608) (283,692) (420,798)
--------------- --------------- --------------- --------------- ---------------
Operating profit 19,422 22,708 56,513 54,342 76,422
Finance charges, net (75) 738 720 1,566 4,955
--------------- --------------- --------------- --------------- ---------------
Profit on ordinary activities
before taxation 19,347 23,446 57,233 55,908 81,377
Tax on profit on ordinary
activities (15,412) (13,711) (44,784) (31,463) (45,668)
--------------- --------------- --------------- --------------- ---------------
Profit on ordinary activities
after taxation 3,935 9,735 12,449 24,445 35,709
--------------- --------------- --------------- --------------- ---------------
Earnings per share
- - basic 0.8p 2.0p 2.5p 6.4p 8.7p
- - diluted 0.8p 1.9p 2.5p 6.3p 8.5p
All results included above relate to the continuing operations of the Group.
Unaudited consolidated statement of total recognised gains and losses
Restated Restated
3 months to 3 months to 9 months to 9 months to Year to
30 September 30 September 30 September 30 September 31 Dec
2002 2001 2002 2001 2001
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
--------------- --------------- --------------- --------------- ---------------
Profit for the period 3,935 9,735 12,449 24,445 35,709
Translation of overseas
subsidiaries' financial
statements (27,989) (35,685) (43,746) (13,252) (6,640)
--------------- --------------- --------------- --------------- ---------------
Total recognised gains and
losses relating to the period (24,054) (25,950) (31,297) 11,193 29,069
Prior year adjustment - (815) - 22,798 22,272
--------------- --------------- --------------- --------------- ---------------
Total gains and losses
recognised (24,054) (26,765) (31,297) 33,991 51,341
--------------- --------------- --------------- --------------- ---------------
Unaudited consolidated balance sheets
Restated
30 September 30 September 31 Dec
2002 2001 2001
(pound)'000 (pound)'000 (pound)'000
--------------- --------------- ---------------
Fixed assets
Goodwill 2,548,049 2,682,734 2,643,578
Other intangible assets 239,169 259,567 259,850
Tangible assets 81,165 75,570 77,880
Fixed asset investments 45,375 41,506 45,045
--------------- --------------- ---------------
2,913,758 3,059,377 3,026,353
--------------- --------------- ---------------
Current assets
Stocks 39,097 33,585 32,080
Deferred tax asset
- - due within one year 15,335 5,563 13,351
- - due after one year 1,733 10,142 8,845
Debtors
- - due within one year 144,261 112,130 159,586
- - due after one year 14,962 12,251 11,953
Investments 170,841 175,179 497,397
Cash at bank and in hand 442,361 345,706 81,434
--------------- --------------- ---------------
828,590 694,556 804,646
Creditors: amounts falling due within one year
Convertible debt (397) (1,028) (1,032)
Other creditors (108,473) (118,251) (158,229)
--------------- --------------- ---------------
(108,870) (119,279) (159,261)
--------------- --------------- ---------------
Net current assets 719,720 575,277 645,385
--------------- --------------- ---------------
Total assets less current liabilities 3,633,478 3,634,654 3,671,738
Creditors: amounts falling due in more than one year
Convertible debt (255,546) (262,415) (268,178)
Other creditors (11,353) (9,236) (9,654)
--------------- --------------- ---------------
(266,899) (271,651) (277,832)
--------------- --------------- ---------------
Net assets 3,366,579 3,363,003 3,393,906
--------------- --------------- ---------------
Capital and reserves
Called-up share capital 24,184 23,895 24,091
Share premium 3,213,500 3,188,388 3,206,280
Shares to be issued 191,629 199,507 194,972
Capital reserve 2,755 2,755 2,755
Other reserves 24,247 24,247 24,247
Profit and loss account (89,736) (75,789) (58,439)
--------------- --------------- ---------------
Equity shareholders' funds 3,366,579 3,363,003 3,393,906
--------------- --------------- ---------------
Notes to the UK GAAP financial statements
1. Earnings per share
Earnings per share has been calculated by dividing the profit on ordinary
activities after taxation for each period by the weighted average number of
shares in issue during those periods, in accordance with FRS14.
The weighted average number of shares used in calculating fully diluted earnings
per share has been adjusted for the effects of all dilutive potential ordinary
shares. The zero coupon convertible loan note has no impact on the numerator for
diluted earnings per share.
Restated Restated
3 months to 3 months to 9 months to 9 months to Year to
30 September 30 September 30 September 30 September 31 Dec
2002 2001 2002 2001 2001
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
---------------- ---------------- ---------------- ---------------- ----------------
Profit for the period (for
basic and diluted EPS) 3,935 9,735 12,449 24,445 35,709
---------------- ---------------- ---------------- ---------------- ----------------
Weighted average number of
shares in issue for basic EPS 501,026,581 493,790,267 500,394,452 379,858,618 412,183,058
Conversion of convertible debt - 282,444 - 282,444 289,101
Exercise of share options 1,993,136 9,543,434 2,553,745 7,484,424 6,270,923
Exercise of warrants 1,263,184 298,595 1,263,184 298,595 919,029
---------------- ---------------- ---------------- ---------------- ----------------
Total for fully diluted EPS 504,282,901 503,914,740 504,211,381 387,924,081 419,662,111
---------------- ---------------- ---------------- ---------------- ----------------
Basic net income per share 0.8p 2.0p 2.5p 6.4p 8.7p
---------------- ---------------- ---------------- ---------------- ----------------
Diluted net income per share 0.8p 1.9p 2.5p 6.3p 8.5p
---------------- ---------------- ---------------- ---------------- ----------------
2. Basis of preparation
The interim accounts have been prepared in accordance with the accounting
policies set out in the full UK statutory accounts for the year ended 31
December 2001. The Group adopted FRS19 (Deferred tax) for the year ended 31
December 2001 and the prior period financial comparatives have been restated in
accordance with this standard.
The results for the three months and nine months ended 30 September 2002 and 30
September 2001 have not been audited and do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.
The audited financial statements for the year ended 31 December 2001 have been
delivered to the Registrar of Companies.
Summary of significant differences between US generally accepted accounting
principles followed by the Group and UK generally accepted accounting
principles.
The Group's consolidated financial statements have been prepared under US GAAP,
which differs in certain respects from UK GAAP. The principal differences
between the Group's accounting policies under US GAAP and UK GAAP are set out in
the tables below:
Reconciliation of net income/(loss) from US GAAP to UK GAAP
3 months to 3 months to 3 months to 3 months to
30 September 30 September 30 September 30 September
2002 2001 2002 2001
$'000 $'000 (pound)'000 (pound)'000
--------------- --------------- --------------- ---------------
Net income as reported under US GAAP 63,585 58,111 40,844 40,729
Adjustments to conform to UK GAAP:
Merger accounting adjustments - 3,378 - 1,941
Amortisation of capitalised goodwill - 2,456 - 1,698
Amortisation under acquisition accounting (54,254) (49,863) (34,828) (34,473)
Stock option compensation costs (16) 51 (10) 23
Difference in accounting for convertible
debt (38) (16) (24) (11)
Accrued taxes on share options (5) 332 (3) 232
Foreign exchange on US$ denominated assets
and liabilities - - (2,044) (404)
--------------- --------------- --------------- ---------------
Net income as reported under UK GAAP 9,272 14,449 3,935 9,735
--------------- --------------- --------------- ---------------
9 months to 9 months to 9 months to 9 months to
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
$'000 $'000 (pound)'000 (pound)'000
--------------- --------------- --------------- ---------------
Net income/(loss) as reported under US GAAP 179,694 (24,616) 121,576 (19,133)
Adjustments to conform to UK GAAP:
Merger accounting adjustments - 138,281 - 97,965
Amortisation of capitalised goodwill - 7,314 - 5,093
Amortisation under acquisition accounting (153,871) (88,240) (103,978) (61,579)
Stock option compensation costs (166) 2,403 (119) 1,633
Tax benefit from exercise of non-qualified
stock options 687 3,307 481 2,113
Difference in accounting for convertible
debt (86) (17) (57) (12)
Accrued taxes on share options 45 47 32 30
Foreign exchange on US$ denominated assets
and liabilities - - (5,486) (1,665)
--------------- --------------- --------------- ---------------
Net income as reported under UK GAAP 26,303 38,479 12,449 24,445
--------------- --------------- --------------- ---------------
Reconciliation of total shareholders' equity from US GAAP to UK GAAP
30 September 2002 30 September 30 September 2002 30 September
2001 2001
$'000 $'000 (pound)'000 (pound)'000
--------------- --------------- --------------- ---------------
Total shareholders' equity as reported
under US GAAP 1,485,303 1,190,873 944,489 799,406
Adjustments to conform to UK GAAP:
Goodwill written off to reserves (164,622) (200,362) (104,682) (134,498)
Goodwill amortisation (1,249) 41,887 (794) 28,118
Net book value of goodwill on acquisition
accounting for Roberts Pharmaceutical
Corporation 618,257 619,666 393,143 415,967
Net book value of goodwill on acquisition
accounting for BioChem Pharma Inc 3,356,260 3,356,865 2,134,211 2,253,382
Difference in accounting for convertible
debt 335 445 213 299
Difference in valuation of fixed asset
investments - 556 - 373
Accrued taxes on share options (2) (66) (1) (44)
--------------- --------------- --------------- ---------------
Total shareholders' equity as reported
under UK GAAP 5,294,282 5,009,864 3,366,579 3,363,003
--------------- --------------- --------------- ---------------