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
12 noon GMT 7am ET
Thursday 27 February 2003
STRONG GROWTH IN CHALLENGING YEAR PRODUCES REVENUES IN
EXCESS OF $1 BILLION.
COMPANY REMAINS CONFIDENT FOR 2003.
Basingstoke, UK - 27 February 2003 - Shire Pharmaceuticals Group plc (LSE: SHP,
NASDAQ: SHPGY, TSX: SHQ) announces results for the twelve months ended 31
December 2002.
FULL YEAR 2002 UNAUDITED US GAAP RESULTS HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------
2002 2001
------------------------------------------------------------------------------------------
Discontinued Discontinued
US GAAP Operation Total US GAAP Operation Total
$M $M $M $M $M $M
_______ _______ _______ _______ _______ _______
Revenues 1,037.3 24.0 1,061.3 853.0 24.6 877.6
Growth % +22% -2% +21% +32% +5% +31%
---- ----
Operating income 327.0 13.0 340.0 143.1 10.7 153.8
Income before tax and
extraordinary items 329.1 13.0 101.5 10.7
Income from continuing
operations before
extraordinary item 242.4 - 34.6 -
Income from discontinued
operations 8.2 8.2 6.8 6.8
Extraordinary item - - (2.6) -
Net income 250.6 - 38.8 -
Diluted EPS:
Per common share 49.0c 1.6c 7.7c 1.4c
Per ADS 147.1c 4.7c 23.0c 4.1c
- -------------------------------------------------------------------------------------------------------------------------
(1) The results for 2001 included charges in relation to our merger with
BioChem and stock option compensation. The impact of these charges on the
diluted EPS per ADS in 2001 was 108.6c. The impact of stock option
compensation in 2002 was minimal.
(2) The US GAAP results reflect the disposal of our `Over-The-Counter' (OTC)
business, which has been accounted for as a discontinued operation. See
page 9 for further information.
(3) Average exchange rates for 2002 and 2001 were $1.50: (pound)1.00 and $1.44:
(pound)1.00 respectively.
PRODUCT HIGHLIGHTS
ADDERALL XR(R) sales of $317.9 million in 2002; ADDERALL XR achieved a 30.3%
share of US Attention Deficit Hyperactivity Disorder (ADHD) dollar sales in
December 2002 and a 23.8% share(1) of US ADHD prescriptions.
ADDERALL(R) and ADDERALL XR combined sales of $427.7 million, up 22% on 2001,
together achieved a 36.5% share(1) of US ADHD dollar sales and a 28.8% share1 of
the US ADHD prescription market in December 2002.
1
AGRYLIN(R) sales of $119.2 million, up 39% on 2001; US prescriptions achieved a
26.5% share of the combined US AGRYLIN, Hydrea and generic hydroxyurea market in
December 2002.
PENTASA(R) sales of $87.2 million, up 15% on 2001, achieved 17.6% share of the
US oral mesalamine/olsalazine prescription market in December 2002.
CARBATROL(R) sales of $45.3 million, up 23% on 2001, achieved 36.3% share of the
US extended release carbamazepine market in December 2002.
ROYALTY HIGHLIGHTS
3TC** (Epivir**, Combivir** and Trizivir**) 2002 royalties of $132.5 million, up
10% on 2001, with underlying sales growth of 8%(2).
ZEFFIX** 2002 royalties of $21.2 million, up 25% on 2001, with underlying sales
growth of 23%(2).
REMINYL* marketed in the US by Johnson & Johnson, achieved 15.5% share of the US
Alzheimer's new prescription market, for the week ending 27 December 2002.
FOURTH QUARTER AND RECENT BUSINESS HIGHLIGHTS
Shire acquired the rights to MethyPatch(R)***, a transdermal delivery system of
methylphenidate for the once-daily treatment of ADHD, currently filed with the
FDA from Noven Pharmaceuticals, Inc. (see today's separate announcement for more
details).
Shire announces today that the EU reference member state reviewing FOSRENOL(TM)
requires additional information on two key issues. Shire believes that this
information can be provided based on existing studies and an expanding clinical
data set. However, the review period in the EU is likely to extend into the
second half of 2003. Separately, an action letter from the US FDA for FOSRENOL
is expected to be issued shortly (see R&D section for more details).
Shire filed legal suit against Barr Laboratories regarding an ANDA for ADDERALL
XR.
ADDERALL XR became the most commonly prescribed ADHD product in December 2002
among high volume prescribing ADHD physicians. ADDERALL XR overtook Concerta* in
December with those physicians that prescribe approximately 75% of all ADHD
prescriptions as measured by IMS.
Shire filed with the US Food and Drug Administration for an adult indication of
ADDERALL XR.
Shire presented positive Phase III FOSRENOL data at the American Society of
Nephrology meeting (ASN) in Philadelphia.
Janssen Pharmaceutica Products, L.P., announced in February 2003 that it had
filed an application with the FDA for an extended-release once-daily formulation
of REMINYL.
The first head to head long-term study of REMINYL versus donepezil was presented
in Europe. The data showed that over one year, REMINYL had a superior treatment
profile compared to donepezil when treating patients with Alzheimer's disease.
OTC business sold to Purdue Pharma LP for $72 million in December 2002.
MANAGEMENT SUCCESSION
As announced in October 2002, Shire has commenced its search for a new Chief
Executive. A short list has been compiled and the Company expects to confirm an
appointment by Spring 2003. Rolf Stahel continues as CEO and will do so until a
successor is in place, ensuring a smooth transfer of management
responsibilities.
2
FUTURE PROSPECTS
Shire remains confident that it can deliver good growth in 2003. Revenue growth
is anticipated to be in the low to mid teens for the year. Inclusive of modest
dilution from the acquisition of MethyPatch from Noven Pharmaceuticals, Inc.
announced today, the Board anticipates operating margins of circa 30% and high
single digit to low double digit EPS growth.
At the Annual General Meeting (AGM) held in 2002, shareholder approval was given
to repurchase up to 10% of the Company's issued share capital. The Shire Board
is planning a share repurchase programme.
Commenting on the results, Rolf Stahel, Chief Executive of Shire, said:
"While 2002 was a challenging year for Shire, we exceeded revenue and earnings
growth guidance, benefiting from five years of careful operational planning. We
successfully switched ADDERALL to ADDERALL XR in the US, exceeded sales of $1
billion for the first time, increased sales revenues outside the US by 29% and
improved royalty revenues by 20%.
"Importantly we also laid the foundations for growth in 2003 and beyond. Last
year we invested 18% of our revenues in R&D and today we have one of the most
promising drug pipelines compared to pharmaceutical companies of a similar size.
Of our 22 products in development, four are targeted to move into phase III this
year - supported by strong cash resources that will primarily be used to further
enhance our portfolio through product and project acquisition. Shire is now
emerging as a truly global pharmaceutical company and we are confident that we
will deliver good growth in the current year."
(1) Prescription market (IMS) December 2002
(2) Underlying sales growth expressed in constant exchange rates
(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.
* Trademark of Johnson & Johnson
** Trademark of GlaxoSmithKline
*** Trademark of Noven Pharmaceuticals, Inc.
"High resolution photographs are available to the media free of charge at
www.newscast.co.uk [Tel. +44 (0)20 7608 1000]."
FOR FURTHER INFORMATION PLEASE CONTACT:
GLOBAL (OUTSIDE US & CANADA)
Gordon Ngan - Investor Relations +44 1256 894 160
Jessica Mann - Media +44 1256 894 160
US & CANADA
Gordon Ngan - Investor Relations +44 1256 894 160
Michele Roy - Media +1 450 978 7938
NOTES TO EDITORS
SHIRE PHARMACEUTICALS GROUP PLC
Shire Pharmaceuticals Group plc (Shire) is a rapidly growing international
emerging 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 three platform technologies: advanced drug
delivery, lead optimisation for small molecules 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
3
THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
Statements included herein 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 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, patents, government regulation and approval, including but
not limited to the expected product approval date of lanthanum carbonate
(FOSRENOL(TM)), the impact of competitive products, including but not limited to
the impact of same on Shire's ADHD franchise, and other risks and uncertainties
detailed from time to time in our filings, including the Annual Report filed on
Form 10-K by Shire with the Securities and Exchange Commission.
4
OVERVIEW OF US GAAP FINANCIAL RESULTS
INTRODUCTION
The results for all periods presented and discussed below have been restated to
reflect the disposal of our OTC business which has been accounted for as a
discontinued operation in accordance with US GAAP. Net income from discontinued
operations (which for 2002 includes a gain of $2.1 million on the OTC disposal)
is shown in the statement of operations, below `income from continuing
operations before extraordinary items'. Further details of this discontinued
operation are included in this overview.
Revenues from continuing operations for the year ended 31 December 2002
increased by 22% to $1,037.3 million (2001: $853.0 million).
The Company recorded net income of $250.6 million, an increase of $211.8 million
over the prior year (2001: $38.8 million). The results for 2001 included charges
of $177.0 million relating to the BioChem merger in May 2001. Diluted earnings
per ordinary share were 49.0 cents or 147.1 cents per ADS.
Operations generated positive cash flows of $356.5 million during the 2002
fiscal year. These funds were used to fund capital expenditures, including the
purchase of the APS manufacturing facility for $17 million and the purchase of
SOLARAZE(R) for $20.4 million. The Company received $71 million in respect of
the OTC divestment. Excess cash funds of $407.7 million were invested in
short-term money market investments.
Cash, cash equivalents and marketable securities at 31 December 2002 amounted to
$1,213.8 million (31 December 2001: $842.0 million). After deduction of
borrowings, this translates to a net cash position of $805.7 million (31
December 2001: $435.1 million), which is expected to be used to further enhance
our portfolio through product and project acquisitions. In addition, the Shire
Board is planning to repurchase shares in 2003.
PRODUCT SALES
For the year ended 31 December 2002, product sales increased 23% to $859.4
million (2001: $699.4 million) and represented 83% of total revenues.
CNS FRANCHISE
ADDERALL XR AND ADDERALL
In November 2001, Shire launched ADDERALL XR in the US for the treatment of
ADHD. ADDERALL XR is a patent protected, once daily formulation of ADDERALL that
provides enhanced benefits to patients as an effective, long-acting treatment
derived from Shire Laboratories' proprietary technologies.
For the year ended 31 December 2002, sales of ADDERALL XR were $317.9 million
compared to $32.6 million in the last two months of 2001. The US launch of
ADDERALL XR was the most successful launch of a new product in this therapeutic
area. This achievement, accomplished by our dedicated US sales and marketing
team, was further supported by the results of a community assessment study
presented in May 2002 ("LADD Cat") that confirmed ADDERALL XR as the most
preferred new treatment for ADHD.
Sales of ADDERALL were $109.8 million for the year ended 31 December 2002 (2001:
$317.7 million). These sales benefited from the impact of two price increases
during the year. The decline in ADDERALL sales is largely the result of patients
switching from ADDERALL to the new once a day formulation of the drug, ADDERALL
XR. In addition, some ADDERALL sales have been lost to generic competitors who
launched competing products from mid-February 2002.
5
Wholesaler stock movements between ADDERALL XR and ADDERALL had little effect on
sales levels across the full year and therefore, on a combined basis, sales from
the ADDERALL franchise were up $77.4 million, a 22% increase compared to the
prior year. Over the same period, the number of prescriptions written for the
ADDERALL XR and ADDERALL franchise was marginally higher by 0.6%, compared to
the prior year. The pricing structure of ADDERALL XR versus ADDERALL has had a
favourable impact on sales revenue during 2002, together with lower Medicaid
rebate payments for ADDERALL XR sales and a price increase implemented in May
2002.
In December 2002, these products achieved a 28.8% share of the US ADHD
prescription market (December 2001: 34.4%), which grew by 14% for the full year,
according to IMS data.
CARBATROL
CARBATROL, (containing carbamazepine) for the treatment of epilepsy, recorded
sales of $45.3 million in 2002, an increase of 23% over the prior year.
Prescription growth was 7% year on year. The difference between total sales
growth and prescription growth represents wholesaler and pharmacy partial
re-stocking, following the gradual easing of product supply constraints.
CARBATROL achieved 36.3% of the US extended release carbamazepine prescription
market in December 2002, compared with 35.5% in December 2001.
CARBATROL was re-launched in the US market in January 2003, following the FDA
approval of a second source of supply in Q4 2002.
OTHER FRANCHISES
AGRYLIN
Total AGRYLIN sales for 2002 were $119.2 million, an increase of 39% compared to
the prior year (2001: $85.5 million). Underlying prescriptions for AGRYLIN in
the US, where it is the only product licensed for the treatment of essential
thrombocythaemia, increased by 22%, supported by a price increase in January
2002. Shire achieved 26.5% of the total US AGRYLIN, Hydrea and generic
hydroxyurea prescription market in December 2002, compared to 24.4% in December
2001.
PENTASA
Sales of PENTASA, for the treatment of ulcerative colitis, were up 15% at $87.2
million. Over the same period, PENTASA benefited from modest prescription growth
of 4%, which reflects limited promotions to physicians during 2002. The
difference between growth in total sales and prescriptions is represented mainly
by two price increases in January and May 2002.
PENTASA had a prescription share of 17.6% of the US oral mesalamine/olsalazine
market in December 2002, compared with 18.6% in December 2001.
PROAMATINE(TM)
Sales of PROAMATINE, for the treatment of postural hypotension, were $50.9
million, 34% higher than 2001 sales of $38.0 million. Over the same period,
underlying prescriptions grew by 15%, supported by the launch of a new 10mg
strength. Approximately half the difference between prescription and total sales
growth is represented by higher prices and half by wholesaler stock movements,
some of which are related to the launch of the new 10mg strength.
The US prescription market for PROAMATINE and fludrocortisone acetate
prescriptions indicated that PROAMATINE had a 25.3% share for the month of
December 2002, an increase from 23.6% in December 2001.
6
LICENSING & DEVELOPMENT
Licensing and development income decreased to $3.1 million (2001: $5.5 million),
reflecting a decrease in milestone payments in relation to Shire Laboratories'
drug delivery services. Additionally, 2001 revenues included a one-time licence
fee of $1.0 million.
ROYALTIES
Royalty revenue increased 20% to $174.8 million for the year ended 31 December
2002 (2001: $145.2 million).
For the products 3TC and ZEFFIX, treatments for HIV infection (AIDS) and chronic
hepatitis B respectively, Shire receives royalties from GSK on worldwide sales,
with the exception of Canada, where a commercialisation partnership with GSK
exists.
3TC royalties for the year ended 31 December 2002 were $132.5 million, an
increase of 10% over the prior year. Worldwide in-market sales of 3TC by GSK
were $982.3 million in 2002, an increase of 9% compared to sales of $902.0
million in 2001. 3TC sales growth expressed in constant exchange rates was 8%.
ZEFFIX royalties were $21.2 million, an increase of 25% over the prior year.
Underlying in-market sales of ZEFFIX by GSK were $185.6 million in 2002 compared
to $149.0 million in 2001, an increase of 25%. ZEFFIX sales growth expressed in
constant exchange rates was 23%.
Royalty revenue is also received in respect of REMINYL from Johnson & Johnson,
and in respect of a number of hormone replacement therapy products from various
licensees.
COST OF PRODUCT SALES
For the year ended 31 December 2002, our cost of product sales amounted to 16%
of product sales, a ratio consistent with 2001. A slightly more favourable mix
of the higher margin products offset costs associated with enhancing internal
and external production facility capabilities.
The production of ADDERALL was transferred from our Valley Stream facility to
DSM Pharmaceuticals during 2002. DSM Pharmaceuticals was also approved as a
second source of supply for CARBATROL in Q4, 2002.
We have continued to upgrade manufacturing capacity, as reflected in our
purchase of Atlantic Pharmaceutical Services in September 2002, and to
rationalise our non-strategic manufacturing and distribution facilities. Our
manufacturing site in Ontario, Canada was divested in August 2001 and our Valley
Stream facility was closed in February 2003. These activities have reduced
supply complexity in the short-term and will result in improved margins on key
US products over time.
RESEARCH AND DEVELOPMENT
R&D expenditure increased to $189.2 million in 2002 from $171.0 million in 2001,
representing an increase of 11%. Expressed as a percentage of total revenues,
R&D expenditure was 18% (2001: 20%), in line with the Group's current target
level.
Shire aims to invest between 18% and 20% of total revenues in R&D, although the
actual level of expenditure required each year is driven by the development
phase of existing and new projects.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased from $257.7 million in
2001 to $330.8 million in 2002, an increase of 28%. As a percentage of product
sales, these expenses were 38% (2001: 37%).
7
Higher selling, general, and administrative expenses were primarily due to
increased selling and marketing expenses supporting promotional efforts for
recent product launches, including ADDERALL XR.
DEPRECIATION AND AMORTISATION
Depreciation and amortisation charges were $55.2 million, an increase of 21%
(2001: $45.8 million).
For 2002, the amortisation expense of $42.3 million included amortisation
charged for the year of $23.5 million and $18.8 million in respect of
impairments recorded on tail end products in Europe and the US. In the prior
year the annual charge was $31.4 million. Following the adoption of SFAS No.
142, with effect from 1 January 2002 goodwill is no longer amortised, and is
instead tested at least annually for impairment. Goodwill amortisation was $10.8
million in 2001.
The depreciation charge for 2002 was $12.9 million, a decrease of $1.5 million
compared to 2001. This decrease is primarily the result of the sale of our
Canadian manufacturing facility in August 2001.
OTHER CHARGES
In 2001, the Company incurred charges totalling $177.0 million in connection
with the BioChem merger comprising asset impairments and restructuring charges
($85.4 million), merger transaction expenses ($83.5 million) and losses on
disposal of assets ($8.1 million). $56.0 million of the asset impairment charges
were in respect of investments, and are shown in other expenses within the
statement of operations.
The Company also incurred a loss of $2.1 million on the disposition of
non-strategic products during 2001.
INTEREST INCOME AND EXPENSE
In the year ended 31 December 2002, the Company received interest income of
$19.5 million (2001: $19.7 million). Interest expense increased from $8.3
million in 2001 to $9.3 million in 2002. This increase reflects a full twelve
months of interest expense in relation to the $400 million convertible notes,
which were issued in August 2001. The notes bear interest at a fixed rate of 2%
per annum.
OTHER EXPENSES, NET
For the year ended 31 December 2002, other expenses totalled $8.3 million. The
main components were a $2.3 million mark to market loss recorded on the fully
funded ex Roberts Supplemental Executive Retirement Plan, $8.7 million in
respect of write-downs of non-current asset investments due to other than
temporary impairments and income of $3.3 million from other investments.
Other expenses for the year ended 31 December 2001 were $52.9 million, and
mainly comprised $56.0 million in respect of impairments to investments. The
Company received $4.0 million return on investments in two venture capital
funds, the GeneChem Technologies Venture Fund L.P. and the GeneChem Therapeutics
Venture Fund L.P.
TAXATION
The effective rate of tax for 2002 was 27% (2001: 68%). The effective tax rate
for 2001 was affected by the $177.0 million of charges in connection with the
BioChem merger. Income taxes in respect of continuing operations increased by
$19.5 million to $88.4 million (2001: $68.9 million). At 31 December 2002, net
deferred tax assets of $41.1 million were recognised (31 December 2001: $39.7
million). In 2003, the effective rate of tax is likely to increase to 28%, as
previously indicated, due to a greater proportion of profits coming from the US
business.
8
EQUITY IN EARNINGS OF EQUITY METHOD INVESTEES
Income from equity method investees for the year ended 31 December 2002 was $1.7
million (2001: $2.0 million). We received $2.6 million representing our 50%
share of earnings from our antiviral commercialisation partnership with GSK in
Canada and we incurred a loss of $0.9 million representing our 50% share of the
losses of our commercialisation partnership with Qualia Computing Inc (which
includes our prior investment in CADx ).
DISCONTINUED OPERATIONS
The Company completed its divestment of the OTC portfolio on 27 December 2002.
These products were originally acquired in 1999 as a result of the Company's
merger with Roberts Pharmaceutical Corporation. The OTC portfolio consisted of
non-prescription laxatives and dietary supplements. This disposal marks Shire's
complete exit from OTC activities which were not considered core to Shire's
focus on branded prescription pharmaceuticals.
In accordance with US GAAP disclosure requirements for discontinued operations,
the 2001 and 2000 results have been restated. The results of the discontinued
operation have been removed from all periods on a line-by-line basis from
product sales revenue to income from continuing operations before extraordinary
items. The net income from the discontinued operation, together with the gain on
disposal recognised in 2002, are shown as separate line items.
The OTC business contributed net income of $6.1 million and $6.7 million for the
years ended 31 December 2002 and 2001 respectively. In addition, the 2002 net
income from discontinued operations includes a gain of $2.1 million on the
disposal. Sales generated by the OTC products represented 3% of total product
sales in 2002 and 2001.
EXTRAORDINARY ITEMS
There were no extraordinary items in respect of the year ended 31 December 2002.
In the previous year we incurred a $2.6 million charge relating to the write-off
of deferred financial charges on a term loan repaid as a result of our merger
with BioChem.
R&D OVERVIEW
Shire has a long-term commitment to annual R&D investment of 18-20% of its
revenues. The benefit of this level of spending is gaining visibility as the
late stage pipeline emerges. The Company currently has a total of 22 projects in
full development, of which the following late stage milestones are expected to
occur this year:
Approval / Regulatory Action
o FOSRENOL (Hyperphosphataemia) - US / EU
o XAGRID(R) (Essential thrombocythaemia) - EU
o METHYPATCH (ADHD) - US
o ADDERALL XR (Adult ADHD) - US
o ADDERALL XR (ADHD) - Canada
Progress into Phase III clinical trials
o SPD503 (ADHD)*
o SPD476 (Ulcerative Colitis)
o TROXATYL(R)(Acute Myelogenous Leukemia)
o TROXATYL (Pancreatic Cancer)
* already occurred
9
R&D ACTIVITIES FROM NOVEMBER 2002 TO FEBRUARY 2003
HYPERPHOSPHATAEMIA
FOSRENOL is under regulatory review by the US FDA and a Reference Member State
country within the EU.
STATUS REPORT ON FOSRENOL REGULATORY REVIEW - EUROPE
In the most recent of a series of discussions with the EU reference member
state, the agency required additional information on two key issues, namely the
pre-clinical and potential clinical consequences of long-term tissue exposure to
lanthanum.
The next step is for Shire to submit a proposal on how to address the above
issues. The agency will then respond either accepting or otherwise.
Shire believes the above questions can be answered from analysis of existing
data and from an additional external expert report. With these assumptions, the
review period is likely to extend into the second half of the year.
STATUS REPORT ON FOSRENOL REGULATORY REVIEW - US
Recent contact with the FDA suggests the Agency are close to finalising their
initial review and are preparing to issue an action letter. This is expected
shortly. Shire has been involved in a wide range of technical discussions with
the FDA including conduct of manufacturing site inspections as well as further
detailed analysis of the clinical and preclinical data set on FOSRENOL.
ATTENTION DEFICIT AND HYPERACTIVITY DISORDER
In December 2002, an sNDA filing was made to the US FDA seeking approval to
market ADDERALL XR for the treatment of adult ADHD. ADDERALL XR is currently
indicated for the once a day treatment of ADHD in children aged 6-12. Positive
data supporting ADDERALL XR's use in adult ADHD was presented at the Company's
R&D briefing in the Autumn of 2002.
The Company is also working on two existing ADHD compounds in its R&D pipeline.
Following positive safety and efficacy results in children with ADHD, the first
of these two non-scheduled compounds, SPD503, entered Phase III clinical trials
in February 2003. An IND was filed in December 2002 for SPD473, an amine
reuptake inhibitor licensed from DevCo., to enable progression to Phase II proof
of concept studies in 2003.
Shire is also now disclosing two new lifecycle management projects for the
ADDERALL franchise, designated SPD465, and SPD483, which are in Phase I and
pre-clinical stage, respectively.
With the acquisition of METHYPATCH, the first transdermal delivery system for
the once-daily treatment of ADHD, Shire has also expanded its franchise into the
methylphenidate segment of the ADHD market (see today's separate announcement
for more details).
ANTI-INFECTIVES
SPD754, the nucleoside antiviral agent targeted at HIV, entered Phase II
clinical trials in December 2002. These trials are expected to be essentially
complete during 2003, and assuming the profile remains as attractive as it
currently is, progression into Phase III will follow rapidly.
Separately, preclinical issues for SPD756 will likely lead to its
discontinuation, once a final review is completed. Two additional lead
optimisation projects have been started in HIV.
10
Good progress is being made with the vaccine portfolio with a number of vaccines
currently in Phase I development.
EPILEPSY
Shire has recently reviewed a series of results from studies on the epilepsy
project SPD421 and has concluded that it does not meet Shire's criteria to
warrant investment in Phase III studies. The licensor, D-Pharm Ltd., has
indicated its intent to continue development and Shire is therefore currently
discussing the return of the project to D-Pharm.
Shire has also decided not to pursue two potential reformulation projects in
epilepsy, designated SPD452 and SPD453. Instead, Shire is actively reviewing
other potential in-licensing projects for epilepsy and related disorders.
ALZHEIMER'S DISEASE
A once-daily formulation of REMINYL, a product currently approved for the
treatment of mild to moderate Alzheimer's disease, was recently filed for
approval in the US and EU. Shire receives royalties from REMINYL in all markets,
except the UK and Ireland, where Shire co-markets with Janssen Pharmaceutica
Products, L.P.
11
US GAAP RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
UNAUDITED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2002 2001
$'000 $'000
___________ ___________
ASSETS
Current assets:
Cash and cash equivalents 897,718 118,040
Marketable securities 316,126 723,911
Accounts receivable, net 138,397 193,913
Inventories 49,216 44,911
Deferred tax asset 34,849 19,430
Prepaid expenses and other current assets 30,790 38,571
___________ ___________
Total current assets from continuing operations 1,467,096 1,138,776
Current assets from discontinuing operations - 1,779
___________ ___________
Total current assets 1,467,096 1,140,555
Investments 71,962 68,743
Property, plant and equipment, net 135,234 113,347
Goodwill, net 203,767 175,341
Other intangible assets, net 301,084 308,355
Deferred tax asset 6,216 20,274
Other non-current assets 23,264 26,168
___________ ___________
Total long-term assets from continuing operations 741,527 712,228
Long-term assets from discontinued operations - 57,948
___________ ___________
Total assets 2,208,623 1,910,731
___________ ___________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current instalments of long-term debt 888 4,325
Accounts payable and accrued expenses 184,107 167,152
Unearned income - 17,409
Other current liabilities 15,492 42,730
___________ ___________
Total current liabilities from continuing operations 200,487 231,616
Current liabilities from discontinued operations 12,784 -
___________ ___________
Total current liabilities 213,271 231,616
___________ ___________
Long-term debt, excluding current instalments 407,302 402,481
Other long-term liabilities 14,884 13,645
___________ ___________
Total liabilities 635,457 647,742
___________ ___________
Shareholders' equity:
Common stock of 5p par value; 800,000,000 shares authorised; and
484,344,412 (2001: 481,817,487) shares issued and outstanding 40,051 39,861
Exchangeable shares; 5,874,112 (2001: 5,978,902) shares issued and 272,523 277,386
outstanding
Additional paid-in capital 1,027,499 1,014,796
Accumulated other comprehensive losses (41,431) (93,009)
Retained earnings 274,524 23,955
___________ ___________
Total shareholders' equity 1,573,166 1,262,989
___________ ___________
Total liabilities and shareholders' equity 2,208,623 1,910,731
___________ ___________
12
The balance sheet as at December 31, 2001 has been restated to reflect the
disposal of our OTC business, which has been accounted for as a discontinued
operation.
US GAAP RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2002 2001 2000
$'000 $'000 $'000
________ ________ ________
Total revenues 1,037,298 852,956 647,654
Cost of revenues (133,682) (112,006) (95,071)
________ ________ ________
Gross profit 903,616 740,950 552,583
Operating expenses (576,578) (597,842) (412,308)
________ ________ ________
Operating income 327,038 143,108 140,275
Interest income 19,536 19,667 19,232
Interest expense (9,252) (8,315) (16,413)
Other (expense)/income, net (8,262) (52,933) 109,023
________ ________ ________
Total other income/(expense), net 2,022 (41,581) 111,842
________ ________ ________
Income from continuing operations before
income taxes, equity in earnings of
equity method investees and
extraordinary items 329,060 101,527 252,117
Income taxes (88,350) (68,897) (43,564)
Equity in earnings of equity method investees 1,668 1,985 (3,809)
________ ________ ________
Income from continuing operations before extraordinary
items 242,378 34,615 204,744
Income from discontinued operations (net of income tax
expense of $3,588, $3,963 and $4,100 respectively) 6,108 6,748 6,983
Gain on disposition of discontinued operations (net of
income tax expense of $1,224) 2,083 - -
Extraordinary item, net of tax - (2,604) -
________ ________ ________
Net income 250,569 38,759 211,727
________ ________ ________
Earnings per share:
Basic
Continuing operations before extraordinary item 48.4c 7.0c 42.4c
Discontinued operations 1.6c 1.4c 1.4c
Extraordinary item - (0.5)c -
________ ________ ________
Net income 50.0c 7.9c 43.8c
________ ________ ________
Diluted
Continuing operations before extraordinary item 47.4c 6.9c 41.4c
Discontinued operations 1.6c 1.3c 1.4c
Extraordinary item - (0.5)c -
________ ________ ________
Net income 49.0c 7.7c 42.8c
________ ________ ________
Weighted average number of shares:
Basic 500,687,594 492,594,226 482,890,070
Diluted 522,418,246 504,875,587 494,691,805
___________ ___________ ___________
The results for the year ended December 31, 2000 have been restated to include
the results of Biochem Pharma, Inc., the merger with whom was accounted for as a
pooling of interests in accordance with Accounting Principles Board Opinion No.
16, "Accounting for Business Combinations" (APB 16).
13
The results for the year ended December 31, 2001 and 2000 have been restated to
reflect the disposal of our OTC business that has been accounted for as a
discontinued operation.
14
US GAAP RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, 2002 2001 2000
$'000 $'000 $'000
___________ ___________ ___________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 250,569 38,759 211,727
Adjustments to reconcile net income to net cash provided by
operating activities:
Acquired in-process research and development - - 26,947
Depreciation and amortisation 36,434 45,809 37,988
Stock option compensation - options (166) 2,278 21,914
Stock option compensation - warrants - 4,502 -
Tax benefit of stock option compensation, credited directly 688 3,805 30,782
to equity
(Increase)/decrease in deferred tax asset (8,761) 1,229 3,782
Non cash exchange gains and losses 12,495 (1,017) (1,677)
Gain on sale of long-term investments - - (98,627)
Loss on sale of property, plant and equipment 1,376 8,112 -
Loss on sale of intangible assets - 2,052 1,514
Gain on sale of a business (3,307) - -
Write-down of long-term investments 8,732 61,596 -
Write-down of intangible assets 18,777 25,393 -
Equity in (earnings)/losses of equity method investees (1,668) (1,985) 3,809
Other elements - 1,788 1,102
Changes in operating assets and liabilities, net of acquisitions:
Decrease/(increase) in accounts receivable 61,159 (52,033) (52,570)
(Increase)/decrease in inventory (5,327) 2,922 (7,916)
Decrease/(increase) in prepayments and other current assets 8,662 (26,109) 1,215
Decrease in other assets 2,905 823 -
(Decrease)/increase in accounts and notes payable and other (8,642) 61,504 37,727
liabilities
(Decrease)/increase in unearned income (17,409) 17,409 -
Reserve for restructuring charges - - (83,608)
___________ ___________ ___________
Net cash provided by operating activities 356,517 196,837 134,109
___________ ___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES:
Redemption of/(investment in) marketable securities 407,653 (367,206) (186,019)
Purchase of subsidiary undertakings (17,000) - -
Expenses of acquisition (350) - (1,461)
Net cash acquired with subsidiary undertakings 50 - -
Additional investment in existing subsidiary - - (32,302)
Purchase of long-term investments (5,933) (20,351) (16,995)
Purchase of intangible assets (24,032) (35,986) (38,379)
Purchase of property, plant and equipment (22,647) (13,604) (44,243)
Purchase of other assets - - (6,658)
Proceeds from sale of long-term investments 4,108 - 123,327
Proceeds from sale of property, plant and equipment 721 7,081 12,007
Proceeds from sale of intangible assets - 4,556 -
Proceeds from sale of a business 71,000 - -
Collection on notes receivable - - 766
Other investing activities - - (1,427)
___________ ___________ ___________
Net cash provided by/(used in) investing activities 413,570 (425,510) (191,384)
___________ ___________ ___________
15
US GAAP RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Year ended December 31, 2002 2001 2000
$'000 $'000 $'000
__________ ___________ ___________
CASH FLOWS FROM FINANCING ACTVITIES:
Proceeds from issue of long-term debt - 400,000 -
Payment of debt issuance costs - (9,000) -
Payments on long-term debt, capital leases and notes (3,381) (207,762) (8,514)
Proceeds from issue of common stock, net - 1,526 14,589
Proceeds from exercise of options 6,008 70,192 45,647
___________ ___________ ___________
Net cash provided by financing activities 2,627 254,956 51,722
___________ ___________ ___________
Effect of foreign exchange rate changes on cash and cash
equivalents 6,964 (1,509) (1,975)
___________ ___________ ___________
Net increase/(decrease) in cash and cash equivalents 779,678 24,774 (7,528)
Cash flows used in discontinued operations - - (1,708)
___________ ___________ ___________
Net increase/(decrease) in cash and cash equivalents 779,678 24,774 (9,236)
Cash and cash equivalents at beginning of period 118,040 93,266 102,502
___________ ___________ ___________
Cash and cash equivalents at end of period 897,718 118,040 93,266
___________ ___________ ___________
The results for the year ended December 31, 2000 have been restated to include
the results of BioChem Pharma, Inc. the merger with whom was accounted for as a
pooling of interests in accordance with APB 16.
NOTES TO THE UNAUDITED US GAAP FINANCIAL STATEMENTS
(1) ANALYSIS OF REVENUES, 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 or loss
before interest and income taxes.
The corporate overheads are included within the International segment.
Year ended December 31, 2002 US International R&D Total
$'000 $'000 $'000 $'000
________ ________ ________ ________
Product sales 714,655 144,733 - 859,388
Licensing and development 2,661 403 - 3,064
Royalties 215 174,597 - 174,812
Other revenues - 34 - 34
________ ________ ________ ________
Total revenues 717,531 319,767 - 1,037,298
________ ________ ________ ________
Cost of product sales 63,356 70,326 - 133,682
Research and development - - 189,179 189,179
Selling, general and administrative 209,811 121,001 - 330,812
Losses on dispositions of assets 1,221 155 - 1,376
________ ________ ________ ________
Total operating expenses 274,388 191,482 189,179 655,049
________ ________ ________ ________
Earnings before interest, tax depreciation
and amortisation 443,143 128,285 (189,179) 382,249
Depreciation and amortisation 28,999 26,212 - 55,211
________ ________ ________ ________
Operating income/(loss) 414,144 102,073 (189,179) 327,038
________ ________ ________ ________
16
US GAAP RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
NOTES TO THE UNAUDITED US GAAP FINANCIAL STATEMENTS (CONTINUED)
Year ended December 31, 2001 US International R&D Total
$'000 $'000 $'000 $'000
________ ________ ________ ________
Product sales 587,449 111,902 - 699,351
Licensing and development 4,507 991 - 5,498
Royalties 264 144,891 - 145,155
Other revenues - 2,952 - 2,952
________ ________ ________ ________
Total revenues 592,220 260,736 - 852,956
________ ________ ________ ________
Cost of product sales 58,655 53,351 - 112,006
Research and development - - 171,029 171,029
Selling, general and administrative 178,119 79,552 - 257,671
Asset impairment and restructuring charges - 29,699 - 29,699
Merger transaction expenses - 83,470 - 83,470
Losses on dispositions of assets 2,052 8,112 - 10,164
________ ________ ________ ________
Total operating expenses 238,826 254,184 171,029 664,039
________ ________ ________ ________
Earnings before interest, tax depreciation
and amortisation 353,394 6,552 (171,029) 188,917
Depreciation and amortisation 17,319 28,490 - 45,809
________ ________ ________ ________
Operating income/(loss) 336,075 (21,938) (171,029) 143,108
________ ________ ________ ________
Year ended December 31, 2000 US International R&D Total
$'000 $'000 $'000 $'000
________ ________ ________ ________
Product sales 391,168 105,607 - 496,775
Licensing and development 1,326 12,821 - 14,147
Royalties 266 135,204 - 135,470
Other revenues 20 1,242 - 1,262
________ ________ ________ ________
Total revenues 392,780 254,874 - 647,654
________ ________ ________ ________
Cost of product sales 47,093 47,978 - 95,071
Research and development - - 155,145 155,145
Selling, general and administrative 101,901 90,327 - 192,228
In process research and development - 26,947 - 26,947
________ ________ ________ ________
Total operating expenses 148,994 165,252 155,145 469,391
________ ________ ________ ________
Earnings before interest, tax depreciation 243,786 89,622 (155,145) 178,263
and amortisation
Depreciation and amortisation 14,860 23,128 - 37,988
________ ________ ________ ________
Operating income/(loss) 228,926 66,494 (155,145) 140,275
________ ________ ________ ________
17
US GAAP RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
NOTES TO THE UNAUDITED US GAAP FINANCIAL STATEMENTS (CONTINUED)
(2) EARNINGS PER SHARE
Basic earnings per share is based upon the net income available to common
stockholders divided by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share is based upon net income 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.
Year ended December 31, 2002 2001 2000
$'000 $'000 $'000
__________ __________ __________
Numerator for basic earnings per share 250,569 38,759 211,727
Interest charged on convertible debt, net of tax 5,585 - -
__________ __________ __________
Numerator for diluted earnings per share 256,154 38,759 211,727
__________ __________ __________
Number of Number of Number of
shares shares shares
__________ __________ __________
Weighted average number of shares:
Basic 500,687,594 492,594,226 482,890,070
Effect of dilutive shares:
Stock options 1,883,475 11,362,332 11,801,735
Warrants - 919,029 -
Convertible debt 19,847,177 - -
__________ __________ __________
Diluted 522,418,246 504,875,587 494,691,805
__________ __________ __________
Basic earnings per share 50.0c 7.9c 43.8c
__________ __________ __________
Diluted earnings per share 49.0c 7.7c 42.8c
__________ __________ __________
The computation of weighted average number of shares for diluted EPS for the
year ended December 31, 2001 and 2000 does not include convertible debt because,
after eliminating interest charged to operations from the numerator, the
inclusion would be anti-dilutive.
Warrants to purchase approximately 1.4 million common shares for the year ended
December 31, 2002 were not dilutive and were therefore not included in the
computation of diluted earnings per share.
Stock options to purchase approximately 17.5 million common shares for the year
ended December 31, 2002 were not dilutive and were therefore not included in the
computation of diluted earnings per share.
The Group will file financial information with the Securities and Exchange
Commission in the US in its Annual Report on Form 10-K in due course.
18
US GAAP RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002
NOTES TO THE UNAUDITED US GAAP FINANCIAL STATEMENTS (CONTINUED)
(3) ANALYSIS OF REVENUES
Q1 Q2 Q3 Q4 Year 2002 2002
2002 2002 2002 2002 2002 change % of total
$'000 $'000 $'000 $'000 $'000 % revenues
_______ _______ _______ _______ _____ _______ ______
Net product sales:
ADDERALL XR 61,875 75,821 78,000 102,244 317,940 +874% 31%
ADDERALL 46,170 28,321 18,128 17,163 109,782 -65% 11%
AGRYLIN 23,436 29,435 28,725 37,611 119,207 +39% 12%
PENTASA 17,547 21,479 21,619 26,511 87,156 +15% 8%
PROAMATINE 9,573 10,868 14,398 16,069 50,908 +34% 5%
CARBATROL 11,572 12,574 10,944 10,161 45,251 +23% 4%
Calciums 4,699 5,703 6,126 6,633 23,161 +11% 2%
Others 21,635 22,660 27,564 34,124 105,983 +15% 10%
_______ _______ _______ _______ ________ _______ ______
196,507 206,861 205,504 250,516 859,388 +23% 83%
_______ _______ _______ _______ ________ _______ ______
Royalty income:
3TC 30,636 30,720 32,501 38,672 132,529 +10% 13%
ZEFFIX 5,293 4,510 5,547 5,885 21,235 +25% 2%
Others 3,647 5,282 5,437 6,682 21,048 +160% 2%
_______ _______ _______ _______ ________ _______ ______
39,576 40,512 43,485 51,239 174,812 +20% 17%
_______ _______ _______ _______ ________ _______ _______
Licensing 682 923 726 733 3,064 -44% -
Other 217 (212) 5 24 34 -99% -
_______ _______ _______ _______ ________ _______ _______
Total revenues 236,982 248,084 249,720 302,512 1,037,298 +22% 100%
_______ _______ _______ _______ ________ _______ _______
Q1 Q2 Q3 Q4 Year 2001 2001
2001 2001 2001 2001 2001 change % of total
$'000 $'000 $'000 $'000 $'000 % revenues
_______ _______ _______ _______ ________ ______ _______
Net product sales:
ADDERALL XR - - - 32,642 32,642 N/a 4%
ADDERALL 70,146 69,430 86,661 91,453 317,690 +48% 37%
AGRYLIN 17,146 25,787 19,782 22,798 85,513 +48% 10%
PENTASA 14,400 19,083 19,992 22,015 75,490 +39% 9%
PROAMATINE 7,577 10,511 8,901 10,962 37,951 +60% 4%
CARBATROL 9,639 9,882 7,909 9,394 36,824 +44% 4%
Calciums 4,795 4,979 5,494 5,657 20,925 +28% 2%
Others 20,486 22,927 21,476 27,427 92,316 -12% 12%
_______ _______ _______ _______ ________ ______ _______
144,189 162,599 170,215 222,348 699,351 +41% 82%
_______ _______ _______ _______ ________ ______ _______
Royalty income:
3TC 28,188 31,730 31,643 28,557 120,118 +1% 14%
ZEFFIX 3,783 4,441 4,759 3,956 16,939 +35% 2%
Others 920 3,001 1,408 2,769 8,098 +97% 1%
_______ _______ _______ _______ ________ ______ _______
32,891 39,172 37,810 35,282 145,155 +7% 17%
_______ _______ _______ _______ ________ ______ _______
Licensing 3,042 244 943 1,269 5,498 -61% 1%
Other 275 471 784 1,422 2,952 +134% -
_______ _______ _______ _______ ________ ______ _______
Total revenues 180,397 202,486 209,752 260,321 852,956 +32 100%
_______ _______ _______ _______ ________ ______ _______
19
US GAAP RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2002
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
3 months ended December 31, 2002 2001
$'000 $'000
__________ __________
Product sales 250,516 222,348
Licensing and development 733 1,269
Royalties 51,239 35,282
Other revenues 24 1,422
__________ __________
Total revenues 302,512 260,321
Cost of product sales (47,173) (35,121)
__________ __________
Gross profit 255,339 225,200
Operating expenses:
Research and development 50,622 50,191
Selling, general and administrative 82,497 83,457
Losses on disposition of assets 1,223 38
__________ __________
Total operating expenses 134,342 133,686
__________ __________
Earnings before interest, tax, depreciation and amortisation 120,997 91,514
Depreciation and amortisation 20,351 12,056
__________ __________
Operating income 100,646 79,458
Interest income 4,843 5,416
Interest expense (3,199) (2,644)
Other (expenses)/income, net (8,693) 1,006
__________ __________
Total other (expenses)/income, net (7,049) 3,778
__________ __________
Income before income taxes 93,597 83,236
Income taxes (24,316) (20,954)
Equity in earnings of equity method investees (1,635) 297
__________ __________
Net income from continuing operations 67,646 62,579
Income from discontinued operations 1,146 795
Gain on disposition of discontinued operations 2,083 -
__________ __________
Net income 70,875 63,374
__________ __________
Earnings per share - basic
Income from continuing operations 13.5c 12.5c
Discontinued operations 0.6c 0.2c
__________ __________
Net income 14.1c 12.7c
__________ __________
Earnings per share - diluted
Income from continuing operations 13.2c 12.2c
Discontinued operations 0.6c 0.2c
__________ __________
Net income 13.8c 12.4c
__________ __________
Weighted average number of shares:
Basic 501,411,413 498,065,538
Diluted 522,473,225 524,573,166
20
UNAUDITED UK GAAP RESULTS FOR THE YEAR TO 31 DECEMBER 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited
For the year to 31 December 2002 2001
(pound)'000 (pound)'000
________ ________
TURNOVER : GROUP AND SHARE OF JOINT VENTURE 696,661 563,249
Less: share of joint venture's turnover (762) -
________ ________
Group turnover on existing operations 695,899 563,249
Acquisitions 653 -
________ ________
Continuing operations 696,552 563,249
Discontinued operations 15,975 17,120
________ ________
TOTAL TURNOVER 712,527 580,369
Cost of sales (95,042) (83,149)
________ ________
GROSS PROFIT 617,485 497,220
Net operating expenses (1,151,189) (420,798)
________ ________
OPERATING (LOSS)/PROFIT (533,704) 76,422
Existing operations
- - group (539,772) 68,972
- - joint venture (559) -
Acquisitions (1,831) -
________ ________
Continuing operations (542,162) 68,972
Discontinued operations 8,458 7,450
________ ________
TOTAL OPERATING (LOSS)/PROFIT (533,704) 76,422
Finance charges, net 6,931 4,955
________ ________
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (526,773) 81,377
Tax on (loss)/profit on ordinary activities (61,626) (45,668)
________ ________
RETAINED (LOSS)/PROFIT FOR THE YEAR TRANSFERRED (FROM)/TO RESERVES (588,399) 35,709
________ ________
(LOSS)/EARNINGS PER SHARE
Basic (117.5p) 8.7p
Diluted (117.5p) 8.5p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Unaudited
For the year to 31 December 2002 2001
(pound)'000 (pound)'000
________ ________
(LOSS)/PROFIT FOR THE YEAR (588,399) 35,709
Translation of the financial statements of overseas subsidiaries (62,739) (6,640)
________ ________
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR (651,138) 29,069
________ ________
21
UNAUDITED UK GAAP RESULTS FOR THE YEAR TO 31 DECEMBER 2002
CONSOLIDATED BALANCE SHEET
Unaudited
31 December 31 December
2002 2001
(pound)'000 (pound)'000
________ ________
FIXED ASSETS
Intangible assets - intellectual property 183,404 259,850
Intangible assets - goodwill 1,900,896 2,643,578
Tangible assets 84,001 77,880
Fixed asset investments 37,345 45,045
Investment in joint ventures
- - share of gross assets 5,082 -
- - share of gross liabilities (342) -
________ ________
2,210,386 3,026,353
________ ________
CURRENT ASSETS
Stocks 30,571 32,080
Deferred tax asset
- - due within one year 21,646 13,351
- - due after one year 3,861 8,845
Debtors
- - due within one year 106,125 159,586
- - due after one year 14,451 11,953
Investments 196,364 497,397
Cash at bank and in hand 558,432 81,434
________ ________
931,450 804,646
Creditors: amounts falling due within one year
- - convertible debt - (1,032)
- - other creditors (131,885) (158,229)
________ ________
(131,885) (159,261)
________ ________
NET CURRENT ASSETS 799,565 645,385
________ ________
TOTAL ASSETS LESS CURRENT LIABILITIES 3,009,951 3,671,738
Creditors: amounts falling due after more than one year
- - convertible debt (248,463) (268,178)
- - other creditors (13,782) (9,654)
________ ________
(262,245) (277,832)
________ ________
NET ASSETS 2,747,706 3,393,906
________ ________
CAPITAL AND RESERVES
Called-up share capital 24,217 24,091
Share premium 3,214,512 3,206,280
Exchangeable shares 191,552 194,972
Capital reserve 2,755 2,755
Other reserves 24,247 24,247
Profit and loss account (709,577) (58,439)
________ ________
EQUITY SHAREHOLDERS' FUNDS 2,747,706 3,393,906
________ ________
22
UNAUDITED UK GAAP RESULTS FOR THE YEAR TO 31 DECEMBER 2002
CONSOLIDATED CASH FLOW STATEMENT
Unaudited
Year to 31 December 2002 2001
(pound)'000 (pound)'000
________ ________
NET CASH INFLOW FROM OPERATING ACTIVITIES (NOTE 2A) 297,405 202,876
Returns on investments and servicing of finance:
Interest received 15,434 13,077
Interest paid (8,458) (8,122)
Interest element of finance lease rentals paid (45) -
________ ________
NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE 6,931 4,955
________ ________
Taxation:
Overseas corporation tax paid (73,145) (44,982)
________ ________
Capital expenditure and financial investments:
Purchase of long term investment (2,957) -
Purchase of intangible fixed assets (15,470) (20,159)
Purchase of tangible fixed assets (15,014) (9,593)
Proceeds from sale of intangible fixed assets - 3,200
Proceeds from sale of a business 44,103 -
Proceeds from sale of tangible fixed assets 542 4,974
________ ________
NET CASH INFLOW/(OUTFLOW) FOR CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENTS 11,204 (21,578)
________ ________
Acquisitions and disposals:
Purchase of subsidiary undertaking (11,647) -
Expenses of acquisitions (235) (16,450)
Net cash acquired with subsidiary undertakings 33 44,452
________ ________
NET CASH (OUTFLOW)/INFLOW FROM ACQUISITIONS (11,849) 28,002
________ ________
CASH INFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING 230,546 169,273
________ ________
Management of liquid resources:
Increase/(decrease) in cash placed on short-term deposit 254,561 (325,479)
Financing:
Issue of ordinary share capital - 1,050
Exercise of share options 3,985 46,961
Expenses of share issues - (23,584)
Capital element of finance leases (74) -
Net increase in debt during the year 4,084 182,808
________ ________
NET CASH INFLOW FROM FINANCING 7,995 207,235
________ ________
INCREASE IN CASH IN THE YEAR 493,102 51,029
________ ________
23
UNAUDITED UK GAAP RESULTS FOR THE YEAR TO 31 DECEMBER 2002
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
Unaudited
Year to 31 December 2002 2001
(pound)'000 (pound)'000
________ ________
(Loss)/profit for the year (588,399) 35,709
Other recognised gains and losses relating to the year (62,739) (6,640)
________ ________
(651,138) 29,069
Share capital issued 111 1,951,648
Issue of exchangeable shares - 563,897
Issue expenses - (23,584)
Arenol loan conversion 941 -
Proceeds of employee share options 3,886 46,961
________ ________
Net (reductions)/additions to shareholders' funds (646,200) 2,567,991
________ ________
Opening shareholders' funds 3,393,906 825,915
________ ________
Closing shareholders' funds 2,747,706 3,393,906
________ ________
NOTES TO THE UNAUDITED UK GAAP FINANCIAL STATEMENTS
(1) (LOSS)/EARNINGS PER SHARE
(Loss)/earnings per share has been calculated by dividing the (loss)/profit on
ordinary activities after taxation for each period by the weighted average
number of shares in issue during those periods.
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. No such amounts were included in the weighted average number of shares
in 2002 as their inclusion would be anti-dilutive in a loss-making period.
The $400 million convertible loan note is excluded from the calculation of
weighted average number of shares for fully diluted earnings per share in 2001
as it was not dilutive. The zero coupon convertible loan note included in 2001
has no impact on the numerator for fully diluted earnings per share.
Unaudited
Year to 31 December 2002 2001
(pound)'000 (pound)'000
__________ __________
(Loss)/profit for the financial year (for basic and diluted EPS) (588,399) 35,709
__________ __________
Weighted average number of shares:
Basic 500,687,594 412,183,058
Conversion of convertible debt - 289,101
Exercise of share options - 6,270,923
Exercise of warrants - 919,029
__________ __________
Fully diluted 500,687,594 419,662,111
__________ __________
24
UNAUDITED UK GAAP RESULTS FOR THE YEAR TO 31 DECEMBER 2002
NOTES THE UNAUDITED UK GAAP FINANCIAL STATEMENTS (CONTINUED)
(2) NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
(A) RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
Unaudited
Year to 31 December 2002 2001
(pound)'000 (pound)'000
__________ __________
Operating (loss)/profit: group and share of joint venture (533,704) 76,422
Less: share of joint venture's operating loss 559 -
__________ __________
Group operating (loss)/profit (533,145) 76,422
Exchange loss/(gain) 962 (4,315)
Depreciation 9,073 7,092
Amortisation of intangible fixed assets 153,979 111,254
Profit on sale of discontinued operations (2,006) -
Loss on sale of fixed assets 854 7,646
Write-off of fixed asset investments 5,809 500
Write-off on intangible fixed assets 631,447 3,092
(Increase)/decrease in stocks (1,485) 2,836
Decrease/(increase) in debtors 51,832 (44,695)
(Decrease)/increase in creditors (19,915) 43,044
__________ __________
Net cash inflow from operating activities 297,405 202,876
__________ __________
(B) ANALYSIS AND RECONCILIATION OF NET FUNDS
Acquired Other
Year to 31 December 2002 Start of in year Cash non-cash Exchange End of
(unaudited) year excl cash flow changes movement year
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
________ ________ ________ ________ ________ ________
Cash at bank and in hand 81,434 - 493,102 - (16,104) 558,432
Debt due within one year (3,008) - 2,005 565 49 (389)
Finance leases - (243) 74 - 7 (162)
________ ________ ________ ________ ________ ________
78,426 (243) 495,181 565 (16,048) 557,881
Debt due after one year (269,883) - (6,089) 389 26,342 (249,241)
Finance leases - (3,926) - - 169 (3,757)
________ ________ ________ ________ ________ ________
(191,457) (4,169) 489,092 954 10,463 304,883
Current asset investments 497,397 - (254,561) (87) (46,385) 196,364
________ ________ ________ ________ ________ ________
305,940 (4,169) 234,531 867 (35,922) 501,247
________ ________ ________ ________ ________ ________
Acquired Other
Year to 31 December 2001 Start of in year Cash non-cash Exchange End of
year excl cash flow changes movement year
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
________ ________ ________ ________ ________ ________
Cash at bank and in hand 31,194 - 51,029 - (789) 81,434
Debt due within one year (1,004) (2,089) 32 (1,004) 1,057 (3,008)
________ ________ ________ ________ ________ ________
30,190 (2,089) 51,061 (1,004) 268 78,426
Debt due after one year (84,683) (2,075) (182,840) 1,004 (1,289) (269,883)
________ ________ ________ ________ ________ ________
(54,493) (4,164) (131,779) - (1,021) (191,457)
Current asset investments 93,550 81,995 325,479 - (3,627) 497,397
________ ________ ________ ________ ________ ________
39,057 77,831 193,700 - (4,648) 305,940
________ ________ ________ ________ ________ ________
25
UNAUDITED UK GAAP RESULTS FOR THE YEAR TO 31 DECEMBER 2002
NOTES THE UK GAAP FINANCIAL STATEMENTS (CONTINUED)
(C) RECONCILIATION OF NET FUNDS
Unaudited
Year to 31 December 2002 2001
(pound)'000 (pound)'000
__________ __________
Increase in cash in the year 493,102 51,029
Cash inflow from increase in debt and lease financing (4,010) (182,808)
Cash (inflow)/outflow from (decreases)/increases in liquid resources (254,561) 325,479
__________ __________
Change in net funds resulting from cash flows 234,531 193,700
Leases and current asset investments acquired with subsidiary undertakings (4,169) 77,831
Other non-cash changes 867 -
Translation difference (35,922) (4,648)
__________ __________
Movement in net funds in year 195,307 266,883
Net funds at start of year 305,940 39,057
__________ __________
Net funds at end of year 501,247 305,940
__________ __________
(3) BASIS OF PREPARATION
The Group have applied consistent accounting policies throughout both periods.
This preliminary announcement was approved by the Board on 26 February 2002.
The UK GAAP financial information does not constitute the Group's statutory
accounts under section 240 of the Companies Act 1985 for the year ended 31
December 2001 but is derived from those accounts.
The results for the year ended 31 December 2002 have not been audited and do not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985. Statutory accounts for the year ended 31 December 2001, the Group's
last statutory period, have been delivered to the Registrar of Companies. The
auditors have reported on those accounts and their report was unqualified and
did not contain statements under section 237 (2) or (3) of the Companies Act
1985. The 2002 statutory accounts have not yet been delivered to the Registrar
of Companies.
26