EX-99.01 2 nov0104_ex.txt 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 For Immediate Release 12 noon BST 7am EDT Strong third quarter results: good pipeline progression On track for another very good year Basingstoke, UK - November 4, 2004 - Shire Pharmaceuticals Group plc (LSE: SHP, NASDAQ: SHPGY, TSX: SHQ) announces results for the third quarter to September 30, 2004. Third Quarter 2004 Unaudited Results Highlights -------------------------------------------------------------------------------------------------------------------- Restated(1) US GAAP Q3 2004 Q3 2003 $M $M Growth -------------------------------------------------------------------------------------------------------------------- Total revenues 344.9 283.4 +22% Operating income 113.1 97.6 +16% Income from continuing operations before income taxes and equity in earnings/(losses) of equity method investees 105.9 98.5 +8% Income from continuing operations 77.0 73.3 +5% Net income 77.0 64.6 +19% -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Diluted Earnings Per Share (EPS): Per ordinary share Continuing operations 15.3c 14.4c +6% Discontinued operations - (1.6c) ------- --------- 15.3c 12.8c +20% Per American Depositary Share (ADS) 45.8c 38.3c +20% -------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Non-US GAAP -------------------------------------------------------------------------------------------------------------------- Diluted Earnings Per Share (EPS) excluding reorganization costs and the loss from discontinued operations(2): Per ordinary share 16.7c 14.4c +16% Per American Depositary Share (ADS) 50.1c 43.3c +16% --------------------------------------------------------------------------------------------------------------------
Note: Average exchange rates for Q3 2004 and 2003 were $1.82: (pound)1.00 and $1.62: (pound)1.00 respectively. (1) The results for the three months to September 30, 2003 have been restated to reflect the disposal of the vaccines business, accounted for as a discontinued operation in accordance with generally accepted accounting principles in the United States of America (US GAAP). In accordance with US GAAP guidelines, 2003 figures from revenues down to income from continuing operations exclude the results of the vaccines business, while 2003 net income and earnings per share include the results of the vaccines business. (2) This is a non-US GAAP financial measure. Management believes that the presentation of this non-US GAAP financial measure provides useful information to investors regarding Shire's underlying performance as the costs associated with the reorganization and the loss from discontinued operations are not part of the Company's ongoing operations. A reconciliation of this non-US GAAP financial measure to the most directly comparable US GAAP financial measure can be found on page 21. 1 Matthew Emmens, Chief Executive Officer, said: "We have continued to deliver good growth in the third quarter, driven by both product sales and royalty income. These results highlight the strong performance of the underlying business and the success of the ongoing reorganization. We are on track to deliver our previous guidance of expected earnings growth for continuing operations in excess of 20% for 2004. Revenue growth for the year could now be double-digit, offset by an increase in costs relating to new product launches. "To date in 2004, Shire has received four product approvals in both Europe and North America, reflecting the quality of our late stage pipeline. In the last three months we have received approval for two key products, FOSRENOL(R) in the US and ADDERALL XR(R) in the US for the adult indication. In addition, the Food and Drug Administration (FDA) advised us on October 28, 2004 that ADDERALL XR was granted a further six months pediatric extension bringing the marketing exclusivity, under the Hatch-Waxman rules, to April 2005. XAGRID(R) is in the final stages of the regulatory process within Europe prior to approval. Launches of FOSRENOL and XAGRID, are planned to commence at the end of this year. Our pipeline is advancing with a further five projects, SPD417/BIPOTROL(R), METHYPATCH(R), SPD503, SPD476 and SPD465 having the potential for launch by the end of 2006. "We continue to carefully review new in-licensing opportunities for both projects and products." Third Quarter 2004 and Recent Events Highlights o Revenues up 22% to $344.9 million, compared with Q3 2003. o Net Income increased 19% over Q3 2003. o Royalties at $56.2 million, an increase of 13% over Q3 2003. o ADDERALL XR (mixed amphetamine salts) reached 24% share of the total US ADHD market in September 2004 making it the first treatment choice in the US. Sales increased by 16% compared with Q3 2003 to $140.1 million. o ADDERALL XR Adult: FDA approval received on August 12, 2004, launch commenced. o ADDERALL XR: six months additional market exclusivity granted by the FDA. o FOSRENOL (lanthanum carbonate): FDA approval received on October 26, 2004 - launch planned for December 2004. o XAGRID (anagrelide hydrochloride): a positive opinion was issued by the EU regulatory agency in July, the European Commission decision-making process continues. o PENTASA(R) 500 mg: launch in progress. o TROXATYL(R) (troxacitabine) global research, development and marketing rights were out-licensed to Structural GenomiX Inc. on July 24, 2004. o $370.1 million of the convertible loan notes were redeemed during the quarter. o Completion of the sale of the vaccines business to ID Biomedical Corporation (IDB) on September 9, 2004. o First interim dividend of 1 penny per ordinary share paid on October 14, 2004. o Shire appoints Barbara Deptula as Executive Vice President, Business Development and member of the Executive Committee. 2 2004 Financial Outlook Shire's underlying business continues to perform strongly. We are re-iterating our previously stated guidance and continue to anticipate earnings growth for continuing operations to be in excess of 20% for 2004, after excluding the impact of the discontinued vaccines business, the estimated $55 million costs associated with the reorganization and the $14.8 million gain on the sale of a portfolio investment. Revenue growth for the year could now be double-digit, up from our previous guidance of high single digit range, despite the loss of exclusivity on PROAMATINE(R) (midodrine hydrochloride) in Q3 2003 and the anticipated impact of generics on AGRYLIN(R) (anagrelide hydrochloride) in the US. The revenue boost will be offset by launch costs for new products. Beyond 2004 we remain committed to achieving our aspirational target of earnings growth, on average, in the mid teens range with consistent operating margins. - Ends - For further information please contact: Clea Rosenfeld - Investor Relations +44 1256 894 160 Jessica Mann - Media +44 1256 894 160 Notes to editors Shire Pharmaceuticals Group plc Shire Pharmaceuticals Group plc (Shire) is a global pharmaceutical company with a strategic focus on meeting the needs of the specialist physician and currently focuses on developing projects and marketing products in the areas of central nervous system (CNS), gastrointestinal (GI), and renal diseases. Shire has operations in the world's key pharmaceutical markets (US, Canada, UK, France, Italy, Spain and Germany) as well as a specialist drug delivery unit in the US. For further information on Shire, please visit the Company's website: www.shire.com 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 materialize, 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, manufacturing and commercialization, the impact of competitive products, including, but not limited to, the impact of those on Shire's Attention Deficit & Hyperactivity Disorder (ADHD) franchise, patents, including but not limited to, legal challenges relating to Shire's ADHD franchise, government regulation and approval, including but not limited to the expected product approval dates of METHYPATCH(R) (methylphenidate), XAGRID(R) (anagrelide hydrochloride) and SPD417/ BIPOTROL(R) (carbamazepine), Shire's ability to secure new products for development, the implementation of the current reorganization and other risks and uncertainties detailed from time to time in Shire's filings, including its Annual Report on Form 10-K for the year ended December 31, 2003, with the Securities and Exchange Commission. 3 The following are trademarks of Shire or companies within the Shire Group, which are the subject of trademark registrations in certain territories ADDERALL XR(R) (mixed amphetamine salts) AGRYLIN(R) (anagrelide hydrochloride) SPD417/ BIPOTROL(R) (carbamazepine) CARBATROL(R) (carbamazepine) FOSRENOL(R) (lanthanum carbonate) PROAMATINE(R) (midodrine hydrochloride) TROXATYL(R) (troxacitabine) XAGRID(R) (anagrelide hydrochloride) The following are trademarks of third parties 3TC(R) (trademark of GlaxoSmithKline (GSK)) METHYPATCH(R) (trademark of Noven) PENTASA(R) (trademark of Ferring AS) REMINYL(R) (trademark of Johnson & Johnson) ZEFFIX(R) (trademark of GSK) 4 OVERVIEW OF US GAAP FINANCIAL RESULTS 1. Introduction Revenues from continuing operations for the three months to September 30, 2004 increased by 22% to $344.9 million (2003: $283.4 million). Income from continuing operations before income taxes and equity in earnings /(losses) in equity method investees increased by 8% to $105.9 million (2003: $98.5 million) Included in the net income result for the quarter were $10.1 million of reorganization costs (Q3 2003: $8.7 million of loss from discontinued operations). The reported net income under US GAAP including these elements for the three months to September 30, 2004 showed an increase of 19% when compared to Q3 2003. The business generated a cash inflow from operating activities of $75.5 million (2003: $114.7 million). During the three months ended September 30, 2004 the Company redeemed $370.1m of its convertible loan notes. This resulted in a reduction in cash and cash equivalents, restricted cash and marketable securities at September 30, 2004 ($1,331.9 million) compared to December 31, 2003 ($1,414.0 million). After deduction of borrowings, this translates to a net cash position (cash and cash equivalents, restricted cash and marketable securities less current and long-term debt) of $1,325.9 million (December 31, 2003: $1,037.7 million). Where appropriate, this may be used to further enhance our portfolio through product and project acquisitions. 2. Product sales For the three months to September 30, 2004, product sales increased 22% ($51.4 million) to $283.7 million (2003: $232.3 million) and represented 82% of total revenues (2003: 82%). Third Quarter 2004 Product Highlights ------------------------------ ------------------- ------------------- ------------------ --------------------------- Sales Sales** US Rx1 September 2004 1 Product $M Growth Growth US Market Share ------------------------------ ------------------- ------------------- ------------------ --------------------------- ADDERALL XR 140.1 16% 22% 24% AGRYLIN 49.7 92% 8% 27% PENTASA 33.0 66% 0% 11% CARBATROL 11.2 -3% 10% 45% ------------------------------ ------------------- ------------------- ------------------ ---------------------------
1 IMS Prescription Data - Product specific **Compared to Q3 2003 ADDERALL XR for the treatment of ADHD Sales of ADDERALL XR for the three months to September 30, 2004 were $140.1 million, an increase of 16% compared to prior year (2003: $121.3 million). US prescriptions were up 22% over the same period, due primarily to a 15% increase in the total US ADHD market. The difference between sales growth and prescription growth was driven by the wholesalers destocking to normal stock levels in Q3 2004 compared to a moderate level of stocking in Q3 2003, only partially offset by the impact of price increases in November 2003 and June 2004. ADDERALL XR had a 24% share of the total US ADHD market in September 2004 (September 2003: 22%) and is now the leading brand in the US ADHD market. Following submission to the FDA of clinical data examining the effect of ADDERALL XR in adolescent pediatric patients and meeting the FDA's "written request" requirements, Shire is entitled, to an additional six months market exclusivity for ADDERALL XR in the US under the Hatch-Waxman regulations. The additional exclusivity period will expire on April 11, 2005. Litigation proceedings relating to ADDERALL XR are in progress. Further information may be found in our filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2003 and our most recent quarterly report on Form 10-Q for the period ended June 30, 2004. 5 AGRYLIN for the treatment of thrombocythemia Worldwide sales of AGRYLIN for the three months to September 30, 2004 were $49.7 million, an increase of 92% compared to prior year (2003: $25.9 million). US prescription volumes were up 8% over the same period, in line with hydrea and generic hydroxyurea market growth. The difference between sales growth and prescription growth is due mainly to significant wholesaler stocking in anticipation of the launch of generics in Q4 2004, compared to de-stocking in Q3 2003, and a price increase in November 2003. The Company anticipates wholesaler inventory levels could normalize in Q4 2004 due to the delayed launch of generics. AGRYLIN had a 27% share of the total US AGRYLIN, hydrea and generic hydroxyurea prescription market in September 2004 (September 2003: 27%). AGRYLIN's pediatric exclusivity expired in September 2004 in the US. AGRYLIN will be known as XAGRID in the EU and following the anticipated license approval the product will have up to 10 years market exclusivity in accordance with current orphan medicinal product legislation. PENTASA for the treatment of ulcerative colitis Sales of PENTASA for the three months to September 30, 2004 were $33.0 million, an increase of 66% compared to the prior year (2003: $19.8 million). US prescription volumes were constant over the same period, in line with the mesalamine / olsalazine market growth. The difference between sales growth and prescription growth arises mainly from a moderate level of wholesaler stocking in Q3 2004, including $5 million of the new 500mg launch stock, compared with a moderate level of destocking in Q3 2003. In addition there were price increases in November 2003 and September 2004. PENTASA had an 11% share of the total US oral mesalamine / olsalazine prescription market in September 2004 (September 2003: 11%). CARBATROL for the treatment of epilepsy Sales of CARBATROL for the three months to September 30, 2004 were $11.2 million, a decrease of 3% compared to prior year (2003: $11.6 million). US prescription volumes were up 10% over the same period, due to the impact of renewed promotional efforts. The difference between the sales decrease and prescription growth is due to the incidence of sales deductions this quarter resulting from price increases in September 2003. CARBATROL had a 45% share of the total US extended release carbamazepine prescription market in September 2004 (September 2003: 40%). Litigation proceedings relating to CARBATROL are in progress. Further information may be found in our filings with the US Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2003 and our most recent quarterly report on Form 10-Q for the period ended June 30, 2004. 3. Royalties Royalty revenue increased 13% to $56.2 million for the three months to September 30, 2004 (2003: $49.7 million) as a result of strong sales and positive foreign exchange movements. 6 Third Quarter 2004 Royalty Highlights ---------------------------------------------------------------------------------------------------------------------- Product Royalties to Shire Royalty2 Worldwide in-market sales by licensee3 in $M Growth Q3 2004 % $M ---------------------------------------------------------------------------------------------------------------------- 3TC 37.9 7%* 291 ---------------------------------------------------------------------------------------------------------------------- ZEFFIX 7.0 13%** 61 ---------------------------------------------------------------------------------------------------------------------- Other 11.3 37% n/a ----------------------------------------------------------------------------------------------------------------------
* The impact of foreign exchange movements has contributed +2% to the reported growth ** The impact of foreign exchange movements has not contributed to the reported growth 2 Compared with Q3 2003 3 GSK 3TC Royalties from 3TC for the three months to September 30, 2004 were $37.9 million, an increase of 7% compared to Q3 2003 ($35.3 million). This was primarily due to a return to growth in the US market. Shire receives royalties from GSK on worldwide sales of 3TC, with the exception of Canada where a commercialization partnership with GSK exists. GSK's worldwide sales of 3TC, for the three months to September 30, 2004 were $291 million, an increase of 7% compared to the three months ended September 30, 2003 ($272 million). ZEFFIX Royalties from ZEFFIX for the three months to September 30, 2004 were $7.0 million, an increase of 13% compared to Q3 2003 ($6.2 million). The product continues to show strong growth in the UK, the US and Japan. Shire receives royalties from GSK on worldwide sales of ZEFFIX, with the exception of Canada where a commercialization partnership with GSK exists. GSK's worldwide sales of ZEFFIX, for the three months to September 30, 2004, were $61 million, an increase of 17% compared to the three months ended September 30, 2003 ($52 million). OTHER Other royalties are primarily in respect of REMINYL, a product marketed worldwide by Johnson & Johnson (J&J), with the exception of the United Kingdom and Ireland where Shire has exclusive marketing rights. Sales of REMINYL, a treatment for mild to moderately severe dementia of the Alzheimer's type, are growing well in the Alzheimer's market. 4. Financial details Cost of product sales For the three months to September 30, 2004, our cost of product sales amounted to 14% of product sales (2003: 14%). Research and development (R&D) R&D expenditure increased from $47.3 million in Q3 2003 to $57.8 million in Q3 2004, due to the good progress of late stage Phase III trials. Shire's pipeline is now well advanced with six projects in late stage development or registration. Expressed as a percentage of total revenues, R&D expenditure was 17% for the three months to September 30, 2004 (2003: 17%). Selling, general and administrative (SG&A) SG&A expenses increased from $79.9 million in Q3 2003 to $104.7 million in Q3 2004, an increase of 31%, reflecting marketing expenses related to new product launches including FOSRENOL, XAGRID and ADDERALL XR (adult). As a percentage of product sales, these expenses were 37% (Q3 2003: 34%). 7 Depreciation and amortization The depreciation charge for the three months to September 30, 2004 was $5.3 million (2003: $8.6 million, including $5.5 million of tangible fixed asset write-downs). The underlying increase was primarily due to accelerated depreciation on tangible fixed assets as a result of the US site rationalization. Amortization charges were $15.0 million for the three months to September 30, 2004 (2003: $17.3 million). Included within the amortization charge for Q3 2004 is $5.5 million of intangible asset write-downs (2003: $11.2). Reorganization costs During the three months to September 30, 2004, $10.1 million of reorganization costs were incurred. The costs related to employee severance ($2.6 million), relocation ($3.6 million) and other costs associated with the reorganization ($3.9 million). Interest income and expense For the three months to September 30, 2004, the Company received interest income of $5.7 million (2003: $3.7 million). This increase was primarily due to rising interest rates. Interest expense increased from $2.0 million to $8.0 million. This increase is due to the write-off of costs capitalized at the time the convertible loan notes were issued. These costs were being amortized over the life of the notes but were written-off following the redemption of $370.1 million of the loan notes during the quarter. Other (expense)/income, net For the three months to September 30, 2004, other expense totaled $4.9 million (2003: expense of $0.8 million). The expense in Q3 2004 and Q3 2003 primarily related to the write-down of certain portfolio investments. Taxation The effective tax rate on continuing operations for the three months to September 30, 2004 was 28% (2003: 26%). The effective tax rate on continuing operations for the nine months to September 30, 2004 is 28% and it is anticipated that this effective rate on continuing operations will remain for the full year. At September 30, 2004, deferred tax assets of $86.7 million were recognized (December 31, 2003: $63.1 million). Equity in earnings/(losses) of equity method investees During the three months to September 30, 2004, we received $1.1 million representing our 50% share of earnings from our antiviral commercialization partnership with GSK in Canada (2003: $0.9 million). Included in the figure to September 30, 2003 was a loss of $0.9 million representing our 50% share of the losses of our commercialization partnership with Qualia Computing Inc., which was sold in December 2003. Discontinued operations The Company completed the disposal of its vaccines business to IDB on September 9, 2004. The vaccines business impacted net income with losses of $20.1 million for the 9 months to September 30, 2004 (2003: $21.6 million). The impact for the 3 months to September 30, 2004 was $nil (2003: $8.7 million). In addition to the loss for the 9 months to September 30, 2004 is the estimated loss on the disposal of the vaccines business of $44.2 million, recognized in Q2 2004, resulting principally from the write down of a $70 million loan to IDB. IDB is required to reimburse Shire in full for the net cost of operating the vaccines business from June 30, 2004. Consequently the cost of operations for the results of the vaccines business, from July 1, 2004 to September 9, 2004, have been offset by the IDB re-imbursement in the statement of operations. The transaction was treated as a discontinued operation in the previously stated results to June 30, 2004. In accordance with US GAAP disclosure requirements for discontinued operations, the 2003 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. The net loss from the discontinued operation, together with the loss on disposal recognized in Q2 2004, are shown as separate line items. 8 5. R&D pipeline ADDERALL XR The FDA has confirmed that Shire has met the terms of a Written Request to provide data from a clinical program examining the effect of ADDERALL XR in adolescent pediatric patients. This confirmation provides an additional six months market exclusivity for ADDERALL XR in the US, until April 11, 2005 under the Hatch-Waxman regulations. In August, Shire received FDA approval to market ADDERALL XR for adults. Shire continues dialogue with the FDA to assess whether it will pursue approval on higher formulation strengths. FOSRENOL On October 26, 2004 Shire received FDA approval to market FOSRENOL in 250mg and 500mg, in the US. Final launch preparations have now begun and we anticipate that the product will be available in pharmacies before the end of 2004. Following Swedish regulatory approval, Shire is pursuing further European approvals for FOSRENOL via the Mutual Recognition Process. It is anticipated that the product will be available in the first European market early in 2005. XAGRID XAGRID: A positive opinion issued by the EU regulatory agency on July 29, 2004 - the European Commission decision-making phase is underway. Phased launch throughout Europe will follow the issue of the EU license. Shire will commence a phased launch throughout Europe and expects the drug to be available for prescribing from the New Year. 9 US GAAP Results for the 9 months to September 30, 2004 Consolidated Balance Sheets (Unaudited) September 30, December 31, 2004 2003 $'000 $'000 ------------------- ------------------- ASSETS Current assets: Cash and cash equivalents 1,017,890 1,063,362 Restricted cash 30,901 46,474 Marketable securities 283,090 304,129 Accounts receivable, net 244,588 194,583 Inventories 45,892 43,128 Deferred tax asset 64,577 64,532 Prepaid expenses and other current assets 94,882 47,403 ----------- ----------- Current assets from continuing operations 1,781,820 1,763,611 Current assets from discontinued operations - 24,096 ----------- ----------- Total current assets 1,781,820 1,787,707 Investments 108,935 72,975 Property, plant and equipment, net 105,802 94,495 Goodwill, net 222,456 221,231 Other intangible assets, net 303,713 307,882 Deferred tax asset 22,165 - Other non-current assets 20,396 22,420 ----------- ----------- Long-term assets from continuing operations 783,467 719,003 Long-term assets from discontinued operations - 72,070 ----------- ----------- Total assets 2,565,287 2,578,780 ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt 5,907 290 Accounts payable and accrued expenses 275,851 205,779 Other current liabilities 148,607 37,127 ----------- ------------ Current liabilities from continuing operations 430,365 243,196 Current liabilities from discontinued operations - 10,479 ----------- ------------ Total current liabilities 430,365 253,675 Long-term debt, excluding current installments 116 376,017 Deferred tax liability - 1,400 Other long-term liabilities 26,870 23,783 ----------- ------------ Long-term liabilities from continuing operations 26,986 401,200 Long-term liabilities from discontinued operations - 779 ----------- ----------- Total liabilities 457,351 655,654 ----------- -----------
10 US GAAP Results for the 9 months to September 30, 2004 Consolidated Balance Sheets (continued) (Unaudited) September 30, December 31, 2004 2003 $'000 $'000 Shareholders' equity: Ordinary shares of 5p par value; 800,000,000 shares authorized; and 483,800,689 (December 31, 2003: 477,894,726) shares issued and outstanding 40,063 39,521 Exchangeable shares; 4,292,816 (December 31, 2003: 5,839,559) shares issued and outstanding 198,810 270,667 Additional paid-in capital 1,062,978 983,356 Accumulated other comprehensive income 78,794 79,007 Retained earnings 727,291 550,575 ----------- ----------- Total shareholders' equity 2,107,936 1,923,126 ----------- ----------- Total liabilities and shareholders' equity 2,565,287 2,578,780 ----------- -----------
The results for December 31, 2003 have been restated to reflect the disposal of the vaccines business that has been accounted for as a discontinued operation. 11 US GAAP Results for the 9 months to September 30, 2004 Unaudited Consolidated Statements of Operations 3 months to 3 months to 9 months to 9 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2003 $'000 $'000 $'000 $'000 ----------- ----------- ----------- ----------- Total revenues 344,909 283,378 989,469 884,312 Cost of product sales (38,933) (32,700) (100,010) (106,160) ----------- ----------- ----------- ----------- Gross profit 305,976 250,678 889,459 778,152 Operating expenses (192,922) (153,105) (551,961) (481,780) ----------- ----------- ----------- ----------- Operating income 113,054 97,573 337,498 296,372 ----------- ----------- ----------- ----------- Interest income 5,697 3,688 14,101 13,099 Interest expense (8,032) (1,984) (12,259) (7,311) Other (expense)/income, net (4,859) (788) 4,403 (10,561) ----------- ----------- ----------- ----------- Total other (expense)/income, net (7,194) 916 6,245 (4,773) ----------- ----------- ----------- ----------- Income from continuing operations before income taxes and equity in earnings/(losses) of equity method investees 105,860 98,489 343,743 291,599 Income taxes (29,960) (25,139) (97,188) (75,122) Equity in earnings/(losses) of equity method investees 1,140 (45) 3,358 (1,699) ----------- ----------- ----------- ----------- Income from continuing operations 77,040 73,305 249,913 214,778 Loss from discontinued operations - (8,686) (20,135) (21,608) Loss on disposition of discontinued operations - - (44,157) - ----------- ----------- ----------- ----------- Net income 77,040 64,619 185,621 193,170 ----------- ----------- ----------- ----------- Earnings per share: Basic Continuing operations 15.5c 14.8c 50.4c 43.0c Loss from discontinued operations - (1.7c) (4.1c) (4.3c) Loss on disposition of discontinued operations - - (8.9c) - ----------- ----------- ----------- ----------- Net income 15.5c 13.1c 37.4c 38.7c ----------- ----------- ----------- ----------- Diluted Continuing operations 15.3c 14.4c 49.2c 42.0c Loss from discontinued operations - (1.6c) (3.9c) (4.1c) Loss on disposition of discontinued operations - - (8.6c) - ----------- ----------- ----------- ----------- 15.3c 12.8c 36.7c 37.9c ----------- ----------- ----------- ----------- Weighted average number of shares: Basic 496,474,005 494,827,334 496,090,191 499,414,490 Diluted 509,777,052 515,826,822 515,070,302 520,530,702 ----------- ----------- ----------- -----------
The results for the three and nine months ended September 30, 2003 have been restated to reflect the disposal of the vaccines business, which has been accounted for as a discontinued operation. 12 US GAAP Results for the 9 months to September 30, 2004 Unaudited Consolidated Statements of Cash Flows 3 months to 3 months to 9 months to 9 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2003 $'000 $'000 $'000 $'000 ------------------ ------------- ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Income from continuing operations 77,040 73,305 249,913 214,778 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization - Cost of product sales 681 - 1,965 - Sales, general and administration 14,891 9,379 40,474 28,439 (Decrease)/increase in provision for doubtful accounts and discounts (2,132) (596) (2,561) 599 Increase in provision for rebates and returns 16,341 6,416 42,112 6,424 Stock option compensation - options 67 - 165 (24) Movement in deferred tax asset (16,378) 447 (23,610) (17,397) Equity in (earnings)/losses of equity method investees (1,140) 45 (3,358) 1,699 Write-down of long-term investments 5,483 - 13,899 8,472 Other movement on long-term investments - - (1,202) - Write-down of property, plant and equipment - 5,521 1,239 5,521 Write-down of intangible assets 5,456 11,150 5,456 14,437 Gain on sale of long term investments - - (14,805) - Loss/(gain) on sale of property, plant and equipment 86 (104) 8 (104) Loss on sale of assets held for resale 325 - 325 - Changes in operating assets and liabilities: (Increase)/decrease in accounts receivable (72,933) 21,463 (49,261) (35,993) Decrease/(increase) in inventory 3,890 (2,295) (2,864) (864) Decrease/(increase) in prepayments and other current assets 13,832 (5,895) 2,199 (10,328) (Increase)/decrease in other assets (10,132) 1,803 2,023 2,522 Increase/(decrease) in accounts and notes payable and other liabilities 39,811 (2,991) 47,322 (3,528) Increase/(decrease) in deferred revenue 263 - (288) - ----------- ---------- ---------- ---------- Net cash provided by operating activities 75,451 117,648 309,151 214,653 ----------- ---------- ---------- ----------
13 US GAAP Results for the 9 months to September 30, 2004 Unaudited Consolidated Statements of Cash Flows (continued) 3 months to 3 months to 9 months to 9 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2003 $'000 $'000 $'000 $'000 ----------------- ------------- ----------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Movements in short-term deposits (10,933) 1,567 21,039 102,940 Movements in restricted cash 17,343 4,846 15,573 933 Loans issued (23,820) - (23,820) - Purchase of long-term investments (206) - (5,720) (1,475) Purchase of property, plant and equipment (10,879) (8,900) (24,840) (35,270) Purchase of intangible assets (385) (10,608) (12,385) (36,108) Proceeds from sale of a business 30,000 - 30,000 - Proceeds from sale of long-term investments - - 26,733 - Proceeds from sale of property, plant and equipment 44 852 444 852 Proceeds from assets held for resale 3,630 - 11,289 - Distribution from long-term investments - - 1,202 - Dividend received from equity method investees 4,043 2,289 4,043 2,289 ----------- ----------- ----------- ----------- Net cash provided by/(used in) investing activities 8,837 (9,954) 43,558 34,161 ----------- ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of 2% convertible loan notes (370,109) - (370,109) (29,775) Repayment of long-term debt and capital leases (36) (63) (171) (167) Proceeds from issue of common stock, net 285 - 611 - Proceeds from exercise of options 2,180 127 7,531 2,381 Payments for the redemption of common stock - - - (52,392) ----------- ----------- ----------- ----------- Net cash (used in)/provided by financing activities (367,680) 64 (362,138) (79,953) Effect of foreign exchange rate changes on cash and cash equivalents from continuing operations 3,575 537 2,295 19,000 ----------- ----------- ----------- ----------- Net (decrease)/increase in cash and cash equivalents (279,817) 108,295 (7,134) 187,861 Cash flows used in discontinued operations (9,423) (8,925) (38,338) (22,769) ----------- ----------- ----------- ----------- Net (decrease)/increase in cash and cash equivalents (289,240) 99,370 (45,472) 165,092 Cash and cash equivalents at beginning of period 1,307,130 910,863 1,063,362 845,141 ----------- ----------- ---------- ---------- Cash and cash equivalents at end of period 1,017,890 1,010,233 1,017,890 1,010,233 ----------- ----------- ---------- ----------
The results for the three and nine months ended September 30, 2003 have been restated to reflect the disposal of the vaccines business, which has been accounted for as a discontinued operation. 14 US GAAP Results for the 9 months to September 30, 2004 Unaudited Consolidated Statements of Cash Flows (continued) Supplemental information associated with continuing operations: 3 months to 3 months to 9 months to 9 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2003 $'000 $'000 $'000 $'000 ------------------ ------------------- ----------------- ------------------- NON-CASH ACTIVITIES: Proceeds from sale of a business: Investment received 60,000 - 60,000 - Proceeds from sale of a business: Promissory note received 30,000 - 30,000 - ----------- ----------- ----------- -----------
15 US GAAP Results for the 9 months to September 30, 2004 Selected 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 reporting segments of the business, based on the way in which the business is managed and controlled. The Company's principal reporting segments are by operational function, each being managed and monitored separately and serving different markets. The Company evaluates performance based on operating income. The Company does not have inter-segment transactions. The US segment represents our commercial operations in the United States and the International segment represents the commercial operations in the Rest of the World. The R&D segment represents all direct research and development costs incurred by the Company throughout the world. Corporate represents the royalty business that is managed at the corporate office and certain costs that are managed at the corporate office and not allocated to the other segments. The results for the 3 and 9 months to September 30, 2003 have been restated to reflect the disposal of the vaccines business that has been accounted for as a discontinued operation. 3 months to September 30, 2004 US International Corporate R&D Total $'000 $'000 $'000 $'000 $'000 ------- -------- -------- ------ -------- Product sales 237,112 46,611 - - 283,723 Licensing and development 2,163 657 - - 2,820 Royalties - 2,287 53,912 - 56,199 Other revenues 1,198 969 - - 2,167 ------- -------- -------- ------ -------- Total revenues 240,473 50,524 53,912 - 344,909 ------- -------- -------- ------ -------- Cost of product sales 22,274 16,659 - - 38,933 Research and development - - - 57,759 57,759 Selling, general and administrative 69,397 18,947 16,411 - 104,755 Depreciation and amortization (1) 11,496 7,279 1,572 - 20,347 Reorganization costs 6,501 276 1,183 2,101 10,061 ------- -------- -------- ------ -------- Total operating expenses 109,668 43,161 19,166 59,860 231,855 ------- -------- -------- ------ -------- Operating income/(loss) 130,805 7,363 34,746 (59,860) 113,054 ------- -------- -------- ------ -------- 3 months to September 30, 2003 US International Corporate R&D Total $'000 $'000 $'000 $'000 $'000 ------- -------- -------- ------ -------- Product sales 190,530 41,752 - - 232,282 Licensing and development 1,355 - - - 1,355 Royalties - 2,282 47,453 - 49,735 Other revenues 6 - - - 6 ------- -------- -------- ------ -------- Total revenues 191,891 44,034 47,453 - 283,378 ------- -------- -------- ------ -------- Cost of product sales 18,401 14,299 - - 32,700 Research and development - - - 47,277 47,277 Selling, general and administrative 49,440 18,388 12,081 - 79,909 Depreciation and amortization (1) 9,083 16,102 734 - 25,919 ------- -------- -------- ------ -------- Total operating expenses 76,924 48,789 12,815 47,277 185,805 ------- -------- -------- ------ -------- Operating income/(loss) 114,967 (4,755) 34,638 (47,277) 97,573 ------- -------- -------- ------ --------
16 US GAAP Results for the 9 months to September 30, 2004 Selected Notes to the Unaudited US GAAP Financial Statements (continued) 9 months to September 30, 2004 US International Corporate R&D Total $'000 $'000 $'000 $'000 $'000 ------- ------------- ---------- -------- --------- Product sales 670,412 133,185 - - 803,597 Licensing and development 8,442 1,775 - - 10,217 Royalties - 7,922 162,079 - 170,001 Other revenues 2,637 3,017 - - 5,654 ------- -------- -------- ------- ------- Total revenues 681,491 145,899 162,079 - 989,469 ------- -------- -------- ------- ------- Cost of product sales 64,135 35,875 - - 100,010 Research and development - - - 143,760 143,760 Selling, general and administrative 214,013 68,752 47,465 - 330,230 Depreciation and amortization (1) 28,605 12,689 4,636 - 45,930 Reorganization costs 18,925 2,972 4,083 6,061 32,041 ------- -------- -------- ------- ------- Total operating expenses 325,678 120,288 56,184 149,821 651,971 ------- -------- -------- ------- ------- Operating income/(loss) 355,813 25,611 105,895 (149,821) 337,498 ------- -------- -------- ------- ------- 9 months to September 30, 2003 US International Corporate R&D Total $'000 $'000 $'000 $'000 $'000 ------- -------- -------- ------- ------- Product sales 620,100 112,414 - - 732,514 Licensing and development 2,451 - - - 2,451 Royalties 14 7,206 142,114 - 149,334 Other revenues 13 - - - 13 ------- -------- -------- ------- ------- Total revenues 622,578 119,620 142,114 - 884,312 ------- -------- -------- ------- ------- Cost of product sales 71,660 34,500 - - 106,160 Research and development - - - 142,050 142,050 Selling, general and administrative 185,066 59,662 46,605 - 291,333 Depreciation and amortization (1) 25,136 20,846 2,415 - 48,397 ------- -------- -------- ------- ------- Total operating expenses 281,862 115,008 49,020 142,050 587,940 ------- -------- -------- ------- ------- Operating income/(loss) 340,716 4,612 93,094 (142,050) 296,372 ------- -------- -------- ------- -------
(1) Included in depreciation and amortization are the write-downs of intangible assets. Depreciation from manufacturing plant is included within cost of product sales. Depreciation and amortization relating to R&D assets are included within US and International segments. 17 US GAAP Results for the 9 months to September 30, 2004 Selected Notes to the Unaudited US GAAP Financial Statements (continued) (2) Earnings per share Basic EPS is based upon the net income available to ordinary shareholders divided by the weighted-average number of ordinary shares outstanding during the period. Diluted EPS is based upon net income available to ordinary shareholders divided by the weighted-average number of ordinary shares outstanding during the period and adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the period. Stock options to purchase approximately 9.8 million and 17.6 million ordinary shares for the three months and nine months to September 30, 2004 respectively, were not dilutive and were therefore excluded from the computation of diluted earnings per share (2003: 17.5 million and 17.7 million respectively). Warrants to purchase approximately 1.4 million ordinary shares for the three months to September 30, 2004 and for the three and nine months to September 30, 2003 were not dilutive and were therefore excluded from the computation of diluted earnings per share. 3 months to 3 months to 9 months to 9 months to September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003 No. of shares No. of shares No. No. of shares No. of shares ------------------ ------------------- ------------------ ------------------ Weighted average number of shares: Basic 496,474,005 494,827,334 496,090,191 499,414,490 Effect of dilutive shares: Stock options 2,474,699 2,628,923 3,086,390 2,043,820 Warrants - - 55,579 - Convertible debt 10,828,348 18,370,565 15,838,142 19,072,392 ----------------- ----------------- ----------------- ----------------- Diluted 509,777,052 515,826,822 515,070,302 520,530,702 ----------------- ----------------- ----------------- -----------------
18 US GAAP Results for the 9 months to September 30, 2004 Selected Notes to the Unaudited US GAAP Financial Statements (continued) Reconciliation of reported EPS: 3 months to 3 months to 9 months to 9 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2003 $'000 $'000 $'000 $'000 ----------------- ---------------- ----------------- ---------------- Net income for basic EPS 77,040 64,619 185,621 193,170 Interest charged on convertible debt, net of tax 766 1,200 3,432 3,923 ----------------- ----------------- ----------------- ----------------- Net income for diluted EPS 77,806 65,819 189,053 197,093 ----------------- ----------------- ----------------- ----------------- Income from continuing operations 15.5c 14.8c 50.4c 43.0c Loss from discontinued operations - (1.7c) (4.1c) (4.3c) Loss on disposal of discontinued - - (8.9c) - operations ----------------- ----------------- ------------------ ----------------- Basic EPS 15.5c 13.1c 37.4c 38.7c ----------------- ----------------- ------------------ ----------------- Income from continuing operations 15.3c 14.4c 49.2c 42.0c Loss from discontinued operations - (1.6c) (3.9c) (4.1c) Loss on disposal of discontinued - - (8.6c) - operations ----------------- ----------------- ------------------ ----------------- Diluted EPS 15.3c 12.8c 36.7c 37.9c ----------------- ----------------- ------------------ ----------------- (3) Analysis of revenues 3 months to 3 months to 3 months to 3 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2004 $'000 $'000 % change % of total ---------------- ---------------- ---------------- ---------------- Net product sales: ADDERALL XR 140,051 121,255 16% 41% AGRYLIN 49,721 25,907 92% 14% PENTASA 33,025 19,838 66% 10% CARBATROL 11,225 11,619 -3% 3% Others 49,701 53,663 -7% 14% ---------------- ---------------- ---------------- ---------------- 283,723 232,282 22% 82% ---------------- ---------------- ---------------- ---------------- Royalty income: 3TC 37,871 35,300 7% 11% ZEFFIX 7,034 6,217 13% 2% Others 11,294 8,218 37% 3% ---------------- ---------------- ---------------- ---------------- 56,199 49,735 13% 16% ---------------- ---------------- ---------------- ---------------- Licensing and development 2,820 1,355 108% 1% Other 2,167 6 n/a 1% ---------------- ---------------- ---------------- ---------------- Total revenues 344,909 283,378 22% 100% ---------------- ---------------- ---------------- ----------------
19 US GAAP Results for the 9 months to September 30, 2004 Selected Notes to the Unaudited US GAAP Financial Statements (continued) 9 months to 9 months to 9 months to 9 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2004 $'000 $'000 % change % of total ---------------- ---------------- ---------------- ---------------- Net product sales: ADDERALL XR 422,997 338,847 25% 43% AGRYLIN 121,995 102,132 19% 12% PENTASA 86,705 74,311 17% 9% CARBATROL 38,873 34,955 11% 4% Others 133,027 182,269 -27% 13% ---------------- ---------------- ---------------- ---------------- 803,597 732,514 10% 81% ---------------- ---------------- ---------------- ---------------- Royalty income: 3TC 115,673 106,979 8% 12% ZEFFIX 20,174 18,337 10% 2% Others 34,154 24,018 42% 3% ---------------- ---------------- ---------------- ---------------- 170,001 149,334 14% 17% ---------------- ---------------- ---------------- ---------------- Licensing and development 10,217 2,451 317% 1% Other 5,654 13 N/a 1% ---------------- ---------------- ---------------- ---------------- Total revenues 989,469 884,312 12% 100% ---------------- ---------------- ---------------- ----------------
20 Non-GAAP measures for the 9 months to September 30, 2004 Reconciliation of reported EPS: 3 months to 3 months to 9 months to 9 months to September 30, September 30, September 30, September 30, 2004 2003 2004 2003 $'000 $'000 $'000 $'000 --------------- --------------- --------------- --------------- Net income for diluted EPS 77,806 65,819 189,053 197,093 Reorganization costs, net of tax 7,244 - 23,069 - Gain on sale of investment, net of tax - - (10,660) - Discontinued operations - 8,686 64,292 21,608 --------------- --------------- --------------- --------------- Net income for diluted EPS excluding reorganization costs, gain on sale of investment and the impact of the discontinued operation 85,050 74,505 265,754 218,701 --------------- --------------- --------------- --------------- Diluted EPS (as reported) 15.3c 12.8c 36.7c 37.9c Add back: Reorganization costs, net of tax 1.4c - 4.5c - Discontinued operations - 1.6c 12.5c 4.1c Gain on sale of investment, net of tax - - (2.1c) - --------------- --------------- --------------- --------------- Diluted EPS excluding reorganization costs, gain on sale of investment and the impact of the discontinued operation 16.7c 14.4c 51.6c 42.0c --------------- --------------- --------------- ---------------
21 UK GAAP Results for the 9 months ended 30 September 2004 Unaudited and Unreviewed Consolidated Profit and Loss Account 3 months to 3 months to 9 months to 9 months to 30 September 30 September 30 September 30 September 2004 2003 2004 2003 (pound)'000 (pound)'000 (pound)'000 (pound)'000 --------------- --------------- --------------- --------------- Turnover: group and share of joint venture 191,956 175,753 549,357 553,472 Less: share of joint venture's turnover - (790) - (2,326) --------------- --------------- --------------- --------------- Group turnover on continuing operations 191,956 174,963 549,357 551,146 Discontinued operations - 5,293 2,169 6,212 --------------- --------------- --------------- --------------- Group turnover 191,956 180,256 551,526 557,358 Cost of sales (21,470) (24,213) (61,206) (73,709) --------------- --------------- --------------- --------------- Gross profit 170,486 156,043 490,320 483,649 Net operating expenses (131,209) (123,663) (371,389) (397,677) --------------- --------------- --------------- --------------- Operating profit: 39,277 32,380 118,931 85,972 -------------------------------------------------------------------------------------------------------------------------- Continuing operations 39,277 35,818 129,719 98,393 Discontinued operations - (3,438) (10,788) (12,421) --------------- --------------- --------------- --------------- 39,277 32,380 118,931 85,972 -------------------------------------------------------------------------------------------------------------------------- Share of joint venture's operating loss - (580) - (2,571) Loss on disposal of business - - (23,191) - Finance charges, net (774) 380 2,556 3,557 --------------- --------------- --------------- --------------- Profit on ordinary activities before taxation 38,503 32,180 98,296 86,958 Tax on profit on ordinary activities (16,540) (15,514) (53,589) (46,329) --------------- --------------- --------------- --------------- Profit on ordinary activities after taxation 21,963 16,666 44,707 40,629 Dividends (4) - (4,967) - --------------- --------------- --------------- --------------- Retained profit for the period transferred to reserves 21,959 16,666 39,740 40,629 --------------- --------------- --------------- --------------- Earnings per share Basic Net income 4.4p 3.4p 8.0p 8.1p --------------- --------------- --------------- --------------- Diluted Net income 4.4p 3.4p 8.0p 8.1p --------------- --------------- --------------- ---------------
22 UK GAAP Results for the 9 months ended 30 September 2004 Unaudited and Unreviewed Consolidated Statement of Total Recognised Gains and Losses 3 months to 3 months to 9 months to 9 months to 30 September 30 September 30 September 30 September 2004 2003 2004 2003 (pound)'000 (pound)'000 (pound)'000 (pound)'000 --------------- --------------- --------------- --------------- Profit for the period transferred to reserves 21,959 16,666 39,740 40,629 Translation of the financial statements of overseas subsidiaries 10,173 (4,365) (6,849) 4,469 --------------- --------------- --------------- --------------- Total recognised gains and losses for the period 32,132 12,301 32,891 45,098 --------------- --------------- --------------- ---------------
23 UK GAAP Results for the 9 months to 30 September 2004 Unaudited and Unreviewed Consolidated Balance Sheet (Audited) 30 September 31 December 2004 2003 (pound)'000 (pound) '000 --------------- --------------- Fixed assets Intangible assets - intellectual property 166,847 171,548 Intangible assets - goodwill 1,305,644 1,365,583 Tangible assets 58,467 97,054 Fixed asset investments 56,584 33,269 --------------- --------------- 1,587,542 1,667,454 --------------- --------------- Current assets Stocks 25,361 25,282 Debtors - due within one year excluding deferred tax 188,899 141,046 - due within one year - deferred tax 35,686 36,049 - due after more than one year excluding deferred tax 11,271 9,224 - due after more than one year - deferred tax 12,248 - Current asset investments 156,438 169,895 Cash at bank and in hand 580,901 621,670 --------------- --------------- 1,010,804 1,003,166 Creditors: amounts falling due within one year (237,564) (141,722) Net current assets 773,240 861,444 --------------- --------------- Total assets less current liabilities 2,360,782 2,528,898 Creditors: amounts falling due after more than one year Convertible debt (64) (202,659) Deferred tax - (782) Other creditors (14,848) (16,957) --------------- --------------- (14,912) (220,398) --------------- --------------- Net assets 2,345,870 2,308,500 --------------- --------------- Capital and reserves Called-up share capital 24,191 23,895 Share premium 3,273,315 3,218,695 Exchangeable shares 139,986 190,425 Capital reserve 3,135 3,135 Other reserves 24,247 24,247 Profit and loss account deficit (1,119,004) (1,151,897) --------------- --------------- Equity shareholders' funds 2,345,870 2,308,500 --------------- ---------------
24 UK GAAP Results for the 9 months ended 30 September 2004 Selected Notes to the Unaudited and Unreviewed UK GAAP Financial Statements (1) EPS Basic EPS is based upon the profit on ordinary activities after taxation divided by the weighted-average number of ordinary shares outstanding during the period. Diluted EPS is based upon the profit on ordinary activities after taxation divided by the weighted-average number of ordinary shares outstanding during the period and adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the period. Stock options to purchase approximately 9.8 million and 17.6 million ordinary shares for the three months and nine months ended 30 September 2004 respectively, were not dilutive and were therefore excluded from the computation of diluted earnings per share (2003: 17.5 million and 17.7 million respectively). The warrants to purchase approximately 1.4 million ordinary shares for the three months ended 30 September 2004 and for the three and nine months ended 30 September 2003 were not dilutive and were therefore excluded from the computation of diluted earnings per share. The convertible loan note is excluded from the calculation of weighted average number of shares for fully diluted earnings per share for the nine months ended 30 September 2004 and for the three and nine months ended 30 September 2003 as they were not dilutive. 3 months to 3 months to 9 months to 9 months to 30 September 30 September 30 September 30 September 2004 2003 2004 2003 No. of shares No. of shares No. of shares No. of shares ------------- ------------- ------------- -------------- Weighted average number of shares: Basic 496,474,005 494,827,334 496,090,191 499,414,490 Effect of dilutive shares: Stock options 2,474,699 2,628,923 3,086,390 2,043,820 Warrants - - 55,579 - Convertible debt 10,828,348 - - - ----------- ----------- ----------- ------------ Diluted 509,777,052 497,456,257 499,232,160 501,458,310 ----------- ----------- ----------- ------------ Reconciliation of reported EPS: 3 months to 3 months to 9 months to 9 months to 30 September 30 September 30 September 30 September 2004 2003 2004 2003 (pound) '000 (pound) '000 (pound) '000 (pound) '000 ------------- ------------- ------------- -------------- Profit for basic EPS 21,959 16,666 39,740 40,629 Interest charged on convertible debt, net of tax 418 - - - ----------- ----------- ----------- ------------ Profit for diluted EPS 22,377 16,666 39,740 40,629 ----------- ----------- ----------- ------------
25 UK GAAP Results for the 9 months ended 30 September 2004 Selected Notes to the Unaudited and Unreviewed UK GAAP Financial Statements (continued) (3) Basis of preparation The Group has applied consistent accounting policies throughout both periods. The results for the three and nine months ended 30 September 2004 have not been audited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information relating to the year ended 31 December 2003 has been extracted from the full report and accounts which have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified.