EX-99.1 3 shire8k073103-991.txt PRESS RELEASE 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 BST 7am EDT 31 July 2003 Shire announces strong second quarter results and outcome of strategic review Basingstoke, UK - 31 July 2003 - Shire Pharmaceuticals Group plc (LSE: SHP, NASDAQ: SHPGY, TSX: SHQ) announces results for the second quarter ended 30 June 2003. Second Quarter 2003 Unaudited US GAAP Results Highlights
------------------------------------------------------------ ----------------- ------------------ ---------------- Q2 2003 Q2 2002 % Growth $M $M ------------------------------------------------------------ ----------------- ------------------ ---------------- ------------------------------------------------------------ ----------------- ------------------ ---------------- Total revenues 299.0 248.1 +21% Operating income 94.2 75.1 +25% Income from continuing operations before income taxes and equity in (losses) / earnings of equity method investees 92.1 77.2 +19% Net income 65.5 59.3 +10% Diluted Earnings Per Share (EPS): Per common share 12.8c 11.6c +10% Per American Depository Share (ADS) 38.4c 34.8c +10% ------------------------------------------------------------ ----------------- ------------------ ----------------
(1) The 2002 US GAAP results have been restated to reflect the disposal of our `Over-The-Counter' (OTC) business, which has been accounted for as a discontinued operation. All 2002 figures down to net income from continuing operations exclude the OTC business, while 2002 net income and EPS figures include the OTC results. (2) Average exchange rates for Q2 2003 and 2002 were $1.62: (pound)1.00 and $1.47: (pound)1.00 respectively. Matthew Emmens, Chief Executive, said: "Strong financial performance continued in the second quarter. "Since joining Shire in March, I have led a detailed strategic review. Shire has robust franchises in its core areas and has a successful track record in marketing to specialist physicians. With that in mind, we have now made some important decisions that will shape our future. "Our goal is to become the leading company in meeting the needs of the specialist physician. With the right products, small sales forces can deliver impressive sales. This is our core competency. By replicating this success in other `specialty arms' we believe we can achieve our growth aspirations. "This commercial platform has implications for both our R&D and business development efforts. Our R&D focus will shift to fewer, later stage (lower risk) projects and center on areas where we have commercial presence. Business development efforts will intensify and we will use our considerable cash reserves to enhance our product line and specialty reach. "Several immediate actions will be taken as a result of the strategic review. We intend to spin out the vaccines business as an independent company. Our early stage research (lead optimisation) unit will be closed. As a result of exiting oncology and anti-infectives research, we will seek to out-license TROXATYL and partner SPD754. Furthermore, we will significantly enhance our M&A effort - targeting acquisitions in the US, including larger scale transactions. In addition to these actions, I have initiated projects that will better integrate, coordinate and rationalize our global business activities. 1 "Concentrating our business in a more focused way will create a stronger Shire and position us for continued growth. Our strategy is aimed at achieving growth, on average, in the mid-teens range beyond 2003." New R&D focus - later stage, lower risk The exit from the Vaccines business will remove several promising but early stage projects from the portfolio. Shire will increasingly focus investment in R&D onto lower risk, later stage opportunities which can be fully funded and which will have the highest probability of reaching the market in the shortest time. Shire's short-term growth will come from the launch of products from its own pipeline, from M&A and from in-licensing. The early stage research lead optimisation research group, based in Laval Canada will be closed down with the loss of approximately 120 jobs. A re-structuring provision of approximately $12 million will be booked mainly in Q3 2003. Re-structuring costs, net of savings, for the full year 2003 are estimated to be around $7 million, with the major element being non-cash asset write-downs. Ongoing savings from 2004 are estimated to be approximately $15 million per annum. Oncology and anti-infectives will no longer be therapeutic areas of focus in R&D for the Company. Shire will seek to out-license TROXATYL (for the treatment of acute myeloid leukaemia and pancreatic cancer). Shire will continue to develop the anti-infectives project SPD754 (for HIV treatment) while seeking partnership opportunities to more effectively leverage this asset. Vaccines Shire intends to spin off the vaccines business, given its earlier stage of development and the different dynamics in the vaccine market. Shire anticipates concluding this process by the end of H1 2004. In the first six months of 2003, this business had an operating loss of $14.5 million including R&D expenditure of $7.8 million. This is currently a Canadian commercial business, which comprises the NEISVAC-C vaccine for meningitis C and the FLUVIRAL flu vaccine, which is also in development for markets outside Canada (SPD707). The R&D portfolio comprises SPD701 for influenza, SPD703 for pneumonia, SPD704 for meningitis and SPD705 for opportunistic infections all in phase I. Second Quarter 2003 and Recent Events Highlights o Q2 2003 revenues up 21% to $299.0 million, diluted earnings per ADS up 10% to 38.4c. o ADDERALL XR(R) sales up 35% on the same period last year, totalling $102.4 million; the ADDERALL(R) brand has remained the leading ADHD brand in the US with 26%(6) prescription share in Q2 2003. o Strong growth in 3TC sales and positive foreign exchange movements (up 22% to $37.5 million) were major contributors to an overall increase in royalties in Q2 2003, up 28% to $51.8 million. o Shire received positive Committee for Proprietary Medicinal Products (CPMP) opinion for XAGRID(R) in Europe. o Continued dialogue with the US Food and Drug Administration (FDA) with regard to FOSRENOL(R); pre-approval data remains on course for submission in the US and EU. o Rights acquired to five products from DRAXIS Health for the Canadian market in July 2003. New Non Executive Director Shire has announced the appointment of Robin Buchanan as Non Executive Board Director. Mr Buchanan is the Senior Partner of the London office of business consultants, Bain & Company 2 and a member of Bain's worldwide management committee; he is a British citizen and lives in the UK. Future prospects Shire remains comfortable with previous FY 2003 guidance, provided at Q1 2003 results, of mid to high teens revenue growth, operating margins of circa 30% and high single digit to low double digit EPS growth. This excludes a potential 3 cents negative impact in relation to the closure of the Lead Optimisation business. - Ends - 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) Clea Rosenfeld - Investor Relations +44 1256 894 160 Jessica Mann - Media +1 859 669 8905 US & Canada Gordon Ngan - Investor Relations +1 859 669 8918 Michele Roy - Media +1 450 978 7938 Notes to editors Shire Pharmaceuticals Group plc Shire Pharmaceuticals Group plc (Shire) is a global specialty pharmaceutical company with a strategic focus on meeting the needs of the specialist physician and currently has a range of projects and products in the areas of central nervous system (CNS), gastrointestinal (GI), and renal. 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 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, manufacturing and commercialisation, the impact of competitive products, including, but not limited to, the impact 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 date of lanthanum carbonate (FOSRENOL(R)) and METHYPATCH(R), 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. The following are trade marks of Shire or companies within the Shire Group, which are the subject of trade mark registrations in certain territories. ADDERALL XR(R) (mixed amphetamine salts) ADDERALL(R) (mixed amphetamine salts) AGRYLIN(R) (anagrelide hydrochloride) CARBATROL(R) (carbamazepine) FLUVIRAL(R) S/F (split-virion influenza vaccine) FOSRENOL(R) (lanthanum carbonate) METHYPATCH(R) (methylphenidate) PROAMATINE(R) (midodrine hydrochloride) TROXATYL(R) (troxacitabine) XAGRID(R) (anagrelide hydrochloride) The following are trade marks of third parties. 3TC (lamivudine) (trade mark of GlaxoSmithKline (GSK)) NEISVAC-C (trade mark of Baxter International Inc.) PENTASA (mesalamine) (trade mark of Ferring) REMINYL (galantamine hydrobromide) (trade mark of Johnson & Johnson) ZEFFIX (lamivudine) (trade mark of GSK) Data sources. (1) IMS Prescription Data - ADHD market (2) IMS Prescription Data - extended release carbamazepine market (3) IMS Prescription Data - AGRYLIN, Hydrea, generic hydroxyurea market (4) IMS Prescription Data - mesalamine / olsalazine market (5) IMS Prescription Data - PROAMATINE and fludrocortisone acetate market (6) IMS Prescription Data - Product specific (7) GSK 4 OVERVIEW OF US GAAP FINANCIAL RESULTS Introduction The results for the second quarter ended 30 June 2002 have been restated to reflect the disposal of our OTC 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, 2002 figures from revenues down to income from continuing operations exclude the results of the OTC business, while 2002 net income and earnings per share include the results of the OTC business. Revenues from continuing operations for the second quarter ended 30 June 2003 increased by 21% to $299.0 million (Q2 2002: $248.1 million). The Company recorded net income of $65.5 million, an increase of 10% compared to the three months ended 30 June 2002. Diluted earnings per common share were 12.8 cents, or 38.4 cents per ADS, an increase of 10% over Q2 2002. Operations generated cash inflows from operating activities of $1.8 million during the second quarter of 2003. This was primarily due to an increase of $55.7 million in accounts receivable resulting from the phasing of wholesaler buying and a decrease of other liabilities of $16.9 million as a result of periodic tax payments. The Company initiated a share re-purchase programme during the quarter, buying back 7.6 million common shares at a total cost of $52.4 million. Cash, cash equivalents and marketable securities at 30 June 2003 amounted to $1,185.2 million (31 December 2002: $1,213.8 million). After deduction of borrowings, this translates to a net cash position of $806.5 million (31 December 2002: $805.7 million). Where appropriate, this may be used to further enhance our portfolio through product and project acquisitions. Product sales For the quarter ended 30 June 2003, product sales increased $39.6 million to $246.5 million (Q2 2002: $206.9 million) and represented 82% of total revenues. During the early part of Q2 2003, Shire experienced aggressive wholesaler de-stocking, significantly beyond the stock-build of $15 million announced in Q1 2003. This significant de-stocking below normal levels was corrected later in the quarter following the initiation of a wholesaler promotional campaign intended to normalise inventory levels. The Company estimates that Q2 2003 product revenues approximated prescription-based demand for the quarter except for sales of ADDERALL ($5 million) and PROAMATINE ($5 million). ADDERALL benefited from a promotional campaign intended to decrease inventories of short-dated product, while PROAMATINE benefited from increased sales due to the timing of order flow. The combined amount of Q2 revenues in excess of demand was approximately $10 million which, in combination with the wholesaler stocking reported in Q1 2003, is expected to reverse prior to year end. Second Quarter 2003 Product Highlights
------------------------------ ------------------- ------------------- ------------------ --------------------------- Sales US Rx(6) Q2 2003(6) Product Sales Growth Growth US Market Share $M % % % ------------------------------ ------------------- ------------------- ------------------ --------------------------- ------------------------------ ------------------- ------------------- ------------------ --------------------------- ADDERALL XR 102.4 + 35% + 62% 23%(1) ADDERALL 19.2 - 32% - 59% 3%(1) ------------------------------ ------------------- ------------------- ------------------ --------------------------- ------------------------------ ------------------- ------------------- ------------------ --------------------------- Total ADDERALL 121.6 + 17% + 16% 26%(1) ============================== =================== =================== ================== =========================== AGRYLIN 36.6 + 24% + 8% 27%(3) PENTASA 24.8 + 15% - 3% 11%(4) PROAMATINE 18.3 + 68% + 12% 27%(5) CARBATROL 13.9 + 11% + 1% 38%(2) ------------------------------ ------------------- ------------------- ------------------ ---------------------------
5 CNS Franchise ADDERALL XR and ADDERALL Total ADDERALL franchise sales in Q2 2003 were $121.6 million, an increase of 17% over Q2 2002 ($104.1 million). Over the same period, total ADDERALL franchise prescriptions grew by approximately 16%(6), despite the entry of generic versions of ADDERALL last year, as well as increased competition within the ADHD market overall. Sales of ADDERALL XR in Q2 2003 were $102.4 million, an increase of 35% over Q2 2002 ($75.8 million). ADDERALL XR prescriptions increased 62%(6) between periods driven by successful conversion of ADDERALL business to the improved ADDERALL XR formulation and overall market growth. The difference between reported growth and prescription growth is largely due to a strong Q2 2002 that included launch stock related to new strengths of ADDERALL XR. Revenues of ADDERALL XR in Q2 2003 were broadly in line with underlying prescription demand. Increased competitor activity has had a positive impact on the US ADHD market growth, which reached 18%(6) for Q2 2003 over the prior year period. Notwithstanding this increase in competition, ADHD physicians have continued to recognise the strengths of the ADDERALL brand, which maintained its leading position in the ADHD market with a 26%(6) prescription share during Q2 2003. Sales of ADDERALL were $19.2 million in Q2 2003, down 32% from Q2 2002 ($28.3 million). Overall prescriptions were down approximately 59%(6) between periods. In Q2 2003, Shire offered wholesalers short-dated product on a non-returnable basis. The Company estimates that this offer increased ADDERALL revenues by $5 million over normal Q2 wholesaler buying patterns. CARBATROL CARBATROL sales increased by $1.3 million or 11%, year on year, versus a 1%(6) increase in prescriptions. Q2 2003 sales benefited from a price increase implemented in April 2003. The Company believes that wholesaler inventory levels are fully adjusted to reflect current demand levels. Following recommencement of promotional efforts in Q1 2003, Shire has grown CARBATROL's share of the extended release carbamazepine market from 36%(6) in Q2 2002 to 38%(6) in Q2 2003. Total prescription volume for carbamazepine products has remained stable between Q1 2003 and Q2 2003, and Shire will continue to monitor progress in this area. The FDA website indicates that a generic company has filed an abbreviated new drug application for CARBATROL 300mg. Shire has no further information at this time. Other Franchises AGRYLIN AGRYLIN sales growth of 24% in Q2 2003 was supported by 8%(6) US prescription growth, and strong growth in sales from outside the US. While Q2 2003 revenues were in line with underlying prescription demand, wholesaler inventories remain somewhat above normal levels and the Company expects wholesaler de-stocking to adversely impact sales trends in Q3 or Q4 2003. AGRYLIN remains the only product specifically approved for essential thrombocythemia in the US. The anticipated pediatric extension for AGRYLIN could extend its orphan drug exclusivity from March 2004 to September 2004, after which time it is expected to face generic competition. The expected launch of XAGRID (the trade name of AGRYLIN used in the EU) will continue to drive growth from markets outside the US. 6 PENTASA The 15% growth in PENTASA sales revenue compared to Q2 2002, versus a 3%(6) fall in prescription demand for the same period, is largely related to wholesaler stocking movements in Q2 2002 and the favourable impact of an April 2003 price increase. While Q2 2003 revenues were in line with underlying prescription demand, wholesaler inventories remain somewhat above normal levels and the Company expects wholesaler de-stocking to adversely impact sales trends in Q3 or Q4 2003. Although its formal indication is for mild to moderately active ulcerative colitis, PENTASA continues to see the majority of its use in Crohn's disease. PROAMATINE Supported by 12%(6) prescription growth, the remainder of PROAMATINE's total 68% growth during the quarter is attributable to wholesaler buying patterns. The Company estimates that wholesalers stocked approximately $5 million of product in excess of underlying prescription demand. The impact of wholesaler de-stocking prior to year-end and/or the onset of generic competition could adversely impact comparative sales trends in Q3 or Q4 2003. While PROAMATINE grew its share of the PROAMATINE and fludrocortisone acetate market from 24%(6) in Q2 2002 to 27%(6) in Q2 2003, its Orphan Drug Status will expire in September 2003, allowing the entry of potential generic competition. Royalties Royalty revenue increased 28% to $51.8 million for Q2 2003 (Q2 2002: $40.5 million) as a result of strong sales and positive foreign exchange movements. Second Quarter 2003 Royalty Highlights
----------------------- -------------- ----------------------- ------------------- ------------------------------------ Product Royalties Royalty CER(7) Worldwide in-market sales by to Shire $M growth growth licensee in Q2 2003(7) % % $M ----------------------- -------------- ----------------------- ------------------- ------------------------------------ ----------------------- -------------- ----------------------- ------------------- ------------------------------------ 3TC 37.5 + 22% + 10% 281 ----------------------- -------------- ----------------------- ------------------- ------------------------------------ ----------------------- -------------- ----------------------- ------------------- ------------------------------------ ZEFFIX 5.7 + 27% + 15% 52 ----------------------- -------------- ----------------------- ------------------- ------------------------------------ ----------------------- -------------- ----------------------- ------------------- ------------------------------------ Other 8.6 + 62% n/a n/a ----------------------- -------------- ----------------------- ------------------- ------------------------------------
For the products 3TC and ZEFFIX, treatments for HIV infection 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. The nucleoside analogue market for HIV has continued to exhibit solid double-digit growth in recent months. This growth is supported by increases in the number of individuals living with HIV, as well as reduced mortality due to more effective treatment regimens. With the recent introduction of only the second antiviral agent in the US for hepatitis B infection, market dynamics in the US are expected to change. This introduction is not expected to have a dramatic near term impact on royalties, as the majority of ZEFFIX sales continue to be made in Asia-Pacific markets. 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. REMINYL is the newest treatment available for the treatment of mild to moderately severe dementia of the Alzheimer's type. It is currently growing well in the Alzheimer's market, while progress continues for other indications and formulations. Cost of product sales 7 For the second quarter ended 30 June 2003, cost of product sales amounted to 16% of product sales (Q2 2002: 14%). The increase over the prior year period is primarily driven by the sales mix in the quarter. The cost of product sales is 15% of product sales for the six months ended 30 June 2003 (2002: 14%). Research and development (R&D) R&D expenditure increased to $50.1 million in Q2 2003 from $46.8 million in Q2 2002, representing an increase of 7%. Expressed as a percentage of total revenues, R&D expenditure for the quarter was 17% (Q2 2002: 19%). Selling, general and administrative (SG&A) SG&A expenses increased from $84.3 million in Q2 2002 to $102.6 million in Q2 2003, an increase of 22%. As a percentage of product sales, these expenses were 42% (2002: 41%). Q2 2003 SG&A expenses included continued additional promotional spend for ADDERALL XR in relation to sustained competitor activity, as well as for the ongoing relaunch of CARBATROL. As the benefit of this promotional spend is realised, this high level of spend is expected to moderate over the remainder of the year. Depreciation and amortisation The depreciation charge for Q2 2003 was $4.0 million, an increase of $0.7 million compared to 2002. Amortisation charges were $9.1 million, an increase of $0.3 million compared to Q2 2002. Interest income and expense For the three months ended 30 June 2003, the Company received interest income of $4.3 million (Q2 2002: $4.8 million). Interest expense increased from $1.8 million in Q2 2002 to $2.7 million in 2003, primarily relating to costs associated with partial buy back of the convertible notes. Other (expense)/income, net For the three months ended 30 June 2003, other expense totalled $3.7 million (Q2 2002: $0.9 million). The expense is primarily attributable to investment write-downs for other than temporary impairment of $4.5 million. Taxation For Q2 2003 income taxes increased $4.2 million to $25.5 million from $21.3 million for Q2 2002. Our effective tax rate was 28% for Q2 2003 (2002: 27%). We have net deferred tax assets of $58.9 million at 30 June 2003. Realisation is dependent upon generating sufficient taxable income to utilise such assets. Although realisation of these assets is not assured, management believes it is more likely than not that the deferred tax assets will be realised. Equity in (losses)/earnings of equity method investees We received $0.9 million representing our 50% share of earnings from our antiviral commercialisation partnership with GSK in Canada (Q2 2002: $1.9 million) and we incurred a loss of $2.1 million representing our 50% share of the losses of our commercialisation partnership with Qualia Computing Inc (Q2 2002: $nil). Discontinued operations The Company completed the divestment of its 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. In accordance with US GAAP the 2002 results have been restated to present the results of these products as a discontinued operation. 8 The OTC business contributed net income of $1.6 million for the three months ended 30 June 2002, which is included in the reported net income number for 2002. R&D OVERVIEW As part of its strategic review Shire will refocus its portfolio onto lower risk, later stage opportunities and to build its franchise in CNS, GI and in renal, but the refocus and prioritisation will enable Shire to alter the risk balance profile of the portfolio to improve the likely return on this investment. R&D Activities from May to July 2003 RENAL FOSRENOL Additional data collection and analysis is underway and Shire will update as soon as further new information is available. HAEMATOLOGY XAGRID XAGRID (anagrelide hydrochloride) received a positive opinion from the European Committee for Proprietary Medicinal Products (CPMP) for XAGRID to be used in the treatment of Essential Thrombocythemia (ET). Once marketing approval is received, pricing and reimbursement negotiations will commence with individual national authorities prior to launch. The drug is already marketed by Shire in the US and a range of other territories under the trademark AGRYLIN. Total sales of AGRYLIN in 2002 were $119.2 million, up 39% on 2001. It is estimated by Shire that 40,000 patients suffering from ET across the European Union (EU) member states would be eligible for treatment with XAGRID. There is currently no other platelet-reducing treatment approved for the treatment of ET across the EU. Essential Thrombocythemia is a condition arising from a chronic disorder of bone marrow, which leads to an increased production of blood platelets. Excessive platelet production can result in abnormal blood clot formation and bleeding, thereby increasing the risk of stroke, heart attack and gastrointestinal bleeding. CENTRAL NERVOUS SYSTEM (cns) METHYPATCH At the end of February 2003, Shire announced the acquisition from Noven Pharmaceuticals, Inc. (Noven) of the worldwide sales and marketing rights to METHYPATCH, a supplemental product for Shire's ADHD franchise. As previously announced on 28 April 2003, Noven has received a not approvable letter for METHYPATCH. Noven have an ongoing dialogue with the FDA and Shire is working with Noven to resolve the issues. ADDERALL XR Shire submitted an sNDA for ADDERALL XR in the treatment of adult ADHD on 19 December 2002. The review with the FDA is underway with an expected Prescription Drug User Fee Act date at the end of October 2003. Shire estimates adult ADHD treatment rates to be around 5% in the US, thus there is a significant opportunity for ADDERALL XR in the approximately 8 million adult ADHD patient population. GASTROINTESTINAL As announced previously, SPD476 for the treatment of Ulcerative Colitis continues to show promising results. Phase III trials are on schedule to begin during the second half of 2003. 9 ANTI-INFECTIVES SPD754 SPD754 is a cytidine analogue nucleoside reverse transcriptase inhibitor (NRTI) in development for the treatment of HIV, including HIV resistant to other NRTI's. The first phase II study with SPD754 was recently presented at the 2nd International AIDS Society (IAS) meeting in Paris (July 2003). This randomised, double blind trial evaluated the anti-viral activity and safety of 4 doses of SPD754 versus placebo in 63, treatment-naive, HIV infected subjects. SPD754 was shown to have potent anti-viral activity and to be well tolerated with an adverse event profile similar to that of placebo. After 7 and 10 days' monotherapy, SPD754 reduced the mean Viral Load (VL) by up to 1.44 and 1.65 log respectively. Up to 92% of subjects achieved >1 log drop in their VL. All active doses were statistically significantly superior to placebo. SPD754 did not select for known NRTI-resistant mutations in this setting. Overall, the drug was well tolerated, with no indication of dose-limiting adverse events. Shire is excited at the prospect of this compound and is keen to evaluate potential development and marketing partnerships to ensure the product can be rapidly made available to patients. ONCOLOGY As a result of the strategic review, Shire has decided to out-license TROXATYL. 10 US GAAP Results Consolidated Balance Sheets
(Unaudited) 30 June 31 December 2003 2002 $'000 $'000 ----------- ----------- ASSETS Current assets: Cash and cash equivalents 967,480 897,718 Marketable securities 217,677 316,126 Accounts receivable, net 194,908 138,397 Inventories 54,405 49,216 Deferred tax asset 36,759 34,849 Prepaid expenses and other current assets 35,355 30,790 ----------- ----------- Total current assets 1,506,584 1,467,096 Investments 79,117 71,962 Property, plant and equipment, net 167,014 135,234 Goodwill, net 209,134 203,767 Other intangible assets, net 313,898 301,084 Deferred tax asset 22,101 6,216 Other non-current assets 22,630 23,264 ----------- ----------- Total assets 2,320,478 2,208,623 ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current instalments of long-term debt 1,024 888 Accounts payable and accrued expenses 186,083 184,107 Other current liabilities 30,701 15,492 ----------- ----------- Total current liabilities from continuing operations 217,808 200,487 Current liabilities from discontinued operations - 12,784 ----------- ----------- Total current liabilities 217,808 213,271 Long-term debt, excluding current instalments 377,592 407,302 Other long-term liabilities 11,913 14,884 ----------- ----------- Total liabilities 607,313 635,457 ----------- ----------- Shareholders' equity: Common stock of 5p par value; 800,000,000 shares authorised; and 477,292,144 (December 31, 2002: 484,344,412) shares issued and outstanding 39,469 40,051 Exchangeable shares; 5,840,110 (December 31, 2002: 5,874,112) shares issued and outstanding 270,698 272,523 Additional paid-in capital 979,744 1,027,499 Accumulated other comprehensive income/(loss) 20,179 (41,431) Retained earnings 403,075 274,524 ----------- ----------- Total shareholders' equity 1,713,165 1,573,166 ----------- ----------- Total liabilities and shareholders' equity 2,320,478 2,208,623 ----------- -----------
11 US GAAP Results Unaudited Consolidated Statements of Operations
3 months to 30 3 months to 6 months to 30 6 months to 30 June 2003 30 June 2002 June 2003 June 2002 $'000 $'000 $'000 $'000 ---------- ---------- ---------- ---------- Total revenues 298,988 248,084 603,505 485,066 Cost of revenues (38,993) (29,721) (77,638) (54,741) ---------- ---------- ---------- ---------- Gross profit 259,995 218,363 525,867 430,325 Operating expenses (165,778) (143,254) (342,458) (284,923) ---------- ---------- ---------- ---------- Operating income 94,217 75,109 183,409 145,402 Interest income 4,298 4,820 9,411 9,551 Interest expense (2,689) (1,796) (5,337) (3,773) Other (expense)/income, net (3,679) (910) (7,295) 231 ---------- ---------- ---------- ---------- Total other (expense)/income, net (2,070) 2,114 (3,221) 6,009 ---------- ---------- ---------- ---------- Income from continuing operations before income taxes and equity in (losses)/earnings of equity method 92,147 77,223 180,188 151,411 investees Income taxes (25,457) (21,323) (49,983) (41,080) Equity in (losses)/earnings of equity method investees (1,205) 1,855 (1,654) 2,599 ---------- ---------- ---------- ---------- Income from continuing operations 65,485 57,755 128,551 112,930 Income from discontinued operations (net of income tax expense of $nil, $912, $nil and $1,868 respectively) - 1,552 - 3,179 ---------- ---------- ---------- ---------- Net income 65,485 59,307 128,551 116,109 ---------- ----------- ---------- ---------- Earnings per share: Basic Continuing operations 13.1c 11.5c 25.6c 22.6c Discontinued operations - 0.4c - 0.6c ---------- ---------- ---------- ---------- Net income 13.1c 11.9c 25.6c 23.2c ---------- ---------- ---------- ---------- Diluted Continuing operations 12.8c 11.3c 25.1c 22.0c Discontinued operations - 0.3c - 0.6c ---------- ---------- ---------- ---------- Net income 12.8c 11.6c 25.1c 22.6c ---------- ---------- ---------- ---------- Weighted average number of shares: Basic 501,504,962 500,365,947 501,746,083 500,147,383 Diluted 522,559,387 523,990,414 522,652,319 525,324,877 ----------- ----------- ----------- -----------
The results for the 3 and 6 months ended 30 June 2002 have been restated to reflect the disposal of our OTC business that has been accounted for as a discontinued operation. 12 US GAAP Results Unaudited Consolidated Statements of Cash Flows
3 months to 3 months to 30 6 months to 6 months to 30 30 June 2003 June 30 June 2003 June $'000 2002 $'000 2002 $'000 $'000 ----------- ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income from continuing operations 65,485 57,755 128,551 112,930 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortisation 9,800 9,139 21,461 17,812 Stock option compensation - 152 (24) (150) Tax benefit of stock option compensation, charged directly to equity - 99 - 689 Increase in deferred tax asset (6,625) (1,791) (17,795) (4,695) Non cash exchange gains and losses 4,142 2,465 5,937 1,672 Equity in losses/(earnings) of equity method investees 1,205 (1,855) 1,654 (2,599) Write-down of long term investments 4,500 - 8,472 2,500 Write-down of intangible assets 3,287 3,000 3,287 4,500 Loss on sale of fixed assets - 116 - 116 Changes in operating assets and liabilities, net of acquisitions: (Increase)/decrease in accounts receivable (55,699) (109) (56,511) 53,404 Increase in inventory (2,644) (247) (5,189) (9,409) (Increase)/decrease in prepayments and other current assets (4,058) (8,049) (4,565) 4,328 (Increase)/decrease in other assets (684) 1,835 634 569 (Decrease)/increase in accounts and notes payable and other liabilities (16,921) (54,128) 1,431 (52,417) Decrease in unearned income - - - (17,409) ----------- ----------- ----------- ----------- Net cash provided by operating activities 1,788 8,382 87,343 111,841 ----------- ------------ ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in short-term deposits 33,750 11,223 98,449 498,021 Purchase of long-term investments - - (1,475) (1,017) Purchase of intangible assets (25,500) (18,510) (25,500) (18,510) Purchase of property, plant and equipment (13,988) (4,518) (27,601) (7,648) ----------- ----------- ----------- ----------- Net cash (used in)/provided by investing activities (5,738) (11,805) 43,873 470,846 ----------- ------------ ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Repurchase/payments on long-term debt, capital leases and notes (29,816) (2,583) (29,879) (2,583) Proceeds from exercise of options 1,343 2,774 2,254 3,552 Payments for the redemption of common stock (52,392) - (52,392) - ----------- ----------- ----------- ----------- Net cash (used in)/provided by financing activities (80,865) 191 (80,017) 969 ----------- ------------ ----------- ------------ Effect of foreign exchange rate changes on cash and cash equivalents 10,827 9,587 18,563 9,489 ----------- ----------- ----------- ----------- Net (decrease)/increase in cash and cash equivalents (73,988) 6,355 69,762 593,145 Cash flows provided by discontinued operations - 1,711 - 3,338 ----------- ----------- ----------- ----------- Net (decrease)/increase in cash and cash equivalents (73,988) 8,066 69,762 596,483 Cash and cash equivalents at beginning of period 1,041,468 706,457 897,718 118,040 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period 967,480 714,523 967,480 714,523 ----------- ------------ ----------- -----------
13 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 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. For 2003 our reporting has been expanded as set out below to provide more information on the Corporate and International segments. The 2002 reportable segments have been restated on this basis.
3 months to 30 June 2003 US International Biologics Corporate R&D Total $'000 $'000 $'000 $'000 $'000 $'000 -------- -------- -------- -------- -------- -------- Product sales 209,607 36,056 787 - - 246,450 Licensing and development 702 - - - - 702 Royalties 14 2,725 - 49,097 - 51,836 -------- -------- -------- -------- -------- -------- Total revenues 210,323 38,781 787 49,097 - 298,988 -------- -------- -------- -------- -------- -------- Cost of product sales 26,887 11,450 656 38,993 - - Research and development - - - - 50,097 50,097 Selling, general and administrative 65,941 19,084 2,364 15,205 - 102,594 Depreciation and amortisation 8,728 2,379 1,121 859 - 13,087 -------- -------- -------- -------- -------- -------- Total operating expenses 101,556 32,913 4,141 16,064 50,097 204,771 -------- -------- -------- -------- -------- -------- Operating income/(loss) 108,767 5,868 (3,354) 33,033 (50,097) 94,217 -------- -------- -------- -------- -------- --------
3 months to 30 June 2002 US International Biologics Corporate R&D Total $'000 $'000 $'000 $'000 $'000 $'000 -------- -------- -------- -------- -------- -------- Product sales 173,895 32,511 455 - - 206,861 Licensing and development 662 261 - - - 923 Royalties 7 1,280 - 39,225 - 40,512 Other revenues - (31) (181) - - (212) -------- -------- -------- -------- -------- -------- Total revenues 174,564 34,021 274 39,225 - 248,084 -------- -------- -------- -------- -------- -------- Cost of product sales 15,286 14,088 347 - 29,721 - Research and development - - - - 46,802 46,802 Selling, general and administrative 55,269 17,719 2,206 9,119 - 84,313 Depreciation and amortisation 7,534 2,415 1,139 1,051 - 12,139 -------- -------- -------- -------- -------- -------- Total operating expenses 78,089 34,222 3,692 10,170 46,802 172,975 -------- -------- -------- -------- -------- -------- Operating income/(loss) 96,475 (201) (3,418) 29,055 (46,802) 75,109 -------- -------- -------- -------- -------- --------
14 Selected Notes to the Unaudited US GAAP Financial Statements (continued) (1) Analysis of revenues, operating income and reportable segments (continued)
6 months to 30 June 2003 US International Biologics Corporate R&D Total $'000 $'000 $'000 $'000 $'000 $'000 -------- -------- -------- -------- -------- -------- Product sales 429,570 71,747 1,486 - - 502,803 Licensing and development 1,096 - - - - 1,096 Royalties 14 4,924 - 94,661 - 99,599 Other revenues 7 - - - - 7 -------- -------- -------- -------- -------- -------- Total revenues 430,687 76,671 1,486 94,661 - 603,505 -------- -------- -------- -------- -------- -------- Cost of product sales 53,259 23,096 1,283 77,638 - - Research and development - - - - 104,695 104,695 Selling, general and administrative 135,626 38,241 4,616 34,532 - 213,015 Depreciation and amortisation 16,053 4,744 2,270 1,681 - 24,748 -------- -------- -------- -------- -------- -------- Total operating expenses 204,938 66,081 8,169 36,213 104,695 420,096 -------- -------- -------- -------- -------- -------- Operating income/(loss) 225,749 10,590 (6,683) 58,448 (104,695) 183,409 -------- -------- -------- -------- -------- --------
6 months to 30 June 2002 US International Biologics Corporate R&D Total $'000 $'000 $'000 $'000 $'000 $'000 -------- -------- -------- -------- -------- -------- Product sales 341,208 61,563 597 - - 403,368 Licensing and development 1,203 402 - - - 1,605 Royalties 221 3,040 - 76,827 - 80,088 Other revenues - 5 - - - 5 -------- -------- -------- -------- -------- -------- Total revenues 342,632 65,010 597 76,827 - 485,066 -------- -------- -------- -------- -------- -------- Cost of product sales 29,975 24,007 759 - 54,741 - Research and development - - - - 96,531 96,531 Selling, general and administrative 109,583 32,118 3,969 20,410 - 166,080 Depreciation and amortisation 13,479 4,698 2,185 1,950 - 22,312 -------- -------- -------- -------- -------- -------- Total operating expenses 153,037 60,823 6,913 22,360 96,531 339,664 -------- -------- -------- -------- -------- -------- Operating income/(loss) 189,595 4,187 (6,316) 54,467 (96,531) 145,402 -------- -------- -------- -------- -------- --------
Included within the selling, general and administrative costs in the corporate segment for the 6 months to 30 June 2003 is $7.2 million in respect of the former Chief Executive's departure. 15 Selected 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.
3 months to 30 3 months to 30 6 months to 30 6 months to 30 June 2003 June 2002 June 2003 June $'000 $'000 $'000 2002 $'000 ---------- ---------- ---------- ---------- Numerator for basic earnings per share 65,485 59,307 128,551 116,109 Interest charged on convertible debt, net of tax 1,342 1,411 2,723 2,808 ---------- ---------- ---------- ---------- Numerator for diluted earnings per share 66,827 60,718 131,274 118,917 ---------- ---------- ---------- ----------
Number of shares Number of shares Number of shares Number of shares ---------------- ---------------- ---------------- ---------------- Weighted average number of shares: Basic 501,504,962 500,365,947 501,746,083 500,147,383 Effect of dilutive shares: Stock options 2,030,976 2,357,078 1,470,870 3,910,105 Warrants - 1,144,179 - 1,144,179 Convertible debt 19,023,449 20,123,210 19,435,366 20,123,210 ----------- ----------- ----------- ----------- Diluted 522,559,387 523,990,414 522,652,319 525,324,877 ----------- ----------- ----------- ----------- Basic earnings per share 13.1c 11.9c 25.6c 23.2c ----------- ---------- ---------- ---------- Diluted earnings per share 12.8c 11.6c 25.1c 22.6c ----------- ---------- ---------- ----------
Warrants to purchase approximately 1.4 million common shares for the 3 and 6 months ended 30 June 2003 were anti-dilutive and were therefore excluded from the computation of diluted earnings per share. Stock options to purchase approximately 18.1 million and 18.0 million common shares for the 3 months and 6 months ended June 30, 2003 respectively, were anti-dilutive and were therefore excluded from the computation of diluted earnings per share. 16 Selected Notes to the Unaudited US GAAP Financial Statements (continued) (3) Analysis of revenues
3 months to 3 months to 3 months to 3 months to 30 June 2003 30 June 2002 30 June 2003 30 June 2003 $'000 $'000 % change % of total -------- -------- -------- ------ Net product sales: ADDERALL XR 102,429 75,821 +35% 34% ADDERALL 19,191 28,321 -32% 7% AGRYLIN 36,551 29,435 +24% 12% PENTASA 24,754 21,479 +15% 8% PROAMATINE 18,301 10,868 +68% 6% CARBATROL 13,915 12,574 +11% 5% Calciums 6,359 5,703 +12% 2% Others 24,950 22,660 +10% 8% -------- -------- -------- ------- 246,450 206,861 +19% 82% -------- -------- -------- ------- Royalty income: 3TC 37,540 30,720 +22% 13% ZEFFIX 5,721 4,510 +27% 2% Others 8,575 5,282 +62% 3% -------- -------- -------- ------- 51,836 40,512 +28% 18% -------- -------- -------- ------- Licensing 702 923 -24% - Other - (212) - - -------- -------- -------- ------- Total revenues 298,988 248,084 +21% 100% -------- -------- -------- -------
6 months to 6 months to 6 months to 6 months to 30 June 2003 30 June 2002 30 June 2003 30 June 2003 $'000 $'000 % change % of total -------- -------- -------- ------ Net product sales: ADDERALL XR 217,592 137,696 +58% 36% ADDERALL 38,090 74,491 -49% 6% AGRYLIN 76,225 52,871 +44% 13% PENTASA 54,473 39,026 +40% 9% PROAMATINE 32,136 20,441 +57% 5% CARBATROL 23,336 24,146 -3% 4% Calciums 12,467 10,402 +20% 2% Others 48,484 44,295 +9% 8% -------- -------- -------- ------- 502,803 403,368 +25% 83% -------- -------- -------- ------- Royalty income: 3TC 71,679 61,356 +17% 12% ZEFFIX 12,120 9,803 +24% 2% Others 15,800 8,929 +77% 3% -------- -------- -------- ------- 99,599 80,088 +24% 17% -------- -------- -------- ------- Licensing 1,096 1,605 -32% - Other 7 5 +35% - -------- -------- -------- ------- Total revenues 603,505 485,066 +24% 100% -------- -------- -------- -------
17 UK GAAP Results Unaudited and Unreviewed Consolidated Profit and Loss Account
(Audited) 3 months to 3 months to 6 months to 6 months to Year 30 June 30 June 30 June 30 June to 2003 2002 2003 2002 31 Dec (pound)'000 (pound)'000 (pound)'000 (pound)'000 2002 (pound)'000 -------- -------- -------- -------- -------- Turnover: group and share of joint venture 186,628 171,825 378,638 341,070 697,314 Less: share of joint venture's turnover (810) - (1,536) - (762) -------- -------- -------- -------- -------- Group turnover on continuing operations 185,818 171,825 377,102 341,070 696,552 Discontinued operations - 4,128 - 8,520 15,975 -------- -------- -------- -------- -------- Group turnover 185,818 175,953 377,102 349,590 712,527 Cost of sales (27,162) (21,974) (49,496) (41,415) (95,042) -------- -------- -------- -------- -------- Gross profit 158,656 153,979 327,606 308,175 617,485 Net operating expenses (130,065) (134,199) (274,014) (271,084) (1,150,630) -------- -------- -------- -------- -------- Operating profit/(loss): 28,591 19,780 53,592 37,091 (533,145) ------------------------------------------- -------------- -------------- --------------- -------------- -------------- ------------------------------------------- -------------- -------------- --------------- -------------- -------------- Continuing operations - Group 28,591 18,100 53,592 33,585 (541,603) Discontinued operations - 1,680 - 3,506 8,458 -------- -------- -------- -------- -------- 28,591 19,780 53,592 37,091 (533,145) ------------------------------------------- -------------- -------------- --------------- -------------- -------------- ------------------------------------------- -------------- -------------- --------------- -------------- -------------- Share of joint venture's operating loss (1,263) - (1,991) - (559) Finance charges, net 1,492 3,401 3,177 795 6,931 -------- -------- -------- -------- -------- Profit/(loss) on ordinary activities before taxation 28,820 23,181 54,778 37,886 (526,773) Tax on profit/(loss) on ordinary activities (15,628) (15,121) (30,815) (29,372) (61,626) -------- -------- -------- -------- -------- Retained profit/(loss) for the period transferred to/(from) reserves 13,192 8,060 23,963 8,514 (588,399) -------- -------- -------- -------- -------- Earnings/(loss) per share Basic 2.6p 1.6p 4.8p 1.7p (117.5p) Diluted 2.6p 1.6p 4.8p 1.7p (117.5p)
Unaudited and Unreviewed Consolidated Statement of Total Recognised Gains and Losses (Audited) 3 months to 3 months to 6 months to 6 months to Year 30 June 30 June 30 June 30 June to 2003 2002 2003 2002 31 Dec (pound)'000 (pound)'000 (pound)'000 (pound)'000 2002 (pound)'000 -------- -------- -------- -------- -------- Profit/(loss) for the period 13,192 8,060 23,963 8,514 (588,399) Translation of the financial statements of overseas subsidiaries (20,039) (36,865) 8,834 (15,757) (62,739) -------- -------- -------- -------- -------- Total recognised gains and losses relating to the period (6,847) (28,805) 32,797 (7,243) (651,138) -------- -------- -------- -------- --------
18 UK GAAP Results Unaudited and Unreviewed Consolidated Balance Sheet
(Audited) 30 June 31 Dec 30 June 2003 2002 2002 (pound)'000 (pound)'000 (pound)'000 -------- -------- -------- Fixed assets Intangible assets - intellectual property 186,541 183,404 252,272 Intangible assets - goodwill 1,847,076 1,900,896 2,577,186 Tangible assets 101,209 84,001 77,191 Fixed asset investments 37,411 37,345 43,829 Investment in joint ventures Share of gross assets 3,850 5,082 - Share of gross liabilities (523) (342) - -------- -------- -------- 2,175,564 2,210,386 2,950,478 -------- -------- -------- Current assets Stocks 32,969 30,571 37,913 Debtors - due within one year excluding deferred tax 136,073 106,125 121,296 - due within one year - deferred tax 22,275 21,646 17,589 - due after more than one year excluding deferred tax 13,713 9,535 11,194 - due after more than one year - deferred tax 13,393 3,861 6,512 Current asset investments 206,386 196,364 252,267 Cash at bank and in hand 513,548 558,432 365,413 -------- -------- -------- 938,357 926,534 812,184 Creditors: Amounts falling due within one year Convertible debt - - (984) Other creditors (132,601) (131,885) (106,789) -------- -------- -------- (132,601) (131,885) (107,773) -------- -------- -------- Net current assets 805,756 794,649 704,411 -------- -------- -------- Total assets less current liabilities 2,981,320 3,005,035 3,654,889 Creditors: amounts falling due after more than one year Convertible debt (219,544) (243,547) (256,078) Other creditors (11,683) (13,782) (9,715) -------- -------- -------- (231,227) (257,329) (265,793) -------- -------- -------- Net assets 2,750,093 2,747,706 3,389,096 -------- -------- -------- Capital and reserves Called-up share capital 23,866 24,217 24,153 Share premium 3,217,006 3,214,512 3,211,842 Exchangeable shares 190,442 191,552 191,781 Capital reserve 2,755 2,755 2,755 Capital redemption reserve 380 - - Other reserves 24,247 24,247 24,247 Profit and loss account (708,603) (709,577) (65,682) -------- -------- -------- Equity shareholders' funds 2,750,093 2,747,706 3,389,096 -------- -------- --------
19 UK GAAP Results Unaudited and Unreviewed Consolidated cash flow statement
6 months to 6 months to 30 June 30 June 2003 2002 (pound)'000 (pound)'000 -------- -------- Net cash inflow from operating activities (note 2a) 98,224 127,987 Returns on investments and servicing of finance: Interest received 7,303 6,632 Interest paid (4,126) (2,592) -------- -------- Net cash inflow from returns on investments and servicing of finance 3,177 4,040 -------- -------- Taxation: Overseas corporation tax paid (46,605) (47,890) -------- -------- Capital expenditure and financial investments: Purchase of long term investment (912) (2,400) Purchase of intangible fixed assets (14,568) (12,900) Purchase of tangible fixed assets (16,992) (4,175) -------- -------- Net cash outflow for capital expenditure and financial investments (32,472) (19,475) -------- -------- Cash inflow before management of liquid resources and financing 22,324 64,662 -------- -------- Management of liquid resources: (Decrease)/increase in cash placed on short-term deposit (6,235) 238,983 Financing: Payments for redemption of share capital (31,822) - Exercise of share options 1,412 2,433 Net decrease in debt during the year (18,475) (1,725) -------- -------- Net cash (outflow)/inflow from financing (48,885) 708 -------- -------- (Decrease)/increase in cash in the year (32,796) 304,353 -------- --------
20 Selected Notes to the Unaudited and Unreviewed UK GAAP Financial Statements (1) Earnings per share Earnings per share has been calculated by dividing the profit on ordinary activities after taxation for each period by the weighted average number of shares in issue during those periods. The weighted average number of shares used in calculating fully diluted earnings per share has been adjusted for the effects of all dilutive potential ordinary shares. The $400 million convertible loan note is excluded from the calculation of weighted average number of shares for fully diluted earnings per share in 2003 and 2002 as it was not dilutive. The zero coupon convertible loan note included in 2002 has no impact on the numerator for fully diluted earnings per share. The warrants to purchase approximately 1.4 million common shares for the 3 and 6 months ended 30 June 2003 were anti-dilutive and were therefore excluded from the computation of diluted earnings per share.
(Audited) 3 months to 3 months to 6 months to 6 months to Year to 30 June 30 June 30 June 30 June 31 Dec 2003 2002 2003 2002 2002 (pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000 ---------- ---------- ---------- ---------- ---------- Profit for the period (for basic and diluted EPS) 13,192 8,060 23,963 8,514 (588,399) ---------- ---------- ---------- ---------- ----------
Number of Number of Number of Number of Number of shares shares shares shares shares ---------- ---------- ---------- ---------- ---------- Weighted average number of shares: Basic 501,504,962 500,365,947 501,746,083 500,147,383 500,687,594 Conversion of convertible debt - 276,033 - 276,033 - Exercise of share options 2,030,976 2,357,078 1,470,870 3,910,104 - Exercise of warrants - 1,144,179 - 1,144,179 - ---------- ---------- ---------- ---------- ---------- Fully diluted 503,535,938 504,143,237 503,216,953 505,477,699 500,687,594 ---------- ----------- ----------- ----------- ----------
21 Selected Notes to the Unaudited and Unreviewed UK GAAP Financial Statements (continued) (2) Notes to the consolidated cash flow statement (a) Reconciliation of operating profit to net cash inflow from operating activities 6 months to 6 months to 30 June 2003 30 June 2002 (pound)'000 (pound)'000 ---------- ---------- Group operating profit 53,592 37,091 Exchange loss 2,298 5,671 Depreciation 4,734 4,527 Amortisation of intangible fixed assets 62,630 75,302 Write-down of fixed asset investments 5,251 1,853 Write-down on intangible fixed assets 1,996 3,124 Increase in stocks (2,398) (5,833) (Increase)/decrease in debtors (26,494) 50,082 Decrease in creditors (3,385) (43,830) ---------- --------- Net cash inflow from operating activities 98,224 127,987 ---------- ---------- (b) Analysis and reconciliation of net funds
Start of Cash Exchange movement End of 6 months to 30 June 2003 period flow (pound)'000 period (pound)'000 (pound)'000 (pound)'000 -------- -------- -------- -------- Cash at bank and in hand 558,432 (32,796) (12,088) 513,548 Debt due within one year (389) (1) (52) (442) Finance leases (162) (19) 2 (179) -------- -------- -------- -------- 557,881 (32,816) (12,138) 512,927 Debt due after one year (244,325) 18,408 5,490 (220,427) Finance leases (3,757) 87 89 (3,581) -------- -------- -------- -------- 309,799 (14,321) (6,559) 288,919 Current asset investments 196,364 6,235 3,787 206,386 -------- -------- -------- -------- 506,163 (8,086) (2,772) 495,305 -------- -------- -------- --------
Start of Cash Exchange movement End of 6 months to 30 June 2002 period flow (pound)'000 period (pound)'000 (pound)'000 (pound)'000 -------- -------- -------- -------- Cash at bank and in hand 81,434 304,356 (20,377) 365,413 Debt due within one year (3,008) 1,599 (2) (1,411) -------- -------- -------- -------- 78,426 305,955 (20,379) 364,002 Debt due after one year (269,883) 126 12,397 (257,360) -------- -------- -------- -------- (191,457) 306,081 (7,982) 106,642 Current asset investments 497,397 (238,983) (6,147) 252,267 -------- -------- -------- -------- 305,940 67,098 (14,129) 358,909 -------- -------- -------- --------
22 Selected Notes to the Unaudited and Unreviewed UK GAAP Financial Statements (continued) (c) Reconciliation of net funds
6 months to 6 months to 30 30 June 2003 June (pound)'000 2002 (pound)'000 ---------- ---------- (Decrease)/increase in cash in the period (32,796) 304,356 Cash outflow from increase in debt and lease financing 18,475 1,725 Cash outflow/(inflow) from increases/(decreases) in liquid resources 6,235 (238,983) ---------- ---------- Change in net funds resulting from cash flows (8,086) 67,098 Translation difference (2,772) (14,129) ---------- ---------- Movement in net funds in period (10,858) 52,969 Net funds at start of period 506,163 305,940 ---------- ---------- Net funds at end of period 495,305 358,909 ---------- ----------
(2) Basis of preparation The Group has applied consistent accounting policies throughout both periods. The results for the 3 and 6 months ended 30 June 2003 have not been audited or reviewed and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The UK interim financial statements were approved by the Board on 30 July 2003. 23