Final Results - Part 2

AstraZeneca PLC 31 January 2002 PART 2. Consolidated Profit & Loss Account For Continuing Operations 2001 2000 For the year ended 31 December $m $m Sales 16,480 15,804 Cost of sales (4,456) (4,181) Distribution costs (122) (210) Research and development (2,687) (2,620) Selling, general and administrative expenses (5,427) (5,032) Other operating income 368 223 Operating profit before exceptional items 4,156 3,984 Exceptional items charged to operating profit (202) (322) Operating profit 3,954 3,662 Share of joint ventures' and associates' operating profits - (149) Profit on sale of fixed assets 10 - Net interest and dividend income 113 138 Profit on ordinary activities before taxation 4,077 3,651 Profit before taxation before exceptional items 4,269 4,110 Exceptional items charged to profit before taxation (192) (459) Taxation (1,099) (1,114) Profit on ordinary activities after taxation 2,978 2,537 Attributable to minorities (11) (9) Net profit for the year 2,967 2,528 Dividends to Shareholders (1,225) (1,236) Earnings per Ordinary Share before exceptional items $1.77 $1.64 Earnings per Ordinary Share $1.69 $1.43 Diluted earnings per Ordinary Share $1.69 $1.43 Weighted average number of Ordinary Shares in issue (millions) 1,758 1,768 Diluted average number of Ordinary Shares in issue (millions) 1,761 1,770 Consolidated Profit & Loss Account For Continuing Operations 2001 2000 For the quarter ended 31 December $m $m Sales 4,440 4,144 Cost of sales (1,206) (1,136) Distribution costs (33) (42) Research and development (732) (778) Selling, general and administrative expenses (1,443) (1,317) Other operating income 64 100 Operating profit before exceptional items 1,090 971 Exceptional items charged to operating profit (76) (100) Operating profit 1,014 871 Share of joint ventures' and associates' operating profits - (156) Profit on sale of fixed assets - - Net interest and dividend income 12 82 Profit on ordinary activities before taxation 1,026 797 Profit before taxation before exceptional items 1,102 1,034 Exceptional items charged to profit before taxation (76) (237) Taxation (263) (265) Profit on ordinary activities after taxation 763 532 Attributable to minorities (4) 1 Net profit for the period 759 533 Dividends to Shareholders (820) (830) Earnings per Ordinary Share before exceptional items $0.47 $0.42 Earnings per Ordinary Share $0.43 $0.30 Diluted earnings per Ordinary Share $0.43 $0.30 Weighted average number of Ordinary Shares in issue (millions) 1,750 1,766 Diluted average number of Ordinary Shares in issue (millions) 1,752 1,768 Consolidated Balance Sheet 2001 2000 At 31 December $m $m Fixed assets Tangible fixed assets 5,409 4,957 Goodwill and intangible assets 2,700 2,951 Fixed asset investments 23 11 8,132 7,919 Current assets Stocks 2,402 2,105 Debtors 3,628 3,960 Cash and short-term investments 3,823 4,450 9,853 10,515 Total assets 17,985 18,434 Creditors due within one year Short-term borrowings and current instalments of loans (321) (214) Other creditors (6,159) (6,683) (6,480) (6,897) Net current assets 3,373 3,618 Total assets less current liabilities 11,505 11,537 Creditors due after more than one year Loans (635) (631) Other creditors (152) (296) Provisions for liabilities and charges (896) (1,068) (1,683) (1,995) Net assets 9,822 9,542 Capital and reserves Shareholders' funds - equity interests 9,786 9,521 Minority equity interests 36 21 Shareholders' funds and minority interests 9,822 9,542 Statement of Total Recognised Gains and Losses 2001 2000 For the year ended 31 December $m $m Net profit for the financial year 2,967 2,538 Exchange adjustments on net assets (495) (1,038) Translation differences on foreign currency borrowings 18 154 Tax on translation differences on foreign currency borrowings (6) (42) Total recognised gains and losses for the financial year 2,484 1,612 Consolidated Cash Flow Statement Continuing Operations Total 2001 2000 2000 For the year ended 31 December $m $m $m Cash flow from operating activities Operating profit before exceptional items 4,156 3,986 4,330 Depreciation and amortisation 860 870 988 Increase in working capital (1,006) (429) (340) Other non-cash movements 120 (84) 14 Net cash inflow from operating activities before exceptional items 4,130 4,343 4,992 Outflow related to exceptional items (368) (731) (809) Net cash inflow from operating activities 3,762 3,612 4,183 Returns on investments and servicing of finance 156 19 19 Tax paid (792) (497) (648) Capital expenditure and financial investment (1,543) (1,277) (1,426) Acquisitions and disposals (44) 604 (169) Net repayment of debt by Zeneca Agrochemicals - - 909 Equity dividends paid to Shareholders (1,236) (1,220) (1,220) Net cash inflow before management of liquid resources and financing 303 1,241 1,648 Management of liquid resources Movement in short-term investments and fixed deposits (net) 260 (608) (608) Financing (959) (400) (400) (Decrease)/increase in cash in the year (396) 233 640 Reconciliation of Cash Flow to Net Cash Funds Total 2001 2000 For the year ended 31 December $m $m Net funds at 1 January 3,605 2,169 Net cash flows before management of liquid resources and financing 303 1,648 Net cash flows from share issues and repurchases (994) (334) Acquisitions and disposals - 127 Other non cash changes - 48 Exchange (47) (53) Net funds at 31 December 2,867 3,605 Notes to the Preliminary Announcement 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES The results for the year ended 31 December 2001 have been prepared in accordance with UK generally accepted accounting principles. The accounting policies applied are those set out in AstraZeneca PLC's 2000 Annual Report and Form 20-F. In 2001, the continued standardisation of accounting treatments across AstraZeneca has led certain subsidiaries to classify as cost of sales some elements of expense recorded as distribution costs in previous periods. The effect of this change in the year to 31 December 2001 is to reclassify approximately $120m of costs. Previous periods have not been restated. Continuing operations comprises the ongoing business of AstraZeneca and the Comparative Profit and Loss Account figures for 2000 exclude the results of the Agrochemicals business which was demerged on 13 November 2000. The full comparative Profit and Loss Account for 2000 is detailed in Note 2 below. The results for the year ended 2001 presented in this preliminary announcement are extracted from, and are consistent with, those in the Group's audited financial statements for the year ended 31 December 2001 and those financial statements will be delivered to the Registrar of Companies following the Company's annual general meeting. The information in this preliminary announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2000 have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under Section 237 of the Companies Act 1985. 2 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2000 Continuing Discontinued Operations Operations Total $m $m $m Sales 15,804 2,299 18,103 Cost of sales (4,181) (1,299) (5,480) Distribution costs (210) (76) (286) Research and development (2,620) (222) (2,842) Selling, general and administrative expenses (5,032) (399) (5,431) Other operating income 223 43 266 Operating profit before exceptional items 3,984 346 4,330 Exceptional items charged to operating profit (322) - (322) Operating profit 3,662 346 4,008 Share of joint ventures' and associates' operating losses (149) - (149) Profits less losses on sale, closure or demerger of operations - (150) (150) Net interest and dividend income 138 - 138 Profit on ordinary activities before taxation 3,651 196 3,847 Taxation (1,114) (185) (1,299) Profit on ordinary activities after taxation 2,537 11 2,548 Attributable to minorities (9) (1) (10) Net profit for the year 2,528 10 2,538 Dividends to Shareholders (2,905) Loss retained for the year (367) Earnings per Ordinary Share before exceptional items $1.64 $0.12 $1.76 Earnings per Ordinary Share $1.43 $0.01 $1.44 Diluted earnings per Ordinary Share $1.43 $0.01 $1.44 3 JOINT VENTURES AND ASSOCIATES The Group's share of joint ventures' sales for the year ended 31 December 2001 amounted to $183m and $195m for the comparative period. Share of joint ventures' operating profits for the year ended 31 December 2001 amounted to nil, and for the comparative period $(149)m. The 2000 results reflect operational losses of $12m, together with an exceptional charge of $88m to provide for impairment of the 50% interest in the seed company Advanta, and write off of related goodwill which had previously been taken to reserves. 4 ANALYSIS OF EXCEPTIONAL ITEMS CHARGED TO OPERATING PROFIT The following are the components of the exceptional charges to operating profits from continuing operations which relate to the integration and synergy programme commenced after the AstraZeneca merger: 2001 2000 For the year ended 31 December $m $m Cost of sales 34 11 Research and development 86 51 Selling, general and administrative expenses 82 260 Total exceptional items charged to operating profit 202 322 5 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2001 2000 For the year ended 31 December $m $m Shareholders' funds at beginning of year 9,521 10,302 Net profit for the period - from continuing operations 2,967 2,528 - from discontinued operations - 10 Dividends to Shareholders (1,225) (2,905) 1,742 (367) Issue of AstraZeneca PLC Ordinary Shares 86 19 Repurchase of AstraZeneca PLC Ordinary Shares (1,080) (353) Goodwill written back - 862 Foreign currency adjustment (483) (926) Minority interest buy out - (8) Other movements - (8) Net addition to Shareholders' funds 265 (781) Shareholders' funds at end of year 9,786 9,521 6 NET CASH FUNDS The table below provides an analysis of net cash funds and a reconciliation of net cash flow to movement in net cash funds. At 31 Dec Cash Other Exchange At 31 Dec 2000 flow non-cash movements 2001 $m $m $m $m $m Loans due after 1 year (631) (11) 8 (1) (635) Current instalments of loans (88) (17) (8) 6 (107) Total loans (719) (28) - 5 (742) Short-term investments 3,429 (260) - (51) 3,118 Cash 1,021 (299) - (17) 705 Overdrafts (113) (97) - 15 (195) Short-term borrowings, excluding overdrafts (13) (7) - 1 (19) 4,324 (663) - (52) 3,609 Net cash funds 3,605 (691) - (47) 2,867 Issue of AstraZeneca PLC Ordinary Shares (86) Repurchase of AstraZeneca PLC Ordinary Shares 1,080 Net cash inflow before management of liquid resources and financing 303 7 YEAR END PRODUCT SALES ANALYSIS World US Constant Actual Currency Actual 2001 2000 Growth Growth 2001 Growth $m $m % % $m % Gastrointestinal: Losec 5,684 6,260 (9) (7) 3,694 (13) Nexium 580 17 n/m n/m 456 n/m Others 44 45 (2) 7 3 n/m Total Gastrointestinal 6,308 6,322 - 2 4,153 (2) Cardiovascular: Zestril 1,097 1,188 (8) (6) 642 (7) Seloken 722 577 25 28 440 47 Plendil 471 480 (2) 2 203 6 Atacand 414 293 41 46 154 29 Tenormin 404 471 (14) (7) 53 (21) Imdur 86 94 (9) (3) 10 (29) Others 343 374 (8) (3) 62 (3) Total Cardiovascular 3,537 3,477 2 6 1,564 8 Respiratory: Pulmicort 775 705 10 14 276 80 Rhinocort 269 221 22 25 181 38 Accolate 146 152 (4) (2) 102 (16) Oxis 127 116 9 15 - - Bricanyl 107 125 (14) (8) - - Symbicort 83 - n/m n/m - - Others 49 53 (8) 1 - - Total Respiratory 1,556 1,372 13 17 559 38 Oncology: Zoladex 728 734 (1) 5 207 9 Nolvadex 630 576 9 12 474 18 Casodex 569 433 31 37 241 27 Arimidex 191 156 22 27 61 15 Others 28 30 (7) 3 - - Total Oncology 2,146 1,929 11 16 983 18 CNS: Seroquel 700 424 65 67 568 51 Zomig 277 237 17 20 151 6 Others 22 24 (8) (8) 6 (45) Total CNS 999 685 46 48 725 37 7 YEAR END PRODUCT SALES ANALYSIS (CONTINUED) World US Constant Actual Currency Actual 2001 2000 Growth Growth 2001 Growth $m $m % % $m % Pain, Infection and Other Pharma: Diprivan 465 507 (8) (4) 217 (4) Merrem 227 170 34 40 54 135 Xylocaine 212 238 (11) (5) 59 (6) Marcaine 87 92 (5) - 31 (3) Naropin 62 53 17 23 14 - Other Pharma Products 458 563 (19) (9) 139 (14) Total Pain, Infection and Other Pharma 1,511 1,623 (7) - 514 (1) Salick Health Care 194 176 10 10 194 10 Astra Tech 126 114 11 19 8 60 Marlow Foods 103 90 14 22 - - Other - 16 n/m n/m - - Total 16,480 15,804 4 8 8,700 7 n/m not meaningful 8 FOURTH QUARTER PRODUCT SALES ANALYSIS World US 4th 4th Constant 4th Quarter Quarter Actual Currency Quarter Actual 2001 2000 Growth Growth 2001 Growth $m $m % % $m % Gastrointestinal: Losec 1,397 1,728 (19) (19) 848 (30) Nexium 285 13 n/m n/m 238 n/m Others 14 11 27 36 3 n/m Total Gastrointestinal 1,696 1,752 (3) (3) 1,089 (10) Cardiovascular: Zestril 265 228 16 15 148 42 Seloken 168 172 (2) (3) 90 (10) Plendil 139 127 9 10 69 21 Atacand 125 97 29 27 49 7 Tenormin 104 108 (4) (1) 10 100 Imdur 22 21 5 5 2 (33) Others 93 89 4 2 23 77 Total Cardiovascular 916 842 9 9 391 19 8 FOURTH QUARTER PRODUCT SALES ANALYSIS (CONTINUED) World US 4th 4th Constant 4th Quarter Quarter Actual Currency Quarter Actual 2001 2000 Growth Growth 2001 Growth $m $m % % $m % Respiratory: Pulmicort 205 193 6 4 76 29 Rhinocort 75 56 34 34 54 50 Accolate 31 21 48 48 19 46 Oxis 33 32 3 - - - Bricanyl 27 31 (13) (13) - - Symbicort 49 - n/m n/m - - Others 13 15 (13) (6) - - Total Respiratory 433 348 24 23 149 38 Oncology: Zoladex 209 181 15 17 53 66 Nolvadex 184 171 8 9 139 12 Casodex 176 119 48 50 73 62 Arimidex 52 39 33 33 13 8 Others 6 8 (25) (12) - - Total Oncology 627 518 21 23 278 31 CNS: Seroquel 174 131 33 34 130 15 Zomig 68 59 15 15 33 3 Others 6 - n/m n/m 1 n/m Total CNS 248 190 31 32 164 13 Pain, Infection and Other Pharma: Diprivan 136 114 19 20 69 57 Merrem 65 48 35 37 17 42 Xylocaine 57 63 (10) (7) 19 6 Marcaine 26 25 4 4 12 20 Naropin 19 14 36 36 5 25 Other Pharma Products 105 134 (22) (9) 29 (34) Total Pain, Infection and Other Pharma 408 398 3 8 151 14 Salick Health Care 50 41 22 22 50 22 Astra Tech 36 29 24 24 3 50 Marlow Foods 26 22 18 22 - - Other - 4 n/m n/m - - Total 4,440 4,144 7 8 2,275 5 n/m not meaningful 9 FULL YEAR TERRITORIAL SALES ANALYSIS % Growth 2001 2000 Constant $m $m Actual Currency USA 8,700 8,153 7 7 Japan 851 825 3 16 France 967 886 9 15 Germany 693 699 (1) 4 Italy 638 555 15 21 Sweden 263 318 (17) (4) UK 777 820 (5) 1 Rest of World 3,591 3,548 1 8 Total 16,480 15,804 4 8 10 FOURTH QUARTER TERRITORIAL SALES ANALYSIS % Growth 4th 4th Quarter Quarter 2001 2000 Constant $m $m Actual Currency USA 2,275 2,177 5 5 Japan 260 244 7 16 France 266 224 19 13 Germany 182 171 6 - Italy 181 138 31 24 Sweden 64 76 (16) (7) UK 226 217 4 3 Rest of World 986 897 10 13 Total 4,440 4,144 7 8 Convenience Translation of Key Financial Information 2001 2000* 2001 2000* 2001 2000* For the three months ended 31 $m $m £m £m SEKm SEKm December Total Sales 4,440 4,265 3,062 2,941 46,806 44,962 Operating profit before exceptional items (EI) 1,090 965 752 665 11,491 10,173 Profit before tax on continuing operations before EI 1,102 1,034 760 713 11,617 10,900 Net profit for the year 759 331 523 228 8,001 3,489 Earnings per Ordinary Share pre EI $0.47 $0.42 £0.32 £0.29 SEK4.95 SEK4.43 2001 2000* 2001 2000* 2001 2000* For the year ended 31 December $m $m £m £m SEKm SEKm Total Sales 16,480 18,103 11,364 12,484 173,732 190,842 Operating profit before exceptional items (EI) 4,156 4,330 2,866 2,986 43,813 45,647 Profit before tax on continuing operations before EI 4,269 4,110 2,944 2,834 45,004 43,328 Net profit for the year 2,967 2,538 2,046 1,750 31,278 26,756 Basic earnings per Ordinary Share $1.69 $1.44 £1.17 £0.99 SEK17.82 SEK15.18 Earnings per Ordinary Share pre EI $1.77 $1.76 £1.22 £1.21 SEK18.66 SEK18.55 Dividend per Ordinary Share $0.70 $0.70 49.3p 47.4p SEK7.45 SEK6.59 Net cash inflow from operating activities 3,762 4,183 2,594 2,885 39,659 44,097 (Decrease)/increase in cash (396) 640 (273) 441 (4,175) 6,747 Shareholders' funds - equity interests 31 December 9,786 9,521 6,748 6,566 103,164 100,370 * includes discontinued operations except for profit before tax on continuing operations before EI. Sterling (£) and Swedish Kronor equivalents are shown for convenience and have been calculated using the current period end rates of $1=£0.689584 and $1= SEK10.542000, respectively. Dividend per Ordinary Share is shown as the actual amount payable using the rates at the date of declaration of the dividend. Information for US Investors RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES The Group profit and loss account and Group balance sheet set out on pages 9, 10, 11 and 13 are prepared in accordance with generally accepted accounting principles in the United Kingdom (UK GAAP) which differ in certain material respects from those generally accepted in the United States (US GAAP). The differences as they apply to AstraZeneca PLC are explained in the Group's 2000 Annual Report and Form 20-F. In the current year, AstraZeneca adopted SFAS No. 133 'Accounting for Derivative Instruments and Hedging Activities'. The approximate effects on Group income and shareholders' equity of the GAAP differences are shown below. 2001 2000 Income attributable to Shareholders $m $m Net income for the year under UK GAAP 2,967 2,538 Adjustments to conform to US GAAP Purchase accounting adjustments, (including goodwill and tangibles); - deemed acquisition of Astra - amortisation and other acquisition adjustments (1,514) (1,756) - others - (20) Capitalisation, less disposals and amortisation of interest 57 45 Deferred taxation - on fair value of Astra 249 284 - others (259) (146) Pension expense (33) (50) Post-retirement benefits/plan amendment 4 4 Software costs capitalised (10) 98 Restructuring costs (22) (97) Unrealised gains/(losses) on foreign exchange and others (74) (35) Net income before cumulative effect of change in accounting policy 1,365 865 Cumulative effect of change in accounting policy, net of tax, on adoption 32 - of SFAS No. 133 Net income in accordance with US GAAP 1,397 865 Net income from continuing operations 1,397 907 Net income/(loss) from discontinued operations - (42) Net income per Ordinary Share under US GAAP (basic) $0.79 $0.49 Net income per Ordinary Share under US GAAP (diluted) $0.79 $0.49 RECONCILIATION TO UNITED STATES ACCOUNTING PRINCIPLES 31 Dec 31 Dec 2001 2000 Shareholders' equity $m $m Shareholders' equity under UK GAAP 9,786 9,521 Adjustment to conform to US GAAP Purchase accounting adjustments, (including goodwill and tangibles); - deemed acquisition of Astra - goodwill 11,062 12,610 - tangible and intangible fixed assets 8,139 9,510 - others 31 31 Capitalisation, less disposals and amortisation of interest 192 135 Deferred taxation - on fair value of Astra (2,313) (2,702) - others (268) (278) Dividend 820 830 Pension expense (162) (129) Post-retirement benefits/plan amendment (28) (32) Software costs capitalised 110 120 Restructuring costs - 22 Others 33 69 Shareholders' equity in accordance with US GAAP 27,402 29,707 Shareholder Information ANNOUNCEMENTS AND MEETINGS Announcement of First Quarter Results 2002 25 April 2002 Annual General Meeting 25 April 2002 Announcement of Half Year Results 2002 25 July 2002 Announcement of Third Quarter Results 2002 24 October 2002 Annual Business Review Week commencing 4 November 2002 DIVIDENDS The record date for the first interim dividend paid on 5 October 2001 (in the UK, Sweden and the US) was 24 August 2001. Ordinary Shares traded ex-dividend on the London and Stockholm Stock Exchanges from 22 August 2001. ADRs traded ex-dividend on the New York Stock Exchange from the same date. The record date for the second interim dividend for 2001 payable on 8 April 2002 (in the UK, Sweden and the US) will be 22 February 2002. Ordinary Shares will trade ex-dividend on the London and Stockholm Stock Exchanges from 20 February 2002. ADRs will trade ex-dividend on the New York Stock Exchange from the same date. Future dividends will normally be paid as follows: First interim Announced end of July and paid in October. Second interim Announced in January and paid in April. TRADE MARKS The following brand names used in this interim report are trade marks of the AstraZeneca group of companies: Accolate Arimidex Astra Tech Atacand Atacand HCT Atacand Plus Bricanyl Casodex Crestor Diprivan Faslodex Imdur Iressa Losec Marcaine Merrem Naropin Nexium Nolvadex Oxis Plendil Prilosec Pulmicort Pulmicort Respules Rhinocort Rhinocort Aqua Seloken Seroquel Symbicort Tenormin Toprol-XL Xylocaine Zestril Zoladex Zomig Zomig Rapimelt Zomig ZMT ADDRESSES FOR CORRESPONDENCE Registrar and Depositary Registered Office Swedish Securities Register Centre Transfer Office for ADRs 15 Stanhope Gate VPC AB The AstraZeneca Registrar Morgan Guaranty Trust London Box 7822 Lloyds TSB Registrars Company of New York W1K 1LN S-103 97 Stockholm The Causeway ADR Service Center Sweden Worthing PO Box 842006 West Sussex Boston, MA 02284-2006 BN99 6DA Tel: (0870) 600 3956 Tel: (781) 575 4328 Tel: (020) 7304 5000 Tel: (8) 402 9000 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS In order to utilise the 'Safe Harbor' provisions of the United States Private Securities Litigation Reform Act of 1995, AstraZeneca is providing the following cautionary statement. This Preliminary Report contains forward-looking statements with respect to the financial condition, results of operations and businesses of AstraZeneca. By their nature, forward-looking statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from that expressed or implied by these forward-looking statements. These factors include, among other things, exchange rate fluctuations, the risk that research and development will not yield new products that achieve commercial success, the impact of competition, price controls and price reductions, the risk of loss or expiration of patents or trade marks, difficulties of obtaining and maintaining governmental approvals for products, the risk of substantial product liability claims and exposure to environmental liability. 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