Final Results
Celltech Group PLC
18 March 2003
18th March 2003
Embargoed for release at 7am
CELLTECH GROUP PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS FOR YEAR
ENDED 31 DECEMBER 2002
During the past year Celltech has achieved important advances across all areas
of its operations. It has recorded a strong financial performance, with net
pre-tax profit*, excluding milestone payments, increasing by 46%. This
financial strength continues to successfully sustain Celltech's business model,
which is centred upon undertaking long-term internationally-competitive R&D,
supported by the revenues from its cash-generative pharmaceutical operations.
There has been substantial progress with Celltech's exceptional development
pipeline, comprised of products addressing large market opportunities, and in
most cases being developed with high quality major partners.
Additionally, the number of innovative products in early-stage clinical and
pre-clinical development increased substantially during 2002, as output has
continued to accelerate from Celltech's extensive discovery programmes.
The rapid progress seen in both Celltech's antibody-based and small molecule
programmes is being reinforced by leading edge technologies acquired or accessed
during the past two years. These include Celltech's SLAM technology, which
rapidly identifies very high affinity antibodies, and which has significant
advantages over other current technologies, and also the extensive ultra-high
throughput small molecule lead identification programmes conducted in
collaboration with Neogenesis.
Results highlights are as follows:
• Financial Results*
• Turnover - Product sales and royalties: £329.6 million (+9%;
+12% at constant exchange rates), of which
royalties: £76.7 million (+25%, +30% at CER).
• Profit - Net pretax profit: £50.4 million (+5%), pre-
goodwill amortisation and 2001 restructuring
charges.
- Excluding other income (milestone
payments), net pretax profit increased to
£42.3 million (+46%).
- Other income included a $10 million
milestone payment from Pharmacia (2001:
$25 million).
- Earnings per share (pre-goodwill amortisation and
2001 restructuring charges): 15.5p (+8%).
• Cash - Increase in cash and liquid resources during the
year of £20.8 million, notwithstanding payments
relating to a strategic product acquisition
totalling £14.7 million during 2002.
- Cash at 31 December 2002: £105.1 million, offset
by a $50 million (£31.2 million) loan note due
December 2003.
- Cash at 21 February 2003: £138.1 million (£106.5
million net)
* All financial results are presented pre- goodwill amortisation and 2001
restructuring charges, as detailed in the operational profit and loss account
within the Financial Results section below.
• New Product Pipeline
• CDP 870 - Pharmacia initiated a large Phase III programme
in rheumatoid arthritis during October 2002, to
assess the safety and efficacy of CDP 870, both
as monotherapy and combination therapy.
- Encouraging phase II results in Crohn's disease,
including identification of C-reactive protein
(CRP) level at entry as a marker for response to
treatment with CDP 870. Phase III trials are
anticipated to begin in mid-2003.
• PDE4 inhibitor - Merck continues to progress a novel orally-active
once-daily phosphodiesterase 4 inhibitor, arising
from its collaboration with Celltech, in Phase II
studies in asthma and chronic obstructive
pulmonary disease
(COPD).
• BMS-275291 - Bristol-Myers Squibb is continuing a large Phase
II/III study in non-small cell lung cancer with
Celltech's selective metalloproteinase inhibitor.
• Early stage pipeline - Excellent progress has been achieved, with four
products scheduled to enter clinical development
during 2003, to be undertaken by Celltech or by
major partners.
Two further products are planned to enter
preclinical development during 2003, including
CDP 146, a novel once-daily oral p38 kinase
inhibitor due to enter development in H2 2003.
• Celltech Pharmaceutical Operations
- Pharmaceutical product sales increased to £252.9 million (+5%; +8% at CER).
- Acquisition of Dipentum from Pharmacia in H2 2002, for the treatment of
inflammatory bowel diseases. Initial sales of £4.6 million were achieved in
2002.
- Positive head-to-head trial results from a comparison of Metadate CD and
Concerta, announced in October 2002 confirming Metadate's more rapid onset of
action in ADHD patients.
- US salesforce refocused in H2 2002, to establish a 30-strong gastroenterology
salesforce, and reduce the primary care salesforce from 350 to 170
representatives.
- Establishment of a specialist-focused Nordic region sales and marketing
organisation in H2 2002.
• Royalties
A substantial increase in Royalty income was achieved, arising mainly from
Celltech's successful antibody technology as follows:
2002 2001* % change
£m £m
__________ __________ __________
Antibody engineering 53.1 35.5 +49
Asacol 7.6 9.8 -22
Pertactin 11.0 8.4 +31
Mylotarg 2.7 4.0 -33
Other 2.3 1.1 +109
__________ __________ __________
76.7 58.8 +30
Effect of exchange differences - 2.6
__________ __________ __________
As reported 76.7 61.4 +25
__________ __________ __________
* At constant exchange rates
• Proposed acquisition of Oxford GlycoSciences (OGS)
On 26 February 2003 Celltech announced an Offer of 182 pence in cash for OGS,
valuing its entire issued share capital at approximately £101.4 million.
Celltech's rationale for this Offer is the opportunity to acquire important
tangible and intangible assets, including certain novel protein targets
identified and patented by OGS that it can harness into its extensive R&D
capabilities. Celltech believes that using its antibody and small molecule
technology platforms it is well-positioned to exploit these novel protein
targets, in particular through the use of its SLAM technology platform for the
rapid generation of extremely high affinity antibodies for target validation and
therapeutic antibody construction, and through its access to Neogenesis' ultra
high throughput screening capabilities for the rapid identification of lead
series for small molecule approaches.
• New Product Pipeline
Celltech has an extensive and competitive pipeline with 10 products in
development, addressing serious or life-threatening diseases, including 6
products that are in Phase II or Phase III studies, with another four products
expected to enter clinical development during 2003. Recent advances with key
products in mid- or late-stage development are summarised below:
• CDP 870
As Celltech's leading product employing its proprietary PEGylated antibody
fragment technology, CDP 870 represents the next generation of anti-TNF-alpha
therapies. Phase II data in rheumatoid arthritis (RA), presented in 2001,
highlighted that CDP 870 has a fully competitive efficacy and safety profile at
the 400mg dose, with a convenient four-weekly subcutaneous dosing schedule.
During the first half of 2002, Pharmacia developed a new lyophilised formulation
of the drug, which is being used for Phase III studies and eventual in-market
supply.
Pharmacia initiated Phase III studies in RA in October 2002, triggering a $10
million milestone payment to Celltech. The Phase III programme will investigate
the safety and efficacy of CDP 870 as both monotherapy and in combination with
other disease modifying drugs. These studies, in which patients will be treated
for up to 12 months, will evaluate the effect of CDP 870 on both signs and
symptoms, using the American College of Rheumatology (ACR) clinical scoring
system, and disease progression, using x-ray techniques to measure the rate of
joint destruction.
Celltech is also developing CDP 870 in Crohn's disease. Following the
announcement of positive Phase II data in February 2002, Celltech has carried
out further analysis to identify those patients who receive most benefit from
treatment. This resulted in the identification of C-reactive protein (CRP) as a
marker for probable treatment response. Those patients entering the study with
elevated CRP levels immediately prior to treatment with CDP 870 achieved
significantly higher response rates. Celltech plans to discuss its Phase III
plans, which incorporate this new information, with the FDA in the near future.
Phase III studies are expected to begin in mid-2003. The current intention is
to submit applications for registration simultaneously for both the RA and
Crohn's disease indications.
Celltech's collaboration with Pharmacia provides Celltech with co-development
and co-marketing rights in the US, EU and Japan, with Celltech earning a share
of the profits arising from product sales for RA and Crohn's disease in these
territories. In other territories and indications, Celltech will receive a
royalty on product sales. In addition, Celltech has received payments to date
of $60 million, with a further $220 million potentially receivable dependent
upon the attainment of certain future milestone events. Celltech has co-funding
obligations for the development of CDP 870 in RA above an agreed threshold,
which will be triggered during 2003. Celltech is responsible for the costs of
developing CDP 870 in Crohn's disease, subject to a one-off contribution from
Pharmacia towards these costs made at the time of the collaboration. The terms
of this collaboration will be unchanged following the proposed acquisition of
Pharmacia by Pfizer.
US sales of existing TNF-alpha antagonists were around $2 billion in 2002, and
the overall TNF-alpha therapy market is predicted to increase to $4-5 billion in
the US during the next few years.
• CDP 571
Celltech announced in July 2002 Phase III results with this humanised
anti-TNF-alpha antibody in Crohn's disease, which demonstrated efficacy at acute
secondary end-points, but which did not meet its 6-month primary efficacy
endpoint. Celltech is currently assessing the commercial opportunity for CDP
571, including its potential use on a named-patient basis. Celltech intends to
pursue discussions with regulatory authorities regarding the data package
required for acute or as needed usage, with meetings likely to be scheduled
around mid-2003. It is anticipated that Celltech will review its licensing
arrangements for CDP 571, including the existing collaboration with Biogen,
following these meetings.
• PDE4 Inhibitor
Merck continues to progress a novel, potent once-daily PDE4 inhibitor, which
arose from its collaboration with Celltech, in Phase II studies for the
treatment of asthma and chronic obstructive pulmonary disease (COPD). Under the
terms of the collaboration Celltech will receive progress-related milestone
payments, and royalties on worldwide product sales. Celltech also has an option
to obtain a share of future profits, through a contribution to Phase III
development costs.
Worldwide sales for asthma treatments are about $4 billion, with a compound
annual growth rate of 13%. Worldwide sales for COPD are about $1.6 billion,
whilst current forecasts predict that the COPD market will exceed $4 billion by
2008.
• BMS-275291
Bristol-Myers Squibb continues to evaluate this selective metalloproteinase
inhibitor in a large Phase II/III study in non-small cell lung cancer, in
combination with Taxol and Paraplatin, which is expected to be completed during
2003. Celltech will receive further substantial milestone payments and
royalties, should the product be successfully commercialised.
• Early stage development
In addition to its extensive late-stage new product pipeline, the number of
products in Celltech's early stage clinical and preclinical development has
substantially increased during 2002. These innovative product candidates, under
development by Celltech and its partners, address large market opportunities in
cancer and autoimmune diseases.
• Two new antibody fragment-based product candidates are expected to enter
initial clinical studies in mid-2003:
- CDP 484, which blocks the effects of the pro-inflammatory cytokine
interleukin-1-beta, is being pursued as a new treatment for RA and other
inflammatory disorders.
- CDP 791, which blocks a receptor involved in promoting new blood vessel
formation in solid tumours, is being developed as a novel cytostatic agent
for treating common cancers.
• CDP 323, an orally-active small molecule targeting alpha-4 integrins, is
expected to enter clinical development in the second half of 2003,
initially targeted towards RA. Celltech is also exploring the potential of
this product in other inflammatory and autoimmune disorders, including
multiple sclerosis and inflammatory bowel disease.
• Wyeth is collaborating with Celltech on a further antibody-cytotoxic
conjugate, CMC-544 using the technology platform developed for Mylotarg,
comprising an anti-CD22 antibody linked to calicheamicin. This compound is
scheduled to enter clinical development for non-Hodgkins lymphoma in the
first half of 2003.
• Celltech expects to enter CDP 146, an orally active small molecule that is
a potent and highly selective inhibitor of p38 kinase, into preclinical
development during the second half of 2003, along with a further
antibody-fragment targeting inflammatory diseases.
The productivity of Celltech's research operations has been significantly
enhanced through use of the SLAM technology for rapid generation of very high
affinity antibodies, and the Neogenesis collaboration, which provides an ultra
high throughput screening capability for the small molecule pipeline. The SLAM
technology, acquired from Abgenix in 2001, is being intensively exploited in
novel target validation, and also in therapeutic antibody construction, within
Celltech's Seattle and Slough Research Centres. Celltech has further developed
this technology, and believes that it now affords significant advantages over
current methods for selecting high affinity human or near-human antibodies.
These technologies are expected to contribute to a sustained increase in
Celltech's discovery output in future years.
• Celltech Pharmaceutical Operations
Celltech continues to reshape its pharmaceutical business, which has
international sales, marketing and manufacturing operations, to focus and
reinforce its capabilities. This will enable Celltech to retain substantial
incremental value in the mid-term from its innovative development pipeline, by
marketing or co-marketing certain of its key pipeline products to specialist
prescribing audiences, in addition to underpinning its self-financing profile.
During 2002 Celltech established specialist gastrointestinal-focused sales
forces within its US and its European operations, initially to market Dipentum,
which was acquired from Pharmacia in July 2002, and subsequently to market
pipeline products such as CDP 870 for Crohn's disease.
Celltech continued to expand its European presence by establishing a
specialist-focused Nordic region sales and marketing organisation during 2002.
This follows the acquisition of Thiemann, now renamed Celltech Pharma GbmH, in
September 2001, which provided a substantial sales and marketing presence in
Germany, the largest EU pharmaceutical market.
Overall product sales for the year, excluding royalties, increased by 8% to
£252.9 million (2001: £234.9 million at CER). Excluding the impact of the
Thiemann acquisition, product sales were steady at £227.8 million (2001: £228.3
million at CER).
• Sales of Major Products
2002 2001* % change
£m £m
________ ________ ________
Tussionex 71.3 61.4 +16
Zaroxolyn 28.5 29.0 -2
Metadate CD 18.0 8.2 +120
Delsym 14.3 9.5 +51
Generic methylphenidate 12.6 19.6 -36
Perenterol 7.1 1.5 nm
Coracten 6.3 5.4 +17
Ionamin 5.5 5.3 +4
Dipentum 4.6 - nm
Pediapred 3.9 5.7 -32
Semprex-D 2.6 6.4 -59
Other 78.2 82.9 -6
________ ________ ________
Total product sales 252.9 234.9 +8
Effect of exchange differences - 6.8
________ ________ ________
As reported 252.9 241.7 +5
________ ________ ________
* At constant exchange rates
Product sales from US operations were slightly ahead of the previous year at
£162.6 million (2001: £159.4 million at CER), reflecting growth in the cough/
cold range of products and Metadate CD offset by anticipated declines in certain
other products. Tussionex, Celltech's long-acting hydrocodone-based
anti-tussive, increased market share, with sales advancing by 16% to £71.3
million, and Delsym, an extended release OTC anti-tussive responded strongly to
the introduction of a new bottle size, with sales increasing by 51% to £14.3
million.
In October 2002, Celltech announced positive results from a head-to-head study
against the current market leader in the once-daily methylphenidate segment.
This study confirmed that Metadate CD's pharmacokinetic profile translates into
a more rapid onset of action and improved clinical control during the school
day. Celltech plans to publish the positive results from this study during
2003. Sales of Metadate CD increased significantly to £18.0 million, with a
market share of the once-daily methylphenidate market of around 9%.
Celltech's valuable anti-tussive franchise will be strengthened by the addition
of a new 12-hour product, Codeprex, which is expected to be launched in time for
the 2004/5 cough/cold season.
Sales from European operations increased significantly to £90.4 million (2001:
£75.6 million at CER), but excluding the impact of the Thiemann acquisition,
European sales declined by 6% to £65.3 million, reflecting the mature nature of
the European product portfolio, in addition to the cessation of certain revenues
relating to Celltech's agreement with PowderJect for the marketing of its
vaccines.
• Financial Results
Operational profit and loss account for the year ended 31 December 2002
2002 2001 % change
£m £m
________ ________ ________
Sales 329.6 303.1 +9
Cost of sales (94.7) (83.5) +13
________ ________ ________
Gross profit 234.9 219.5 +7
Research and development (95.7) (90.7) +6
Sales, marketing and distribution (71.5) (78.6) -9
Corporate and general administration (26.8) (24.9) +8
________ ________ ________
Total expenses (194.0) (194.2) Nil
________ ________ ________
Operating profit before other income 40.9 25.4 +61
Other income 8.1 18.8 Nm
________ ________ ________
Operating profit pre restructuring items and 49.0 44.2 +11
goodwill
Interest 1.4 3.6 -61
________ ________ ________
Net profit pre restructuring items and goodwill 50.4 47.8 +5
Tax (7.6) (8.1) -6
________ ________ ________
Net profit after tax pre restructuring items and 42.8 39.7 +8
goodwill ________ ________ ________
Operating profit before other income, excluding goodwill amortisation and
restructuring items, increased by 61% to £40.9 million (2001: £25.4 million),
notwithstanding a substantial increase in insurance premiums during the year
along with a £2.9 million charge relating to the Group's self-insurance for
which a captive insurance subsidiary has been established. The operating profit
excluding goodwill amortisation and restructuring items increased to £49.0
million (2001: £44.2 million, including £17.4 signature fee from Pharmacia
relating to the CDP 870 collaboration). Milestone income is an important
revenue source for Celltech, although the level of income can vary substantially
each year depending upon the progress of Celltech's collaborations.
Net pretax profit before other income, excluding goodwill amortisation and
restructuring items, also increased strongly to £42.3 million (+46%), despite a
significant reduction in interest received as a result of the marked decline in
US interest rates, in addition to lower average cash balances. The substantial
increases recorded in the operating and net profit before other income,
excluding goodwill amortisation and restructuring items, reflect the underlying
growth of Celltech's sales and royalty revenues, and its stringent control of
costs.
The tax charge for the year of £7.6 million represents a 15% effective rate on
net profit before goodwill amortisation and restructuring items. Due to the
availability of operating losses carried forward, it is expected that a tax rate
of not more than 20% should be sustained for the next three years, based upon
the current UK and US fiscal environments.
Earnings per share for the year amounted to 15.5p (2001: 14.4p) before
restructuring items and goodwill. Goodwill amortisation for the year, which
arises from the accounting treatment of company acquisitions, amounted to £93.7
million (2001: £92.6 million). The 2001 financial statements included a
restructuring charge of £7.8 million: there have been no restructuring charges
during 2002. In line with normal practice amongst international biotechnology
companies, no dividend is proposed for the year.
Celltech's financial position has been considerably strengthened during the
year, with an increase in cash and liquid resources during the year of £20.8
million, notwithstanding payments made to Pharmacia relating to the acquisition
of Dipentum of £14.7 million. The year-end cash position remains strong at
£105.1 million (2001: £90.4 million) before a loan note due December 2003 of
£31.2 million, and had increased to £138.1 million (£106.5 million net) as at 21
February 2003. The Group has recently renegotiated a £65 million, revolving
credit facility for a further three years to retain flexibility in its future
funding requirements. The Group does not envisage needing additional funding
for normal operational requirements.
Celltech's 2002 results presentation to analysts and investors will be broadcast
via the Internet commencing at 09:00 a.m. today, and will be accessible through
Celltech's homepage at www.celltechgroup.com. A full replay service of the
presentation will be available following the meeting.
Dr Peter Fellner and Peter Allen will today host a results conference call for
investors at 11:00 EST (16:00 London time). This may be accessed by dialling
(800) 361-0912 (US domestic line), +(1) 913 981-5559 (international number), and
quoting 'Celltech Results'.
A recording of the call will be available until 25 March by dialling (888)
203-1112 (US domestic line), +(1) 719 457-0820 (international number), access
code : 671745.
Contacts
Dr Peter Fellner Chief Executive Officer (44) (0) 1753 534655
Peter Allen Chief Financial Officer
Richard Bungay Director of Corporate
Communications
Jon Coles Brunswick (London) (44) (0) 207 404 5959
Fiona Fong Brunswick (London)
Cindy Leggett-Flynn Brunswick (New York) (1) (212) 333 3810
Celltech Group plc (LSE: CCH; NYSE: CLL) is one of Europe's largest
biotechnology companies, with an extensive late stage development pipeline and a
profitable, cash-generative pharmaceutical business. Celltech also possesses
drug discovery capabilities of exceptional strength, including a leading
position in antibody engineering. More details can be found at
www.celltechgroup.com.
This announcement does not constitute an offer or invitation to purchase any
securities or a solicitation of an offer to buy any securities. The Directors
of Celltech accept responsibility for the information contained in this
announcement and, to the best of their knowledge and belief (having taken all
reasonable care to ensure such is the case), the information contained in this
announcement is in accordance with the facts and does not omit anything likely
to affect the import of such information.
Celltech desires to take advantage of the 'Safe Harbor' provisions of the US
Private Securities Litigation Reform Act of 1995, with respect to
forward-looking statements contained within this document. In particular certain
statements with regard to the conduct of clinical trials with CDP 870 and other
development products, the outcome of planned discussions with regulatory
authorities regarding the probable requirements for the registration of CDP 870
and CDP 571, and the feasibility and benefits of the acquisition of OGS by
Celltech, are all forward-looking in nature. By their nature forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by the forward-looking
statements. In addition to factors set forth elsewhere in this document, the
following factors, although not exhaustive, could cause actual results to differ
materially from those the Company expects: pricing and product initiatives of
the Company's competitors, including the introduction of branded competition or
generic substitution for the Company's products, unanticipated difficulties in
the design or implementation of clinical trials, studies and investigations,
results from clinical trials, studies and investigations that are inconsistent
with previous results and the Company's expectations, failure to obtain and
maintain required approvals for products from governmental authorities,
unavailability of raw materials or other interruptions in production or product
distribution both internal and external, unexpected difficulties in the scale-up
of production to viable commercial levels, unexpected fluctuations in production
yields for development products or marketed products, fluctuations in currency
exchange rates, inability of the Company to market existing and new products
effectively, the failure of the Company's development, manufacturing and
marketing partners to perform their contractual obligations and the risk of
substantial product liability claims. Other factors that could affect these
forward-looking statements are described in the Company's reports filed with the
US Securities and Exchange Commission. The forward-looking statements included
in this document represent the Company's best judgement as of the date hereof
based in part on preliminary information and certain assumptions which
management believes to be reasonable. The Company disclaims any obligation to
update these forward-looking statements
Consolidated Profit and Loss Account
for the year ended 31 December 2002
Pre
Pre- restructuring Restructuring
goodwill items and items and
charge Goodwill Total goodwill goodwill Total
Year to Year to Year to Year to Year to Year to
31 31 31 31 31 31
December December December December December December
2002 2002 2002 2001 2001 2001
Notes £m £m £m £m £m £m
Turnover 329.6 - 329.6 303.1 - 303.1
Cost of sales (94.7) - (94.7) (83.5) - (83.5)
_________ _________ _________ _________ _________ ________
Gross profit 234.9 - 234.9 219.6 - 219.6
========= ========= ========= ========= ========= ========
Investment in research and (95.7) - (95.7) (90.7) - (90.7)
development
Selling, marketing and (71.5) - (71.5) (78.6) - (78.6)
distribution
expenses
Administrative expenses (26.8) (93.7) (120.5) (24.9) (100.4) (125.3)
_________ _________ _________ _________ _________ ________
Operating profit/(loss) before 40.9 (93.7) (52.8) 25.4 (100.4) (75.0)
other
income
Other income 1 8.1 - 8.1 18.8 - 18.8
_________ _________ _________ _________ _________ ________
Operating profit/(loss) 49.0 (93.7) (44.7) 44.2 (100.4) (56.2)
Net interest receivable 1.4 - 1.4 3.6 - 3.6
_________ _________ _________ _________ _________ ________
Profit/(loss) on ordinary 50.4 (93.7) (43.3) 47.8 (100.4) (52.6)
activities
before taxation
Tax on profit/(loss) on ordinary (7.6) 5.1 (2.5) (8.1) 5.2 (2.9)
activities
_________ _________ _________ _________ _________ ________
Profit/(loss) on ordinary
activities
after taxation 42.8 (88.6) (45.8) 39.7 (95.2) (55.5)
========= ========= ========= ========= ========= ========
Accrual for unpaid preference
share
dividend (0.2) - (0.2) (0.2) - (0.2)
_________ _________ _________ _________ _________ ________
Transfer to/(from) profit and
loss
reserve 42.6 (88.6) (46.0) 39.5 (95.2) (55.7)
========= ========= ========= ========= ========= ========
Basic earnings/(loss) per share 2 15.5 (16.7) 14.4 (20.3)
(pence)
Diluted earnings/(loss) per 2 15.4 (16.7) 14.2 (20.3)
share (pence)
The results presented above arise from continuing operations.
Consolidated Balance Sheet
as at 31 December 2002
31 December 31 December
2002 2001
£m £m
Fixed assets
Intangible assets 439.9 498.3
Tangible assets 95.2 103.5
Investments 40.2 38.3
____________ ____________
575.3 640.1
____________ ____________
Current assets
Stock 43.4 45.7
Debtors 76.6 82.7
Equity investments - 2.0
Cash and liquid resources 105.1 90.4
____________ ____________
225.1 220.8
Creditors: amounts falling
due within one year (160.1) (119.2)
____________ ____________
Net current assets 65.0 101.6
____________ ____________
Total assets less current 640.3 741.7
liabilities
Creditors: amounts falling due
after
more than one year (12.7) (45.6)
Provisions for liabilities and
Charges (63.2) (76.9)
____________ ____________
Net assets 564.4 619.2
============ ============
Capital and reserves
Called up share capital 141.3 141.0
Share premium account 83.3 81.6
Other reserves 621.4 621.2
Profit and loss account (281.6) (224.6)
____________ ____________
Shareholders' funds 564.4 619.2
============ ============
Approved by the Board on 17 March 2003 and signed on its behalf by
Dr. Peter Fellner
Peter Allen
Directors
Consolidated Cash Flow Statement
for the year ended 31 December 2002
Year to Year to
31 December 31 December
2002 2001
£m £m
Net cash inflow from operating activities 49.4 38.7
Returns on investments and servicing of finance
Interest received 2.8 5.1
Interest paid (2.5) (2.4)
Interest paid on finance leases (0.1) (0.2)
____________ ____________
Net cash inflow from returns on investment and servicing of 0.2 2.5
finance
____________ ____________
Taxation
Taxation paid (4.4) (4.3)
Taxation refunded 0.8 13.0
____________ ____________
Taxation (outflow)/inflow (3.6) 8.7
____________ ____________
Capital expenditure and financial investment
Payments made to acquire tangible fixed assets (11.8) (16.1)
Payments made to acquire intangible fixed assets (16.1) (11.8)
Payments made to acquire fixed asset investments - (7.0)
Proceeds from disposal of equity investments 1.1 11.5
Proceeds from sale of fixed assets 0.7 1.1
____________ ____________
Net cash outflow from capital expenditure and financial (26.1) (22.3)
investment
____________ ____________
Acquisitions and disposals
Deferred consideration - (1.5)
Acquisition of Thiemann, less cash acquired - (26.2)
Net proceeds from European asset sales - 3.0
Cash funding in respect of businesses held for resale - (4.1)
Proceeds from sale of businesses held for disposal - 15.3
____________ ____________
Net cash (outflow)/inflow from disposals and acquisitions of - (13.5)
businesses
____________ ____________
Net cash inflow before management of liquid resources and 19.9 14.1
financing
Management of liquid resources 30.1 (7.0)
Financing
Receipts from issuing shares 2.0 5.0
Capital element of finance lease rental payments (1.1) (1.3)
Repayment of loan of acquired subsidiaries - (5.4)
____________ ____________
Net cash inflow/(outflow) from financing 0.9 (1.7)
============ ============
Increase in cash in the period 50.9 5.4
============ ============
Notes to the Consolidated Cash Flow Statement
(a) Reconciliation of operating loss to net cash outflow from operating
activities
Year to Year to
31 December 2002 31 December 2001
£m £m
Operating loss (44.7) (56.2)
Restructuring - 7.8
____________________ ____________________
Operating loss before restructuring costs (44.7) (48.4)
Depreciation 13.3 12.6
Goodwill amortisation 93.7 92.6
Intangibles amortisation 1.0 -
Decrease/(increase) in stocks 0.1 (5.5)
Decrease/(increase) in debtors 0.9 (26.2)
(Decrease)/increase in creditors (9.7) 20.5
____________________ ____________________
Net cash inflow from operating activities before restructuring 54.6 45.6
costs
Outflow relating to restructuring costs (5.2) (6.9)
____________________ ____________________
Net cash inflow from operating activities 49.4 38.7
==================== ====================
(b) Reconciliation of Net Cash Flow to Movement in Net Funds
Year to Year to
31 December 2002 31 December 2001
£m £m
Increase in cash 50.9 5.4
Management of liquid resources (30.1) 7.0
____________________ ____________________
Total increase in cash and liquid resources 20.8 12.4
Loans and finance leases acquired with subsidiaries - (5.4)
Loans and finance leases disposed with asset sales - 0.3
Decrease in long term debt and finance leases 1.1 6.7
Inception of new finance leases - -
____________________ ____________________
Change in net funds 21.9 14.0
Exchange differences (2.8) 0.5
____________________ ____________________
Movement in net funds in the period 19.1 14.5
Net funds at beginning of period 53.1 38.6
____________________ ____________________
Net funds at 31 December 72.2 53.1
==================== ====================
(c) Analysis of changes in net funds
At 1 January 2002 Cash flow Exchange At 31 December 2002
Movements
________________ _______________ _______________ ____________________
£m £m £m £m
Cash 36.3 50.9 (6.1) 81.1
Liquid resources 54.1 (30.1) - 24.0
Finance leases (2.8) 1.1 - (1.7)
Loans (34.5) - 3.3 (31.2)
________________ _______________ _______________ ____________________
Net funds 53.1 21.9 (2.8) 72.2
================ =============== =============== ====================
Notes to the Financial Statements
Statutory accounts
The information presented does not constitute statutory accounts, as defined in
Section 240 of the Companies Act 1985, for the year ended 31 December 2002 or
2001, but is derived from those accounts. Statutory accounts for 2001 have been
delivered to the Registrar of Companies, and those for 2002 will be delivered
following the Company's Annual General Meeting. The auditors have issued an
unqualified opinion on the accounts for 2002 and 2001.
1. Other income
Year to Year to
31 December 2002 31 December 2001
£m £m
________________ _______________
Pharmacia 6.4 17.5
Other milestones 1.7 1.3
________________ _______________
8.1 18.8
================ ===============
The Pharmacia income in 2002 of $10 million (£6.4 million) relates to the
successful completion of Phase II studies / commencement of Phase III studies of
CDP870 in the rheumatoid arthritis indication.
The Pharmacia income in 2001 relates to $25 million (£17.5 million) of the $50
million initial payment received from the company for the co-development and
co-promotion of CDP870. The income recognised is in relation to the
non-refundable, non-creditable signature payment for the licence. The remainder
of the upfront payment will be offset against CDP870 research and development
expenditure incurred by the Group. Research and development expenditure in 2002
is shown net of £3.7 million (2001:£8.4 million) funding. There is a remaining
£5.3 million held on the balance sheet within accruals and deferred income.
2. Earnings per share
The basic loss per share is based upon a loss of £46 million (2001: loss of
£55.7 million) after deduction of accrued unpaid preference share dividends of
£0.2 million (2001: £0.2 million) and a weighted average number of shares in
issue of 275.4 million.
In addition for the years ended 31 December 2002 and 2001 the earnings per share
before goodwill and restructuring items is provided which is based on profits of
£42.6 million (2001: profit of £39.5 million). This is reconciled to the loss
of £46 million (2001: loss of £55.7 million) as set out below:
Year to 31 December 2002 Year to 31 December 2001
£m £m
__________________________ __________________________
Attributable loss (46.0) (55.7)
Goodwill amortisation 93.7 92.6
Restructuring costs - 7.8
Tax on goodwill (5.1) (5.2)
__________________________ __________________________
Adjusted profit 42.6 39.5
========================== ==========================
The diluted earnings/(loss) per share, takes into account the dilutive effect of
share options and convertible preference shares. A reconciliation between the
number of shares used in the calculation of the basic and diluted earnings/
(loss) per share is shown in the table below:
Year to 31 December 2002 Year to 31 December 2001
Number Number
m m
__________________________ __________________________
Basic weighted average number of shares 275.4 274.5
Share options 0.6 2.6
Convertible preference shares 1.9 1.9
__________________________ __________________________
Diluted number of shares 277.9 279.0
========================== ==========================
Due to the loss making position of the Group, the exercise of share options and
conversion of preference shares do not increase the basic loss per share and
therefore according to FRS14 the basic and diluted loss per share remain the
same. The 2002 and 2001 earnings per share before goodwill and restructuring
items has been adjusted for the dilutive effect.
3. Exchange rates
The Group uses the average exchange rates prevailing during the period to
translate the results of overseas subsidiary undertakings and the period-end
rates to translate the net assets of those undertakings. The currency which
most influences the Group's results is the US dollar and the relevant exchange
rates are as follows:
31 December 2002 31 December 2001
US$/Sterling
__________________________ __________________________
Period average 1.50 1.44
Period end 1.60 1.45
========================== ==========================
Pro Forma Condensed Combined Profit and Loss Accounts
On 15 June 1999 Celltech and Chiroscience announced plans for the merger of
their respective businesses. The merger took effect on 3 August 1999. On 26
January 2000, the Celltech Group acquired Medeva PLC. Due to the significant
impact to the financial position of the Celltech Group caused by these two
transactions the Directors believe that shareholders would benefit from certain
additional pro-forma financial information.
Presented below is a four-year summary of the Celltech Group, on a pro-forma
basis as if the Chiroscience and Medeva businesses had been part of the Celltech
Group for the entire period.
Total continuing Total continuing Total continuing Total continuing
operations operations operations operations
Year to 31 Year to 31 Year to 31 Year to 31
December 2002 December 2001 December 2000 December 1999
£m £m £m £m
____________ ____________ ____________ ____________
Turnover 329.6 303.1 250.2 243.4
Cost of sales (94.7) (83.5) (74.1) (72.5)
____________ ____________ ____________ ____________
Gross profit 234.9 219.6 176.1 170.9
____________ ____________ ____________ ____________
Investment in research and development (95.1) (90.7) (78.5) (80.9)
Selling, marketing and distribution expenses (71.5) (78.6) (52.0) (57.1)
Administrative expenses (27.4) (24.9) (26.7) (33.4)
____________ ____________ ____________ ____________
Operating profit/(loss) before other income 40.9 25.4 18.9 (0.5)
Other income 8.1 18.8 4.6 20.2
____________ ____________ ____________ ____________
Operating profit 49.0 44.2 23.5 19.7
Net interest receivable 1.4 3.6 1.6 (0.1)
____________ ____________ ____________ ____________
Profit before tax 50.4 47.8 25.1 19.6
____________ ____________ ____________ ____________
Basis of preparation
1. The results are presented before goodwill and restructuring.
2. The 2001, 2000 and 1999 results are presented at historic exchange rates.
3. The results of businesses that were held for immediate disposal on the
acquisition of the Medeva Group are excluded.
4. The 2002 and 2001 figures are extracted, without adjustment, from the audited
profit and loss account, before goodwill and restructuring items presented
this year. The 2000 and 1999 figures are extracted from the pro-forma note,
audited by Ernst & Young and presented in the 2000 financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
Tuesday, 14th May 2024
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