29th Apr 2005 11:00
7am (EDT) 12 noon (BST)First quarter results - strong underlying business performance with investmentfor future growthBasingstoke, UK and Philadelphia, US - April 29, 2005 - Shire PharmaceuticalsGroup plc (LSE: SHP, NASDAQ: SHPGY, TSX: SHQ) announces results for the firstquarter to March 31, 2005.Strong underlying business performance: * ADDERALL XR - maintained its 25% share of the US ADHD market. Sales up 4% compared to Q1 2004 to $145.5M, despite wholesaler de-stocking of approximately $20M Underlying growth + 18% Wholesaler de-stocking - 14% Net product sales growth + 4% * De-stocking effect on other US product sales of approximately $10M * Revenues up 3% to $333.7M, royalties up 4% to $58.3M, compared with Q1 2004. Investing for future growth: * Increased SG&A spend of approximately $30M to fund new product launches * FOSRENOL: 12.9% of new US phosphate binder scrips as of April 15. * EQUETRO: launched this month * XAGRID: launched, strong early sales * NRP104: agreement signed in January 2005, $50M upfront payment. Matthew Emmens, Chief Executive Officer, said: "Shire has made a solid start tothe year. The rise in revenues was supported by underlying growth of 18% fromADDERALL XR in the US, which was understated due to significant wholesalerde-stocking."In line with the guidance given with the full year results in March, SG&Aincreased in the first quarter, reflecting the costs of new product launches inthe first half of 2005. We are very pleased with our launch of FOSRENOL in theUS, and the phased launch of XAGRID in Europe. EQUETRO, our new treatment forBipolar 1 Disorder in the US, was launched this month."As expected, R&D costs in the first quarter were also higher than Q1 2004,reflecting the progression of our late stage pipeline and the three plannedfilings in 2005. R&D expenditure in Q1 also includes an upfront payment of $50million for NRP104. On May 10 we will present Phase 3 data for SPD503 and MTSfor the treatment of attention deficit hyperactivity disorder and SPD476 forulcerative colitis."Last week we announced our plans to acquire Transkaryotic Therapies. Webelieve this is an important and complementary acquisition that fits ourstrategy and provides a platform for sustainable growth."First Quarter 2005 Unaudited Results Highlights Restated(1) US GAAP Q1 2005 Q1 2004 $M $M Growth Total revenues 333.7 323.6 +3% Operating income 14.7 114.2 Income from continuing operations 17.4 83.4 Net income 20.5 74.6 Diluted Earnings Per Ordinary Share: Continuing operations 3.5c 16.3c -79% Discontinued operations 0.6c (1.6c) _______ _______ 4.1c 14.7c -72% Diluted Earnings Per American Depositary Share (ADS): Continuing operations 10.4c 49.0c Discontinued operations 1.8c (5.1c) _______ _______ 12.2c 43.9c -72% Non GAAP Adjusted Diluted Earnings Per Share (EPS) from continuing operations(2): Per Ordinary Share 11.0c 16.9c -35% Per ADS 33.0c 50.6c -35% Note: Average exchange rates for Q1 2005 and 2004 were $1.89: ‚£1.00 and $1.84:‚£1.00 respectively. 1. The results for the three months to March 31, 2004 have been restated to reflect the disposal of the vaccines business in Q2 2004, 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, 2004 figures from revenues down to income from continuing operations exclude the results of the vaccines business, while 2004 net income and earnings per share include the results of the vaccines business. 2. This is a non GAAP financial measure that excludes a US$50 million (US$36 million net of tax) cash payment to New River Pharmaceuticals Inc (New River) and reorganization costs. Management believes that the presentation of this non GAAP financial measure provides useful information to investors regarding Shire's underlying performance as the upfront payment to New River and the costs associated with the reorganization are not indicative of the underlying performance of the business. A reconciliation of this non GAAP financial measure to the most directly comparable US GAAP financial measure can be found on page 19. Recent Strategic Achievements * Shire and Transkaryotic Therapies, Inc. (TKT) announced on April 21, 2005 the signing of a definitive agreement under which Shire is to acquire TKT in an all-cash transaction valued at $37 per outstanding TKT share, or $1.57 billion. The proposed acquisition is consistent with Shire's strategy and highly complementary to Shire's business model, which is to develop and market products for specialty pharmaceutical markets. The transaction is subject to approval by the shareholders of both companies as well as regulatory approvals and satisfaction of other customary closing conditions. The transaction is expected to close in the summer of 2005. * Collaborative agreement signed in January 2005 with New River Pharmaceuticals for the global commercialization of NRP104, a Phase 3 compound for the treatment of attention deficit hyperactivity disorder (ADHD) and other potential indications. * SPD754 (HIV compound): global research, development and marketing rights were out-licensed to Avexa Ltd in January 2005 but Shire has retained the right to commercialize the product in the US and Canada. 2005 Financial OutlookShire's underlying business continues to perform strongly. As previouslyindicated: * Revenue growth for 2005 is expected to be in the high single-digit to low double-digit range. * Excluding the $50 million upfront payment to New River, Q1 R&D costs were, as expected, in the high teens (18%) of revenues compared to the very low level of spend experienced in Q1 2004 (12% of revenues). This increase reflects the very good progression of the late stage pipeline over the last twelve months and the expectation of three filings in 2005. For the full year, the percentage increase in R&D costs is expected to be broadly in line with the percentage growth in revenues. * As anticipated, SG&A expenses in Q1 2005 increased by approximately $30 million compared to Q4 2004, reflecting the costs associated with new product launches in the first half of 2005. The growth in new product sales from Q2 onwards should increasingly absorb these costs. By Q4 2005, SG&A is expected to return to a level broadly consistent with Q4 2004. The above financial outlook excludes any financial impact arising from theproposed acquisition of TKT, including: * A charge of approximately $800 million relating mainly to the write-off of the intangible asset value associated with the acquired in-process R&D pipeline. * The cash consideration for the acquisition and the working capital requirements for Shire after completion of the acquisition, which will be met out of current cash resources of the enlarged group, together with new debt facilities of approximately $500 million. - Ends - For further information please contact:Investor Relations Clƒ©a Rosenfeld (Rest of the World) +44 1256 894 160 Brian Piper (North America) +1 484 595 8252 Media Jessica Mann (Rest of the World) +44 1256 894 280 Matthew Cabrey (North America) +1 484 595 8248 Notes to editorsShire Pharmaceuticals Group plcShire Pharmaceuticals Group plc (Shire) is a global specialty pharmaceuticalcompany with a strategic focus on meeting the needs of the specialist physicianand currently focuses on developing projects and marketing products in theareas of central nervous system, gastrointestinal and renal diseases. Shire hasoperations 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."SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF1995Statements included herein that are not historical facts are forward-lookingstatements. Such forward-looking statements involve a number of risks anduncertainties and are subject to change at any time. In the event such risks oruncertainties materialize, Shire's results could be materially affected. Therisks and uncertainties include, but are not limited to, risks associated withthe inherent uncertainty of pharmaceutical research, product development,manufacturing and commercialization, the impact of competitive products,including, but not limited to, the impact of those on Shire's ADHD franchise,patents, including but not limited to, legal challenges relating to Shire'sADHD franchise, government regulation and approval, including but not limitedto Health Canada's suspension of ADDERALL XR sales in Canada and the expectedproduct approval dates of MTS (METHYPATCH) (ADHD), SPD503 (ADHD), SPD465(ADHD), SPD476 (ulcerative colitis), SPD480 (ulcerative colitis) and NRP104(ADHD), including its scheduling classification by the Drug Enforcement Agencyin the United States, Shire's ability to consummate and benefit from itsproposed acquisition of TKT, Shire's ability to secure new products forcommercialization and/or development and other risks and uncertainties detailedfrom time to time in Shire's filings with the Securities and ExchangeCommission, including its Annual Report on Form 10-K for the year to December31, 2004.The following are trademarks of Shire Pharmaceuticals Group plc or itssubsidiaries, which are the subject of trademark registrations in certaincountries.ADDERALL XR‚® (mixed amphetamine salts)ADDERALL‚® (mixed amphetamine salts)AGRYLIN‚® (anagrelide hydrochloride)CALCICHEW‚® (calcium carbonate)CARBATROL‚® (carbamazepine)COLAZIDE‚® (balsalazide)EQUETROTM (carbamazepine)FOSRENOL‚® (lanthanum carbonate)REMINYL‚® (galantamine hydrobromide) (UK and Republic of Ireland)SOLARAZE‚® (diclofenac sodium 3%)XAGRID‚® (anagrelide hydrochloride)The following are trademarks of third parties.AMARYL‚® (glimepiride) (trademark of Sanofi-Aventis)3TC‚® (lamivudine) (trademark of GlaxoSmithKline (GSK))METHYPATCH‚® (methylphenidate) (trademark of Noven Pharmaceuticals Inc. (Noven))*PENTASA‚® (mesalamine) (trademark of Ferring AS)RAZADYNE¢â€ž¢ (galantamine hydrobromide) (trademark of Johnson & Johnson)REMINYL‚® (galantamine hydrobromide) (trademark of Johnson & Johnson, excludingUK and Republic of Ireland)ZEFFIX‚® (lamivudine) (trademark of GSK)* Referred to as MTS in this documentOVERVIEW OF US GAAP FINANCIAL RESULTS 1. Introduction Revenues from continuing operations for the three months to March 31, 2005increased by 3% to $333.7 million (2004: $323.6 million).Income from continuing operations before income taxes and equity in (losses)/earnings of equity method investees decreased by 78% to $24.4 million (2004:$111.3 million) due to the recognition of the payment made to New River of $50million for NRP104 and the anticipated increase in SG&A expenditure, reflectingthe costs associated with four product launches in the first half of 2005.The business generated a cash inflow from operating activities of $6.3 million(2004: $132.0 million). The reduction in cash generation is primarily due tolower income from continuing operations in the quarter, the $50 million upfrontpayment to New River Pharmaceuticals and the timing of working capitalpayments.Cash and cash equivalents, restricted cash and short-term investments at March31, 2005 totaled $1,477.5 million compared to December 31, 2004 ($1,457.5million). 2. Product sales For the three months to March 31, 2005, product sales increased 2% to $269.4million(2004: $264.6 million) and represented 81% of total revenues (2004: 82%).First Quarter 2005 Key Product Highlights Sales Sales US Rx1 March 2005 Product $M Growth** Growth** US Market Share ADDERALL XR 145.5 +4% +16% 25% AGRYLIN and XAGRID 32.0 -17% +5% 26% PENTASA 26.2 -4% +6% 18% CARBATROL 16.9 +7% +1% 45% 1 IMS Prescription Data - Product specific**Compared to Q1 2004ADDERALL XR for the treatment of ADHDUS prescriptions for the three months to March 31, 2005 were up 16% dueprimarily to a 2% increase in ADDERALL XR's total share of the US ADHD market,from 23% in March 2004 to 25% in March 2005. There was a 7% increase in thetotal US ADHD market compared to the same period in 2004.ADDERALL XR had a 25% share of the total US ADHD market in December 2004 and itmaintained this share of the market in March 2005 despite Health Canada'sdecision to suspend sales of ADDERALL XR in Canada in February 2005.Product sales growth was lower than prescription growth for the quarter duemainly to expected wholesaler de-stocking. The wholesaler de-stocking is due tothe negotiation of `fee for service' agreements. These industry-wide agreementschange the way significant wholesale distributors are compensated bypharmaceutical manufacturers and should allow for more efficient management ofinventory levels held by wholesale distributors.Shire is continuing to work with Health Canada to review the February 2005suspension of sales of ADDERALL XR in Canada.ADDERALL XR's pediatric exclusivity in the US under the Hatch-Waxmanregulations expired on April 11, 2005.Litigation proceedings relating to our ADDERALL XR patents are in progress.Further information can be found in our filings with the US Securities andExchange Commission, including our Annual Report on Form 10-K for the year toDecember 31, 2004.AGRYLIN and XAGRID for the treatment of thrombocythemiaAGRYLIN/XAGRID sales worldwide for the three months to March 31, 2005 were$32.0 million, down 17% primarily due to wholesaler de-stocking in Q1 andprovisions for returns following the announcement of the approval of genericversions of AGRYLIN shortly after the quarter end.AGRYLIN's pediatric exclusivity expired in September 2004 in the US and onApril 18, 2005 the FDA rejected Shire's Citizens' Petition, which had beenfiled with the FDA in August 2004. The FDA has approved several genericversions of AGRYLIN and this is expected to adversely affect Shire's futuresales of this product.XAGRID was successfully launched in the UK, Germany and France. Sales of XAGRIDfor the three months to March 31, 2005 were $5.9 million.PENTASA for the treatment of ulcerative colitisShire entered into a co-promotional agreement with Solvay Pharmaceuticals Inc.in February 2005 for PENTASA. US prescriptions for the three months to March31, 2005 were up 6% as a result of the joint marketing efforts on the product.Product sales declined 4% mainly due to wholesaler de-stocking in the threemonths to March 31, 2005 following the negotiation of the `fee for service'agreements. These stock movements were partially offset by a September 2004price increase.PENTASA had an 18% share of the total US oral mesalamine/olsalazineprescription market in March 2005 (March 2004: 17%).CARBATROL for the treatment of epilepsyUS prescriptions for the three months to March 31, 2005 were up 1% despitelimited promotion of this product by Shire during the quarter. Product salesincreased by 7%. The difference between sales growth and prescription growth isdue to a price increase in August 2004 and lower sales deductions, partiallyoffset by wholesaler de-stocking in 2005.CARBATROL had a 45% share of the total US extended release carbamazepineprescription market in March 2005 (March 2004: 43%).Patent litigation proceedings relating to CARBATROL are in progress. Furtherinformation can be found in our filings with the US Securities and ExchangeCommission, including our Annual Report on Form 10-K for the year to December31, 2004. 3. Royalties Royalty revenue increased 4% to $58.3 million for the three months to March 31,2005 (2004: $56.1 million). The following table provides an analysis of Shire'sroyalty income:First Quarter 2005 Royalty HighlightsProduct Royalties to Royalty2 Worldwide in-market sales by Shire Growth licensee3 in Q1 2005 % $M $M 3TC 39.4 +3%* 298 ZEFFIX 6.5 +3%** 56 Other 12.4 +7% n/a * The impact of foreign exchange movements has contributed +1% to the reportedgrowth** The impact of foreign exchange movements has contributed +3% to the reportedgrowth2 Compared with Q1 20043 GSK3TCRoyalties from 3TC for the three months to March 31, 2005 were $39.4 million,an increase of 3% compared to the three months to March 31, 2004 ($38.2million). This was due to the continued growth in the nucleoside analoguemarket for HIV and the positive impact of foreign exchange movements.Shire receives 3TC royalties from GSK on worldwide sales, with the exception ofCanada where a commercialization partnership with GSK exists. GSK's worldwidesales of 3TC for the three months to March 31, 2005 were $298 million (2004:$289 million).ZEFFIXRoyalties from ZEFFIX for the three months to March 31, 2005 were $6.5 million,an increase of 3% compared to the three months to March 31, 2004 ($6.3million), due mainly to the positive impact of foreign exchange movements.Shire receives ZEFFIX royalties from GSK on worldwide sales, with the exceptionof Canada where a commercialization partnership with GSK exists. GSK'sworldwide sales of ZEFFIX for the three months to March 31, 2005 were $56million (2004: $55 million).OtherOther royalties are primarily in respect of REMINYL (now marketed as RAZADYNEin the US), a product marketed worldwide by Janssen, with the exception of theUnited Kingdom and the Republic of Ireland where Shire acquired the exclusivemarketing rights from May 2004.On April 11, 2005, Ortho-McNeil Neurologics Inc. (Janssen's US affiliatecompany) announced that REMINYL would be marketed in the US under the newproduct name of RAZADYNE. Ortho-McNeil Neurologics Inc. worked closely with theFDA on a name change following dispensing errors in the US, between REMINYL andthe Type 2 diabetes mellitus drug known as AMARYL. Shire is unaware of anysimilar dispensing errors outside the US and REMINYL continues to be marketedoutside the US under its original name for the time being.Sales of REMINYL/RAZADYNE, a treatment for mild to moderately severe dementiaof the Alzheimer's type, are growing well in the Alzheimer's market.Shire and Janssen are in ongoing discussions with the European regulatoryauthorities in relation to their assessment of the data for REMINYL frominvestigational studies in mild cognitive impairment.Shire has submitted its response to the preliminary Appraisal ConsultationDocument issued by the National Institute for Clinical Excellence in Englandand Wales (NICE). This preliminary appraisal recommends that all existingapproved products for the symptomatic treatment of mild to moderate Alzheimer'sdisease in England and Wales are no longer reimbursable when used by newpatients. NICE's final recommendation is expected to be published in June 2005. 4. Financial details Cost of product salesFor the three months to March 31, 2005, the cost of product sales amounted to12% of product sales (2004: 13%). The increase in gross margin is driven by achange in the product mix, with more income being generated from higher marginproducts.Research and development (R&D)R&D expenditure increased from $38.6 million in the three months to March 31,2004 to $111.5 million in the three months to March 31, 2005. This increaseincluded an initial payment to New River of $50 million in respect of NRP104.Expressed as a percentage of total revenues, R&D expenditure, excluding the NewRiver payment, was 18% for the three months to March 31, 2005 (2004: 12%). Thelevel of expenditure in the three months to March 31, 2004 was below normallevels due in part to the phasing of project spend and the restatement of R&Dcosts in respect of continuing operations following the disposal of thevaccines business in the second quarter of 2004. Shire's pipeline is now welladvanced with five projects in late stage development or registration.Selling, general and administrative (SG&A)SG&A expenses, excluding depreciation and amortization, increased from $120.3million in Q1 2004 to $157.6 million in Q1 2005, an increase of 31%. As apercentage of product sales, these expenses were 58% (2004: 45%). The increasein SG&A was as expected with additional costs in Q1 2005 attributable primarilyto four product launches in the first half of 2005, together with theincremental cost associated with the new FOSRENOL sales force recruited in Q42004.Depreciation and amortizationThe depreciation charge for the three months to March 31, 2005 was $4.4 million(2004: $3.4 million). Amortization charges were $9.2 million for the threemonths to March 31, 2005 (2004: $9.1 million).Reorganization costsDuring the three months to March 31, 2005 the Company incurred costs of $2.9million in relation to the reorganization of the business announced in 2004(2004: $3.8 million). Costs in both periods were primarily related to employeeseverance.Interest income and expenseFor the three months to March 31, 2005, the Company received interest income of$9.7 million (2004: $4.0 million). This increase in interest income is due tohigher interest rates on our US cash deposits.With the repayment of the convertible loan notes in August 2004, the Companyhad negligible interest expense for this quarter (2004: $2.1 million).Other expenseFor the three months to March 31, 2005, other expense totaled $0.1 million(2004: $4.8 million). In 2004, other expense was primarily attributable to thewrite-down of certain portfolio investments.TaxationThe effective rate of tax for the three months to March 31, 2005 was 28% (2004:26%). At March 31, 2005, net deferred tax assets of $81.3 million wererecognized (December 31, 2004: $78.1 million).Equity in (losses)/earnings of equity method investeesLosses of $0.2 million were recorded for the three months to March 31, 2005(2004: $1.0 million earnings). Earnings of $1.4 million, representing a 50%share of earnings from the antiviral commercialization partnership with GSK inCanada (2004: $1.0 million) were offset by the share of losses in the GeneChemand EGS Healthcare Funds of $1.6 million (2004: $nil).Discontinued operationsDuring the quarter a provision for $3.1 million, recorded in 2004 as part ofthe sale of the vaccines business to ID Biomedical Inc. (IDB), was released andthis positively impacted net income for the quarter. This adjustment arose fromthe finalization of the working capital agreement with IDB. Further details ofthis transaction are disclosed in the Company's Form 10-K for 2004. 5. R&D pipeline Shire focuses its resources on later stage and lower risk projects. By the endof 2005, Shire expects to make regulatory filings for SPD503 (ADHD), MTS (ADHD)and SPD476 (ulcerative colitis). NRP104 (ADHD) and SPD465 (ADHD) are expectedto be filed for US registration in early 2006.R&D Highlights by Therapeutic Area:Central Nervous System (CNS): * SPD503: Two Phase 3 pivotal studies for this program are now in the reporting stage; further information will be provided at the Shire product development update session to be held on May 10, 2005. Shire plans to meet with the FDA during the second quarter of 2005 to discuss development status and current filing strategy for the program leading to an anticipated regulatory submission in late 2005. * MTS: Positive preliminary results have been reported from one Phase 2 and one Phase 3 study investigating MTS in the treatment of children aged between 6-12 years with a previous diagnosis of ADHD. Further details will be provided at the product development update session. Data generated from these clinical studies will be included as part of an amendment to the New Drug Application (NDA) previously submitted to the FDA by Noven Pharmaceuticals Inc. (Noven). Shire and Noven believe that the new data will address issues raised by the FDA following their initial review of the NDA submission. * NRP104: Positive data from a Phase 2 study investigating NRP104 in children aged between 6-12 years with ADHD was reported by New River. Shire recently signed a collaborative agreement for the global commercialization of this product. * SPD465: Recruitment into Phase 3 clinical studies continues. Gastro-Intestinal (GI): * SPD476: Phase 3 trials have now completed. Data from these pivotal Phase 3 studies will be provided at the product development update session. US GAAP Results for the 3 months to March 31, 2005Consolidated Balance Sheets (Unaudited) March 31, December 31, 2005 2004 $'000 $'000 ______________ ______________ ASSETS Current assets: Cash and cash equivalents 1,141,090 1,111,477 Restricted cash 20,688 21,627 Short-term investments 315,702 324,411 Accounts receivable, net 231,738 222,546 Inventories 45,880 41,230 Deferred tax asset 49,546 70,387 Prepaid expenses and other current assets 90,587 137,271 ___________ ___________ Total current assets 1,895,231 1,928,949 Investments 57,817 63,267 Property, plant and equipment, net 145,021 131,351 Goodwill, net 231,841 235,396 Other intangible assets, net 298,687 309,297 Deferred tax asset 31,715 7,724 Other non-current assets 38,885 38,895 ___________ ___________ Total assets 2,699,197 2,714,879 ___________ ___________ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses 308,536 311,231 Loan facility 22,810 43,162 Other current liabilities 70,077 77,558 ___________ ____________ Total current liabilities 401,423 431,951 Long-term debt 116 116 Other non-current liabilities 26,402 32,159 ___________ ____________ Total liabilities 427,941 464,226 ___________ ___________US GAAP Results for the 3 months to March 31, 2005Consolidated Balance Sheets (continued) (Unaudited) March 31, December 31, 2005 2004 $'000 $'000 ___________ ___________ Shareholders' equity: Ordinary shares of 5p par value; 800,000,000 40,525 40,064shares authorized; and 490,767,573 (December 31, 2004: 484,916,034) shares issued and outstanding Exchangeable shares; 2,926,597 (December 31, 135,524 195,8302004: 4,226,476) shares issued and outstanding Treasury stock (223) (264) Additional paid-in capital 1,148,674 1,072,407 Accumulated other comprehensive income 115,577 131,939 Retained earnings 831,179 810,677 ___________ ___________ Total shareholders' equity 2,271,256 2,250,653 ___________ ___________ Total liabilities and shareholders' equity 2,699,197 2,714,879 ___________ ___________US GAAP Results for the 3 months to March 31, 2005Unaudited Consolidated Statements of Operations 3 months to Restated March 31, 3 months to March 31, 2005 2004 $'000 $'000 __________ __________ Revenues: Product sales 269,444 264,594 Royalties 58,323 56,145 Licensing and development 3,869 1,915 Other revenues 2,057 946 __________ __________ Total revenues 333,693 323,600 __________ __________ Costs and expenses: Cost of product sales 33,333 34,093 Research and development 111,532 38,626 Selling, general and administrative 171,209 132,838 Reorganization costs 2,878 3,813 __________ __________ Total operating expenses 318,952 209,370 __________ __________ Operating income 14,741 114,230 Interest income 9,725 4,029 Interest expense (15) (2,126) Other expense, net (66) (4,819) __________ __________ Total other income/(expense), net 9,644 (2,916) __________ __________ Income from continuing operations before income 24,385 111,314taxes and equity in earnings of equity method investees Income taxes (6,803) (29,002) Equity in (losses)/earnings of equity method (205) 1,048investees __________ __________ Income from continuing operations 17,377 83,360 Loss from discontinued operations - (8,786) Loss on disposition of discontinued operations 3,125 - __________ __________ Net income 20,502 74,574 __________ __________The results for the three months to March 31, 2004 have been restated toreflect the disposal of the vaccines business, which was accounted for as adiscontinued operation.US GAAP Results for the 3 months to March 31, 2005Unaudited Consolidated Statements of Operations (continued) 3 months to Restated March 31, 3 months to March 31, 2005 2004 __________ __________ Earnings per share - basic Income from continuing operations 3.5c 16.8c Loss from discontinued operations - (1.8c) Loss on disposal of discontinued operations 0.6c - __________ __________ Net income 4.1c 15.0c __________ __________ Earnings per share - diluted Income from continuing operations 3.5c 16.3c Loss from discontinued operations - (1.6c) Loss on disposal of discontinued operations 0.6c - __________ __________ 4.1c 14.7c __________ __________ Weighted average number of shares: Basic 498,998,570 495,718,205 Diluted 503,669,426 518,119,910 ___________ ___________The results for the three months to March 31, 2004 have been restated toreflect the disposal of the vaccines business, which was accounted for as adiscontinued operation.US GAAP Results for the 3 months to March 31, 2005Unaudited Consolidated Statements of Cash Flows 3 months to Restated March 31, 3 months to 2005 March 31, $'000 2004 $'000 ____________ ____________ CASH FLOWS FROM OPERATING ACTIVITIES: Net income from continuing operations 17,377 83,360 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,465 12,516 Increase in provision for sales deductions 7,946 5,891 Stock option compensation 49 - Movement in deferred taxes (3,149) (2,150) Equity in losses/(earnings) of equity 205 (1,048)method investees Investments - 7,214 Movements in long term assets (16) 396 Changes in operating assets and liabilities, net of acquisitions: Increase in accounts receivable (10,746) (6,183) Increase in inventory (4,658) (2,208) (Increase)/decrease in prepayments and (16,700) 7,245other current assets Decrease in other assets 10 5,716 Increase in accounts and notes payable and 2,930 21,825other liabilities Decrease in deferred revenue (1,433) (551) Dividends received from investments 20 - ___________ ___________ Net cash provided by operating activities 6,300 132,023 ___________ ___________US GAAP Results for the 3 months to March 31, 2005Unaudited Consolidated Statements of Cash Flows (continued) 3 months to Restated March 31, 2005 3 months to $'000 March 31, 2004 $'000 ___________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES: Movements in short-term investments 7,319 16,821 Movements in restricted cash 939 3,345 Loans made to IDB (20,352) - Purchase of long-term investments (1,814) (712) Purchase of intangible assets (19,951) - Purchase of property, plant and equipment (19,940) (7,830) Proceeds from sale of long-term investments - 220 Proceeds from sale of property, plant and 48 -equipment Proceeds from redemption of IDB 60,000 -subscription receipts Additional proceeds from sale of the 2,236 -vaccines business ___________ ___________ Net cash provided by investing activities 8,485 11,844 ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt and capital - (76)leases Proceeds from exercise of options 16,168 3,108 Tax benefit of stock option compensation, 205 -charged directly to reserves ___________ ___________ Net cash provided by financing activities 16,373 3,032 ___________ ___________ Effect of foreign exchange rate changes on (1,545) (401)cash and cash equivalents from continuing operations ___________ ___________ Net increase in cash and cash equivalents 29,613 146,498 Cash flows used in discontinued operations - (6,258) Cash and cash equivalents at beginning of 1,111,477 1,063,362period ___________ ___________ Cash and cash equivalents at end of period 1,141,090 1,203,602 ___________ ___________The results for the three months to March 31, 2004 have been restated toreflect the disposal of the vaccines business, which has been accounted for asa discontinued operation.US GAAP Results for the 3 months to March 31, 2005Selected Notes to the Unaudited US GAAP Financial Statements 1. Earnings per share 3 months to Restated March 31, 2005 3 months to $'000 March 31, 2004 $'000 __________ __________ Income from continuing operations 17,377 83,360 Loss from discontinued operations, net of tax - (8,786) Loss on disposal of discontinued operations 3,125 - __________ __________ Numerator for basic earnings per share 20,502 74,574 Interest charged on convertible debt, net of tax - 1,296 __________ __________ Numerator for diluted earnings per share 20,502 75,870 __________ __________ Weighted average number of shares: No. of shares No. of shares __________ __________ Basic 498,998,570 495,718,205 Effect of dilutive shares: Stock options 4,425,778 3,899,118 Warrants 245,078 132,023 Convertible debt - 18,370,564 __________ __________ 4,670,856 22,401,705 __________ __________ Diluted 503,669,426 518,119,910 __________ __________The share options and convertible debt not included within the calculation ofthe diluted weighted average number of shares, because the exercise pricesexceeded the Company's average share price during the calculation period, areshown below:3 months to March 31, 2005 Restated 2004 No. of shares No. of shares Share options 7,664,048 10,328,167 Convertible debt 5,756 - ___________ ___________ 7,669,804 10,328,167 ___________ ___________(2) Analysis of revenues 3 months to 3 months to 3 months to 3 months to March 31, March 31, March 31, March 31, 2005 2005 2004 % change 2005 $'000 $'000 % of total revenue ____________ _____________ ____________ ____________Related Shares:
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