23rd Apr 2007 07:03
AstraZeneca PLC23 April 2007 Consolidated Income Statement 2007 2006For the quarter ended 31 March $m $mSales 6,966 6,180 Cost of sales (1,486) (1,251) Distribution costs (61) (54) Research and development (1,170) (861) Selling, general and administrative costs (2,217) (2,115) Other operating income 138 77 Operating profit 2,170 1,976 Finance income 247 200 Finance expense (150) (132) Profit before tax 2,267 2,044 Taxation (703) (620) Profit for the period 1,564 1,424 Attributable to: Equity holders of the Company 1,560 1,425 Minority interests 4 (1) 1,564 1,424 Basic earnings per $0.25 Ordinary Share $1.02 $0.90 Diluted earnings per $0.25 Ordinary Share $1.02 $0.90 Weighted average number of Ordinary Shares in issue (millions) 1,527 1,579 Diluted average number of Ordinary Shares in issue (millions) 1,531 1,582 Consolidated Balance Sheet At 31 March At 31 Dec 2007 2006 $m $mASSETS Non-current assets Property, plant and equipment 7,420 7,453Intangible assets, including goodwill 4,447 4,204Other investments 116 119Deferred tax assets 1,296 1,220 13,279 12,996 Current assets Inventories 2,294 2,250Trade and other receivables 6,238 5,561Other investments 849 657Income tax receivable 1,338 1,365Cash and cash equivalents 5,567 7,103 16,286 16,936Total assets 29,565 29,932 LIABILITIES Current liabilities Interest bearing loans and borrowings (59) (136)Trade and other payables (7,012) (6,334)Income tax payable (3,278) (2,977) (10,349) (9,447)Non-current liabilities Interest bearing loans and borrowings (1,087) (1,087)Deferred tax liabilities (1,695) (1,559)Retirement benefit obligations (1,772) (1,842)Provisions (384) (327) Other payables (256) (254) (5,194) (5,069)Total liabilities (15,543) (14,516)Net assets 14,022 15,416 EQUITY Capital and reserves attributable to equity holders ofthe Company Share capital 378 383 Share premium account 1,704 1,671 Other reserves 1,884 1,902 Retained earnings 9,941 11,348 13,907 15,304 Minority equity interests 115 112 Total equity 14,022 15,416 Consolidated Cash Flow Statement For the quarter ended 31 March 2007 2006 $m $mCash flows from operating activities Profit before taxation 2,267 2,044Finance income and expense (97) (68)Depreciation, amortisation and impairment 370 282Increase in working capital (61) (365)Other non-cash movements 88 41Cash generated from operations 2,567 1,934 Interest paid (2) (12) Tax paid (378) (410) Net cash inflow from operating activities 2,187 1,512 Cash flows from investing activities Acquisition of businesses* (143) (203)Movement in short term investments and fixed deposits* (193) (1,524)Purchase of property, plant and equipment (222) (181)Disposal of property, plant and equipment 13 12Purchase of intangible assets (183) (108)Purchase of non-current asset investments - (14)Disposal of non-current asset investments - 54Interest received 113 65Dividends paid by subsidiaries to minority interests (1) (4)Net cash outflow from investing activities (616) (1,903)Net cash inflow/(outflow) before financing activities* 1,571 (391)Cash flows from financing activities Proceeds from issue of share capital 33 362Repurchase of shares (1,184) (564)Dividends paid (1,878) (1,442)Movement in short term borrowings (10) 2Net cash outflow from financing activities (3,039) (1,642)Net decrease in cash and cash equivalents in the period (1,468) (2,033) Cash and cash equivalents at the beginning of the period 6,989 4,895Exchange rate effects (1) 7Cash and cash equivalents at the end of the period 5,520 2,869Cash and cash equivalents consists of:Cash and cash equivalents 5,567 2,954Overdrafts (47) (85) 5,520 2,869 Note: Free Cash Flow (*) of $1,907 million (2006: $1,336 million) is calculatedas; net cash inflow/(outflow) before financing activities, adjusted for:acquisition of businesses, movements in short term investments and fixeddeposits. Consolidated Statement of Recognised Income and Expense For the quarter ended 31 March 2007 2006 $m $m Profit for the period 1,564 1,424 Foreign exchange adjustments on consolidation (22) 87 Available for sale (losses)/gains taken to equity (2) 18 Actuarial gains for the period 84 151 Tax on items taken directly to reserves (16) (33) 44 223 Total recognised income and expense for the period 1,608 1,647 Attributable to: Equity holders of the Company 1,605 1,647 Minority interests 3 - 1,608 1,647 Notes to the Interim Financial Statements 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES The unaudited financial statements for the quarter ended 31 March 2007 have beenprepared in accordance with International Accounting Standards and InternationalFinancial Reporting Standards (collectively "IFRS") as adopted by the EuropeanUnion (EU). Details of the accounting policies applied are those set out inAstraZeneca PLC's Annual Report and Form 20-F Information 2006. The information contained in Note 3 updates the disclosures concerning legalproceedings and contingent liabilities in the Company's Annual Report and Form20-F Information 2006. These interim financial statements do not constitute statutory accounts of theGroup within the meaning of Section 240 of the Companies Act 1985. Statutoryaccounts for the year ended 31 December 2006 will be filed with the Registrar ofCompanies following the Company's Annual General Meeting. The auditors' reporton those accounts was unqualified and did not contain any statement underSection 237 of the Companies Act 1985. 2 NET CASH FUNDS The table below provides an analysis of net cash funds and a reconciliation ofnet cash flow to the movement in net cash funds. At 1 Jan Cash Non-cash Exchange At 31 March flow Acquisitions movements movements 2007 2007 $m $m $m $m $m $m Loans due after 1 year (1,087) - - - - (1,087) Other investments - current 657 193 - (1) - 849Cash and cash equivalents 7,103 (1,535) - - (1) 5,567Overdrafts (114) 67 - - - (47)Short term borrowings (22) 10 - - - (12) 7,624 (1,265) - (1) (1) 6,357Net funds 6,537 (1,265) - (1) (1) 5,270 Non-cash movements in the period consist of fair value adjustments under IAS 39. 3 LEGAL PROCEEDINGS and commitments AstraZeneca is involved in various legal proceedings typical to its businessincluding litigation relating to employment matters, product liability,commercial disputes, infringement of intellectual property rights and thevalidity of certain patents. The matters discussed below constitute the moresignificant developments since the publication of the legal proceedings in theForm 20-F filing in respect of the fiscal year ended 31 December 2006 and filedwith the SEC on 27 March 2007. Matters disclosed in respect of the first quarter of 2007 and April 2007. SeroquelTM In March 2007, AstraZeneca received a notice from Sandoz, Inc. that Sandoz hadsubmitted an Abbreviated New Drug Application (ANDA) for quetiapine fumarate25mg tablets. AstraZeneca's patent covering SeroquelTM tablets is listed in theFDA's Orange Book. The Sandoz notice contained a Paragraph IV certificationalleging non-infringement and patent invalidity in respect of AstraZeneca'slisted patent covering SeroquelTM. Sandoz is the second generic drugmanufacturer to submit an ANDA containing a Paragraph IV certification andseeking approval to market a 25mg quetiapine fumarate tablet. As disclosed inNovember 2005, Teva Pharmaceuticals USA submitted the first ANDA seekingapproval to market 25mg quetiapine fumarate tablets and notifying AstraZeneca ofan ANDA submission to the FDA containing a paragraph IV certification. InFebruary 2006, Teva supplemented its ANDA to seek approval to market 100, 200and 300mg quetiapine fumarate tablets. In April 2007, AstraZeneca filed a patent infringement lawsuit in U.S. FederalDistrict Court, District of New Jersey, against Sandoz for patent infringementin respect of its 25mg ANDA product. Currently pending in U.S. Federal DistrictCourt, District of New Jersey, is AstraZeneca's consolidated ANDA patentinfringement action relating to Teva's ANDA for 25, 100, 200 and 300mgquetiapine fumarate tablets. In January 2007, Teva sought leave to amend its responsive pleadings inAstraZeneca's consolidated lawsuit against Teva to add allegations, defenses,and counter-claims directed to AstraZeneca's alleged inequitable conduct in theprocurement of its patent. AstraZeneca did not object to the Court grantingleave to amend, and, in March 2007, the Court allowed Teva to amend itspleadings. Later in March 2007, AstraZeneca filed a responsive pleading denyingor contesting Teva's amended pleadings. Government Investigation AstraZeneca, along with several other manufacturers, has received a letter fromthe Committee on Oversight and Government Reform of the U.S. House ofRepresentatives as part of the Committee's ongoing oversight of thepharmaceutical industry's research and marketing practices. The Committee hasrequested that AstraZeneca provide clinical and marketing information relatingto SeroquelTM. AstraZeneca is co-operating with the Committee's enquiry. CrestorTM As previously disclosed, AstraZeneca Pharmaceuticals LP and/or AstraZeneca LP inthe US were served with seven individual lawsuits in 2004 and 2005 involvingalleged injury in association with the use of CrestorTM. Five of these lawsuitshave now been dismissed. In addition, a motion for authorisation to institute aclass action and to be a representative was filed in Quebec, Canada againstAstraZeneca PLC and AstraZeneca Canada Inc., in which the petitioner allegedinjury as a result of the use of CrestorTM. This matter was dismissed in March2007. During 2006, AstraZeneca was served with six additional individuallawsuits in the US, all six of which have since been dismissed. AstraZeneca isvigorously defending all the remaining actions. 4 FIRST QUARTER TERRITORIAL SALES ANALYSIS % Growth 1st Quarter 1st Quarter Actual Constant 2007 2006 Currency $m $m US 3,234 2,882 12 12 Canada 254 250 2 2 North America 3,488 3,132 11 11 Western Europe 2,200 1,934 14 4 Japan 331 304 9 12 Other Established ROW 133 117 14 7 Established ROW* 2,664 2,355 13 5 Emerging Europe 246 238 3 - China 92 72 28 25 Emerging Asia Pacific 169 149 13 8 Other Emerging ROW 307 234 31 29 Emerging ROW 814 693 17 14Total Sales 6,966 6,180 13 9 * Established ROW comprises Western Europe (including France, UK, Germany,Italy, Sweden and others), Japan, Australia and New Zealand. 5 FIRST QUARTER PRODUCT SALES ANALYSIS World US 1st 1st Constant 1st Quarter Quarter Actual Currency Quarter Actual 2007 2006 Growth Growth 2007 Growth $m $m % % $m % Gastrointestinal: Nexium 1,308 1,189 10 8 862 9Losec/Prilosec 279 344 (19) (22) 54 (2)Others 20 18 11 6 7 -Total Gastrointestinal 1,607 1,551 4 1 923 9Cardiovascular: Seloken/Toprol 444 456 (3) (4) 331 (7)Crestor 628 387 62 59 343 56Atacand 296 254 17 11 65 12Tenormin 71 76 (7) (9) 5 (29)Zestril 80 75 7 1 8 33Plendil 65 72 (10) (14) 7 17Others 69 70 (1) (7) 1 -Total Cardiovascular 1,653 1,390 19 16 760 17Respiratory:Pulmicort 401 328 22 20 270 29Symbicort 354 277 28 19 - -Rhinocort 92 85 8 6 63 3Oxis 23 22 5 (5) - -Accolate 19 18 6 6 14 17Others 42 35 20 11 - -Total Respiratory 931 765 22 17 347 23Oncology:Arimidex 401 335 20 15 162 27Casodex 310 274 13 9 73 11Zoladex 249 231 8 4 22 (8)Iressa 52 50 4 4 3 (25)Others 84 68 24 21 39 50Total Oncology 1,096 958 14 11 299 21Neuroscience:Seroquel 923 807 14 13 655 11Local anaesthetics 126 132 (5) (9) 8 (67)Zomig 107 93 15 11 47 18Diprivan 59 89 (34) (36) 9 (74)Others 12 15 (20) (27) 2 (50)Total Neuroscience 1,227 1,136 8 6 721 4Infection and Other:Merrem 178 141 26 21 35 21Other Products 74 68 9 3 38 15Total Infection and Other 252 209 21 15 73 18Aptium Oncology 98 88 11 11 98 11Astra Tech 102 83 23 13 13 44Total 6,966 6,180 13 9 3,234 12 Shareholder Information ANNOUNCEMENTS AND MEETINGS Annual General Meeting 26 April 2007Announcement of second quarter and half year 2007 results 26 July 2007Announcement of third quarter and nine months 2007 results 1 November 2007 DIVIDENDS The record date for the second interim dividend for 2006 paid on 19 March 2007(in the UK, Sweden and the US) was 9 February 2007. Ordinary shares tradedex-dividend on the London and Stockholm Stock Exchanges from 7 February 2007.ADRs traded ex-dividend on the New York Stock Exchange from the same date. Future dividends will normally be paid as follows:First interim Announced in July and paid in SeptemberSecond interim Announced in January/February and paid in March TRADEMARKS The following brand names used in these interim financial statements aretrademarks of the AstraZeneca Group of companies: Accolate Arimidex Astra Tech Atacand Casodex Crestor Diprivan FaslodexIressa Losec Merrem Nexium Nolvadex Oxis Plendil Prilosec PulmicortPulmicort Respules Pulmicort Flexhaler Rhinocort Rhinocort Aqua SelokenSeroquel Symbicort Tenormin Toprol-XL Zestril Zoladex Zomig ADDRESSES FOR CORRESPONDENCE Registrar and Depositary Registered Office Swedish Securities Registration CentreTransfer Office for ADRs VPC ABThe AstraZeneca Registrar JPMorgan Chase Bank 15 Stanhope Gate PO Box 7822Lloyds TSB Registrars JPMorgan Service Center London SE-103 97 StockholmThe Causeway PO Box 3408 W1K 1LN SwedenWorthing South Hackensack UK West Sussex NJ 07606-3408 BN99 6DA US UK Tel: +46 (0)8 402 9000Tel (freephone in UK): Tel (toll free in US): Tel: +44 (0)20 7304 50000800 389 1580 888 697 8018Tel (outside UK):+44 (0)121 415 7033 Tel: +1 (201) 680 6630 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS In order to utilise the 'safe harbour' provisions of the US Private SecuritiesLitigation Reform Act 1995, we are providing the following cautionary statement:These interim financial statements contain certain forward-looking statementsabout AstraZeneca. Although we believe our expectations are based on reasonableassumptions, any forward-looking statements may be influenced by factors thatcould cause actual outcomes and results to be materially different from thosepredicted. We identify the forward-looking statements by using the words 'anticipates', 'believes', 'expects', 'intends' and similar expressions in suchstatements. These forward-looking statements are subject to numerous risks anduncertainties. Important factors that could cause actual results to differmaterially from those contained in forward-looking statements, certain of whichare beyond our control, include, among other things: the loss or expiration ofpatents, marketing exclusivity or trade marks; the risk of substantial adverselitigation/government investigation claims and insufficient insurance coverage;exchange rate fluctuations; the risk that R&D will not yield new products thatachieve commercial success; the risk that strategic alliances will beunsuccessful; the impact of competition, price controls and price reductions;taxation risks; the risk of substantial product liability claims; the impact ofany failure by third parties to supply materials or services; the risk offailure to manage a crisis; the risk of delay to new product launches; thedifficulties of obtaining and maintaining regulatory approvals for products; therisk of failure to observe ongoing regulatory oversight; the risk that newproducts do not perform as we expect; the risk of environmental liabilities; therisks associated with conducting business in emerging markets; the risk ofreputational damage; and the risk of product counterfeiting. 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