BUCKINGHAMSHIRE, U.K., July 30, 2002 (PRIMEZONE) -- Amersham plc:
All results are stated before exceptional items and goodwill amortisation and in U.K. GAAP. Trading profit represents operating profit before R&D. All growth rates stated at constant exchange unless otherwise noted.
6 months 6 months Growth at Growth at
to 30 Jun 02 to 30 Jun 01 Constant Actual
(Pounds) (Pounds) Exchange Rate Exchange
(CER) % Rate %
Sales 812 783 7# 4
Operating 165 143 15 15
profit**
Profit
before 159 138 15 15
tax**
EPS** 15.5p 13.4p* 19 16
Dividend per 2.65p 2.35p na 13
share
HIGHLIGHTS
* Sales up 7%# to 812 million pounds, operating profit up 15% to 165
million pounds, driven by 2% improvement in operating margin,
earnings per share up 19% and dividend per share up 13%
* Good growth in medical diagnostics:
- Continued strong growth in portfolio of patented products:
sales up 21% to 171 million pounds
- Sales of unpatented products up 6% to 188 million pounds, with
sales of Omnipaque(TM) up 9% to 117 million pounds
* Protein separations sales up 12%# to 131 million pounds
* Discovery systems sales up 3%# to 202 million pounds
* Operating cash flow** increased by 29 million pounds to 134
million pounds
** Before exceptional items and goodwill amortisation. After exceptional items and goodwill amortisation, operating profit was 150 million pounds up from 143 million pounds in the first half of 2001, profit before tax was 144 million pounds up from 137 million pounds, and earnings per share were 14.9p up from 13.6p.
# Comparable growth excluding disposed business
*Restated for FRS 19
Sir William Castell, Chief Executive, said: "Strong growth in medical diagnostics and protein separations, combined with improved margins, gave us a good performance in the first half of 2002. With this positive momentum we are on track to meet our targets for the full year. Sole ownership of Amersham Biosciences now enables us to fully share core technical competencies and innovation across our businesses, moving Amersham closer to delivering our long term vision of personalised medicine."
Financial overview
Amersham plc sales for the first six months totalled 812 million pounds, with both Amersham Health and Amersham Biosciences growing sales at seven per cent. This followed an increase in sales of nine per cent in the second quarter after a five per cent growth in the first quarter. Trading profit was 252 million pounds, up nine per cent. Investment in R&D was 87 million pounds down one per cent. Excluding investment in disease profiling, discontinued in December 2001, R&D spend was up four per cent. Operating profit was up 15 per cent at 165 million pounds.
Net cash flow from operations before exceptional items was 134 million pounds, up from 105 million pounds in the first half of 2001. Free cash flow was 60 million pounds, following an increase in capital expenditure of 17 million pounds, compared with 81 million pounds in the first half of 2001 which included 22 million pounds from asset sales. Net debt increased to 259 million pounds at June 30, 2002, up by 234 million pounds from December 31, 2001, primarily as a result of the 704 million pounds purchase of Pharmacia's 45 per cent stake in Amersham Biosciences. This acquisition was financed through the issue of 57.5 million new shares and drawing on existing bank facilities and cash resources. Net interest expense was lower at 4 million pounds.
Profit before tax increased by 15 per cent to 159 million pounds. The impact of exchange in the first half was neutral when compared with the same period last year and, as previously indicated, is expected to have a small negative effect in the second half. The purchase of the minority stake in Amersham Biosciences contributed to a lower tax rate of 33.5 per cent for 2002 compared with 34.7 per cent in 2001. This has been restated for the introduction of the new accounting standard on deferred taxation, FRS19. Earnings per share before exceptional items and goodwill amortisation increased by 19 per cent to 15.5p. The board is recommending an interim dividend of 2.65p per share, up 13 per cent.
After exceptional items and goodwill amortisation, profit before tax was 144 million pounds up from 137 million pounds in the first half of 2001, and earnings per share were 14.9p up from 13.6p.
Strategic business developments
The convergence of technologies in medical diagnostics, therapeutics, life sciences research and information technology is driving new approaches to the study and treatment of disease. In keeping with this development, Amersham has undertaken a number of strategic acquisitions and collaborations in 2002 to add value to existing products and underpin its strategy for exploring all aspects of the emerging field of molecular medicine.
-- January Amersham Health announced a collaboration with Pfizer, the world's largest pharmaceutical company -- January Amersham Biosciences acquired filtration companies AG Technology and InnovaSep Technology -- March Amersham plc acquired 45 per cent of Amersham Biosciences, taking it to full ownership -- May Amersham Biosciences acquired a controlling stake in informatics company Cimarron -- May Amersham Health extended its network of imaging research centres, Imanet(TM), to include the worldleading PET centre in Uppsala, Sweden. -- July Amersham plc acquired Motorola Life Science's CodeLink(TM) prearrayed slides business -- July Amersham Biosciences announced a collaboration with the SloanKettering Institute
Amersham Health
1H 2002 1H 2001 CER Actual Rate
m Pounds m Pounds Growth % Growth %
Sales 479 458 7 5
Trading profit 183 167 10 10
R&D (43) (40) 7 8
Operating profit 140 127 11 10
In the first six months of 2002, Amersham Health achieved sales of 479 million pounds, up seven per cent. Trading profit was 183 million pounds, an increase of 10 per cent, and after R&D expenditure of 43 million pounds, up seven per cent, operating profits were 140 million pounds. The operating margin increased to 29.2 per cent from 27.7 per cent in the first half of 2001. This increase was the result of good sales growth of higher margin patented products and strong manufacturing efficiencies, partially driven by stock building ahead of the transfer of production to the newly expanded Amersham Health facility in Cork, Ireland. Amersham Health continues to invest in the supply chain to improve its efficiency. Benefits from the new primary production line at Lindesnes, Norway, commissioned in the second half of 2001, have already begun to come through. In June, an additional 46.5 million pounds investment was approved to increase the production capacity for key intermediates used in this primary production.
Excluding Japan, sales of medical diagnostic products grew 13 per cent to 362 million pounds with doubledigit growth in Xray, magnetic resonance imaging and radiopharmaceutical products. In Japan, sales fell eight per cent, following a reduction in inmarket prices as a result of the Japanese government's biennial pharmaceutical price review. The number of diagnostic procedures in Japan continues to grow and the margin impact of the sales reduction has been significantly offset by lower royalty payments to third parties.
In Xray diagnostics, sales were 172 million pounds, up 11 per cent, with Visipaque(TM) sales of 44 million pounds, up 18 per cent, and sales of Omnipaque(TM) up nine per cent to 117 million pounds. Strong sales in magnetic resonance imaging were driven by Omniscan(TM) which grew 16 per cent to 46 million pounds. The radiopharmaceuticals diagnostic business grew 11 per cent to 134 million pounds driven by continued excellent growth of Myoview, with sales up 25 per cent to 64 million pounds. Further investments have been made in Amersham Health's network of radiopharmacies in the U.S., with five new radiopharmacies being opened this year.
The U.S. market for prostate cancer brachytherapy seeds remains competitive, leaving therapy sales down 4 million pounds to 33 million pounds in the first half of the year. However, sales of RapidStrand(TM) grew strongly in both the U.S. and Europe.
Portfolio development
The first six months of 2002 saw progress in a number of areas of clinical development. NC100668, a molecular diagnostic for the detection of thrombus formation, moved from phase I to phase IIa.
After a satisfactory review of Sonazoid(TM) phase IIb studies for ultrasound detection of liver disease, consultation with the regulators in the US and Europe is underway to discuss the size and scope of phase III trials required for global registration.
Amersham Health's joint venture in Japan, Nihon MediPhysics (NMP), is pursuing two additional clinical phase III trials for fluorodeoxyglucose (FDG), the main radionuclide used in positron emission tomography (PET) imaging.
Visipaque(TM) phase III trials are underway in the area of computed tomography angiography, an evolving noninvasive technology for blood vessel examination, and a clinical phase IV trial has begun to study renal safety in patients with impaired kidney function.
The Parkinson's disease diagnostic, DaTSCAN(TM), is being investigated for potential use in diagnosing Lewy body, a specific form of dementia. Clinical trials may commence within the next few months. Dementia with Lewy body affects some 200,000 patients in Europe.
Amersham Biosciences
1H 2002 1H 2001 CER Actual Rate
m pounds m pounds Growth % Growth %
Sales 333 325 7# 2
Trading profit 80 72 11 11
R&D (44) (44) 1
Operating profit 36 28 25 28
# Comparable growth excluding disposed business.
Sales for the first half of the year were up seven per cent to 333 pounds million. Trading profit grew by 11 per cent to 80 million pounds, benefiting from reduced litigation spend. As planned, the rate of growth in R&D was lowered to one per cent following significant investment over the last three years in discovery systems. Operating profit grew 25 per cent to 36 million pounds.
Protein separations
Protein separations is the market leader in chromatographic systems (instruments, software and reagents) for the purification of proteins on a laboratory and manufacturing scale. Sales for the first half of 2002 were 131 million pounds, up 12 per cent and operating profit was up 3 million pounds to 48 million pounds. The good growth in protein separations continues to be driven by the increasing number and volume of biopharmaceuticals on the market, and the focus on protein research. New products launched in the first six months included AKTA(TM)3D for automated high throughput protein purification, and Plasmid Select for purification of plasmids on a laboratory and industrial scale.
In January, Amersham Biosciences acquired AG Technology and InnovaSep Technology, broadening its protein separations capabilities into filtration, an adjacent step to chromatography in biopharmaceutical manufacturing and thus a natural strategic fit. The integration of these companies is progressing well and the first order for a full downstream processing system, encompassing both chromatography and filtration, has already been received.
Discovery systems
Discovery systems provides high throughput systems to improve the effectiveness of life science and pharmaceutical R&D, as well as a broad range of laboratory research tools and technology to purify, detect and analyse biological molecules. Sales in the first half of 2002 were 202 million pounds, up three per cent, held back by some caution over spending in the pharmaceutical sector for capital equipment, particularly in the U.S. The operating loss was reduced by 5 million pounds to 12 million pounds. This improvement resulted from a slight reduction in R&D and reduced litigation spend, offset in part by the investment in Cimarron and a restructuring charge taken in the first half for the rebalancing of R&D.
Discovery systems includes three application areas of genomics, proteomics and bioassays. Genomics was driven by good sales of sequencing reagents and of TempliPhi(TM), the DNA template preparation kit. The genomics market is changing rapidly, with a shift from gene sequencing to the study of gene function and genetic variation. Amersham Biosciences is well positioned to play a key part in this, with its strengths in sequencing, genetic amplification and array technology. Proteomics saw good sales of reagents, particularly for 2D gel electrophoresis systems. The Ettan(TM) MaldiTOF Pro, a new easytouse mass spectrometry system developed for the generalist life science researcher, was launched. In bioassays, the IN Cell Analyzer, the cellbased screening system that enables researchers to observe directly the effects of a potential new drug on living cells in real time, has received excellent reviews, and is due to be launched later this year.
Outlook
Amersham plc remains on track to meet full year targets.
Amersham Health is expected to continue to achieve good sales growth in medical diagnostics, excluding Japan, for the remainder of the year. Sales of bulk product to Japan are expected to decline at a similar rate as that seen in the first half with particularly low sales in the third quarter due to order phasing. Operating margins, before exchange impacts, are expected to be slightly higher in 2002 than in 2001, after the strong first half performance.
In Amersham Biosciences, the good visibility in our order book due to commissioning of new customer plants is expected to accelerate sales in protein separations in the remainder of the year. Sales growth in discovery systems is expected to show modest improvement in the second half of the year benefiting from sales of new products introduced during the first half. Operating margins, before exchange impacts, are expected to improve by up to two percentage points for the year prior to modest dilution from the Cimarron and Codelink(TM) acquisitions.
Shareholders will be updated on Amersham plc's third quarter sales progress on 28 October.
Dividend calendar
Oct. 2, 2002 Ex dividend date Oct. 4, 2002 Record date for interim dividend Nov. 1, 2002 Payment of interim dividend