TIDMAZN
RNS Number : 7428G
AstraZeneca PLC
06 March 2015
AstraZeneca REFINES ITS FINANCIAL REPORTING
in line with evolving business model
6 March 2015
AstraZeneca today announces an update to the presentation of its
Statement of Comprehensive Income, which will see revenue from
externalisation becoming more visible to enhance transparency for
investors. The change is effective from 1 January 2015 and will be
reported as part of the Company's first quarter financial results
on 24 April 2015. The impact is presentational and therefore does
not impact Reported or Core profit.
As previously outlined, AstraZeneca's business model includes an
increasing level of externalisation activity to create value from
the strong science that exists in the pipeline. This will benefit
patients whilst sharpening further the focus on our main therapy
areas - Respiratory, Inflammation & Autoimmunity;
Cardiovascular & Metabolic Disease and Oncology. The Company's
two biotech centres, the Innovative Medicines Unit and MedImmune,
continue to increase R&D productivity. Consequently AstraZeneca
will consider opportunities to out-licence technologies and
potential new medicines to ensure these reach patients as quickly
as possible.
The updated financial reporting structure reflects the Company's
entrepreneurial approach and provides a clear picture of a growing
additional revenue stream.
Historically, reported revenue reflected only product sales
(formerly known as sales revenue), with externalisation revenue
forming part of other operating income presented below cost of
goods sold (COGS). From 1 January 2015 externalisation revenue,
alongside product sales, contribute to total revenue, which is
shown above COGS. Externalisation revenue includes development,
commercialisation, partnership and out-licence revenue, such as
royalties and milestone receipts, together with income from
services or repeatable licences.
Income will be recorded as externalisation revenue when the
Company has an ongoing interest in the product and/or it is
repeatable business and there is no derecognition of an intangible
asset. Disposals of assets and businesses, where AstraZeneca does
not retain an interest, will continue to be recorded in other
operating income.
The Company has updated its revenue accounting policy with
effect from 1 January 2015 and the prior-year financial results
will be restated accordingly. An illustration of the change to the
presentation of prior-period Core financial performance is shown in
the appendix. These numbers are unaudited and are indicative of the
impact of the change in policy.
2015 Financial Guidance
To reflect the change outlined above, the Company today provides
2015 total revenue guidance. Total revenue is expected to decline
by mid single-digit percent at constant exchange rates (CER). This
is consistent with previous guidance stating that sales revenue was
expected to decline by mid single-digit percent at CER. Core EPS
guidance is unchanged and Core EPS is expected to increase by low
single-digit percent at CER.
The Company also provides the following non-guidance information
related to currency sensitivity: Based on current exchange rates(1)
, total revenue is expected to decline by low double-digit percent.
This is consistent with previous expectations stating an
anticipated sales revenue decline of low double-digit percent. Core
EPS is expected to be broadly in line with 2014. For additional
currency sensitivity information, please see below:
Average exchange Impact of 5% weakening
rates versus in exchange rate versus
USD USD ($m)(2)
--------- ----------------------- ----------------------------
YTD Core
Primary Feb Change Total operating
Currency relevance 2014 2015(1) % revenue profit
--------- ---------- ----------- ---------- ------ -------- ------------
Product
EUR sales 0.75 0.87 (13) (194) (119)
Product
JPY sales 105.87 118.55 (11) (105) (75)
Product
CNY sales 6.16 6.23 (1) (113) (48)
SEK Costs 6.86 8.22 (16) (5) 95
GBP Costs 0.61 0.66 (7) (34) 104
Other(3) (213) (123)
---------------------------------- ----------- ---------- ------ -------- ------------
(1) Based on average daily spot rates YTD to the end of February
2015.
(2) Based on 2014 actual group currency exposures.
(3) Other important currencies include AUD, BRL, CAD, KRW and
RUB.
ENDS -
Appendix
Impact of Revenue Accounting Changes
All numbers shown below are at actual exchange rates in $m
unless otherwise stated.
Core Q1 2013 Core Q2 2013 Core Q3 2013 Core Q4 2013 Core FY 2013
Restated As Restated As Restated As Restated As Restated As
Formerly Formerly Formerly Formerly Formerly
Presented Presented Presented Presented Presented
Product Sales 6,385 6,385 6,232 6,232 6,250 6,250 6,844 6,844 25,711 25,711
Externalisation
Revenue 12 - 47 - 12 - 12 - 83 -
Total Revenue 6,397 6,385 6,279 6,232 6,262 6,250 6,856 6,844 25,794 25,711
--------- ---------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
Cost of Sales (1,136) (1,136) (1,105) (1,105) (1,103) (1,103) (1,289) (1,289) (4,633) (4,633)
Gross Profit 5,261 5,249 5,174 5,127 5,159 5,147 5,567 5,555 21,161 21,078
Distribution (77) (77) (76) (76) (81) (81) (72) (72) (306) (306)
R&D (963) (963) (1,040) (1,040) (1,061) (1,061) (1,205) (1,205) (4,269) (4,269)
SG&A (2,055) (2,055) (2,173) (2,173) (2,154) (2,154) (2,483) (2,483) (8,865) (8,865)
Other Income 158 170 171 218 164 176 176 188 669 752
Operating Profit 2,324 2,324 2,056 2,056 2,027 2,027 1,983 1,983 8,390 8,390
----------------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
All numbers shown below are at actual exchange rates in $m
unless otherwise stated.
Core Q1 2014 Core Q2 2014 Core Q3 2014 Core Q4 2014 Core FY 2014
Restated As Restated As Restated As Restated As Restated As
Formerly Formerly Formerly Formerly Formerly
Presented Presented Presented Presented Presented
Product Sales 6,416 6,416 6,454 6,454 6,542 6,542 6,683 6,683 26,095 26,095
Externalisation
Revenue 49 - 302 - 69 - 41 - 461 -
Total Revenue 6,465 6,416 6,756 6,454 6,611 6,542 6,724 6,683 26,556 26,095
--------- ---------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
Cost of Sales (1,193) (1,193) (1,156) (1,156) (1,180) (1,180) (1,359) (1,359) (4,888) (4,888)
Gross Profit 5,272 5,223 5,600 5,298 5,431 5,362 5,365 5,324 21,668 21,207
Distribution (72) (72) (77) (77) (87) (87) (88) (88) (324) (324)
R&D (1,098) (1,098) (1,208) (1,208) (1,275) (1,275) (1,360) (1,360) (4,941) (4,941)
SG&A (2,317) (2,317) (2,460) (2,460) (2,486) (2,486) (2,953) (2,953) (10,216) (10,216)
Other Income 167 216 176 478 187 256 220 261 750 1,211
Operating Profit 1,952 1,952 2,031 2,031 1,770 1,770 1,184 1,184 6,937 6,937
----------------- --------- ---------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
NOTES TO EDITORS
About AstraZeneca
AstraZeneca is a global, innovation-driven biopharmaceutical
business that focuses on the discovery, development and
commercialisation of prescription medicines, primarily for the
treatment of cardiovascular, metabolic, respiratory, inflammation,
autoimmune, oncology, infection and neuroscience diseases.
AstraZeneca operates in over 100 countries and its innovative
medicines are used by millions of patients worldwide.
CONTACTS
Media Enquiries
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Vanessa Rhodes +44 20 7604 8037 (UK/Global)
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Investor Enquiries
Thomas Kudsk Larsen +44 20 7604 8199 mob: +44 7818 524185
Karl Hård +44 20 7604 8123 mob: +44 7789 654364
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Craig Marks +44 20 7604 8591 mob: +44 7881 615764
Christer Gruvris +44 20 7604 8126 mob: +44 7827 836825
This information is provided by RNS
The company news service from the London Stock Exchange
END
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