AstraZeneca PLC AZN Definition of Core Financial Measures

  AstraZeneca PLC (AZN) - Definition of Core Financial Measures

RNS Number : 9250Q
AstraZeneca PLC
12 November 2012




AstraZeneca PLC

Definition of Core Financial measures

                                                      London, 12 November 2012



Definition of Core Financial Measures will change with effect from Q1 2013



As  previously  announced,  with  effect  from  first  quarter  results  2013, 
AstraZeneca PLC  will update  its  definition of  Core financial  measures  to 
exclude all  intangible asset  amortisation  charges and  impairments,  except 
those for  IS-related intangibles.  As  intangibles acquired  as a  result  of 
externalisation become an increasing proportion of the Group's asset base, the
new definition has been extended to provide better clarity of the impact  from 
amortisation and  impairment  charges included  in  Reported results  and,  in 
addition, while recognising that  non-GAAP measures differ between  companies, 
it will aid comparability of our results versus our peers.



The items  excluded  from  Core  results  under  the  previous  definition  as 
disclosed in detail on page 84 of our Annual Report and Form 20-F  Information 
2011 remain a constituent part of  the new definition. These excluded  certain 
significant items,  such  as charges  and  provisions related  to  our  global 
restructuring programmes,  amortisation  and  impairment  of  the  significant 
intangibles relating to our acquisition of MedImmune Inc. in 2007 and our exit
arrangements with Merck in the US, and other specified items.



Detailed, un-audited reconciliations between  the current Reported basis,  the 
previously disclosed  Core basis  and the  newly defined  Core basis  for  the 
full-year 2011, first nine months of 2012 and each of the quarters to Q3  2012 
are set out  below. These  are presented as  the full  reconciliation back  to 
Reported performance,  as  management  believe a  full  understanding  of  the 
performance is best obtained by reviewing both Reported and Core  performance. 
Reported performance  remains a  key metric  for management  in reviewing  the 
performance of the Group.



Adjustments between reported and core performance



Amortisation and impairments of intangible assets. The definition of this item
has been  updated  to include  all  amortisation and  impairment  charges  for 
intangible assets  excluding  IS-related  assets. Adjusting  for  these  items 
removes the  volatility when  impairments are  booked on  such assets  and  is 
intended to provide a  better measure of  underlying business performance.  It 
has been  extended  to cover  all  amortisation and  impairments  relating  to 
product marketing and distribution rights and other intangibles, incorporating
those  already  excluded  under  the   current  definition  relating  to   our 
acquisition of  MedImmune  Inc. and  our  exit arrangements  with  Merck.  The 
amortisation and impairment of IS-related intangibles are not included in  the 
adjustment, and will remain in core.



Restructuring costs. The definition for this item has not been changed. These
charges arise from the major restructuring programmes as separately  announced 
by  the  Group,  and  will  include  the  remainder  of  the  third  phase  of 
restructuring announced in February 2012.



Legal charges and other  charges. The definition for  this item has not  been 
changed.  Legal  payments,  charges  and  expenses  related  to   settlements, 
judgments and fines in the context of product liability litigation, anti-trust
litigation, patent litigation and  government investigations will be  excluded 
from the  Core measures  and the  adjustment  will be  stated net  of  related 
insurance recoveries.  In the  ordinary course,  external legal  professional 
fees, including those relating to intellectual property protection costs,  and 
the costs  of  AstraZeneca's in-house  legal  function will  remain  in  Core. 
Professional  fees   directly   attributable  to   AstraZeneca's   significant 
acquisitions and other significant business combination activity will continue
be excluded from Core. Other specified items deemed not to be in the  ordinary 
course of business will continue to be excluded from Core.



Tax on adjustments. The  definition for this item  has not been changed.  The 
Group's Reported effective  tax rate, adjusted  for significant one-off  items 
embedded within that rate,  is applied to all  taxable Core adjustments.  This 
approach is unchanged.



NOTES TO EDITORS

This announcement shall not constitute an offer to sell or the solicitation of
an offer  to buy,  nor shall  there be  any sale  of these  securities in  any 
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration  or  qualification  under  the securities  laws  of  any  such 
jurisdiction.

  About AstraZeneca

AstraZeneca is a global,  innovation-driven biopharmaceutical business with  a 
primary  focus  on  the   discovery,  development  and  commercialization   of 
prescription medicines  for  gastrointestinal,  cardiovascular,  neuroscience, 
respiratory and  inflammation, oncology  and infectious  disease.  AstraZeneca 
operates in  over 100  countries  and its  innovative  medicines are  used  by 
millions  of   patients  worldwide.   For  more   information  please   visit: 
www.astrazeneca.com.

CONTACT INFORMATION

  

  Media Enquiries

Esra Erkal-Paler  +44 20 7604 8030

  Investor Enquiries UK

James Ward-Lilley  +44 20 7604 8122  mob: +44
7785 432613
Karl Hård  +44 20 7604 8123  mob:
+44 7789 654364
Nicklas Westerholm  +44 20 7604 8124  mob: +44
7585 404950

  Investor Enquiries US

Ed Seage  +1 302 886 4065  mob: +1
302 373 1361

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS



In order, among other things, to utilise the 'safe harbour' provisions of  the 
US Private  Securities  Litigation  Reform  Act 1995,  we  are  providing  the 
following cautionary  statement:  The  interim  financial  statements  contain 
certain forward-looking statements with respect to the operations, performance
and financial condition of the Group. Although we believe our expectations are
based on reasonable assumptions, any forward-looking statements, by their very
nature, involve risks and uncertainties and may be influenced by factors  that 
could cause actual outcomes and results to be materially different from  those 
predicted. The forward-looking  statements reflect  knowledge and  information 
available at the date of preparation  of the interim financial statements  and 
AstraZeneca  undertakes  no   obligation  to   update  these   forward-looking 
statements. We  identify the  forward-looking statements  by using  the  words 
'anticipates', 'believes',  'expects', 'intends'  and similar  expressions  in 
such statements. Important factors that  could cause actual results to  differ 
materially from  those contained  in  forward-looking statements,  certain  of 
which are  beyond  our control,  include,  among  other things:  the  loss  or 
expiration of patents,  marketing exclusivity  or trademarks, or  the risk  of 
failure  to  obtain  patent  protection;  the  risk  of  substantial   adverse 
litigation/government  investigation   claims   and   insufficient   insurance 
coverage; exchange rate  fluctuations; the risk  that R&D will  not yield  new 
products that achieve  commercial success; the  risk that strategic  alliances 
and acquisitions  will  be  unsuccessful; the  impact  of  competition,  price 
controls and price reductions; taxation risks; the risk of substantial product
liability claims;  the  impact of  any  failure  by third  parties  to  supply 
materials or services; the  risk of failure  to manage a  crisis; the risk  of 
delay to new product launches;  the difficulties of obtaining and  maintaining 
regulatory approvals  for products;  the risk  of failure  to observe  ongoing 
regulatory oversight; the risk that new products do not perform as we  expect; 
the risk of  environmental liabilities; the  risks associated with  conducting 
business in emerging  markets; the risk  of reputational damage;  the risk  of 
product counterfeiting; the risk of failure to successfully implement  planned 
cost reduction  measures through  productivity initiatives  and  restructuring 
programmes; the risk that regulatory approval processes for biosimilars  could 
have an  adverse effect  on future  commercial prospects;  and the  impact  of 
increasing implementation and enforcement  of more stringent anti-bribery  and 
anti-corruption legislation.

Reconciliations of Reported through previous Core to Revised Core



Nine Months to September 2012



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                            Merck &                  Legal

                                         MedImmune  Intangible Provisions         Actual                               Revised Actual
                Reported                                                      Core         CER                             Core         CER
                    2012 Restructuring Amortisation Impairments    & Other    2012      %    % Amortisation Impairments    2012      %    %
Revenue          20,691            -           -           -         - 20,691   (17) (15)           -          - 20,691   (17) (15)
Cost of Sales    (3,995)           75           -           -         - (3,920)                     198          - (3,722)
Gross Profit     16,696           75           -           -         - 16,771   (18) (16)         198          - 16,969   (18) (15)
% sales            80.7%                                                     81.1%   -1.3 -1.2                            82.0%   -0.7 -0.7
Distribution       (241)            -           -           -         -   (241)    (8)  (4)           -          -   (241)    (8)  (4)
% sales             1.2%                                                      1.2%   -0.2 -0.1                             1.2%   -0.2 -0.1
R&D              (3,923)          697           -           -         - (3,226)    (3)  (2)          18        147 (3,061)    (6)  (4)
% sales            19.0%                                                     15.6%   -2.2 -2.1                            14.8%   -1.7 -1.6
SG&A             (7,170)          388         384           -       127 (6,271)   (15) (13)          86          - (6,185)   (15) (13)
% sales            34.6%                                                     30.3%   -0.7 -0.7                            29.9%   -0.5 -0.5
Other Income        822            -          43           -         -    865    41  44          17          -    882    44   47
% sales             4.0%                                                      4.2%   +1.8 +1.7                             4.3%   +1.8 +1.7
Operating                                                                   7,898                     319        147  8,364
Profit            6,184        1,160         427*           -      127**           (22) (20)                                    (20) (17)
% sales            29.9%                                                     38.2%   -2.6 -2.4                            40.4%   -1.3 -1.2
Net Finance                                                                  (320)                       -          -   (320)
Expense            (320)            -           -           -         -
Profit before                                                               7,578                     319        147  8,044
Tax               5,864        1,160         427           -       127           (23) (21)                                    (20) (18)
Taxation         (1,071)         (259)        (61)*           -       (28) (1,419)                     (52)        (33) (1,504)
Profit after                                                                6,159                      267        114  6,540
Tax               4,793          901         366           -        99           (21) (19)                                    (19) (16)
Non-controlling                                                               (17)                       -          -    (17)
Interests           (17)            -           -           -         -
Net Profit        4,776          901         366           -        99  6,142   (21) (19)         267        114  6,523   (19) (16)
Weighted                                                                    1,266                   1,266      1,266  1,266
Average Shares    1,266        1,266       1,266       1,266     1,266
Earnings per                                                                 4.85                    0.21       0.09   5.15
Share              3.77         0.71        0.29           -      0.08           (14) (11)                                    (12)  (9)



*  Of the $427 million amortisation adjustment, $272 million is related to
   MedImmune, with a corresponding tax adjustment of $61 million; Merck
   related amortisation was $155 million, which carries no tax adjustment.
** Includes $61 million of acquisition related expenses.



Third Quarter 2012



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                            Merck &                  Legal

                                         MedImmune  Intangible Provisions         Actual                               Revised Actual
                Reported                                                      Core         CER                             Core          CER
                    2012 Restructuring Amortisation Impairments    & Other    2012      %    % Amortisation Impairments    2012      %     %
Revenue           6,682            -           -           -         -  6,682   (19) (15)           -          -  6,682   (19)  (15)
Cost of Sales    (1,274)           14           -           -         - (1,260)                     130          - (1,130)
Gross Profit      5,408           14           -           -         -  5,422   (18) (15)         130          -  5,552   (16)  (13)
% sales            80.9%                                                     81.1%   +0.7 -0.1                            83.1%  +2.2 +1.3
Distribution        (90)            -           -           -         -    (90)    (3)    2           -          -    (90)    (3)    2
% sales             1.3%                                                      1.3%   -0.2 -0.2                             1.3%  -0.2 -0.2
R&D              (1,204)          116           -           -         - (1,088)    (5)  (3)           6         89   (993)   (12)   (9)
% sales            18.0%                                                     16.3%   -2.3 -1.9                            14.9%  -1.1 -0.8
SG&A             (2,359)          123         151           -        57 (2,028)   (15) (12)          50          - (1,978)   (17)  (13)
% sales            35.3%                                                     30.3%   -1.2 -1.0                            29.6%  -0.7 -0.5
Other Income        401            -          15           -         -    416     99  103          17          -    433   107  111
% sales             6.0%                                                      6.2%   +3.7 +3.5                             6.5%  +3.9 +3.7
Operating                                                                   2,632                     203         89  2,924
Profit            2,156          253         166*           -         57           (17) (14)                                    (10)   (7)
% sales            32.3%                                                     39.4%   +0.7 +0.3                            43.8%  +4.1 +3.5
Net Finance                                                                  (108)                       -          -   (108)
Expense            (108)            -           -           -         -
Profit before                                                               2,524                     203         89  2,816
Tax               2,048          253         166           -        57           (18) (15)                                    (11)   (8)
Taxation           (515)          (70)        (23)*           -     (24)**   (632)                     (42)        (21)   (695)
Profit after                                                                1,892                     161         68  2,121
Tax               1,533          183         143           -        33           (18) (15)                                    (11)   (7)
Non-controlling                                                                (8)                       -          -     (8)
Interests            (8)            -            -           -         -
Net Profit        1,525          183         143           -        33  1,884   (18) (15)         161         68  2,113   (11)   (7)
Weighted                                                                    1,250                   1,250      1,250  1,250
Average Shares    1,250        1,250       1,250       1,250     1,250
Earnings per                                                                 1.51                    0.13       0.05   1.69
Share              1.22         0.15        0.11           -      0.03           (12)  (8)                                     (3)    -



*  Of the $166 million amortisation adjustment, $91 million is related to
   MedImmune, with a corresponding tax adjustment of $23 million; Merck
   related amortisation was $75 million, which carries no tax adjustment.
** Includes $11 million tax adjustment on the $50 million acquisition related
   expenses incurred in the second quarter.









Second Quarter 2012



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                            Merck &                  Legal

                                         MedImmune  Intangible Provisions         Actual                                Revised Actual
                Reported                                                      Core          CER                             Core          CER
                    2012 Restructuring Amortisation Impairments    & Other    2012      %     % Amortisation Impairments    2012      %     %
Revenue           6,660            -           -          -         -  6,660   (21)  (18)           -          -  6,660   (21)  (18)
Cost of Sales    (1,346)            6           -          -         - (1,340)                       34          - (1,306)
Gross Profit      5,314            6           -          -         -  5,320   (24)  (20)          34          -  5,354   (23)  (20)
% sales            79.8%                                                     79.9%  -2.8 -1.9                            80.4%  -2.6 -1.7
Distribution        (75)            -           -          -         -    (75)   (15)  (10)           -          -    (75)   (15)  (10)
% sales             1.1%                                                      1.1%  -0.1 -0.1                             1.1%  -0.1 -0.1
R&D              (1,189)          136           -          -         - (1,053)    (6)   (4)           6          6 (1,041)    (5)   (3)
% sales            17.9%                                                     15.8%  -2.5 -2.4                            15.6%  -2.6 -2.4
SG&A             (2,350)           63         116          -        66 (2,105)   (20)  (18)          19          - (2,086)   (20)  (17)
% sales            35.3%                                                     31.6%  -0.4 -0.4                            31.3%  -0.4 -0.4
Other Income        168            -          14          -         -    182    (3)    -           -          -    182    (3)    -
% sales             2.5%                                                      2.7%  +0.5 +0.5                             2.7%  +0.5 +0.5
Operating                                                                   2,269                       59          6  2,334
Profit            1,868          205         130*          -       66**           (32)  (27)                                    (31)  (27)
% sales            28.0%                                                     34.1%  -5.3 -4.3                            35.1%  -5.2 -4.1
                                                                                                                            
Net Finance
Expense            (105)            -           -          -         -   (105)                        -          -   (105)
Profit before                                                               2,164                       59          6  2,229
Tax               1,763          205         130          -        66           (33)  (28)                                    (32)  (28)
Taxation           (145)          (48)        (20)*          -        (3)   (216)                       (4)         (2)   (222)
Profit after                                                                1,948                       55          4  2,007
Tax               1,618          157         110          -        63           (19)  (14)                                    (18)  (13)
                                                                                                                            
Non-controlling
Interests            (7)            -           -          -         -     (7)                        -          -     (7)
Net Profit        1,611          157         110          -        63  1,941   (19)  (14)          55          4  2,000   (18)  (13)
                                                                                                                            
Weighted
Average Shares    1,267        1,267       1,267      1,267     1,267  1,267                    1,267      1,267  1,267
Earnings per                                                                 1.53                     0.04       0.01   1.58
Share              1.27         0.12        0.09          -      0.05           (12)   (6)                                    (11)   (6)
                                                                                                            
      *      Of the $130 million amortisation adjustment, $91 million is related to MedImmune, with a
            corresponding tax adjustment of $20 million; Merck related amortisation was $39 million, which  
             carries no tax adjustment.
     **     Includes $50 million of acquisition related expenses which carry no tax adjustment.             



First Quarter 2012



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                            Merck &                  Legal

                                         MedImmune  Intangible Provisions         Actual                                Revised Actual
                Reported                                                      Core          CER                             Core          CER
                    2012 Restructuring Amortisation Impairments    & Other    2012      %     % Amortisation Impairments    2012      %     %
Revenue           7,349            -           -           -         -  7,349   (11)  (11)           -          -  7,349   (11)  (11)
Cost of Sales    (1,375)           55           -           -         - (1,320)                       34          - (1,286)
Gross Profit      5,974           55           -           -         -  6,029   (13)  (13)          34          -  6,063   (13)  (13)
% sales            81.3%                                                     82.0%  -2.0 -1.9                            82.5%   -1.8 -1.7
Distribution        (76)            -           -           -         -    (76)    (5)   (3)           -          -    (76)    (5)   (3)
                                                                              1.0%                                     1.0%
% sales             1.0%                                                             -    -0.1                                      - -0.1
R&D              (1,530)          445           -           -         - (1,085)     1    2           6         52 (1,027)     -    -
% sales            20.8%                                                     14.7%  -1.8 -1.9                            13.9%  -1.5 -1.6
SG&A             (2,461)          202         117           -         4 (2,138)    (9)   (9)          17          - (2,121)    (9)   (9)
% sales            33.5%                                                     29.1%  -0.8 -0.8                            28.9%  -0.7 -0.8
Other Income        253            -          14           -         -    267    24   25           -          -    267    24   25
% sales             3.4%                                                      3.6%  +1.0 +1.1                             3.6%  +1.0 +1.1
Operating                                                                   2,997                       57         52  3,106
Profit            2,160          702         131*           -         4           (19)  (18)                                    (17)  (17)
% sales            29.4%                                                     40.8%  -3.6 -3.6                            42.3%  -3.0 -3.1
Net Finance                                                                  (107)                        -          -   (107)
Expense            (107)            -           -           -         -
Profit before                                                               2,890                       57         52  2,999
Tax               2,053          702         131           -         4           (19)  (19)                                    (18)  (18)
Taxation           (411)         (141)        (18)*           -        (1)   (571)                       (6)        (10)   (587)
Profit after                                                                2,319                       51         42  2,412
Tax               1,642          561         113           -         3           (26)  (26)                                    (24)  (24)
Non-controlling                                                                (2)                        -          -     (2)
Interests            (2)            -           -           -         -
Net Profit        1,640          561         113           -         3  2,317   (26)  (26)          51         42  2,410   (24)  (24)
                                                                                                                            
Weighted
Average Shares    1,281        1,281       1,281       1,281     1,281  1,281                    1,281      1,281  1,281
Earnings per                                                                 1.81                     0.04       0.03   1.88
Share              1.28         0.44        0.09           -         -           (19)  (19)                                    (17)  (17)



* Of the $131 million amortisation adjustment, $90 million is related to
  MedImmune, with a corresponding tax adjustment of $18 million; Merck related
  amortisation was $41 million, which carries no tax adjustment.











Full Year 2011



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.





                                            Merck &                  Legal

                                         MedImmune  Intangible Provisions         Actual                               Revised Actual
                Reported                                                      Core         CER                             Core         CER
                    2011 Restructuring Amortisation Impairments    & Other    2011      %    % Amortisation Impairments    2011      %    %
Revenue          33,591            -           -          -         - 33,591     1  (2)            -           - 33,591     1  (2)
Cost of Sales    (6,026)           54           -          -         - (5,972)                      129           - (5,843)
Gross Profit     27,565           54           -          -         - 27,619     2   -          129           - 27,748     2  (1)
% sales            82.1%                                                     82.2%   +1.0 +1.3                            82.6%   +0.7 +1.0
Distribution       (346)            -           -          -         -   (346)     3  (1)            -           -   (346)     3  (1)
% sales             1.0%                                                      1.0%     -   -                             1.0%     -   -
R&D              (5,523)          468           -         22         - (5,033)    19  15           27         527 (4,479)    10   6
% sales            16.5%                                                     15.0%   -2.3 -2.2                            13.3%   -1.1 -0.9
SG&A            (11,161)          639         469          -       135 (9,918)     1  (2)           78           4 (9,836)     1  (2)
% sales            33.2%                                                     29.5%   -0.1 -0.1                            29.3%   -0.1    -
Other Income      2,260            -          68          -  (1,483)**    845    (7)  (8)            -           -    845    (7)  (8)
% sales             6.7%                                                      2.5%   -0.2 -0.2                             2.5%   -0.2 -0.2
Operating                                                                                               234         531
Profit           12,795        1,161         537*         22    (1,348) 13,167    (3)  (4)                          13,932    (1)  (2)
% sales            38.1%                                                     39.2%   -1.6 -1.2                            41.5%   -0.7 -0.1
Net Finance                                                                                               -           -
Expense            (428)            -           -          -         -   (428)                                        (428)
Profit before                                                                                           234         531
Tax              12,367        1,161         537         22    (1,348) 12,739    (3)  (4)                          13,504      -  (1)
Taxation         (2,351)         (306)         (98)         (6)       (36) (2,797)                     (28)       (140) (2,965)
Profit after                                                                                            206         391
Tax              10,016          855         439         16    (1,384)  9,942     3   2                          10,539      5   4
                                                                                                                     
Non-controlling
Interests           (33)            -           -          -         -    (33)                        -           -    (33)
Net Profit        9,983          855         439         16    (1,384)  9,909     3   2          206         391 10,506     5   4
                                                                                                                     
Weighted
Average Shares    1,361        1,361       1,361       1,361     1,361  1,361                    1,361       1,361  1,361
Earnings per                                                                                           0.15        0.29
Share              7.33         0.63        0.32       0.01     (1.01)   7.28     9   7                            7.72    11  10
                                                                                                           
      *      Of the $537 million amortisation adjustment, $373 million is related to MedImmune, with a
             corresponding tax adjustment of $98 million; Merck related amortisation was $164 million,
            which carries no tax adjustment.                                                              

             
     **     Gain on the sale of Astra Tech was $1,483 million, and carries no tax adjustment.              



Fourth Quarter 2011



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                            Merck &                  Legal                                               Revised Actual
                Reported                  MedImmune  Intangible Provisions    Core          CER                             Core         CER
                    2011 Restructuring Amortisation Impairments    & Other    2011 Actual%    % Amortisation Impairments    2011      %    %
Revenue           8,656           -           -           -         -  8,656      -   -            -           -  8,656     -   -
Cost of Sales    (1,612)           36           -           -         - (1,576)                        37           - (1,539)
Gross Profit      7,044           36           -           -         -  7,080      3   1           37           -  7,117     3   1
% sales            81.4%                                                     81.8%    +1.8 +0.9                            82.2%   +1.9 +1.0
Distribution        (85)           -           -           -         -    (85)     (2)  (1)            -           -    (85)    (2)  (1)
% sales             1.0%                                                      1.0%      -   -                             1.0%     -   -
R&D              (1,867)          175           -           -         - (1,692)     31  31            6         467 (1,219)      5    4
% sales            21.6%                                                     19.5%    -4.5 -4.6                            14.1%   -0.6 -0.6
SG&A             (3,141)          448         117           -        30 (2,546)    (12) (12)           14           4 (2,528)   (12) (12)
% sales            36.3%                                                     29.5%    +4.0 +3.9                            29.2%   +4.0 +3.9
Other Income        216            -          17           -         -    233      -   -            -           -    233     -   -
% sales             2.5%                                                      2.7%      -   -                             2.7%     -   -
Operating                                                                                                 57         471
Profit            2,167          659        134*           -        30  2,990      4   1                           3,518     16   12
% sales            25.0%                                                     34.5%    +1.3 +0.2                            40.6%   +5.3 +4.3
Net Finance                                                                                                -           -
Expense            (115)            -           -           -         -   (115)                                         (115)
Profit before                                                                                             57         471
Tax               2,052          659         134           -        30  2,875      5   1                           3,403     17   13
Taxation           (559)         (174)         (25)           -        (8)   (766)                       (5)       (124)   (895)
Profit after                                                                                              52         347
Tax               1,493          485         109           -        22  2,109      7   3                           2,508     19   16
Non-controlling                                                                                            -           -
Interests            (7)            -           -           -         -     (7)                                           (7)
Net Profit        1,486          485         109           -        22  2,102      7   4           52         347  2,501     20   16
                                                                                                                      
Weighted
Average Shares    1,312        1,312       1,312       1,312     1,312  1,312                     1,312       1,312  1,312
Earnings per                                                                                            0.04        0.26
Share              1.16         0.36        0.08           -      0.01   1.61     16  12                            1.91     29   25



* Of the $134 million amortisation adjustment, $93 million is related to
  MedImmune, with a corresponding tax adjustment of $25 million; Merck related
  amortisation was $41 million, which carries no tax adjustment.









Third Quarter 2011



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                                                                        
                                                                                             
                                            Merck &                  Legal         Actual                                Revised Actual
                 Reported                  MedImmune  Intangible Provisions    Core          CER                             Core          CER
                     2011 Restructuring Amortisation Impairments    & Other    2011      %     % Amortisation Impairments    2011      %     %
Revenue            8,213            -          -          -        -  8,213     4   (2)           -          -  8,213     4   (2)
Cost of Sales     (1,593)          (14)          -          -        - (1,607)                       42          - (1,565)
Gross Profit       6,620          (14)          -          -        -  6,606     3    -          42          -  6,648     2   (2)
% sales             80.6%                                                     80.4%  -0.5 +1.2                            80.9%  -1.9 -0.2
Distribution         (93)            -          -          -        -    (93)    13    5           -          -    (93)    14    5
% sales              1.1%                                                      1.1%  -0.1 -0.1                             1.1%  -0.1 -0.1
R&D               (1,296)          124          -         22        - (1,150)    17   10           7         14 (1,129)    16    9
% sales             15.8%                                                     14.0%  -1.5 -1.5                            13.7%  -1.4 -1.3
SG&A              (2,644)          111         117          -        21 (2,395)     3   (2)          22          - (2,373)     3   (2)
% sales             32.2%                                                     29.1%  +0.2 +0.2                            28.9%  +0.2 +0.2
Other Income       1,675            -          17          -  (1,483)**    209    (6)   (5)           -          -    209    (8)   (8)
% sales             20.4%                                                      2.5%  -0.3 -0.1                             2.5%  -0.3 -0.2
Operating Profit   4,262          221         134*         22    (1,462)  3,177    (2)   (2)          71         14  3,262    (5)   (5)
% sales             51.9%                                                     38.7%  -2.2 -0.3                            39.7%  -3.5 -1.6
Net Finance                                                                                                -          -
Expense              (93)            -           -          -        -    (93)                                          (93)
Profit before                                                                                             71         14
Tax                4,169          221         134         22    (1,462)  3,084     -   (1)                           3,169   (3)   (4)
Taxation            (684)          (58)        (23)*         (6)      (6)**   (777)                       (8)         (4)   (789)
Profit after Tax   3,485          163         111         16    (1,468)  2,307     7    6          63         10  2,380     4    3
Non-controlling                                                                                           -          -
Interests             (8)            -          -          -        -     (8)                                           (8)
Net Profit         3,477          163         111         16    (1,468)  2,299     7    6          63         10  2,372     3    3
Weighted Average                                                                                       1,354      1,354
Shares             1,354        1,354       1,354      1,354     1,354  1,354                                        1,354
Earnings per                                                                                            0.05          -
Share               2.56         0.12        0.08       0.01     (1.06)   1.71    14   12                            1.76    10    9



*  Of the $134 million amortisation adjustment, $93 million is related to
   MedImmune, with a corresponding tax adjustment of $23 million; Merck
   related amortisation was $41 million, which carries no tax adjustment.

   
** Gain on the sale of Astra Tech was $1,483 million, and carries no tax
   adjustment.









Second Quarter 2011



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                                                      Legal              
                                                                                             
                                            Merck &             Provisions         Actual                                Revised Actual
                 Reported                  MedImmune  Intangible               Core          CER                             Core          CER
                    2011 Restructuring Amortisation Impairments    & Other    2011      %     % Amortisation Impairments    2011      %     %
Revenue            8,430            -          -           -         -  8,430     3   (2)           -          -  8,430     3   (2)
Cost of Sales     (1,482)           20          -           -         - (1,462)                       25          - (1,437)
Gross Profit       6,948           20          -           -         -  6,968     3   (2)          25          -  6,993     3   (2)
% sales             82.4%                                                     82.7%  -0.3 +0.1                            82.9%  -0.3 +0.2
Distribution         (88)            -          -           -         -    (88)     -   (8)           -          -    (88)     -   (8)
% sales              1.0%                                                      1.0%  +0.1 +0.1                             1.0%  +0.1 +0.1
R&D               (1,198)           79          -           -         - (1,119)    16    8           7         14 (1,098)    15    7
% sales             14.2%                                                     13.3%  -1.5 -1.1                            13.0%  -1.3 -1.0
SG&A              (2,868)           39        118           -        84 (2,627)    16    9          24          - (2,603)    15    9
% sales             34.0%                                                     31.2%  -3.4 -3.1                            30.9%  -3.3 -2.9
Other Income         171            -         17           -         -    188     1   (2)           -          -    188     1   (2)
% sales              2.0%                                                      2.2%  -0.1    -                             2.2%  -0.1    -
Operating Profit   2,965          138        135*           -        84  3,322    (9)  (10)          56         14  3,392    (8)  (10)
% sales             35.2%                                                     39.4%  -5.2 -4.0                            40.2%  -4.9 -3.6
Net Finance                                                                                                -          -
Expense             (107)            -          -           -         -   (107)                                         (107)
Profit before                                                                                             56         14
Tax                2,858          138        135           -        84  3,215    (9)  (11)                           3,285    (8)  (10)
Taxation            (735)          (34)       (24)*           -       (22)   (815)                       (8)         (3)   (826)
Profit after Tax   2,123          104        111           -        62  2,400    (7)   (9)          48         11  2,459    (7)   (8)
Non-controlling                                                                                           -          -
Interests            (10)            -          -           -         -    (10)                                          (10)
Net Profit         2,113          104        111           -        62  2,390    (7)   (9)          48         11  2,449    (7)   (8)
Weighted Average                                                                                       1,381      1,381
Shares             1,381        1,381      1,381       1,381     1,381  1,381                                        1,381
Earnings per                                                                                            0.03       0.01
Share               1.53         0.08       0.08           -      0.04   1.73    (3)   (5)                            1.77    (2)   (4)



* Of the $135 million amortisation adjustment, $94 million is related to
  MedImmune, with a corresponding tax adjustment of $24 million; Merck related
  amortisation was $41 million, which carries no tax adjustment.

  











First Quarter 2011



All financial figures, except earnings per share, are in $ millions. Weighted
average shares in millions.



                                            Merck &                  Legal              

                                         MedImmune  Intangible Provisions         Actual                                Revised Actual
                Reported                                                      Core          CER                             Core               CER
                    2011 Restructuring Amortisation Impairments    & Other    2011      %     % Amortisation Impairments    2011      %          %
Revenue           8,292            -           -           -          -  8,292    (3)   (4)           -          -  8,292    (3)        (4)
Cost of Sales    (1,339)           12           -           -          - (1,327)                       25          - (1,302)
Gross Profit      6,953           12           -           -          -  6,965     -   (1)          25          -  6,990     -         -
% sales            83.9%                                                     84.0%  +3.0  +3.0                            84.3%  +3.1      +3.2
Distribution        (80)            -           -           -          -    (80)     3    -           -          -    (80)     3         -
% sales             1.0%                                                      1.0%  -0.1    -                             1.0%  -0.1         -
R&D              (1,162)           90           -           -          - (1,072)    10    7           7         32 (1,033)     6         4
% sales            14.0%                                                     12.9%  -1.6 -1.3                            12.4%  -1.1      -0.9
SG&A             (2,508)           41         117           -          - (2,350)     2    1          18          - (2,332)     2         1
% sales            30.3%                                                     28.3%  -1.3 -1.4                            28.2%  -1.4      -1.4
Other Income        198            -          17           -          -    215   (20)  (21)           -          -    215   (20)       (21)
% sales             2.4%                                                      2.6%  -0.6 -0.6                             2.6%  -0.6      -0.6
Operating                                                                   3,678                       50         32  3,760
Profit            3,401          143         134*           -          -            (5)   (5)                                     (3)        (4)
% sales            41.0%                                                     44.4%  -0.6 -0.3                            45.3%  -0.1      +0.3
Net Finance                                                                  (113)                        -          -   (113)
Expense            (113)            -           -           -          -
Profit before                                                               3,565                       50         32  3,647
Tax               3,288          143         134           -          -            (5)   (4)                                     (3)        (3)
Taxation           (373)          (40)        (26)*           -          -   (439)                       (7)         (9)   (455)
Profit after                                                                3,126                       43         23  3,192
Tax               2,915          103         108           -          -             6    6                                      7         7
Non-controlling                                                                (8)                        -          -     (8)
Interests            (8)            -           -           -          -
                                                                            3,118                       43         23  3,184        The story
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