Shire Reports 7% Product Sales Growth: Anticipating Double Digit Non GAAP Earnings Growth in 2013

  Shire Reports 7% Product Sales Growth: Anticipating Double Digit Non GAAP
                           Earnings Growth in 2013

PR Newswire

DUBLIN, July 25, 2013

DUBLIN, July 25, 2013 /PRNewswire/ --

Shire (LSE: SHP, NASDAQ: SHPG) announces results for the three months to June
30, 2013.

                                                                    Reported
    Financial Highlights                                Q2 2013    Growth (1)
                                                            $1,230
    Product sales                                          million         +7%
                                                            $1,275
    Total revenues                                         million         +6%

    Non GAAP operating income                         $452 million         +8%
    US GAAP operating income                          $342 million        +13%

    Non GAAP diluted earnings per ADS                        $1.79         +6%
    US GAAP diluted earnings per ADS                         $1.36        +10%

    Non GAAP cash generation                          $374 million        -28%
    Non GAAP free cash flow                           $241 million        -44%
    US GAAP net cash provided by operating
    activities                                        $259 million        -44%


^(1) Percentages compare to equivalent 2012 period.

The Non GAAP financial measures included within this release are explained on
page 24, and are reconciled to the most directly comparable financial measures
prepared in accordance with US GAAP on pages 19 - 23.

GOOD PROGRESS: INCREASING GROWTH AND STRONG OPERATIONAL LEVERAGE IN Q2

  oProduct sales growth increased to 7% year on year as expected
  oNon GAAP Operating Income +8% reflecting strong operating leverage in Q2
    2013 and year to date
  oNon GAAP earnings per ADS +6%, held back by the timing of quarterly tax
    charges

EXECUTING OUR STRATEGY

  oFurther enhanced organic growth and improved operating margins
  oProgression of our late stage pipeline addressing unmet needs including:

       oLifitegrast for dry eye disease and LDX for binge eating and major
         depressive disorders
       oContinued but focused R&D investment in other development
         opportunities

       *Focus on growth and value-driving business development
       *Good progress integrating three divisions into a simplified 'One
         Shire' organization to create operating leverage, drive fast
         decisions and focus on growth-driving products

    Flemming Ornskov, M.D., Chief Executive Officer, commented:

    "We are pleased with our Q2 results, have made good progress and have
    returned to higher growth.

    We're successfully executing our strategy, which is to grow by focusing on
    innovation-driven specialty products through both R&D and M&A. We've
    sharpened our focus on commercial excellence and we're enhancing our
    pipeline productivity. Our late Phase 3 projects lifitegrast and LDX for
    BED are progressing well and are programs in which we have increasing
    confidence.

    Our strategy has been designed to deliver further enhanced growth. We
    anticipate delivering full year double digit Non GAAP earnings growth in
    2013 and are confident in our ability to grow operating margins going
    forward."

    FINANCIAL SUMMARY

    Second Quarter 2013 Unaudited Results

                            Q2 2013                          Q2 2012
                                           Non                           Non
                US GAAP   Adjustments     GAAP   US GAAP   Adjustments   GAAP
                     $M            $M       $M        $M            $M       $M
     Total
     revenues     1,275             -    1,275     1,208             -    1,208
     Operating
     income         342           110      452       302           118      420
 
     Diluted
     earnings
     per ADS      $1.36         $0.43    $1.79     $1.24         $0.44    $1.68
 

       oProduct sales in Q2 2013 were $1,230 million, up 7% when compared
         against a strong set of comparatives in Q2 2012. On a Constant
         Exchange Rate ("CER") basis, which is a Non GAAP measure, product
         sales were up 8%.

    Six of our top ten products delivered double digit growth: VYVANSE^® (up
    13% to $300 million), ELAPRASE^® (up 22% to $149 million),
    LIALDA^®/MEZAVANT^® (up 46% to $138 million), INTUNIV^® (up 31% to $90
    million), PENTASA^® (up 15% to $74 million), and FIRAZYR^®(up 56% to $50
    million).

    LIALDA/MEZAVANT sales in Q2 2013 were particularly strong due in part to
    new managed care contracts in the US. ELAPRASE sales in Q2 2013 benefited
    from the timing of shipments to markets with large infrequent orders.

    Growth in total product sales was moderated by DERMAGRAFT^® (down 57% to
    $22 million), ADDERALL XR^® (down 16% to $112 million) and REPLAGAL^®
    (down 7% to $114 million; down 5% on a CER basis). Q2 2013 sales for all
    three products compare against strong prior year comparatives that will
    ease over the second half of the year.

    The return of competition to the Fabry market in Europe was a factor in
    the lower REPLAGAL product sales, as was the timing of shipments which
    have distorted quarter on quarter growth rates in both 2013 and 2012.
    However, recent positive trends in patient dynamics indicate that the
    impact of switches to the competitor product is diminishing and we
    continue to see strong growth in the number of new naïve patients starting
    on REPLAGAL globally. Sales of $114 million in Q2 2013 were flat against
    Q1 2013 and we expect similar levels in Q3 2013 with sequential growth in
    the final quarter of the year.

       oTotal revenues were up 6% to $1,275 million (Q2 2012: $1,208 million)
         as the growth in product sales was partially offset, as expected, by
         lower royalties, particularly from ADDERALL XR.

       oOn a Non GAAP basis:

    Operating income was up 8% to $452 million (Q2 2012: $420 million),
    reflecting further operating leverage as total operating costs increased
    at a lower rate (up 4%) than total revenues. Research and Development
    expenditure was up 15% as we continue to progress a number of promising
    pipeline programs. The increase was moderated by lower Selling, General
    and Administrative expenditure (down 5%) as we focus on simplifying our
    business, delivering efficient growth and with that enhanced margins.

    On a US GAAP basis:

    Operating income was up 13% to $342 million (Q2 2012: $302 million) as the
    good underlying operating leverage in Q2 2013 further benefited from lower
    legal and litigation costs and lower impairment charges, only partially
    offset by higher reorganization and acquisition costs compared to the
    prior year.

       oNon GAAP diluted earnings per American Depository Share ("ADS")
         increased 6% to $1.79 (Q2 2012: $1.68) as higher Non GAAP operating
         income was partially offset by a higher effective tax rate on Non
         GAAP income of 23% (Q2 2012: 20%).

    On a US GAAP basis, diluted earnings per ADS increased 10% to $1.36 (Q2
    2012: $1.24), due to higher US GAAP operating income partially offset by a
    higher US GAAP effective tax rate of 22% (Q2 2012: 18%).

       oCash generation, a Non GAAP measure, was 28% lower at $374 million
         (Q2 2012: $520 million) due to timing of receipts from large
         distributors in the US and operating expenses payments in Q2 2013 as
         compared to Q2 2012. In addition cash generation in Q2 2012 benefited
         from significant cash receipts from government-supported healthcare
         providers in Spain.

    Free cash flow, also a Non GAAP measure, decreased by 44% to $241 million
    (Q2 2012: $433 million) primarily due to the lower cash generation and the
    effect of higher cash tax payments in Q2 2013 as compared to Q2 2012.

    On a US GAAP basis, net cash provided by operating activities was down 44%
    to $259 million (Q2 2012: $466 million).

    

    OUTLOOK

    As we look forward to the remainder of the year, we anticipate delivering
    full year double digit Non GAAP earnings growth in 2013.

    Based on our actual results to date and anticipated trends for the
    remainder of the year, we continue to expect full year product sales
    growth in the mid-to-high single digits. We expect the rate of product
    sales growth, as previously guided, to show improvement over the balance
    of the year as our portfolio continues to deliver growth and we benefit
    from an easing of comparatives in the second half.

    We have narrowed our estimates for royalties and other revenues, which are
    now expected to be 35-40% lower than 2012.

    Our Non GAAP gross margin is expected to remain at a similar level to
    2012.

    We continue to invest behind our promising pipeline and to progress our
    late stage clinical trials. Non GAAP R&D in 2013 is now expected to grow
    in the low double digits as compared to the full year 2012.

    Whilst we expect to see a higher level of Non GAAP SG&A in the second half
    compared to the first half of 2013 as we increase commercial investment
    behind VYVANSE, we now anticipate Non GAAP SG&A for the full year to be
    2-4% lower than 2012.

    We now expect combined Non GAAP R&D and SG&A to be only marginally higher
    than in 2012, supporting operating leverage for the full year.

    Our core effective tax rate on Non GAAP income is anticipated to remain in
    the range of 18-20%.

    As we look forward to the remainder of the year, we anticipate delivering
    full year double digit Non GAAP earnings growth in 2013.

    

    SECOND QUARTER 2013 AND RECENT PIPELINE DEVELOPMENTS

    Pipeline

    INTUNIV - for the treatment of Attention Deficit Hyperactivity Disorder
    ("ADHD") in Canada

       oOn July 5, 2013 Shire received approval from Health Canada for
         INTUNIV XR^[^TM^] (guanfacine hydrochloride extended-release tablets)
         as monotherapy for the treatment of ADHD in children aged 6 to 12
         years and as adjunctive therapy to psychostimulants for the treatment
         of ADHD in children, aged 6 to 12 years, with a sub-optimal response
         to psychostimulants. The targeted launch date is November 2013.

    SPD602 - for the treatment of transfusion-dependent iron overload

       oIn June 2013 data from an on-going phase 2 study was presented at
         the 18th Congress of the European Hematology Association.
         Seventy-two-week data in patients with hereditary anemias indicate
         that the safety, tolerability and efficacy profile of SPD602 supports
         its continued development. Full data from the ongoing phase 2
         proof-of-concept program will be available mid-2014.

    SPD557 - for the treatment of refractory gastroesophageal reflux disease
    ("rGERD")

       oThis program has been discontinued following review of headline data
         from the proof-of-concept study which did not support continued
         development.

    SPD554 (selective α2A agonist) - for the treatment of various central
    nervous system disorders

       oThis program has been discontinued as part of ongoing portfolio
         prioritization assessments.

    OTHER DEVELOPMENTS

    Legal Proceedings

    LIALDA patent litigation

       oOn May 9, 2013 Shire announced that it had prevailed in its
         litigation against Watson Pharmaceuticals Inc., Watson Laboratories,
         Inc.-Florida, Watson Pharma, Inc. and Watson Laboratories, Inc.
         (collectively "Watson", now "Actavis") in connection with their ANDA
         for a generic version of Shire's LIALDA. Following a bench trial, the
         US Court for the Southern District of Florida upheld the validity of
         US Patent No. 6,773,720 and ruled that the proposed generic product
         infringes that patent. Actavis has appealed this ruling to the Court
         of Appeals of the Federal Circuit.

    Share Buy-Back Program

       oIn Q4 2012 Shire commenced a share buy-back program, for the purpose
         of returning funds to shareholders, of up to $500 million, through
         both direct purchases of Ordinary Shares and through the purchase of
         Ordinary Shares underlying American Depositary Receipts. As of July
         24, 2013 Shire had made on-market repurchases totaling 9,567,253
         Ordinary Shares at a cost of $289.9 million (excluding transaction
         costs).

    DIVIDEND

    In respect of the six months ended June 30, 2013 the Board resolved to pay
    an interim dividend of 3.00 US cents per Ordinary Share (2012: 2.73 US
    cents per Ordinary Share).

    Dividend payments will be made in Pounds Sterling to holders of Ordinary
    Shares and in US Dollars to holders of ADSs. A dividend of 1.95 pence per
    Ordinary Share (an increase of 12% compared to 2012: 1.74 pence) and 9.00
    US cents per ADS (an increase of 10% compared to 2012: 8.19 US cents) will
    be paid on October 3, 2013 to shareholders on the register as at the close
    of business on September 6, 2013.

    ADDITIONAL INFORMATION

    The following additional information is included in this press release:

                                                                Page
     Overview of Second Quarter 2013 Financial Results            6
     Financial Information                                       10
     Non GAAP Reconciliation                                     19
     Notes to Editors                                            23
     Safe Harbor Statement                                       24
     Explanation of Non GAAP Measures                            24
     Trade marks                                                 25

    Dial in details for thelive conference callfor investors 14:00 BST /
    09:00 EDT on July 25, 2013:

    UK dial in:         0808 237 0030 or 0203 139 4830

    US dial in:         1 866 928 7517 or 1 718 873 9077

    International Access Numbers:
    http://wpc.1726.planetstream.net/001726/FEL_Events_International_Access_List.pdf

    Password/Conf ID:      35386459#

    Live Webcast:        http://www.shire.com/shireplc/en/investors

    OVERVIEW OF SECOND QUARTER 2013 FINANCIAL RESULTS

    1.  Product sales

    For the three months to June 30, 2013 product sales increased by 7% to
    $1,230 million (Q2 2012: $1,148 million) and represented 97% of total
    revenues (Q2 2012: 95%).

                                                                    US Exit
                                                                     Market
                                         Year on year growth       Share (1)
                                             Non GAAP
     Product sales      Sales $M   Sales        CER     US Rx (1)
 
     VYVANSE(2)            300.3    +13%           +13%        +7%        16%
     ELAPRASE              149.2    +22%           +25%    n/a (3)    n/a (3)
     LIALDA/MEZAVANT       137.5    +46%           +46%       +17%        26%
     REPLAGAL              114.1     -7%            -5%    n/a (4)    n/a (4)
     ADDERALL XR           112.3    -16%           -16%       -11%         5%
     INTUNIV                90.4    +31%           +31%       +10%         5%
     VPRIV(R)               82.5       -            +1%    n/a (3)    n/a (3)
     PENTASA                73.6    +15%           +15%        -1%        14%
     FIRAZYR                49.5    +56%           +56%    n/a (3)    n/a (3)
     DERMAGRAFT             22.3    -57%           -57%    n/a (3)    n/a (3)
     OTHER                  98.5     -9%            -8%        n/a        n/a
     Total               1,230.2     +7%            +8%
 

    (1)   Data provided by IMS Health National Prescription Audit ("IMS
    NPA") relates solely to US-based prescriptions. Exit market share
    represents the average monthly US market share in the month ended June 30,
    2013.

    (2)   Lisdexamfetamine ("LDX") currently marketed as VYVANSE in the US
    & Canada, VENVANSE^® in Latin America and ELVANSE^® in certain territories
    in the EU.

    (3)IMS NPA Data not available.

    (4)   Not sold in the US in Q2 2013.

    VYVANSE - ADHD

    VYVANSE product sales showed strong growth (up 13%) in Q2 2013 compared to
    Q2 2012, primarily as a result of higher prescription demand (up 7%) and
    to a lesser extent the effect of a price increase taken since Q2 2012, the
    benefit of which was partially offset by higher destocking in Q2 2013
    compared to Q2 2012.

    ELAPRASE- Hunter syndrome

    Product sales from ELAPRASE in Q2 2013 were up 22% (up 25% on a CER basis)
    compared to Q2 2012 primarily due to the impact of the timing of large
    orders to certain markets which order less frequently, in addition to
    underlying growth in patient numbers.

    LIALDA/MEZAVANT - Ulcerative Colitis

    Product sales for LIALDA/MEZAVANT in Q2 2013 were up 46%. New Managed Care
    contracts in the US contributed to increased prescription demand (up 17%)
    and stocking in Q2 2013 (compared to destocking in Q2 2012). To a lesser
    extent sales also benefited from the effect of a price increase taken
    since Q2 2012.

    REPLAGAL - Fabry disease

    REPLAGAL sales were down 7% (down 5% on a CER basis) as compared to Q2
    2012 partly due to the return of competition to the Fabry market in Europe
    and the timing of shipments which have distorted quarter on quarter growth
    rates in both 2013 and 2012. However, recent positive trends in patient
    dynamics indicate that the impact of switches to the competitor product is
    diminishing and we continue to see strong growth in the number of new
    naïve patients starting on REPLAGAL globally. Sales of $114.1 million in
    Q2 2013 were flat against Q1 2013 and we expect similar levels in Q3 2013
    with sequential growth in the final quarter of the year.

    ADDERALL XR - ADHD

    ADDERALL XR product sales decreased (down 16%) in Q2 2013 primarily as a
    result of lower US prescription demand (down 11%) following the
    introduction of a new generic competitor in June 2012 and the effect of
    higher sales deductions as a percentage of sales in Q2 2013 compared to Q2
    2012.

    INTUNIV - ADHD

    The strong growth in INTUNIV product sales (up 31%) in Q2 2013 was driven
    by both growth in US prescription demand (up 10%) and the effect of price
    increases taken since Q2 2012.

    VPRIV - Gaucher disease

    VPRIV product sales were flat (up 1% on a CER basis) in Q2 2013,
    reflecting the relatively strong quarterly sales seen in Q2 2012 which
    benefited from higher US volumes and the timing of orders to Latin
    America. The number of patients on therapy continues to grow.

    PENTASA - Ulcerative Colitis

    PENTASA product sales (up 15%) benefited from both price increases taken
    since Q2 2012 and the impact of moderate stocking in Q2 2013 compared to a
    small amount of pipeline destocking in Q2 2012.

    FIRAZYR -Hereditary Angioedema

    FIRAZYR product sales (up 56%) showed strong growth reflecting the
    continuing global growth of the product, particularly in the US market.

    DERMAGRAFT - Diabetic Foot Ulcers

    DERMAGRAFT product sales grew by 21% compared to Q1 2013 but were down 57%
    compared to Q2 2012. 

    2.  Royalties

                                                      Year on year growth
                                 Royalties to
     Product                       Shire $M       Royalties            CER
 
     3TC(R) and ZEFFIX(R)  1.00      11.3            +7%               +8%
     FOSRENOL(R)           1.00      10.8           -17%              -17%
     ADDERALL XR           1.00       4.9           -81%              -81%
     Other                 1.00       9.3           +33%              +29%
     Total                 1.00      36.3           -36%              -35%
 

    Royalties from ADDERALL XR in Q2 2013 were significantly impacted by both
    reduced sales volume and a lower royalty rate being payable to Shire by
    Impax Laboratories, Inc. for its authorised generic product following the
    launch of a new generic product in June 2012.

    3.  Financial details

    Cost of product sales

                                             % of              % of
                                          product           product
                                 Q2 2013    sales  Q2 2012    sales
                                      $M                $M
     Cost of product sales (US
     GAAP)                         175.7      14%    152.5      13%
     Depreciation                  (10.0)             (7.0)
     Cost of product sales (Non
     GAAP)                         165.7      13%    145.5      13%
 

    Cost of product sales as a percentage of product sales remained broadly
    constant in Q2 2013 as compared to Q2 2012.

    Research and Development ("R&D")

                                             % of              % of
                                          product           product
                                 Q2 2013    sales  Q2 2012    sales
                                      $M                $M
     R&D (US GAAP)                 260.1      21%    238.6      21%
     Impairment of intangible
     assets                        (19.9)            (27.0)
     Depreciation                   (4.3)             (6.4)
     R&D (Non GAAP)                235.9      19%    205.2      18%
 

    Non GAAP R&D increased by $30.7 million, or 15%, due to the continued
    investment in our R&D pipeline, primarily on non-ADHD programs for LDX, on
    SPD602 for iron overload and the impact of development programs acquired
    through business development in 2013.

    US GAAP R&D increased by $21.5 million, or 9%, a lower rate of increase
    than on a Non GAAP basis primarily due to lower impairment charges of
    IPR&D intangible assets acquired through Movetis N.V. ("Movetis"),
    compared to Q2 2012.

    Selling, General and Administrative ("SG&A")

                                             % of              % of
                                          product           product
                                    2013    sales     2012    sales
                                      $M                $M
     SG&A (US GAAP)                457.6      37%    511.0      45%
     Intangible asset
     amortization                  (45.8)            (51.0)
     Legal and litigation costs     (5.3)            (35.9)
     Depreciation                  (16.1)            (14.5)
     SG&A (Non GAAP)               390.4      32%    409.6      36%
 

    Non GAAP SG&A decreased by $19.2 million, or 5%, due to our continuing
    focus on simplifying our business and delivering efficient growth.

    US GAAP SG&A decreased by $53.4 million, or 10%, a higher rate of decrease
    than on a Non GAAP basis primarily due to higher legal and litigation
    costs incurred in Q2 2012, as compared to Q2 2013.

    Gain on sale of product rights

    For the three months to June 30, 2013 Shire recorded a gain on sale of
    product rights of $4.5 million (2012: $3.6 million) following
    re-measurement of the contingent consideration receivable from the
    divestment of DAYTRANA^®.

    Reorganization costs

    For the three months to June 30, 2013 Shire recorded reorganization costs
    of $26.4 million (Q2 2012: $nil) primarily relating to the "One Shire"
    reorganization as we transition to a new operating structure. The charges
    in Q2 2013 primarily related to property costs arising from the decisions
    to not relocate to a new site in Pennsylvania and to limit the site
    expansion in San Diego to manufacturing facilities only.

    Integration and acquisition costs

    For the three months to June 30, 2013 Shire recorded integration and
    acquisition costs of $17.4 million primarily associated with the
    acquisitions of SARcode Biosciences Inc. ("SARcode") and Lotus Tissue
    Repair, Inc. ("Lotus") in addition to charges related to the change in
    fair value of contingent consideration. In Q2 2012 integration and
    acquisition costs ($7.1 million) primarily related to the acquisition of
    FerroKin Biosciences, Inc. ("FerroKin") and integration of Advanced
    BioHealing Inc. ("ABH").

    Interest expense

    For the three months to June 30, 2013 Shire incurred interest expense of
    $8.9 million (Q2 2012: $9.6 million). Interest expense in Q2 2013
    principally relates to the coupon on Shire's $1,100 million 2.75%
    convertible bonds due 2014.

    Taxation

    The effective rate of tax on Non GAAP income in Q2 2013 was 23% (Q2 2012:
    20%), and on a US GAAP basis the effective rate of tax was 22% (Q2 2012:
    18%).

    The effective rate of tax in Q2 2013 on both a Non GAAP and US GAAP basis
    is higher than the same period in 2012 due primarily to changes in both
    profit mix and estimates of the amount of certain tax liabilities
    following the finalisation of various tax returns. In addition, on a US
    GAAP basis, the effective rate of tax is further increased by the impact
    of higher integration and acquisition costs in Q2 2013 which are not
    deductible for tax purposes. Our core Non GAAP tax rate guidance for 2013
    remains at 18% to 20%.

    FINANCIAL INFORMATION

    TABLE OF CONTENTS

                                                              Page
 
     Unaudited US GAAP Consolidated Balance Sheets              11
 
     Unaudited US GAAP Consolidated Statements of Income        12
 
     Unaudited US GAAP Consolidated Statements of Cash
     Flows                                                      14
 
     Selected Notes to the Unaudited US GAAP Financial
     Statements
     (1) Earnings per share                                     16
     (2) Analysis of revenues                                   17
 
     Non GAAP reconciliation                                    19

    Unaudited US GAAP financial position as of June 30, 2013
    Consolidated Balance Sheets

                                                         June 30,  December 31,
                                                             2013          2012
                                                               $M            $M
     ASSETS
     Current assets:
     Cash and cash equivalents                            1,301.9       1,482.2
     Restricted cash                                         17.6          17.1
     Accounts receivable, net                               915.2         824.2
     Inventories                                            492.2         436.9
     Deferred tax asset                                     212.5         229.9
     Prepaid expenses and other current assets              289.1         221.8
 
     Total current assets                                 3,228.5       3,212.1
 
     Non-current assets:
     Investments                                             33.2          38.7
     Property, plant and equipment ("PP&E"), net            953.1         955.8
     Goodwill                                               611.6         644.5
     Other intangible assets, net                         2,998.1       2,388.1
     Deferred tax asset                                      44.5          46.5
     Other non-current assets                                33.9          31.5
 
     Total assets                                         7,902.9       7,317.2
 
     LIABILITIES AND EQUITY
     Current liabilities:
     Accounts payable and accrued expenses                1,456.7       1,501.5
     Convertible bonds                                    1,100.0             -
     Other current liabilities                              158.8         144.1
 
     Total current liabilities                            2,715.5       1,645.6
 
     Non-current liabilities:
     Convertible bonds                                          -       1,100.0
     Deferred tax liability                                 731.4         520.8
     Other non-current liabilities                          624.5         241.6
 
     Total liabilities                                    4,071.4       3,508.0
 
     Equity:
     Common stock of 5p par value; 1,000 million
     shares authorized; and 562.8 million shares
     issued and outstanding (2012: 1,000 million
     shares authorized; and 562.5 million shares
     issued and outstanding)                                 55.8          55.7
     Additional paid-in capital                           3,024.1       2,981.5
     Treasury stock: 14.5 million shares (2012: 10.7
     million)                                              (476.9)       (310.4)
     Accumulated other comprehensive income                  52.2          86.9
     Retained earnings                                    1,176.3         995.5
 
     Total equity                                         3,831.5       3,809.2
 
     Total liabilities and equity                         7,902.9       7,317.2

    Unaudited US GAAP results for the three months and six months to June 30,
    2013
    Consolidated Statements of Income

                             3 months to  3 months to  6 months to  6 months to
                                June 30,     June 30,     June 30,     June 30,
                                    2013         2012         2013         2012
                                      $M           $M           $M           $M
     Revenues:
     Product sales               1,230.2      1,147.7      2,346.9      2,254.6
     Royalties                      36.3         56.3         74.8        112.6
     Other revenues                  8.0          3.8         14.7         12.4
     Total revenues              1,274.5      1,207.8      2,436.4      2,379.6
 
     Costs and expenses:
     Cost of product sales         175.7        152.5        331.6        310.9
     R&D (1)                       260.1        238.6        484.3        458.9
     SG&A (1)                      457.6        511.0        896.3      1,011.0
     Goodwill impairment
     charge                            -            -        198.9            -
     Gain on sale of product
     rights                         (4.5)        (3.6)       (11.0)       (10.8)
     Reorganization costs           26.4            -         43.9            -
     Integration and
     acquisition costs              17.4          7.1         21.5         12.4
     Total operating
     expenses                      932.7        905.6      1,965.5      1,782.4
 
     Operating income              341.8        302.2        470.9        597.2
 
     Interest income                 0.5          0.6          1.2          1.4
     Interest expense               (8.9)        (9.6)       (18.0)       (19.8)
     Other (expense)/income,
     net                            (1.4)        (1.8)        (2.5)         0.1
     Total other expense,
     net                            (9.8)       (10.8)       (19.3)       (18.3)
 
     Income before income
     taxes and equity in
     earnings/(losses) of
     equity method investees       332.0        291.4        451.6        578.9
     Income taxes                  (74.4)       (53.0)      (129.6)      (103.0)
     Equity in
     earnings/(losses) of
     equity method
     investees, net of taxes         0.5         (0.6)         0.9          0.3
     Net income                    258.1        237.8        322.9        476.2

    (1) R&D includes intangible asset impairment charges of $19.9 million for
    the three months to June 30, 2013 (2012: $27.0 million) and $19.9 million
    for the six months to June 30, 2013 (2012: $27.0 million). SG&A costs
    include amortization and impairment charges of intangible assets relating
    to intellectual property rights acquired of $45.8 million for the three
    months to June 30, 2013 (2012: $51.0 million) and $91.7 million for the
    six months to June 30, 2013 (2012: $96.6 million).

    Unaudited US GAAP results for the three months and six months to June 30,
    2013
    Consolidated Statements of Income (continued)

                             3 months to  3 months to  6 months to  6 months to
                                June 30,     June 30,     June 30,     June 30,
                                    2013         2012         2013         2012
 
     Earnings per Ordinary
     Share - basic                 46.9c        42.7c        58.6c        85.8c
 
     Earnings per ADS -
     basic                        140.7c       128.1c       175.8c       257.4c
 
     Earnings per Ordinary
     Share - diluted               45.3c        41.3c        57.5c        82.8c
 
     Earnings per ADS -
     diluted                      135.9c       123.9c       172.5c       248.4c
 
     Weighted average number
     of shares:
                                Millions     Millions     Millions     Millions
 
     Basic                         549.6        557.0        550.5        555.2
     Diluted                       586.0        594.9        587.5        594.8

    Unaudited US GAAP results for the three months and six months to June 30,
    2013
    Consolidated Statements of Cash Flows

                                           3 months to June      6 months to
                                                 30,              June 30,
                                             2013       2012     2013      2012
                                               $M         $M       $M        $M
     CASH FLOWS FROM OPERATING
     ACTIVITIES:
 
     Net income                             258.1      237.8    322.9     476.2
     Adjustments to reconcile net income
     to net cash provided by operating
     activities:
               Depreciation and
               amortization                  76.2       79.4    151.2     152.4
               Share based compensation      19.8       21.5     36.4      43.4
               Impairment of intangible
               assets                        19.9       27.0     19.9      27.0
               Goodwill impairment charge       -          -    198.9         -
               Gain on sale of product
               rights                        (4.5)      (3.6)   (11.0)    (10.8)
               Other                         19.0        2.7     20.9       4.3
     Movement in deferred taxes              19.8       (3.3)    21.2     (24.1)
     Equity in (earnings)/losses of
     equity method investees                 (0.5)       0.6     (0.9)     (0.3)
     Changes in operating assets and
     liabilities:
               (Increase)/decrease in
               accounts receivable          (51.3)      87.6   (102.6)     22.4
               (Decrease)/increase in
               sales deduction accrual       (4.4)     (26.9)    40.0      27.6
               Increase in inventory        (24.8)     (42.0)   (53.9)    (67.0)
               (Increase)/decrease in
               prepayments and other
               assets                        (4.7)      15.0    (66.5)     32.1
               (Decrease)/increase in
               accounts payable and other
               liabilities                  (67.2)      65.1   (160.7)     34.7
     Returns on investment from joint
     venture                                  3.2        4.9      3.2       4.9
     Net cash provided by operating
     activities[(A)]                        258.6      465.8    419.0     722.8

     CASH FLOWS FROM INVESTING ACTIVITIES:
 
     Movements in restricted cash                1.7      0.5     (0.5)      6.2
     Purchases of subsidiary undertakings
     and businesses, net of cash acquired     (150.6)   (97.0)  (227.8)    (97.0)
     Purchases of PP&E                         (17.7)   (32.7)   (65.0)    (64.4)
     Purchases of intangible assets                -    (21.5)       -     (43.5)
     Proceeds received on sale of product
     rights                                      5.5      4.8     10.3      10.4
     Other                                       3.1      0.2      3.7       8.4
     Net cash used in investing
     activities[(B)]                          (158.0)  (145.7)  (279.3)   (179.9)

    Unaudited US GAAP results for the three months and six months to June 30,
    2013
    Consolidated Statements of Cash Flows (continued)

                                         3 months to June     6 months to June
                                                30,                 30,
                                            2013       2012     2013       2012
                                              $M         $M       $M         $M
 
     CASH FLOWS FROM FINANCING
     ACTIVITIES:
 
     Payments to acquire shares under
     the share buy-back program          (107.1)          -   (177.7)          -
     Payment of dividend                  (79.2)      (70.7)   (79.2)      (70.7)
     Payments to acquire shares by the
     Employee Benefit Trust ("EBT")       (50.0)      (10.7)   (50.0)      (10.7)
     Excess tax benefit associated with
     exercise of stock options              1.7         0.4      6.1        35.2
     Contingent consideration payments     (2.8)          -     (8.8)          -
     Other                                 (6.8)       (3.0)    (7.5)       (2.4)
     Net cash used in financing
     activities[(C)]                     (244.2)      (84.0)  (317.1)      (48.6)
     Effect of foreign exchange rate
     changes on cash and cash
     equivalents [(D)]                     (5.2)       (2.8)    (2.9)       (1.6)
     Net (decrease)/increase in cash
     and cash equivalents[(A) +(B) +(C)
     +(D)]                               (148.8)      233.3   (180.3)      492.7
     Cash and cash equivalents at
     beginning of period                1,450.7       879.4  1,482.2       620.0
     Cash and cash equivalents at end
     of period                          1,301.9     1,112.7  1,301.9     1,112.7

    Unaudited US GAAP results for the three months and six months to June 30,
    2013

    Selected Notes to the Financial Statements

    (1) Earnings Per Share ("EPS")

                             3 months to  3 months to  6 months to  6 months to
                                June 30,     June 30,     June 30,     June 30,
                                    2013         2012         2013         2012
                                      $M           $M           $M           $M
 
     Numerator for basic EPS       258.1        237.8        322.9        476.2
     Interest on convertible
     bonds, net of tax               7.5          7.8         15.1         16.2
 
     Numerator for diluted
     EPS                           265.6        245.6        338.0        492.4
 
     Weighted average number
     of shares:
                                Millions     Millions     Millions     Millions
     Basic (1)                    549.6        557.0        550.5        555.2
     Effect of dilutive
     shares:
     Share based awards to
     employees (2)                  2.6          4.4          3.3          6.1
     Convertible bonds 2.75%
     due 2014 (3)                  33.8         33.5         33.7         33.5
 
     Diluted                       586.0        594.9        587.5        594.8

     1.Excludes shares purchased by the EBT and under the share buy-back
         program and presented by Shire as treasury stock.
     2.Calculated using the treasury stock method.
     3.Calculated using the "if converted" method.

    The share equivalents not included in the calculation of the diluted
    weighted average number of shares are shown below:

                             3 months to  3 months to  6 months to  6 months to
                                June 30,     June 30,     June 30,     June 30,
                                    2013         2012         2013         2012
                                Millions     Millions     Millions     Millions
     Share based awards to
     employees (1)                 11.0          6.3          9.1          4.5

     1.Certain stock options have been excluded from the calculation of
         diluted EPS because (a) their exercise prices exceeded Shire's
         average share price during the calculation period or (b) the required
         performance conditions were not satisfied as at the balance sheet
         date.

    Unaudited US GAAP results for the three months to June 30, 2013

    Selected Notes to the Financial Statements

    (2) Analysis of revenues

     3 months to June 30,        2013       2012       2013        2013
                                                          %  % of total
                                   $M         $M     change     revenue
     Net product sales:
     VYVANSE                    300.3      266.2        13%         24%
     ELAPRASE                   149.2      122.2        22%         12%
     LIALDA/MEZAVANT            137.5       94.1        46%         11%
     REPLAGAL                   114.1      123.2        -7%          9%
     ADDERALL XR                112.3      133.9       -16%          9%
     INTUNIV                     90.4       69.1        31%          7%
     VPRIV                       82.5       82.7         0%          6%
     PENTASA                     73.6       63.9        15%          6%
     FIRAZYR                     49.5       31.7        56%          4%
     FOSRENOL                    42.1       43.2        -3%          3%
     XAGRID(R)                   26.5       25.5         4%          2%
     DERMAGRAFT                  22.3       52.4       -57%          2%
     Other product sales         29.9       39.6       -24%          2%
     Total product sales      1,230.2    1,147.7         7%         97%
 
     Royalties:
     3TC and ZEFFIX              11.3       10.6         7%          1%
     FOSRENOL                    10.8       13.0       -17%          1%
     ADDERALL XR                  4.9       25.7       -81%         <1%
     Other                        9.3        7.0        33%          1%
     Total royalties             36.3       56.3       -36%          3%
 
     Other revenues               8.0        3.8       111%         <1%
 
     Total revenues           1,274.5    1,207.8         6%        100%

    Unaudited US GAAP results for the six months to June 30, 2013

    Selected Notes to the Financial Statements

    (2) Analysis of revenues

     6 months to June 30,        2013       2012       2013        2013
                                                          %  % of total
                                   $M         $M     change     revenue
     Net product sales:
     VYVANSE                    598.7      526.2        14%         24%
     ELAPRASE                   263.5      247.8         6%         11%
     LIALDA/MEZAVANT            238.0      184.1        29%         10%
     REPLAGAL                   228.1      257.6       -11%          9%
     ADDERALL XR                212.1      245.3       -14%          9%
     INTUNIV                    168.1      137.6        22%          7%
     VPRIV                      164.1      154.4         6%          7%
     PENTASA                    144.6      129.7        11%          6%
     FIRAZYR                     91.2       51.4        77%          4%
     FOSRENOL                    84.4       88.7        -5%          3%
     XAGRID                      49.9       48.7         2%          2%
     DERMAGRAFT                  40.8      101.2       -60%          2%
     Other product sales         63.4       81.9       -23%          2%
     Total product sales      2,346.9    2,254.6         4%         96%
 
     Royalties:
     3TC and ZEFFIX              23.8       24.2        -2%          1%
     FOSRENOL                    19.8       23.0       -14%          1%
     ADDERALL XR                 13.0       51.0       -75%         <1%
     Other                       18.2       14.4        26%          1%
     Total royalties             74.8      112.6       -34%          3%
 
     Other revenues              14.7       12.4        19%          1%
 
     Total revenues           2,436.4    2,379.6         2%        100%

    Unaudited results for the three months to June 30, 2013

    Non GAAP reconciliation

     3 months to June 30,                                                   Non
     2013                   US GAAP             Adjustments                GAAP
 
                                        (a)    (b)    (c)   (d)    (e)
                                 $M      $M     $M     $M    $M     $M       $M
     Total revenues         1,274.5       -      -      -     -      -  1,274.5
 
     Costs and expenses:
     Cost of product sales    175.7       -      -      -     - (10.0)    165.7
     R&D                      260.1  (19.9)      -      -     -  (4.3)    235.9
     SG&A                     457.6  (45.8)      -      - (5.3) (16.1)    390.4
     Gain on sale of
     product rights           (4.5)       -      -    4.5     -      -        -
     Reorganization costs      26.4       -      - (26.4)     -      -        -
     Integration and
     acquisition costs         17.4       - (17.4)      -     -      -        -
     Depreciation                 -       -      -      -     -   30.4     30.4
     Total operating
     expenses                 932.7  (65.7) (17.4) (21.9) (5.3)      -    822.4
 
     Operating income         341.8    65.7   17.4   21.9   5.3      -    452.1
 
     Interest income            0.5       -      -      -     -      -      0.5
     Interest expense         (8.9)       -      -      -     -      -    (8.9)
     Other expense, net       (1.4)       -      -      -     -      -    (1.4)
     Total other expense,
     net                      (9.8)       -      -      -     -      -    (9.8)
     Income before income
     taxes and equity in
     earnings of equity
     method investees         332.0    65.7   17.4   21.9   5.3      -    442.3
     Income taxes            (74.4)  (14.5)  (1.6)  (8.9) (1.9)      -  (101.3)
     Equity in earnings of
     equity method
     investees, net of tax      0.5       -      -      -     -      -      0.5
     Net income               258.1    51.2   15.8   13.0   3.4      -    341.5
     Impact of convertible
     debt, net of tax           7.5       -      -      -     -      -      7.5
     Numerator for diluted
     EPS                      265.6    51.2   15.8   13.0   3.4      -    349.0
     Weighted average
     number of shares
     (millions) - diluted     586.0       -      -      -     -      -    586.0
     Diluted earnings per
     ADS                     135.9c   26.2c   8.2c   6.7c  1.8c      -   178.8c

    The following items are included in Adjustments:

     1.Amortization and asset impairments: Impairment of IPR&D intangible
         assets acquired through Movetis ($19.9 million), amortization of
         intangible assets relating to intellectual property rights acquired
         ($45.8 million), and tax effect of adjustments;
     2.Acquisition and integration activities: Costs primarily associated
         with the acquisitions of SARcode and Lotus ($5.5 million), charges
         related to the change in fair value of deferred contingent
         consideration ($11.9 million), and tax effect of adjustments;
     3.Divestments, reorganizations and discontinued operations:
         Re-measurement of DAYTRANA contingent consideration to fair value
         ($4.5 million), costs relating to the collective dismissal and
         closure of Shire's facility at Turnhout, Belgium and the "One Shire"
         reorganization announced at Q1 2013 ($26.4 million), and tax effect
         of adjustments;
     4.Legal and litigation costs: Costs related to litigation, government
         investigations, other disputes and external legal costs ($5.3
         million), and tax effect of adjustments; and
     5.Depreciation reclassification: Depreciation of $30.4 million included
         in Cost of product sales, R&D costs and SG&A costs for US GAAP
         separately disclosed for the presentation of Non GAAP earnings.

    Unaudited results for the three months to June 30, 2012

    Non GAAP reconciliation

     3 months to June 30,                                                   Non
     2012                   US GAAP             Adjustments                GAAP
 
                                        (a)   (b)    (c)    (d)    (e)
                                 $M      $M    $M     $M     $M     $M       $M
     Total revenues         1,207.8       -     -      -      -      -  1,207.8
 
     Costs and expenses:
     Cost of product sales    152.5       -     -      -      -  (7.0)    145.5
     R&D                      238.6  (27.0)     -      -      -  (6.4)    205.2
     SG&A                     511.0  (51.0)     -      - (35.9) (14.5)    409.6
     Gain on sale of
     product rights           (3.6)       -     -    3.6      -      -        -
     Integration and
     acquisition costs          7.1       - (7.1)      -      -      -        -
     Depreciation                 -       -     -      -      -   27.9     27.9
     Total operating
     expenses                 905.6  (78.0) (7.1)    3.6 (35.9)      -    788.2
 
     Operating income         302.2    78.0   7.1  (3.6)   35.9      -    419.6
 
     Interest income            0.6       -     -      -      -      -      0.6
     Interest expense         (9.6)       -     -      -      -      -    (9.6)
     Other expense, net       (1.8)       -     -      -      -      -    (1.8)
     Total other expense,
     net                     (10.8)       -     -      -      -      -   (10.8)
     Income before income
     taxes and equity in
     earnings of equity
     method investees         291.4    78.0   7.1  (3.6)   35.9      -    408.8
     Income taxes            (53.0)  (14.5) (2.4)      - (13.0)      -   (82.9)
     Equity in losses of
     equity method
     investees, net of tax    (0.6)       -     -      -      -      -    (0.6)
     Net income               237.8    63.5   4.7  (3.6)   22.9      -    325.3
     Impact of convertible
     debt, net of tax           7.8       -     -      -      -      -      7.8
     Numerator for diluted
     EPS                      245.6    63.5   4.7  (3.6)   22.9      -    333.1
     Weighted average
     number of shares
     (millions) - diluted     594.9       -     -      -      -      -    594.9
     Diluted earnings per
     ADS                     123.9c   32.1c  2.4c (1.8c)  11.4c      -   168.0c

    The following items are included in Adjustments:

     1.Amortization and asset impairments: Impairment of IPR&D intangible
         assets acquired through Movetis ($27.0 million), amortization of
         intangible assets relating to intellectual property rights acquired
         ($51.0 million), and tax effect of adjustments;
     2.Acquisition and integration activities: Costs associated with the
         acquisition of FerroKin and the integration of ABH ($5.0 million),
         charges related to the change in fair value of deferred contingent
         consideration ($2.1 million), and tax effect of adjustments;
     3.Divestments, reorganizations and discontinued operations:
         Re-measurement of DAYTRANA contingent consideration to fair value
         ($3.6 million);
     4.Legal and litigation costs: Costs related to the settlement of
         litigation and external legal costs ($35.9 million), and tax effect
         of adjustments; and
     5.Depreciation reclassification: Depreciation of $27.9 million included
         in Cost of product sales, R&D costs and SG&A costs for US GAAP
         separately disclosed for the presentation of Non GAAP earnings.

    Unaudited results for the six months to June 30, 2013

    Non GAAP reconciliation

     6 months to June 30,                                                   Non
     2013                  US GAAP             Adjustments                 GAAP
 
                                        (a)    (b)    (c)   (d)    (e)
                                $M       $M     $M     $M    $M     $M       $M
     Total revenues        2,436.4        -      -      -     -      -  2,436.4
 
     Costs and expenses:
     Cost of product sales   331.6        -      -      -     - (17.8)    313.8
     R&D                     484.3   (19.9)      -      -     -  (8.9)    455.5
     SG&A                    896.3   (91.7)      -      - (9.5) (32.8)    762.3
     Goodwill impairment
     charge                  198.9  (198.9)      -      -     -      -        -
     Gain on sale of
     product rights         (11.0)        -      -   11.0     -      -        -
     Reorganization costs     43.9        -      - (43.9)     -      -        -
     Integration and
     acquisition costs        21.5        - (21.5)      -     -      -        -
     Depreciation                -        -      -      -     -   59.5     59.5
     Total operating
     expenses              1,965.5  (310.5) (21.5) (32.9) (9.5)      -  1,591.1
 
     Operating income        470.9    310.5   21.5   32.9   9.5      -    845.3
 
     Interest income           1.2        -      -      -     -      -      1.2
     Interest expense       (18.0)        -      -      -     -      -   (18.0)
     Other expense, net      (2.5)        -      -      -     -      -    (2.5)
     Total other expense,
     net                    (19.3)        -      -      -     -      -   (19.3)
     Income before income
     taxes and equity in
     earnings of equity
     method investees        451.6    310.5   21.5   32.9   9.5      -    826.0
     Income taxes          (129.6)   (29.1)  (2.1)  (8.9) (3.4)      -  (173.1)
     Equity in earnings of
     equity method
     investees, net of tax     0.9        -      -      -     -      -      0.9
     Net income              322.9    281.4   19.4   24.0   6.1      -    653.8
     Impact of convertible
     debt, net of tax         15.1        -      -      -     -      -     15.1
     Numerator for diluted
     EPS                     338.0    281.4   19.4   24.0   6.1      -    668.9
     Weighted average
     number of shares
     (millions) - diluted    587.5        -      -      -     -      -    587.5
     Diluted earnings per
     ADS                    172.5c   143.8c  10.0c  12.3c  3.1c      -   341.7c

    The following items are included in Adjustments:

     1.Amortization and asset impairments: Impairment of IPR&D intangible
         assets acquired with Movetis ($19.9 million), impairment of goodwill
         relating to Shire's Regenerative Medicine Business ($198.9 million),
         amortization of intangible assets relating to intellectual property
         rights acquired ($91.7 million), and tax effect of adjustments;
     2.Acquisitions and integration activities: Costs primarily associated
         with the acquisitions of SARcode and Lotus ($7.8 million), charges
         related to the change in fair value of deferred contingent
         consideration ($13.7 million), and tax effect of adjustments;
     3.Divestments, reorganizations and discontinued operations:
         Re-measurement of DAYTRANA contingent consideration to fair value
         ($11.0 million), costs relating to the collective dismissal and
         closure of Shire's facility at Turnhout, Belgium and the "One Shire"
         reorganization announced at Q1 2013 ($43.9 million), and tax effect
         of adjustments;
     4.Legal and litigation costs: Costs related to litigation, government
         investigations, other disputes and external legal costs ($9.5
         million), and tax effect of adjustments; and
     5.Depreciation reclassification: Depreciation of $59.5 million included
         in Cost of product sales, R&D costs and SG&A costs for US GAAP
         separately disclosed for the presentation of Non GAAP earnings.

    Unaudited results for the six months to June 30, 2012

    Non GAAP reconciliation

 
     6 months to June 30,                                                   Non
     2012                 US GAAP              Adjustments                 GAAP
 
                                       (a)    (b)    (c)    (d)    (e)
                               $M       $M     $M     $M     $M     $M       $M
     Total revenues       2,379.6        -      -      -      -      -  2,379.6
 
     Costs and expenses:
     Cost of product
     sales                  310.9        -      -      -      - (14.2)    296.7
     R&D                    458.9   (27.0) (23.0)      -      - (12.8)    396.1
     SG&A                 1,011.0   (96.6)      -      - (35.9) (28.1)    850.4
     Gain on sale of
     product rights        (10.8)        -      -   10.8      -      -        -
     Integration and
     acquisition costs       12.4        - (12.4)      -      -      -        -
     Depreciation               -                             -   55.1     55.1
     Total operating
     expenses             1,782.4  (123.6) (35.4)   10.8 (35.9)      -  1,598.3
 
     Operating income       597.2    123.6   35.4 (10.8)   35.9      -    781.3
 
     Interest income          1.4        -      -      -      -      -      1.4
     Interest expense      (19.8)        -      -      -      -      -   (19.8)
     Other income, net        0.1        -      -      -      -      -      0.1
     Total other expense,
     net                   (18.3)        -      -      -      -      -   (18.3)
     Income before income
     taxes and equity in
     earnings of equity
     method investees       578.9    123.6   35.4 (10.8)   35.9      -    763.0
     Income taxes         (103.0)   (27.7)  (9.0)      - (13.0)      -  (152.7)
     Equity in earnings
     of equity method
     investees, net of
     tax                      0.3        -      -      -      -      -      0.3
     Net income             476.2     95.9   26.4 (10.8)   22.9      -    610.6
     Impact of
     convertible debt,
     net of tax              16.2        -      -      -      -      -     16.2
     Numerator for
     diluted EPS            492.4     95.9   26.4 (10.8)   22.9      -    626.8
     Weighted average
     number of shares
     (millions) - diluted   594.8        -      -      -      -      -    594.8
     Diluted earnings per
     ADS                   248.4c    48.3c  13.2c (5.4c)  11.7c      -   316.2c

    The following items are included in Adjustments:

     1.Amortization and asset impairments: Impairment of IPR&D intangible
         assets acquired through Movetis ($27.0 million), amortization of
         intangible assets relating to intellectual property rights acquired
         ($96.6 million), and tax effect of adjustments;
     2.Acquisitions and integration activities: Up-front payments made to
         Sangamo Biosciences Inc. and for the acquisition of the US rights to
         prucalopride (marketed in certain countries in Europe as RESOLOR)
         ($23.0 million), costs associated with acquisition of FerroKin and
         the integration of ABH ($10.3 million), charges related to the change
         in fair value of deferred contingent consideration ($2.1 million),
         and tax effect of adjustments;
     3.Divestments, reorganizations and discontinued operations:
         Re-measurement of DAYTRANA contingent consideration to fair value
         ($10.8 million);
     4.Legal and litigation costs: Costs related to the settlement of
         litigation and external legal costs ($35.9 million), and tax effect
         of adjustments; and
     5.Depreciation reclassification: Depreciation of $55.1 million included
         in Cost of product sales, R&D costs and SG&A costs for US GAAP
         separately disclosed for the presentation of Non GAAP earnings.

    Unaudited results for the three months and six months to June 30, 2013

    Non GAAP reconciliation

    The following table reconciles US GAAP net cash provided by operating
    activities to Non GAAP cash generation:

                                 3 months to June 30,    6 months to June 30,
                                     2013         2012       2013         2012
                                       $M           $M         $M           $M
     Net cash provided by
     operating activities           258.6        465.8      419.0        722.8
     Tax and interest payments,
     net                            115.4         54.4      212.5         84.2
     Up-front payments in
     respect of in-licensed and
     acquired products                  -            -          -         23.0
     Non GAAP cash generation       374.0        520.2      631.5        830.0

    The following table reconciles US GAAP net cash provided by operating
    activities to Non GAAP free cash flow:

                                 3 months to June 30,    6 months to June 30,
                                     2013         2012       2013         2012
                                       $M           $M         $M           $M
     Net cash provided by
     operating activities           258.6        465.8      419.0        722.8
     Up-front payments in
     respect of in-licensed and
     acquired products                  -            -          -         23.0
     Capital expenditure           (17.7)       (32.7)     (65.0)       (64.4)
     Non GAAP free cash flow        240.9        433.1      354.0        681.4

    Non GAAP net cash comprises:

                                              June 30,  December 31,
                                                  2013          2012
                                                    $M            $M
     Cash and cash equivalents                 1,301.9       1,482.2
 
     Convertible bonds                       (1,100.0)     (1,100.0)
     Other debt                                  (8.9)         (9.3)
     Non GAAP net cash                           193.0         372.9

    NOTES TO EDITORS

    Shire enables people with life-altering conditions to lead better lives.

    Our strategy is to focus on developing and marketing innovative specialty
    medicines to meet significant unmet patient needs.

    We provide treatments in Neuroscience, Rare Diseases, Gastrointestinal,
    Internal Medicine and Regenerative Medicine and we are developing
    treatments for symptomatic conditions treated by specialist physicians in
    other targeted therapeutic areas.

    http://www.shire.com

    FORWARD - LOOKING STATEMENTS - "SAFE HARBOR" STATEMENT UNDER THE PRIVATE
    SECURITIES LITIGATION REFORM ACT OF 1995

    Statements included in this announcement that are not historical facts are
    forward-looking statements. Forward-looking statements involve a number of
    risks and uncertainties and are subject to change at any time. In the
    event such risks or uncertainties materialize, Shire's results could be
    materially adversely affected. The risks and uncertainties include, but
    are not limited to, that:

       oShire's products may not be a commercial success;
       orevenues from ADDERALL XR are subject to generic erosion;
       othe failure to obtain and maintain reimbursement, or an adequate
         level of reimbursement, by third-party payors in a timely manner for
         Shire's products may impact future revenues and earnings;
       oShire relies on a single source for manufacture of certain of its
         products and a disruption to the supply chain for those products may
         result in Shire being unable to continue marketing or developing a
         product or may result in Shire being unable to do so on a
         commercially viable basis;
       oShire uses third party manufacturers to manufacture many of its
         products and is reliant upon third party contractors for certain
         goods and services, and any inability of these third party
         manufacturers to manufacture products, or any failure of these third
         party contractors to provide these goods and services, in each case
         in accordance with its respective contractual obligations, could
         adversely affect Shire's ability to manage its manufacturing
         processes or to operate its business;
       othe development, approval and manufacturing of Shire's products is
         subject to extensive oversight by various regulatory agencies and
         regulatory approvals or interventions associated with changes to
         manufacturing sites, ingredients or manufacturing processes could
         lead to significant delays, increase in operating costs, lost product
         sales, an interruption of research activities or the delay of new
         product launches;
       othe actions of certain customers could affect Shire's ability to sell
         or market products profitably and fluctuations in buying or
         distribution patterns by such customers could adversely impact
         Shire's revenues, financial conditions or results of operations;
       oinvestigations or enforcement action by regulatory authorities or law
         enforcement agencies relating to Shire's activities in the highly
         regulated markets in which it operates may result in the distraction
         of senior management, significant legal costs and the payment of
         substantial compensation or fines;
       oadverse outcomes in legal matters and other disputes, including
         Shire's ability to obtain, maintain, enforce and defend patents and
         other intellectual property rights required for its business, could
         have a material adverse effect on Shire's revenues, financial
         condition or results of operations;

    and other risks and uncertainties detailed from time to time in Shire's
    filings with the U.S. Securities and Exchange Commission, including its
    most recent Annual Report on Form 10-K.

    NON GAAP MEASURES

    This press release contains financial measures not prepared in accordance
    with US GAAP.These measures are referred to as "Non GAAP" measures and
    include: Non GAAP operating income; Non GAAP net income; Non GAAP diluted
    earnings per ADS; effectivetax rate on Non GAAP income before income taxes
    and earnings/(losses) of equity method investees ("effective tax rate on
    Non GAAP income"); Non GAAP cost of product sales; Non GAAP research and
    development; Non GAAP selling, general and administrative; Non GAAP other
    income/expense; Non GAAP cash generation; Non GAAP free cash flow and Non
    GAAP net cash/(debt). These Non GAAP measures exclude the effect of
    certain cash and non-cash items, that Shire's management believes are not
    related to the core performance of Shire's business.

    These Non GAAP financial measures are used by Shire's management to make
    operating decisions because they facilitate internal comparisons of
    Shire's performance to historical results and to competitors'
    results.Shire's Remuneration Committee uses certain key Non GAAP measures
    when assessing the performance and compensation of employees, including
    Shire's executive directors.

    The Non GAAP measures are presented in this press release as Shire's
    management believe that they will provide investors with a means of
    evaluating, and an understanding of how Shire's management evaluates,
    Shire's performance and results on a comparable basis that is not
    otherwise apparent on a US GAAP basis, since many non-recurring,
    infrequent or non-cash items that Shire's management believe are not
    indicative of the core performance of the business may not be excluded
    when preparing financial measures under US GAAP.

    These Non GAAP measures should not be considered in isolation from, as
    substitutes for, or superior to financial measures prepared in accordance
    with US GAAP.

    Where applicable the following items, including their tax effect, have
    been excluded when calculating Non GAAP earnings for both 2013 and 2012,
    and from our Outlook:

    Amortization and asset impairments:

       oIntangible asset amortization and impairment charges; and
       oOther than temporary impairment of investments.

    Acquisitions and integration activities:

       oUp-front payments and milestones in respect of in-licensed and
         acquired products;
       oCosts associated with acquisitions, including transaction costs, fair
         value adjustments on contingent consideration and acquired inventory;
       oCosts associated with the integration of companies; and
       oNoncontrolling interests in consolidated variable interest entities.

    Divestments, reorganizations and discontinued operations:

       oGains and losses on the sale of non-core assets;
       oCosts associated with restructuring and reorganization activities;
       oTermination costs; and
       oIncome/(losses) from discontinued operations.

    Legal and litigation costs:

       oNet legal costs related to the settlement of litigation, government
         investigations and other disputes (excluding internal legal team
         costs).

    Depreciation, which is included in Cost of product sales, R&D and SG&A
    costs in our US GAAP results, has been separately disclosed for the
    presentation of 2013 and 2012 Non GAAP earnings.

    Cash generation represents net cash provided by operating activities,
    excluding up-front and milestone payments for in-licensed and acquired
    products, tax and interest payments.

    Free cash flow represents net cash provided by operating activities,
    excluding up-front and milestone payments for in-licensed and acquired
    products, but including capital expenditure in the ordinary course of
    business.

    A reconciliation of Non GAAP financial measures to the most directly
    comparable measure under US GAAP is presented on pages 19 to 23.

    Growth at CER, which is a Non GAAP measure, is computed by restating 2013
    results using average 2012 foreign exchange rates for the relevant period.

    Average exchange rates for the six months to June 30, 2013 were
    $1.55:£1.00 and $1.31:€1.00 (2012: $1.58:£1.00 and $1.31:€1.00). Average
    exchange rates for Q2 2013 were $1.53:£1.00 and $1.30:€1.00 (2012:
    $1.59:£1.00 and $1.30:€1.00).

    TRADE MARKS

    All trade marks designated ^® and ™ used in this press release are trade
    marks of Shire plc or companies within the Shire group except for 3TC^®
    and ZEFFIX^® which are trade marks of GlaxoSmithKline, PENTASA^® which is
    a registered trade mark of FERRING B.V., LIALDA^® and MEZAVANT^® which are
    trade marks of Nogra Pharma Limited, and DAYTRANA^® which is a trade mark
    of Noven Therapeutics, LLC. Certain trade marks of Shire plc or companies
    within the Shire group are set out in Shire's Annual Report on Form 10-K
    for the year ended December 31, 2012 and the Quarterly Report on Form 10-Q
    for the three months ended March 31, 2013.

    For further information please contact:

    Investor Relations
    - Eric Rojas, erojas@shire.com, +1-781-482-0999
    - Sarah Elton-Farr, seltonfarr@shire.com, +44(0)1256-894-157
    Media
    - Jessica Mann, jmann@shire.com, +44(0)1256-894-280
    - Gwen Fisher, gfisher@shire.com, +1-484-595-9836
    - Jessica Cotrone, jcotrone@shire.com, +1-781-482-9538

SOURCE Shire plc