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AstraZeneca 6-K 2015

Documents found in this filing:

  1. 6-K
  2. 6-K
azn201507306k.htm



FORM 6-K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Issuer


Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month o  July 2015

 
Commission File Number:  001-11960

AstraZeneca PLC

2 Kingdom Street, London W2 6BD

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F X            Form 40-F  __

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):            

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ______

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  __                 No X

If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b):   82-_____________
 

 
30 July 2015
H1 2015 Results

Financial Summary>
 
H1 2015
 
Q2 2015
 
$m
% change
 
$m
% change
   
CER1
Actual
   
CER1
Actual
Total Revenue2
12,364
1
(6)
 
6,307
2
(7)
               
Core3 Op. Profit
3,618
(4)
(9)
 
1,813
(4)
(11)
Core EPS
$2.29
-
(7)
 
$1.21
3
(8)
               
Reported Op. Profit
1,856
1
(5)
 
923
(10)
(17)
Reported EPS
$0.99
2
(4)
 
$0.55
(4)
(13)

·  
Total H1 Revenue up 1%; Core Gross margin over 83%, up 1% point
·  
Robust top-line performance, supported by externalisation, underpins accelerated investment in R&D to progress pipeline, up 24% in H1
·  
Core SG&A efficiency programme - early progress: Core SG&A 35% of Q2 Total Revenue (Q4 2014: 44%)
-  
Sales & marketing effectiveness, centralisation of functions, process improvements, third-party spend, further efficiencies across support areas, footprint optimisation
·  
Core H1 EPS stable, up 3% in Q2, enhanced by one-off tax benefit
·  
FY 2015 Total Revenue guidance at CER improved: Now expected to decline by low single-digit percent (prior guidance - mid single-digit). Core EPS guidance at CER is unchanged: Expected to increase by low single-digit percent, reflecting the continued accelerated investment in R&D
·  
The Board recommends an unchanged first interim dividend of $0.90

H1 Commercial Highlights>
Growth platforms grew by 11%, representing 56% of Total Revenue:
1
Brilinta/Brilique: +42%. Achieved 10% new-to-brand prescription market share in the US
2.  
Diabetes: +32%, including 88% sales growth in Emerging Markets
3.  
Respiratory: +9%, ahead of market growth. Q2 sales up 11%
4.  
Emerging Markets: +14%. China sales growth of +19%
5.  
Japan: +2%, with Q2 sales growth of +6%

Achieving Scientific Leadership: Progress since the prior results announcement>
Regulatory Approvals
Iressa - lung cancer (US)
Faslodex 500mg - breast cancer (China)
Regulatory Submissions* and/or Regulatory Submission Acceptances
saxagliptin/dapagliflozin - diabetes (EU)
AZD9291 - lung cancer (US*, EU)
cediranib - ovarian cancer (EU)
Ceftazidime Avibactam (CAZ AVI) - serious infections (EU)
Phase III Read-outs
selumetinib - uveal melanoma: Primary endpoint not met
Other Key Developments
Brilinta/Brilique - post-myocardial infarction (MI):
Granted FDA Priority Review

Pascal Soriot, Chief Executive Officer, commenting on the results said>:
“We made good progress in the period, delivering a robust underlying business performance. This represents six successive quarters of top-line growth. The initiatives introduced to increase efficiency are starting to reduce SG&A costs, supporting our continued strategic investment in science and the acceleration of our pipeline which has positive momentum across all key areas.

I’m particularly pleased by the pace of progress in Oncology, with new approvals for both Iressa and Faslodex accompanied by regulatory submissions for AZD9291 and cediranib. The strong performance of the growth platforms and the subsequent upgrade to top-line guidance, together with increased R&D productivity reaffirm the confidence we have in our ability to navigate the final impacts from the loss of exclusivity and meet our revenue targets.”

Notes>
1.  
All growth rates are shown at constant exchange rates (CER) unless specified otherwise.
2.  
Total Revenue defined as Product Sales and Externalisation Revenue. For further details on the presentation of Total Revenue, see the announcement published by the Company on 6 March 2015.
3.  
See the Operating and Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

Results Presentation>
A presentation for investors and analysts, hosted by management, will begin at midday BST today. The accompanying live webcast can be accessed via www.astrazeneca.com/investors.
 
Reporting Calendar>
The Company intends to publish its nine months and third quarter financial results on 5 November 2015.
 
AstraZeneca is a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of cardiovascular, metabolic, respiratory, inflammation, autoimmune, oncology, infection and neuroscience diseases. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.
 
    Media Enquiries
 
   
    Esra Erkal-Paler
 
UK/Global
+44 20 7604 8030
    Vanessa Rhodes
 
UK/Global
+44 20 7604 8037
    Ayesha Bharmal
 
UK/Global
+44 20 7604 8034
     Jacob Lund
  
Sweden
+46 8 553 260 20
    Michele Meixell
US
+1 302 885 2677

Investor Enquiries
     
    UK
     
    Thomas Kudsk Larsen
   
 
+44 20 7604 8199
+44 7818 524185
    Eugenia Litz
RIA
 
+44 20 7604 8233
+44 7884 735627
    Nick Stone
CVMD
 
+44 20 7604 8236
+44 7717 618834
    Karl Hård
Oncology
 
+44 20 7604 8123
+44 7789 654364
    Craig Marks
ING
+44 20 7604 8591
+44 7881 615764
    Christer Gruvris
   
 
+44 20 7604 8126
+44 7827 836825
US
     
    Dial / Toll-Free
 
+1 301 398 3251
 +1 866 381 7277
 
Key: RIA - Respiratory, Inflammation and Autoimmunity, CVMD - Cardiovascular and Metabolic Disease,
ING - Infection, Neuroscience and Gastrointestinal

Research and Development Update
________________________________________________________________________________

A comprehensive update of the AstraZeneca development pipeline is presented in conjunction with this announcement and can be found later in the document.
 
Progress since the prior results announcement on 24 April 2015:

Regulatory Approvals
2
       - Iressa - lung cancer (US)
       - Faslodex 500mg - breast cancer (China)
 
Regulatory Submissions* and/or Regulatory Submission Acceptances
4
- saxagliptin/dapagliflozin - diabetes (EU)
- AZD9291 - lung cancer (US*, EU)
- cediranib - ovarian cancer (EU)
- CAZ AVI - serious infections (EU)
 
Phase III Read-outs
1
        - selumetinib - uveal melanoma: Primary endpoint not met
 
Other Key Developments
1
 
       - Brilinta/Brilique - post-MI (PEGASUS trial):  Granted FDA Priority Review
 
Forthcoming Regulatory Submissions
3
       - brodalumab - psoriasis, PT003 - COPD,
         AZD9291 - lung cancer (JP)
 
Forthcoming Regulatory Decisions
5
       - lesinurad - gout, saxagliptin/dapagliflozin, Brilinta/Brilique, AZD9291, CAZ-AVI
 
Pivotal Trial Starts
6
      - PT010 - COPD
      - anifrolumab - lupus
      - durvalumab (MEDI4736) + tremelimumab - 2nd-line SCCHN** (CONDOR trial), 2nd and 3rd-line gastric cancer, 1st-line NSCLC 
        (MYSTIC trial)
      - AZD9291 - 2nd-line EGFRm NSCLC (CAURAL trial)
 
New Molecular Entities (NMEs) in Pivotal Studies or under Regulatory Review
15
RIA
- lesinurad - gout
- PT003 - COPD
- PT010 - COPD (new)
- brodalumab - psoriasis
- benralizumab - severe asthma
- tralokinumab - severe asthma
- anifrolumab - lupus (new)
 
CVMD
- roxadustat - anaemia
 
Oncology
- AZD9291 - lung cancer
- cediranib - ovarian cancer
- selumetinib - lung cancer
- tremelimumab - mesothelioma
- durvalumab - lung cancer
- moxetumomab pasudotox - leukaemia
 
ING
- CAZ AVI - serious infections
 
Projects in clinical pipeline
119
 

**Squamous Cell Carcinoma of the Head and Neck

In the period 2015-2016 AstraZeneca anticipates 12-16 Phase II starts, 14-16 NME and major line-extension regulatory submissions and 8-10 NME and major line-extension approvals.

1.  
Respiratory, Inflammation and Autoimmunity (RIA)

Significant progress continues to be made in the RIA pipeline, which now includes seven programmes in pivotal studies or under registration. AstraZeneca holds a unique position in respiratory disease, including asthma, chronic obstructive pulmonary disease (COPD) and idiopathic pulmonary fibrosis (IPF), with a range of differentiated potential medicines in development by leveraging novel combinations, biologics and devices. The pipeline also has a number of promising assets in inflammatory and autoimmune diseases within areas such as psoriasis, psoriatic arthritis, gout, systemic lupus and rheumatoid arthritis.
 
AstraZeneca and Ardea Biosciences had a strong presence at the recent European League Against Rheumatism annual meeting, with 24 abstracts accepted. Data were presented on several investigational molecules including lesinurad (gout), mavrilimumab (rheumatoid arthritis) and brodalumab (psoriatic arthritis).

a)  
PT010 (COPD)
The first patient has been dosed in the Phase III programme for PT010, a combination of budesonide, glycopyrronium and formoterol fumarate (BGF) in development for patients with moderate to severe COPD. PT010 has the potential in a number of markets to be the first fixed-dose triple-combination medicine to be delivered in a pressurised metered-dose inhaler using the unique porous particle co-suspension technology developed by Pearl Therapeutics, acquired by AstraZeneca in 2013.

The Phase III ETHOS trial is assessing a twice-daily investigational formulation in more than 8,000 patients with moderate to severe COPD over the course of 52 weeks. More than 750 centres in over 25 countries are expected to participate in the trial.
 
ETHOS is a randomised, double-blind, multi-centre, parallel group trial assessing efficacy and safety of BGF relative to two active comparators - a fixed-dose combination of the budesonide and formoterol fumarate and a fixed-dose combination of glycopyrronium and formoterol. The primary endpoint is the rate of moderate or severe COPD exacerbations.

b)  
Anifrolumab (lupus)
The first patient has been dosed in the Phase III programme for anifrolumab, a first-in-class investigational medicine for patients with moderate to severe systemic lupus erythematosus (SLE, or lupus), and the only anti-type-I IFN receptor approach currently in development. The Phase III TULIP programme includes two clinical trials that will evaluate the efficacy and safety of anifrolumab versus placebo in subjects with moderately to severely active, autoantibody-positive SLE, while receiving standard of care (SoC) treatment. The programme will assess the effect of anifrolumab in reducing disease activity (as measured by the SRI-4), decreasing use of oral corticosteroids, improving skin manifestations (as measured by CLASI) and reducing flares.
 
Anifrolumab has been developed with a biomarker test based on the type-I IFN-inducible gene signature, which is also being investigated as part of the clinical programme. The Company intends to present full anifrolumab Phase IIb data at the American College of Rheumatology congress in November 2015.

c)  
Benralizumab (severe asthma)
The Phase III benralizumab trials CALIMA and SIROCCO have completed enrolment. These trials are designed to evaluate safety and effectiveness in actively reducing exacerbations in patients with uncontrolled asthma. The trials also assess lung function, asthma symptoms and other asthma-control measures, as well as emergency room and hospitalisation rates.
 
d)  
Tralokinumab (severe asthma)
In May 2015 AstraZeneca announced that it had entered an agreement with Abbott Laboratories, Inc. (Abbott) to develop companion diagnostic tests to identify patients with severe asthma most likely to benefit from tralokinumab. No companion diagnostic blood tests have yet been approved for use in asthma.
 
Under the terms of the agreement, Abbott will develop and commercialise diagnostic tests to measure serum levels of the proteins periostin and dipeptidyl peptidase-4 (DPP-4), identified as potential predictive biomarkers of up-regulated IL-13 in severe asthma. The tests will be developed in conjunction with the Phase III trials of tralokinumab as a potential treatment for patients with severe, inadequately-controlled asthma.

e)  
Brodalumab (psoriasis)
In May 2015 Amgen, Inc. (Amgen) announced the termination of its co-development and commercialisation agreement with AstraZeneca for brodalumab, an investigational IL-17 receptor monoclonal antibody in development for patients with moderate-to-severe plaque psoriasis, psoriatic arthritis, and axial spondyloarthritis.
 
AstraZeneca has conducted an initial evaluation of the data, which confirms that brodalumab demonstrated strong efficacy in psoriasis and indicates that the observations of suicidal ideation and behaviour are unlikely to be causally related to brodalumab therapy. Whilst continuing the transfer of the programme from Amgen, the Company is proceeding with a full analysis and evaluating potential partnering options in parallel. AstraZeneca will communicate its definitive decision in due course.
 
2.  
Cardiovascular and Metabolic Disease (CVMD)

AstraZeneca's strategy in CVMD focuses on ways to reduce morbidity, mortality and organ damage by addressing multiple risk factors across cardiovascular (CV) disease, diabetes and chronic kidney-disease indications. The patient-centric approach is reinforced by science-led life-cycle management programmes and technologies, including early research into regenerative methods.
 
Reporting results of the Company’s research and development in diabetes, AstraZeneca presented 86 abstracts at the recent American Diabetes Association (ADA) annual meeting. These abstracts included clinical trial data evaluating Farxiga/Forxiga, Bydureon, Byetta and Onglyza, as well as the investigational combination of Onglyza and Farxiga/Forxiga.
 
Notable late-breaking abstracts included data from a positive Phase III trial comparing the efficacy and safety of Farxiga/Forxiga versus placebo as an add-on to Onglyza and metformin immediate release in adults with type-2 diabetes who had inadequate glycaemic control. The trial met its primary endpoint.

a)  
Brilinta/Brilique (CV disease)
In April 2015, AstraZeneca announced that the FDA had accepted a supplemental new-drug application (sNDA) and granted Priority Review for Brilinta for patients with a history of prior MI. The sNDA was based on the results of PEGASUS-TIMI 54, a large-scale outcomes trial in more than 21,000 patients that investigated Brilinta plus low-dose aspirin, compared to placebo plus low-dose aspirin, for the chronic secondary prevention of atherothrombotic events in patients who had experienced a heart attack one to three years prior to trial enrolment.
 
A Priority Review designation is granted to medicines that the FDA determines have the potential to provide significant improvements in the treatment, prevention or diagnosis of a disease.

b)  
Onglyza (type-2 diabetes)
AstraZeneca is working closely with regulators as part of the ongoing review of the full SAVOR dataset. The Company is currently awaiting a forthcoming decision from the FDA on a possible label update for Onglyza and Kombiglyze XR respectively.
 
At the recent ADA meeting AstraZeneca announced results from an observational, retrospective trial which found no evidence of increased risk of hospitalisation for heart failure (hHF) with Onglyza, compared with sitagliptin, both of which are DPP-4 inhibitors, in patients with type-2 diabetes. A similar finding was obtained when comparing the overall DPP-4 class to sulfonylureas. The analysis included patients with and without prior CV disease and concluded that, among the latter, DPP-4 treatment was associated with a statistically-significant lower risk of hHF compared to treatment with sulfonylureas.

c)  
SGLT2 Inhibitors (type-2 diabetes)
In May 2015, the FDA posted a Drug Safety Communication warning that sodium/glucose co-transporter-2 (SGLT2) inhibitors, the class to which Farxiga/Forxiga belongs and is used to treat type-2 diabetes, may lead to diabetic ketoacidosis (DKA), a medical condition where the body produces high levels of blood acids called ketones that may require hospitalisation.
 
Last month the European Medicines Agency (EMA) announced a review of SGLT2 inhibitors to evaluate the risk of DKA. The regulatory authorities will continue to investigate this safety issue and will determine whether changes are needed in the prescribing information for this class of drugs. AstraZeneca is committed to working with the FDA and EMA during their respective reviews of the data.

The DECLARE outcomes trial for Farxiga/Forxiga recently completed its global patient enrolment around one year ahead of plan. The DECLARE trial is a large CV outcomes trial designed to assess the impact of Farxiga/Forxiga on CV risk/benefit, when the medicine is added to a patient’s current anti-diabetes therapy, on CV events such as heart attack, ischemic stroke and CV-related death, compared with placebo. The trial involves the enrolment of around 26,000 patients with type-2 diabetes in more than 30 countries with the aim of randomising over 17,000 patients. It is an event-driven trial and is estimated to be completed in 2019.

d)  
Tenapanor (chronic kidney disease)
In June 2015 Ardelyx, Inc. (Ardelyx) announced that it had entered into a termination agreement with AstraZeneca. Under the agreement all rights to Ardelyx’s portfolio of NHE3-inhibitors, including Ardelyx’s lead product candidate, tenapanor will be returned to Ardelyx.

3.  
Oncology

AstraZeneca’s vision in Oncology is to help patients by redefining the cancer-treatment paradigm, with the aim of bringing six new cancer medicines to patients between 2013 and 2020. A broad pipeline of next-generation medicines is focused principally on four disease areas - breast, ovarian, lung and haematological cancers.
 
As well as other tumour types, these are being targeted through four key platforms - immunotherapy, the genetic drivers of cancer and resistance, DNA damage repair, and antibody drug conjugates, underpinned by personalised healthcare and biomarker technologies.
 
AstraZeneca hosted an investor science event during the 2015 American Society of Clinical Oncology (ASCO) meeting in Chicago. Key presentations included:

·  
Data presented on durvalumab (formerly MEDI4736) as monotherapy in heavily pre-treated patients with non-small cell lung cancer (NSCLC) or SCCHN were encouraging and suggested that patients with PD-L1 positive tumours may have an improved overall response rate (ORR) compared to patients with PD-L1 negative tumours, highlighting the unmet medical need for the majority of tumours that are PD-L1 negative
 
·  
Data presented on durvalumab plus tremelimumab confirmed the Phase III trial dose and schedule for this combination. The combination demonstrated an ORR of 38% at doses selected for the Phase III trials versus a 5% ORR for patients receiving durvalumab monotherapy in the 1108 trial. The combination was well tolerated with a very low 7% drug-related discontinuation rate
 
·  
In addition, durvalumab is demonstrating strong potential to combine with small molecules
 
AstraZeneca has an extensive development programme underway across multiple tumour types and stages of disease, assessing the potential for immunotherapy to either replace or combine with traditional targeted and chemotherapy treatment. 
 
Today there are six AstraZeneca Oncology NMEs in pivotal studies or under regulatory review.
 
Highlights from the late-stage portfolio include:
 
Medicine
Indication
Status
Iressa
Lung cancer
Earlier this month the Company announced that the FDA had approved Iressa (gefitinib) tablets, a 250mg once-daily 1st-line treatment for patients with metastatic epidermal growth-factor receptor (EGFR) mutated NSCLC. Iressa was granted Orphan Drug Designation by the FDA in 2014.
 
AZD9291
Lung cancer
In June 2015, the Company submitted the rolling new-drug application (NDA) for AZD9291 as a potential medicine for the 2nd-line treatment of patients with advanced or metastatic T790M-mutated NSCLC. The EMA also accepted the regulatory submission for AZD9291.
 
CAURAL, a randomised Phase III trial in 2nd-line metastatic EGFR T790M-mutation positive NSCLC testing AZD9291 plus durvalumab versus AZD9291 monotherapy is being prepared for dosing. The trial has a primary endpoint of progression-free survival (PFS).
 
At the ASCO meeting, preliminary efficacy and safety data for AZD9291 in the 1st-line treatment of EGFRm-positive advanced NSCLC were presented. Data showed that 81% (95% confidence interval (CI) 68% to 89%) of patients on a once-daily dose of AZD9291 were progression-free at nine months; the ORR was 73% (95% CI 60% to 84%). The longest duration of response was ongoing at 13.8 months at the time of data cut-off. These data support the ongoing development of AZD9291 in 1st-line lung cancer, including the Phase III FLAURA trial.
 
Cediranib
Ovarian cancer
The Company received acceptance from the EU this month for the marketing authorisation application for cediranib with an intended indication in platinum-sensitive relapsed ovarian cancer. The application was based on the ICON6 trial. ICON6 results showed that, compared to platinum chemotherapy alone, cediranib given with platinum-based chemotherapy and continued as maintenance, significantly improves PFS in women with recurrent ovarian cancer.
 
Subsequent secondary-efficacy measures supported significant sustained efficacy, leading to a strong overall survival trend.
 
Selumetinib
Uveal melanoma
The Phase III SUMIT trial of selumetinib (MEK inhibitor) in combination with dacarbazine did not meet its primary endpoint of PFS. This combination therapy showed an adverse event profile generally consistent with current knowledge of the safety profiles of dacarbazine and selumetinib. A full evaluation of the data is ongoing.
 
Outside uveal melanoma, selumetinib is in a Phase III trial in 2nd-line KRAS-mutant advanced NSCLC in combination with docetaxel, in a Phase III trial in differentiated thyroid cancer and in a Phase II registration trial in patients with neurofibromatosis Type 1. These trials have a different scientific rationale and selumetinib is being tested in alternative combinations. The findings from SUMIT are not expected to have any impact on the other studies.
 

 
 
Durvalumab
 
 
Lung cancer
ATLANTIC, a Phase II trial in PD-L1 positive 3rd-line metastatic NSCLC, is now fully recruited and scheduled to deliver data in the second half. This trial could potentially, if positive, support the first regulatory submission for durvalumab.
 
ARCTIC, a Phase III trial in 3rd-line metastatic NSCLC is recruiting patients and contains a randomised durvalumab monotherapy sub-study for PD-L1 positive patients versus SoC and a sub-study with a concurrent-combination treatment with tremelimumab versus the contribution of components and SoC in PD-L1 negative patients.
 
MYSTIC, which is being prepared for dosing, is a 1st-line NSCLC durvalumab-tremelimumab trial in PD-L1 unselected, EGFR/ALK wild-type patients and includes a sub-group analysis of PD-L1 positive and PD-L1 low/negative patients. The primary endpoint is PFS and the trial includes durvalumab monotherapy and the durvalumab-tremelimumab combination versus SoC.
 
NEPTUNE, a further durvalumab-tremelimumab versus SoC trial with overall survival (OS) as the primary endpoint complements the MYSTIC PFS trial and will commence in due course.
 
A third 1st-line NSCLC trial of durvalumab plus chemotherapy in PD-L1 unselected, EGFR/ALK wild-type NSCLC will also be initiated after a lead-in phase.
 
PD-L1 status is being assessed by a proprietary (SP263) immunohistochemistry diagnostic test jointly developed with Ventana Medical Systems, Inc., a member of the Roche Group.
 
Head and Neck cancer
In the CONDOR trial for patients with recurrent or metastatic SCCHN the first patient was dosed in the quarter. The CONDOR trial is a Phase II, randomised, global trial of durvalumab monotherapy, tremelimumab monotherapy and durvalumab in combination with tremelimumab in PD-L1 negative patients. It is designed to complement the HAWK trial which targets PD-L1 positive patients.
 
Gastric cancer
A Phase II trial in 2nd and 3rd-line gastric cancer was also initiated in the period. This trial explores durvalumab-tremelimumab versus durvalumab versus tremelimumab.
 
Pancreatic cancer
A pancreatic cancer uncontrolled Phase II trial will explore combinations of immunotherapies, in particular durvalumab plus tremelimumab, in 2nd-line metastatic pancreatic ductal adenocarcinoma (PDAC). In addition, the programme will explore combinations of immunotherapy with both chemotherapy in 1st-line PDAC and with targeted therapies in 2nd-line PDAC; the first targeted therapy included in this trial is AZD5069 (CXCR2).
 
Bladder cancer
A 1st-line bladder cancer Phase III, randomised and controlled trial will evaluate both durvalumab monotherapy and durvalumab-tremelimumab in metastatic, urothelial bladder cancer.
 
 
Durvalumab and Ramucirumab (advanced solid tumours)
In May 2015, AstraZeneca and Eli Lilly & Company (Lilly) announced a clinical-trial collaboration to evaluate the safety and preliminary efficacy of durvalumab, in combination with ramucirumab, Lilly’s VEGF receptor-2 anti-angiogenic cancer medicine. The planned trial will assess the combination as a treatment for patients with advanced solid tumours.
 
A Phase I trial is expected to establish the safety and a recommended dosing regimen, with the potential to open expansion cohorts in various tumours of interest for the combination of durvalumab and ramucirumab. Under the terms of the agreement, the trial will be sponsored by Lilly.

4.  
Infection, Neuroscience and Gastrointestinal (ING)

a)  
CAZ-AVI (serious infections)
In May 2015 the EU submission for CAZ-AVI was validated and accepted by the EMA.
 
CAZ-AVI is being developed to treat adult hospitalised patients with complicated intra-abdominal infections, complicated urinary tract infections or nosocomial pneumonia (including hospital acquired pneumonia and ventilated patients). Full Phase III results evaluating the safety and efficacy of CAZ-AVI for the global RECLAIM-1 and RECLAIM-2 studies and the global REPRISE trial were presented at the 25th European Congress of Clinical Microbiology and Infectious Diseases.
 
CAZ-AVI is anticipated as the first choice for the treatment of Gram-negative pathogens that are increasingly becoming resistant to prevailing standards of care, leading to greater numbers of life-threatening infections and additional healthcare costs.

b)  
AZD3293 (Alzheimer’s disease)
AZD3293 is an oral, potent and selective small-molecule inhibitor designed as a novel treatment for patients suffering from early Alzheimer’s disease. A global co-development and co-commercialisation agreement was established with Lilly in 2014 for this important potential medicine.
 
Under the terms of the agreement, Lilly will pay AstraZeneca up to $500m in development and regulatory milestone payments. The first progress milestone was met in July 2015 and, as such, $50m of Externalisation Revenue from Lilly to AstraZeneca will be recognised in the third quarter.

Scientific Collaborations>
______________________________________________________________________________

Montreal Heart Institute
AstraZeneca announced in May 2015 a collaboration with the Montreal Heart Institute in Quebec, Canada, to search the genomes of up to 80,000 patients for genes associated with cardiovascular diseases and diabetes, their complications and treatment outcomes. This is one of the largest such screens of its type to date and will drive understanding of the biological mechanisms underlying these conditions and their complications. The analysis will also uncover which genetic traits are linked to better treatment outcomes.

Corporate and Business Development Update>
___________________________________________________________________________

a)  
Haematology Collaboration with Celgene
In April 2015 AstraZeneca announced an exclusive collaboration agreement with Celgene Corporation (Celgene), a global leader in haematological cancers, for the development and commercialisation of durvalumab across a range of blood cancers including non-Hodgkin’s lymphoma, myelodysplastic syndrome and multiple myeloma.
 
Under the terms of the agreement, Celgene made an upfront payment of $450m in the second quarter to AstraZeneca. Celgene will lead on development across all clinical trials within the collaboration and will take on all research and development costs until the end of 2016, after which it will take on 75% of these costs. Celgene will also be responsible for global commercialisation of approved treatments. AstraZeneca will continue to manufacture and book all sales of durvalumab and will pay a royalty to Celgene on worldwide sales in haematological indications. The royalty rate will start at 70% and will decrease to approximately half of the sales of durvalumab in haematological indications over a period of four years. AstraZeneca may elect to opt out of funding part of any clinical study prior to its initiation, resulting in an increase of future royalty rates or a subsequent re-opt in payment.
 
Within the collaboration, durvalumab will be assessed both as monotherapy and in combination with other AstraZeneca and Celgene potential and existing cancer medicines. Over time, the collaboration has the potential to expand and include other assets.

b)  
NKG2A Antibody Collaboration with Innate
AstraZeneca entered into a collaboration in the second quarter with Innate Pharma SA (Innate) to accelerate and broaden the development of Innate’s proprietary NKG2A antibody, IPH2201, including in combination with durvalumab. Currently in Phase II development, IPH2201 is a potential first-in-class humanised IgG4 antibody against NKG2A. NKG2A is a checkpoint receptor that inhibits the anti-cancer functions of Natural Killer and cytotoxic T-cells.
 
Under the terms of the agreement, AstraZeneca made an initial payment to Innate of $250m, which included the consideration for exclusive global rights to co-develop and commercialise IPH2201 in combination with durvalumab, as well as access to IPH2201 in monotherapy and other combinations in certain treatment areas for which AstraZeneca has the option to pay a further $100m prior to initiation of Phase III development. The agreement also includes additional regulatory and sales-related milestones. AstraZeneca will book all sales and will pay Innate double-digit royalties on net sales. The arrangement includes the right for Innate to co-promote in Europe for a 50% profit share.

c)  
Joint Venture with Fujifilm Kyowa Kirin Biologics
In July 2015 AstraZeneca entered into an agreement with Fujifilm Kyowa Kirin Biologics Co., Ltd to establish a joint venture for the development and commercialisation of FKB238, a biosimilar version of bevacizumab, currently in Phase I development for the treatment of multiple solid tumours. The Company plans to use the biosimilar in combination with its portfolio of innovative oncology investigational and on-market medicines, across a range of cancers and at different stages of disease.
 
By developing an interchangeable biosimilar to support the Company’s combination-focused oncology strategy, AstraZeneca will explore potential new treatment options for patients, while at the same time keep the cost of those combination therapies low enough to enable access for the majority of patients.

d)  
Entocort Divestment
In July 2015 AstraZeneca completed an agreement entered into with Tillotts, part of the Zeria Group, for the divestment of global rights, outside the US, to Entocort (budesonide), a gastroenterology medicine for patients with mild-moderate Crohn’s disease and ulcerative colitis.
 
Entocort is currently available in over 40 countries, with total product sales of $53m outside the US in 2014. A regulatory submission for Entocort in Japan is anticipated in the coming months. Under the terms of the agreement, Tillotts made an upfront payment to AstraZeneca of $215m upon completion of the transaction to acquire the rights to sell and develop Entocort capsules and enema formulations outside the US. The payment will be shown within Other Operating Income in the Company’s financial statements in the third quarter.

e)  
Benralizumab: Japan
 
The Company recently announced an agreement with Kyowa Hakko Kirin Co. Ltd (Kyowa Hakko Kirin) for an exclusive option to commercialise benralizumab for asthma and COPD in Japan.
 
Benralizumab is a monoclonal antibody in Phase III development for the treatment of severe uncontrolled asthma and COPD. The results for benralizumab in severe asthma are expected to read out in 2016, with regulatory submissions anticipated later that year. Phase III results and regulatory filing in COPD are expected in 2018.
 
Under the terms of the agreement, the Company will make a $45m up-front option payment and may make subsequent payments for regulatory filing, approval and commercial milestones, and sales royalties should the option be exercised. Kyowa Hakko Kirin will continue to be responsible for the research and development of benralizumab in Japan. On exercising the option, AstraZeneca will be responsible for all sales and marketing in asthma and COPD in Japan. Kyowa Hakko Kirin will retain the rights to participate in certain commercial activities alongside AstraZeneca.

f)  
Caprelsa Divestment
This month AstraZeneca announced that it had entered into a definitive agreement with Genzyme Corporation (Genzyme), part of Sanofi S.A., to divest Caprelsa (vandetanib), a rare-disease medicine. Caprelsa was granted Orphan Drug Designation by the US FDA in 2005 and is currently available in 28 countries for the treatment of aggressive and symptomatic medullary thyroid carcinoma, with global product sales of $48m in 2014.
 
Under the terms of the agreement, Genzyme will pay AstraZeneca up to $300m, including an upfront payment of $165m to acquire the global rights to sell and develop Caprelsa, and further development and sales milestone payments of up to $135m. The transaction does not include the transfer of any AstraZeneca employees or facilities. As an asset divestment, the upfront receipt and any subsequent payments will be reported in Other Operating Income in the Company’s financial statements.

g)  
Creation of Antibiotics Business Unit
The Company recently announced the intention to create a new antibiotics business unit focused on the development of the late-stage pipeline of small molecules (CAZ-AVI, ATM-AVI and CXL) and on maximising the commercial potential of the portfolio of small molecule antibiotics (Merrem and Zinforo) across a number of prioritised markets.
 
The creation of a new, focused business unit is the best way to enable these important medicines to reach patients while further increasing the focus on the Company’s three main therapy areas. The creation of this new internal structure will have no impact on either the presentation of the Company’s financial statements or the Company’s biologics Infection business.

h)  
Change In Senior Executive Team
Briggs Morrison, formerly Executive Vice President, Global Medicines Development and Chief Medical Officer, left the Company in June having accepted offers to become the Chief Executive Officer of Syndax Pharmaceuticals, Inc., a privately-held oncology company, and a Managing Director of venture capital firm, MPM Capital, Inc.
 
Pending the appointment of Dr Morrison’s successor, Elisabeth Björk, Vice President and Head of Development, Cardiovascular, Metabolism and Diabetes was appointed Interim Chief Medical Officer and took over operational leadership of Global Medicines Development, and Pascal Soriot became temporary Co-Chairman of the Late Stage Product Committee, the governance body accountable for post-Phase II investment decisions.

i)  
Future Infrastructure
In the half the Company continued both with the construction of its new Global R&D Centre and Corporate Headquarters on the Cambridge Biomedical Campus and the move of employees to Cambridge from other UK locations.
 
AstraZeneca announced in the half that it will invest approximately $285m in a new high-tech facility for the manufacture of biological medicines in Södertälje, Sweden. The new plant will be focused on the filling and packaging of protein therapeutics. It is anticipated that the new facility will supply medicines for clinical-trial programmes from the end of 2018 and will deliver finished products for commercial use once fully operational by 2019.
 
Södertälje is home to AstraZeneca’s largest global tablets and capsules manufacturing facility and is also a launch-platform site for the Company, with specialist capabilities on-site that allow large-scale production of new medicines, working closely with the research and development organisation. By locating the new manufacturing plant in Södertälje, the Company will combine its expertise in biologics with the well-established culture of operational excellence that exists within the Sweden Operations unit.

Operating and Financial Review>
_____________________________________________________________________________

All narrative on growth and results in this section relates to Core performance, based on constant exchange rates (CER) unless stated otherwise. Financial figures are in $millions ($m). The performance shown below covers the six and three month periods to 30 June 2015 (the half and the quarter respectively) compared to the six and three months to 30 June 2014 (the half and the quarter respectively). Core measures, which are presented in addition to Reported financial information, are non-GAAP measures provided to enhance understanding of the Company’s underlying financial performance. Core financial measures are adjusted to exclude certain significant items, such as:
 
− amortisation and impairment of intangibles, including impairment reversals but excluding any charges relating to IT assets
− charges and provisions related to our global restructuring programmes (this will include such charges that relate to the impact of our global restructuring programmes on our capitalised IT assets)
− other specified items, principally comprising legal settlements and acquisition-related costs, which include fair value adjustments and the imputed finance charge relating to contingent consideration on business combinations
 
More detail on the nature of these measures is given on page 72 of the 2014 Annual Report and Form 20-F Information.

Total Revenue>
Total Revenue grew by 1% in the half to $12,364m. Based on actual exchange rates, Total Revenue declined by 6% reflecting the particular weakness of key trading currencies against the US dollar.

Product Sales
Product Sales declined by 2% in the half (Q2 2015: down by 1%) reflecting the US market entry of a Nexium generic product from February 2015 as well as an adverse impact from the change in accounting for the US Branded Pharmaceutical Fee following issuance of final regulations in Q3 2014.
 
Externalisation Revenue
Externalisation Revenue of $780m in the half (H1 2014: $352m) primarily reflected income from completion of the collaboration agreement in haematology with Celgene ($450m), together with income from the co-commercialisation agreement with Daiichi Sankyo Co, Ltd. (Daiichi Sankyo) for Movantik in the US ($200m), plus the co-commercialisation of Nexium in Japan ($55m), also with Daiichi Sankyo.

Product Sales>
________________________________________________________________________________

The performance of a selection of key medicines is shown below. A geographical split of the performance is shown in Notes 6 and 7.

 
H1 2015
 
Q2 2015
   
% Change
   
% Change
 
$m
CER
Actual
 
$m
CER
Actual
               
Respiratory, Inflammation and Autoimmunity
             
Symbicort
1,687
-
(9)
 
842
-
(9)
Pulmicort
518
18
10
 
232
19
11
Tudorza/Eklira
Daliresp
85
39
n/m
n/m
n/m
n/m
 
55
32
n/m
n/m
n/m
n/m
Duaklir
7
n/m
n/m
 
5
n/m
n/m
               
Cardiovascular and Metabolic Disease
             
Brilinta/Brilique
275
42
27
 
144
38
23
Onglyza
391
4
(2)
 
208
(7)
(13)
Bydureon
263
41
37
 
140
29
25
Byetta
172
8
4
 
82
(1)
(7)
Farxiga/Forxiga
205
n/m
n/m
 
129
n/m
n/m
               
Legacy:
             
Crestor
2,477
(5)
(11)
 
1,310
(3)
(10)
Seloken/Toprol-XL
378
7
(2)
 
184
6
(5)
Atacand
194
(11)
(26)
 
99
(13)
(29)
               
Oncology
             
Iressa
273
(3)
(14)
 
129
(1)
(12)
Lynparza
30
n/m
n/m
 
21
n/m
n/m
               
Legacy:
             
Zoladex
409
9
(11)
 
215
14
(9)
Faslodex
333
5
(5)
 
172
9
(4)
Casodex
139
(5)
(16)
 
69
(5)
(17)
Arimidex
126
(9)
(19)
 
64
(6)
(18)
               
Infection, Neuroscience and Gastrointestinal
             
Nexium
1,291
(27)
(32)
 
647
(27)
(33)
Seroquel XR
526
(7)
(12)
 
264
(8)
(13)
Synagis
270
(28)
(28)
 
66
40
40
Losec/Prilosec
181
(6)
(16)
 
85
(9)
(19)
FluMist/Fluenz
21
75
75
 
14
180
180
Movantik/Moventig
4
n/m
n/m
 
1
n/m
n/m

H1 Product Sales Summary>
________________________________________________________________________________

During 2014, final regulations relating to the US Branded Pharmaceutical Fee were issued, affecting how the fee is recognised; AstraZeneca consequently accrues for the obligation as each sale occurs. As the fee is based on actual Product Sales in the current year, the fee is recognised as a deduction from Product Sales rather than a charge to SG&A, impacting individual brand sales by an average of 2%.

RIA>

Symbicort
Product Sales in the half were stable at $1,687m. The brand continues to demonstrate strong differentiation in asthma reinforced by guidelines and ongoing lifecycle management in milder conditions.
 
In the US, the decline in the half to $717m was limited to 1% with continued lower net prices reflecting additional access and co-pay assistance. Symbicort’s share of total prescriptions for fixed-combination medicines increased in the half, growing by 0.7% points.
 
In Europe, Product Sales declined by 8% to $582m, reflecting increased competition from recently-launched analogue medicines. This performance contrasted with growth of 28% in Emerging Markets to $187m, notably with 64% growth in China where Product Sales reached $63m.
 
Pulmicort
Product Sales of Pulmicort in the first half were $518m, up 18%. Growth was driven primarily by the performance of Pulmicort Respules in Emerging Markets, which were up 37% at $303m. China Product Sales increased by 43% to $240m, reflecting sustained investment in supporting asthma and COPD patients for several years, both in hospitals and more recently at home.
 
In February 2015, the US District Court for the District of New Jersey ruled the patent protecting Pulmicort Respules in the US was invalid. The US Court of Appeals for the Federal Circuit subsequently affirmed the decision (see Note 5). Consequently a reduced level of sales-related receipts was realised in the second quarter (within Other Operating Income) from Teva Pharmaceutical Industries, Ltd.
 
Tudorza/Eklira
Product Sales in the half were $85m. This included $45m in the US, where the brand name is Tudorza, following the completion of the acquisition of the Actavis plc product rights in March 2015.
 
Rights were also acquired at that time for Daliresp, for which sales amounted to $39m in the half.

CVMD>

Brilinta/Brilique
Product Sales in the half were $275m, up 42%, with consistent strong growth in each quarter.

Brilinta Product Sales in the US were $101m, up 60%. The brand’s weekly new-to-brand prescription market share achieved a new high of 10% in June 2015.
 
In Europe, Brilique continued to perform well, with an increase in Product Sales of 21% to $110m, reflecting indication leadership across a number of European markets. Emerging Market sales grew by 80% to $47m as the medicine remains in launch phase.
 
Onglyza
Product Sales were up 4% in the half to $391m. Growth of 19% in Q1 was offset by a 7% decline in Q2, reflecting a reallocation of promotional activities to Farxiga/Forxiga.
 
In the US, H1 Product Sales were down 16% at $211m driven primarily by destocking and competition in the
DPP-4 class, as well as the aforementioned changes in promotional activities. Product Sales in the Rest of World (ROW) were $180m, with growth in all key markets, notably in Europe where sales were $71m, up 23%. Product Sales in the half in Emerging Markets grew by 56% to $77m.

Bydureon/Byetta
Combined sales were $435m in the half, up 26%, with Bydureon representing 60% of total Bydureon/Byetta sales.
 
Product Sales in the US were $343m, up 28%. Bydureon total prescriptions grew 22% in the second quarter, reflecting the launch of the Bydureon Pen in September 2014. Most of the remaining sales of Bydureon/Byetta reside in Europe, where sales growth of 19% in the half reflected the ongoing successful Pen launch.
 
Farxiga/Forxiga
Product Sales were $205m in the half following the recent launch of the brand.
 
In the US, Product Sales of $115m compared to $26m in the comparative period. Additional promotional activity underpinned the growth of Farxiga, which continued to face market share pressures in the period, due to formulary-access changes.
 
Product Sales in Europe, at $53m in the half, more than doubled while Emerging Markets sales stood at $26m.
 
Crestor
Product Sales declined by 5% in the half to $2,477m. The performance reflected ongoing generic competition and price pressures.

In the US, Crestor’s H1 Product Sales declined by 7% to $1,374m, with price pressures exacerbated by lower volumes that were in line with total prescription share; inventory movements also impacted the performance. Market share was maintained in the second quarter however, with a 1% point growth in new-to-brand share since the start of the year. In Europe, Product Sales declined by 7% to $469m, reflecting prevailing competitive trends.
 
Crestor consolidated its position as the leading statin in Japan, growing its sales by 6% in the half. Emerging Markets delivered sales growth of 5% at $352m, including 21% in China.


Iressa
H1 Product Sales declined by 3% to $273m, primarily a function of the competitive environment in Europe where sales were down by 5%, and in Japan down by 14%. The latter territory saw a material swing in performance from quarter to quarter, with year-on-year growth of 9% in Q2.
 
Emerging Markets grew by 3% with Product Sales of $139m, with particular growth in China, up 5% and Russia, up 23%.
 
Lynparza
Product Sales reached $30m following the launch in the US at the end of 2014. Growth has been driven by the pool of eligible patients awaiting treatment as well as patients newly-tested for BRCA mutation. Over 1,000 patients have already been treated with Lynparza in the US for germline BRCA-advanced ovarian cancer with three or more lines of chemotherapy.
 
Zoladex
Product Sales in the half were up 9% to $409m. Notable performances included growth of 36% in China where Product Sales reached $60m.
 
Faslodex
Product Sales for the half were up 5% to $333m. A 1% rise in European sales to $101m was complemented by 2% growth in the US where Product Sales reached $165m.
 
The notable performance was in Emerging Markets, where sales of $42m represented a growth rate of 32%, an encouraging result alongside the approval of 500mg Faslodex in China in May 2015.

ING>

Nexium
Overall H1 Product Sales fell 27% to $1,291m, with Q2 sales similarly down 27% at $647m. The decline was particularly felt in the US, where sales in the half fell 49% to $479m, reflecting the loss of exclusivity in February 2015 which directly impacted both pricing and volumes. In Q2 this resulted in an increase to the estimate for pipeline inventory returns, although the value of the level of business and volume maintained remains at a high level. Sales in Europe fell 10% in the half to $143m.
 
Product Sales in markets outside the US delivered a positive result, with H1 Latin American sales up 17%, Japan sales up 16% and China sales up 3%. Emerging Markets represent a key opportunity for Nexium, with the brand’s sales totalling $397m in the half.
 
Seroquel XR
Product Sales declined by 7% in the half to $526m, with similar falls in each quarter. In the US H1 sales were up 2% to $353m where the performance was mainly driven by a higher underlying net price.
 
The majority of the remainder of the brand’s sales are in Europe, where a H1 sales decline of 25% to $113m was driven primarily by competition from generic products.
 
Synagis
Product Sales fell 28% in the half to $270m, reflecting the 38% decline in the US where the majority of sales are made. A significant factor was lower demand related to the American Academy of Pediatrics Committee on Infectious Disease guidelines issued in mid-2014. These further restricted patients eligible for preventative therapy with Synagis. While these guidelines were inconsistent with the approved label, demand was significantly impacted; this is anticipated to continue in the second half. Product Sales in Europe fell 6% to $110m.

Regional Product Sales>
________________________________________________________________________________

   
H1 2015
 
Q2 2015
 
     
% Change
   
% Change
 
   
$m
CER
Actual
 
$m
CER
Actual
 
 
US
4,525
(9)
(9)
 
2,356
(3)
(3)
 
                   
 
Europe
2,601
(5)
(20)
 
1,261
(5)
(23)
 
                   
 
Established ROW1
1,491
(2)
(15)
 
785
-
(14)
 
   
Japan
977
2
(12)
 
522
6
(10)
 
   
Canada
273
6
(5)
 
138
5
(6)
 
   
Other Established ROW
241
(23)
(33)
 
125
(22)
(34)
 
                   
 
Emerging Markets2
2,967
14
2
 
1,434
9
(2)
 
   
China
1,309
19
18
 
583
10
11
 
   
Ex.China
1,658
10
(7)
 
851
8
(10)
 
                   
 
Total
11,584
(2)
(10)
 
5,836
(1)
(10)
 
1 Established ROW comprises Japan, Canada, Australia and New Zealand.
2 Emerging Markets comprises all remaining Rest of World markets, including Brazil, China, India, Mexico, Russia, and Turkey.
 
 
US
Product Sales in the half were down 9% to $4,525m, with an encouraging trend in sales illustrated by only a 3% fall in the second quarter. Excluding the impact of the change in accounting related to the Branded Pharmaceutical Fee, Product Sales in the quarter were down 1% versus the comparative period.
 
The headline decline in sales however reflected the loss of Nexium patent exclusivity, competition facing Crestor from therapeutic substitution by generic statins, the adverse impact of the Synagis guideline changes and the aforementioned change in accounting related to the Branded Pharmaceutical Fee. Onglyza sales also declined in the second quarter due to ongoing competition in the diabetes market.
 
These declines were partly offset by growth in Brilinta, Bydureon, Farxiga, Lynparza and the inclusion of Tudorza and Daliresp. Brilinta growth was driven by strong consecutive quarters of growth in total and new-to-brand prescription market share gains. Bydureon continues to benefit from the launch of the Bydureon Pen as well as growth in demand in the overall GLP-1 class. A strong acceleration in Farxiga sales reflected continued growth in demand underpinned by additional promotional activity. With Lynparza exceeding the 1,000 patient milestone, it was encouraging to see the early benefit to patients from a pipeline due to launch a number of important medicines in the US in the near term.
 
Europe
Product Sales in the half were down 5% to $2,601m. Strong growth from Forxiga and Onglyza was more than offset by continued generic competition facing Crestor and Seroquel XR. An 8% decline in Symbicort sales reflected adverse pricing movements driven by competition from analogues in key markets.
 
Established ROW
Product Sales were down 2% in the first half to $1,491m. Following a decline in the first quarter, Japan Q2 sales increased by 6%, reflecting the passing of the anniversary of the mandated April 2014 biennial price cut.
 
Nexium and Crestor continue to grow strongly in Japan, growing by 16% and 6% in the half, respectively. Crestor’s growth reflected a continued increase in the usage of the 5mg dosage.
 
Canada Product Sales grew by 6% to $273m in the half, driven by the performances of Onglyza and Symbicort.
 
Emerging Markets
The Company continues to focus on delivering innovative medicines by accelerating investment in its Emerging Markets’ capabilities, with a focus on China and other leading markets, such as Russia and Brazil.
 
Product Sales were up 14% to $2,967m in the half with growth across the region. China sales in the half increased by 19% to $1,309m, more in line with recent trends, with the Company’s medicines for respiratory, cardiovascular and diabetes diseases delivering particularly strong results. Russia sales were up 30% to $116m, while Brazil sales were up 15% to $206m.

Q2 Product Sales were up 9% to $1,434m. China sales were up 10% to $583m, with slower growth after a 28% growth in Product Sales in the first quarter.

Financial Performance>
________________________________________________________________________________

H1 2015
Reported
Restructuring
Intangible
Amortisation & Impairments
Diabetes Alliance
Other1
Core
% Change
H1 2015
H1 20142
CER
Actual
Product Sales
11,584
-
-
-
-
11,584
12,870
(2)
(10)
Externalisation Revenue
780
-
-
-
-
780
352
124
122
Total Revenue
12,364
-
-
-
-
12,364
13,222
1
(6)
                   
Cost of Sales
(2,336)
101
317
-
-
(1,918)
(2,349)
(7)
(18)
                   
Gross Profit
10,028
101
317
-
-
10,446
10,873
3
(4)
Gross Margin3
79.8%
       
83.4%
81.7%
+1.0
+1.7
                   
Distribution
(161)
-
-
-
-
(161)
(149)
23
8
% Total Revenue
1.3%
       
1.3%
1.1%
-0.2
-0.2
                   
R&D
(2,822)
124
62
-
-
(2,636)
(2,306)
24
14
% Total Revenue
22.8%
       
21.3%
17.4%
-3.8
-3.9
                   
SG&A
(5,765)
223
444
216
298
(4,584)
(4,777)
4
(4)
% Total Revenue
46.6%
       
37.1%
36.1%
-0.9
-1.0
                   
Other Operating Income
576
-
135
-
(158)
553
342
77
62
% Total Revenue
4.7%
       
4.5%
2.6%
+1.9
+1.9
                   
Operating Profit
1,856
448
958
216
140
3,618
3,983
(4)
(9)
% Total Revenue
15.0%
       
29.3%
30.1%
-1.5
-0.8
                   
Net Finance
Expense
(513)
-
-
204
59
(250)
(267)
   
Joint Ventures
(7)
-
-
-
-
(7)
-
   
                   
Profit Before Tax
1,336
448
958
420
199
3,361
3,716
(3)
(10)
Taxation
(88)
(94)
(193)
(95)
(2)
(472)
(600)
   
Tax Rate
6.6%
       
14.0%
16.1%
   
Profit After Tax
1,248
354
765
325
197
2,889
3,116
-
(7)
                   
Non-controlling Interests
(1)
-
-
-
-
(1)
(3)
   
Net Profit
1,247
354
765
325
197
2,888
3,113
-
(7)
                   
Weighted Average Shares
1,263
1,263
1,263
1,263
1,263
1,263
1,261
   
                   
Earnings Per Share
0.99
0.28
0.60
0.26
0.16
2.29
2.47
-
(7)

1 Other adjustments include provision charges and settlement income related to certain legal matters (see Note 5) and fair value adjustments to contingent consideration liabilities arising on business combinations (see Note 4).
2 2014 comparatives have been restated to reflect the reclassification of Externalisation Revenue from Other Operating Income.
3 Gross Margin reflects Gross Profit derived from Product Sales, divided by Product Sales.

Q2 2015
Reported
Restructuring
Intangible
Amortisation & Impairments
Diabetes Alliance
Other1
Core
% Change
Q2 2015
Q2 20142
CER
Actual
Product Sales
5,836
-
-
-
-
5,836
6,454
(1)
(10)
Externalisation Revenue
471
-
-
-
-
471
308
54
53
Total Revenue
6,307
-
-
-
-
6,307
6,762
2
(7)
                   
Cost of Sales
(1,067)
58
44
-
-
(965)
(1,156)
(7)
(16)
                   
Gross Profit
5,240
58
44
-
-
5,342
5,606
4
(5)
Gross Margin3
81.7%
       
83.5%
82.1%
+1.1
+1.4
                   
Distribution
(84)
-
-
-
-
(84)
(77)
27
10
% Total Revenue
1.3%
       
1.3%
1.1%
-0.3
-0.2
                   
R&D
(1,466)
62
48
-
-
(1,356)
(1,208)
23
12
% Total Revenue
23.2%
       
21.5%
17.9%
-3.7
-3.6
                   
SG&A
(2,966)
115
242
108
285
(2,216)
(2,460)
(1)
(10)
% Total Revenue
47.0%
       
35.1%
36.4%
+1.2
+1.3
                   
Other Operating Income
199
-
86
-
(158)
127
170
(12)
(25)
% Total Revenue
3.2%
       
2.0%
2.5%
-0.3
-0.5
                   
Operating Profit
923
235
420
108
127
1,813
2,031
(4)
(11)
% Total Revenue
14.6%
       
28.7%
30.0%
-1.7
-1.3
                   
Net Finance
Expense
(263)
-
-
100
31
(132)
(141)
   
Joint Ventures
(2)
-
-
-
-
(2)
-
   
                   
Profit Before Tax
658
235
420
208
158
1,679
1,890
(2)
(11)
Taxation
38
(49)
(104)
(47)
2
(160)
(247)
   
Tax Rate
-5.8%
       
9.5%
13.1%
   
Profit After Tax
696
186
316
161
160
1,519
1,643
3
(8)
                   
Non-controlling Interests
1
-
-
-
-
1
(1)
   
Net Profit
697
186
316
161
160
1,520
1,642
3
(8)
                   
Weighted Average Shares
1,264
1,264
1,264
1,264
1,264
1,264
1,262
   
                   
Earnings Per Share
0.55
0.15
0.25
0.13
0.13
1.21
1.30
3
(8)

1 Other adjustments include provision charges and settlement income related to certain legal matters (see Note 5) and fair value adjustments to contingent consideration liabilities arising on business combinations (see Note 4).
2 2014 comparatives have been restated to reflect the reclassification of Externalisation Revenue from Other Operating Income.
3 Gross Margin reflects Gross Profit derived from Product Sales, divided by Product Sales.

Gross Profit
Core gross profit increased by 3% in the half to $10,446m. Excluding the impact of externalisation, the Core gross profit margin increased by 1% point. Drivers of the margin increase included the mix of Product Sales, the contribution from the growth platforms and additional manufacturing efficiencies.

Operating Expenses
Core R&D costs were up 24% in the half to $2,636m as the Company continued its accelerated investment in the pipeline. The Company anticipates a lower growth rate in the second half of the year.
 
Core SG&A costs were up 4% to $4,584m in the half as the Company continued to invest in the product launch programme and the growth platforms; costs declined by 1% in the second quarter, reflecting the third successive quarter of falling Core SG&A costs as a proportion of Total Revenue. In the second quarter, Core SG&A costs represented 35% of Total Revenue, compared to 39% in Q1 2015 and 44% in Q4 2014.
 
The Company is committed to reducing Core SG&A costs in 2015 versus the prior year, both in terms of absolute value and, importantly, relative to Total Revenue. A number of programmes designed to meet this target are in progress. These initiatives are centred on:

-  
Sales, marketing and medical-cost effectiveness
 
-  
Centralisation of selected functions and process improvements
 
-  
Reduced third-party spend
 
-  
Additional efficiencies gained across support functions and IT
 
-  
Continued footprint optimisation, including presence in the UK and US

Resources are being deployed more opportunistically to meet changing customer needs and the evolving portfolio, while driving top-line growth more efficiently.
 
Other Operating Income
Core Other Operating Income of $553m in the half included gains on the disposal of Myalept ($193m) and other disposals amounting to $120m, including the US rights to Tenormin.
 
Operating Profit
Core Operating Profit was down 4% to $3,618m in the half. Core Operating Margin declined by 1.5% points to 29.3% of Total Revenue as the Company continued to invest in the pipeline and the growth platforms.
 
Finance Expense
Core net finance expense was $250m versus $267m in the first half of 2014. Reported net finance expense of $513m included a charge of $263m relating to the discount unwind on contingent consideration creditors recognised on business combinations, principally relating to the acquisition of BMS’s share of the global diabetes alliance last year.
 
Taxation
Excluding the one-off tax benefit of $186m following settlement of past years’ US federal tax liabilities, both the Core and Reported tax rates for the half year were around 20%. Including the impact of this benefit, the Core and Reported tax rates for the half year were 14% and 7% respectively. The cash tax paid for the half year was $782m, which is 59% of Reported Profit Before Tax and 23% of Core Profit Before Tax.
 
The Core and Reported tax rates for the first half of 2014 were 19% and 21% respectively when excluding the impact of a one-off tax benefit of $117m in respect of prior periods following the inter-governmental agreement of a transfer pricing matter. Including the impact of this benefit, the Core and Reported tax rates for the first half of 2014 were 16% and 13% respectively. The cash tax paid for the first half of 2014 was $736m, which was 49% of Reported Profit Before Tax and 20% of Core Profit Before Tax.
 
Earnings Per Share (EPS)
Core EPS in the half was stable at $2.29, a favourable performance versus Core Operating Profit due to a one-off tax benefit in the second quarter. Reported Operating Profit of $1,856m was 1% higher than the first half of 2014. Reported EPS was up by 2% at $0.99.
 
Productivity
Restructuring charges of $448m were taken in the first half of 2015, including $101m incurred on initiatives identified since the announcement of the fourth wave of restructuring.
 
The Company continues to make good progress in implementing the fourth wave of restructuring that was announced in 2013 and expanded in 2014. It remains on track to incur $3.2bn in one-time restructuring costs and to deliver annualised benefits of $1.1bn by the end of 2016. In addition to the fourth wave of restructuring an additional $600m of costs are estimated to be incurred by the end of 2016 (of which $362m has been incurred to date) associated with previously-announced site exits (including Avlon in the UK) and the integration of businesses acquired since the beginning of 2014.
 
It is anticipated that, once completed, the total annualised benefits of these additional actions will be $200m, bringing the total annualised benefit of all ongoing restructuring activities to $1.3bn by the end of 2016.
 
Cash Flow
The Company generated a cash inflow from operating activities of $1,008m in the half, compared with an inflow of $3,266m in the first half of 2014, reflecting the operational performance of the business. Net cash outflows from investing activities were $1,234m compared with $4,955m in the first half of 2014, primarily reflecting the acquisition of the BMS share of the global diabetes alliance last year. The Company has embarked upon an initiative to further improve cash generation from the business including standardisation of global processes and payment terms.
 
Net cash distributions to shareholders were $2,337m through dividends of $2,357m, offset by proceeds from the issue of shares of $20m due to the exercise of stock options.
 
Debt and Capital Structure
At 30 June 2015, outstanding gross debt (interest-bearing loans and borrowings) was $11,008m (30 June 2014: $10,074m). Of the gross debt outstanding at 30 June 2015, $2,705m was due within one year (30 June 2014: $2,500m).
 
The Company’s net debt position at 30 June 2015 was $5,994m (30 June 2014: $3,959m).
 
Shares in Issue
During the half, 0.5 million shares were issued in respect of share option exercises for a consideration of $20m. The total number of shares in issue at 30 June 2015 was 1,264 million.
 
Dividends
The Board has recommended an unchanged first interim dividend of $0.90 (57.5 pence, 7.71 SEK) per Ordinary Share.
 
For holders of the Company’s American Depositary Shares (ADSs) this equates to $0.45 per ADS. Following the ratio change to the Company’s NYSE-listed sponsored Level 2 American Depositary Receipt programme on 27 July 2015, two ADSs equal one Ordinary Share.
 
The level of the dividend per share reflects the Board’s aim of setting the first interim dividend at around a third of the prior-year dividend, which for FY 2014 was $2.80 per Ordinary Share.
 
The Board has adopted a progressive dividend policy, by which the Board intends to maintain or grow the dividend per share each year. In adopting this policy, the Board recognises that some earnings fluctuations are to be expected as the Company’s revenue base transitions through a period of exclusivity losses and new-product launches.
 
In setting the distribution policy and the overall financial strategy, the Board’s aim is to continue to strike a balance between the interests of the business, financial creditors and the Company’s shareholders. After providing for business investment, funding the progressive dividend policy and meeting debt-service obligations, the Board will keep under review the opportunity to return cash in excess of these requirements to shareholders through periodic share repurchases. However, the Board has decided that no share repurchases will take place in 2015 in order to maintain the strategic flexibility to invest in the business.
 
FY 2015 Guidance
The Company today revises its Total Revenue guidance at CER from that provided on 24 April 2015. Total Revenue in the full year is now expected to decline by low single-digit percent versus the prior guidance of a mid single-digit decline. Core EPS guidance at CER for the year is unchanged and Core EPS is expected to increase by low single-digit percent, reflecting the continued accelerated investment in R&D.
 
The Company also provides the following non-guidance information related to currency sensitivity: Based on current exchange rates1, Total Revenue is expected to decline by high single-digit percent with Core EPS expected to be broadly in line with FY 2014. For additional currency sensitivity information, please see below:
 

       
Average Exchange Rates Versus USD
     
Impact Of 5% Weakening In Exchange Rate Versus USD ($m)2
Currency
 
Primary Relevance
 
FY
2014
 
H1 20151
 
Change %
 
Total Revenue
 
Core Operating Profit
EUR
 
Product Sales
 
0.75
 
0.89
 
(16)
 
(225)
 
(138)
JPY
 
Product Sales
 
105.87
 
120.25
 
(12)
 
(119)
 
(84)
CNY
 
Product Sales
 
6.16
 
6.22
 
(1)
 
(115)
 
(49)
SEK
 
Costs
 
6.86
 
8.37
 
(18)
 
(6)
 
114
GBP
 
Costs
 
0.61
 
0.66
 
(7)
 
(37)
 
112
Other3
                 
(242)
 
(139)
                         
 
1 Based on average daily spot rates YTD to the end of June 2015
2 Based on 2014 actual average exchange rates and group currency exposures
3 Other important currencies include AUD, BRL, CAD, KRW and RUB
 
Related Party Transactions
There have been no significant related party transactions in the period.
 
Principal Risks and Uncertainties
It is not anticipated that the nature of the principal risks and uncertainties that affect the business, and which are set out on pages 205 to 219 of the Annual Report and Form 20-F Information 2014, will change in respect of the second six months of the financial year.
 
In summary, the principal risks and uncertainties listed in the Annual Report and 20-F Information 2014 are:

a) Product pipeline risks
Failure to meet development targets; difficulties of obtaining and maintaining regulatory approvals for new products; failure to obtain and enforce effective intellectual property protection; delay to new product launches; strategic alliances and acquisitions may be unsuccessful.
 
b) Commercialisation and business execution risks
Challenges to achieving commercial success of new products; illegal trade in our products; developing our business in Emerging Markets; expiry or loss of, or limitations on, intellectual property rights; pressures resulting from generic competition; effects of patent litigation in respect of intellectual property rights; price controls and price reductions; economic, regulatory and political pressures; biosimilars; increasing implementation and enforcement of more stringent anti-bribery and anti-corruption legislation; any expected gains from productivity initiatives are uncertain; changes in senior management, failure to attract and retain key personnel and failure to successfully engage with our employees; failure of information technology; failure of outsourcing.
 
c) Supply chain and delivery risks
Manufacturing biologics; difficulties and delays in the manufacturing, distribution and sale of our products; reliance on third parties for goods.
 
d) Legal, regulatory and compliance risks
Adverse outcome of litigation and/or governmental investigations; substantial product liability claims; failure to adhere to applicable laws, rules and regulations; failure to adhere to laws, rules and regulations relating to anti-competitive behaviour; environmental and occupational health and safety liabilities; misuse of social media platforms and new technology.
 
e) Economic and financial risks
Adverse impact of a sustained economic downturn; political and socio-economic conditions; impact of fluctuations in exchange rates; limited third party insurance coverage; taxation; pensions.

Condensed Consolidated Statement of Comprehensive Income>
 
For the half year ended 30 June
 
2015 
$m 
 
Restated  2014*
$m 
Product sales
 
11,584 
 
12,870 
Externalisation revenue
 
780 
 
352 
Total revenue
 
12,364 
 
13,222 
Cost of sales
 
(2,336)
 
(2,760)
Gross profit
 
10,028 
 
10,462 
Distribution costs
 
(161)
 
(149)
Research and development expense
 
(2,822)
 
(2,528)
Selling, general and administrative costs
 
(5,765)
 
(5,784)
Other operating income and expense
 
576 
 
(56)
Operating profit
 
1,856 
 
1,945 
Finance income
 
24 
 
26 
Finance expense
 
(537)
 
(467)
Share of after tax losses in joint ventures
 
(7)
 
Profit before tax
 
1,336 
 
1,504 
Taxation
 
(88)
 
(201)
Profit for the period
 
1,248 
 
1,303 
         
Other comprehensive income
       
Items that will not be reclassified to profit or loss
       
Remeasurement of the defined benefit pension liability
 
242 
 
(288)
Tax on items that will not be reclassified to profit or loss
 
(57)
 
85 
   
185 
 
(203)
Items that may be reclassified subsequently to profit or loss
       
Foreign exchange arising on consolidation
 
(11)
 
64 
Foreign exchange arising on designating borrowings in net investment hedges
 
(217)
 
(122)
Fair value movements on derivatives designated in net investment hedges
 
20 
 
(11)
Amortisation of loss on cash flow hedge
 
 
Net available for sale (losses)/gains taken to equity
 
(29)
 
49 
Tax on items that may be reclassified subsequently to profit or loss
 
43 
 
   
(193)
 
(14)
Other comprehensive income for the period, net of tax
 
(8)
 
(217)
Total comprehensive income for the period
 
1,240 
 
1,086 
         
Profit attributable to:
       
Owners of the Parent
 
1,247 
 
1,300 
Non-controlling interests
 
 
   
1,248 
 
1,303 
         
Total comprehensive income attributable to:
       
Owners of the Parent
 
1,239 
 
1,089 
Non-controlling interests
 
 
(3)
   
1,240 
 
1,086 
         
Basic earnings per $0.25 Ordinary Share
 
$0.99 
 
$1.03 
Diluted earnings per $0.25 Ordinary Share
 
$0.99 
 
$1.03 
Weighted average number of Ordinary Shares in issue (millions)
 
1,263 
 
1,261 
Diluted weighted average number of Ordinary Shares in issue (millions)
 
1,265 
 
1,263 

* 2014 comparatives restated for reclassification of Externalisation revenue (see Note 1)
 
Condensed Consolidated Statement of Comprehensive Income>
 
 
For the quarter ended 30 June
 
2015 
$m 
 
Restated 
2014*
$m 
Product sales
 
5,836 
 
6,454 
Externalisation revenue
 
471 
 
308 
Total revenue
 
6,307 
 
6,762 
Cost of sales
 
(1,067)
 
(1,307)
Gross profit
 
5,240 
 
5,455 
Distribution costs
 
(84)
 
(77)
Research and development expense
 
(1,466)
 
(1,328)
Selling, general and administrative costs
 
(2,966)
 
(3,058)
Other operating income and expense
 
199 
 
117 
Operating profit
 
923 
 
1,109 
Finance income
 
13 
 
10 
Finance expense
 
(276)
 
(253)
Share of after tax losses of joint ventures
 
(2)
 
Profit before tax
 
658 
 
866 
Taxation
 
38 
 
(69)
Profit for the period
 
696 
 
797 
         
Other comprehensive income
       
Items that will not be reclassified to profit or loss
       
Remeasurement of the defined benefit pension liability
 
259 
 
(263)
Tax on items that will not be reclassified to profit or loss
 
(61)
 
79 
   
198 
 
(184)
Items that may be reclassified subsequently to profit or loss
       
Foreign exchange arising on consolidation
 
438 
 
Foreign exchange arising on designating borrowings in net investment hedges
 
191 
 
(121)
Fair value movements on derivatives designated in net investment hedges
 
(1)
 
(2)
Amortisation of loss on cash flow hedge
 
 
Net available for sale (losses)/gains taken to equity
 
(48)
 
47 
Tax on items that may be reclassified subsequently to profit or loss
 
(57)
 
12 
   
524 
 
(54)
Other comprehensive income for the period, net of tax
 
722 
 
(238)
Total comprehensive income for the period
 
1,418 
 
559 
         
Profit attributable to:
       
Owners of the Parent
 
697 
 
796 
Non-controlling interests
 
(1)
 
   
696 
 
797 
         
Total comprehensive income attributable to:
       
Owners of the Parent
 
1,418 
 
558 
Non-controlling interests
 
 
   
1,418 
 
559 
         
Basic earnings per $0.25 Ordinary Share
 
$0.55 
 
$0.63 
Diluted earnings per $0.25 Ordinary Share
 
$0.55 
 
$0.63 
Weighted average number of Ordinary Shares in issue (millions)
 
1,264 
 
1,262 
Diluted weighted average number of Ordinary Shares in issue (millions)
 
1,265 
 
1,264 
 
* 2014 comparatives restated for reclassification of Externalisation revenue (see Note 1)
 
Condensed Consolidated Statement of Financial Position>
 
   
At 30
Jun
2015
$m
 
At 31 Dec 2014
$m
 
At 30 Jun 2014
$m
ASSETS
Non-current assets
           
Property, plant and equipment
 
6,134 
 
6,010 
 
6,150 
Goodwill
 
11,467 
 
11,550 
 
11,560 
Intangible assets
 
20,486 
 
20,981 
 
21,150 
Derivative financial instruments
 
471 
 
465 
 
349 
Investments in joint ventures
 
52 
 
59 
 
70 
Other investments
 
448 
 
502 
 
289 
Other receivables
 
957 
 
1,112 
 
1,380 
Deferred tax assets
 
1,342 
 
1,219 
 
1,387 
   
41,357 
 
41,898 
 
42,335 
Current assets
           
Inventories
 
2,198 
 
1,960 
 
2,249 
Trade and other receivables
 
6,615 
 
7,232 
 
7,817 
Other investments
 
531 
 
795 
 
819 
Derivative financial instruments
 
51 
 
21 
 
Income tax receivable
 
450 
 
329 
 
360 
Cash and cash equivalents
 
3,967 
 
6,360 
 
4,958 
   
13,812 
 
16,697 
 
16,204 
Total assets
 
55,169 
 
58,595 
 
58,539 
LIABILITIES
Current liabilities
           
Interest-bearing loans and borrowings
 
(2,705)
 
(2,446)
 
(2,500)
Trade and other payables
 
(10,659)
 
(11,886)
 
(10,304)
Derivative financial instruments
 
(6)
 
(21)
 
(12)
Provisions
 
(731)
 
(623)
 
(679)
Income tax payable
 
(2,049)
 
(2,354)
 
(2,827)
   
(16,150)
 
(17,330)
 
(16,322)
Non-current liabilities
           
Interest-bearing loans and borrowings
 
(8,303)
 
(8,397)
 
(7,574)
Deferred tax liabilities
 
(1,582)
 
(1,796)
 
(2,427)
Retirement benefit obligations
 
(2,377)
 
(2,951)
 
(2,634)
Provisions
 
(479)
 
(484)
 
(580)
Other payables
 
(7,979)
 
(7,991)
 
(6,950)
   
(20,720)
 
(21,619)
 
(20,165)
Total liabilities
 
(36,870)
 
(38,949)
 
(36,487)
Net assets
 
18,299 
 
19,646 
 
22,052 
EQUITY
           
Capital and reserves attributable to equity holders of the Company
           
Share capital
 
316 
 
316 
 
316 
Share premium account
 
4,281 
 
4,261 
 
4,236 
Other reserves
 
2,033 
 
2,021 
 
1,973 
Retained earnings
 
11,649 
 
13,029 
 
15,504 
   
18,279 
 
19,627 
 
22,029 
Non-controlling interests
 
20 
 
19 
 
23 
Total equity
 
18,299 
 
19,646 
 
22,052 
 
 
Condensed Consolidated Statement of Cash Flows>
 
 
For the half year ended 30 June
 
2015
$m 
 
2014 
$m 
Cash flows from operating activities
       
Profit before tax
 
1,336 
 
1,504 
Finance income and expense
 
513 
 
441 
Share of after tax losses in joint ventures
 
 
Depreciation, amortisation and impairment
 
1,565 
 
1,410 
(Increase)/decrease in working capital and short-term provisions
 
(767)
 
703 
Non-cash and other movements
 
(612)
 
216 
Cash generated from operations
 
2,042
 
4,274 
Interest paid
 
(252)
 
(272)
Tax paid
 
(782)
 
(736)
Net cash inflow from operating activities
 
1,008 
 
3,266 
Cash flows from investing activities
       
Movement in short-term investments and fixed deposits
 
273 
 
34 
Purchase of property, plant and equipment
 
(497)
 
(378)
Disposal of property, plant and equipment
 
16 
 
133 
Purchase of intangible assets
 
(1,222)
 
(1,490)
Disposal of intangible assets
 
350 
 
Purchase of non-current asset investments
 
(30)
 
(5)
Disposal of non-current asset investments
 
56 
 
Payments to joint ventures
 
 
(70)
Upfront payments on business acquisitions
 
 
(2,778)
Payment of contingent consideration on business acquisitions
 
(239)
 
(449)
Interest received
 
59 
 
58 
Payments made by subsidiaries to non-controlling interests
 
 
(10)
Net cash outflow from investing activities
 
(1,234)
 
(4,955)
Net cash outflow before financing activities
 
(226)
 
(1,689)
Cash flows from financing activities
       
Proceeds from issue of share capital
 
20 
 
254 
Repayment of loans
 
(884)
 
(750)
Dividends paid
 
(2,357)
 
(2,425)
Hedge contracts relating to dividend payments
 
(43)
 
25 
Repayment of obligations under finance leases
 
(34)
 
(17)
Payments to acquire non-controlling interest
 
 
(102)
Movement in short-term borrowings
 
910 
 
445 
Net cash outflow from financing activities
 
(2,388)
 
(2,570)
Net decrease in cash and cash equivalents in the period
 
(2,614)
 
(4,259)
Cash and cash equivalents at the beginning of the period
 
6,164 
 
8,995 
Exchange rate effects
 
(29)
 
Cash and cash equivalents at the end of the period
 
3,521 
 
4,739 
Cash and cash equivalents consists of:
       
Cash and cash equivalents
 
3,967 
 
4,958 
Overdrafts
 
(446)
 
(219)
   
3,521 
 
4,739 
 
 
Condensed Consolidated Statement of Changes in Equity>
 
   
Share
capital
$m
 
Share
premium
account
$m
 
Other
reserves*
$m
 
Retained
earnings
$m
 
Total 
$m 
 
Non-
controlling
interests
$m
 
Total
equity
$m
At 1 Jan 2014
 
315
 
3,983
 
1,966
 
16,960 
 
23,224 
 
29 
 
23,253 
Profit for the period
 
-
 
-
 
-
 
1,300 
 
1,300 
 
 
1,303 
Other comprehensive income
 
-
 
-
 
-
 
(211)
 
(211)
 
(6)
 
(217)
Transfer to other reserves
 
-
 
-
 
7
 
(7)
 
-
 
 
-
Transactions with owners:
                           
Dividends
 
-
 
-
 
-
 
(2,395)
 
(2,395)
 
 
(2,395)
Issue of Ordinary Shares
 
1
 
253
 
-
 
-
 
254 
 
 
254 
Share-based payments
 
-
 
-
 
-
 
(143)
 
(143)
 
 
(143)
Transfer from non-controlling interests to payables
 
-
 
-
 
-
 
-
 
-
 
(3)
 
(3)
Net movement
 
1
 
253
 
7
 
(1,456)
 
(1,195)
 
(6)
 
(1,201)
At 30 Jun 2014
 
316
 
4,236
 
1,973
 
15,504
 
22,029
 
23
 
22,052
                             
                             
   
Share
capital
$m
 
Share
premium
account
$m
 
Other
reserves*
$m
 
Retained
earnings
$m
 
Total 
$m 
 
Non-
controlling
interests
$m
 
Total
equity
$m
At 1 Jan 2015
 
316
 
4,261
 
2,021
 
13,029 
 
19,627 
 
19 
 
19,646 
Profit for the period
 
-
 
-
 
-
 
1,247 
 
1,247 
 
 
1,248 
Other comprehensive income
 
-
 
-
 
-
 
(8)
 
(8)
 
 
(8)
Transfer to other reserves
 
-
 
-
 
12
 
(12)
 
 
 
Transactions with owners:
                           
Dividends
 
-