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Faulding -- Full Year Announcement.

Business Editors

Year Ended 30 June 2001

Consolidated Group Results

ADELAIDE, South Australia--(BUSINESS WIRE)--Aug. 7, 2001

Faulding
- A 17.5% increase in sales revenue to $2.734 billion.

- A 21.1% increase in earnings before interest and tax (EBIT) to $171.9
million.

- An increase of 35.4% in net profit after tax (NPAT) to $106.0 million.
Adjusting for significant one off expense and revenue items results in an NPAT
of $98.4 million, an increase of 25.7%.

- A 33.8% increase in earnings per share from 48.8(cent)to 65.3(cent)per share.


- A 12.2% increase in research and development expenditure to $77.8 million.


- A partially franked (65%) final dividend of 16(cent)has been

declared (June 2000 - 12(cent)), taking the full year dividend

to 28(cent), an increase of 5(cent).

- A 22.1% increase in return on average equity to 14.9%.

Divisional Highlights

- The Pharmaceuticals division has had a particularly strong

year, especially in the Americas and Asia Pacific regions.

Total divisional EBIT increased by 29.8% to $118.5 million

from $91.3 million in 2000. The Purepac oral pharmaceutical

business again performed well ahead of expectations and the

previous year, while two new products achieved record launch

sales in Australia.

- Healthcare recorded an 11.6% increase in EBIT to $77.7

million, a solid performance in a competitive trading

environment and in spite of dampened demand for nutraceutical

products in Australia.

 Results by Business Unit

----------------------------------------------------------------------

Profit and Loss Sales Revenue EBIT
----------------------------------------------------------------------
 $m $m
 ------------------ % -------------------- %
 June 01 June 00 Change June 01 June 00(aa) Change
 ------------------ ------ -------------------- ------

Healthcare

Services 1,800.6 1,617.1 11.3 49.4 44.2 11.8
Consumer 209.7 202.5 3.6 28.3 25.4 11.4
----------------------------------------------------------------------
Total
 Healthcare 2,010.3 1,819.6 10.5 77.7 69.6 11.6

Pharmaceuticals

Asia Pacific 135.3 106.3 27.3 23.5 8.5 176.5
Americas 450.9 285.0 58.2 55.1 45.0 22.4
EMEA 137.1 114.9 19.3 36.1 39.9 (9.5)
GPD/Soltec 0.6 1.0 n/m 3.8 (2.1) n/m
----------------------------------------------------------------------

Total
 Pharmaceuticals 723.9 507.2 42.7 118.5 91.3 29.8

Group
 Operations(a) -- -- -- (24.3) (19.0) (27.9)
----------------------------------------------------------------------
Total 2,734.2 2,326.8 17.5 171.9 141.9 21.1
----------------------------------------------------------------------

(a) For statutory reporting purposes the "cost" of the debtors
 securitisation funding programme is required to be treated as a
 loss on sale and included in EBIT. This cost (economically in
 the nature of interest) amounted to $6.8 million in 2001
 (Nil - 2000).

(aa) June 2000 comparative numbers - Soltec Research Pty Limited was
 sold in March 2001. Included in the EBIT results is a
 contribution of $1.5 million for the year 2000 and a
 contribution of $1.2 million for the year 2001. Last year's
 Soltec EBIT contribution was included in Healthcare's result.
 Further EBIT of $(0.4) million has been reclassified from Group
 Operations to Pharmaceuticals.


 There were a number of significant one-off items in 2001 which are
identified below to provide a better comparison with the previous
year.
----------------------------------------------------------------------

 EBIT Effect NPAT Effect
 $m $m
 ----------------- --------------

Integration costs -8.0 -5.2

Soltec profit on sale +13.7 +9.0

Capital losses - tax effect
 not previously booked -- +4.7

Other tax benefits, incl change
 in Australian tax rate -- +4.4

Share sales (investment holdings) +3.5 +2.3

Provision for employee incentives (USA)(a) -11.5 -7.6

 -------------- -----------
 -2.3 +7.6
----------------------------------------------------------------------

(a) The incentives include a stock appreciation rights plan based on
 the Company's share price performance which is operated in the
 United States as, due to legal restrictions, the Company's
 employee option and share plans are unable to operate in that
 country. This provision resulted from the significant increase in
 the Company's share price during the financial year.

 In addition, retail pharmacy brand development costs totalling
$9.9 million were capitalised in the prior year. This capitalisation
ceased from 1 July 2000.

 Normalising for the significant one-off items in 2001 and the
capitalised expenses in 2000, the relative performance can be
summarised as follows:

 -----------------------------------------

 June 01 June 00 Change
$m Actual Actual %
----------------------------------------------------------------------

Group EBIT 176.4 132.0 +33.6

Interest (35.0) (26.2) +33.6
----------------------------------------------------------------------

Net Profit before Tax 141.4 105.8 +33.6

Tax and minorities (43.0) (37.4) +15.0
----------------------------------------------------------------------

Net Profit after Tax 98.4 68.4 +43.9
----------------------------------------------------------------------

Adjusted eps (cps) 60.6 42.6 +42.4

----------------------------------------------------------------------


Pharmaceuticals Division

As announced in June 2000, Faulding's worldwide oral and injectable pharmaceutical businesses commenced operation as a single division, Faulding Pharmaceuticals, from 1 July 2000. A head office for the division was established in New Jersey, USA and it is now organised and reporting on a regional basis. The Pharmaceuticals division's result was driven by strong demand throughout the world for its increasing range of quality generic products and its reinvigorated brand franchise. Sales revenues were also boosted by a much lower Australian dollar exchange rate, in particular against the United States dollar which averaged approximately 17% higher than last year. However, the full benefit of the lower exchange rate on EBIT was constrained by the Group's hedging programme. Net foreign exchange losses from all sources, including the hedging programme, amounted to $17.9 million before tax (June 2000 - profit $1.5 million before tax).

Americas

The Americas region recorded an increase in EBIT of 22.4% to $55.1 million with Purepac remaining the major contributor. This result has been driven by continued strong sales of diltiazem where the Company has achieved a 24% market share in a stable pricing environment, and of spironolactone, lorazepam and phentermine. In the case of phentermine, the Company has benefited from an increasing price in a mature but growing market. Purepac launched four oral generic products during the year and currently has a further twelve products on file with the FDA. These products had a total brand sales value of US$6.4 billion in calendar 2000.

On 18 April 2001, Purepac received a warning letter from the Food & Drug Administration (FDA) in the United States identifying certain deviations from Good Manufacturing Practice regulations observed during an audit of its facility in Elizabeth, New Jersey. The Company has responded to all of the issues raised by the FDA and is confident that it has taken all steps necessary to satisfy it. A formal reinspection is required before the warning letter can be lifted. It is expected to occur within the next two weeks.

The status of Purepac's gabapentin product has not changed materially since announcement of the Company's half year results in March. Summary judgment is awaited on the "submarine" `482 chloride patent while resolution of the so-called D-43 labelling exclusivity remains an impediment to a tentative approval. The FDA has issued draft guidelines which, if implemented, would remove this impediment. In any event, this exclusivity expires in March 2002

Faulding Laboratories continues to grow as a result of the increasing demand for its patent protected, branded product Kadian(R) (morphine sulphate sustained release capsules). Sales of this increasingly profitable product continue to perform well in excess of previous achievements, with net sales of US$11.2 million for 2001, rising from 2000 sales of US$4.8 million. Serax(R) is operating as a useful support product for the Company's branded sales representatives, while the technology transfer associated with the FUDR branded product, acquired earlier this year, is expected to be completed for launch early in calendar 2002. Coupled with increasing sales of the company's Doryx(R) product through Warner Chilcott in the United States, which is captured in the results for the Asia Pacific region, this result demonstrates the effectiveness of the work being undertaken to build on Faulding's heritage of branded products.

The sales and EBIT position relating to injectable products in the Americas region improved significantly from the previous year. Increases were a result of integration-related cost savings, a strong performance in Canada and the launch of new products. These were offset by intense competition leading to severe price erosion in the United States, and by capacity constraints at the Mulgrave plant.

EMEA

In the EMEA region, EBIT declined by 9.5% from the previous year to $36.1m, reflecting lower sales in the UK (after adjusting for exchange rate effects). Capacity constraints at Mulgrave were also a factor here. Margins are generally being sustained in the UK. Strong results were achieved in the Middle East in particular and in Ireland. Italy also continues to show encouraging growth as new products are launched and generics are increasingly accepted in that country. The signing of the licence agreement with NaPro Biotherapeutics, obtaining rights to distribute and sell paclitaxel throughout Europe, is a vital step underpinning the region's growth prospects in the future. Launch of the product is expected to commence during the 2003/04 financial year.

Asia Pacific

The Pharmaceuticals division's Asia Pacific region recorded an increase in EBIT from the previous year of 176.5% to $23.5 million, resulting from a strong sales performance and an increased gross margin. This significant growth has been driven by contract manufacturing of paclitaxel, continued growth of Doryx(R) sales to Warner Chilcott and the early and successful launches of both propofol and pamidronate in Australia. Both propofol and pamidronate are among the top ten selling drugs in hospitals in Australia and Faulding has captured 20% and more than 30% market shares since launch in April 2001 and October 2000 respectively. The business in China was profitable this year, contributing EBIT of just over $1.0m. The facility in Foshan, China achieved GMP status during the course of the year.

The GPD/Soltec line item in the results breakdown includes the trading results for Soltec until its divestment in March 2001, together with the subsequent net profit on sale. "GPD" refers to the research and development costs associated with the global proprietary drug development function, centred in Salisbury, South Australia. The majority of these resources are dedicated to a collaborative research project with CSIRO developing a treatment for prostate cancer.

Capacity constraints at Purepac are being alleviated by upgrades of the Elizabeth plant and development of the plant acquired at Piscataway, New Jersey. Commercial packaging for shipment is expected to commence from Piscataway by September 1st of this year. Capacity to produce 50% more oral pharmaceuticals will be in place by June 2002. Additional anti-neoplastic filling facilities, in train for some time now and required to alleviate capacity constraints at the Mulgrave plant, are expected to be operational by October 2001. Capital expenditure on these facilities remains on target and within budget.

Faulding Healthcare

Faulding Healthcare has continued to maintain and deliver growth from leading positions in the markets in which it operates.

Healthcare Services

Healthcare Services increased EBIT by 11.8%. This result was driven primarily by Pharmaceutical Benefits Scheme (PBS) led sales growth. The retail strategy is producing rewards from both increased franchise and service-related income and from the increasing importance of the division's branded pharmacies to the growing distribution business. Membership of the Company's retail brands remains stable. The division's information technology and knowledge management platforms have been enhanced greatly during the year, through both acquisition and development. This is considered to be a primary offering to pharmacists, and a central plank to the business strategy for the future.

The Ethical Category Development business, which registers and distributes oral generic products in Australia, continues to show positive progress. Thirty five drug molecules have now been registered and it is expected that a sufficiently broad product offering will be registered and available by August 2002.

Consumer

Healthcare Consumer increased EBIT by 11.4%. This result was achieved despite sales growth of only 3.6%, resulting from the depressed nutraceuticals, or vitamins, minerals and supplements (VMS), market, in turn brought on by the implementation of the GST (where previously there was no tax). Management has focussed on long term productivity or efficiency gains to achieve this solid year on year increase in EBIT. Moves to integrate the supply chain for the VMS business have ensured that significant cost savings continue to be realised. This integration process is on track for completion by January 2002. Industry and company sales data provide some confidence that the tough trading conditions affecting VMS may be easing.

The Banta(R) range of sunscreens was successfully launched this year with market share peaking at 5.8%, which exceeded expectations. This launch did not affect the leading market share of the Company's Banana Boat(R) franchise, which remained at approximately 20%. In the soap and personal wash categories, the business has successfully integrated the acquisition of machinery from Campbell Brothers into our Shepparton plant and has maintained the number one position in the multi-pack category. Sales, including contract sales, continued to grow steadily. These categories were also instrumental in mitigating the results from the downturn in VMS products.

Group Cashflow

The Group's operating cashflow increased to $158.2 million (June 2000 - $154.1 million) after adjusting for cash received under the securitisation funding programme. This cashflow included a negative impact of $40 million when compared to last year, as a result of higher income tax payments driven by higher US profits and the acceleration of company tax instalments in Australia. Investing cashflow was substantially higher due to record capital expenditure, primarily on the manufacturing facilities at Elizabeth and Piscataway, New Jersey and at Mulgrave, Victoria. This investment was partially funded from asset sales totalling approximately $35.5 million (Soltec sale proceeds - $32 million) during the second half of the year as management continued to focus on core operations and increasing return on funds to shareholders.

Faulding is a worldwide health and personal care company, listed on the Australian Stock Exchange. Faulding's principal businesses are generic oral and injectable pharmaceuticals, consumer health products, the provision of distribution and retail management services to pharmacies and logistics management services to hospitals.

KADIAN, SERAX, DORYX and BANTA are registered trade marks of F H Faulding & Co Limited and its controlled entities.

BANANA BOAT is a registered trade mark of Sun Pharmaceuticals Corporation used under licence.


 CONSOLIDATED GROUP FINANCIAL SUMMARY

----------------------------------------------------------------------

 June 01 June 00
 $000 $000 Change
----------------------------------------------------------------------

 Sales Revenue ($m) 2,734.2 2,326.8 17.5%

 Earnings before interest, tax and
 abnormals ($m) 171.9 141.9 21.1%

 Operating profit before tax and
 abnormals ($m) 142.7 115.2 23.9%

 Group net profit after tax and
 abnormals ($m) 106.0 78.3 35.4%

 Return on funds (Group net
 profit after tax/average equity) 14.9% 12.2% 22.1%

Earnings per share after tax (cents) 65.3(cent) 48.8(cent) 33.8%

Dividends per share (cents) 28.0(cent) 23.0(cent) 21.7%

----------------------------------------------------------------------


 CONSOLIDATED GROUP FINANCIAL SUMMARY

----------------------------------------------------------------------

 June 01 June 00
Cash Flow $000 $000 Change
----------------------------------------------------------------------

Operating Cash Flow(a) 185.7 244.1 (23.9%)

Investing Cash Flow (182.6) (155.0) 17.8%

Financing Cash Flow 14.2 (67.7) 120.9%

Net Cash Flow 17.3 21.4 (19.2%)

----------------------------------------------------------------------

----------------------------------------------------------------------

 June 01 June 00
Balance Sheet $000 $000 Change
----------------------------------------------------------------------

Net Current Assets 205.1 164.3 24.8%

Fixed Assets 428.9 336.0 27.6%

Other Net Assets 24.7 23.8 3.8%

Intangibles 234.2 217.1 7.9%

Goodwill 148.7 163.4 (9.0%)

Financed by:

Net Debt 288.9 229.5 25.9%

Shareholders' Funds 752.7 675.1 11.5%

Gearing 38.4% 34.0% 12.9%

----------------------------------------------------------------------

(a) June 2000 includes $90 million receipt from the activation of
 the debtors securitisation funding programme compared to $27.5
 million received in 2001.


 CONSOLIDATED GROUP FINANCIAL SUMMARY


Intangible Assets

----------------------------------------------------------------------

 Opening Closing
 Balance Balance
$m July Additions/ June
 2000 Disposals(a) Amortisation FX 2001
----------------------------------------------------------------------
Brand Names 178 2 -- 4 184
R&D 24 -- (4) -- 20
Patents, rights
 & trademarks 15 18 (4) 1 30
Goodwill 163 (9) (11) 6 149
----------------------------------------------------------------------
Total 380 11 (19) 11 383
----------------------------------------------------------------------
(a) Includes acquisition of Campbell Brothers, Minfos and Amfac;
purchase of the NaPro licence for paclitaxel and disposal of Soltec.


Property, Plant and Equipment
----------------------------------------------------------------------

 Opening Closing
 Balance Balance
 July Additions/ June
$m 2000 Disposals(a) Depreciation FX 2001
----------------------------------------------------------------------
Land 22 5 -- 1 28
Buildings 118 8 (5) 10 131
Plant
 & Equipment 196 95 (30) 9 270
----------------------------------------------------------------------

Total 336 108 (35) 20 429

Healthcare 120 29 (11) -- 138
Pharmaceuticals 203 79 (23) 20 279
Corporate 13 -- (1) -- 12

----------------------------------------------------------------------


 CONSOLIDATED GROUP FINANCIAL SUMMARY

Return on Funds by Division

----------------------------------------------------------------------

Funds Employed (Average) 2000 2001 Change

----------------------------------------------------------------------

Healthcare 560 611 51
Pharmaceuticals 445 547 102
Other 24 (81) (105)

----------------------------------------------------------------------

Total 1,029 1,077 48
----------------------------------------------------------------------


-------------------------------------------------------

ROFE(a) 2000 2001
-------------------------------------------------------
Healthcare 12.4% 12.7%
Pharmaceuticals 20.5% 21.7%
-------------------------------------------------------
Total 15.6% 18.2%
-------------------------------------------------------
(a) EBIT/Average Funds Employed
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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