Full Press Release Details
CONSOLIDATED FINANCIAL STATEMENTS
| 1 CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS | 1 | |||
| CONSOLIDATED BALANCE SHEETS ASSETS | 1 | |||
| CONSOLIDATED BALANCE SHEETS EQUITY AND LIABILITIES | 2 | |||
| CONSOLIDATED INCOME STATEMENTS | 3 | |||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | 4 | |||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | 5 | |||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | 8 | |||
| NOTES TO THE CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2018 | 10 | |||
| INTRODUCTION | 10 | |||
| A/ Basis of preparation of the half-year financial statements and accounting policies | 10 | |||
| B/ Significant information for the first half of 2018 | 25 | |||
| C/ Events subsequent to June 30, 2018 | 50 |
1 CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS ASSETS
| ( million) | Note | June 30, 2018 | December 31, 2017 (a) | |||||||||
| Property, plant and equipment | B.2. | 9,470 | 9,579 | |||||||||
| Goodwill | B.3. | 44,828 | 40,264 | |||||||||
| Other intangible assets | B.3. | 22,436 | 13,080 | |||||||||
| Investments accounted for using the equity method | B.5. | 2,964 | 2,847 | |||||||||
| Other non-current assets | B.6. | 3,133 | 3,364 | |||||||||
| Deferred tax assets | 4,478 | 4,291 | ||||||||||
| Non-current assets | 87,309 | 73,425 | ||||||||||
| Inventories | 7,364 | 6,818 | ||||||||||
| Accounts receivable | B.7. | 6,602 | 7,216 | |||||||||
| Other current assets | 2,477 | 2,005 | ||||||||||
| Cash and cash equivalents | B.9. | 7,493 | 10,315 | |||||||||
| Current assets | 23,936 | 26,354 | ||||||||||
| Assets held for sale or exchange | B.21. | 1,533 | 34 | |||||||||
| TOTAL ASSETS | 112,778 | 99,813 |
The accompanying notes on pages 10 to 50 are an integral part of the condensed half-year consolidated financial statements.
1 | Sanofi 2018 HALF-YEAR
CONSOLIDATED BALANCE SHEETS EQUITY AND LIABILITIES
| ( million) | Note | June 30, 2018 | December 31, 2017 (a) | |||||||||
| Equity attributable to equity holders of Sanofi | 56,197 | 58,070 | ||||||||||
| Equity attributable to non-controlling interests | 164 | 169 | ||||||||||
| Total equity | B.8. | 56,361 | 58,239 | |||||||||
| Long-term debt | B.9. | 22,788 | 14,326 | |||||||||
| Non-current liabilities related to business combinations and to non-controlling interests | B.11. | 1,018 | 1,026 | |||||||||
| Non-current provisions and other non-current liabilities | B.12. | 8,949 | 9,154 | |||||||||
| Deferred tax liabilities | 3,784 | 1,605 | ||||||||||
| Non-current liabilities | 36,539 | 26,111 | ||||||||||
| Accounts payable | 4,582 | 4,633 | ||||||||||
| Current liabilities related to business combinations and to non-controlling interests | B.11. | 450 | 343 | |||||||||
| Current provisions and other current liabilities | 8,422 | 9,212 | ||||||||||
| Short-term debt and current portion of long-term debt | B.9. | 6,153 | 1,275 | |||||||||
| Current liabilities | 19,607 | 15,463 | ||||||||||
| Liabilities related to assets held for sale or exchange | B.21. | 271 | ||||||||||
| TOTAL EQUITY AND LIABILITIES | 112,778 | 99,813 |
The accompanying notes on pages 10 to 50 are an integral part of the condensed half-year consolidated financial statements.
HALF-YEAR FINANCIAL REPORT Sanofi | 2
CONSOLIDATED INCOME STATEMENTS
| ( million) | Note | June 30, 2018 (6 months) | June 30, 2017 (6 months) (a) | December 31, 2017 (12 months) (a) | ||||||||||||
| Net sales | B.20.4. | 16,074 | 17,324 | 35,072 | ||||||||||||
| Other revenues | 533 | 519 | 1,149 | |||||||||||||
| Cost of sales | (5,265 | ) | (5,671 | ) | (11,613 | ) | ||||||||||
| Gross profit | 11,342 | 12,172 | 24,608 | |||||||||||||
| Research and development expenses | (2,755 | ) | (2,667 | ) | (5,472 | ) | ||||||||||
| Selling and general expenses | (4,819 | ) | (5,054 | ) | (10,072 | ) | ||||||||||
| Other operating income | B.15. | 323 | 173 | 237 | ||||||||||||
| Other operating expenses | B.15. | (165 | ) | (71 | ) | (233 | ) | |||||||||
| Amortization of intangible assets | B.3. | (999 | ) | (990 | ) | (1,866 | ) | |||||||||
| Impairment of intangible assets | B.4. | (101 | ) | (12 | ) | (293 | ) | |||||||||
| Fair value remeasurement of contingent consideration | B.6 B.11. | 10 | (100 | ) | (159 | ) | ||||||||||
| Restructuring costs and similar items | B.16. | (607 | ) | (364 | ) | (731 | ) | |||||||||
| Other gains and losses, and litigation | B.17. | (67 | ) | (7 | ) | (215 | ) | |||||||||
| Operating income | 2,162 | 3,080 | 5,804 | |||||||||||||
| Financial expenses | B.18. | (202 | ) | (218 | ) | (420 | ) | |||||||||
| Financial income | B.18. | 97 | 95 | 147 | ||||||||||||
| Income before tax and investments accounted for using the equity method | 2,057 | 2,957 | 5,531 | |||||||||||||
| Income tax expense | B.19. | (297 | ) | (612 | ) | (1,722 | ) | |||||||||
| Share of profit/(loss) of investments accounted for using the equity method | 75 | 27 | 85 | |||||||||||||
| Net income excluding the exchanged/held-for-exchange Animal Health business | 1,835 | 2,372 | 3,894 | |||||||||||||
| Net income/(loss) of the exchanged/held-for-exchange Animal Health business (b) | 4,421 | 4,643 | ||||||||||||||
| Net income | 1,835 | 6,793 | 8,537 | |||||||||||||
| Net income attributable to non-controlling interests | 57 | 64 | 121 | |||||||||||||
| Net income attributable to equity holders of Sanofi | 1,778 | 6,729 | 8,416 | |||||||||||||
| Average number of shares outstanding (million) | B.8.7. | 1,247.8 | 1,260.3 | 1,256.9 | ||||||||||||
| Average number of shares after dilution (million) | B.8.7. | 1,254.9 | 1,270.6 | 1,266.8 | ||||||||||||
| Basic earnings per share (in euros) | 1.42 | 5.34 | 6.70 | |||||||||||||
| Basic earnings per share excluding the exchanged/held-for-exchange Animal Health business (in euros) | 1.42 | 1.83 | 3.00 | |||||||||||||
| Diluted earnings per share (in euros) | 1.42 | 5.30 | 6.64 | |||||||||||||
| Diluted earnings per share excluding the exchanged/held-for-exchange Animal Health business (in euros) | 1.42 | 1.82 | 2.98 |
The accompanying notes on pages 10 to 50 are an integral part of the condensed half-year consolidated financial statements.
3 | Sanofi 2018 HALF-YEAR
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| ( million) | Note | June 30, 2018 (6 months) | June 30, 2017 (a) (6 months) | December 31, 2017 (a) (12 months) | ||||||||||||
| Net income | 1,835 | 6,793 | 8,537 | |||||||||||||
| Attributable to equity holders of Sanofi | 1,778 | 6,729 | 8,416 | |||||||||||||
| Attributable to non-controlling interests | 57 | 64 | 121 | |||||||||||||
| Other comprehensive income: | ||||||||||||||||
| Actuarial gains/(losses) | B.8.8. | 118 | 282 | (28 | ) | |||||||||||
| Change in fair value of equity instruments included in financial assets (b) | B.8.8. | (213 | ) | |||||||||||||
| Tax effects | B.8.8. | 12 | (60 | ) | (90 | ) | ||||||||||
| Sub-total: items not subsequently reclassifiable to profit or loss (A) | (83 | ) | 222 | (118 | ) | |||||||||||
| Change in fair value of available-for-sale financial assets (b) | B.8.8. | 325 | 838 | |||||||||||||
| Change in fair value of debt instruments included in financial assets (b) | B.8.8. | (1 | ) | |||||||||||||
| Change in fair value of cash flow hedges | B.8.8. | 5 | (28 | ) | (24 | ) | ||||||||||
| Currency translation differences | B.8.8. | 804 | (2,011 | ) | (3,239 | ) | ||||||||||
| Tax effects | B.8.8. | (2 | ) | (51 | ) | (137 | ) | |||||||||
| Sub-total: items subsequently reclassifiable to profit or loss (B) | 806 | (1,765 | ) | (2,562 | ) | |||||||||||
| Other comprehensive income for the period, net of taxes (A+B) | 723 | (1,543 | ) | (2,680 | ) | |||||||||||
| Comprehensive income | 2,558 | 5,250 | 5,857 | |||||||||||||
| Attributable to equity holders of Sanofi | 2,504 | 5,194 | 5,751 | |||||||||||||
| Attributable to non-controlling interests | 54 | 56 | 106 |
The accompanying notes on pages 10 to 50 are an integral part of the condensed half-year consolidated financial statements.
HALF-YEAR FINANCIAL REPORT Sanofi | 4
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| ( million) | Share capital | Additional paid-in capital and retained earnings (a) | Treasury shares | Stock options and other share- based payments | Other comprehensive income (a) | Attributable to equity holders of Sanofi | Attributable to non- controlling interests | Total equity | ||||||||||||||||||||||||
| Balance at January 1, 2016 per the published financial statements | 2,611 | 52,010 | (298 | ) | 2,814 | 912 | 58,049 | 161 | 58,210 | |||||||||||||||||||||||
| First-time application of IFRS 15 (b) | (2 | ) | (2 | ) | (2 | ) | ||||||||||||||||||||||||||
| Balance at January 1, 2016 including the effects of IFRS 15 (b) | 2,611 | 52,008 | (298 | ) | 2,814 | 912 | 58,047 | 161 | 58,208 | |||||||||||||||||||||||
| Other comprehensive income for the period | (127 | ) | 1,052 | 925 | 3 | 928 | ||||||||||||||||||||||||||
| Net income for the period (b) | 4,709 | 4,709 | 91 | 4,800 | ||||||||||||||||||||||||||||
| Comprehensive income for the period (b) | 4,582 | 1,052 | 5,634 | 94 | 5,728 | |||||||||||||||||||||||||||
| Dividend paid out of 2015 earnings ( 2.93 per share) | (3,759 | ) | (3,759 | ) | (3,759 | ) | ||||||||||||||||||||||||||
| Payment of dividends to non-controlling interests | (110 | ) | (110 | ) | ||||||||||||||||||||||||||||
| Share repurchase program (c) | (2,905 | ) | (2,905 | ) | (2,905 | ) | ||||||||||||||||||||||||||
| Reduction in share capital (c) | (45 | ) | (1,655 | ) | 1,700 | |||||||||||||||||||||||||||
| Share-based payment plans: | ||||||||||||||||||||||||||||||||
| Exercise of stock options | 7 | 212 | 219 | 219 | ||||||||||||||||||||||||||||
| Issuance of restricted shares | 7 | (7 | ) | |||||||||||||||||||||||||||||
| Employee share ownership plan | 4 | 96 | 100 | 100 | ||||||||||||||||||||||||||||
| Value of services obtained from employees | 227 | 227 | 227 | |||||||||||||||||||||||||||||
| Tax effects of the exercise of stock options | (9 | ) | (9 | ) | (9 | ) | ||||||||||||||||||||||||||
| Change in non-controlling interests without loss of control | (2 | ) | (2 | ) | 27 | 25 | ||||||||||||||||||||||||||
| Change in non-controlling interests arising from divestment | (2 | ) | (2 | ) | ||||||||||||||||||||||||||||
| Balance at December 31, 2016 (b) | 2,584 | 51,475 | (1,503 | ) | 3,032 | 1,964 | 57,552 | 170 | 57,722 |
5 | Sanofi 2018 HALF-YEAR
| ( million) | Share capital | Additional paid-in capital and retained earnings (a) | Treasury shares | Stock options and other share- based payments | Other comprehensive income (a) | Attributable to equity holders of Sanofi | Attributable to non- controlling interests | Total equity | ||||||||||||||||||||||||
| Balance at January 1, 2017 (b) | 2,584 | 51,475 | (1,503 | ) | 3,032 | 1,964 | 57,552 | 170 | 57,722 | |||||||||||||||||||||||
| Other comprehensive income for the period | 222 | (1,757 | ) | (1,535 | ) | (8 | ) | (1,543 | ) | |||||||||||||||||||||||
| Net income for the period (b) | 6,729 | 6,729 | 64 | 6,793 | ||||||||||||||||||||||||||||
| Comprehensive income for the period (b) | 6,951 | (1,757 | ) | 5,194 | 56 | 5,250 | ||||||||||||||||||||||||||
| Dividend paid out of 2016 earnings ( 2.96 per share) | (3,710 | ) | (3,710 | ) | (3,710 | ) | ||||||||||||||||||||||||||
| Payment of dividends to non-controlling interests | (55 | ) | (55 | ) | ||||||||||||||||||||||||||||
| Share repurchase program (c) | (1,697 | ) | (1,697 | ) | (1,697 | ) | ||||||||||||||||||||||||||
| Reduction in share capital (c) | (73 | ) | (2,709 | ) | 2,782 | |||||||||||||||||||||||||||
| Share-based payment plans: | ||||||||||||||||||||||||||||||||
| Exercise of stock options | 3 | 96 | 99 | 99 | ||||||||||||||||||||||||||||
| Issuance of restricted shares | 7 | (7 | ) | |||||||||||||||||||||||||||||
| Value of services obtained from employees | 126 | 126 | 126 | |||||||||||||||||||||||||||||
| Tax effects of the exercise of stock options | 13 | 13 | 13 | |||||||||||||||||||||||||||||
| Other changes arising from issuance of restricted shares (d) | 16 | 16 | 16 | |||||||||||||||||||||||||||||
| Change in non-controlling interests without loss of control | 27 | 27 | (5 | ) | 22 | |||||||||||||||||||||||||||
| Change in non-controlling interests arising from divestment | (5 | ) | (5 | ) | ||||||||||||||||||||||||||||
| Balance at June 30, 2017 (b) | 2,521 | 52,139 | (418 | ) | 3,171 | 207 | 57,620 | 161 | 57,781 | |||||||||||||||||||||||
| Other comprehensive income for the period (b) | (339 | ) | (791 | ) | (1,130 | ) | (7 | ) | (1,137 | ) | ||||||||||||||||||||||
| Net income for the period (b) | 1,687 | 1,687 | 57 | 1,744 | ||||||||||||||||||||||||||||
| Comprehensive income for the period (b) | 1,348 | (791 | ) | 557 | 50 | 607 | ||||||||||||||||||||||||||
| Payment of dividends to non-controlling interests | (44 | ) | (44 | ) | ||||||||||||||||||||||||||||
| Share repurchase program (c) | (462 | ) | (462 | ) | (462 | ) | ||||||||||||||||||||||||||
| Reduction in share capital (c) | (21 | ) | (845 | ) | 866 | |||||||||||||||||||||||||||
| Share-based payment plans: | ||||||||||||||||||||||||||||||||
| Exercise of stock options | 5 | 119 | 124 | 124 | ||||||||||||||||||||||||||||
| Employee share ownership plan | 3 | 103 | 106 | 106 | ||||||||||||||||||||||||||||
| Value of services obtained from employees | 137 | 137 | 137 | |||||||||||||||||||||||||||||
| Tax effects of the exercise of stock options | (10 | ) | (10 | ) | (10 | ) | ||||||||||||||||||||||||||
| Change in non-controlling interests without loss of control | (2 | ) | (2 | ) | 4 | 2 | ||||||||||||||||||||||||||
| Change in non-controlling interests arising from divestment | (2 | ) | (2 | ) | ||||||||||||||||||||||||||||
| Balance at December 31, 2017 (b) | 2,508 | 52,862 | (14 | ) | 3,298 | (584 | ) | 58,070 | 169 | 58,239 |
HALF-YEAR FINANCIAL REPORT Sanofi | 6
| ( million) | Share capital | Additional paid-in capital and retained earnings (a) | Treasury shares | Stock options and other share- based payments | Other comprehensive income (a) | Attributable to equity holders of Sanofi | Attributable to non -controlling interests | Total equity | ||||||||||||||||||||||||
| Balance at December 31, 2017 (b) | 2,508 | 52,862 | (14 | ) | 3,298 | (584 | ) | 58,070 | 169 | 58,239 | ||||||||||||||||||||||
| First-time application of IFRS 9 (e) | 839 | (852 | ) | (13 | ) | (13 | ) | |||||||||||||||||||||||||
| Other comprehensive income for the period | (83 | ) | 809 | 726 | (3 | ) | 723 | |||||||||||||||||||||||||
| Net income for the period | 1,778 | 1,778 | 57 | 1,835 | ||||||||||||||||||||||||||||
| Comprehensive income for the period | 1,695 | 809 | 2,504 | 54 | 2,558 | |||||||||||||||||||||||||||
| Dividend paid out of 2017 earnings ( 3.03 per share) | (3,773 | ) | (3,773 | ) | (3,773 | ) | ||||||||||||||||||||||||||
| Payment of dividends to non-controlling interests | (51 | ) | (51 | ) | ||||||||||||||||||||||||||||
| Share repurchase program (c) | (729 | ) | (729 | ) | (729 | ) | ||||||||||||||||||||||||||
| Reduction in share capital (c) | (14 | ) | (498 | ) | 512 | |||||||||||||||||||||||||||
| Share-based payment plans: | ||||||||||||||||||||||||||||||||
| Exercise of stock options | 6 | 6 | 6 | |||||||||||||||||||||||||||||
| Issuance of restricted shares and vesting of existing restricted shares (f) | 4 | (83 | ) | 79 | ||||||||||||||||||||||||||||
| Value of services obtained from employees | 151 | 151 | 151 | |||||||||||||||||||||||||||||
| Tax effects of the exercise of stock options | 7 | 7 | 7 | |||||||||||||||||||||||||||||
| Other changes arising from issuance of restricted shares (d) | 13 | 13 | 13 | |||||||||||||||||||||||||||||
| Change in non-controlling interests without loss of control | (39 | ) | (39 | ) | (8 | ) | (47 | ) | ||||||||||||||||||||||||
| Balance at June 30, 2018 | 2,498 | 51,022 | (152 | ) | 3,456 | (627 | ) | 56,197 | 164 | 56,361 |
accompanying notes on pages 10 to 50 are an integral part of the condensed half-year consolidated financial statements.
7 | Sanofi 2018 HALF-YEAR
CONSOLIDATED STATEMENTS OF CASH FLOWS
| ( million) | Note | June 30, 2018 (6 months) | June 30, 2017 (6 months) (a) /(b) | December 31, 2017 (12 months) (a) /(b) | ||||||||||||
| Net income attributable to equity holders of Sanofi | 1,778 | 6,729 | 8,416 | |||||||||||||
| Net (income)/loss of the exchanged/held-for-exchange Animal Health business | (4,421 | ) | (4,643 | ) | ||||||||||||
| Non-controlling interests, excluding BMS (c) | 15 | 21 | 38 | |||||||||||||
| Share of undistributed earnings from investments accounted for using the equity method | (59 | ) | 2 | (47 | ) | |||||||||||
| Depreciation, amortization and impairment of property, plant and equipment and intangible assets | 1,779 | 1,762 | 3,686 | |||||||||||||
| Gains and losses on disposals of non-current assets, net of tax (d) | (217 | ) | (79 | ) | (97 | ) | ||||||||||
| Net change in deferred taxes | (330 | ) | (268 | ) | (909 | ) | ||||||||||
| Net change in non-current provisions and other non-current liabilities (e) | (56 | ) | (204 | ) | 321 | |||||||||||
| Cost of employee benefits (stock options and other share-based payments) | 152 | 126 | 263 | |||||||||||||
| Impact of the workdown of acquired inventories remeasured at fair value | 100 | 176 | 166 | |||||||||||||
| Other profit or loss items with no cash impact | 119 | (9 | ) | 38 | ||||||||||||
| Operating cash flow before changes in working capital and excluding the exchanged/held-for-exchange Animal Health business | 3,281 | 3,835 | 7,232 | |||||||||||||
| (Increase)/decrease in inventories | (627 | ) | (500 | ) | (144 | ) | ||||||||||
| (Increase)/decrease in accounts receivable | 571 | 150 | (529 | ) | ||||||||||||
| Increase/(decrease) in accounts payable | (219 | ) | 110 | 577 | ||||||||||||
| Net change in other current assets and other current liabilities (f) | (1,232 | ) | (1,039 | ) | 243 | |||||||||||
| Net cash provided by/(used in) operating activities excluding the exchanged/held-for-exchange Animal Health business (f) | 1,773 | 2,556 | 7,379 | |||||||||||||
| Net cash provided by/(used in) operating activities of the exchanged/held-for-exchange Animal Health business | ||||||||||||||||
| Acquisitions of property, plant and equipment and intangible assets | B.2. B.3. | (823 | ) | (998 | ) | (1,956 | ) | |||||||||
| Acquisitions of consolidated undertakings and investments accounted for using the equity method (g)/(i) | B.1. | (12,784 | ) | (381 | ) | (1,151 | ) | |||||||||
| Acquisitions of other equity investments | (32 | ) | (45 | ) | (61 | ) | ||||||||||
| Proceeds from disposals of property, plant and equipment, intangible assets and other non-current assets, net of tax (h) | 486 | 440 | 535 | |||||||||||||
| Net change in loans and other financial assets | 67 | (78 | ) | (263 | ) | |||||||||||
| Net cash provided by/(used in) investing activities excluding the exchanged/held-for-exchange Animal Health business | (13,085 | ) | (1,062 | ) | (2,896 | ) | ||||||||||
| Net cash provided by/(used in) investing activities of the exchanged/held-for-exchange Animal Health business | ||||||||||||||||
| Net cash inflow from the exchange of the Animal Health business for BI s Consumer Healthcare business (i) | 5 | 4,349 | 3,535 | |||||||||||||
| Issuance of Sanofi shares | B.8.1. | 19 | 99 | 319 | ||||||||||||
| Dividends paid: | ||||||||||||||||
| to shareholders of Sanofi | (3,773 | ) | (3,710 | ) | (3,710 | ) | ||||||||||
| to non-controlling interests, excluding BMS (c) | (10 | ) | (11 | ) | (15 | ) | ||||||||||
| Payments received/(made) on changes of ownership interest in a subsidiary without loss of control | (45 | ) | (37 | ) | (37 | ) | ||||||||||
| Additional long-term debt contracted | B.9.1. | 9,674 | 1 | 41 | ||||||||||||
| Repayments of long-term debt | B.9.1. | (25 | ) | (7 | ) | (2,368 | ) | |||||||||
| Net change in short-term debt | 3,383 | 173 | 30 | |||||||||||||
| Acquisitions of treasury shares | B.8.2. | (730 | ) | (1,700 | ) | (2,162 | ) | |||||||||
| Disposals of treasury shares, net of tax | ||||||||||||||||
| Net cash provided by/(used in) financing activities excluding the exchanged/held-for-exchange Animal Health business | 8,494 | (5,192 | ) | (7,902 | ) |
HALF-YEAR FINANCIAL REPORT Sanofi | 8
| ( million) | Note | June 30, 2018 (6 months) | June 30, 2017 (6 months) (a)/(b) | December 31, 2017 (12 months) (a)/(b) | ||||||||||||
| Net cash provided by/(used in) financing activities of the exchanged/held-for-exchange Animal Health business | ||||||||||||||||
| Impact of exchange rates on cash and cash equivalents | (9 | ) | (47 | ) | (74 | ) | ||||||||||
| Net change in cash and cash equivalents | (2,822 | ) | 604 | 42 | ||||||||||||
| Cash and cash equivalents, beginning of period | 10,315 | 10,273 | 10,273 | |||||||||||||
| Cash and cash equivalents, end of period | B.9. | 7,493 | 10,877 | 10,315 |
| Income tax paid | (1,061 | ) | (1,324 | ) | (1,734 | ) | ||||||
| Interest paid (excluding cash flows on derivative instruments used to hedge debt) | (144 | ) | (114 | ) | (347 | ) | ||||||
| Interest received (excluding cash flows on derivative instruments used to hedge debt) | 31 | 30 | 56 | |||||||||
| Dividends received from non-consolidated entities | 6 | 8 |
The accompanying notes on pages 10 to 50 are an integral part of the condensed half-year consolidated financial statements.
9 | Sanofi 2018 HALF-YEAR
NOTES TO THE CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2018
Sanofi, together with its subsidiaries
(collectively Sanofi or the Company ), is a global healthcare leader engaged in the research, development and marketing of therapeutic solutions focused on patient needs.
Sanofi is listed in Paris (Euronext: SAN) and New York (NYSE: SNY).
The condensed consolidated financial statements for the six months ended June 30, 2018 were reviewed by the Sanofi Board of Directors at the Board
meeting on July 30, 2018.
A/ BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL STATEMENTS AND ACCOUNTING POLICIES
A.1. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
The half-year consolidated financial statements have been prepared and presented in condensed format in accordance with IAS 34 (Interim Financial Reporting).
The accompanying notes therefore relate to significant events and transactions of the period, and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2017.
The accounting policies used in the preparation of the consolidated financial statements as of June 30, 2018 comply with international financial
reporting standards (IFRS) as endorsed by the European Union and as issued by the International Accounting Standards Board (IASB). IFRS as endorsed by the European Union as of June 30, 2018 are available via the following web link:
became applicable on January 1, 2018. Consequently, the accounting policies applied from that date are identical to those described in the published consolidated financial statements for the year ended December 31, 2017, except for the
accounting policies presented in the notes relating to (i) net sales and other revenues and (ii) financial instruments, as described in Notes A.1.2. and A.1.3. below, respectively.
The other standards and interpretations issued by the IASB and endorsed by the European Union that became applicable on January 1, 2018 had no impact on
the Sanofi consolidated financial statements.
A.1.1. UPDATE TO SIGNIFICANT ACCOUNTING POLICIES EFFECTIVE JANUARY 1, 2018
IFRS 15 and IFRS 9 became applicable on January 1, 2018, requiring Sanofi to update its accounting policies on revenue and financial instruments.
However, those updates do not materially affect the way in which Sanofi accounts for revenue or financial instruments.
As regards revenue, the concept of transfer of control , which is used primarily to determine the date of revenue recognition, does not call for
any change in accounting for the majority of transactions with Sanofi s customers. The concept of variable consideration does not materially alter the principles and methods used to measure net sales, which continue to be recognized
net of customer incentives and discounts, and of certain sales-based payments paid or payable to the healthcare authorities.
As regards financial
instruments, IFRS 9 changes the terminology used to classify some sub-categories of non-derivative financial assets without affecting the measurement principles applied
to those assets, which continue to be measured at either fair value or amortized cost. The valuation models used by Sanofi are unchanged.
changes to the principles used in determining impairment of financial assets measured at amortized cost mean that an expected loss approach is now applied to such assets. In practice, this has an immaterial effect on the amount of impairment, and
mainly affects accounts receivable.
The impacts of the first-time application of IFRS 15 are described in detail in Note A.1.2.
The impacts of the first-time application of IFRS 9 are described in detail in Note A.1.3.
With the exception of the policies presented in those two notes, the significant accounting policies applied effective January 1, 2018 are identical to
those presented in the consolidated financial statements for the year ended December 31, 2017.
HALF-YEAR FINANCIAL REPORT Sanofi | 10
A.1.2. IMPACTS OF THE FIRST-TIME APPLICATION OF IFRS 15
Sanofi is applying IFRS 15 retrospectively (in accordance with IAS 8) with effect from January 1, 2018, without applying any of the practical
expedients permitted under IFRS 15. The impacts of the first-time application of IFRS 15 on the consolidated balance sheet with effect from January 1, 2016 are presented below. The main impacts relate to:
Because those impacts do not represent cash inflows or outflows, cash generated by or used in operating activities for the comparative
periods presented in the statements of cash flows have not been amended. Intermediate line items within the statements of cash flows have been adjusted accordingly.
The impacts on the consolidated balance sheet as of January 1, 2016 are set forth below:
| January 1, 2016 | ||||||||||||
| ( million) | Published | Impact of IFRS 15 | Including impact of IFRS 15 | |||||||||
| Investments accounted for using the equity method | 2,676 | 2,676 | ||||||||||
| Deferred tax assets | 4,714 | 1 | 4,715 | |||||||||
| Non-current assets | 71,641 | 1 | 71,642 | |||||||||
| Inventories | 6,516 | 1 | 6,517 | |||||||||
| Current assets | 24,928 | 1 | 24,929 | |||||||||
| TOTAL ASSETS | 102,321 | 2 | 102,323 | |||||||||
| Equity attributable to equity holders of Sanofi | 58,049 | (2 | ) | 58,047 | ||||||||
| Total equity | 58,210 | (2 | ) | 58,208 | ||||||||
| Other current liabilities | 9,442 | 4 | 9,446 | |||||||||
| Current liabilities | 16,825 | 4 | 16,829 | |||||||||
| TOTAL EQUITY AND LIABILITIES | 102,321 | 2 | 102,323 |
11 | Sanofi 2018 HALF-YEAR
The impacts on the consolidated balance sheet as of December 31, 2016 are set forth below:
| December 31, 2016 | ||||||||||||
| ( million) | Published | Impact of IFRS 15 | Including impact of IFRS 15 | |||||||||
| Investments accounted for using the equity method | 2,890 | 2 | 2,892 | |||||||||
| Deferred tax assets | 4,669 | 1 | 4,670 | |||||||||
| Non-current assets | 71,564 | 3 | 71,567 | |||||||||
| Inventories | 6,892 | 4 | 6,896 | |||||||||
| Current assets | 26,687 | 4 | 26,691 | |||||||||
| TOTAL ASSETS | 104,672 | 7 | 104,679 | |||||||||
| Equity attributable to equity holders of Sanofi | 57,554 | (2 | ) | 57,552 | ||||||||
| Total equity | 57,724 | (2 | ) | 57,722 | ||||||||
| Other current liabilities | 10,175 | 9 | 10,184 | |||||||||
| Current liabilities | 16,434 | 9 | 16,443 | |||||||||
| TOTAL EQUITY AND LIABILITIES | 104,672 | 7 | 104,679 |
The impacts on the consolidated balance sheet as of December 31, 2017 are set forth below:
| December 31, 2017 | ||||||||||||
| ( million) | Published | Impact of IFRS 15 | Including impact of IFRS 15 | |||||||||
| Investments accounted for using the equity method | 2,863 | (16 | ) | 2,847 | ||||||||
| Deferred tax assets | 4,290 | 1 | 4,291 | |||||||||
| Non-current assets | 73,440 | (15 | ) | 73,425 | ||||||||
| Inventories | 6,816 | 2 | 6,818 | |||||||||
| Current assets | 26,352 | 2 | 26,354 | |||||||||
| TOTAL ASSETS | 99,826 | (13 | ) | 99,813 | ||||||||
| Equity attributable to equity holders of Sanofi | 58,089 | (19 | ) | 58,070 | ||||||||
| Total equity | 58,258 | (19 | ) | 58,239 | ||||||||
| Other current liabilities | 9,206 | 6 | 9,212 | |||||||||
| Current liabilities | 15,457 | 6 | 15,463 | |||||||||
| TOTAL EQUITY AND LIABILITIES | 99,826 | (13 | ) | 99,813 |
HALF-YEAR FINANCIAL REPORT Sanofi | 12
The impacts on the consolidated income statement for the year ended December 31, 2016 are set forth below:
| December 31, 2016 | ||||||||||||
| ( million) | Published | Impact of IFRS 15 | Including impact of IFRS 15 | |||||||||
| Net sales | 33,821 | (12 | ) | 33,809 | ||||||||
| Cost of sales | (10,702 | ) | 1 | (10,701 | ) | |||||||
| Gross profit | 24,006 | (11 | ) | 23,995 | ||||||||
| Selling and general expenses | (9,486 | ) | 8 | (9,478 | ) | |||||||
| Operating income | 6,534 | (3 | ) | 6,531 | ||||||||
| Income before tax and investments accounted for using the equity method | 5,678 | (3 | ) | 5,675 | ||||||||
| Income tax expense | (1,326 | ) | 1 | (1,325 | ) | |||||||
| Share of profit/(loss) of investments accounted for using the equity method | 134 | 2 | 136 | |||||||||
| Net income excluding the exchanged/held-for-exchange Animal Health business | 4,486 | 4,486 | ||||||||||
| Net income | 4,800 | 4,800 | ||||||||||
| Net income attributable to equity holders of Sanofi | 4,709 | 4,709 | ||||||||||
| Basic earnings per share (in euros) | 3.66 | 3.66 |
The impacts on the consolidated income statement for the year ended December 31, 2017 are set forth below:
| December 31, 2017 | ||||||||||||
| ( million) | Published | Impact of IFRS 15 | Including impact of IFRS 15 | |||||||||
| Net sales | 35,055 | 17 | 35,072 | |||||||||
| Cost of sales | (11,611 | ) | (2 | ) | (11,613 | ) | ||||||
| Gross profit | 24,593 | 15 | 24,608 | |||||||||
| Selling and general expenses | (10,058 | ) | (14 | ) | (10,072 | ) | ||||||
| Operating income | 5,803 | 1 | 5,804 | |||||||||
| Income before tax and investments accounted for using the equity method | 5,530 | 1 | 5,531 | |||||||||
| Income tax expense | (1,722 | ) | (1,722 | ) | ||||||||
| Share of profit/(loss) of investments accounted for using the equity method | 104 | (19 | ) | 85 | ||||||||
| Net income excluding the exchanged/held-for-exchange Animal Health business | 3,912 | (18 | ) | 3,894 | ||||||||
| Net income | 8,555 | (18 | ) | 8,537 | ||||||||
| Net income attributable to equity holders of Sanofi | 8,434 | (18 | ) | 8,416 | ||||||||
| Basic earnings per share (in euros) | 6.71 | 6.70 |
13 | Sanofi 2018 HALF-YEAR
The impacts on the consolidated income statement for the six months ended June 30, 2017 are set forth below:
| June 30, 2017 (6 months) | ||||||||||||
| ( million) | Published | Impact of IFRS 15 | Including impact of IFRS 15 | |||||||||
| Net sales | 17,311 | 13 | 17,324 | |||||||||
| Cost of sales | (5,670 | ) | (1 | ) | (5,671 | ) | ||||||
| Gross profit | 12,160 | 12 | 12,172 | |||||||||
| Selling and general expenses | (5,046 | ) | (8 | ) | (5,054 | ) | ||||||
| Operating income | 3,076 | 4 | 3,080 | |||||||||
| Income before tax and investments accounted for using the equity method | 2,953 | 4 | 2,957 | |||||||||
| Income tax expense | (610 | ) | (2 | ) | (612 | ) | ||||||
| Share of profit/(loss) of investments accounted for using the equity method | 38 | (11 | ) | 27 | ||||||||
| Net income excluding the exchanged/held-for-exchange Animal Health business | 2,381 | (9 | ) | 2,372 | ||||||||
| Net income | 6,802 | (9 | ) | 6,793 | ||||||||
| Net income attributable to equity holders of Sanofi | 6,738 | (9 | ) | 6,729 | ||||||||
| Basic earnings per share (in euros) | 5.35 | 5.34 |
The accounting policies on revenue recognition described in the consolidated financial statements for the year ended
December 31, 2017 have been amended as follows:
Update to Note B.13.1. ( Net sales ) to the consolidated financial statements for the
year ended December 31, 2017
Revenue arising from the sale of goods is presented in the income statement within Net sales. Net
sales comprise revenue from sales of pharmaceutical products, consumer healthcare products, active ingredients and vaccines, net of sales returns, of customer incentives and discounts, and of certain sales-based payments paid or payable to the
healthcare authorities.
In accordance with IFRS 15 (Revenue from Contracts with Customers), such revenue is recognized when Sanofi transfers control over
the product to the customer; control of an asset refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from, that asset. For the vast majority of contracts, revenue is recognized when the product is
physically transferred, in accordance with the delivery and acceptance terms agreed with the customer.
For contracts entered into by Sanofi Pasteur,
transfer of control is usually determined by reference to the terms of release (immediate or deferred) and acceptance of batches of vaccine.
of contracts with distributors, Sanofi does not recognize revenue when the product is physically transferred to the distributor if the products are sold on consignment, or if the distributor acts as agent. In such cases, revenue is recognized when