We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gsk Plc | LSE:GSK | London | Ordinary Share | GB00BN7SWP63 | ORD 31 1/4P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 12.50 | 0.76% | 1,653.00 | 1,654.00 | 1,655.00 | 1,655.50 | 1,634.00 | 1,638.50 | 3,990,601 | 16:35:15 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pharmaceutical Preparations | 30.33B | 4.93B | 1.1970 | 13.83 | 68.14B |
TIDMGSK
RNS Number : 4273U
GlaxoSmithKline PLC
29 July 2015
Hot Features
Premium
Issued: Wednesday, 29 July 2015, London U.K.
Results Announcement for the second quarter 2015 and Half-yearly Financial Report for the
half-year 2015
GSK delivers Q2 Group sales of GBP5.9 billion +7% CER and core EPS of 17.3p (flat CER) in
first full quarter of performance since transaction
Group on track to achieve guidance for 2015 and remains confident in outlook for 2016
New product momentum accelerates across all three businesses with further innovation to be
presented at investor R&D event in November
Core results
Q2 2015 Growth H1 2015 Growth
------------ ------------
GBPm CER% GBP% GBPm CER% GBP%
-------- ----- ----- -------- ----- -----
Turnover 5,888 7 6 11,510 4 3
Core operating profit 1,349 3 (4) 2,654 (6) (10)
Core earnings per
share 17.3p - (9) 34.6p (8) (14)
Total results
Q2 2015 Growth H1 2015 Growth
------------ ------------
GBPm CER% GBP% GBPm CER% GBP%
-------- ----- ----- -------- ----- -----
Turnover 5,888 7 6 11,510 4 3
Operating profit 335 (61) (71) 9,551 >100 >100
Earnings per share 3.1p (63) (77) 170.7p >100 >100
Summary
-- Group sales +7% CER on a reported basis and +2% CER pro-forma
- Pharmaceuticals GBP3.5 billion, -6% (+2% pro-forma); Vaccines
GBP0.8 billion, +11% (-5% pro-forma); Consumer Healthcare GBP1.5
billion, +51% (+6% pro-forma)
- New Pharmaceutical and Vaccine sales of GBP446 million in Q2
-- Q2 core EPS of 17.3p, flat in CER terms
- EPS reflects dilution of Novartis transaction, ongoing pricing
pressure partly offset by cost reductions
- Integration of new Consumer and Vaccine businesses on track
- On track to deliver targeted annual cost savings of GBP3 billion
from all restructuring programmes
-- Total Q2 EPS of 3.1p and H1 EPS of 170.7p
- Reflects phasing of pre-tax transaction gains and accelerated
restructuring charges
-- 2015 earnings guidance and 2016 outlook reiterated
- Expect 2015 core EPS to decline at a high teen percentage rate
(CER)
- 2016 core EPS percentage growth expected to reach double digits
(CER)
-- Q2 dividend of 19p declared
- Continued expectation for full year dividend of 80p
-- R&D innovation with significant potential to drive long-term
Group performance
- Progress of new respiratory portfolio continues with positive
FDA AdCom recommendation for Nucala and regulatory filing for
approval in Japan
- Positive CHMP decision received for Mosquirix
- Group has 40 NMEs (drugs and vaccines) in Phase II/III clinical
development, primarily focused on HIV, Oncology, Vaccines,
Cardiovascular, Immuno-inflammation and Respiratory diseases
- New data and prospects for advanced/early-stage pipeline to
be reviewed at R&D event in November
The full results are presented under 'Income Statement' on page 31
and core results reconciliations are presented on pages 51 to 54.
All commentaries are presented in terms of CER growth as defined on
page 28, unless otherwise stated.
All expectations and targets regarding future performance should be
read together with the "Assumptions related to 2016-2020 outlook",
"Assumptions and cautionary statement regarding forward-looking statements"
and "Principal risks and uncertainties" sections.
Sir Andrew Witty, Chief Executive Officer, GSK said:
"This is our first full quarter of performance since completion of
the transaction with Novartis and it is encouraging. Our integration
and restructuring plans are on track and we remain confident that
we can achieve our targets for this year and return the Group to earnings
growth in 2016.
"Sales grew 7% on a reported basis and 2% pro-forma. New product performance
was positive in all three of GSK's businesses, with the standout performance
for the quarter coming from our new HIV drugs, Tivicay and Triumeq.
Both of these are tracking ahead of recent best-in-class launches,
and together generated sales of GBP294 million. Elsewhere, we saw
continued strong uptake for Flonase OTC, an improving market share
for Breo Ellipta following the indication for asthma granted in April,
and continued uptake of the newly acquired Meningitis vaccines Bexsero
and Menveo. Importantly the growth of our new pharmaceutical products
is now more than offsetting sales declines of Seretide/Advair.
"We will be showcasing further product innovation at our event for
investors in November at which we expect to review new data and prospects
for advanced and early-stage development projects in HIV, Oncology,
Vaccines, Cardiovascular, Immuno-inflammation and Respiratory diseases."
Information and details regarding today's results, including a video
interview with CFO Simon Dingemans is available on: www.gsk.com/investors.
Strategy and outlook
GSK has created a Group of three world-leading businesses in Pharmaceuticals,
Vaccines and Consumer Healthcare, which aims to deliver sustainable
and improving returns to shareholders through development of innovative
healthcare options for patients and consumers.
GSK has a strong portfolio of innovative products across these three
businesses, enabling the Group to access the fast growing global demand
for healthcare and to balance its exposure to future changes in the
industry pricing environment.
The Group has a presence in more than 150 markets, with revenues split
across Pharmaceuticals 59%, Consumer Healthcare 25% and Vaccines 16%
on a full-year 2014 historic pro-forma basis. Demand for the Group's
products is expected to increase worldwide, particularly in Emerging
Markets.
R&D innovation underpins all three businesses. The Group has a pipeline
of 40 NMEs (drugs and vaccines) in Phase II/III clinical development,
primarily focused on HIV, Oncology, Vaccines, Cardiovascular, Immuno-inflammation
and Respiratory diseases. All three businesses are supported by proprietary
technologies and manufacturing capabilities in areas such as devices,
adjuvants, bio-electronics and formulations. The Group aims to improve
returns from its R&D innovation by striking a balance between pricing
and volume generation.
At its Investor Day on 6 May 2015, GSK outlined a series of expectations
for its performance over the five year period 2016-2020. This included
an expectation that Group core EPS would grow at a CAGR of mid-to-high
single digits on a CER basis. The introduction of a generic alternative
to Advair in the US was factored into the Group's assessment of its
future performance. The Group also stated its intention to pay an
annual ordinary dividend of 80p for each of the next three years (2015-2017).
For more information see www.gsk.com/en-gb/investors/investor-event.
Contents Page
Q2 2015 results summary 1
Group performance 4
Segmental performance 16
Research and development 25
Definitions 28
Outlook assumptions and cautionary statements 29
Contacts 30
Income statements 31
Statement of comprehensive income - three months ended 30 June
2015 32
Statement of comprehensive income - six months ended 30 June
2015 33
Pharmaceuticals and Vaccines turnover - three months ended 30
June 2015 34
Pharmaceuticals and Vaccines turnover - six months ended 30
June 2015 35
Balance sheet 36
Statement of changes in equity 37
Cash flow statement - six months ended 30 June 2015 38
Segment information 39
Legal matters 42
Taxation 42
Additional information 43
Reconciliation of cash flow to movements in net debt 50
Core results reconciliations 51
Principal risks and uncertainties 55
Directors' responsibility statement 56
Independent review report 57
Group performance
The Novartis transaction completed on 2 March 2015 and so GSK's reported
year to date results include four month's turnover of the former Novartis
Vaccines and Consumer Healthcare products and exclude sales of the
former GSK Oncology business from 2 March. The Group has restated
its segment information for the change in its segments described on
page 39.
In addition, the Group has presented pro-forma growth rates for turnover,
core operating profit and core operating profit by business. Pro-forma
growth rates are calculated comparing reported turnover and core operating
profit for Q2 2015 with the turnover and core operating profit for
Q2 2014 adjusted to include the equivalent three month's sales of
the former Novartis Vaccines and Consumer Healthcare products and
exclude the sales of the former GSK Oncology business during Q2 2014.
Similarly, pro-forma growth rates for the half-year are calculated
comparing reported turnover and core operating profit for H1 2015
with the turnover and core operating profit for H1 2014 adjusted to
include the equivalent four month's sales of the former Novartis Vaccines
and Consumer Healthcare products and exclude the sales of the former
GSK Oncology products from March to June 2014.
Group turnover by business and geographic region
Group turnover by business
Q2 2015 Q2 2015 H1 2015 H1 2015
----------------- ---------- ------------------ ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
------ --------- ---------- ------- --------- ----------
Global Pharmaceuticals 2,981 (12) (4) 6,058 (12) (7)
HIV 559 59 59 1,005 51 51
------ --------- ---------- ------- --------- ----------
Pharmaceuticals 3,540 (6) 2 7,063 (7) (2)
Vaccines 814 11 (5) 1,513 11 (1)
Consumer Healthcare 1,509 51 6 2,890 37 7
------ --------- ---------- ------- --------- ----------
5,863 7 2 11,466 4 1
Corporate and other
unallocated turnover 25 87 87 44 29 20
------ --------- ---------- ------- --------- ----------
Group turnover 5,888 7 2 11,510 4 1
------ --------- ---------- ------- --------- ----------
Group turnover by geographic region
Q2 2015 Q2 2015 H1 2015 H1 2015
----------------- ---------- ------------------ ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
------ --------- ---------- ------- --------- ----------
US 1,992 5 7 3,787 - 1
Europe 1,612 13 4 3,169 9 3
International 2,284 5 (2) 4,554 3 (1)
------ --------- ---------- ------- --------- ----------
Group turnover 5,888 7 2 11,510 4 1
HIV turnover represents the sales of ViiV Healthcare.
Turnover - Q2 2015
Group turnover for Q2 2015 increased 7% on a reported basis to GBP5,888
million, with Pharmaceuticals down 6%, Vaccines up 11% and Consumer
Healthcare up 51%, all three businesses reflecting the impact of the
Novartis transaction. On a pro-forma basis, Group turnover increased
2%, with Pharmaceuticals up 2%, Vaccines down 5% and Consumer Healthcare
up 6%. Sales of New Pharmaceutical and Vaccine products as set out
on page 24 were GBP446 million in the quarter.
Pharmaceuticals
Pharmaceuticals turnover was GBP3,540 million, down 6% on a reported
basis, primarily reflecting the disposal of the Oncology business
to Novartis. Adjusting for the impact of the disposal, pro-forma turnover
was up 2%. Respiratory sales declined 6%, reflecting further declines
in Seretide/Advair in both the US and Europe and the continuing transition
of the portfolio to newer products. Sales of Established Products
declined 5%, with growth of 3% in International offset by declines
in the US and Europe. HIV products grew 59%.
US Global Pharmaceuticals turnover of GBP1,084 million declined 16%
in the quarter and 7% on a pro-forma basis. The pro-forma decline
primarily reflected a 12% fall in Respiratory sales and a 16% fall
in Established Products sales. Within Respiratory, Advair sales were
down 17% to GBP484 million and Flovent sales declined 15% to GBP100
million. Breo Ellipta and Anoro Ellipta sales were GBP19 million and
GBP12 million respectively in the quarter. Benlysta sales increased
21% to GBP51 million and Relenza sales more than doubled to GBP33
million partly reflecting the timing of US CDC orders. Lovaza sales
were down 22% to GBP24 million following the introduction of generic
competition in April 2014.
In Europe, Global Pharmaceuticals turnover declined 18% to GBP696
million on a reported basis and was down 8% on a pro-forma basis.
Respiratory sales declined 8% to GBP369 million as a 16% decline in
Seretide was partly offset by Relvar Ellipta sales of GBP19 million
in the quarter. Established Products sales were down 13% to GBP121
million reflecting increased generic competition combined with some
capacity constraints to supply for a number of products.
International Global Pharmaceuticals sales of GBP1,201 million were
down 4% on a reported basis and up 1% on a pro-forma basis. Sales
in Emerging Markets of GBP771 million declined 6% reported and 1%
pro-forma. Continued growth in Respiratory sales of 4%, including
Veramyst, up 27%, was more than offset by a decline in Established
Products, down 5%, and Dermatology products, down 10%, both of which
were impacted by capacity constraints to supply, as well as increased
competition to Seretide. Sales in China were also down 14% pro-forma,
reflecting the implementation of new pricing policies as part of the
ongoing reshaping of the business and the disposal of a number of
peripheral parts of the portfolio. In Japan, Global Pharmaceutical
sales were up 13% on a pro-forma basis to GBP283 million, including
a 9% increase in Adoair sales which partly benefited from the comparison
with a Q2 2014, impacted by significant destocking. With sales of
Relvar Ellipta of GBP13 million, total Respiratory sales in Japan
were up 17% for the quarter.
HIV turnover increased 59% to GBP559 million, with the US up 84%,
Europe up 46% and International up 26%. The growth in all three regions
was driven primarily by strong performances from both Tivicay and
Triumeq, with sales of GBP145 million and GBP149 million respectively
in the quarter. Epzicom/Kivexa sales increased 1% to GBP185 million,
benefiting from use in combination with Tivicay.
Vaccines
Vaccines turnover of GBP814 million grew 11% on a reported basis,
but declined 5% on a pro-forma basis, with strong growth in Europe
being offset by declines in the US and International after a strong
performance in Q2 2014.
In the US, reported growth of 13% primarily reflected the contribution
of the recently acquired Meningitis portfolio. The pro-forma decline
of 5% resulted primarily from lower sales of Infanrix/Pediarix following
the return to the market of a competitor vaccine during 2014.
In Europe, sales grew 27% on a reported basis, benefiting from the
strong performance of Bexsero which also contributed to pro-forma
growth of 12%. Sales of Boostrix, up 31%, were helped by improved
supply.
In International, sales fell 2% to GBP300 million on a reported basis
and 16% on a pro-forma basis. The pro-forma decline primarily reflected
the phasing of tenders of Synflorix and a number of other products
relative to Q2 2014.
Consumer Healthcare
Consumer Healthcare turnover grew 51% on a reported basis and 6% on
a pro-forma basis to GBP1,509 million, with strong growth in the US
and Europe being offset by a weaker performance in International.
US turnover increased 66% to GBP360 million, with 28% pro-forma growth
primarily reflecting the continuing benefit of the recent launch of
OTC Flonase and comparison with a Q2 2014 impacted by supply constraints.
Sales in Europe grew 90% to GBP470 million (up 7% pro-forma), largely
driven by strong Oral health sales which were boosted by improved
supply relative to Q2 2014 but also market share gains following recent
new launches.
Reported International sales of GBP679 million grew 27%, but declined
2% pro-forma, with growth in Oral health products and continued momentum
in India offset by the negative impact of reducing channel inventories
in the acquired consumer businesses, most notably in China, Russia
and the Middle East.
Corporate and other unallocated turnover
The Corporate and unallocated turnover of GBP25 million represented
sales of several Vaccines and Consumer Healthcare products, which
are being held for sale in a number of markets. GSK is required to
dispose of these products in specific markets in order to meet the
requirements of the anti-trust approvals for the Novartis transaction.
Agreements to divest these products have been reached and the transactions
are expected to complete in H2 2015.
Turnover - H1 2015
Group turnover for H1 2015 increased 4% on a reported basis to GBP11,510
million, with Pharmaceuticals down 7%, Vaccines up 11% and Consumer
Healthcare up 37%, all three businesses reflecting the impact of the
Novartis transaction. On a pro-forma basis, Group turnover increased
1%, with Pharmaceuticals down 2%, Vaccines down 1% and Consumer Healthcare
up 7%. Sales of New Pharmaceutical and Vaccine products as set out
on page 24 were GBP715 million in the six months.
Pharmaceuticals
Pharmaceuticals turnover was GBP7,063 million, down 7% on a reported
basis, primarily reflecting the disposal of the Oncology business.
Adjusting for the impact of the disposal, pro-forma turnover was down
2%, reflecting an 8% decline in Respiratory sales and a 13% decline
in sales of Established Products, partly offset by growth in HIV sales
of 51%.
US Global Pharmaceuticals reported turnover of GBP2,103 million declined
20% in the six months and 14% on a pro-forma basis. This decline primarily
reflected a 16% fall in Respiratory sales and a 31% fall in Established
Products sales. Within Respiratory, Advair sales were down 19% to
GBP876 million and Flovent sales declined 27% to GBP183 million. Breo
Ellipta and Anoro Ellipta sales were GBP33 million and GBP21 million,
respectively, in the period. The primary driver of the decline in
Established Products was Lovaza, which was down 64% to GBP52 million
following the launch of generic competition in April 2014. Relenza
sales more than doubled to GBP44 million, partly reflecting the timing
of US CDC orders, while Benlysta continued its strong growth with
sales of GBP97 million, up 24%.
In Europe, Global Pharmaceuticals turnover declined 12% to GBP1,511
million and was down 5% on a pro-forma basis after adjusting for the
impact of the Oncology disposal. Respiratory sales declined 6% to
GBP761 million as a 14% decline in Seretide was partly offset by Relvar
Ellipta sales of GBP35 million in the period. Established Products
sales were down 14% to GBP253 million reflecting increased generic
competition and some capacity constraints to supply of a number of
products.
International Pharmaceuticals sales were GBP2,444 million, down 5%
on a reported basis and down 2% on a pro-forma basis, driven by a
decline of 4% (1% pro-forma) in Emerging Markets to GBP1,551 million
and a 3% decline (flat pro-forma) in sales in Japan to GBP618 million.
Emerging Markets saw continued growth in Respiratory, up 5%, including
Seretide, up 3%, but this was more than offset by declines in Established
Products, down 9%, and Dermatology products, both of which were impacted
by capacity constraints to supply, as well as increased competition
to Seretide. China, down 8% pro-forma, also impacted Emerging Markets
performance. In Japan, pro-forma Pharmaceutical sales were flat as
a 7% increase in Respiratory sales, primarily driven by Relvar Ellipta,
was offset by lower sales of Relenza and Established Products.
HIV turnover increased 51% to GBP1,005 million, with the US up 76%,
Europe up 40% and International up 18%. The growth in all three regions
was driven primarily by the strong performances of both Tivicay and
Triumeq, with sales of GBP257 million and GBP230 million, respectively
in the six months. Epzicom/ Kivexa sales increased 1% to GBP361 million,
benefiting from use in combination with Tivicay.
Vaccines
Vaccines turnover of GBP1,513 million grew 11% on a reported basis,
benefiting from the newly acquired products from Novartis, but fell
1% on a pro-forma basis as growth in the US and Europe was offset
by a decline in International sales.
In the US, reported growth of 14% (2% pro-forma) primarily reflected
strong growth in the Meningitis portfolio as well as in Hepatitis
vaccines, which partly benefited from favourable stocking patterns.
This growth was partly offset by lower sales of Infanrix/Pediarix
as a result of the return to the market of a competitor vaccine during
2014.
In Europe, sales grew 15% on a reported basis and 5% pro-forma. This
reflected strong performances from Boostrix and Bexsero, partly offset
by lower Infanrix/Pediarix sales, which were impacted by the introduction
of a competitor vaccine in 2014 and the phasing of shipments in several
countries.
In International, sales grew 5% to GBP558 million on a reported basis
but declined 8% pro-forma primarily reflecting the phasing of tenders
of a number of products, particularly Synflorix and Boostrix relative
to H1 2014.
Consumer Healthcare
Consumer Healthcare sales in the six months grew 37% on a reported
basis and 7% on a pro-forma basis to GBP2,890 million, with strong
pro-forma growth in the US and Europe while International pro-forma
sales were flat.
US turnover increased 56% to GBP690 million (31% pro-forma growth),
primarily reflecting the launch of OTC Flonase, with sales of GBP110
million in the six months, and a favourable comparison with H1 2014
which was impacted by supply constraints. Sensodyne gained a percentage
point of market share.
Sales of GBP834 million in Europe grew 60% (6% pro-forma) primarily
as a result of double-digit growth in Oral health sales, benefiting
from improved supply and a number of new product introductions, together
with strong Voltaren sales following a new advertising campaign.
International sales of GBP1,366 million grew 19% but were flat on
a pro-forma basis. Strong growth in Oral health sales and the India
business were offset by the negative impact of reducing channel inventories
in the acquired consumer businesses, most notably in China, Russia
and the Middle East.
Corporate and other unallocated turnover
The Corporate and unallocated turnover of GBP44 million represented
sales of several Vaccines and Consumer Healthcare products, which
are being held for sale in a number of markets. GSK is required to
dispose of these products in specific markets in order to meet the
requirements of the anti-trust approvals for the Novartis transaction.
Core operating profit and margin
Core operating profit
Q2 H1
Q2 2015 2015 H1 2015 2015
------------------------------ ---------- ------------------------------ ----------
Reported Pro-forma Reported Pro-forma
% of growth growth % of growth growth
GBPm turnover CER% CER% GBPm turnover CER% CER%
-------- --------- --------- ---------- -------- --------- --------- ----------
Turnover 5,888 100 7 2 11,510 100 4 1
Cost of sales (1,779) (30.2) 18 3 (3,518) (30.6) 16 5
Selling,
general
and
administration (2,091) (35.5) 7 (2) (3,957) (34.4) 5 (1)
Research and
development (731) (12.4) (6) (10) (1,520) (13.2) (4) (7)
Royalty income 62 1.0 (14) (33) 139 1.3 (1) (16)
-------- --------- --------- ---------- -------- --------- --------- ----------
Core operating
profit 1,349 22.9 3 14 2,654 23.1 (6) -
-------- --------- --------- ---------- -------- --------- --------- ----------
Core profit
before
tax 1,169 1 2,325 (7)
Core profit
after
tax 936 4 1,861 (4)
Core profit
attributable
to
shareholders 837 - 1,671 (8)
-------- --------- -------- ---------
Core earnings
per share 17.3p - 34.6p (8)
-------- --------- -------- ---------
Core operating profit by business
Q2 H1
Q2 2015 2015 H1 2015 2015
---------------------------- ---------- ------------------------------- ----------
Reported Pro-forma Reported Pro-forma
% of growth growth % of growth growth
GBPm turnover CER% CER% GBPm turnover CER% CER%
------ --------- --------- ---------- -------- ---------- --------- ----------
Global
Pharmaceuticals 1,212 40.7 (18) (8) 2,468 40.7 (20) (14)
HIV 413 73.9 84 84 731 72.7 70 70
Pharmaceuticals
R&D (509) (15) (6) (1,090) (8) (2)
------ --------- --------- ---------- -------- ---------- --------- ----------
Pharmaceuticals 1,116 31.5 (1) 11 2,109 29.9 (9) (3)
Vaccines 177 21.7 (32) (10) 338 22.3 (32) (17)
Consumer
Healthcare 108 7.2 41 - 290 10.0 47 17
------ --------- --------- ---------- -------- ---------- --------- ----------
1,401 23.9 (3) 7 2,737 23.9 (8) (4)
Corporate &
other
unallocated
costs (52) (93) (94) (83) (59) (59)
------ --------- --------- ---------- -------- ---------- --------- ----------
Core operating
profit 1,349 22.9 3 14 2,654 23.1 (6) -
------ --------- --------- ---------- -------- ---------- --------- ----------
HIV operating profit represents the operating profit of ViiV Healthcare.
Core operating profit - Q2 2015
Core operating profit was GBP1,349 million, 3% higher in CER terms
than in Q2 2014 on a turnover increase of 7%. The core operating margin
of 22.9% was 2.4 percentage points lower than in Q2 2014 and 1.0 percentage
point lower on a CER basis. The decrease included a 3.5 percentage
point impact from the Novartis transaction, reflecting the disposal
of GSK's higher margin Oncology business and the acquisition of lower
margin Vaccines and Consumer Healthcare businesses from Novartis.
On a pro-forma basis core operating profit grew 14% in CER terms compared
to Q2 2014 on a turnover increase of 2%. The core operating margin
increased on a pro-forma basis by 2.5 percentage points in CER terms,
primarily benefiting from the initial phases of the Pharmaceuticals
restructuring programme, although an improved product mix offset continued
pricing pressure on the cost of sales margin.
Cost of sales as a percentage of turnover was 30.2%, up 2.5 percentage
points in sterling terms and 2.6 percentage points higher in CER terms
than in Q2 2014. On a pro-forma basis the cost of sales percentage
decreased 0.1 percentage points and was flat in CER terms. This reflected
a more favourable product mix in the quarter driven by strong growth
in new products, particularly Tivicay and Triumeq, and a benefit from
the Group's cost reduction programmes, offset by adverse price pressure
in Pharmaceuticals, primarily respiratory, and increased investments
in Vaccines to improve the reliability and capacity of the supply
chain.
SG&A costs were 35.5% of turnover, 0.9 percentage points higher than
in Q2 2014 but 0.2% lower on a CER basis. On a pro-forma basis, SG&A
as a percentage of sales decreased by 0.4 percentage points and 1.5
percentage points on a CER basis. This primarily reflected savings
in Global Pharmaceuticals, including the initial benefits of the Pharmaceuticals
cost reduction programme, partly offset by the inherited costs in
Consumer Healthcare where synergies are still in the very early stages
of delivery.
R&D expenditure declined 6% CER to GBP731 million (12.4% of turnover)
compared with GBP766 million (13.8% of turnover) in Q2 2014. On a
pro-forma basis, R&D expenditure declined 10% reflecting the benefit
of cost reduction programmes in Pharmaceuticals and Vaccines as well
as the phasing of ongoing project spending.
Royalty income was GBP62 million (Q2 2014: GBP72 million).
Core operating profit by business - Q2 2015
Following the completion of the transaction with Novartis, GSK has
reorganised the Group to reflect the greater balance between its Pharmaceuticals,
Vaccines and Consumer Healthcare businesses and responsibilities for
some parts of these respective businesses have been realigned. GSK
is reporting these three businesses separately with corporate costs
reallocated to each accordingly so that the profitability of each
business is reflected more accurately.
Pharmaceuticals core operating profit was GBP1,116 million, 1% lower
than in Q2 2014 in CER terms on a turnover decrease of 6%. The core
operating margin of 31.5% was 1.0 percentage points higher than in
Q2 2014 and 1.7 percentage points higher on a CER basis. On a pro-forma
basis, core operating margin increased 2.5 percentage points on a
CER basis, primarily reflecting strong growth in HIV, partly offset
by continued pricing pressure in Global Pharmaceuticals, primarily
respiratory products, and the initial benefits of the restructuring
programmes in Pharmaceuticals and R&D.
Vaccines operating profit was GBP177 million, 32% lower than in Q2
2014 in CER terms on a turnover increase of 11%. The core operating
margin of 21.7% was 10.7 percentage points lower than in Q2 2014 and
down 12.5% on a CER basis, primarily driven by the cost base of the
former Novartis Vaccines business. The pro-forma margin declined 1.3
percentage points which primarily reflected mix changes in the quarter
and additional supply chain investments, partly offset by reductions
in R&D.
Consumer Healthcare core operating profit was GBP108 million, 41%
higher than in Q2 2014 in CER terms on a turnover increase of 51%.
The core operating margin of 7.2% was 2.9 percentage points lower
than in Q2 2014, and 0.7 percentage points lower on a CER basis. On
a pro-forma basis, the Consumer Healthcare operating margin was 0.6
percentage points lower, driven by a one-off sales tax settlement
which impacted the operating margin by 1.3%, along with the net effect
of the inherited Novartis cost base and the limited integration benefits
to date, given the early stage of this programme.
Core operating profit - H1 2015
Core operating profit was GBP2,654 million, 6% lower than in H1 2014
in CER terms on a turnover increase of 4%. The core operating margin
of 23.1% was 3.2 percentage points lower than in H1 2014, 2.5 percentage
points lower on a CER basis. This decline included a 2.4 percentage
point impact of the Novartis transaction reflecting the disposal of
GSK's higher margin Oncology business and the acquisition of lower
margin Vaccines and Consumer Healthcare businesses from Novartis.
On a pro-forma basis the operating margin declined 0.1 percentage
points which primarily reflected an increase in cost of sales as a
percentage of turnover partly offset by reduced SG&A and R&D percentages.
Cost of sales as a percentage of turnover was 30.6%, 2.9 percentage
points higher than in H1 2014. On a pro-forma basis, the cost of sales
percentage increased 1.1 percentage points and 1.3 percentage points
on a CER basis. This reflected adverse price movements, particularly
in US Global Pharmaceuticals, increased investments in Vaccines to
improve the reliability and capacity of the supply chain and an adverse
comparison to the reduced cost of sales in Vaccines in H1 2014, which
benefited from a number of inventory adjustments. These declines were
partly offset by improved product mix, as a result of the growth in
HIV products, and the benefits of the Group's ongoing cost reduction
programmes.
SG&A costs as a percentage of sales were 34.4%, 1.0 percentage points
higher than in H1 2014 and 0.5 percentage points higher on a CER basis.
On a pro-forma basis, SG&A costs increased 0.1 percentage point, but
decreased 0.4 percentage points on a CER basis, This primarily reflected
declines in Global Pharmaceuticals, including the initial benefits
of the Pharmaceuticals cost reduction programme, partly offset by
the inherited costs in the Novartis Consumer Healthcare businesses
where synergies are still in the early stages of delivery.
R&D expenditure declined 4% CER to GBP1,520 million (13.2% of turnover)
compared with GBP1,550 million (13.9% of turnover) in H1 2014. On
a pro-forma basis, R&D expenditure declined 7% reflecting the benefit
of cost reduction programmes in Pharmaceuticals and Vaccines as well
as the phasing of ongoing project spending.
Royalty income was GBP139 million (H1 2014: GBP142 million).
Core operating profit by business - H1 2015
Pharmaceuticals core operating profit was GBP2,109 million, 9% lower
than in H1 2014 in CER terms on a turnover decrease of 7%. The core
operating margin of 29.9% was 1.6 percentage points lower than in
H1 2014 and 0.8 percentage points lower on a CER basis. Excluding
the impact of the Novartis transaction, on a pro-forma basis, the
core operating margin declined 0.5 percentage points on a CER basis,
which reflected an increase in cost of sales as a percentage of turnover
primarily due to adverse price movements partly offset by favourable
mix from growth in HIV products, and declines in the SG&A and R&D
percentages, reflecting the benefits of the cost reduction programmes.
Vaccines operating profit was GBP338 million, 32% lower than in H1
2014 in CER terms on a turnover increase of 11%. The core operating
margin of 22.3% was 10.1 percentage points lower than in H1 2014 and
12.3% lower on a CER basis, primarily driven by the cost base of the
former Novartis Vaccines business. The pro-forma margin declined 3.8
percentage points which reflected an increase in cost of sales as
a percentage of turnover due to mix changes in the six months, additional
supply chain investments and the benefit to H1 2014 of a number of
inventory adjustments.
Consumer Healthcare core operating profit was GBP290 million, 47%
higher than in H1 2014 in CER terms on a turnover increase of 37%.
The core operating margin of 10.0% was 0.6 percentage points lower
than in H1 2014, but improved 0.9 percentage points on a CER basis.
On a pro-forma basis the operating margin increased 1.0 percentage
points on a CER basis, due to a significant improvement in gross margin,
reflecting benefits from both improved supply and pricing and the
US Flonase launch, partly offset by increased investment in SG&A behind
new product launches, with synergies on track but still in the early
stages of delivery.
Core profit after tax and core earnings per share - Q2 2015
Net finance expense was GBP178 million compared with GBP156 million
in Q2 2014, reflecting the change in the mix of gross debt. The share
of losses of associates and joint ventures was GBP2 million (Q2 2014:
GBP8 million profit).
Tax on core profit amounted to GBP233 million and represented an effective
core tax rate of 20.0% (Q2 2014: 22.0%).
The allocation of earnings to non-controlling interests amounted to
GBP99 million (Q2 2014: GBP61 million), the increase reflecting the
Consumer Healthcare non-controlling interest allocation together with
an increase in the allocation of ViiV Healthcare profits.
Core EPS of 17.3p was flat in CER terms compared with a 3% increase
in the operating profit primarily as a result of the increased non-controlling
interest allocation, partly offset by a lower tax charge.
Core profit after tax and core earnings per share - H1 2015
Net finance expense was GBP334 million compared with GBP317 million
in H1 2014, reflecting the change in the mix of gross debt.
The share of profits of associates and joint ventures was GBP5 million
(H1 2014: GBP9 million). In March 2015, GSK reduced its shareholding
in its one significant associate, Aspen Pharmacare Holdings Limited,
from 12.4% to 6.2% of the issued share capital. As a result, GSK no
longer accounts for Aspen as an associate and the contribution from
associates and joint ventures in 2015 is expected to be minimal.
Tax on core profit amounted to GBP464 million and represented an effective
core tax rate of 20.0% (H1 2014: 22.0%).
The allocation of earnings to non-controlling interests amounted to
GBP190 million (H1 2014: GBP123 million), the increase reflecting
the Consumer Healthcare non-controlling interest allocation together
with an increase in the allocation of ViiV Healthcare profits.
Core EPS of 34.6p decreased 8% in CER terms compared with a 6% decline
in the operating profit primarily as a result of the increase in the
non-controlling interest allocation, partly offset by a lower tax
charge.
Guidance for 2015
Core EPS for 2015 is expected to decline at a percentage rate in the
high teens (CER) primarily due to continued pricing pressure on Seretide/Advair
in US/Europe, the dilutive effect of the Novartis transaction and
the inherited cost base of the Novartis businesses.
2016 outlook
In 2016, GSK expects to see a significant recovery in core EPS with
percentage growth expected to reach double digits on a CER basis as
the adverse impacts seen in 2015 diminish and the sales and synergy
benefits of the Novartis transaction contribute more meaningfully.
Currency impact
The Q2 2015 results are based on average exchange rates, principally
GBP1/$1.54, GBP1/EUR1.38 and GBP1/Yen 186. Comparative exchange rates
are given on page 43. The period-end exchange rates were GBP1/$1.57,
GBP1/EUR1.41 and GBP1/Yen 192.
In the quarter, turnover increased 7% CER and 6% at actual exchange
rates. Core EPS of 17.3p was flat in CER terms and down 9% at actual
rates. The negative currency impact reflected the strength of Sterling
against the majority of the Group's trading currencies relative to
Q2 2014 partly offset by a weakening of Sterling against the US Dollar.
Losses on settled intercompany transactions contributed three percentage
points of the negative currency impact of nine percentage points on
core EPS.
In H1 2015, turnover increased 4% CER and 3% at actual exchange rates.
Core EPS of 34.6p was down 8% in CER terms and down 14% at actual
rates. The negative currency impact reflected the strength of Sterling
against the majority of the Group's trading currencies relative to
H1 2014 partly offset by a weakening of Sterling against the US Dollar.
Losses on settled intercompany transactions contributed one percentage
point of the negative currency impact of six percentage points on
core EPS.
If exchange rates were to hold at the Q2 2015 period-end rates for
the rest of 2015, the estimated adverse impact on 2015 Sterling turnover
would be around 2%, and if there were no further exchange gains or
losses, the estimated adverse impact on 2015 Sterling core EPS would
be around 6%.
Core adjustments
The adjustments that reconcile core operating profit, profit after
tax and earnings per share to total results are as follows:
Q2 2015 Q2 2014
---------------------------- ---------------------------
Profit Profit
Operating after Operating after
profit tax EPS profit tax EPS
GBPm GBPm p GBPm GBPm p
---------- ------- ------- ---------- ------- ------
Core results 1,349 936 17.3 1,407 982 19.1
Intangible asset amortisation (125) (108) (2.2) (152) (115) (2.3)
Intangible asset impairment (2) (2) - (1) (1) -
Major restructuring costs (515) (390) (8.1) (101) (79) (1.6)
Legal costs (50) (49) (1.0) (47) (42) (0.9)
Acquisition accounting
and other (322) (272) (2.9) 31 (43) (0.7)
---------- ------- ------- ---------- ------- ------
(1,014) (821) (14.2) (270) (280) (5.5)
---------- ------- ------- ---------- ------- ------
Total results 335 115 3.1 1,137 702 13.6
---------- ------- ------- ---------- ------- ------
H1 2015 H1 2014
---------------------------- ----------------------------
Profit Profit
Operating after Operating after
profit tax EPS profit tax EPS
GBPm GBPm p GBPm GBPm p
---------- ------- ------- ---------- ------- -------
Core results 2,654 1,861 34.6 2,937 2,051 40.1
Intangible asset amortisation (276) (222) (4.6) (322) (241) (5.0)
Intangible asset impairment (104) (79) (1.6) (49) (40) (0.8)
Major restructuring costs (881) (656) (13.6) (180) (140) (2.9)
Legal costs (135) (134) (2.8) (155) (128) (2.7)
Acquisition accounting
and other 8,293 7,383 158.7 (28) (81) (1.2)
---------- ------- ------- ---------- ------- -------
6,897 6,292 136.1 (734) (630) (12.6)
---------- ------- ------- ---------- ------- -------
Total results 9,551 8,153 170.7 2,203 1,421 27.5
---------- ------- ------- ---------- ------- -------
Full reconciliations between core results and total results are set
out on pages 51 to 54 and the definition of core results is set out
on page 28.
Total operating profit and total earnings per share - Q2 2015
Total operating profit was GBP335 million compared with GBP1,137 million
in Q2 2014. The non-core items resulted in a net charge of GBP1,014
million (Q2 2014: GBP270 million), reflecting the impact of an acceleration
in restructuring costs driven by the Novartis transaction and the Pharmaceuticals
restructuring programme as well as the impact of further adjustments
related to ViiV Healthcare and Consumer Healthcare.
The intangible asset amortisation decreased to GBP125 million from
GBP152 million in Q2 2014, which included accelerated amortisation
on Lovaza. Intangible asset impairments were GBP2 million (Q2 2014:
GBP1 million).
Major restructuring charges accrued in the quarter were GBP515 million
(Q2 2014: GBP101 million), the majority of which are expected to be
cash items, reflecting the acceleration of a number of restructuring
projects following the completion of the Novartis transaction, as well
as further charges for Pharmaceuticals restructuring projects.
Legal charges of GBP50 million (Q2 2014: GBP47 million) included settlement
of existing anti-trust matters and higher litigation costs.
Acquisition accounting and other adjustments resulted in a net charge
of GBP322 million (Q2 2014: credit of GBP31 million). This included
the unwinding of the discounting effects on both the contingent consideration
for the acquisition of the former Shionogi-ViiV Healthcare Joint Venture
and on the Consumer Healthcare Joint Venture put option. Other items
also included equity investment and asset disposals, one-off required
regulatory charges in R&D and certain other adjusting items. The net
credit in Q2 2014 included a gain of GBP106 million arising from the
termination in Europe of the commercialisation agreement for Prolia
with Amgen.
A tax charge of GBP37 million on total profits represented an effective
tax rate of 24.3% (Q2 2014: 28.8%) and reflected the differing tax
effects of the various non-core items. See 'Taxation' on page 42 for
further details.
Total EPS was 3.1p, compared with 13.6p in Q2 2014, primarily reflecting
accelerated investments in transaction benefits in the quarter.
Total operating profit and total earnings per share - H1 2015
Total operating profit was GBP9,551 million compared with GBP2,203
million in H1 2014. The non-core items resulted in a net credit of
GBP6,897 million (H1 2014: net charge of GBP734 million), primarily
reflecting the impact of the Novartis transaction.
The intangible asset amortisation decreased to GBP276 million from
GBP322 million in H1 2014, which included accelerated amortisation
on Lovaza.
Intangible asset impairments of GBP104 million (H1 2014: GBP49 million)
included impairments of several R&D and commercial assets.
Major restructuring charges of GBP881 million have been accrued (H1
2014: GBP180 million), the majority of which are expected to be cash
items, and reflected the acceleration of a number of restructuring
projects following completion of the Novartis transaction. The programmes
have delivered GBP0.4 billion of incremental benefit compared with
H1 2014.
Charges to date are GBP1.8 billion, predominantly cash. The total cash
charges of the combined restructuring programmes are expected to be
approximately GBP3.65 billion and the non-cash charges up to GBP1.35
billion. The combined programmes have delivered approximately GBP1.0
billion of annual savings on a moving annual total basis and are on
track to deliver GBP3 billion of benefits. The combined programme is
expected to be largely complete by 2017.
Legal charges of GBP135 million (H1 2014: GBP155 million) included
settlement of existing anti-trust matters and litigation costs.
Acquisition accounting and other adjustments resulted in a net credit
of GBP8,293 million (H1 2014: charge of GBP28 million). This included
the profit on disposal of the Oncology business to Novartis of GBP9,247
million, partly offset by an increase in the liability for the contingent
consideration for the acquisition of the former Shionogi-ViiV Healthcare
joint venture from remeasurements and the unwinding of the discounting
effect of GBP964 million.
Other items also included equity investment and asset disposals, one-off
required regulatory charges in R&D and certain other adjusting items.
The profit on disposal of associates of GBP844 million arose from the
disposal of half of GSK's investment in Aspen Pharmacare and the remeasurement
of the remaining holding to market value on its reclassification to
equity investments.
The charge for taxation on total profits amounted to GBP1,922 million
and represented a total effective tax rate of 19.1% (H1 2014: 24.8%),
reflecting the differing tax effects of the various non-core items.
See 'Taxation' on page 42 for further details.
Total EPS was 170.7p, compared with 27.5p in H1 2014, the increase
primarily reflecting the profits on disposal of the Oncology business
and the Aspen Pharmacare shares, partly offset by the increase in the
liability for the contingent consideration for the acquisition of the
former Shionogi-ViiV Healthcare joint venture and increased major restructuring
expenditure.
Cash generation and conversion
Cash flow and net debt
Q2 2015 H1 2015 H1 2014
-------- -------- --------
Net cash inflow from operating activities
(GBPm) 217 587 1,693
Adjusted net cash inflow from operating
activities* (GBPm) 291 823 1,939
Free cash flow* (GBPm) (606) (675) 507
Adjusted free cash flow* (GBPm) (532) (439) 753
Free cash flow growth (%) >(100)% >(100)% (70)%
Free cash flow conversion* (%) >(100)% (5)% 52%
Net debt (GBPm) 9,553 9,553 14,423
-------- -------- --------
* Adjusted net cash inflow from operating activities, free cash flow,
adjusted free cash flow and free cash flow conversion are defined
on page 28.
Q2 2015
The net cash inflow from operating activities for the quarter was GBP217
million (Q2 2014: GBP766 million). This was after the payment of non-core
restructuring and integration and transaction costs of GBP248 million
(Q2 2014: GBP107 million), legal settlements of GBP74 million (Q2 2014:
GBP205 million) and the initial tax payment of GBP511 million in the
quarter arising on the sale of the Oncology business. Adjusting for
these items, each of which has been funded from divestment proceeds,
the net cash inflow from operating activities would have been GBP1,050
million, broadly similar to the Q2 2014 cash flow of GBP1,078 million.
H1 2015
The net cash inflow from operating activities for the six months was
GBP587 million (H1 2014: GBP1,693 million). This included the payment
of non-core restructuring and integration costs of GBP502 million (H1
2014: GBP208 million), legal settlements of GBP236 million (H1 2014:
GBP246 million) and the initial tax payment arising on the sale of
the Oncology business. Adjusting for these items, each of which has
been funded from divestment proceeds, the net cash inflow from operating
activities would have been GBP1,836 million (H1 2014: GBP2,147 million).
The decrease primarily reflected the impact of lower operating profits
in the first half.
Free cash outflow was GBP675 million for the first half. Excluding
non-core restructuring and integration costs, legal payments and the
initial tax payment on the sale of the Oncology business, the free
cash inflow was GBP574 million (H1 2014: GBP961 million). The decrease
primarily reflected the impact of lower operating profits, together
with higher payments to non-controlling interests in the six months.
Free cash flow conversion was impacted by the profits on the disposals
of the Oncology business and the Aspen investments.
Net debt
At 30 June 2015, net debt was GBP9.6 billion, compared with GBP14.4
billion at 31 December 2014, comprising gross debt of GBP17.2 billion
and cash and liquid investments of GBP7.6 billion. The decrease in
net debt reflected the impact of the Novartis transaction in which
GSK sold its Oncology business for net cash proceeds of GBP10.0 billion
and paid GBP3.3 billion, net of cash acquired, to purchase the Novartis
businesses. An initial tax payment of GBP511 million on the transaction
has been made with a significant proportion of the remainder expected
to be settled before the end of the year. In addition, GSK sold part
of its shareholding in Aspen for cash proceeds of GBP564 million and
paid dividends to shareholders of GBP2,035 million. At 30 June 2015,
GSK had short-term borrowings (including overdrafts) repayable within
12 months of GBP2,472 million with loans of GBP1,271 million repayable
in the subsequent year.
Working capital
30 June 31 March 31 December 30 September 30 June
2015 2015 2014 2014 2014
-------- --------- ------------ ------------- --------
Working capital conversion
cycle* (days) 215 215 209 216 208
Working capital percentage
of turnover (%) 25 24 22 24 22
-------- --------- ------------ ------------- --------
* Working capital conversion cycle is defined on page 28.
Although working capital increased by GBP245 million in the quarter,
this had no overall effect on the working capital conversion cycle.
In the six months, working capital was significantly impacted by the
inclusion of inventory acquired with the former Novartis Vaccines business.
The increase was partly offset by favourable exchange effects.
Returns to shareholders
GSK expects to pay an annual ordinary dividend of 80p for each of the
next three years (2015-2017).
GSK also plans to return approximately GBP1 billion (20p per share)
to shareholders via a special dividend to be paid alongside GSK's Q4
2015 ordinary dividend payment.
Any future returns to shareholders of surplus capital will be subject
to the Group's strategic progress, visibility on the put options associated
with ViiV Healthcare and the Consumer Healthcare joint venture and
other capital requirements.
Quarterly dividends
The Board has declared a second interim dividend of 19 pence per share
(Q2 2014: 19 pence per share).
Payment of dividends
The equivalent interim dividend receivable by ADR holders will be calculated
based on the exchange rate on 29 September 2015. An annual fee of $0.02
per ADS (or $0.005 per ADS per quarter) will be charged by the Depositary.
The ex-dividend date will be 13 August 2015 (12 August 2015 for ADR
holders), with a record date of 14 August 2015 and a payment date of
1 October 2015.
Paid/ Pence per
payable share GBPm
-------------- ---------- ------
2015
First interim 9 July 2015 19 918
1 October
Second interim 2015 19 918
2014
First interim 10 July 2014 19 916
2 October
Second interim 2014 19 918
8 January
Third interim 2015 19 924
Fourth interim 9 April 2015 23 1,111
---------- ------
80 3,869
---------- ------
GSK made no share repurchases during the quarter. The company issued
0.6 million shares under employee share schemes amounting to GBP5
million (Q2 2014: GBP32 million).
The weighted average number of shares for Q2 2015 was 4,832 million,
compared with 4,812 million in Q2 2014.
Segmental performance
Pharmaceuticals
Q2 2015 Q2 2015 H1 2015 H1 2015
----------------- ---------- ----------------- ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
------ --------- ---------- ------ --------- ----------
US 1,084 (16) (7) 2,103 (20) (14)
Europe 696 (18) (8) 1,511 (12) (5)
International 1,201 (4) 1 2,444 (5) (2)
------ --------- ---------- ------ --------- ----------
Global Pharmaceuticals 2,981 (12) (4) 6,058 (12) (7)
------ --------- ---------- ------ --------- ----------
Q2 2015 Q2 2015 H1 2015 H1 2015
---------------- ---------- ----------------- ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
----- --------- ---------- ------ --------- ----------
US 308 84 84 537 76 76
Europe 172 46 46 326 40 40
International 79 26 26 142 18 18
----- --------- ---------- ------ --------- ----------
HIV 559 59 59 1,005 51 51
----- --------- ---------- ------ --------- ----------
Q2 2015 Q2 2015 H1 2015 H1 2015
----------------- ---------- ----------------- ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
------ --------- ---------- ------ --------- ----------
US 1,392 (5) 4 2,640 (10) (4)
Europe 868 (10) - 1,837 (6) -
International 1,280 (3) 2 2,586 (4) (1)
------ --------- ---------- ------ --------- ----------
Pharmaceuticals 3,540 (6) 2 7,063 (7) (2)
------ --------- ---------- ------ --------- ----------
Q2 2015 H1 2015
----------------- -----------------
Reported Reported
growth growth
GBPm CER% GBPm CER%
------ --------- ------ ---------
Respiratory 1,467 (6) 2,875 (8)
Cardiovascular, metabolic
and urology 242 5 460 (2)
Immuno-inflammation 56 27 116 23
Oncology 19 (94) 235 (58)
Other pharmaceuticals 542 (6) 1,067 (7)
Established Products 655 (5) 1,305 (13)
------ --------- ------ ---------
Global Pharmaceuticals 2,981 (12) 6,058 (12)
HIV 559 59 1,005 51
------ --------- ------ ---------
Pharmaceuticals 3,540 (6) 7,063 (7)
------ --------- ------ ---------
Respiratory
Q2 2015 (GBP1,467 million; down 6%)
Respiratory sales in the quarter declined 6% to GBP1,467 million.
Seretide/Advair sales were down 13% to GBP960 million, Flixotide/Flovent
sales decreased 10% to GBP159 million and Ventolin sales rose 2% to
GBP160 million. Relvar/Breo Ellipta recorded sales of GBP53 million
and Anoro Ellipta, now launched in the US, Europe and Japan, recorded
sales of GBP15 million in the quarter.
In the US, Respiratory sales declined 12% to GBP704 million in the
quarter (5% volume growth and a 17% negative impact of price and mix).
This decline included the price and mix impact of new contracts agreed
in 2014 in response to competitive pressures in the ICS/LABA combination
market, where Advair and Breo Ellipta compete. Sales of Advair were
GBP484 million, down 17% (2% volume decline and a 15% negative impact
of price and mix). Flovent sales were down 15% to GBP100 million while
Ventolin sales rose 3% to GBP81 million. The reported growth rates
for both Flovent and Ventolin reflected the net negative impact of
true up adjustments to accruals for returns and rebates recorded in
both Q2 2014 and Q2 2015. Excluding the impact of true up adjustments
and stocking patterns, on an estimated underlying basis Flovent sales
declined 6% while Ventolin grew 19%. Breo Ellipta recorded sales of
GBP19 million, and Anoro Ellipta, recorded sales of GBP12 million
in the quarter.
European Respiratory sales were down 8% to GBP369 million, with Seretide
sales down 16% to GBP267 million, reflecting the expected pressures
of increased competition from generics and the transition of the Respiratory
portfolio to newer products. Relvar Ellipta, approved in Europe for
both COPD and asthma, recorded sales of GBP19 million in the quarter,
while Anoro Ellipta, with launches now underway in many countries
throughout the region, recorded sales of GBP3 million.
Respiratory sales in the International region grew 5% to GBP394 million
with Emerging Markets up 4% and Japan, benefiting from comparison
with a weak Q2 2014, up 17%. In Emerging Markets, sales of Seretide
were in line with last year at GBP121 million, while Ventolin grew
5% to GBP47 million. In Japan, sales of Relvar Ellipta of GBP13 million
in the quarter and a 9% increase in Adoair sales, drove overall Respiratory
performance.
H1 2015 (GBP2,875 million; down 8%)
Respiratory sales in the six months declined 8% to GBP2,875 million.
Seretide/Advair sales were down 14% to GBP1,858 million, Flixotide/Flovent
sales decreased 16% to GBP312 million and Ventolin sales fell 4% to
GBP321 million. Relvar/Breo Ellipta recorded sales of GBP94 million
and Anoro Ellipta GBP27 million.
In the US, Respiratory sales declined 16% to GBP1,287 million in the
six months (3% volume growth and a 19% negative impact of price and
mix). Sales of Advair were GBP876 million, down 19% (2% volume decline
and a 17% negative impact of price and mix). Flovent sales were down
27% to GBP183 million and Ventolin sales fell 12% to GBP159 million.
The reported declines for both Flovent and Ventolin reflected the
net negative impact of true up adjustments to accruals for returns
and rebates recorded in both H1 2014 and H1 2015. Excluding the impact
of true up adjustments and stocking patterns, on an estimated underlying
basis Flovent sales declined 6% while Ventolin grew 20%. Breo Ellipta
recorded sales of GBP33 million, and Anoro Ellipta, recorded sales
of GBP21 million in the first half of 2015.
European Respiratory sales were down 6% to GBP761 million, with Seretide
sales down 14% to GBP558 million, reflecting the expected pressures
of increased competition from generics and the transition of the Respiratory
portfolio to newer products. Relvar Ellipta, approved in Europe for
both COPD and asthma, recorded sales of GBP35 million in the six months
while Anoro Ellipta recorded sales of GBP5 million.
Respiratory sales in the International region grew 5% to GBP827 million
with Emerging Markets up 5% and Japan up 7%. In Emerging Markets,
sales of Seretide increased 3% to GBP247 million, while Ventolin grew
6% to GBP93 million. In Japan, sales of Relvar Ellipta of GBP22 million,
together with strong Avamys and Xyzal sales growth more than offset
a 13% decline in Adoair sales.
Cardiovascular, metabolic and urology
Q2 2015 (GBP242 million; up 5%)
Sales in the category rose 5% to GBP242 million. The Avodart franchise
fell 2% to GBP192 million, with 9% growth in sales of Duodart/Jalyn
offset by a 6% decline in sales of Avodart. In the US, generic competition
to both Avodart and Jalyn is expected to begin in Q4 2015. Sales of
Prolia increased 38% to GBP11 million, reflecting the impact of the
termination of the joint commercialisation agreement with Amgen in
a number of European markets, Mexico and Russia in Q2 2014 on the
prior period comparative.
H1 2015 (GBP460 million; down 2%)
Sales in the category fell 2% to GBP460 million in the six months.
The Avodart franchise fell 4% to GBP371 million, with 11% growth in
sales of Duodart/Jalyn more than offset by a 10% decline in sales
of Avodart. Sales of Prolia declined 9% to GBP20 million, reflecting
the termination in Q2 2014 of the joint commercialisation agreement
with Amgen.
Immuno-inflammation
Q2 2015 (GBP56 million; up 27%)
Immuno-inflammation sales grew 27% to GBP56 million. Benlysta turnover
in the quarter was GBP56 million, up 30%. In the US, Benlysta sales
were GBP51 million, up 21%.
H1 2015 (GBP116 million; up 23%)
Immuno-inflammation sales grew 23% to GBP116 million. Benlysta turnover
in the first half was GBP107 million, up 27%. In the US, Benlysta
sales were GBP97 million, up 24%.
Other pharmaceuticals
Q2 2015 (GBP542 million; down 6%)
Sales in other therapy areas fell 6% to GBP542 million. Dermatology
sales declined 8% to GBP105 million adversely affected by supply constraints
due to capacity limitations, while Augmentin sales increased 2% to
GBP143 million. Relenza sales more than doubled in the quarter to
GBP33 million, partly driven by the timing of US CDC orders. Sales
of products for Rare diseases rose 2% to GBP94 million, including
sales of Volibris which were up 8% compared with Q2 2014.
H1 2015 (GBP1,067 million; down 7%)
Sales in other therapy areas fell 7% to GBP1,067 million in the six
months. Augmentin sales were down 1% at GBP283 million and Dermatology
sales declined 10% to GBP214 million in part adversely affected by
supply constraints due to capacity limitations. Relenza sales were
up 33% to GBP63 million driven by the timing of US CDC orders. Sales
of products for Rare diseases declined 4% to GBP185 million, primarily
as a result of generic competition to Mepron in the US.
Established Products
Q2 2015 (GBP655 million; down 5%)
Established Products turnover fell 5% to GBP655 million with sales
in the US down 16% to GBP168 million. Lovaza sales fell 22% to GBP24
million, as the impact of generic competition started to annualise.
Europe was down 13% to GBP121 million, with Serevent sales down 23%
to GBP9 million. International was up 3% to GBP366 million, with higher
sales of Amoxil, up 77% to GBP22 million, and Valtrex, up 71% to GBP33
million, following the regaining of exclusivity in Canada until October
2015. These gains were partly offset by a 26% decline in sales of
Zeffix in China.
H1 2015 (GBP1,305 million; down 13%)
Established Products turnover fell 13% to GBP1,305 million in the
six months. Sales in the US were down 31% to GBP331 million, primarily
reflecting a 64% fall in sales of Lovaza.
Europe was down 14% to GBP253 million, with Seroxat sales falling
18% to GBP17 million, reflecting increased generic competition to
a number of other products and a number of supply constraints. International
was down 3% to GBP721 million, primarily reflecting lower sales of
Seroxat/Paxil due to generic competition in Japan and of Zeffix in
China, partly offset by increased Valtrex sales following the regaining
of exclusivity in Canada in late 2014.
HIV
Q2 2015 (GBP559 million; up 59%)
HIV sales increased 59% to GBP559 million in the quarter, with the
US up 84%, Europe up 46% and International up 26%. The growth in all
three regions was driven by Tivicay and Triumeq.
The ongoing roll-out of Tivicay resulted in sales of GBP145 million
and Triumeq, now launched in the US and much of Europe recorded sales
of GBP149 million in the quarter. Epzicom/Kivexa, which benefited
from use in combination with Tivicay, increased 1% to GBP185 million,
but Selzentry sales fell 18% to GBP31 million. There were also continued
declines in the mature portfolio, mainly driven by generic competition
to both Combivir, down 44% to GBP9 million, and Lexiva, down 10% to
GBP18 million.
H1 2015 (GBP1,005 million; up 51%)
Sales increased 51% to GBP1,005 million in the six months, with the
US up 76%, Europe up 40% and International up 18%.
Tivicay sales were GBP257 million in the six months and Triumeq sales
were GBP230 million. Epzicom/Kivexa sales increased 1% to GBP361 million,
but Selzentry declined 14% to GBP61 million. Combivir and Lexiva sales
fell 41% and 19%, respectively.
Vaccines
Q2 2015 Q2 2015 H1 2015 H1 2015
---------------- ---------- ----------------- ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
----- --------- ---------- ------ --------- ----------
US 240 13 (5) 457 14 2
Europe 274 27 12 498 15 5
International 300 (2) (16) 558 5 (8)
----- --------- ---------- ------ --------- ----------
814 11 (5) 1,513 11 (1)
----- --------- ---------- ------ --------- ----------
Q2 2015 Q2 2015 H1 2015 H1 2015
---------------- ---------- ----------------- ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
----- --------- ---------- ------ --------- ----------
Rotarix 101 2 2 199 7 7
Synflorix 77 (20) (20) 137 (10) (10)
Fluarix, FluLaval 7 29 29 11 (20) (20)
Bexsero 30 - >100 37 - >100
Menveo 43 - 8 54 - 6
Boostrix 96 3 3 162 5 5
Infanrix, Pediarix 187 (4) (4) 373 (5) (5)
Hepatitis 121 (15) (15) 264 (1) (1)
Cervarix 18 (14) (14) 46 (14) (14)
Other 134 65 (15) 230 52 (10)
----- --------- ---------- ------ --------- ----------
814 11 (5) 1,513 11 (1)
----- --------- ---------- ------ --------- ----------
Q2 2015 (GBP814 million; up 11%)
Vaccines sales grew 11% to GBP814 million with the US up 13%, Europe
up 27% and International down 2%. The business benefited from the
sales of the newly-acquired products, primarily Bexsero in Europe
and Menveo in the US. On a pro-forma basis, sales for the quarter
declined by 5%, primarily reflecting the phasing of tenders in International
markets for Synflorix and Havrix, together with competitive pressures
on Infanrix/Pediarix.
In the US, reported sales grew 13% to GBP240 million but declined
5% on a pro-forma basis. This was largely attributable to the 12%
decline in Infanrix/Pediarix sales as a result of the return to the
market of a competitor vaccine during 2014, partly offset by growth
in the Meningitis portfolio and in Rotarix and Boostrix sales.
In Europe, sales grew 27% on a reported basis (12% pro-forma) to GBP274
million. This growth primarily reflected increased sales of Bexsero,
mainly driven by the UK NHS immunisation programme, Portugal and Italy.
The quarter also benefited from improved supplies of Boostrix, up
31%. The growth was partly offset by a 15% decline in sales of Hepatitis
vaccines, reflecting supply constraints as well as tender phasing,
together with an Infanrix/Pediarix sales decline of 3%, impacted by
the introduction of a competitor vaccine during 2014 and the phasing
of shipments in several countries.
International sales of GBP300 million declined 2% on a reported basis
and 16% on a pro-forma basis. This primarily reflected a decline in
sales in Brazil, the Middle East and North Asia due to the phasing
of tenders, partly offset by growth of Synflorix in Africa.
H1 2015 (GBP1,513 million; up 11%)
Vaccines sales grew 11% to GBP1,513 million with the US up 14%, Europe
up 15% and International up 5%. The business benefited from the sales
of the newly acquired products, particularly the Meningitis portfolio
in Europe and the US. Pro-forma sales declined by 1% primarily due
to the phasing of Synflorix shipments in International markets and
a decline in Infanrix/Pediarix, following the return to the market
of a competitor vaccine during 2014, partly offset by strong growth
in Bexsero.
In the US, reported growth of 14% (2% pro-forma) to GBP457 million
mainly reflected growth in Hepatitis vaccines, Rotarix and Boostrix,
benefiting from CDC stockpile order timing, and wholesaler inventory
replenishment. Infanrix/Pediarix sales declined 12% as a result of
the return to the market of a competitor vaccine during 2014.
In Europe, sales grew 15% on a reported basis (5% pro-forma) to GBP498
million. This growth primarily reflected increased Bexsero sales mainly
driven by the UK NHS immunisation programme, Portugal and Italy. The
six months also benefited from the improved supply of Boostrix (up
29%) and MMRV (up 8%). The growth was partly offset by a 10% decline
in sales of Hepatitis vaccines, largely due to supply constraints
as well as tender phasing, together with a 6% decline in Infanrix/Pediarix
sales resulting from the introduction of a competitor vaccine during
2014 and the phasing of shipments in several countries.
International sales of GBP558 million grew 5% on a reported basis
but declined 8% on a pro-forma basis. Sales of a number of products,
including Boostrix and Synflorix, declined as a result of the phasing
of tenders in Brazil, the Middle East and North Asia.
Consumer Healthcare
Turnover Q2 2015 Q2 2015 H1 2015 H1 2015
----------------- ---------- ----------------- ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
------ --------- ---------- ------ --------- ----------
US 360 66 28 690 56 31
Europe 470 90 7 834 60 6
International 679 27 (2) 1,366 19 -
------ --------- ---------- ------ --------- ----------
Total 1,509 51 6 2,890 37 7
------ --------- ---------- ------ --------- ----------
Turnover Q2 2015 H1 2015
--------------- ---------------
Growth Growth
GBPm CER% GBPm CER%
------ ------- ------ -------
Wellness 740 >100 1,333 75
Oral health 462 11 947 10
Nutrition 165 7 347 4
Skin health 142 >100 263 70
------ ------- ------ -------
Total 1,509 51 2,890 37
------ ------- ------ -------
Q2 2015 (GBP1,509 million; up 51%)
The Consumer Healthcare business represents the Consumer Healthcare
Joint Venture with Novartis together with the GSK Consumer Healthcare
listed businesses in India and Nigeria, which are excluded from the
Joint Venture.
Turnover grew 51% to GBP1,509 million, benefiting significantly from
the first full quarter's sales of the newly-acquired products. On
a pro-forma basis, growth was 6% (4% volume and 2% price), principally
reflecting strong growth in the US following the launch of Flonase
OTC. Momentum from key Q1 launches continued to drive innovation contribution,
with sales from product introductions in the last three years representing
approximately 15% of the quarter's sales. Estimated in-market consumption
of GSK Consumer Healthcare brands grew slightly ahead of the global
market growth of approximately 6% in the quarter.
US sales grew 66% on a reported basis to GBP360 million, and 28% on
a pro-forma basis. Flonase was the region's primary growth driver
and with quarterly sales of GBP45 million the brand has contributed
to the category growth of 15%, achieving 11% market share in the quarter.
Oral health sales were driven by Sensodyne, which continued its strong
performance with growth of 27%, helped by improved supply and the
launch of Sensodyne Repair and Protect Whitening. Excedrin grew 25%
in the quarter, outperforming the category which grew at 6%, due to
a strong base business performance combined with new variant launches
and a price increase. Nicorette Mini lozenges and alli continued their
recovery from supply shortages in 2014 and Tums started to recover
from the Q1 interruptions.
Sales in Europe grew 90% on a reported basis to GBP470 million and
7% pro-forma. Oral health products reported growth of 11%, helped
by improved supply relative to Q2 2014, but also reflecting strong
performances from Sensodyne due to new advertising in key markets
and the roll-out of Sensodyne True White in the UK, Sensodyne Repair
and Protect in Germany, and Sensodyne Mouthwash across a number of
markets together with some supply recovery of Aquafresh. In Wellness,
Voltaren grew 18% pro-forma, with strong performances across the region
particularly in Germany, with strong marketing support behind a new
advertising campaign.
International sales of GBP679 million grew 27% on a reported basis
but declined 2% pro-forma. India continued to perform well with double-digit
pro-forma growth reflecting distribution expansion, enhanced marketing
campaigns ("Drink Daily, Grow Daily" and "Power of Milk") and the
achievement of a four-year market share high for Horlicks. Oral health
sales continued to grow in the region, up 9%, driven by Sensodyne.
Sales in Wellness were affected by the negative impact of reducing
channel inventories in the acquired consumer businesses.
H1 2015 (GBP2,890 million; up 37%)
Turnover grew 37% to GBP2,890 million, benefiting significantly from
the sales of the newly-acquired products included in the Joint Venture.
On a pro-forma basis, growth was 7% (5% volume and 2% price), primarily
reflecting strong growth in the US following the launch of Flonase
OTC. Sales from new GSK innovations (product introductions within
the last three years on a rolling basis) represented approximately
15% of sales. Other key 2015 launches to date include Fenbid Chewable
in China, Sensodyne Repair and Protect Whitening in the US and Germany,
and the roll-out of Sensodyne Mouthwash.
US sales grew 56% on a reported basis to GBP690 million, and 31% on
a pro-forma basis, partly reflecting a favourable comparison with
H1 2014 which was impacted by supply constraints. Flonase was the
region's principal growth driver with year to date sales of GBP110
million. Oral health sales were again driven by Sensodyne, up 20%,
with the launch of Sensodyne Repair and Protect Whitening. Sensodyne
gained a percentage point of market share in the six months. Excedrin
grew 17% as a result of the launch of new variants and a price increase.
Nicorette Mini lozenges and alli returned to the market but Tums supply
was constrained.
Sales in Europe grew 60% on a reported basis to GBP834 million and
grew 6% pro-forma. Oral health products reported growth of 10%, reflecting
strong performances from both Sensodyne and Aquafresh following an
improved supply position compared with H1 2014, new advertising in
key markets, and the roll out of new Sensodyne variants across the
region. Wellness recorded 7% pro-forma growth, driven by regional
Respiratory brands, which benefited from a strong cold and flu season,
and a strong Voltaren performance across the region with 16% pro-forma
growth.
International sales of GBP1,366 million grew 19% on a reported basis
and were flat pro-forma. India and South Africa reported double-digit
pro-forma growth. Oral health sales grew strongly at 10% across the
region and Gastro-intestinal health sales grew 8%, driven by Eno in
India and Brazil. Overall Wellness growth was affected by a 20% decline
in Panadol sales in Australia, largely due to private label competition
and lower sales of Contac in China due to consumer trends towards
milder remedies, combined with the negative impacts of reducing channel
inventories in the acquired consumer businesses. In Nutrition, Horlicks
was up 4%, with strong sales growth in India of 9% as a result of
new marketing campaigns, partly offset by some retailer destocking
in South East Asia.
Sales from New Pharmaceutical and Vaccine products
Q2 2015 Q2 2015 H1 2015 H1 2015
---------------- ---------- ----------------- ----------
Reported Pro-forma Reported Pro-forma
growth growth growth growth
GBPm CER% CER% GBPm CER% CER%
----- --------- ---------- ------ --------- ----------
Respiratory
Relvar/Breo Ellipta 53 >100 >100 94 >100 >100
Anoro Ellipta 15 >100 >100 27 >100 >100
Arnuity 1 - - 1 - -
Incruse Ellipta 1 - - 2 - -
CVMU
Eperzan/Tanzeum 9 - - 13 - -
----- --------- ---------- ------ --------- ----------
Global Pharmaceuticals 79 >100 >100 137 >100 >100
Tivicay 145 >100 >100 257 >100 >100
Triumeq 149 - - 230 - -
----- --------- ---------- ------ --------- ----------
Pharmaceuticals 373 >100 >100 624 >100 >100
----- --------- ---------- ------ --------- ----------
Bexsero 30 - >100 37 - >100
Menveo 43 - 8 54 - 6
----- --------- ---------- ------ --------- ----------
Vaccines 73 - 67 91 - 58
----- --------- ---------- ------ --------- ----------
Total 446 >100 >100 715 >100 >100
----- --------- ---------- ------ --------- ----------
At its Investor day on 6 May 2015, GSK identified a series of New
Pharmaceutical and Vaccine products that were expected to deliver
at least GBP6 billion of revenues per annum on a CER basis by 2020.
Those products, plus current clinical pipeline assets, Nucala and
Shingrix, are as set out above and, as a group are defined as New
Pharmaceutical and Vaccine products.
Sales of New Pharmaceutical and Vaccine products were GBP446 million,
grew GBP322 million pro-forma in Sterling terms, a rate in excess
of 100% CER, in the quarter and represented approximately 10% of Pharmaceuticals
and Vaccines turnover.
In the six months, sales of New Pharmaceutical and Vaccine products
were GBP715 million, grew GBP542 million pro-forma in Sterling terms,
a rate in excess of 100% CER, and represented approximately 8% of
Pharmaceuticals and Vaccines turnover.
Research and development
GSK remains focused on delivering an improved return on its investment
in R&D. Sales contribution, reduced attrition and cost reduction are
all important drivers of an improving internal rate of return. R&D
expenditure is not determined as a percentage of sales but instead
capital is allocated using strict returns-based criteria depending
on the pipeline opportunities available.
The operations of Pharmaceuticals R&D are broadly split into Discovery
activities (up to the completion of Phase IIa trials) and Development
work (from Phase IIb onwards) each supported by specific and common
infrastructure and other shared services where appropriate. R&D expenditure
for Q2 2015 is analysed below.
Q2 2015 H1 2015 H1 2014
GBPm GBPm GBPm
-------- -------- --------
Discovery 199 387 355
Development 253 567 653
Facilities and central support functions 91 199 232
-------- -------- --------
Pharmaceuticals R&D 543 1,153 1,240
Vaccines 124 248 234
Consumer Healthcare 64 119 76
-------- -------- --------
Core R&D 731 1,520 1,550
Amortisation and impairment of intangible
assets 14 48 75
Major restructuring costs 55 87 9
Acquisition accounting and other 12 24 34
Total R&D 812 1,679 1,668
-------- -------- --------
Pipeline of GSK's Phase II/III assets
Listed below is our quarterly update to show events and changes to
the late-stage pipeline during the quarter and up to the date of this
announcement. The table comprises the 40 NMEs in Phase II/III clinical
development, plus significant line extensions in Phase III.
Since the Q1 2015 Results Announcement, the following pipeline milestones
have been achieved:
-- Announced start of Phase III study of combination use of dolutegravir
and rilpivirine on 6 May 2015;
-- FDA AdCom recommended US approval of Nucala (mepolizumab) for adult
patients with severe asthma with eosinophilic inflammation on 11
June 2015;
-- Nucala filed in Japan for severe eosinophilic asthma on 22 May 2015;
-- Announced CHMP positive opinion for Mosquirix on 24 July 2015.
Respiratory Phase
-------------------------------------------------------------------------------- ----------------
'277 (TNFR1 domain antibody) Acute lung injury Ph II
--------------------------------------- --------------------------------------- ----------------
'081 (MABA) COPD Ph II
--------------------------------------- --------------------------------------- ----------------
danirixin (CXCR2 chemokine COPD Ph II
receptor antagonist)
--------------------------------------- --------------------------------------- ----------------
'557 (PI3K inhibitor) COPD & asthma Ph II
--------------------------------------- --------------------------------------- ----------------
'035 (toll-like receptor Asthma Ph II
7 agonist)
--------------------------------------- --------------------------------------- ----------------
'881 (recombinant human angiotensin Acute lung injury Ph II
converting enzyme 2)
--------------------------------------- --------------------------------------- ----------------
Nucala (mepolizumab) Severe eosinophilic asthma Filed (US &
EU) Nov 2014.
--------------------------------------- --------------------------------------- ----------------
COPD Ph III
--------------------------------------- --------------------------------------- ----------------
FF+UMEC+VI COPD Ph III
--------------------------------------- --------------------------------------- ----------------
Cardiovascular & Metabolic Phase
-------------------------------------------------------------------------------- ----------------
otelixizumab (CD3 monoclonal New Onset Type I Diabetes Ph II
antibody)
--------------------------------------- --------------------------------------- ----------------
'863 (prolyl hydroxylase Anaemia associated with chronic Ph II
inhibitor) renal disease
--------------------------------------- --------------------------------------- ----------------
'672 (ileal bile acid transport Type 2 diabetes & cholestatic Ph II
inhibitor) pruritis
--------------------------------------- --------------------------------------- ----------------
camicinal (motilin receptor Delayed gastric emptying Ph II
agonist)
--------------------------------------- --------------------------------------- ----------------
losmapimod (p38 kinase inhibitor) Acute coronary syndrome (ACS) Ph III
--------------------------------------- --------------------------------------- ----------------
retosiban (oxytocin antagonist) Threatened pre-term labour Ph III
--------------------------------------- --------------------------------------- ----------------
HIV/Infectious Diseases Phase
-------------------------------------------------------------------------------- ----------------
cabotegravir (HIV integrase HIV treatment and pre-exposure Ph II
inhibitor) prophylaxis
--------------------------------------- --------------------------------------- ----------------
'944 (type 2 topoisomerase Bacterial infections Ph II
inhibitor)
--------------------------------------- --------------------------------------- ----------------
tafenoquine (8-aminoquinoline) Plasmodium vivax malaria Ph III
--------------------------------------- --------------------------------------- ----------------
dolutegravir+ rilpivirine HIV infection - two drug Ph III
(HIV integrase inhibitor maintenance regimen
+ NNRTI)
--------------------------------------- --------------------------------------- ----------------
Immuno-inflammation Phase
-------------------------------------------------------------------------------- ----------------
'165 (granulocyte macrophage Rheumatoid arthritis Ph II
colony-stimulating factor
monoclonal antibody)
--------------------------------------- --------------------------------------- ----------------
Benlysta (s.c.) Systemic lupus erythematosus Ph III
--------------------------------------- --------------------------------------- ----------------
sirukumab (IL6 human monoclonal Rheumatoid arthritis Ph III
antibody)
--------------------------------------- --------------------------------------- ----------------
Oncology Phase
-------------------------------------------------------------------------------- ----------------
'794 (NY-ESO-1 T cell receptor)(1) Cancer Ph II
--------------------------------------- --------------------------------------- ----------------
tarextumab (Anti-Notch 2/3 Cancer Ph II
Mab)(2)
--------------------------------------- --------------------------------------- ----------------
Vaccines Phase
--------------------------------------- --------------------------------------- ----------------
RSV Respiratory syncytial virus Ph II
prophylaxis (maternal immunisation)
--------------------------------------- --------------------------------------- ----------------
Group B Streptococcus Group B Streptococcus prophylaxis Ph II
(maternal immunisation)
--------------------------------------- --------------------------------------- ----------------
Pseudomonas(3) Prevention of Pseudomonas Ph II
infection
--------------------------------------- --------------------------------------- ----------------
S. pneumoniae next generation Streptococcus pneumoniae Ph II
disease prophylaxis
--------------------------------------- --------------------------------------- ----------------
Men ABCWY Meningococcal A,B,C,W,Y disease Ph II
prophylaxis
--------------------------------------- --------------------------------------- ----------------
Malaria next generation Malaria prophylaxis (Plasmodium Ph II
falciparum)
--------------------------------------- --------------------------------------- ----------------
Tuberculosis Tuberculosis prophylaxis Ph II
--------------------------------------- --------------------------------------- ----------------
Hepatitis C Hepatitis C virus prophylaxis Ph II
--------------------------------------- --------------------------------------- ----------------
NTHi Non-typeable Haemophilus Ph II
influenza prophylaxis
--------------------------------------- --------------------------------------- ----------------
MMR Measles, mumps and rubella Ph III (US)
prophylaxis
--------------------------------------- --------------------------------------- ----------------
MAGE-A3 Melanoma Ph III
--------------------------------------- --------------------------------------- ----------------
Ebola Ebola Zaire virus Ph III
--------------------------------------- --------------------------------------- ----------------
Shingrix Shingles prophylaxis Ph III
--------------------------------------- --------------------------------------- ----------------
Mosquirix (RTS,S) Malaria prophylaxis Filed (EU) July
2014
--------------------------------------- --------------------------------------- ----------------
Rare diseases Phase
-------------------------------------------------------------------------------- ----------------
'852 + '898 (SAP monoclonal Amyloidosis Ph II
antibody + SAP depleter (CPHPC))
--------------------------------------- --------------------------------------- ----------------
'274 (ex-vivo stem cell gene Metachromatic leukodystrophy Ph II
therapy)
--------------------------------------- --------------------------------------- ----------------
'275 (ex-vivo stem cell gene Wiscott-Aldrich syndrome Ph II
therapy)
--------------------------------------- --------------------------------------- ----------------
'273 (ex-vivo stem cell gene Adenosine deaminase severe Filed (EU) May
therapy) combined immune deficiency 2015
(ADA-SCID) US: Ph II/III
--------------------------------------- --------------------------------------- ----------------
'728 (antisense oligonucleotide)(4) Transthyretin amyloidosis Ph III
--------------------------------------- --------------------------------------- ----------------
Other Pharmaceuticals
--------------------------------------------------------------------------------------------------
Dermatology Phase
-------------------------------------------------------------------------------- ----------------
'512 (non-steroidal anti-inflammatory) Atopic dermatitis & psoriasis Ph II
--------------------------------------- --------------------------------------- ----------------
Toctino Chronic hand eczema Ph III (US)
--------------------------------------- --------------------------------------- ----------------
Neurosciences Phase
-------------------------------------------------------------------------------- ----------------
rilapladib (Lp-PLA2 inhibitor) Alzheimer's disease Ph II
--------------------------------------- --------------------------------------- ----------------
'776 (beta amyloid monoclonal Geographic retinal atrophy/Alzheimer's Ph II
antibody) disease
--------------------------------------- --------------------------------------- ----------------
(1) Option-based alliance with Adaptimmune Ltd.
(2) Option-based alliance with OncoMed Pharmaceuticals
(3) Option-based alliance with Valneva
(4) Option-based alliance with ISIS Pharmaceuticals
Definitions
Core results
Core results exclude the following items from total results: amortisation
and impairment of intangible assets (excluding computer software)
and goodwill; major restructuring costs, including those costs following
material acquisitions; legal charges (net of insurance recoveries)
and expenses on the settlement of litigation and government investigations,
and acquisition accounting adjustments for material acquisitions,
disposals of associates, products and businesses, other operating
income other than royalty income, and other items, together with the
tax effects of all of these items. GSK believes this approach provides
a clearer view of the underlying performance of the core business
and should make the Group's results more comparable with the majority
of its peers.
CER growth
In order to illustrate underlying performance, it is the Group's practice
to discuss its results in terms of constant exchange rate (CER) growth.
This represents growth calculated as if the exchange rates used to
determine the results of overseas companies in Sterling had remained
unchanged from those used in the comparative period. All commentaries
are presented in terms of CER growth, unless otherwise stated.
Pro-forma growth
The Novartis transaction completed on 2 March 2015 and so GSK's reported
results include the results of the former Novartis Vaccines and Consumer
Healthcare businesses and exclude the results of the former GSK Oncology
products, both from 2 March. Pro-forma growth rates are calculated
comparing reported turnover for Q2 or H1 2015 with the turnover for
Q2 or H1 2014 adjusted to include the equivalent results of the former
Novartis Vaccines and Consumer Healthcare businesses and to exclude
the results of the former GSK Oncology products from 2 March 2014.
Full-year 2014 pro-forma results
Pro-forma results for the full-year 2014, where provided, include
the following major adjustments: (i) the exclusion of Oncology, (ii)
the inclusion of 12 months of the acquired Novartis Consumer and Vaccines
businesses, (iii) reallocation of most corporate costs to more accurately
reflect the profitability of each segment and (iv) the reallocation
of divestments required to Corporate and other unallocated costs.
Pro-forma 2014 Corporate and other unallocated operating profit includes
a structural benefit of GBP219 million realised in Q3 2014. See "Cautionary
statement regarding unaudited pro-forma financial information" on
page 29.
Free cash flow
Free cash flow is the net cash inflow from operating activities less
capital expenditure, interest and dividends paid to non-controlling
interests plus proceeds from the sale of property, plant and equipment
and dividends received from joint ventures and associated undertakings.
It is used by management for planning and reporting purposes and in
discussions with and presentations to investment analysts and rating
agencies. Free cash flow growth is calculated on a reported basis.
Adjusted free cash flow
Adjusted free cash flow excludes payments made to settle legal disputes.
Free cash flow conversion
Free cash flow conversion is free cash flow as a percentage of earnings
excluding after-tax legal charges and legal settlements.
Adjusted net cash inflow from operating activities
Adjusted net cash inflow from operating activities excludes payments
made to settle legal disputes.
Working capital conversion cycle
The working capital conversion cycle is calculated as the number of
days sales outstanding plus days inventory outstanding, less days
purchases outstanding.
Brand names and partner acknowledgements
Brand names appearing in italics throughout this document are trademarks
of GSK or associated companies or used under licence by the Group.
Outlook assumptions and cautionary statements
Assumptions related to 2016-2020 outlook
In outlining the expectations for the five-year period 2016-2020,
the Group has made certain assumptions about the healthcare sector,
the different markets in which the Group operates and the delivery
of revenues and financial benefits from its current portfolio, pipeline
and restructuring programmes.
For the Group specifically, over the period to 2020 GSK expects further
declines in sales of Seretide/Advair. The introduction of a generic
alternative to Advair in the US has been factored into the Group's
assessment of its future performance. The Group assumes no premature
loss of exclusivity for other key products over the period. The Group's
expectation of at least GBP6 billion of revenues per annum on a CER
basis by 2020 from products launched in the last three years includes
contributions from current pipeline assets mepoluzimab and Shingrix.
The Group also expects volume demand for its products to increase,
particularly in Emerging Markets.
The assumptions for the Group's revenue and earnings expectations
assume no material mergers, acquisitions, disposals, litigation costs
or share repurchases for the Company; and no change in the Group's
shareholdings in ViiV Healthcare or Consumer Healthcare.
The Group's expectations assume successful delivery of the Group's
integration and restructuring plans over the period 2016-2020. Material
costs for investment in new product launches and R&D have been factored
into the expectations given. The expectations are given on a constant
currency basis and assume no material change to the Group's effective
tax rate.
Assumptions and cautionary statement regarding forward-looking statements
The Group's management believes that the assumptions outlined above
are reasonable, and that the aspirational targets described in this
report are achievable based on those assumptions. However, given the
longer term nature of these expectations and targets, they are subject
to greater uncertainty, including potential material impacts if the
above assumptions are not realised, and other material impacts related
to foreign exchange fluctuations, macroeconomic activity, changes
in regulation, government actions or intellectual property protection,
actions by our competitors, and other risks inherent to the industries
in which we operate.
This document contains statements that are, or may be deemed to be,
"forward-looking statements". Forward-looking statements give the
Group's current expectations or forecasts of future events. An investor
can identify these statements by the fact that they do not relate
strictly to historical or current facts. They use words such as 'anticipate',
'estimate', 'expect', 'intend', 'will', 'project', 'plan', 'believe',
'target' and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance.
In particular, these include statements relating to future actions,
prospective products or product approvals, future performance or results
of current and anticipated products, sales efforts, expenses, the
outcome of contingencies such as legal proceedings, and financial
results. Other than in accordance with its legal or regulatory obligations
(including under the UK Listing Rules and the Disclosure and Transparency
Rules of the Financial Conduct Authority), the Group undertakes no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise. The reader
should, however, consult any additional disclosures that the Group
may make in any documents which it publishes and/or files with the
SEC. All readers, wherever located, should take note of these disclosures.
Accordingly, no assurance can be given that any particular expectation
will be met and investors are cautioned not to place undue reliance
on the forward-looking statements.
Forward-looking statements are subject to assumptions, inherent risks
and uncertainties, many of which relate to factors that are beyond
the Group's control or precise estimate. The Group cautions investors
that a number of important factors, including those in this document,
could cause actual results to differ materially from those expressed
or implied in any forward-looking statement. Such factors include,
but are not limited to, those discussed under Item 3.D 'Risk factors'
in the Group's Annual Report on Form 20-F for 2014 and those discussed
in Part 2 of the Circular to Shareholders and Notice of General Meeting
furnished to the SEC on Form 6-K on 24 November 2014. Any forward
looking statements made by or on behalf of the Group speak only as
of the date they are made and are based upon the knowledge and information
available to the Directors on the date of this report.
Cautionary statement regarding unaudited pro-forma financial information
The unaudited pro-forma financial information in this release has
been prepared to illustrate the effect of (i) the disposal of the
oncology assets, (ii) the Consumer Healthcare Joint Venture (i.e.
the acquisition of the Novartis OTC Business), and (iii) the acquisition
of the Vaccines business (which excludes the Novartis influenza vaccines
business) on the results of the Group as if they had taken place as
at 1 January 2014.
The unaudited pro-forma financial information has been prepared for
illustrative purposes only and, by its nature, addresses a hypothetical
situation and, therefore, does not represent the Group's actual financial
position or results. The unaudited pro-forma financial information
does not purport to represent what the Group's financial position
actually would have been if the disposal of the Oncology assets, the
Consumer Healthcare Joint Venture and the Vaccines acquisition had
been completed on the dates indicated; nor does it purport to represent
the financial condition at any future date. In addition to the matters
noted above, the unaudited pro-forma financial information does not
reflect the effect of anticipated synergies and efficiencies associated
with the Oncology disposal, the Consumer Healthcare Joint Venture
and the Vaccines acquisition.
The unaudited pro-forma financial information does not constitute
financial statements within the meaning of Section 434 of the Companies
Act 2006. The unaudited pro-forma financial information in this release
should be read in conjunction with the financial statements included
in (i) the Group's Q2 2015 earnings report dated 29 July 2015 and
furnished to the SEC on Form 6-K, (ii) the Group's Annual Report on
Form 20-F for 2014 and (iii) the Circular to Shareholders and Notice
of General Meeting furnished to the SEC on Form 6-K on 24 November
2014.
Contacts
GSK - one of the world's leading research-based pharmaceutical and
healthcare companies - is committed to improving the quality of human
life by enabling people to do more, feel better and live longer. For
further information please visit www.gsk.com.
GSK enquiries:
UK Media enquiries: David Mawdsley +44 (0) 20 8047 (London)
5502
Simon Steel +44 (0) 20 8047 (London)
5502
US Media enquiries: Sarah Alspach +1 215 715 1048 (Washington)
Jenni Ligday +1 202 715 1049 (Washington)
Analyst/Investor enquiries: Ziba Shamsi +44 (0) 20 8047 (London)
5543
Tom Curry +1 215 751 5419 (Philadelphia)
Gary Davies +44 (0) 20 8047 (London)
5503
James Dodwell +44 (0) 20 8047 (London)
2406
Jeff McLaughlin +1 215 751 7002 (Philadelphia)
Registered in England & Wales:
No. 3888792
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
Financial information
Income statements
Q2 2015 Q2 2014 H1 2015 H1 2014
GBPm GBPm GBPm GBPm
-------- -------- -------- --------
TURNOVER 5,888 5,561 11,510 11,174
Cost of sales (2,005) (1,722) (4,108) (3,465)
-------- -------- -------- --------
Gross profit 3,883 3,839 7,402 7,709
Selling, general and administration (2,541) (2,055) (4,766) (4,026)
Research and development (812) (809) (1,679) (1,668)
Royalty income 62 72 139 142
Other operating income/(expense) (257) 90 8,455 46
-------- -------- -------- --------
OPERATING PROFIT 335 1,137 9,551 2,203
Finance income 12 18 44 36
Finance expense (194) (177) (385) (359)
Profit on disposal of associates 1 - 844 -
Share of after tax (losses)/profits
of associates
and joint ventures (2) 8 21 9
-------- -------- -------- --------
PROFIT BEFORE TAXATION 152 986 10,075 1,889
Taxation (37) (284) (1,922) (468)
Tax rate % 24.3% 28.8% 19.1% 24.8%
-------- -------- -------- --------
PROFIT AFTER TAXATION FOR THE PERIOD 115 702 8,153 1,421
-------- -------- -------- --------
(Loss)/profit attributable to non-controlling
interests (34) 48 (85) 99
Profit attributable to shareholders 149 654 8,238 1,322
-------- -------- -------- --------
115 702 8,153 1,421
-------- -------- -------- --------
EARNINGS PER SHARE 3.1p 13.6p 170.7p 27.5p
-------- -------- -------- --------
Diluted earnings per share 3.1p 13.4p 169.2p 27.1p
-------- -------- -------- --------
Statement of comprehensive income
Q2 2015 Q2 2014
GBPm GBPm
-------- --------
Profit for the period 115 702
Items that may be reclassified subsequently to income
statement:
Exchange movements on overseas net assets and net
investment hedges (69) (70)
Fair value movements on available-for-sale investments (39) 105
Reclassification of fair value movements on available-for-sale
investments (10) (3)
Deferred tax on fair value movements on available-for-sale
investments (11) 5
Deferred tax reversed on reclassification of available-for-sale
investments 1 2
Fair value movements on cash flow hedges (6) (2)
Deferred tax on fair value movements on cash flow 1 -
hedges
Reclassification of cash flow hedges to income statement 7 -
(126) 37
-------- --------
Items that will not be reclassified to income statement:
Exchange movements on overseas net assets of non-controlling
interests (26) (10)
Remeasurement gains on defined benefit plans 534 30
Deferred tax on remeasurement gains on defined benefit
plans (145) (2)
-------- --------
363 18
-------- --------
Other comprehensive income for the period 237 55
-------- --------
Total comprehensive income for the period 352 757
-------- --------
Total comprehensive income for the period attributable
to:
Shareholders 412 719
Non-controlling interests (60) 38
-------- --------
352 757
-------- --------
Statement of comprehensive income
H1 2015 H1 2014
GBPm GBPm
-------- --------
Profit for the period 8,153 1,421
Items that may be reclassified subsequently to income
statement:
Exchange movements on overseas net assets and net
investment hedges (401) (87)
Fair value movements on available-for-sale investments 202 75
Reclassification of fair value movements on available-for-sale
investments (272) (4)
Deferred tax on fair value movements on available-for-sale
investments (35) (14)
Deferred tax reversed on reclassification of available-for-sale
investments 3 2
Fair value movements on cash flow hedges (12) (3)
Deferred tax on fair value movements on cash flow 2 -
hedges
Reclassification of cash flow hedges to income statement 10 2
Share of other comprehensive expense of associates
and joint ventures (77) 13
-------- --------
(580) (16)
-------- --------
Items that will not be reclassified to income statement:
Exchange movements on overseas net assets of non-controlling
interests (6) (5)
Remeasurement gains/(losses) on defined benefit
plans 206 (147)
Deferred tax on remeasurement gains/(losses) on
defined benefit plans (70) 40
-------- --------
130 (112)
-------- --------
Other comprehensive expense for the period (450) (128)
-------- --------
Total comprehensive income for the period 7,703 1,293
-------- --------
Total comprehensive income for the period attributable
to:
Shareholders 7,794 1,199
Non-controlling interests (91) 94
-------- --------
7,703 1,293
-------- --------
Pharmaceuticals and Vaccines turnover
Three months ended 30 June 2015
Total US Europe International
--------------- --------------- --------------- ----------------
Growth Growth Growth Growth
GBPm CER% GBPm CER% GBPm CER% GBPm CER%
------ ------- ------ ------- ------ ------- ------- -------
Respiratory 1,467 (6) 704 (12) 369 (8) 394 5
Anoro Ellipta 15 >100 12 >100 3 - - -
Avamys/Veramyst 59 9 7 (14) 22 - 30 21
Flixotide/Flovent 159 (10) 100 (15) 22 8 37 (8)
Relvar/Breo Ellipta 53 >100 19 >100 19 >100 15 >100
Seretide/Advair 960 (13) 484 (17) 267 (16) 209 -
Ventolin 160 2 81 3 28 - 51 2
Other 61 5 1 - 8 (11) 52 4
Cardiovascular,
metabolic and urology
(CVMU) 242 5 102 2 66 4 74 10
Avodart 192 (2) 66 (9) 66 6 60 (2)
Other 50 45 36 33 - (100) 14 100
- - - - - - - -
Immuno-inflammation 56 27 51 21 3 33 2 -
Benlysta 56 30 51 21 3 33 2 >100
Other - (100) - - - - - (100)
- - - - - - - -
Oncology 19 (94) (2) <(100) (1) (100) 22 (71)
- - - - - - - -
Other pharmaceuticals 542 (6) 61 >100 138 (7) 343 (13)
Dermatology 105 (8) 10 (9) 34 (12) 61 (5)
Augmentin 143 2 - - 37 (5) 106 4
Other anti-bacterials 42 (19) 2 - 12 - 28 (26)
Rare diseases 94 2 11 22 30 (3) 53 2
Other 158 (11) 38 >100 25 (14) 95 (30)
------ ------- ------ ------- ------ ------- ------- -------
Innovative Pharmaceuticals 2,326 (14) 916 (16) 575 (19) 835 (7)
Established Products 655 (5) 168 (16) 121 (13) 366 3
Coreg 29 (10) 29 (10) - - - -
Hepsera 18 (14) - - - - 18 (14)
Imigran/Imitrex 46 7 27 23 13 (7) 6 (14)
Lamictal 132 6 67 2 23 - 42 16
Lovaza 24 (22) 24 (22) - - - -
Requip 23 (12) - (100) 7 (36) 16 14
Serevent 24 (8) 11 11 9 (23) 4 -
Seroxat/Paxil 43 (6) (7) - 9 - 41 8
Valtrex 46 30 6 (38) 7 (13) 33 71
Zeffix 33 (23) 1 - 1 - 31 (24)
Other 237 (11) 10 (65) 52 (15) 175 (1)
------ ------- ------ ------- ------ ------- ------- -------
Global Pharmaceuticals 2,981 (12) 1,084 (16) 696 (18) 1,201 (4)
------ ------- ------ ------- ------ ------- ------- -------
HIV 559 59 308 84 172 46 79 26
Combivir 9 (44) 3 (1) 2 (44) 4 (56)
Epzicom/Kivexa 185 1 67 (10) 80 4 38 17
Lexiva/Agenerase 18 (10) 10 (23) 3 (27) 5 53
Selzentry 31 (18) 15 (3) 13 (6) 3 (67)
Tivicay 145 >100 95 83 37 >100 13 >100
Triumeq 149 - 109 - 31 - 9 -
Trizivir 7 - 2 >100 4 (23) 1 5
Other 15 (11) 7 14 2 (50) 6 (22)
------ ------- ------ ------- ------ ------- ------- -------
Pharmaceuticals 3,540 (6) 1,392 (5) 868 (10) 1,280 (3)
------ ------- ------ ------- ------ ------- ------- -------
Vaccines 814 11 240 13 274 27 300 (2)
Bexsero 30 - 2 - 24 - 4 -
Boostrix 96 3 52 9 31 31 13 (38)
Cervarix 18 (14) 1 - 9 - 8 (30)
Fluarix, FluLaval 7 29 (4) <(100) - - 11 83
Hepatitis 121 (15) 58 (7) 37 (15) 26 (29)
Infanrix, Pediarix 187 (4) 64 (12) 81 (3) 42 7
Menveo 43 - 25 - 7 - 11 -
Rabipur/Rabivert 15 - 5 - 6 - 4 -
Rotarix 101 2 30 17 15 7 56 (5)
Synflorix 77 (20) - - 8 - 69 (22)
Other 119 48 7 - 56 63 56 29
------ ------- ------ ------- ------ ------- ------- -------
4,354 (3) 1,632 (3) 1,142 (3) 1,580 (3)
------ ------- ------ ------- ------ ------- ------- -------
Pharmaceuticals and Vaccines turnover
Six months ended 30 June 2015
Total US Europe International
--------------- --------------- --------------- ----------------
Growth Growth Growth Growth
GBPm CER% GBPm CER% GBPm CER% GBPm CER%
------ ------- ------ ------- ------ ------- ------- -------
Respiratory 2,875 (8) 1,287 (16) 761 (6) 827 5
Anoro Ellipta 27 >100 21 >100 5 - 1 -
Avamys/Veramyst 130 8 13 (20) 39 2 78 17
Flixotide/Flovent 312 (16) 183 (27) 49 2 80 4
Relvar/Breo Ellipta 94 >100 33 >100 35 >100 26 >100
Seretide/Advair 1,858 (14) 876 (19) 558 (14) 424 (2)
Ventolin 321 (4) 159 (12) 60 3 102 6
Other 133 5 2 - 15 (6) 116 4
Cardiovascular,
metabolic and urology
(CVMU) 460 (2) 185 (3) 134 (3) 141 1
Avodart 371 (4) 122 (11) 132 4 117 (7)
Other 89 12 63 19 2 (91) 24 59
Immuno-inflammation 116 23 106 21 7 33 3 50
Benlysta 107 27 97 24 7 33 3 >100
Other 9 (11) 9 - - - - (100)
Oncology 235 (58) 91 (63) 69 (62) 75 (40)
Other pharmaceuticals 1,067 (7) 103 29 287 (3) 677 (12)
Dermatology 214 (10) 22 (13) 71 (8) 121 (10)
Augmentin 283 (1) - - 88 (4) 195 1
Other anti-bacterials 89 (17) 3 - 28 (9) 58 (22)
Rare diseases 185 (4) 23 (33) 62 1 100 1
Other 296 (10) 55 >100 38 5 203 (26)
------ ------- ------ ------- ------ ------- ------- -------
Innovative Pharmaceuticals 4,753 (12) 1,772 (17) 1,258 (12) 1,723 (5)
Established Products 1,305 (13) 331 (31) 253 (14) 721 (3)
Coreg 56 (16) 56 (16) - - - -
Hepsera 40 (11) - - - - 40 (11)
Imigran/Imitrex 84 (4) 45 (4) 26 (7) 13 -
Lamictal 259 2 130 1 46 (6) 83 9
Lovaza 52 (64) 52 (64) - - - -
Requip 45 (13) 1 (75) 14 (27) 30 7
Serevent 47 (11) 21 6 19 (23) 7 (11)
Seroxat/Paxil 86 (13) (7) - 17 (18) 76 (4)
Valtrex 88 24 11 (29) 13 (13) 64 53
Zeffix 72 (19) 1 (50) 3 - 68 (19)
Other 476 (14) 21 (60) 115 (14) 340 (8)
------ ------- ------ ------- ------ ------- ------- -------
Global Pharmaceuticals 6,058 (12) 2,103 (20) 1,511 (12) 2,444 (5)
------ ------- ------ ------- ------ ------- ------- -------
HIV 1,005 51 537 76 326 40 142 18
Combivir 19 (41) 6 (9) 5 (48) 8 (47)
Epzicom/Kivexa 361 1 127 (10) 162 6 72 10
Lexiva/Agenerase 34 (19) 20 (21) 7 (32) 7 4
Selzentry 61 (14) 29 (1) 25 (9) 7 (50)
Tivicay 257 >100 167 >100 66 >100 24 >100
Triumeq 230 - 171 - 49 - 10 -
Trizivir 14 (22) 4 (6) 8 (27) 2 (26)
Other 29 (23) 13 (19) 4 (38) 12 (20)
------ ------- ------ ------- ------ ------- ------- -------
Pharmaceuticals 7,063 (7) 2,640 (10) 1,837 (6) 2,586 (4)
------ ------- ------ ------- ------ ------- ------- -------
Vaccines 1,513 11 457 14 498 15 558 5
Bexsero 37 - 2 - 30 - 5 -
Boostrix 162 5 89 11 48 29 25 (33)
Cervarix 46 (14) 2 - 19 (16) 25 (14)
Fluarix, FluLaval 11 (20) (1) <(100) - - 12 (7)
Hepatitis 264 (1) 122 12 78 (10) 64 (7)
Infanrix, Pediarix 373 (5) 133 (12) 158 (6) 82 10
Menveo 54 - 32 - 8 - 14 -
Rabipur/Rabivert 20 - 8 - 7 - 5 -
Rotarix 199 7 62 14 32 3 105 6
Synflorix 137 (10) - - 17 (10) 120 (10)
Other 210 40 8 >100 101 47 101 29
------ ------- ------ ------- ------ ------- ------- -------
8,576 (4) 3,097 (7) 2,335 (2) 3,144 (2)
------ ------- ------ ------- ------ ------- ------- -------
Balance sheet
31 December
30 June 2015 30 June 2014 2014
GBPm GBPm GBPm
------------- ------------- ------------
ASSETS
Non-current assets
Property, plant and equipment 9,319 8,667 9,052
Goodwill 5,072 3,666 3,724
Other intangible assets 16,614 8,413 8,320
Investments in associates and
joint ventures 85 319 340
Other investments 1,666 1,283 1,114
Deferred tax assets 2,452 2,108 2,688
Other non-current assets 794 841 735
------------- ------------- ------------
Total non-current assets 36,002 25,297 25,973
------------- ------------- ------------
Current assets
Inventories 4,797 4,111 4,231
Current tax recoverable 96 - 120 138
Trade and other receivables 5,314 5,000 4,600
Derivative financial instruments 90 93 146
Liquid investments 69 64 69
Cash and cash equivalents 7,546 3,163 4,338
Assets held for sale 204 1,002 1,156
------------- ------------- ------------
Total current assets 18,116 13,553 14,678
------------- ------------- ------------
TOTAL ASSETS 54,118 38,850 40,651
------------- ------------- ------------
LIABILITIES
Current liabilities
Short-term borrowings (2,472) (3,143) (2,943)
Trade and other payables (8,155) (6,949) (7,958)
Derivative financial instruments (117) (96) (404)
Current tax payable (1,827) (1,215) (945)
Short-term provisions (1,225) (849) (1,045)
------------- ------------- ------------
Total current liabilities (13,796) (12,252) (13,295)
------------- ------------- ------------
Non-current liabilities
Long-term borrowings (14,696) (14,507) (15,841)
Deferred tax liabilities (1,721) (698) (445)
Pensions and other post-employment
benefits (3,143) (2,264) (3,179)
Other provisions (469) (515) (545)
Derivative financial instruments (7) (23) (9)
Other non-current liabilities (9,734) (1,755) (2,401)
------------- ------------- ------------
Total non-current liabilities (29,770) (19,762) (22,420)
------------- ------------- ------------
TOTAL LIABILITIES (43,566) (32,014) (35,715)
------------- ------------- ------------
NET ASSETS 10,552 6,836 4,936
------------- ------------- ------------
EQUITY
Share capital 1,339 1,338 1,339
Share premium account 2,792 2,706 2,759
Retained earnings 556 (158) (2,074)
Other reserves 2,133 2,232 2,239
------------- ------------- ------------
Shareholders' equity 6,820 6,118 4,263
Non-controlling interests 3,732 718 673
------------- ------------- ------------
TOTAL EQUITY 10,552 6,836 4,936
------------- ------------- ------------
Statement of changes in equity
Share- Non-
Share Share Retained Other holder's controlling Total
capital premium earnings reserves equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 1 January 2015 1,339 2,759 (2,074) 2,239 4,263 673 4,936
Profit/(loss)
for the period 8,238 8,238 (85) 8,153
Other
comprehensive
expense
for the period (338) (106) (444) (6) (450)
------------ ------------ ------------ ------------ ------------
Total
comprehensive
income/(expense)
for the period 7,900 (106) 7,794 (91) 7,703
------------ ------------ ------------ ------------ ------------
Distributions to
non-controlling
interests (210) (210)
Dividends to
shareholders (2,035) (2,035) (2,035)
Gain on transfer
of net assets
into
Consumer
Healthcare Joint
Venture 2,881 2,881 2,881
Consumer
Healthcare Joint
Venture
put option (6,204) (6,204) (6,204)
Changes in
non-controlling
interests 3,360 3,360
Shares issued - 33 33 33
Shares acquired
by ESOP Trusts (78) (78) (78)
Write-down on
shares held
by ESOP
Trusts (78) 78 - -
Share-based
incentive plans 166 166 166
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 30 June 2015 1,339 2,792 556 2,133 6,820 3,732 10,552
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 1 January 2014 1,336 2,595 913 2,153 6,997 815 7,812
Profit for the
period 1,322 1,322 99 1,421
Other
comprehensive
(expense)/income
for the
period (182) 59 (123) (5) (128)
------------ ------------ ------------ ------------ ------------
Total comprehensive
income
for the period 1,140 59 1,199 94 1,293
------------ ------------ ------------ ------------ ------------
Distributions to
non-controlling
interests (160) (160)
Dividends to
shareholders (2,009) (2,009) (2,009)
Changes in
non-controlling
interests (54) (54) (31) (85)
Shares issued 2 111 113 113
Forward contract
relating
to non-controlling
interest 21 21 21
Ordinary shares
purchased
and held as
Treasury shares (238) (238) (238)
Shares acquired by
ESOP Trusts (73) (73) (73)
Write-down on
shares held
by ESOP Trusts (72) 72 - -
Share-based
incentive plans 162 162 162
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 30 June 2014 1,338 2,706 (158) 2,232 6,118 718 6,836
------------ ------------ ------------ ------------ ------------ ------------ ------------
Cash flow statement
Six months ended 30 June 2015
H1 2015 H1 2014
GBPm GBPm
-------- --------
Profit after tax 8,153 1,421
Tax on profits 1,922 468
Share of after tax profits of associates and joint
ventures (21) (9)
Profit on disposal of interest in associates (844) -
Net finance expense 341 323
Profit on disposal of Oncology business (9,247) -
Depreciation and other adjusting items 1,112 948
Increase in working capital (439) (318)
Increase/(decrease) in other net liabilities 564 (491)
-------- --------
Cash generated from operations 1,541 2,342
Taxation paid (954) (649)
-------- --------
Net cash inflow from operating activities 587 1,693
-------- --------
Cash flow from investing activities
Purchase of property, plant and equipment (515) (473)
Proceeds from sale of property, plant and equipment 30 15
Purchase of intangible assets (265) (270)
Proceeds from sale of intangible assets - 58
Purchase of equity investments (42) (41)
Proceeds from sale of equity investments 267 22
Purchase of businesses, net of cash acquired (3,461) (16)
Disposal of businesses 10,026 194
Investment in associates and joint ventures (12) (4)
Proceeds from disposal of associates and joint 564 -
ventures
Interest received 42 28
Dividends from associates and joint ventures - 4
-------- --------
Net cash inflow/(outflow) from investing activities 6,634 (483)
-------- --------
Cash flow from financing activities
Issue of share capital 33 113
Shares acquired by ESOP Trusts (78) (73)
Shares purchased and held as Treasury shares - (237)
Purchase of non-controlling interests - (669)
Repayment of short-term loans (1,289) (204)
Net repayment of obligations under finance leases (11) (11)
Interest paid (344) (330)
Dividends paid to shareholders (2,035) (2,009)
Distributions to non-controlling interests (210) (160)
Other financing items (188) 38
-------- --------
Net cash outflow from financing activities (4,122) (3,542)
-------- --------
Increase/(decrease) in cash and bank overdrafts
in the period 3,099 (2,332)
-------- --------
Cash and bank overdrafts at beginning of the period 4,028 5,231
Exchange adjustments (21) (41)
Increase/(decrease) in cash and bank overdrafts 3,099 (2,332)
-------- --------
Cash and bank overdrafts at end of the period 7,106 2,858
-------- --------
Cash and bank overdrafts at end of the period comprise:
Cash and cash equivalents 7,546 3,163
Overdrafts (440) (305)
-------- --------
7,106 2,858
-------- --------
Segment information
Operating segments are reported based on the financial information
provided to the Chief Executive Officer and the responsibilities of
the Corporate Executive Team (CET). The completion of the Novartis
transaction on 2 March 2015 has changed the balance of the Group and
GSK has changed its segment reporting to reflect this. With effect
from 1 January 2015, GSK is reporting results under five segments:
Global Pharmaceuticals, ViiV Healthcare, Pharmaceuticals R&D, Vaccines
and Consumer Healthcare and individual members of the CET are responsible
for each segment. Comparative information has been restated accordingly.
The Group's management reporting process allocates intra-Group profit
on a product sale to the market in which that sale is recorded, and
the profit analyses below have been presented on that basis.
The Pharmaceuticals R&D segment is the responsibility of the Head
of Research & Development and is reported as a separate segment.
Corporate and other unallocated costs include the results of several
Vaccines and Consumer Healthcare products which are being held for
sale in a number of markets in order to meet anti-trust approval requirements,
together with the costs of corporate functions.
Turnover by segment
Q2 2014
Q2 2015 (restated) Growth
GBPm GBPm CER%
-------- ------------- -------
Global Pharmaceuticals 2,981 3,414 (12)
ViiV Healthcare 559 352 59
-------- ------------- -------
Total Pharmaceuticals 3,540 3,766 (6)
Vaccines 814 759 11
Consumer Healthcare 1,509 1,021 51
-------- ------------- -------
Segment turnover 5,863 5,546 7
Corporate and other unallocated turnover 25 15 87
-------- ------------- -------
Total turnover 5,888 5,561 7
-------- ------------- -------
Operating profit by segment
Q2 2014
Q2 2015 (restated) Growth
GBPm GBPm CER%
-------- ------------- -------
Global Pharmaceuticals 1,212 1,497 (18)
ViiV Healthcare 413 225 84
Pharmaceuticals R&D (509) (572) (15)
-------- ------------- -------
Total Pharmaceuticals 1,116 1,150 (1)
Vaccines 177 246 (32)
Consumer Healthcare 108 103 41
-------- ------------- -------
Segment profit 1,401 1,499 (3)
Corporate and other unallocated costs (52) (92) (93)
-------- ------------- -------
Core operating profit 1,349 1,407 3
Non-core items (1,014) (270)
-------- ------------- -------
Total operating profit 335 1,137 (61)
Finance income 12 18
Finance costs (194) (177)
Profit on disposal of associates 1 -
Share of after tax (losses)/profits of
associates and joint ventures (2) 8
-------- ------------- -------
Profit before taxation 152 986 (73)
-------- ------------- -------
Turnover by segment
H1 2014
H1 2015 (restated) Growth
GBPm GBPm CER%
-------- ------------- -------
Global Pharmaceuticals 6,058 6,921 (12)
ViiV Healthcare 1,005 663 51
-------- ------------- -------
Total Pharmaceuticals 7,063 7,584 (7)
Vaccines 1,513 1,410 11
Consumer Healthcare 2,890 2,142 37
-------- ------------- -------
Segment turnover 11,466 11,136 4
Corporate and other unallocated turnover 44 38 29
-------- ------------- -------
Total turnover 11,510 11,174 4
-------- ------------- -------
Operating profit by segment
H1 2014
H1 2015 (restated) Growth
GBPm GBPm CER%
-------- ------------- -------
Global Pharmaceuticals 2,468 3,093 (20)
ViiV Healthcare 731 429 70
Pharmaceuticals R&D (1,090) (1,131) (8)
-------- ------------- -------
Total Pharmaceuticals 2,109 2,391 (9)
Vaccines 338 457 (32)
Consumer Healthcare 290 228 47
-------- ------------- -------
Segment profit 2,737 3,076 (8)
Corporate and other unallocated costs (83) (139) (59)
-------- ------------- -------
Core operating profit 2,654 2,937 (6)
Non-core items 6,897 (734)
-------- ------------- -------
Total operating profit 9,551 2,203 >100
Finance income 44 36
Finance costs (385) (359)
Profit on disposal of associates 844 -
Share of after tax profits of associates
and joint ventures 21 9
-------- ------------- -------
Profit before taxation 10,075 1,889 >100
-------- ------------- -------
Legal matters
The Group is involved in significant legal and administrative proceedings,
principally product liability, intellectual property, tax, anti-trust
and governmental investigations as well as related private litigation,
which are more fully described in the 'Legal Proceedings' note in
the Annual Report 2014.
At 30 June 2015, the Group's aggregate provision for legal and other
disputes (not including tax matters described under 'Taxation' below)
was GBP0.4 billion (31 December 2014: GBP0.5 billion). The Group may
become involved in significant legal proceedings in respect of which
it is not possible to make a reliable estimate of the expected financial
effect, if any, that could result from ultimate resolution of the
proceedings. In these cases, the Group would provide appropriate disclosures
about such cases, but no provision would be made.
The ultimate liability for legal claims may vary from the amounts
provided and is dependent upon the outcome of litigation proceedings,
investigations and possible settlement negotiations. The Group's position
could change over time, and, therefore, there can be no assurance
that any losses that result from the outcome of any legal proceedings
will not exceed by a material amount the amount of the provisions
reported in the Group's financial accounts.
There have been no significant developments since the Annual Report
2014 and the quarter ended 31 March 2015.
Developments with respect to tax matters are described in 'Taxation'
below.
Taxation
There have been no material changes to historical tax matters since
the publication of the Annual Report. Issues in relation to taxation
are described in the 'Taxation' note in the Annual Report 2014. The
Group continues to believe it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the outcome
of agreements with relevant tax authorities.
In the quarter, tax on core profits amounted to GBP233 million and
represented an effective core tax rate of 20.0% (Q2 2014: 22.0%).
The charge for taxation on total profits amounted to GBP37 million
and represented an effective tax rate of 24.3% (Q2 2014: 28.8%).
In H1 2015, tax on core profits amounted to GBP464 million and represented
an effective core tax rate of 20.0% (H1 2014: 22.0%). The charge for
taxation on total profits amounted to GBP1,922 million and represented
an effective tax rate of 19.1% (H1 2014: 24.8%).
The core tax rate for the full year is also expected to be around
20%. The Group's balance sheet at 30 June 2015 included a tax payable
liability of GBP1,827 million, which includes the remaining taxation
payable on the Oncology disposal, and a tax recoverable asset of GBP96
million.
Additional information
Accounting policies and basis of preparation
This unaudited Results Announcement contains condensed financial information
for the three and six months ended 30 June 2015, is prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the Financial
Conduct Authority and IAS 34 'Interim financial reporting' and should
be read in conjunction with the Annual Report 2014, which was prepared
in accordance with International Financial Reporting Standards as
adopted by the European Union. This Results Announcement has been
prepared applying consistent accounting policies to those applied
by the Group in the Annual Report 2014, except that an amendment to
IAS 19 'Defined benefit plans: Employee contributions' has been implemented
from 1 January 2015. This revision has not had a material impact on
the results or financial position of the Group.
In addition, the segment information for 2014 has been restated to
reflect changes made to segments in 2015 as set out under 'Segment
information' above.
This Results Announcement does not constitute statutory accounts of
the Group within the meaning of sections 434(3) and 435(3) of the
Companies Act 2006. The full Group accounts for 2014 were published
in the Annual Report 2014, which has been delivered to the Registrar
of Companies and on which the report of the independent auditors was
unqualified and did not contain a statement under section 498 of the
Companies Act 2006.
Exchange rates
GSK operates in many countries, and earns revenues and incurs costs
in many currencies. The results of the Group, as reported in Sterling,
are affected by movements in exchange rates between Sterling and other
currencies. Average exchange rates, as modified by specific transaction
rates for large transactions, prevailing during the period, are used
to translate the results and cash flows of overseas subsidiaries,
associates and joint ventures into Sterling. Period-end rates are
used to translate the net assets of those entities. The currencies
which most influenced these translations and the relevant exchange
rates were:
Q2 2015 Q2 2014 H1 2015 H1 2014 2014
-------- -------- -------- -------- -----
Average rates:
US$/GBP 1.54 1.68 1.53 1.67 1.65
Euro/GBP 1.38 1.23 1.36 1.22 1.24
Yen/GBP 186 173 184 172 175
Period-end rates:
US$/GBP 1.57 1.71 1.57 1.71 1.56
Euro/GBP 1.41 1.25 1.41 1.25 1.29
Yen/GBP 192 173 192 173 187
During Q2 2015, average sterling exchange rates were stronger against
the Euro and the Yen, but weaker against the US Dollar, compared with
the same period in 2014. Similarly, during the six months ended 30
June 2015, average sterling exchange rates were stronger against the
Euro and the Yen, but weaker against the US Dollar compared with the
same period in 2014. Period-end sterling exchange rates were also
stronger against the Euro and the Yen, but weaker against the US Dollar.
Weighted average number of shares
Q2 2015 Q2 2014
millions millions
---------- ----------
Weighted average number of shares - basic 4,832 4,812
Dilutive effect of share options and share awards 42 62
---------- ----------
Weighted average number of shares - diluted 4,874 4,874
---------- ----------
H1 2015 H1 2014
millions millions
---------- ----------
Weighted average number of shares - basic 4,826 4,807
Dilutive effect of share options and share awards 42 63
---------- ----------
Weighted average number of shares - diluted 4,868 4,870
---------- ----------
At 30 June 2015, 4,834 million shares were in free issue (excluding
Treasury shares and shares held by the ESOP Trusts). This compares
with 4,804 million shares at 30 June 2014.
Net assets
The book value of net assets increased by GBP5,616 million from GBP4,936
million at 31 December 2014 to GBP10,552 million at 30 June 2015.
This primarily reflects the impact of the profit arising from the
disposal of the Group's oncology business to Novartis, the gain on
the sale of part of its shareholding in Aspen, partly offset by the
remeasurement of the ViiV Healthcare contingent consideration, the
Consumer Healthcare acquisition and the dividends paid in the period.
The carrying value of investments in associates and joint ventures
at 30 June 2015 was GBP85 million, with a market value of GBP159 million.
Assets held for sale amounted to GBP204 million at 30 June 2015 (31
December 2014: GBP1,156 million). The decrease in the period primarily
reflected the realisation of the assets sold to Novartis.
At 30 June 2015, the net deficit on the Group's pension plans was
GBP1,709 million compared with GBP1,689 million at 31 December 2014.
The increase in the net deficit primarily arose from an increase in
the UK inflation rate from 3% to 3.2%, together with the impact of
the Novartis transaction, partly offset by increases in the rates
used to discount UK pension liabilities from 3.6% to 3.8%, and US
pension liabilities from 3.8% to 4.2%.
At 30 June 2015, the post-retirement benefits provision was GBP1,315
million compared with GBP1,397 million at 31 December 2014. The decrease
in the provision arose from the increase in the rate used to discount
the US provision.
In certain circumstances, Novartis has the right to require GSK to
acquire its 36.5% shareholding in the Consumer Healthcare joint venture
at a market-based valuation. This right is exercisable in certain
windows from 2018 to 2035 and may be exercised either in respect of
Novartis' entire shareholding or in up to four instalments. If exercised,
GSK would not be able to avoid this obligation, and so has recognised
a financial liability of GBP6,274 million in Other non-current liabilities
as at the end of 30 June 2015. This represents the present value of
the estimated amount payable by GSK in the event of full exercise
of the right by Novartis. If the market multiples on which this valuation
is based were to change by 2%, there would be an impact on the income
statement of approximately GBP125 million.
In certain circumstances, the other shareholders in ViiV Healthcare,
Pfizer (11.7%) and Shionogi (10%) may require GSK to acquire their
shareholdings at a market based valuation. Pfizer may request an IPO
at any time and if either GSK does not consent to such IPO or an offering
is not completed within nine months, Pfizer could require GSK to acquire
its shareholding. Shionogi may also request GSK to acquire its shareholding
in ViiV in certain circumstances and limited windows in 2017, 2020
and 2022.
At 30 June 2015, the ESOP Trusts held 32.4 million GSK shares against
the future exercise of share options and share awards. The carrying
value of GBP151 million has been deducted from other reserves. The
market value of these shares was GBP439 million.
At 30 June 2015, the company held 491.5 million Treasury shares at
a cost of GBP6,917 million, which has been deducted from retained
earnings.
Contingent liabilities
There were contingent liabilities at 30 June 2015 in respect of guarantees
and indemnities entered into as part of the ordinary course of the
Group's business. No material losses are expected to arise from such
contingent liabilities. Provision is made for the outcome of legal
and tax disputes where it is both probable that the Group will suffer
an outflow of funds and it is possible to make a reliable estimate
of that outflow. Descriptions of the significant legal and tax disputes
to which the Group is a party are set out on page 42.
Business acquisitions and disposals
The three-part inter-conditional transaction with Novartis AG involving
the Consumer Healthcare, Vaccines and Oncology businesses completed
on 2 March 2015.
GSK and Novartis have contributed their respective Consumer Healthcare
businesses into a Consumer Healthcare Joint Venture in a non-cash
transaction. GSK has an equity interest of 63.5% and majority control
of the Joint Venture. In addition, GSK has acquired Novartis' global
Vaccines business (excluding influenza vaccines) for an initial cash
consideration of $5.25 billion with contingent consideration representing
subsequent potential milestone payments of up to $1.8 billion arising
on the achievement of specified development targets and ongoing royalties
based on the future sales performance of certain products, and so
the total amount payable is unlimited. The first milestone of $450
million (GBP300 million) was paid on 26 March 2015.
The fair values of the assets acquired, including goodwill are set
out in the table below.
Consumer
Healthcare Vaccines
GBPm GBPm
------------ ---------
Net assets acquired:
Intangible assets 5,976 2,680
Property, plant and equipment 250 434
Inventory 256 342
Trade and other receivables 414 162
Other assets including cash and cash
equivalents 317 232
Trade and other payables (388) (109)
Deferred tax liabilities (1,325) (98)
Other liabilities (154) (237)
------------ ---------
5,346 3,406
Non-controlling interest (2,114) (19)
Goodwill 884 548
------------ ---------
4,116 3,935
------------ ---------
Consideration settled by shares in GSK Consumer
Healthcare Holdings 4,116
Cash consideration paid 3,417
Contingent consideration 594
Deferred tax on contingent consideration (52)
Loss on settlement of pre-existing relationships (24)
------------ ---------
Total consideration 4,116 3,935
------------ ---------
The non-controlling interest in the Consumer Healthcare Joint Venture
calculated applying the full goodwill method represents Novartis'
share of the net assets of the joint venture together with attributable
goodwill. The goodwill in both businesses acquired represents the
potential for synergies arising from combining the acquired businesses
with GSK's existing businesses together with the value of the workforce
acquired. The majority of the goodwill recognised is not expected
to be deductible for tax purposes. Total transaction costs of the
acquisitions recognised in both 2014 and 2015 amounted to GBP100 million.
Since acquisition on 2 March 2015, turnover of GBP715 million arising
from these businesses has been included in Group turnover. If the
businesses had been acquired at the beginning of the year, it is estimated
that Group turnover in H1 2015 would have been approximately GBP320
million higher. These businesses have been integrated into the Group's
existing activities and it is not practicable to identify the impact
on the Group profit in the period.
GSK has also divested its marketed Oncology portfolio, related R&D
activities and rights to its AKT inhibitor and also granted commercialisation
partner rights for future oncology products to Novartis for consideration
of $16 billion (GBP10,395 million), as follows:
GBPm
-------
Cash consideration 10,395
Net assets sold:
Intangible assets (516)
Goodwill (497)
9,382
Disposal costs (135)
-------
Profit on disposal 9,247
-------
The amounts arising on the Novartis transaction are provisional and
subject to change.
In addition, GSK completed one small Vaccines business acquisition
for cash consideration of GBP120 million, net of cash acquired. This
represented goodwill of GBP22 million, intangible assets of GBP124
million less other net liabilities of GBP26 million. These amounts
are provisional and subject to change.
GSK also made a small business disposal in the period for net cash
consideration of GBP2 million.
Movements in contingent consideration are as follows:
H1 2015 H1 2014
GBPm GBPm
-------- --------
Contingent consideration at beginning of the period 1,724 924
Exchange adjustments (4) -
Additions 594 -
Remeasurement through goodwill - (4)
Remeasurement through income statement 976 68
Settlement (330) 41
-------- --------
Contingent consideration at end of the period 2,960 1,029
-------- --------
At 30 June 2015, contingent consideration arising on the Novartis
Vaccines acquisition amounted to GBP303 million, and on the acquisition
of the former Shionogi-ViiV Healthcare joint venture amounted to GBP2,619
million.
Financial instruments fair value disclosures
Certain of the Group's financial instruments are measured at fair
value. The following tables categorise these financial assets and
liabilities by the valuation methodology applied in determining their
fair value. Where possible, quoted prices in active markets are used
(Level 1). Where such prices are not available, the asset or liability
is classified as Level 2, provided all significant inputs to the valuation
model used are based on observable market data. If one or more of
the significant inputs to the valuation model is not based on observable
market data, the instrument is classified as Level 3.
Level Level Level
1 2 3 Total
At 30 June 2015 GBPm GBPm GBPm GBPm
------ ------ ------ ------
Financial assets at fair value
Available-for-sale financial assets:
Liquid investments 67 2 - 69
Other investments 1,464 - 202 1,666
Financial assets at fair value through
profit or loss:
Other non-current assets - 267 - 267
Derivatives designated as at fair
value through
profit or loss - 71 - 71
Derivatives classified as held
for trading under IAS 39 - 24 1 25
------ ------ ------ ------
1,531 364 203 2,098
------ ------ ------ ------
Financial liabilities at fair value
Financial liabilities at fair value
through profit or loss:
Trade and other payables - - (296) (296)
Other non-current liabilities - - (2,664) (2,664)
Derivatives designated as at fair
value through
profit or loss - (14) - (14)
Derivatives classified as held
for trading under IAS 39 - (108) (8) (116)
---- ------ -------- --------
- (122) (2,968) (3,090)
---- ------ -------- --------
Level Level Level
1 2 3 Total
At 30 June 2014 GBPm GBPm GBPm GBPm
------ ------ ------ ------
Financial assets at fair value
Available-for-sale financial assets:
Liquid investments 63 1 - 64
Other investments 1,113 - 170 1,283
Financial assets at fair value through
profit or loss:
Other non-current assets - 238 4 242
Derivatives designated as at fair
value through
profit or loss - 24 - 24
Derivatives classified as held
for trading under
IAS 39 - 69 - 69
------ ------ ------ ------
1,176 332 174 1,682
------ ------ ------ ------
Financial liabilities at fair value
Financial liabilities at fair value
through profit or loss:
Trade and other payables - - (8) (8)
Other non-current liabilities - - (1,021) (1,021)
Derivatives designated as at fair
value through
profit or loss - (13) - (13)
Derivatives classified as held
for trading under IAS 39 - (83) (23) (106)
---- ----- -------- --------
- (96) (1,052) (1,148)
---- ----- -------- --------
Level Level Level
1 2 3 Total
At 31 December 2014 GBPm GBPm GBPm GBPm
------ ------ ------ ------
Financial assets at fair value
Available-for-sale financial assets:
Liquid investments 67 2 - 69
Other investments 892 - 222 1,114
Financial assets at fair value through
profit or loss:
Other non-current assets - 264 5 269
Derivatives designated as at fair
value through
profit or loss - 76 - 76
Derivatives classified as held
for trading under IAS 39 - 69 1 70
------ ------ ------ ------
959 411 228 1,598
------ ------ ------ ------
Financial liabilities at fair value
Financial liabilities at fair value
through profit or loss:
Trade and other payables - - (105) (105)
Other non-current liabilities - - (1,619) (1,619)
Derivatives designated as at fair
value through
profit or loss - (3) - (3)
Derivatives classified as held
for trading under IAS 39 - (402) (8) (410)
---- ------ -------- --------
- (405) (1,732) (2,137)
---- ------ -------- --------
Movements in the six months to 30 June 2015 for financial instruments
measured using Level 3 valuation methods are presented below:
Financial Financial
assets liabilities
GBPm GBPm
---------- -------------
At 1 January 2015 228 (1,732)
Losses recognised in the income statement (5) (976)
Gains recognised in other comprehensive income 6 -
Additions 37 (594)
Transfers from Level 3 (7) -
Equity investment disposals (51) -
Payments in the period - 330
Exchange (5) 4
---------- -------------
At 30 June 2015 203 (2,968)
---------- -------------
At 1 January 2014 205 (962)
Losses recognised in the income statement - (87)
Gains recognised in other comprehensive income 3 -
Additions 24 (3)
Transfers from Level 3 (41) -
Equity investment disposals (12) -
Exchange (5) -
----- --------
At 30 June 2014 174 (1,052)
----- --------
Net losses of GBP981 million (2014: net losses of GBP87 million) and
net gains of GBP2 million (2014: net gains of GBPnil) attributable
to Level 3 financial instruments held at the end of the period were
reported in other operating income and other comprehensive income
respectively.
At 30 June 2015, financial liabilities measured using Level 3 valuation
methods included GBP2,619 million of contingent consideration for
the acquisition of the former Shionogi-ViiV Healthcare joint venture.
This consideration is expected to be paid over a number of years and
will vary in line with sales of dolutegravir and other compounds.
The financial liability is measured at the present value of expected
future cash flows, the most significant inputs to the valuation model
being future sales forecasts and market interest rates.
At 30 June 2015, financial liabilities measured using Level 3 valuation
methods included GBP303 million of contingent consideration for the
acquisition of the Novartis Vaccines business. This consideration
is expected to be paid out over a number of years and will vary in
line with product sales and the achievement of certain milestone targets.
The financial liability is measured at the present value of expected
future cash flows, the most significant inputs to the valuation model
being future sales forecasts, market interest rates and probability
of success in achieving milestone targets.
The table below shows, on an indicative basis, the income statement
and balance sheet sensitivity to reasonably possible changes in key
inputs to the valuation of this liability.
Increase/(decrease) in financial liability and loss/(gain) in Income
statement from change in key inputs
Shionogi
Novartis +
vaccines ViiV Healthcare
GBPm GBPm
---------- -----------------
10% increase in sales forecasts 16 274
10% decrease in sales forecasts (16) (274)
1% increase in market interest rates (21) (115)
1% decrease in market interest rates 24 124
10% increase in probability of milestone success 59
10% decrease in probability of milestone success (59)
The Group transfers financial instruments between different levels
in the fair value hierarchy when, as a result of an event or change
in circumstances, the valuation methodology applied in determining
their fair values alters in such a way that it meets the definition
of a different level. There were no transfers between the Level 1
and Level 2 fair value measurement categories in the period. Transfers
from Level 3 relate to equity investments in companies which were
listed on stock exchanges during the period.
The following methods and assumptions were used to measure the fair
value of the significant financial instruments carried at fair value
on the balance sheet:
-- Liquid investments - based on quoted market prices or calculated
based on observable inputs in the case of marketable securities;
based on principal amounts in the case of non-marketable securities
because of their short repricing periods
-- Other investments - equity investments traded in an active market
determined by reference to the relevant stock exchange quoted bid
price; other equity investments determined by reference to the current
market value of similar instruments or by reference to the discounted
cash flows of the underlying net assets
-- Contingent consideration for business acquisitions after 1 January
2010 - based on present value of expected future cash flows
-- Interest rate swaps and foreign exchange contracts - based on the
present value of contractual cash flows using market-sourced data
(exchange rates or interest rates) at the balance sheet date
-- Company-owned life insurance policies - based on cash surrender
value
There are no material differences between the carrying value of the
Group's other financial assets and liabilities and their estimated
fair values, with the exception of bonds, for which the carrying values
and fair values are set out in the table below:
30 June 2015 30 June 2014 31 December 2014
-------------------- -------------------- --------------------
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- --------- --------- --------- ---------
Bonds in a designated
hedging relationship (3,776) (3,958) (2,275) (2,496) (4,124) (4,349)
Other bonds (12,802) (14,492) (12,770) (14,252) (13,540) (15,706)
--------- --------- --------- --------- --------- ---------
(16,578) (18,450) (15,045) (16,748) (17,664) (20,055)
--------- --------- --------- --------- --------- ---------
The following methods and assumptions are used to estimate the fair
values of financial assets and liabilities which are not measured
at fair value on the balance sheet:
-- Cash and cash equivalents - approximates to the carrying amount
-- Short-term loans, overdrafts and commercial paper - approximates
to the carrying amount because of the short maturity of these instruments
-- Long-term loans - based on quoted market prices in the case of the
European and US Medium term notes and other fixed rate borrowings;
approximates to the carrying amount in the case of floating rate
bank loans and other loans
-- Receivables and payables - approximates to the carrying amount
-- Lease obligations - approximates to the carrying amount
-- Other non-current liabilities - approximates to the carrying amount
Reconciliation of cash flow to movements in net debt
H1 2015 H1 2014
GBPm GBPm
--------- ---------
Net debt at beginning of the period (14,377) (12,645)
Increase/(decrease) in cash and bank overdrafts 3,099 (2,332)
Net repayment of short-term loans 1,289 204
Net repayment of obligations under finance leases 11 11
Exchange adjustments 431 333
Other non-cash movements (6) 6
--------- ---------
Decrease/(increase) in net debt 4,824 (1,778)
--------- ---------
Net debt at end of the period (9,553) (14,423)
--------- ---------
Core results reconciliations
The reconciliations between core results and total results for Q2
2015 and Q2 2014 and also H1 2015 and H1 2014 are set out below.
Income statement - Core results reconciliation
Three months ended 30 June 2015
Acquisition
accounting
Core Intangible Intangible Major Legal and Total
results amortisation impairment restructuring costs other results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------ ------------ ------------ ------------ ------------
Turnover 5,888 5,888
Cost of sales (1,779) (116) 3 (56) (57) (2,005)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Gross profit 4,109 (116) 3 (56) (57) 3,883
Selling, general
and
administration (2,091) (404) (50) 4 (2,541)
Research and
development (731) (9) (5) (55) (12) (812)
Royalty income 62 62
Other operating
income/(expense) (257) (257)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating profit 1,349 (125) (2) (515) (50) (322) 335
Net finance costs (178) (2) (2) (182)
Profit on
disposal of
associates 1 1
Share of after
tax profits
of associates
and joint
ventures (2) (2)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit before
taxation 1,169 (125) (2) (517) (50) (323) 152
Taxation (233) 17 127 1 51 (37)
Tax rate % 20.0% 24.3%
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit after
taxation 936 (108) (2) (390) (49) (272) 115
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit
attributable
to
non-controlling
interests 99 (133) (34)
Profit
attributable
to
shareholders 837 (108) (2) (390) (49) (139) 149
------------ ------------ ------------ ------------ ------------ ------------ ------------
Earnings per
share 17.3p (2.2)p - (8.1)p (1.0)p (2.9)p 3.1p
------------ ------------ ------------ ------------ ------------ ------------ ------------
Weighted average
number
of shares
(millions) 4,832 4,832
------------ ------------
The allocation of non-core items to non-controlling interests is presented
as one amount in the 'Acquisition accounting and other' column.
Income statement - Core results reconciliation
Three months ended 30 June 2014
Acquisition
accounting
Core Intangible Intangible Major Legal and Total
results amortisation impairment restructuring costs other results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------ ------------ ------------ ------------ ------------
Turnover 5,561 5,561
Cost of sales (1,538) (135) 1 (48) (2) (1,722)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Gross profit 4,023 (135) 1 (48) (2) 3,839
Selling, general
and
administration (1,922) (48) (47) (38) (2,055)
Research and
development (766) (17) (2) (5) (19) (809)
Royalty income 72 72
Other operating
income/(expense) 90 90
------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating profit 1,407 (152) (1) (101) (47) 31 1,137
Net finance costs (156) (1) (2) (159)
Share of after
tax profits
of associates
and joint
ventures 8 8
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit before
taxation 1,259 (152) (1) (102) (47) 29 986
Taxation (277) 37 - 23 5 (72) (284)
Tax rate % 22.0% 28.8%
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit after
taxation 982 (115) (1) (79) (42) (43) 702
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit
attributable
to
non-controlling
interests 61 (13) 48
Profit
attributable
to
shareholders 921 (115) (1) (79) (42) (30) 654
------------ ------------ ------------ ------------ ------------ ------------ ------------
Earnings per
share 19.1p (2.3)p - (1.6)p (0.9)p (0.7)p 13.6p
------------ ------------ ------------ ------------ ------------ ------------ ------------
Weighted average
number
of shares
(millions) 4,812 4,812
------------ ------------
The allocation of non-core items to non-controlling interests is presented
as one amount in the 'Acquisition accounting and other' column.
Income statement - Core results reconciliation
Six months ended 30 June 2015
Acquisition
accounting
Core Intangible Intangible Major Legal and Total
results amortisation impairment restructuring costs other results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------ ------------ ------------ ------------ ------------
Turnover 11,510 11,510
Cost of sales (3,518) (254) (78) (211) (47) (4,108)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Gross profit 7,992 (254) (78) (211) (47) 7,402
Selling, general
and
administration (3,957) (583) (135) (91) (4,766)
Research and
development (1,520) (22) (26) (87) (24) (1,679)
Royalty income 139 139
Other operating
income/(expense) 8,455 8,455
------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating profit 2,654 (276) (104) (881) (135) 8,293 9,551
Net finance costs (334) (3) (4) (341)
Profit on
disposal of
associates 844 844
Share of after
tax profits
of associates
and joint
ventures 5 16 21
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit before
taxation 2,325 (276) (104) (884) (135) 9,149 10,075
Taxation (464) 54 25 228 1 (1,766) (1,922)
Tax rate % 20.0% 19.1%
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit after
taxation 1,861 (222) (79) (656) (134) 7,383 8,153
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit
attributable
to
non-controlling
interests 190 (275) (85)
Profit
attributable
to
shareholders 1,671 (222) (79) (656) (134) 7,658 8,238
------------ ------------ ------------ ------------ ------------ ------------ ------------
Earnings per
share 34.6p (4.6)p (1.6)p (13.6)p (2.8)p 158.7p 170.7p
------------ ------------ ------------ ------------ ------------ ------------ ------------
Weighted average
number
of shares
(millions) 4,826 4,826
------------ ------------
The allocation of non-core items to non-controlling interests is presented
as one amount in the 'Acquisition accounting and other' column.
Income statement - Core results reconciliation
Six months ended 30 June 2014
Acquisition
accounting
Core Intangible Intangible Major Legal and Total
results amortisation impairment restructuring costs other results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------ ------------ ------------ ------------ ------------
Turnover 11,174 11,174
Cost of sales (3,096) (282) (14) (71) (2) (3,465)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Gross profit 8,078 (282) (14) (71) (2) 7,709
Selling, general
and
administration (3,733) (100) (155) (38) (4,026)
Research and
development (1,550) (40) (35) (9) (34) (1,668)
Royalty income 142 142
Other operating
income/(expense) - 46 46
------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating profit 2,937 (322) (49) (180) (155) (28) 2,203
Net finance costs (317) (2) (4) (323)
Profit on
disposal of
associates - -
Share of after
tax profits
of associates
and joint
ventures 9 - 9
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit before
taxation 2,629 (322) (49) (182) (155) (32) 1,889
Taxation (578) 81 9 42 27 (49) (468)
Tax rate % 22.0% 24.8%
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit after
taxation 2,051 (241) (40) (140) (128) (81) 1,421
------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit
attributable
to
non-controlling
interests 123 (24) 99
Profit
attributable
to
shareholders 1,928 (241) (40) (140) (128) (57) 1,322
------------ ------------ ------------ ------------ ------------ ------------ ------------
Earnings per
share 40.1p (5.0)p (0.8)p (2.9)p (2.7)p (1.2)p 27.5p
------------ ------------ ------------ ------------ ------------ ------------ ------------
Weighted average
number
of shares
(millions) 4,807 4,807
------------ ------------
The allocation of non-core items to non-controlling interests is
presented as one amount in the 'Acquisition accounting and other'
column.
Principal risks and uncertainties
The principal risks and uncertainties affecting the Group are those
described under the headings below. These are detailed in the 'Risk
factors' section of the Annual Report 2014.
Patient safety Failure to appropriately collect, review, follow
up, or report adverse events from all potential
sources, and to act on any relevant findings
in a timely manner.
Intellectual property Failure to appropriately secure and protect intellectual
property rights.
Product quality Failure to comply with current Good Manufacturing
Practices or inadequate controls and governance
of quality.
Supply chain continuity Failure to deliver a continuous supply of compliant
finished product.
Financial reporting Failure to report accurate financial information
and disclosure in compliance with accounting standards and applicable
legislation.
Tax and treasury Failure to comply with current tax law or incurring
significant losses due to treasury activities.
Anti-Bribery and Corruption Failure to comply with applicable local and international
(ABAC) ABAC legislation.
Commercial practices Failure to engage in commercial and/or scientific
and scientific engagement activities that are consistent with the letter
and spirit of legal, industry, or the Group's
requirements relating to marketing and communications
about our medicines and therapeutic areas.
Research practices Failure to protect and inform patients involved
in human clinical trial research and, generally,
to conduct clinical trials in compliance with
law.
Environment, health Failure to manage EHSS consistent with the Group's
& safety and sustainability objectives, policies and relevant laws and regulations.
(EHSS)
Information protection Failure to protect and maintain access to critical
or sensitive computer systems or information.
Crisis and continuity Inability to recover and sustain critical operations
management following a disruption or to respond to a crisis
incident in a timely manner.
Third-party oversight Failure to maintain adequate governance and oversight
over third-party relationships.
Directors' responsibility statement
The Board of Directors approved this Half-yearly Financial Report on
29 July 2015.
The Directors confirm that to the best of their knowledge the unaudited
condensed financial information has been prepared in accordance with
IAS 34 as adopted by the European Union and that the interim management
report includes a fair review of the information required by DTR 4.2.7
and DTR 4.2.8.
After making enquiries, the Directors considered it appropriate to
adopt the going concern basis in preparing this Half-yearly Financial
Report.
The Directors of GlaxoSmithKline plc are as follows:
Sir Philip Hampton Chairman (Non-Executive Director)
Sir Andrew Witty Chief Executive (Executive Director)
Simon Dingemans Chief Financial Officer (Executive Director)
Dr Moncef Slaoui Chairman, Global Vaccines (Executive Director)
Professor Sir Roy Independent Non-Executive Director
Anderson
Dr Stephanie Burns Independent Non-Executive Director
Stacey Cartwright Independent Non-Executive Director
Lynn Elsenhans Independent Non-Executive Director, Corporate Responsibility
Committee Chairman
Judy Lewent Independent Non-Executive Director, Audit & Risk
Committee Chairman
Sir Deryck Maughan Senior Independent Non-Executive Director
Dr Daniel Podolsky Independent Non-Executive Director
Urs Rohner Independent Non-Executive Director, Remuneration
Committee Chairman
Hans Wijers Independent Non-Executive Director
By order of the Board
Sir Andrew Witty Simon Dingemans
Chief Executive Officer Chief Financial Officer
29 July 2015
Independent review report to GlaxoSmithKline plc
Report on the condensed financial information
Our conclusion
We have reviewed the condensed financial information, defined below,
in the Results Announcement of GlaxoSmithKline plc for the three and
six months ended 30 June 2015. Based on our review, nothing has come
to our attention that causes us to believe that the condensed financial
information is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
This conclusion is to be read in the context of what we say in the
remainder of this report.
What we have reviewed
The condensed financial information, which is prepared by GlaxoSmithKline
plc, comprises:
-- the balance sheet at 30 June 2015;
-- the income statement and statement of comprehensive income for the
three and six month periods then ended;
-- the cash flow statement for the six month period then ended;
-- the statement of changes in equity for the six month period then
ended; and
-- the accounting policies and basis of preparation and related notes
on pages 39 to 50 (excluding the Pharmaceuticals and Vaccines turnover
tables).
As disclosed on page 43, the financial reporting framework that has
been applied in the preparation of the full annual financial statements
of the Group is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
The condensed financial information included in the Results Announcement
has been prepared in accordance with the accounting policies set out
in the accounting policies and basis of preparation section on page
43.
What a review of condensed financial information involves
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity' issued
by the Auditing Practices Board for use in the United Kingdom. A review
of interim financial information consists of making enquiries, primarily
of persons responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Results Announcement
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed financial information.
Responsibilities for the condensed financial information and the review
Our responsibilities and those of the directors
The Results Announcement, including the condensed financial information,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the Results Announcement
in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the Company a conclusion on the
condensed financial information in the Results Announcement based
on our review. This report, including the conclusion, has been prepared
for and only for the Company for the purpose of complying with the
Disclosure and Transparency Rules of the Financial Conduct Authority
and for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
29 July 2015
London
Notes:
(a) The maintenance and integrity of the GlaxoSmithKline plc website
is the responsibility of the directors; the work carried out by
the auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the condensed financial information
since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of condensed financial information may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GMGZNGLGGKZM
1 Year Gsk Chart |
1 Month Gsk Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
