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GlaxoSmithKline PLC — Interim / Quarterly Report 2011
Apr 27, 2011
5262_ffr_2011-04-27_0e2909b9-1299-41d8-a878-89739e32cbc7.zip
Interim / Quarterly Report
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
xbrl,dc
For the period ending 27 th April 2011
/xbrl,dc
GlaxoSmithKline plc
(Name of registrant)
980 Great West Road, Brentford, Middlesex, TW8 9GS (Address of principal executive offices)
Indicate by check mark if the registrant files or will file annual reports under cover Form 20-F or Form 40-F
Form 20-F þ Form 40-F o
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No þ
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SIGNATURES
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link1 "SIGNATURES"
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
| Date:
April 27th, 2011 | |
| --- | --- |
| By: | /s/ Victoria Whyte |
| | VICTORIA WHYTE |
| | Authorised Signatory for and on behalf of
GlaxoSmithKline plc |
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PRESS RELEASE Issued: Wednesday, 27th April 2011, London, UK Results announcement for the first quarter 2011
GSK Q1 performance demonstrates continued progress with delivery of underlying sales growth*, cash generation and pipeline visibility
Reported sales -10%; underlying sales +4% EPS before major restructuring 32.2p (+9%); dividend 16p (+7%)
Results before major restructuring*
| £m | CER% | £% | |||
|---|---|---|---|---|---|
| Turnover | 6,585 | (10 | ) | (10 | ) |
| Earnings per share | 32.2p | 9 | 5 |
Total results
| £m | CER% | £% | |||
|---|---|---|---|---|---|
| Turnover | 6,585 | (10 | ) | (10 | ) |
| Restructuring charges | 135 | ||||
| Earnings per share | 30.0p | 18 | 14 |
The full results are presented under Income Statement on page 9.
- For explanations of the measures Results before major restructuring, CER growth and Underlying sales growth, which excludes pandemic products, Avandia and Valtrex , see page 8.
Summary
Underlying sales growth across each of Pharmaceuticals, Vaccines and Consumer:
| - | Strong underlying pharmaceutical sales growth* in Emerging Markets (+23%) and
Japan (+53%) more than offset declines in USA (-4%) and Europe (-5%) |
| --- | --- |
| - | Sales of new pharmaceuticals, including vaccines, £575 million (+40%) |
| - | Consumer sales +7% with growth across all categories (OTC, Oral care, Nutritionals) |
| - | Reported sales -10% reflecting loss of approximately £1 billion of sales of
pandemic products, Avandia and Valtrex |
Continuing focus on costs, cash generation and capital allocation:
| - | Cost and operating margin expectations for 2011 unchanged |
|---|---|
| - | Annualised restructuring benefits of £1.9 billion delivered; on track for 2012 |
| £2.2 billion target | |
| - | Adjusted net cash inflow from operating activities (excluding £451 million cash |
| outflow for legal matters) £1.4 billion | |
| - | Quest and Zovirax divestments realise cash proceeds of £1.2 billion; net EPS |
| contribution of 7.1p | |
| - | Net debt down £440 million to £8.4 billion |
Enhancing returns to shareholders:
| - | Q1 dividend up 7% to 16p |
|---|---|
| - | £317 million of shares repurchased in Q1; 2011 share buybacks now expected to be |
| at top end of £1-2 billion range |
Increasing pipeline visibility:
| - | 3 product approvals year to date ( Benlysta (USA), Trobalt (EU), Horizant (USA))
and one filing ( Nimenrix (EU)) |
| --- | --- |
| - | Positive Phase III studies for IPX066 (Parkinsons disease) and Votrient (sarcoma), Phase III study for otelixizumab (Type 1 diabetes) failed to show
efficacy |
| - | Phase III data expected on an additional ~12 assets by end of 2012 |
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PRESS RELEASE
GSKs strategic priorities
GSK has focused its business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve GSKs long-term financial performance:
| | Grow a diversified global business |
|---|---|
| | Deliver more products of value |
| | Simplify GSKs operating model |
Chief Executive Officers Review
These first quarter results are in line with the expectation that I set out in February that GSK will make significant progress during 2011 to improve sales performance, enhance cash generation and deliver new product approvals and pipeline visibility.
Reported sales were down 10%, reflecting a £1 billion reduction in sales of pandemic products, Avandia and Valtrex versus a year ago. This impact is set to decline going forward and we expect underlying sales growth to translate into sustainable reported growth in 2012.
Underlying sales grew 4%, reflecting growth across multiple areas of the business including Emerging Markets, Japan and Consumer Healthcare. On the same basis US and Europe pharmaceutical sales declined 4% and 5% respectively primarily as a result of the year-on-year impact of US Healthcare reform and EU austerity measures.
We also remain focused on driving operating leverage through the business. As we have previously signalled, there will be some volatility in quarterly margins during the year as sales from pandemic products, Avandia and Valtrex decrease. Margins for the first quarter are in line with our expectations. We also remain on track to deliver £2.2 billion of annual restructuring savings by 2012.
Adjusted net cash inflow from operating activities in the quarter (excluding legal payments) was £1.4 billion. We continue to focus on improvements in business efficiency, including our working capital reduction programme, to enhance cash conversion. Cash contribution from our ongoing operations is in line with our expectations, inevitably impacted this quarter by the reduction in sales from pandemic products, Avandia and Valtrex.
This quarter we also sold our shareholding in Quest Diagnostics and our remaining commercial interests in topical Zovirax in North America for cash proceeds of £1.2 billion. The Quest, Zovirax and previously announced proposed non-core OTC divestments (2010 sales of ~£500 million) are all examples of our strategy to optimise returns to shareholders.
Increased confidence in the operating performance of the business and resulting cash generation is allowing us to accelerate returns to shareholders. We have increased the dividend by 7% to 16p and we remain committed to further growth. Share buy-backs currently offer attractive returns and we now expect share repurchases this year to be at the top end of the £1-2 billion range we had previously set. In addition, net proceeds from the proposed divestment of our non-core OTC assets will also be returned to shareholders. This divestment is expected towards the end of 2011.
Pipeline delivery continues to be encouraging, with regulatory approvals for three new products so far this year ( Benlysta (USA), Horizant (USA) and Trobalt (EU)). We have also received data on three of the 15 assets that we are expecting updates on by the end of 2012. Two studies, one of IPX066 in Parkinsons disease and one of Votrient in sarcoma, were positive. A third study of otelixizumab in Type 1 diabetes failed to show efficacy. We continue to evaluate opportunities for future development of this molecule across multiple indications.
One of our key goals is to increase returns on investment in R&D and we have made fundamental changes within the organisation to achieve this. Our continued progress in both pipeline delivery and cost reduction supports our belief that we can achieve this objective.
In summary, I believe this first quarter performance is positive on many fronts, with good progress made in delivery of our strategy to improve long-term financial performance.
Andrew Witty
Chief Executive Officer
A short video with Andrew Witty discussing todays results and GSKs strategic progress is available on www.gsk.com .
Issued: Wednesday, 27th April 2011, London, U.K. 2
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PRESS RELEASE
Trading update
Turnover and key product movements impacting growth for the quarter
Total Group turnover for the quarter declined 10% to £6,585 million, with pharmaceutical turnover down 14% to £5,264 million and Consumer Healthcare sales up 7% to £1,321 million.
Reported turnover declined in all pharmaceutical regions except Asia Pacific, which increased 1%: USA fell 13%, Europe 23%, Emerging Markets 1% and Japan 24%. ViiV Healthcare sales declined by 4%.
Pandemic related sales, Avandia and Valtrex
As expected, sales of pandemic related products, Avandia and Valtrex declined significantly from £1,127 million in Q1 2010 to £140 million in Q1 2011. The decline of these products had a significant negative impact on reported pharmaceutical sales growth in all regions.
The quarter-on-quarter negative impact on reported growth related to these products will be lower in future quarters. (Total sales for these products in Q2 2010, Q3 2010 and Q4 2010 were £600 million, £241 million and £317 million, respectively).
Underlying trading performance
The following pharmaceutical sales growth analysis is presented on an underlying basis, see page 8.
Underlying sales
Underlying sales growth (excluding sales of pandemic related products, Avandia and Valtrex ) for the Group was 4% (underlying pharmaceutical sales growth was 3%). This was achieved despite the impact of US Healthcare reform and European austerity measures which together reduced sales by approximately £85 million this quarter compared with the same quarter last year.
The full year 2011 incremental negative impact on sales against 2010 of these measures is expected to be approximately £325 million. The industry levy associated with US Healthcare reform will also result in approximately £77 million in additional SG&A costs in 2011, with £19 million recorded in Q1 2011.
Regional underlying pharmaceutical sales
US pharmaceuticals sales were down 4% to £1,571 million, primarily reflecting higher discounts required as a result of US Healthcare reform, generic competition to Hycamtin which began in the fourth quarter of 2010, and the impact of the divestment of Zovirax which was sold during the quarter to Valeant Pharmaceuticals.
Europe pharmaceuticals sales were £1,418 million, down 5%, primarily due to the impact of government austerity measures and a large tender sale of Cervarix in the UK recorded in the first quarter of 2010.
Emerging Markets pharmaceuticals grew 23% to £830 million. Excluding the benefit of bolt-on acquisitions that have not yet reached their first anniversary, the region grew 18%, with strong growth across most product categories. Asia Pacific pharmaceuticals grew 12% to £291 million.
Sales in Japan grew 53% to £465 million, led by strong sales of Cervarix (£70 million), where the product is the only HPV vaccine currently approved by regulators, and of respiratory medicines which benefited from a strong allergy season this year (+50% to £177 million). Growth rates in Q1 2011 also reflected a favourable comparison with Q1 2010 (when underlying sales were £279 million, up 1%) which was negatively impacted by wholesaler de-stocking in anticipation of government price reductions implemented in Q2 2010.
Issued: Wednesday, 27th April 2011, London, U.K. 3
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Pharmaceutical products
Respiratory sales grew 3% to £1,815 million, with growth from Flovent (+4% to £202 million), Ventolin (+27% to £146 million) and Avamys/Veramyst (+52% to £72 million), offsetting a 2% decline in Seretide/Advair sales to £1,223 million.
In the USA, reported sales of Advair were down 5% to £586 million. On an underlying basis, sales for the quarter declined approximately 1% (4% volume decline largely offset by 3% positive impact of mix and price). The 4 percentage point difference between underlying and reported growth is primarily due to wholesaler and retail de-stocking that occurred in the quarter. Flovent , the markets leading single agent inhaled corticosteroid, grew 11% to £107 million.
Sales of Seretide in Europe (-4% to £399 million) and Emerging Markets (-6% to £76 million) were negatively impacted by higher levels of discounts (required as a result of austerity measures by European governments) and price cuts in Turkey and Russia. Growth was also affected by comparison with strong performances in Q1 2010 (when Europe grew 10% and Emerging Markets grew 28%). Seretide/Advairs total performance was helped by strong growth in Japan (+30% to £65 million).
Total vaccine sales (excluding pandemic sales) were £753 million (+5%), with strong growth in Japan (£70 million in Q1 2011 compared with £6 million in Q1 2010) and Emerging Markets (+49% to £178 million). In the USA, vaccine sales were £155 million, down 7% compared with a very strong quarter a year ago when reported growth was +55%, which reflected the benefit of supply shortages of competitor products. Vaccine sales in Europe were down 23% to £236 million, primarily as a result of a large tender sale of Cervarix in the UK recorded in the first quarter of 2010.
Dermatology sales were up 3% to £273 million in the quarter. Excluding £10 million of sales from a private business acquired in the fourth quarter of 2010 and the impact of the disposal of Zovirax in North America (sold to Valeant Pharmaceuticals), dermatology sales grew 5%. In addition, GSKs heritage consumer dermatology portfolio, reported within Consumer Healthcare, contributed sales of £68 million (+10%).
Total sales of new products (launched since beginning of 2007 and excluding pandemic vaccine) were £575 million and grew 40% in the quarter. The most significant contributors to this growth were Cervarix , Synflorix and Avamys/Veramyst .
Other strong pharmaceutical performances in the quarter included Augmentin (+19% to £187 million), Avodart (+20% to £166 million) and Lovaza (+21% to £127 million).
Sales of HIV products by ViiV Healthcare were down 4% to £353 million. Growth from Epzicom/Kivexa (+8% to £140 million) and Selzentry (+26% to £23 million) was offset by reductions in the sales from other HIV products including Combivir (-12% to £71 million) and Trizivir (-21% to £30 million).
Consumer Healthcare
Total Consumer Healthcare sales were up 7% to £1,321 million, outpacing estimated market growth of approximately 5% in the quarter.
Sales in Rest of World grew 15% to £605 million, with strong growth in all key markets and all major categories: OTC medicines +14%, Oral healthcare +18% and Nutritional healthcare +12%. Europe sales grew 2% to £475 million, with growth in Nutritional healthcare (+6%), respiratory tract products (+10%) and analgesics (+12%) offsetting the impact of lower sales of alli (£20 million in Q1 2011 compared with £34 million in Q1 2010). The USA grew 1% to £241 million, with strong performances from Sensodyne, Tums, Poligrip , Biotene, and Breathe Right offsetting lower sales of alli and Aquafresh .
Issued: Wednesday, 27th April 2011, London, U.K. 4
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On a category basis, global Oral healthcare sales grew 12% to £426 million, led by Sensodyne which is benefiting from the launch of Sensodyne Rapid Relief that began during 2010. The launch of the new Sensodyne Repair and Protect product began in certain markets during Q1 2011. Nutritional healthcare sales grew 9% to £254 million, led by growth of Horlicks and Lucozade . Sales of OTC medicines were £641 million, up 3%, with strong growth of Panadol , respiratory tract products, and core gastrointestinal brands Tums and Eno , partly offset by lower sales of alli in both the USA and Europe.
Excluding the OTC brands which have been proposed for divestment (2010 annual sales of approximately £500 million) the remaining portfolio grew approximately 11% in the quarter.
Operating profit and earnings per share commentary
Results before major restructuring
Operating profit before major restructuring for Q1 2011 was £2,170 million, a 5% decline in CER terms and a decrease of 9% in sterling terms. The reduction reflected the decline in higher margin sales of flu pandemic products, Avandia and Valtrex, only partially offset by lower SG&A, legal and R&D costs and higher other operating income in the quarter. The company continues to expect operating margin (excluding legal charges and other operating income) in 2011 to be around 1 percentage point lower than in 2010.
Cost of sales for Q1 2011 increased to 27.0% of turnover (Q1 2010: 26.2%). This reflected the impact of the reduction of higher margin sales of flu pandemic products, Avandia and Valtrex ; together with the effect of regional mix during the quarter, particularly the phasing of lower margin vaccine tenders in Emerging Markets, and the impact of US Healthcare reform and European austerity price cuts. These adverse impacts were partially offset by lower inventory write-offs and greater savings from the operational excellence restructuring programme in the quarter compared with Q1 2010. The company continues to expect 2011 cost of sales as a percentage of turnover to be around 26%.
In Q1 2011, SG&A costs as a percentage of turnover were unchanged from Q1 2010 at 31.2%. Excluding legal costs (£nil in Q1 2011, £210 million in Q1 2010), SG&A costs were 2.8 percentage points higher in Q1 2011 than in Q1 2010. This reflected the impact of the reduction in sales of flu pandemic products, Avandia and Valtrex , lower exchange gains on intercompany transactions and a 6% decrease in costs as operational efficiency savings were partially offset by investment in Emerging Markets and the introduction of the US Healthcare reform levy. The company continues to expect 2011 SG&A costs, excluding legal charges, as a percentage of turnover to be around 30.5%.
R&D expenditure in Q1 2011 was 13.6% of turnover (Q1 2010: 12.8%) and included £8 million of intangible asset write-offs (Q1 2010: £32 million). Excluding the impact of the reduction in write-offs, R&D expenditure was broadly in line with Q1 2010 as additional investment was offset by efficiency savings. The company continues to expect 2011 R&D costs as a percentage of turnover to be around 14%.
Other operating income was £317 million (Q1 2010: £199 million) primarily reflecting royalty income of £72 million (Q1 2010: £80 million) and asset disposals of £253 million (Q1 2010: £122 million). The increase compared with Q1 2010 principally reflected the disposal of the rights to the Zovirax brand in the USA and Canada and other non-core product divestments. The company continues to expect other operating income of around £600 million for the year, excluding the profit arising on the proposed Consumer Healthcare divestments of non-core OTC brands.
The pre-tax profit on the disposal of interests in associates was £584 million (£246 million after tax), reflecting the disposal of the remaining shares in Quest Diagnostics.
Issued: Wednesday, 27th April 2011, London, U.K. 5
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PRESS RELEASE
Tax on profit before major restructuring charges amounted to £901 million and represented an effective tax rate of 34.7% (Q1 2010: 27.7%). Excluding the impact of the tax on the disposals of the Quest shares and Zovirax in North America, the tax rate for the quarter was approximately 27%. The company continues to expect a tax rate for the full year, excluding the Quest disposal and the effect of any tax on the proposed Consumer Healthcare divestments of non-core brands, of around 27%. The overall tax rate for the year, including the Quest disposal, is still expected to be around 29.5%.
EPS before major restructuring for the quarter of 32.2p increased 9% in CER terms and 5% in sterling terms compared with 2010. The adverse currency impact of four percentage points primarily reflected intercompany settlement exchange gains in 2010.
Total results after restructuring
Operating profit after restructuring for Q1 2011 was £2,035 million, an increase of 2% CER (a decrease of 3% in sterling terms) compared with Q1 2010. This included £135 million of restructuring charges (Q1 2010: £301 million): £15 million was charged to cost of sales (Q1 2010: £28 million), £103 million to SG&A (Q1 2010: £52 million) and £17 million to R&D (Q1 2010: £221 million). EPS after restructuring of 30.0p increased 18% in CER terms (an increase of 14% in sterling terms) compared with Q1 2010.
Cash flow and net debt
The adjusted net cash inflow from operating activities in the quarter, before legal settlements of £451 million (Q1 2010: £56 million), was £1,438 million, a 34% decrease in sterling terms over Q1 2010. This primarily reflected the lower contributions from pandemic products, Avandia and Valtrex in the quarter.
Working capital increased by £295 million in the quarter, largely as a result of increased inventory and trade receivables in the growth markets and lower payables arising from reduced levels of expenditure. The cash flow from operations together with asset disposals of £1,295 million enabled the Group to pay dividends (including distributions to non-controlling interests) of over £900 million, spend £303 million on repurchasing shares and reduce net debt by £440 million. At 31st March 2011, net debt was £8.4 billion, comprising gross debt of £15.1 billion and cash and liquid investments of £6.7 billion.
At 31st March 2011, GSK had short-term borrowings (including overdrafts) repayable within 12 months of £258 million with loans of £2,650 million repayable in the subsequent year.
Dividends
The Board has declared a first interim dividend of 16 pence per share (Q1 2010: 15 pence). The equivalent interim dividend receivable by ADR holders is 52.6336 cents per ADS based on an exchange rate of £1/$1.6448. The ex-dividend date will be 4th May 2011, with a record date of 6th May 2011 and a payment date of 7th July 2011.
Currency impact
The Q1 results are based on average exchange rates, principally £1/$1.60, £1/1.16 and £1/Yen 131. Comparative exchange rates are given on page 22. The period end exchange rates were £1/$1.60, £1/1.13 and £1/Yen 133. If exchange rates were to hold at these period end levels for the rest of 2011 and there were no exchange gains or losses, the estimated positive impact on 2011 sterling EPS before major restructuring would be approximately 2p.
Additional income statement information
Additional detailed financial information for the different areas of our business is provided on pages 23 to 24.
Issued: Wednesday, 27th April 2011, London, U.K. 6
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PRESS RELEASE
GlaxoSmithKline (GSK) together with its subsidiary undertakings, the Group one of the worlds 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. GlaxoSmithKlines website www.gsk.com gives additional information on the Group. Information made available on the website does not constitute part of this document.
| Enquiries: | David Mawdsley | (020) 8047 5502 |
|---|---|---|
| Claire Brough | (020) 8047 5502 | |
| Stephen Rea | (020) 8047 5502 | |
| Alexandra Harrison | (020) 8047 5502 | |
| Janet Morgan | (020) 8047 5502 | |
| David Daley | (020) 8047 5502 | |
| US Media | Nancy Pekarek | (919) 483 2839 |
| Mary Anne Rhyne | (919) 483 2839 | |
| Kevin Colgan | (919) 483 2839 | |
| Sarah Alspach | (919) 483 2839 | |
| European Analyst / Investor | Sally Ferguson | (020) 8047 5543 |
| Gary Davies | (020) 8047 5503 | |
| Ziba Shamsi | (020) 8047 3289 | |
| US Analyst / Investor | Tom Curry | (215) 751 5419 |
| Jeff McLaughlin | (215) 751 7002 |
Issued: Wednesday, 27th April 2011, London, U.K. 7
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Results before major restructuring
Results before major restructuring is a measure used by management to assess the Groups financial performance and is presented after excluding restructuring charges relating to the Operational Excellence programme, which commenced in October 2007, and the acquisitions of Reliant Pharmaceuticals in December 2007 and Stiefel in July 2009. Management believes that this presentation assists shareholders in gaining a clearer understanding of the Groups financial performance and in making projections of future financial performance, as results that include such costs, by virtue of their size and nature, have limited comparative value.
CER growth
In order to illustrate underlying performance, it is the Groups 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.
Underlying sales growth
Underlying sales growth excludes the sales of pandemic products, Avandia and Valtrex . Management believes this measure assists shareholders in gaining a clearer understanding of the Groups sales performance and prospects because of the size and nature of the loss of sales from these products in 2010 and 2011. Sales of these products were:
| £m | £m | Q1 2010 — £m | £m | Growth — CER% | |
|---|---|---|---|---|---|
| Group sales | 6,585 | 7,357 | (10 | ) | |
| Pandemic products | 14 | 782 | |||
| Avandia | 36 | 169 | |||
| Valtrex | 90 | 176 | |||
| 140 | 1,127 | ||||
| Underlying Group sales | 6,445 | 6,230 | 4 |
| Other | |||||||
|---|---|---|---|---|---|---|---|
| Emerging | Asia | trading and | |||||
| USA | Europe | Markets | Pacific | Japan | unallocated | Total | |
| Q1 2011 | £m | £m | £m | £m | £m | £m | £m |
| Pandemic products | | 5 | | | 7 | 2 | 14 |
| Avandia | 26 | | 5 | 1 | | 4 | 36 |
| Valtrex | 22 | 12 | 6 | 15 | 34 | 1 | 90 |
| Other | ||||||||
|---|---|---|---|---|---|---|---|---|
| Emerging | Asia | trading and | ||||||
| USA | Europe | Markets | Pacific | Japan | unallocated | Total | ||
| Q1 2010 | £m | £m | £m | £m | £m | £m | £m | |
| Pandemic products | 30 | 306 | 153 | 21 | 300 | (28 | ) | 782 |
| Avandia | 89 | 38 | 19 | 10 | | 13 | 169 | |
| Valtrex | 107 | 23 | 5 | 10 | 27 | 4 | 176 |
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.
Cautionary statement regarding forward-looking statements
Under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, the company cautions investors that any forward-looking statements or projections made by the company, including those made in this Announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect the Groups operations are described under Risk Factors in the Business Review in the companys Annual Report on Form 20-F for 2010.
GlaxoSmithKline plc, 980 Great West Road, Brentford, Middlesex TW8 9GS, United Kingdom Registered in England and Wales. Registered number: 3888792
Issued: Wednesday, 27th April 2011, London, U.K. 8
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Income statement
Three months ended 31st March 2011
| before major | Major | before major | Major | |||||||||||
| restructuring | restructuring | Total | restructuring | restructuring | Total | |||||||||
| Q1 2011 | Growth | Q1 2011 | Q1 2011 | Q1 2010 | Q1 2010 | Q1 2010 | ||||||||
| £m | CER% | £m | £m | £m | £m | £m | ||||||||
| TURNOVER | 6,585 | (10 | ) | 6,585 | 7,357 | 7,357 | ||||||||
| Cost of sales | (1,780 | ) | (8 | ) | (15 | ) | (1,795 | ) | (1,924 | ) | (28 | ) | (1,952 | ) |
| Gross profit | 4,805 | (11 | ) | (15 | ) | 4,790 | 5,433 | (28 | ) | 5,405 | ||||
| Selling, general and | ||||||||||||||
| administration | (2,054 | ) | (14 | ) | (103 | ) | (2,157 | ) | (2,298 | ) | (52 | ) | (2,350 | ) |
| Research and development | (898 | ) | (4 | ) | (17 | ) | (915 | ) | (939 | ) | (221 | ) | (1,160 | ) |
| Other operating income | 317 | 317 | 199 | 199 | ||||||||||
| OPERATING PROFIT | 2,170 | (5 | ) | (135 | ) | 2,035 | 2,395 | (301 | ) | 2,094 | ||||
| Finance income | 19 | 19 | 17 | 17 | ||||||||||
| Finance expense | (193 | ) | (193 | ) | (204 | ) | (1 | ) | (205 | ) | ||||
| Profit on disposal of interest | ||||||||||||||
| in associate | 584 | 584 | | | ||||||||||
| Share of after tax profits of | ||||||||||||||
| associates and joint | ||||||||||||||
| ventures | 19 | 19 | 25 | 25 | ||||||||||
| PROFIT BEFORE TAXATION | 2,599 | 21 | (135 | ) | 2,464 | 2,233 | (302 | ) | 1,931 | |||||
| Taxation | (901 | ) | 21 | (880 | ) | (618 | ) | 82 | (536 | ) | ||||
| Tax rate % | 34.7 | % | 35.7 | % | 27.7 | % | 27.8 | % | ||||||
| PROFIT AFTER TAXATION FOR | ||||||||||||||
| THE PERIOD | 1,698 | 9 | (114 | ) | 1,584 | 1,615 | (220 | ) | 1,395 | |||||
| Profit attributable to | ||||||||||||||
| non-controlling interests | 59 | 59 | 55 | 55 | ||||||||||
| Profit attributable to | ||||||||||||||
| shareholders | 1,639 | (114 | ) | 1,525 | 1,560 | (220 | ) | 1,340 | ||||||
| 1,698 | (114 | ) | 1,584 | 1,615 | (220 | ) | 1,395 | |||||||
| EARNINGS PER SHARE | 32.2 | p | 9 | 30.0 | p | 30.7 | p | 26.4 | p | |||||
| Diluted earnings per share | 31.9 | p | 29.6 | p | 30.4 | p | 26.1 | p |
Issued: Wednesday, 27th April 2011, London, U.K. 9
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Pharmaceuticals turnover Three months ended 31st March 2011
| £m | CER% | £m | CER% | £m | CER% | £m | CER% | £m | CER% | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Respiratory | 1,815 | 3 | 791 | 1 | 537 | (4 | ) | 150 | 6 | 337 | 27 | |||||
| Avamys/Veramyst | 72 | 52 | 15 | (12 | ) | 16 | 23 | 7 | 40 | 34 | >100 | |||||
| Flixonase/Flonase | 48 | 2 | 3 | (50 | ) | 9 | | 9 | | 27 | 20 | |||||
| Flixotide/Flovent | 202 | 4 | 107 | 11 | 40 | (9 | ) | 13 | (7 | ) | 42 | 5 | ||||
| Seretide/Advair | 1,223 | (2 | ) | 586 | (5 | ) | 399 | (4 | ) | 76 | (6 | ) | 162 | 18 | ||
| Serevent | 52 | 2 | 21 | 38 | 22 | (15 | ) | 1 | | 8 | (22 | ) | ||||
| Ventolin | 146 | 27 | 56 | 66 | 36 | (3 | ) | 30 | 30 | 24 | 10 | |||||
| Xyzal | 15 | >100 | | | | | 1 | | 14 | >100 | ||||||
| Zyrtec | 31 | 45 | | | | | 5 | >100 | 26 | 33 | ||||||
| Anti-virals | 201 | (45 | ) | 41 | (73 | ) | 20 | (40 | ) | 52 | 9 | 88 | (33 | ) | ||
| Hepsera | 28 | (7 | ) | | | | | 12 | 8 | 16 | (18 | ) | ||||
| Relenza | 9 | (89 | ) | | | | | | | 9 | (82 | ) | ||||
| Valtrex | 90 | (51 | ) | 22 | (79 | ) | 12 | (48 | ) | 6 | 20 | 50 | 12 | |||
| Zeffix | 56 | 6 | 4 | 33 | 6 | (14 | ) | 33 | 10 | 13 | | |||||
| Central nervous system | 396 | (6 | ) | 103 | (23 | ) | 120 | (14 | ) | 60 | 30 | 113 | 12 | |||
| Imigran/Imitrex | 51 | (12 | ) | 21 | (8 | ) | 17 | (23 | ) | 2 | | 11 | | |||
| Keppra | 11 | 83 | | | | | 7 | >100 | 4 | 100 | ||||||
| Lamictal | 114 | (4 | ) | 53 | (11 | ) | 33 | (8 | ) | 14 | 17 | 14 | 30 | |||
| Requip | 53 | (4 | ) | 10 | | 30 | (14 | ) | | | 13 | 33 | ||||
| Seroxat/Paxil | 103 | (8 | ) | 1 | (90 | ) | 16 | (23 | ) | 21 | 40 | 65 | | |||
| Treximet | 14 | 15 | 14 | 15 | | | | | | | ||||||
| Wellbutrin | 19 | (5 | ) | 3 | (50 | ) | 10 | 11 | 4 | 33 | 2 | | ||||
| Cardiovascular and urogenital | 615 | 9 | 344 | 5 | 161 | 8 | 35 | 29 | 75 | 33 | ||||||
| Arixtra | 74 | 9 | 44 | 15 | 24 | (8 | ) | 3 | 50 | 3 | 33 | |||||
| Avodart | 166 | 20 | 76 | 3 | 50 | 28 | 9 | 50 | 31 | 71 | ||||||
| Coreg | 37 | (10 | ) | 37 | (10 | ) | | | | | | | ||||
| Fraxiparine | 54 | (2 | ) | | | 39 | (7 | ) | 15 | 36 | | | ||||
| Lovaza | 127 | 21 | 126 | 21 | | | | | 1 | | ||||||
| Vesicare | 28 | 16 | 28 | 16 | | | | | | | ||||||
| Volibris | 22 | >100 | | | 17 | >100 | 1 | | 4 | >100 | ||||||
| Metabolic | 91 | (60 | ) | 26 | (70 | ) | 16 | (72 | ) | 17 | (43 | ) | 32 | (40 | ) | |
| Avandia products | 36 | (79 | ) | 26 | (70 | ) | | | 5 | (74 | ) | 5 | (83 | ) | ||
| Bonviva/Boniva | 16 | (26 | ) | | | 12 | (35 | ) | 1 | | 3 | | ||||
| Anti-bacterials | 379 | 8 | 19 | (21 | ) | 156 | 12 | 162 | 14 | 42 | (5 | ) | ||||
| Augmentin | 187 | 19 | 3 | (63 | ) | 75 | 21 | 87 | 25 | 22 | 28 | |||||
| Oncology and emesis | 150 | (10 | ) | 59 | (35 | ) | 57 | 16 | 14 | 8 | 20 | 43 | ||||
| Arzerra | 9 | 100 | 7 | 40 | 3 | | | | (1 | ) | | |||||
| Hycamtin | 14 | (65 | ) | | | 11 | (15 | ) | 2 | 50 | 1 | (100 | ) | |||
| Promacta | 12 | 100 | 6 | | 4 | | | | 2 | | ||||||
| Tyverb/Tykerb | 52 | (2 | ) | 13 | (24 | ) | 24 | | 6 | 20 | 9 | 29 | ||||
| Votrient | 17 | >100 | 12 | >100 | 5 | | | | | | ||||||
| Vaccines | 758 | (46 | ) | 155 | (7 | ) | 241 | (60 | ) | 178 | (34 | ) | 184 | (51 | ) | |
| Boostrix | 32 | 7 | 15 | | 9 | | 1 | (67 | ) | 7 | >100 | |||||
| Cervarix | 109 | 34 | 1 | (50 | ) | 15 | (75 | ) | 10 | >100 | 83 | >100 | ||||
| Fluarix, FluLaval | 9 | 60 | 1 | | | | 3 | | 5 | | ||||||
| Flu Pandemic | 5 | (99 | ) | | | 5 | (98 | ) | | | | | ||||
| Hepatitis | 158 | (19 | ) | 70 | (23 | ) | 54 | (10 | ) | 12 | (35 | ) | 22 | (13 | ) | |
| Infanrix, Pediarix | 161 | (2 | ) | 40 | 28 | 91 | (11 | ) | 12 | 10 | 18 | (15 | ) | |||
| Rotarix | 77 | 20 | 27 | 4 | 10 | (23 | ) | 32 | 88 | 8 | | |||||
| Synflorix | 77 | 73 | | | 13 | 8 | 61 | >100 | 3 | (57 | ) | |||||
| Dermatologicals | 273 | 3 | 77 | (20 | ) | 62 | 2 | 82 | 32 | 52 | 11 | |||||
| Bactroban | 28 | 7 | 11 | | 7 | 17 | 7 | 17 | 3 | | ||||||
| Dermovate | 19 | 27 | | | 6 | 50 | 6 | | 7 | 40 | ||||||
| Duac | 28 | 4 | 16 | (6 | ) | 6 | | 3 | (25 | ) | 3 | | ||||
| Soriatane | 17 | (6 | ) | 17 | (6 | ) | | | | | | | ||||
| Zovirax | 36 | (29 | ) | 11 | (58 | ) | 7 | | 6 | | 12 | 10 | ||||
| Other | 233 | 10 | 4 | 25 | 65 | (1 | ) | 91 | 32 | 73 | (1 | ) | ||||
| 4,911 | (14 | ) | 1,619 | (13 | ) | 1,435 | (23 | ) | 841 | (1 | ) | 1,016 | (13 | ) | ||
| ViiV Healthcare (HIV) | 353 | (4 | ) | 153 | (1 | ) | 145 | (7 | ) | 25 | (8 | ) | 30 | (3 | ) | |
| Combivir | 71 | (12 | ) | 30 | (9 | ) | 27 | (18 | ) | 9 | (10 | ) | 5 | | ||
| Epivir | 26 | (7 | ) | 11 | 20 | 9 | (10 | ) | 3 | (25 | ) | 3 | (50 | ) | ||
| Epzicom/Kivexa | 140 | 8 | 51 | 8 | 65 | 3 | 7 | 75 | 17 | 7 | ||||||
| Lexiva | 32 | (20 | ) | 17 | (14 | ) | 12 | (20 | ) | 1 | (50 | ) | 2 | (33 | ) | |
| Selzentry | 23 | 26 | 10 | 25 | 12 | 20 | | | 1 | 100 | ||||||
| Trizivir | 30 | (21 | ) | 15 | (21 | ) | 13 | (24 | ) | | | 2 | 100 | |||
| 5,264 | (14 | ) |
Pharmaceutical turnover includes co-promotion income.
Issued: Wednesday, 27th April 2011, London, U.K. 10
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PRESS RELEASE
Consumer Healthcare turnover Three months ended 31st March 2011
| £m | CER% | |
|---|---|---|
| Over-the-counter medicines | 641 | 3 |
| Oral healthcare | 426 | 12 |
| Nutritional healthcare | 254 | 9 |
| 1,321 | 7 |
| £m | CER% | |
|---|---|---|
| USA | 241 | 1 |
| Europe | 475 | 2 |
| Rest of World | 605 | 15 |
| 1,321 | 7 |
Statement of comprehensive income
| £m | £m | |||
|---|---|---|---|---|
| Profit for the period | 1,584 | 1,395 | ||
| Exchange movements on overseas net assets and net investment hedges | (6 | ) | 203 | |
| Fair value movements on available-for-sale investments | 6 | 24 | ||
| Deferred tax on fair value movements on available-for-sale investments | 2 | 1 | ||
| Reclassification of fair value movements on available-for-sale investments | (12 | ) | (13 | ) |
| Deferred tax reversed on reclassification of available-for-sale investments | 1 | | ||
| Actuarial gains/(losses) on defined benefit plans | 31 | (165 | ) | |
| Deferred tax on actuarial movements in defined benefit plans | (16 | ) | 53 | |
| Fair value movements on cash flow hedges | (2 | ) | | |
| Reclassification of cash flow hedges to income statement | 2 | | ||
| Share of other comprehensive income of associates and joint ventures | (8 | ) | | |
| Other comprehensive (expense)/income for the period | (2 | ) | 103 | |
| Total comprehensive income for the period | 1,582 | 1,498 | ||
| Total comprehensive income for the period attributable to: | ||||
| Shareholders | 1,534 | 1,413 | ||
| Non-controlling interests | 48 | 85 | ||
| 1,582 | 1,498 |
Issued: Wednesday, 27th April 2011, London, U.K. 11
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Table of Contents
PRESS RELEASE
GSKs late-stage pharmaceuticals and vaccines pipeline
The table below is provided as part of GSKs quarterly update to show events and changes to the late stage pipeline during the quarter and up to the date of announcement.
Almorexant was listed as terminated in the last quarterly update and is no longer included in the table.
In February 2011, the following 15 assets were listed as expected to deliver Phase III data by the end of 2012: albiglutide, IPX066, MAGE-A3 (event driven) migalastat HCl, Mosquirix , otelixizumab, Promacta , Relovair , Tykerb , Votrient , 1120212, dolutegravir (1349572), 2118436, 2402968, 642444+573719.
Data reported on the following assets in the quarter: IPX066, otelixizumab, Votrient; as shown in the table below.
| Biopharmaceuticals | USA | EU | News update in the quarter | |
|---|---|---|---|---|
| Arzerra | CLL (first line & relapsed) | Ph III | Ph III | |
| (ofatumumab) | NHL (FL) | Ph III | Ph III | |
| NHL (DLBCL) | Ph III | Ph III | ||
| Benlysta | Systemic lupus erythematosus | Approved | Filed | Approved in the USA 9th March 2011. |
| (belimumab) | Mar 2011 | Jun 2010 | ||
| otelixizumab | Type 1 diabetes | Ph III | Ph III | Did not achieve primary efficacy endpoint in DEFEND-1 study. Data being evaluated. |
| albiglutide | Type 2 diabetes | Ph III | Ph III | |
| Prolia (denosumab) | Post menopausal osteoporosis | n/a | Launched | Filings taking place in expansion territory emerging markets. |
| Skeletal related events (SRE) in cancer | n/a | n/a | Filings taking place in expansion territory emerging markets. | |
| Cardiovascular & Metabolic | USA | EU | News update in the quarter | |
| darapladib | Atherosclerosis | Ph III | Ph III | |
| Neurosciences | USA | EU | News update in the quarter | |
| Horizant | RLS | Approved | n/a | Approved in USA 6th April 2011. |
| Apr 2011 | ||||
| Potiga (ezogabine)/ | Epilepsy | Filed | Approved | Approved in EU 29th March 2011. Filed Response to FDA CR letter |
| Trobalt (retigabine) | Mar 2011 | 15th April 2011. | ||
| IPX066 | Parkinsons disease | Ph III | Ph III | Positive data announced 14th March 2011 from the ADVANCE-PD study. |
| Oncology | USA | EU | News update in the quarter | |
| Promacta/Revolade | Hepatitis C | Ph III | Ph III | |
| CLD | Ph III | Ph III | Awaiting Hepatitis C data before deciding next steps. | |
| Avodart | Prostate cancer prevention | File withdrawn | File withdrawn | Filings withdrawn in March 2011. |
| Votrient | Sarcoma | Ph III | Ph III | Positive data in-house to be presented at congress shortly. |
| (pazopanib) | Ovarian | Ph III | Ph III | |
| Tykerb | First-line metastatic breast cancer | Ph III | Ph III | 535 study filed in EU 14th March 2011. |
| Adjuvant breast cancer | Ph III | Ph III | ||
| Head & neck cancer | Ph III | Ph III | ||
| Gastric cancer | Ph III | Ph III | ||
| 1120212 | Metastatic melanoma | Ph III | Ph III | |
| (MEK inhibitor) | ||||
| 2118436 | Metastatic melanoma | Ph III | Ph III | |
| (BRaf inhibitor) |
Issued: Wednesday, 27th April 2011, London, U.K. 12
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PRESS RELEASE
| Respiratory & Immuno-inflammation | USA | EU | News update in the quarter | |
|---|---|---|---|---|
| Relovair | COPD | Ph III | Ph III | |
| (444+698) | Asthma | Ph III | Ph III | |
| 1605786 (CCX282) | Crohns disease | Ph III | Ph III | |
| 444+719 | COPD | Ph III | Ph III | Recruitment has commenced in all 7 studies required for filing. |
| Rare Diseases | USA | EU | News update in the quarter | |
| migalastat HCl | Fabry disease | Ph III | Ph III | |
| 2402968 (PRO051) | Duchenne muscular dystrophy | Ph III | ||
| 2696273 | adenosine deaminase severe | Ph II/III | ||
| (Ex-vivo stem cell gene therapy) | combined immune deficiency | |||
| (ADA-SCID) | ||||
| Vaccines | USA | EU | News update in the quarter | |
| Menhibrix | MenCY and Hib prophylaxis | Filed | n/a | Filed response to FDA CR letter on 15th April 2011. |
| (HibMenCY-TT) | ||||
| MAGE-A3 | Melanoma | Ph III | Ph III | |
| NSCLC | Ph III | Ph III | ||
| Nimenrix | MenACWY prophylaxis | Ph III | Filed | Filed in EU 2nd March 2011. |
| (MenACWY) | Mar 2011 | |||
| Herpes zoster | Shingles prophylaxis | Ph III | Ph III | |
| Mosquirix | Malaria prophylaxis | n/a | n/a | Phase III study ongoing in Africa. |
| HIV (ViiV Healthcare) | USA | EU | News update in the quarter | |
| dolutegravir (1349572) | HIV integrase inhibitor | Ph III | Ph III | |
| 572-Trii | HIV integrase inhibitor + | Ph III | Ph III | |
| abacavir + lamivudine | ||||
| fixed dose combination |
Issued: Wednesday, 27th April 2011, London, U.K. 13
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PRESS RELEASE
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Balance sheet
xbrl,body
| 2011 | 2010 | 2010 | ||||
|---|---|---|---|---|---|---|
| £m | £m | £m | ||||
| ASSETS | ||||||
| Non-current assets | ||||||
| Property, plant and equipment | 9,020 | 9,532 | 9,045 | |||
| Goodwill | 3,712 | 3,524 | 3,606 | |||
| Other intangible assets | 8,580 | 8,412 | 8,532 | |||
| Investments in associates and joint ventures | 637 | 965 | 1,081 | |||
| Other investments | 687 | 529 | 711 | |||
| Deferred tax assets | 2,514 | 2,492 | 2,566 | |||
| Derivative financial instruments | 93 | 94 | 97 | |||
| Other non-current assets | 534 | 653 | 556 | |||
| Total non-current assets | 25,777 | 26,201 | 26,194 | |||
| Current assets | ||||||
| Inventories | 4,035 | 4,157 | 3,837 | |||
| Current tax recoverable | 51 | 52 | 56 | |||
| Trade and other receivables | 5,949 | 6,814 | 5,793 | |||
| Derivative financial instruments | 82 | 87 | 93 | |||
| Liquid investments | 170 | 254 | 184 | |||
| Cash and cash equivalents | 6,498 | 6,964 | 6,057 | |||
| Assets held for sale | 16 | 28 | 16 | |||
| Total current assets | 16,801 | 18,356 | 16,036 | |||
| TOTAL ASSETS | 42,578 | 44,557 | 42,230 | |||
| LIABILITIES | ||||||
| Current liabilities | ||||||
| Short-term borrowings | (258 | ) | (1,034 | ) | (291 | ) |
| Trade and other payables | (7,246 | ) | (6,796 | ) | (6,888 | ) |
| Derivative financial instruments | (174 | ) | (127 | ) | (188 | ) |
| Current tax payable | (1,604 | ) | (1,716 | ) | (1,047 | ) |
| Short-term provisions | (3,829 | ) | (2,480 | ) | (4,380 | ) |
| Total current liabilities | (13,111 | ) | (12,153 | ) | (12,794 | ) |
| Non-current liabilities | ||||||
| Long-term borrowings | (14,829 | ) | (15,220 | ) | (14,809 | ) |
| Deferred tax liabilities | (732 | ) | (667 | ) | (707 | ) |
| Pensions and other post-employment benefits | (2,608 | ) | (3,280 | ) | (2,672 | ) |
| Other provisions | (784 | ) | (1,191 | ) | (904 | ) |
| Derivative financial instruments | (5 | ) | (6 | ) | (5 | ) |
| Other non-current liabilities | (622 | ) | (614 | ) | (594 | ) |
| Total non-current liabilities | (19,580 | ) | (20,978 | ) | (19,691 | ) |
| TOTAL LIABILITIES | (32,691 | ) | (33,131 | ) | (32,485 | ) |
| NET ASSETS | 9,887 | 11,426 | 9,745 | |||
| EQUITY | ||||||
| Share capital | 1,416 | 1,417 | 1,418 | |||
| Share premium account | 1,435 | 1,384 | 1,428 | |||
| Retained earnings | 4,985 | 6,822 | 4,779 | |||
| Other reserves | 1,235 | 1,047 | 1,262 | |||
| Shareholders equity | 9,071 | 10,670 | 8,887 | |||
| Non-controlling interests | 816 | 756 | 858 | |||
| TOTAL EQUITY | 9,887 | 11,426 | 9,745 |
/xbrl,bs
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PRESS RELEASE
xbrl,cf
Cash flow statement
xbrl,body
Three months ended 31st March 2011
| £m | £m | £m | ||||
|---|---|---|---|---|---|---|
| Profit after tax | 1,584 | 1,395 | 1,853 | |||
| Tax on profits | 880 | 536 | 1,304 | |||
| Share of after tax profits of associates and joint ventures | (19 | ) | (25 | ) | (81 | ) |
| Profit on disposal of interest in associates | (584 | ) | | (8 | ) | |
| Net finance expense | 174 | 188 | 715 | |||
| Depreciation and other non-cash items | 130 | 466 | 2,071 | |||
| (Increase)/decrease in working capital | (295 | ) | (277 | ) | 1,297 | |
| (Decrease)/increase in other net liabilities | (569 | ) | 122 | 1,480 | ||
| Cash generated from operations | 1,301 | 2,405 | 8,631 | |||
| Taxation paid | (314 | ) | (283 | ) | (1,834 | ) |
| Net cash inflow from operating activities | 987 | 2,122 | 6,797 | |||
| Cash flow from investing activities | ||||||
| Purchase of property, plant and equipment | (175 | ) | (207 | ) | (1,014 | ) |
| Proceeds from sale of property, plant and equipment | 17 | 17 | 92 | |||
| Purchase of intangible assets | (94 | ) | (119 | ) | (621 | ) |
| Proceeds from sale of intangible assets | 220 | | 126 | |||
| Purchase of equity investments | (5 | ) | (61 | ) | (279 | ) |
| Proceeds from sale of equity investments | 14 | 10 | 27 | |||
| Purchase of businesses, net of cash acquired | (240 | ) | | (354 | ) | |
| Investment in associates and joint ventures | (11 | ) | (13 | ) | (61 | ) |
| Proceeds from disposal of interest in associate | 1,044 | | | |||
| Decrease in liquid investments | 40 | 28 | 91 | |||
| Interest received | 23 | 19 | 107 | |||
| Dividends from associates and joint ventures | 2 | 2 | 18 | |||
| Net cash inflow/(outflow) from investing activities | 835 | (324 | ) | (1,868 | ) | |
| Cash flow from financing activities | ||||||
| Proceeds from own shares for employee share options | 1 | 6 | 17 | |||
| Issue of share capital | 7 | 17 | 62 | |||
| Shares acquired by ESOP Trusts | (28 | ) | (56 | ) | (16 | ) |
| Shares purchased and cancelled or held as Treasury shares | (303 | ) | | | ||
| Repayment of short-term loans | (4 | ) | (625 | ) | (1,296 | ) |
| Increase in short-term loans | 2 | 15 | 6 | |||
| Net repayment of obligations under finance leases | (8 | ) | (11 | ) | (45 | ) |
| Interest paid | (55 | ) | (40 | ) | (775 | ) |
| Dividends paid to shareholders | (816 | ) | (763 | ) | (3,205 | ) |
| Distributions to non-controlling interests | (108 | ) | (67 | ) | (118 | ) |
| Other financing items | 1 | (93 | ) | (201 | ) | |
| Net cash outflow from financing activities | (1,311 | ) | (1,617 | ) | (5,571 | ) |
| Increase/(decrease) in cash and bank overdrafts in the period | 511 | 181 | (642 | ) | ||
| Exchange adjustments | (39 | ) | 103 | 81 | ||
| Cash and bank overdrafts at beginning of period | 5,807 | 6,368 | 6,368 | |||
| Cash and bank overdrafts at end of period | 6,279 | 6,652 | 5,807 | |||
| Cash and bank overdrafts at end of period comprise: | ||||||
| Cash and cash equivalents | 6,498 | 6,964 | 6,057 | |||
| Overdrafts | (219 | ) | (312 | ) | (250 | ) |
| 6,279 | 6,652 | 5,807 |
/xbrl,cf
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PRESS RELEASE
Statement of changes in equity
| Share | Share | Retained | Other | holders | controlling | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| capital | premium | earnings | reserves | equity | interests | equity | |||||||
| £m | £m | £m | £m | £m | £m | £m | |||||||
| At 1st January 2011 | 1,418 | 1,428 | 4,779 | 1,262 | 8,887 | 858 | 9,745 | ||||||
| Profit for the period | | | 1,525 | | 1,525 | 59 | 1,584 | ||||||
| Other comprehensive income/(expense) | |||||||||||||
| for the period | | | 13 | (4 | ) | 9 | (11 | ) | (2 | ) | |||
| Distributions to non-controlling interests | | | | | | (108 | ) | (108 | ) | ||||
| Changes in non-controlling interests | | | | | | 18 | 18 | ||||||
| Forward contract relating to | |||||||||||||
| non-controlling interest | | | | (30 | ) | (30 | ) | | (30 | ) | |||
| Dividends to shareholders | | | (816 | ) | | (816 | ) | | (816 | ) | |||
| Shares issued | | 7 | | | 7 | | 7 | ||||||
| Ordinary shares purchased and cancelled | |||||||||||||
| or held as Treasury shares | (2 | ) | | (518 | ) | 2 | (518 | ) | | (518 | ) | ||
| Consideration received for shares | |||||||||||||
| transferred by ESOP Trusts | | | | 1 | 1 | | 1 | ||||||
| Shares acquired by ESOP Trusts | | | | (28 | ) | (28 | ) | | (28 | ) | |||
| Write-down on shares held by ESOP | |||||||||||||
| Trusts | | | (32 | ) | 32 | | | | |||||
| Share-based incentive plans | | | 34 | | 34 | | 34 | ||||||
| At 31st March 2011 | 1,416 | 1,435 | 4,985 | 1,235 | 9,071 | 816 | 9,887 | ||||||
| At 1st January 2010 | 1,416 | 1,368 | 6,321 | 900 | 10,005 | 737 | 10,742 | ||||||
| Profit for the period | | | 1,340 | | 1,340 | 55 | 1,395 | ||||||
| Other comprehensive income for the | |||||||||||||
| period | | | 61 | 12 | 73 | 30 | 103 | ||||||
| Distributions to non-controlling interests | | | | | | (67 | ) | (67 | ) | ||||
| Changes in non-controlling interests | | | | | | 1 | 1 | ||||||
| Dividends to shareholders | | | (763 | ) | | (763 | ) | | (763 | ) | |||
| Shares issued | 1 | 16 | | | 17 | | 17 | ||||||
| Consideration received for shares | |||||||||||||
| transferred by ESOP Trusts | | | | 6 | 6 | | 6 | ||||||
| Shares acquired by ESOP Trusts | | | | (56 | ) | (56 | ) | | (56 | ) | |||
| Write-down on shares held by ESOP | |||||||||||||
| Trusts | | | (185 | ) | 185 | | | | |||||
| Share-based incentive plans | | | 48 | | 48 | | 48 | ||||||
| At 31st March 2010 | 1,417 | 1,384 | 6,822 | 1,047 | 10,670 | 756 | 11,426 |
Issued: Wednesday, 27th April 2011, London, U.K. 16
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PRESS RELEASE
Segmental information
GSK has revised its segmental information disclosures to reflect changes in the internal reporting structures with effect from 1st January 2011. The Japan Pharmaceuticals business is now shown as a separate segment. Comparative information has been restated on a consistent basis.
GSKs operating segments are being reported based on the financial information provided to the Chief Executive Officer and the responsibilities of the Corporate Executive Team (CET). Individual members of the CET are responsible for geographic regions of the Pharmaceuticals business, ViiV Healthcare and for the Consumer Healthcare business as a whole, respectively.
R&D investment is essential for the sustainability of the pharmaceutical businesses. However, for segment reporting, the USA, Europe, Emerging Markets, Asia Pacific and Japan pharmaceutical operating profits exclude allocations of globally funded R&D as well as central costs, principally corporate functions and unallocated manufacturing costs. GSKs 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.
Other trading and unallocated pharmaceuticals includes Canada, Puerto Rico, central vaccine tender sales and contract manufacturing sales, together with costs such as vaccines R&D, central dermatology costs and central manufacturing costs not attributed to other segments.
The Pharmaceuticals R&D segment is the responsibility of the Chairman, Research & Development and is reported as a separate segment.
Corporate and other unallocated costs and disposal profits include corporate functions, costs for legal matters, fair value movements on financial instruments and investments and profits on global asset disposals.
Turnover
| Q1 2011 | (restated) | Growth | ||
|---|---|---|---|---|
| £m | £m | CER% | ||
| US pharmaceuticals | 1,619 | 1,909 | (13 | ) |
| Europe pharmaceuticals | 1,435 | 1,893 | (23 | ) |
| Emerging Markets pharmaceuticals | 841 | 860 | (1 | ) |
| Asia Pacific pharmaceuticals | 307 | 288 | 1 | |
| Japan pharmaceuticals | 506 | 606 | (24 | ) |
| ViiV Healthcare | 353 | 373 | (4 | ) |
| Other trading and unallocated pharmaceuticals | 203 | 198 | 2 | |
| Pharmaceuticals turnover | 5,264 | 6,127 | (14 | ) |
| Consumer Healthcare turnover | 1,321 | 1,230 | 7 | |
| 6,585 | 7,357 | (10 | ) |
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PRESS RELEASE
Operating profit
| Q1 2011 | (restated) | Growth | ||||
|---|---|---|---|---|---|---|
| £m | £m | CER% | ||||
| US pharmaceuticals | 1,224 | 1,295 | (3 | ) | ||
| Europe pharmaceuticals | 796 | 1,138 | (29 | ) | ||
| Emerging Markets pharmaceuticals | 241 | 306 | (15 | ) | ||
| Asia Pacific pharmaceuticals | 145 | 136 | (2 | ) | ||
| Japan pharmaceuticals | 308 | 396 | (31 | ) | ||
| ViiV Healthcare | 195 | 212 | (7 | ) | ||
| Pharmaceuticals R&D | (700 | ) | (765 | ) | (7 | ) |
| Other trading and unallocated pharmaceuticals | (131 | ) | (128 | ) | (48 | ) |
| Pharmaceuticals operating profit | 2,078 | 2,590 | (17 | ) | ||
| Consumer Healthcare operating profit | 261 | 199 | 31 | |||
| Segment profit | 2,339 | 2,789 | ||||
| Corporate and other unallocated costs and disposal profits | (169 | ) | (394 | ) | (64 | ) |
| Operating profit before major restructuring | 2,170 | 2,395 | (5 | ) | ||
| Major restructuring | (135 | ) | (301 | ) | ||
| Total operating profit | 2,035 | 2,094 | ||||
| Finance income | 19 | 17 | ||||
| Finance costs | (193 | ) | (205 | ) | ||
| Profit on disposal of interest in associates | 584 | | ||||
| Share of after tax profits of associates and joint ventures | 19 | 25 | ||||
| Profit before taxation | 2,464 | 1,931 |
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PRESS RELEASE
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 2010.
At 31st March 2011, the Groups aggregate provision for legal and other disputes (not including tax matters described under Taxation on page 20) was £3.5 billion (31st December 2010: £4.0 billion). The Group may become involved in 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, appropriate disclosures about such cases would be included, 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 Groups 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 the amount of the provisions reported in the Groups financial statements by a material amount.
Significant developments since the date of the Annual Report 2010 are as follows:
On 30th March 2011, the Group, which has marketing rights for Lovaza (omega-3-acid ethyl esters) in the USA and Puerto Rico, confirmed that Pronova BioPharma Norge AS (Pronova BioPharma), which owns the patents for Lovaza , entered into an agreement with Apotex Corp. and Apotex Inc. (Apotex) to settle their patent litigation in the USA related to Lovaza . The settlement grants Apotex a license to enter the US market with a generic version of Lovaza in the first quarter of 2015 or earlier depending on certain circumstances. Other terms of the settlement are confidential. Pronova BioPharma is currently still involved in lawsuits with Teva Pharmaceuticals USA, Inc., and Par Pharmaceuticals, Inc., regarding its patents relating to Lovaza .
On 18th April 2011, the Group received a subpoena from the Office of the Inspector General of the US Department of Health and Human Services requesting production of documents relating to the Groups marketing and promotion of Lovaza . The scope of the document request is from 1st January 2006 to the present. The Group is responding to the subpoena.
Developments with respect to tax matters are described in Taxation on page 20.
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Taxation
Transfer pricing and other issues are as previously described in the Taxation note to the Financial Statements included in the Annual Report 2010. There have been no material changes to tax matters since the publication of the Annual Report.
During the first quarter the company disposed of its investment in Quest Diagnostics and of intellectual property relating to Zovirax in the USA and Canada. As a result of these transactions the tax rate for the quarter is 34.7%. In line with previous guidance, the rate for the full year is expected to be around 29.5% excluding the effect of any tax on the proposed Consumer Healthcare divestments of non-core brands.
GSK continues to believe that it has made adequate provision for the liabilities likely to arise from open assessments. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of litigation proceedings and negotiations with the relevant tax authorities.
A number of changes to the UK Corporation tax system were announced in the March 2011 Budget Statement. The impact on the Groups future estimated tax rate will be considered in conjunction with the other announced reforms to the UK Corporation Tax system when enacted.
Dividends
| Paid/ — payable | Pence per — share | £m | |
|---|---|---|---|
| 2011 | |||
| First interim | 7th July 2011 | 16 | 803 |
| 2010 | |||
| First interim | 8th July 2010 | 15 | 764 |
| Second interim | 7th October 2010 | 15 | 759 |
| Third interim | 6th January 2011 | 16 | 816 |
| Fourth interim | 7th April 2011 | 19 | 967 |
| 65 | 3,306 |
Weighted average number of shares
| millions | millions | millions | |
|---|---|---|---|
| Weighted average number of shares basic | 5,087 | 5,078 | 5,085 |
| Dilutive effect of share options and share awards | 52 | 46 | 43 |
| Weighted average number of shares diluted | 5,139 | 5,124 | 5,128 |
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Net assets
The book value of net assets increased by £142 million from £9,745 million at 31st December 2010 to £9,887 million at 31st March 2011. This reflects profits retained in the period in excess of shares repurchased. At 31st March 2011, the net deficit on the Groups pension plans was £1,212 million compared with £1,224 million at 31st December 2010. The marginal decrease in the pension deficit arose from increases in the rates used to discount UK pension liabilities from 5.5% to 5.6% and US pension liabilities from 5.2% to 5.4%, partly offset by a higher long-term inflation rate. Asset values remained broadly in line with the year-end position.
The carrying value of investments in associates and joint ventures at 31st March 2011 was £637 million, with a market value of £771 million.
At 31st March 2011, the ESOP Trusts held 97 million GSK shares against the future exercise of share options and share awards. The carrying value of £840 million has been deducted from other reserves. The market value of these shares was £1,153 million.
During the period, GSK purchased £317 million of shares either to be held as Treasury shares or for cancellation and in addition an accrual of £201 million was provided to reflect the maximum potential commitment under an irrevocable purchase agreement to acquire shares for cancellation during the period from 1st April to 27th April 2011. At 31st March 2011, the company held 494.4 million Treasury shares at a cost of £6,712 million, which has been deducted from retained earnings.
Reconciliation of cash flow to movements in net debt
| £m | £m | £m | ||||
|---|---|---|---|---|---|---|
| Net debt at beginning of the period | (8,859 | ) | (9,444 | ) | (9,444 | ) |
| Increase/(decrease) in cash and bank overdrafts | 511 | 181 | (642 | ) | ||
| Cash inflow from liquid investments | (40 | ) | (28 | ) | (91 | ) |
| Net repayment of short-term loans | 2 | 610 | 1,290 | |||
| Net repayment of obligations under finance leases | 8 | 11 | 45 | |||
| Debt of subsidiary undertakings acquired | (2 | ) | | (20 | ) | |
| Exchange adjustments | (79 | ) | (349 | ) | 61 | |
| Other non-cash movements | 40 | (17 | ) | (58 | ) | |
| Decrease in net debt | 440 | 408 | 585 | |||
| Net debt at end of the period | (8,419 | ) | (9,036 | ) | (8,859 | ) |
Business acquisitions
On 17th February 2011, GSK completed the acquisition of Maxinutrition Group Holdings Ltd. for a cash consideration of £163 million, net of cash acquired. The purchase price of £166 million included £3 million of cash and cash equivalents, £178 million of goodwill and intangible assets and £15 million of other net liabilities. These are provisional amounts and may change in the future. GSK completed two other small acquisitions in the quarter for total cash consideration of £77 million.
Related party transactions
The Groups significant related parties are its joint ventures and associates as disclosed in the Annual Report 2010.
During the period, the Group sold its entire shareholding in Quest Diagnostics Inc. The sale comprised a secondary public offering and an accompanying repurchase of shares by Quest Diagnostics which together generated cash proceeds of £1,044 million before tax.
Apart from the above transaction, there were no material transactions with any of the Groups joint ventures and associates in the period. There were also no material transactions with Directors.
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Contingent liabilities
There were contingent liabilities at 31st March 2011 in respect of guarantees and indemnities entered into as part of the ordinary course of the Groups business. No material losses are expected to arise from such contingent liabilities.
Exchange rates
The Group 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:
| Average rates: | |||
| US$/£ | 1.60 | 1.56 | 1.55 |
| Euro/£ | 1.16 | 1.13 | 1.16 |
| Yen/£ | 131 | 143 | 136 |
| Period end rates: | |||
| US$/£ | 1.60 | 1.52 | 1.56 |
| Euro/£ | 1.13 | 1.12 | 1.17 |
| Yen/£ | 133 | 142 | 127 |
During Q1 2011, average Sterling exchange rates were stronger against the Euro and US dollar but weaker against the Yen compared with the same period in 2010. Period end Sterling exchange rates were also stronger against the Euro and the US dollar but weaker against the Yen.
Accounting policies
This unaudited Results Announcement containing condensed financial information for the three months ended 31st March 2011 is prepared in accordance with the Disclosure and Transparency Rules of the United Kingdoms Financial Services Authority, IAS 34 Interim financial reporting and the accounting policies set out in the Annual Report 2010 except that GSK has implemented an amendment to IAS 32 Financial instruments: Presentation classification of rights issues, IAS 24 (Revised) Related party disclosures, IFRIC 19 Extinguishing financial liabilities with equity instruments and IFRIC 14 Pre-payments of a minimum funding requirement.
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 balance sheet at 31st December 2010 has been derived from the full Group accounts published in the Annual Report 2010, 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.
Internet
This Announcement and other information about GSK are available on the companys website at: http://www.gsk.com .
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Additional income statement information
Three months ended 31st March 2011
| Cost of | SG&A | R&D | operating | Operating | Operating | |||||||||||
| Turnover | sales | costs | costs | income | profit | margin % | ||||||||||
| US pharmaceuticals | Q1 2011 | £m | 1,619 | (199 | ) | (409 | ) | | 213 | 1,224 | 75.6 | |||||
| Q1 2010 (restated) | £m | 1,909 | (209 | ) | (522 | ) | | 117 | 1,295 | 67.8 | ||||||
| Growth CER | % | (13 | ) | (4 | ) | (19 | ) | | 86 | (3 | ) | |||||
| Europe pharmaceuticals | Q1 2011 | £m | 1,435 | (315 | ) | (327 | ) | | 3 | 796 | 55.5 | |||||
| Q1 2010 (restated) | £m | 1,893 | (396 | ) | (363 | ) | | 4 | 1,138 | 60.1 | ||||||
| Growth CER | % | (23 | ) | (19 | ) | (8 | ) | | (25 | ) | (29 | ) | ||||
| Emerging Markets pharmaceuticals | Q1 2011 | £m | 841 | (319 | ) | (280 | ) | (1 | ) | | 241 | 28.7 | ||||
| Q1 2010 (restated) | £m | 860 | (316 | ) | (237 | ) | (1 | ) | | 306 | 35.6 | |||||
| Growth CER | % | (1 | ) | 2 | 14 | | | (15 | ) | |||||||
| Asia Pacific pharmaceuticals | Q1 2011 | £m | 307 | (84 | ) | (80 | ) | | 2 | 145 | 47.2 | |||||
| Q1 2010 (restated) | £m | 288 | (83 | ) | (69 | ) | | | 136 | 47.2 | ||||||
| Growth CER | % | 1 | | 10 | | | (2 | ) | ||||||||
| Japan pharmaceuticals | Q1 2011 | £m | 506 | (82 | ) | (108 | ) | (8 | ) | | 308 | 60.9 | ||||
| Q1 2010 (restated) | £m | 606 | (111 | ) | (95 | ) | (6 | ) | 2 | 396 | 65.3 | |||||
| Growth CER | % | (24 | ) | (27 | ) | 5 | 17 | (100 | ) | (31 | ) | |||||
| ViiV Healthcare | Q1 2011 | £m | 353 | (66 | ) | (63 | ) | * | (24) | (5 | ) | 195 | 55.2 | |||
| Q1 2010 (restated) | £m | 373 | (83 | ) | (68 | ) | * | (7) | (3 | ) | 212 | 56.8 | ||||
| Growth CER | % | (4 | ) | (20 | ) | (6 | ) | >100 | (67 | ) | (7 | ) | ||||
| Pharmaceuticals R&D | Q1 2011 | £m | | | (34 | ) | (669 | ) | 3 | (700 | ) | | ||||
| Q1 2010 (restated) | £m | | | (42 | ) | (725 | ) | 2 | (765 | ) | | |||||
| Growth CER | % | | | (17 | ) | (6 | ) | 50 | (7 | ) | ||||||
| Other trading and unallocated | ||||||||||||||||
| pharmaceuticals | Q1 2011 | £m | 203 | (194 | ) | (88 | ) | (136 | ) | 84 | (131 | ) | (64.5 | ) | ||
| Q1 2010 (restated) | £m | 198 | (220 | ) | (32 | ) | (142 | ) | 68 | (128 | ) | (64.6 | ) | |||
| Growth CER | % | 2 | (13 | ) | (31 | ) | (2 | ) | 25 | (48 | ) | |||||
| Total pharmaceuticals | Q1 2011 | £m | 5,264 | (1,259 | ) | (1,389 | ) | (838 | ) | 300 | 2,078 | 39.5 | ||||
| Q1 2010 (restated) | £m | 6,127 | (1,418 | ) | (1,428 | ) | (881 | ) | 190 | 2,590 | 42.3 | |||||
| Growth CER | % | (14 | ) | (11 | ) | (7 | ) | (4 | ) | 61 | (17 | ) | ||||
| Consumer Healthcare | Q1 2011 | £m | 1,321 | (497 | ) | (541 | ) | (40 | ) | 18 | 261 | 19.8 | ||||
| Q1 2010 (restated) | £m | 1,230 | (483 | ) | (513 | ) | (37 | ) | 2 | 199 | 16.2 | |||||
| Growth CER | % | 7 | 2 | 5 | 8 | >100 | 31 | |||||||||
| Corporate and other unallocated | ||||||||||||||||
| costs | Q1 2011 | £m | | (24 | ) | (124 | ) | (20 | ) | (1 | ) | (169 | ) | | ||
| Q1 2010 (restated) | £m | | (23 | ) | (357 | ) | (21 | ) | 7 | (394 | ) | | ||||
| Growth CER | % | | (22 | ) | (71 | ) | (24 | ) | | (64 | ) | |||||
| Results before major | ||||||||||||||||
| restructuring | Q1 2011 | £m | 6,585 | (1,780 | ) | (2,054 | ) | (898 | ) | 317 | 2,170 | 33.0 | ||||
| Q1 2010 (restated) | £m | 7,357 | (1,924 | ) | (2,298 | ) | (939 | ) | 199 | 2,395 | 32.6 | |||||
| Growth CER | % | (10 | ) | (8 | ) | (14 | ) | (4 | ) | 62 | (5 | ) |
- Note: This excludes HIV discovery research (pre-Phase IIb) which is conducted by GSK and Pfizer, and R&D expenditure related to the Shionogi JV and Phase IV clinical expenditure which are reported within the ViiV Healthcare OOI and SG&A lines respectively.
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The following table provides additional financial analysis for worldwide vaccines and worldwide dermatologicals which are not segments for financial reporting purposes and are managed within the geographical pharmaceutical segments. Consequently, these results are included within the financial information of the relevant geographical pharmaceuticals segments as reported to the CEO and presented in the tables on pages 17 to 18.
Three months ended 31st March 2011
| Cost of | SG&A | R&D | operating | Operating | Operating | |||||||||
| Turnover | sales | costs | costs | income | profit | margin % | ||||||||
| Worldwide vaccines | Q1 2011 | £m | 758 | (287 | ) | (126 | ) | (126 | ) | 21 | 240 | 31.7 | ||
| Q1 2010 (restated) | £m | 1,411 | (389 | ) | (170 | ) | (117 | ) | 28 | 763 | 54.1 | |||
| Growth CER | % | (46 | ) | (25 | ) | (24 | ) | 9 | (25 | ) | (70 | ) | ||
| Worldwide dermatologicals | Q1 2011 | £m | 273 | (64 | ) | (83 | ) | (10 | ) | 190 | 306 | >100.0 | ||
| Q1 2010 (restated) | £m | 265 | (53 | ) | (78 | ) | (8 | ) | 1 | 127 | 47.9 | |||
| Growth CER | % | 3 | 17 | 9 | 25 | >100 | >100 | |||||||
| All other pharmaceuticals | Q1 2011 | £m | 4,233 | (908 | ) | (1,180 | ) | (702 | ) | 89 | 1,532 | 36.2 | ||
| Q1 2010 (restated) | £m | 4,451 | (976 | ) | (1,180 | ) | (756 | ) | 161 | 1,700 | 38.2 | |||
| Growth CER | % | (4 | ) | (6 | ) | (6 | ) | (6 | ) | (44 | ) | (5 | ) | |
| Total pharmaceuticals | Q1 2011 | £m | 5,264 | (1,259 | ) | (1,389 | ) | (838 | ) | 300 | 2,078 | 39.5 | ||
| Q1 2010 (restated) | £m | 6,127 | (1,418 | ) | (1,428 | ) | (881 | ) | 190 | 2,590 | 42.3 | |||
| Growth CER | % | (14 | ) | (11 | ) | (7 | ) | (4 | ) | 61 | (17 | ) |
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Independent review report to GlaxoSmithKline plc Introduction
We have been engaged by the company to review the condensed financial information in the Results Announcement for the three months ended 31st March 2011 which comprises the income statement, statement of comprehensive income, balance sheet, cash flow statement, statement of changes in equity and related notes (excluding the late-stage pharmaceuticals and vaccines pipeline table and the additional income statement information). 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.
Directors responsibilities
The Results Announcement 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 Kingdoms Financial Services Authority.
The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed financial information included in the Results Announcement for the three months ended 31st March 2011 has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union.
Our responsibility
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 the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, 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.
Scope of review
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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed financial information in the Results Announcement for the three months ended 31st March 2011 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 Kingdoms Financial Services Authority.
PricewaterhouseCoopers LLP Chartered Accountants 27th April 2011 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 financial statements may differ from legislation in
other jurisdictions. |
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