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

For the period ending 6 May 2008

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-Fx      Form 40-Fo

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.

Yeso      Nox

THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-149531) OF GLAXOSMITHKLINE PLC, GLAXOSMITHKLINE CAPITAL INC. AND GLAXOSMITHKLINE CAPITAL PLC AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

 

 

GlaxoSmithKline plc

Results Announcement for the first quarter 2008

GlaxoSmithKline (GSK) together with its subsidiary undertakings, the ‘Group’- 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. GlaxoSmithKline’s website www.gsk.com gives additional information on the Group. Information made available on the website does not constitute part of this current report on Form 6-K.

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 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 influence these translations are the US dollar, the Euro and the Japanese Yen.

Business performance

Business performance, which is a supplemental measure, is the primary performance measure used by management and is presented after excluding restructuring charges relating to the new Operational Excellence programme, which commenced in October 2007, and significant acquisitions. Management believes that exclusion of these items provides a better reflection of the way in which the business is managed and gives a more useful indication of the underlying performance of the Group.

Constant exchange rate

In order to illustrate underlying performance, it is the Group’s practice to discuss its results in terms of constant exchange rate (CER) growth. All commentaries are presented in terms of CER growth and compare 2008 business performance results with 2007 total results, unless otherwise stated. See ‘Accounting Presentation and Policies’ on page 16.

Brand names

Brand names appearing in italics throughout this document are trademarks of GSK or associated companies with the exception of Levitra, a trademark of Bayer, Bonviva/Boniva, a trademark of Roche, and Vesicare, a trademark of Astellas Pharmaceuticals in many countries and of Yamanouchi Pharmaceuticals in certain countries, all of which are 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 Results Announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect the Group’s operations are described on page 17.

PHARMACEUTICAL UPDATE

Total pharmaceutical turnover for the first quarter declined 4% to £4.8 billion, with growth from key products offset by significant generic competition to products in the USA and declines in Avandia sales in all regions. In the United States, turnover was £2,138 million, down 10%, in Europe turnover was £1,526 million, down 1%, and in International markets sales were £1,129 million, up 6%.

Seretide/Advair sales up 10% with strong performance in all regions

Sales of Seretide/Advair, for asthma and COPD, rose 10% to £954 million, with sales in the USA also growing 10% to £499 million. In Europe, sales grew 9% to £351 million and in International sales grew by 16% to £104 million.

GSK continues to see increased use of Seretide/Advair in the treatment of COPD and is in ongoing discussions with the FDA to expand further the indication for use in this patient group. GSK expects a decision from the FDA during the second quarter.

Vaccine sales of £436 million up 10% driven by strong US performance

US vaccine sales grew 34% for the quarter to £109 million, driven by continued strong performances of hepatitis vaccines, up 66% to £53 million, and Infanrix/Pediarix, up 21% to £51 million. In Europe, sales of vaccines were up 5% to £202 million. In International markets sales rose 2% to £125 million, adversely impacted in part by the timing of shipments. GSK expects stronger growth in this region in the rest of this year.

GSK expects to submit a response to the FDA’s Complete Response letter regarding Cervarix in the second quarter and will continue discussions with the agency regarding the application. Cervarix has now been approved in more than 60 countries with discussions regarding reimbursement and tender orders on-going. Sales for Cervarix in the quarter were £12 million.

In April, GSK received FDA approval for Rotarix, a new two-dose vaccine to prevent rotavirus gastroenteritis, with launch expected in the second half of the year. Sales of Rotarix in markets outside of the USA grew 79% to £27 million.

In February, GSK received a positive opinion from the EMEA regarding Prepandrix, its pre-pandemic flu vaccine. Prepandrix will be the first vaccine approved for pre-pandemic use in Europe. In March a supply contract was signed by the Finnish Government for 5.2 million doses of Prepandrix for use in advance of a pandemic flu outbreak. Shipments will commence in the second half of 2008.

New growth drivers

Arixtra, for deep vein thrombosis and pulmonary embolism, delivered strong growth with sales up 70% to £35 million. Sales grew in Europe (up 33% to £14 million) following approval last year for the treatment of specific acute coronary syndromes (ACS). In the USA, GSK is in on-going discussions with the FDA regarding a potential ACS indication.

Avodart, for benign prostatic hyperplasia (enlarged prostate), continued to perform strongly with sales up 30% to £85 million for the quarter. GSK has filed for a co-prescription indication in the USA, Europe and International markets for use of Avodart in combination with the alpha-blocker, tamsulosin. In April, GSK received its first regulatory approval for this indication in Europe under the mutual recognition procedure. GSK expects a response from the FDA in June for this application.

GSK’s co-promotion income for Boniva/Bonviva, the only once-monthly oral medicine for post-menopausal osteoporosis, was up 50% to £49 million.

Sales of GSK’s newly acquired Lovaza, an omega-3-acid product for adult patients with very high levels of triglycerides, contributed £50 million (+72% on a proforma basis).

Tykerb/Tyverb, for breast cancer, achieved sales of £19 million for the quarter. An extensive development programme involving 10 phase III clinical trials is ongoing, including metastatic, first line and adjuvant breast cancer. Last week new data were presented at the European Breast Cancer Conference in Berlin which demonstrated the efficacy of Tykerb in shrinking tumours prior to surgery and reducing the number of chemotherapy-resistant cancer stem cells responsible for tumour regeneration. Enrolment was completed for TEACH in the quarter — a phase III study investigating whether adjuvant treatment with Tykerb will improve survival in early breast cancer by preventing the disease from recurring.

Veramyst/Avamys, for allergic rhinitis, generated sales of £13 million across the USA and Europe for the quarter.

Other key pharmaceutical products

Sales of Avandia products, for the treatment of type 2 diabetes, fell 56% to £191 million. Sales in the USA for the quarter were £99 million, down 66%, with Avandia‘s share of total prescriptions in the US oral anti-diabetic market currently stable at around 4%. In Europe sales were £54 million, down 14%, and in International markets £38 million, down 44%.

Sales of Coreg products, for heart disease, fell 77% to £48 million, following the introduction of generic competition to Coreg IR in September 2007. Sales of Coreg CR were £35 million with increasing share gains made in the US hypertension market.

Total sales of HIV products were £358 million, down 5%. Competition to older products, Combivir (-13% to £105 million) and Epivir (-22% to £34 million), was partially offset by strong sales growth of Epzicom/Kivexa (+25% to £99 million).

Sales of Lamictal, for the treatment of epilepsy and bipolar disorder, were £290 million driven by strong performance in the USA with sales up 22% to £240 million.

Sales of Relenza, an antiviral treatment for flu, were £29 million (£92 million in Q1 2007), reflecting the variable timing of tender orders from governments stockpiling against a possible flu pandemic.

Sales of Requip, for Parkinson’s Disease/Restless Legs Syndrome, grew 15% to £94 million for the quarter. Requip XL, a new once-daily formulation for Parkinson’s Disease, has now been launched in 12 European markets. In the USA, GSK expects a response from the FDA on its application for Requip XL during the second quarter of 2008.

Sales of Valtrex, for herpes, rose 9% to £249 million, with US sales up 7% to £173 million, driven by increased use of the product for prevention of herpes transmission. Sales in Europe grew 18% to £37 million and in International sales grew 9% to £39 million.

Product sales affected by generic competition were Wellbutrin (-3% to £126 million), Flixonase/Flonase (-33% to £46 million) and Zofran (-69% to £29 million).

UNAUDITED PHARMACEUTICAL TURNOVER
Three months ended 31st March 2008

		Total												USA												Europe												International
		£m				CER%				£%				£m				CER%				£%				£m				CER%				£%				£m				CER%				£%
RESPIRATORY			1,355				6				11				616				8				6				495				4				15				244				5				16
Seretide/Advair			954				10				14				499				10				9				351				9				19				104				16				27
Flixotide/Flovent			162				(1	)			5				75				7				6				45				(7	)			7				42				(7	)			—
Serevent			67				(5	)			3				17				(11	)			(11	)			37				6				16				13				(21	)			(7	)
Flixonase/Flonase			46				(33	)			(27	)			4				(84	)			(84	)			14				—				8				28				—				12
Veramyst			13				—				—				12				—				—				1				—				—				—				—				—
CENTRAL NERVOUS SYSTEM			829				3				4				594				7				5				131				(7	)			2				104				(8	)			1
Seroxat/Paxil			121				(15	)			(10	)			31				(16	)			(16	)			29				(21	)			(15	)			61				(11	)			(3	)
Paxil IR			88				(13	)			(5	)			2				—				—				29				(21	)			(15	)			57				(12	)			(3	)
Paxil CR			33				(20	)			(20	)			29				(22	)			(22	)			—				—				—				4				—				—
Wellbutrin			126				(3	)			(5	)			121				(4	)			(5	)			3				>100				>100				2				(33	)			(33	)
Wellbutrin IR, SR			13				(43	)			(43	)			11				(45	)			(45	)			1				—				—				1				(50	)			(50	)
Wellbutrin XL			113				6				4				110				4				2				2				—				—				1				—				—
Imigran/Imitrex			165				(1	)			(1	)			134				—				(1	)			23				(5	)			10				8				(11	)			(11	)
Lamictal			290				16				16				240				22				20				34				(11	)			(3	)			16				—				7
Requip			94				15				18				60				9				7				29				24				38				5				67				67
ANTI-VIRALS			739				(8	)			(4	)			347				(9	)			(10	)			213				(15	)			(6	)			179				6				14
HIV			358				(5	)			—				152				(6	)			(7	)			159				(6	)			5				47				2				9
Combivir			105				(13	)			(9	)			45				(8	)			(10	)			43				(20	)			(12	)			17				(6	)			6
Trizivir			54				(16	)			(13	)			27				(16	)			(16	)			24				(19	)			(11	)			3				—				—
Epivir			34				(22	)			(17	)			11				(21	)			(21	)			15				(22	)			(17	)			8				(22	)			(11	)
Ziagen			25				(8	)			(4	)			10				(9	)			(9	)			9				(11	)			—				6				—				—
Agenerase, Lexiva			35				(3	)			—				18				(10	)			(10	)			15				8				15				2				—				—
Epzicom/Kivexa			99				25				32				40				17				14				48				33				45				11				29				57
Herpes			274				6				10				174				7				5				45				11				25				55				2				15
Valtrex			249				9				11				173				7				5				37				18				32				39				9				22
Zovirax			25				(15	)			(4	)			1				(50	)			(50	)			8				(13	)			—				16				(13	)			—
Zeffix			46				8				15				3				—				—				7				—				17				36				10				16
Relenza			29				(71	)			(68	)			8				(82	)			(82	)			—				—				—				21				19				31
VACCINES			436				10				18				109				34				33				202				5				17				125				2				10
Hepatitis			139				16				23				53				66				66				57				(5	)			2				29				—				16
Influenza			5				—				—				—				—				—				4				—				—				1				—				—
Infanrix/Pediarix			153				6				14				51				21				19				82				(1	)			12				20				—				11
Boostrix			13				(8	)			—				5				(29	)			(29	)			5				—				25				3				50				50
Rotarix			27				79				93				—				—				—				9				100				>100				18				70				80
Cervarix			12				—				—				—				—				—				10				—				—				2				—				—
CARDIOVASCULAR AND UROGENITAL			398				(12	)			(9	)			232				(22	)			(23	)			119				6				19				47				19				31
Coreg			48				(77	)			(78	)			48				(78	)			(78	)			—				—				—				—				—				—
Coreg CR			35				>100				>100				35				>100				>100				—				—				—				—				—				—
Coreg IR			13				(94	)			(94	)			13				(94	)			(94	)			—				—				—				—				—				—
Levitra			14				—				—				13				—				—				1				—				—				—				—				—
Avodart			85				30				35				49				22				20				28				39				56				8				75				100
Arixtra			35				70				75				19				73				73				14				33				56				2				—				—
Fraxiparine			51				(4	)			9				—				—				—				44				(7	)			5				7				20				40
Vesicare			14				36				27				14				36				27				—				—				—				—				—				—
Lovaza			50				—				—				50				—				—				—				—				—				—				—				—
ANTI-BACTERIALS			365				(2	)			5				45				(13	)			(15	)			181				(7	)			3				139				10				16
Augmentin			156				(1	)			6				17				(29	)			(29	)			82				—				12				57				10				14
Altabax			2				—				—				2				—				—				—				—				—				—				—				—
METABOLIC			274				(45	)			(42	)			133				(57	)			(58	)			74				(6	)			4				67				(30	)			(24	)
Avandia products			191				(56	)			(54	)			99				(66	)			(66	)			54				(14	)			(5	)			38				(44	)			(40	)
Avandia			122				(62	)			(61	)			71				(69	)			(69	)			22				(35	)			(29	)			29				(48	)			(44	)
Avandamet			62				(29	)			(25	)			24				(49	)			(49	)			31				8				19				7				(30	)			(30	)
Avandaryl			7				(63	)			(56	)			4				(73	)			(73	)			1				—				—				2				—				100
Bonviva/Boniva			49				50				53				33				48				43				15				44				67				1				—				—
ONCOLOGY AND EMESIS			113				(27	)			(23	)			58				(41	)			(42	)			38				6				19				17				—				13
Zofran			29				(69	)			(67	)			3				(95	)			(95	)			16				(30	)			(20	)			10				(9	)			(9	)
Hycamtin			30				(3	)			—				17				(5	)			(11	)			11				11				22				2				(50	)			—
Tykerb			19				>100				>100				10				>100				>100				7				>100				>100				2				—				—
OTHER			284				13				18				4				(91	)			(88	)			73				20				30				207				32				36
			4,793				(4	)			—				2,138				(10	)			(12	)			1,526				(1	)			10				1,129				6				13

Pharmaceutical turnover includes co-promotion income.

CONSUMER HEALTHCARE UPDATE

Consumer Healthcare sales grew 8% to £893 million, driven by innovation and geographic expansion

In Europe, sales grew 7% to £413 million with strong performances in Central and Eastern Europe. In International, sales grew 18% to £285 million with strong performances from key markets, Latin America, India and the Middle East.

Sales in North America declined 2% to £195 million due to strong competition to smoking cessation products from prescription medicines and retailers’ own-label nicotine replacement products. Excluding the smoking cessation brands, North American consumer healthcare sales grew 6% to £157 million.

Over-the-counter medicine sales grew 4% to £411 million. Following its successful launch in June 2007, alli contributed sales of £9 million which were impacted by normalisation of inventory levels after a year-end promotion. Demand for alli continues to be strong and, based on retail market data, underlying demand is estimated to have been £35 million during the quarter. Panadol sales grew 19% to £80 million. Sales of Breathe Right, recently acquired from CNS, grew 14% to £17 million. The product will be launched in European, Asian and Latin American markets this year.

Oral healthcare sales were up 8% to £289 million for the quarter. Sales of Sensodyne grew 19% to £86 million, aided by the successful launch of Sensodyne Pronamel. Sales of Aquafresh grew 7% to £83 million, and sales of the denture care brands, Poligrip, Corega and Polident, grew 4% to £60 million.

Nutritional healthcare sales for the quarter increased by 14% to £193 million. Lucozade continued its excellent performance, up 18% to £86 million. Horlicks sales grew 18% to £56 million, whilst sales of Ribena declined 5% to £37 million.

UNAUDITED CONSUMER HEALTHCARE TURNOVER
Three months ended 31st March 2008

		Q1 2008				Growth
		£m				CER%				£%
Over-the-counter medicines			411				4				10
Analgesics			116				13				20
Dermatological			46				8				15
Gastrointestinal			68				—				3
Respiratory tract			71				18				27
Smoking control			58				(27	)			(26	)
Natural wellness support			32				—				7
Weight management			9				—				—
Oral care			289				8				17
Nutritional healthcare			193				14				18
Total			893				8				14

PHARMACEUTICAL PIPELINE UPDATE

In February, the company published an update of its R&D pipeline. GSK currently has 157 projects in clinical development comprising 96 NCEs, 37 PLEs and 24 Vaccines. GSK has 34 key assets currently in phase III development or registration.

First major market approvals and filings

In April, GSK received FDA approval for Treximet, a new acute treatment of migraine. Treximet is the first and only migraine product designed to target multiple mechanisms of migraine by combining a triptan, a class of migraine-specific medicines pioneered by GSK, and an anti-inflammatory pain reliever in a single tablet. Treximet will be launched in the USA in May.

In March, the FDA granted priority review for Promacta, an oral thrombopoeitin receptor agonist, for the short-term treatment of patients with chronic idiopathic thrombocytopenic purpura. The FDA’s decision on Promacta is expected in the second quarter and, if approved, would be the first treatment of its type to be approved for this indication.

In February, the EMEA granted a positive opinion for approval of Volibris (ambrisentan) to treat functional class II and III pulmonary arterial hypertension.

Late-stage pipeline progress

Following analysis of the full data set for darapladib, which includes the dose ranging study presented at the American College of Cardiology in March and the IBIS-2 imaging study, GSK intends to progress darapladib into Phase III development and will shortly start discussions with regulators regarding the structure of the Phase III programme. GSK expects data from IBIS-2 to be presented and published in the second half of the year.

In March, positive phase III data were published demonstrating that Bosatria (mepolizumab) showed disease control with reduced corticosteroid use in treatment of hypereosinophilic syndrome. This is a group of rare disorders leading to significant respiratory, cardiac, skin and gastrointestinal problems and can be life-threatening in some people with advanced disease.

Positive results from the third pivotal phase III study for GSK1838262 (XP13512) were also received in the quarter demonstrating its efficacy as a treatment of moderate-to-severe symptoms of primary restless legs syndrome. GSK expects to file ‘262 with the FDA for approval in the third quarter of 2008.

Acquisitions

On 22nd April GSK announced an agreement to acquire Sirtris Pharmaceuticals, a world leader in ‘sirtuin’ research and development. Sirtuins are a class of enzymes that could be used to develop new medicines to address diseases associated with metabolism and ageing such as diabetes, muscle wasting and neurodegeneration.

Collaborations

On 17th April, GSK announced a worldwide strategic alliance with Regulus Therapeutics to discover, develop and market novel microRNA-targeted therapeutics, a new approach for the treatment of a wide range of diseases, including inflammatory diseases such as rheumatoid arthritis and inflammatory bowel disease.

FINANCIAL REVIEW

Operating profit — business performance

		Q1 2008								Q1 2007								Growth
						% of								% of
		£m				turnover				£m				turnover				CER%				£%
Turnover			5,686				100.0				5,592				100.0				(3	)			2
Cost of sales			(1,299	)			(22.8	)			(1,234	)			(22.1	)			1				5
Selling, general and administration			(1,720	)			(30.3	)			(1,673	)			(29.9	)			(2	)			3
Research and development			(780	)			(13.7	)			(726	)			(13.0	)			5				7
Other operating income			161				2.8				207				3.7
Operating profit			2,048				36.0				2,166				38.7				(9	)			(5	)

Business performance operating margin decreased 2.7 percentage points, as sterling operating profit decreased 5% while sterling turnover increased 2%.

Costs of sales increased to 22.8% of turnover (Q1 2007: 22.1%) reflecting the impact of generic competition to higher margin products and lower Avandia sales, partly offset by improvements in manufacturing efficiencies

SG&A costs as a percentage of turnover increased 0.4 percentage points compared with Q1 2007. Pharmaceuticals SG&A fell by 4% and Consumer Healthcare SG&A grew by 9% as a result of higher advertising and promotion expenses. The combined 2% reduction in SG&A costs was less than the 3% fall in turnover.

R&D expenditure as a percentage of turnover increased 0.7 percentage points, and included significant increased investment in vaccines R&D. Pharmaceuticals R&D expenditure in the quarter represented 15.8% (Q1 2007: 14.6%) of pharmaceutical turnover.

Other operating income includes royalty income, equity investment disposals and impairments, product disposals and fair value adjustments to financial instruments. Other operating income was £161 million in Q1 2008 (Q1 2007: £207 million). This reduction in other operating income added some 2 percentage points to the EPS decline in the quarter.

With respect to other operating income in the quarter, gains from asset disposals and legal settlements were £54 million (Q1 2007: £102 million), costs for legal matters were £39 million (Q1 2007: £26 million), fair value movements on financial instruments resulted in income of £66 million (Q1 2007: £33 million) and charges related to previous restructuring programmes were £6 million (Q1 2007: £9 million). The business performance operating profit impact of these items was a £75 million credit in Q1 2008 (Q1 2007: £100 million credit).

Business performance operating profit of £2,048 million decreased by 9% in CER terms compared with Q1 2007. This was more than the fall in turnover of 3%, reflecting higher R&D costs and lower other operating income, partly offset by lower SG&A expenditure.

GSK’s share of the results of associates was a £1 million loss (Q1 2007: £15 million profit) as a result of the recognition of a legal provision made by Quest Diagnostics Inc.

Business performance profit after taxation decreased by 13% in CER terms, more than the decline in operating profit, reflecting higher net interest costs (primarily driven by increased borrowing to fund the share repurchase programme) and a higher tax rate.

Business performance EPS of 25.6 pence decreased 9% in CER terms (5% in sterling terms) compared with Q1 2007.

Operating profit — total

Total operating profit for Q1 2008 was £1,963 million, down 13% CER and 9% in sterling terms compared with Q1 2007. This included £85 million of restructuring charges; £60 million was charged to cost of sales and £25 million to SG&A. There were no such charges in Q1 2007. Total EPS was 24.4 pence.

Taxation

The charge for taxation on business performance profit, amounting to £563 million, represents an effective tax rate of 28.7%. The charge for taxation on total profit was £542 million.

Transfer pricing and other issues are as previously described in the ‘Taxation’ note to the Financial Statements included in the Annual Report 2007. The Group has open issues with the revenue authorities in the UK, USA, Canada and Japan. There have been no further developments on these issues since the publication of the Annual Report 2007.

GSK uses the best advice in determining its transfer pricing methodology and in seeking to manage transfer pricing and other issues to a satisfactory conclusion and, on the basis of external professional advice, 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.

Dividend

The Board has declared a first interim dividend of 13 pence per share. This compares with a dividend of 12 pence per share for Q1 2007. The equivalent interim dividend receivable by ADR holders is 51.8570 cents per ADS based on an exchange rate of £1/$1.9945. The ex-dividend date was 30th April 2008, with a record date of 2nd May 2008 and a payment date of 10th July 2008.

Balance Sheet

Net assets

The book value of net assets decreased by £700 million from £9,910 million at 31st December 2007 to £9,210 million at 31st March 2008. This reflects an increase in net debt arising from the funding of the share buy-back programme and dividend payments, partly offset by the elimination of the pension deficit. The elimination of the pension deficit arose from an increase in the rate used to discount UK pension liabilities from 5.75% to 6.75%, partially offset by a reduction in asset values and by changes in the estimated long-term UK inflation rate. At 31st March 2008, the net surplus on the Group’s pension plans was £13 million.

The carrying value of investments in associates and joint ventures at 31st March 2008 was £328 million, with a market value of £864 million.

Equity

At 31st March 2008, total equity had decreased from £9,910 million at 31st December 2007 to £9,210 million. The decrease arose principally from further purchases of shares for cancellation and dividend payments, partially offset by retained earnings and actuarial gains on defined benefit pension and post-employment plans in the period.

At 31st March 2008, the ESOP Trusts held 131.4 million GSK shares against the future exercise of share options and share awards. The carrying value of £1,507 million has been deducted from other reserves. The market value of these shares was £1,401 million.

During the period, GSK purchased £986 million of shares for cancellation and in addition an accrual of £605 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 23rd April 2008. At 31st March 2008, the company held 484.2 million Treasury shares at a cost of £6,418 million, which has been deducted from retained earnings.

Cash flow

Cash generated from operations was £2,108 million in Q1 2008. This represents an increase of £302 million compared with Q1 2007. The operating cash flow is in excess of the funds needed for the routine cash flows of tax, capital expenditure on property, plant and equipment and dividend payments to shareholders, together amounting to £1,269 million. Receipts of £36 million arose from the exercise of share options: £6 million from shares held by the ESOP Trusts and £30 million from the issue of new shares. In addition, £986 million was spent in the period on purchasing the company’s shares for cancellation. The decreased cash position at 31st March 2008 also reflects the net repayment of £1.8 billion of short-term loans in Q1 2008, partially offset by a further issuance of £0.7 billion under the EMTN programme.

Currencies

The Q1 2008 results are based on average exchange rates, principally £1/$1.99, £1/Euro 1.32 and £1/Yen 210. The period-end exchange rates were £1/$1.99, £1/Euro 1.26 and £1/Yen 198. If exchange rates were to hold at the average Q1 2008 levels for the rest of the year, the positive currency impact on business performance EPS growth for the full-year would be around 4 to 5 percentage points.

2008 earnings guidance

GSK continues to expect a mid-single digit percentage decline in business performance EPS, at constant exchange rates.

UNAUDITED INCOME STATEMENT
Three months ended 31st March 2008

		Business
		performance				Restructuring				Total
		Q1 2008				Q1 2008				Q1 2008				Q1 2007
		£m				£m				£m				£m
Turnover:
Pharmaceuticals			4,793								4,793				4,806
Consumer Healthcare			893								893				786
TURNOVER			5,686								5,686				5,592
Cost of sales			(1,299	)			(60	)			(1,359	)			(1,234	)
Gross profit			4,387				(60	)			4,327				4,358
Selling, general and administration			(1,720	)			(25	)			(1,745	)			(1,673	)
Research and development			(780	)							(780	)			(726	)
Other operating income			161								161				207
Operating profit:
Pharmaceuticals			1,889				(84	)			1,805				2,028
Consumer Healthcare			159				(1	)			158				138
OPERATING PROFIT			2,048				(85	)			1,963				2,166
Finance income			82								82				58
Finance expense			(168	)			(2	)			(170	)			(96	)
Share of after tax (losses)/profits of associates and joint ventures			(1	)							(1	)			15
PROFIT BEFORE TAXATION			1,961				(87	)			1,874				2,143
Taxation			(563	)			21				(542	)			(610	)
Tax rate %			28.7	%							28.9	%			28.5	%
PROFIT AFTER TAXATION FOR THE PERIOD			1,398				(66	)			1,332				1,533
Profit attributable to minority interests			25				—				25				19
Profit attributable to shareholders			1,373				(66	)			1,307				1,514
			1,398				(66	)			1,332				1,533
EARNINGS PER SHARE			25.6p								24.4p				27.0p
Diluted earnings per share			25.5p								24.2p				26.7p

UNAUDITED BALANCE SHEET

		31st March				31st December
		2008				2007
		£m				£m
ASSETS
Non-current assets
Property, plant and equipment			8,026				7,821
Goodwill			1,372				1,370
Other intangible assets			4,492				4,456
Investments in associates and joint ventures			328				329
Other investments			424				517
Deferred tax assets			2,262				2,196
Derivative financial instruments			113				1
Other non-current assets			806				687
Total non-current assets			17,823				17,377
Current assets
Inventories			3,314				3,062
Current tax recoverable			45				58
Trade and other receivables			5,316				5,495
Derivative financial instruments			483				475
Liquid investments			1,225				1,153
Cash and cash equivalents			2,147				3,379
Assets held for sale			3				4
Total current assets			12,533				13,626
TOTAL ASSETS			30,356				31,003
LIABILITIES
Current liabilities
Short-term borrowings			(1,799	)			(3,504	)
Trade and other payables			(5,329	)			(4,861	)
Derivative financial instruments			(244	)			(262	)
Current tax payable			(1,056	)			(826	)
Short-term provisions			(851	)			(892	)
Total current liabilities			(9,279	)			(10,345	)
Non-current liabilities
Long-term borrowings			(8,114	)			(7,067	)
Deferred tax liabilities			(989	)			(887	)
Pensions and other post-employment benefits			(1,326	)			(1,383	)
Other provisions			(1,084	)			(1,035	)
Derivative financial instruments			—				(8	)
Other non-current liabilities			(354	)			(368	)
Total non-current liabilities			(11,867	)			(10,748	)
TOTAL LIABILITIES			(21,146	)			(21,093	)
NET ASSETS			9,210				9,910
EQUITY
Share capital			1,476				1,503
Share premium account			1,295				1,266
Retained earnings			5,717				6,475
Other reserves			428				359
Shareholders’ equity			8,916				9,603
Minority interests			294				307
TOTAL EQUITY			9,210				9,910

UNAUDITED CASH FLOW STATEMENT
Three months ended 31st March 2008

		Q1 2008				Q1 2007
		£m				£m
Profit after tax			1,332				1,533
Tax on profits			542				610
Share of after tax losses/(profits) of associates and joint ventures			1				(15	)
Net finance expense			88				38
Depreciation and other non-cash items			310				274
Decrease/(increase) in working capital			39				(31	)
Decrease in other net liabilities			(204	)			(603	)
Cash generated from operations			2,108				1,806
Taxation paid			(307	)			(256	)
Net cash inflow from operating activities			1,801				1,550
Cash flow from investing activities
Purchase of property, plant and equipment			(254	)			(312	)
Proceeds from sale of property, plant and equipment			2				19
Purchase of intangible assets			(61	)			(396	)
Proceeds from sale of intangible assets			—				—
Purchase of equity investments			(12	)			(141	)
Proceeds from sale of equity investments			2				14
Purchase of businesses, net of cash acquired			—				(233	)
Investment in associates and joint ventures			(2	)			—
Interest received			87				59
Dividends from associates and joint ventures			2				4
Net cash outflow from investing activities			(236	)			(986	)
Cash flow from financing activities
(Increase)/decrease in liquid investments			(14	)			34
Proceeds from own shares for employee share options			6				41
Shares acquired by ESOP Trusts			(1	)			—
Issue of share capital			30				214
Purchase of own shares for cancellation			(986	)			—
Purchase of Treasury shares			—				(575	)
Increase in long-term loans			693				—
Repayment of long-term loans			—				—
Net (repayment of)/increase in short-term loans			(1,811	)			440
Net repayment of obligations under finance leases			(12	)			(9	)
Interest paid			(42	)			(24	)
Dividends paid to shareholders			(708	)			(671	)
Dividends paid to minority interests			(34	)			(56	)
Other financing cash flows			54				(38	)
Net cash outflow from financing activities			(2,825	)			(644	)
(Decrease)/increase in cash and bank overdrafts in the period			(1,260	)			(80	)
Exchange adjustments			(5	)			7
Cash and bank overdrafts at beginning of period			3,221				1,762
Cash and bank overdrafts at end of period			1,956				1,689
Cash and bank overdrafts at end of period comprise:
Cash and cash equivalents			2,147				1,981
Overdrafts			(191	)			(292	)
			1,956				1,689

UNAUDITED STATEMENT OF RECOGNISED INCOME AND EXPENSE

		Q1 2008				Q1 2007
		£m				£m
Exchange movements on overseas net assets			160				17
Tax on exchange movements			(6	)			—
Fair value movements on available-for-sale investments			(87	)			(19	)
Deferred tax on fair value movements on available-for-sale investments			15				(4	)
Exchange movements on goodwill in reserves			(31	)			(1	)
Actuarial gains on defined benefit plans			219				330
Deferred tax on actuarial movements in defined benefit plans			(54	)			(94	)
Fair value movements on cash flow hedges			—				(3	)
Deferred tax on fair value movements on cash flow hedges			—				1
Net gains recognised directly in equity			216				227
Profit for the period			1,332				1,533
Total recognised income and expense for the period			1,548				1,760
Total recognised income and expense for the period attributable to:
Shareholders			1,527				1,739
Minority interests			21				21
			1,548				1,760

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION

1

Weighted average number of shares

		Q1 2008				Q1 2007				2007
		millions				millions				millions
Weighted average number of shares — basic			5,355				5,599				5,524
Dilutive effect of share options and share awards			39				63				43
Weighted average number of shares — diluted			5,394				5,662				5,567

The number of shares in issue, excluding those held by the ESOP Trusts and those held as Treasury shares at 31st March 2008, was 5,289 million (31st March 2007: 5,580 million).

2

Dividends

		Paid/		Pence per
		payable		share				£m
2008
First interim		10th July 2008			13				688
2007
First interim		12th July 2007			12				670
Second interim		11th October 2007			12				667
Third interim		10th January 2008			13				708
Fourth interim		10th April 2008			16				860
					53				2,905