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Issued:
Wednesday, 8 February 2017, London U.K.
Unaudited
Preliminary Results Announcement for the year ended 31 December
2016
GSK delivers continued momentum in 2016 through broadly-based sales
growth, improved cash flow and further pipeline
progression
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Core results
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2016
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Growth
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Q4 2016
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Growth
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£m
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CER%
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£%
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£m
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CER%
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£%
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Turnover
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27,889
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6
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17
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7,586
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3
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21
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Core
operating profit
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7,771
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14
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36
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2,062
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16
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52
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Core
earnings per share
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102.4p
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12
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35
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26.1p
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11
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45
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Total results
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2016
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Growth
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Q4 2016
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Growth
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£m
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CER%
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£%
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£m
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CER%
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£%
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Turnover
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27,889
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6
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17
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7,586
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3
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21
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Operating
profit
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2,598
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(86)
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(75)
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595
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>100
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>100
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Earnings
per share
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18.8p
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(99)
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(89)
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5.3p
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>100
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>100
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Summary
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●
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Group sales £27.9 billion, +6% CER on a reported basis , +5%
CER pro-forma
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-
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Pharmaceuticals
£16.1 billion, +3% (+4 % pro-forma); Vaccines £4.6
billion, +14% (+12% pro-forma); Consumer Healthcare £7.2
billion, +9% (+5% pro-forma)
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●
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New product sales more than doubled to £4.5 billion; Q4
£1.4 billion, +71% CER. Driven by HIV (Tivicay, Triumeq), Respiratory (Relvar/Breo, Anoro, Incruse, Nucala) and Meningitis vaccines
(Bexsero, Menveo)
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-
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New
Pharmaceutical products sales represented 24% of 2016
Pharmaceuticals sales; 27% of Q4 sales
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Improved core operating leverage across all three
businesses
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Group
core operating profit margin 27.9%; Pharmaceuticals 34.1%; Vaccines
31.7%; Consumer 15.5%
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-
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Incremental
annual cost savings of £1.4 billion delivered in 2016, with
total annual cost savings now at £3.0 billion including
currency benefit of £0.2 billion
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●
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2016 core EPS 102.4p, +12% CER
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2016 total EPS 18.8p, -99% CER, primarily reflecting comparison
with £9.2 billion profit in 2015 from disposal of marketed
Oncology assets
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●
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2016 net cash flow from operations of £6.5 billion (2015:
£2.6 billion), reflecting improved operating performance and
the net benefit of exchange rate movements
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●
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GSK and Shionogi have agreed to remove the Shionogi put option and
first two exercise windows of GSK’s call option in relation
to ViiV Healthcare. Liability for put option of £1.2 billion
de-recognised to equity
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23p dividend declared for Q4 delivering total dividend for 2016 of
80p. Continue to expect 80p dividend for 2017
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Continued progress by the Group expected in 2017 although core EPS
growth subject to uncertainty of timing and impact of possible
generic competition to Advair in the US
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In the
event of no generic competition to Advair in the US, expect 2017 core EPS
growth to be 5-7% CER
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-
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In the
event of a mid-year introduction of a substitutable generic
competitor to Advair in the
US, expect full year 2017 US Advair sales of ~£1 billion at CER
(US$1.36/£1) with core EPS flat to a slight decline in
percentage terms at CER
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January
2017 average exchange rates, if applied to whole of 2017, would
benefit Sterling turnover by around 6% and core EPS by around
9%
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●
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Sustained pipeline progress with multiple milestones expected in
2017/18:
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Filed 4
assets with regulators in H2 2016 (Shingrix; Closed Triple; Benlysta SC; sirukumab), with
regulatory decisions expected by end 2017
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4 key
phase III starts in Q4 for assets in HIV, respiratory and
anaemia
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Continue
to expect key data on between 20-30 assets by end 2018 in areas
including HIV, respiratory, immuno-inflammation, oncology and
vaccines
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The
full results are presented under ‘Income Statement’ on
page 39 and core results reconciliations and pro-forma growth rate
reconciliations are presented on pages 12 and 57 to 62. All
commentaries are presented in terms of CER growth, unless otherwise
stated. See ‘Definitions’ on page 36. All expectations
and targets regarding future performance should be read together
with the “Assumptions related to 2016-2020 outlook”,
and “Assumptions and cautionary statement regarding
forward-looking statements” on page 37.
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Sir Andrew Witty, Chief Executive Officer, GSK said:
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“2016
has seen GSK perform strongly with good sales growth across all
three businesses, excellent new product momentum, disciplined cost
control and further pipeline progress. Core EPS for the year was
102.4p, up 12% CER and we have announced a dividend of 23 pence for
the quarter, making a total dividend for shareholders of 80 pence
for 2016.
“Our
performance reflects the investments we have made to build new
scale and sustainability in the Group and to develop new products.
We expect the sales momentum of our new products to continue and,
with regulatory decisions on other major product opportunities also
expected this year, like
Shingrix and Closed Triple,
we remain confident in the financial outlook we have previously set
out for investors.
“Clearly,
this year we face some uncertainty as to the level of our earnings
performance, given the possibility of substitutable generic
competition to Advair in
the US, and this is reflected in the guidance we have issued today.
This event is something we have anticipated and prepared for, and
whilst there will be an inevitable financial impact to absorb, we
fully expect to maintain leadership in this therapy area given our
new product portfolio and the innovation we have in our
pipeline.
“The
next 24 months will be significant for GSK’s pipeline and it
marks the start of another intense period of R&D activity for
the company, as we expect important data read-outs on around 20-30
assets in HIV, respiratory, immuno-inflammation, oncology and
vaccines.
“This
quarter marks the last I will report to shareholders after nearly
10 years as CEO and more than 30 years as an employee. GSK is a
very special company that touches people’s lives across the
world and I feel enormously privileged to have had the opportunity
to lead it. I would like to thank all of GSK’s employees,
partners and shareholders for their support to build a company that
delivers strong financial performance and meaningful contributions
to society.”
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Full year performance summary
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Group
sales grew 6% (5% pro-forma) to £27.9 billion with growth
across all three businesses. New Pharmaceuticals and Vaccines sales
contributed significantly to the growth with sales more than
doubling to £4.5 billion.
Pharmaceutical
sales grew 3% (+4% pro-forma) to £16.1 billion. This reflected
the continued good performance of new HIV products Tivicay and Triumeq with combined sales for the
year of £2.7 billion, up 82%. Total respiratory sales grew 2%,
with the continued decline in Seretide/Advair sales offset by growth
in the rest of the portfolio. New respiratory products generated
sales of £1.05 billion. The Vaccines business grew 14% (+12%
pro-forma) to £4.6 billion. This included Meningitis vaccines
Bexsero and Menveo, which had combined sales of
nearly £600 million (+96%), and flu vaccines sales of
£414 million, up 38%. Consumer Healthcare grew 9% (+5%
pro-forma) to £7.2 billion with good contributions to growth
from a number of power brands including Sensodyne, Voltaren and Panadol as well as growth from
Flonase OTC.
Core
earnings per share was 102.4p (+12% CER), at the top end of our
guidance for the year.
Total
earnings per share was 18.8p (2015: 174.3p). The year on year
decline primarily reflected the comparison with the £9.2
billion profit from the sale of our marketed Oncology assets to
Novartis reported in 2015 but also the impact in 2016 of charges
arising from increases in the valuations of the liabilities for
contingent consideration and the put options associated with
increases in the Sterling value of the Group’s HIV and
Consumer Healthcare businesses, partly offset by improved
performance and reduced restructuring costs.
The
Group has declared a full-year dividend of 80p (23p declared for
Q4) and continues to expect to pay 80p for 2017.
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2017 guidance
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The
Group expects to make continued progress in 2017 although the
expectation for core EPS growth is dependent on a number of factors
including, in particular, uncertainties relating to the timing and
extent of potential generic competition to Advair in the US.
In the
event that no generic version of Advair is introduced to the US market
in 2017, the Group expects 2017 core EPS growth of 5-7% at CER.
This is based on an expected decline in 2017 US Advair sales of 15-20%.
In the
event of a mid-year introduction of a substitutable generic
competitor to Advair in the
US, the Group expects full year 2017 US Advair sales of around £1 billion
at CER (US$1.36/£1), with core EPS flat to a slight decline in
percentage terms at CER.
If
exchange rates were to hold at January 2017 average levels for the
rest of 2017, the estimated positive impact on full-year 2017
Sterling turnover growth would be around 6% and if exchange losses
were recognised at the same level as in 2016, the estimated
positive impact on 2017 Sterling core EPS growth would be around
9%.
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Group strategy outlook
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GSK has
created a Group of three world-leading businesses in
Pharmaceuticals, Vaccines and Consumer Healthcare, which aim to
deliver growth and improving returns to shareholders through
development of innovative healthcare options for patients and
consumers.
GSK has
a strong portfolio of innovative products across its three
businesses with a presence in more than 150 markets. In 2016
revenues were split across Pharmaceuticals 58%, Consumer Healthcare
26% and Vaccines 16%. R&D innovation underpins all three
businesses. In November 2015, the Group profiled to investors an
R&D portfolio of ~40 assets focused on Oncology,
Immuno-inflammation, Vaccines, HIV and Infectious diseases,
Respiratory and Rare diseases.
All
three businesses are supported by proprietary technologies and
manufacturing capabilities in areas such as devices, adjuvants,
bio-electronics and formulations. The Group aims to improve returns
from its R&D innovation by striking a balance between pricing
and volume generation. Details of the Group’s innovative
R&D portfolio and the progress of assets in development can be
found on pages 32 to 35 of this Announcement.
At its
Investor Day on 6 May 2015, GSK outlined a series of expectations
for its performance over the five year period 2016-2020. This
included an expectation that Group core EPS would grow at a CAGR of
mid-to-high single digits on a CER basis. The introduction of a
generic alternative to Advair in the US was factored into the
Group’s assessment of its future performance. The Group also
stated it expects to pay an annual ordinary dividend of 80p for
each of the years 2015-2017.
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Reporting the Group’s performance
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GSK
presents total results and core results in order to help
shareholders better understand the Group’s operational
performance.
Total
results represent the Group’s overall performance. However,
these results can contain material unusual or non-operational items
that may obscure the key trends and factors determining the
Group’s operational performance. GSK therefore also reports
core results to help shareholders identify and assess more clearly
the key drivers of the Group’s performance. This approach
aligns the presentation of the Group’s results more closely
with the majority of GSK’s peer group.
Core
results exclude the following items from total results:
amortisation and impairments of intangible assets and goodwill;
major restructuring costs; legal charges; transaction-related
accounting adjustments; disposals and other operating income other
than royalty income. Reconciliations between total and core results
are provided on pages 57 to 60.
Recent
costs for major restructuring reflect the programmes to reshape the
Group’s Pharmaceuticals business and the integration of the
Novartis Vaccines and Consumer Healthcare businesses following the
transaction which was completed in 2015. Costs for these major
restructuring programmes are expected to reduce significantly in
2017 with only residual charges thereafter.
The
most significant recent adjustments to total results have been
transaction-related items and disposal gains. Transaction-related
items are volatile and relate primarily to the required
re-measurement each quarter of the present value of the forecast
liabilities and contingent consideration associated with the
Group’s majority-owned Consumer Healthcare and HIV
businesses. These re-measurements reflect changes in the values of
these businesses and the expected forecast liabilities for the put
options, preference shares and future contingent consideration
payments. As these valuation adjustments do not relate to current
trading but primarily to consideration potentially due in the
future, they are excluded from core earnings. The major drivers of
the re-measurements have been changes in the forecasts of exchange
rates and performance. Re-measurement increases in liabilities
result in a charge and decreases in liabilities result in a credit
to total earnings.
In
order to illustrate underlying performance, it is also the
Group’s practice to present its results at constant exchange
rate (CER) growth.
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Information
regarding today’s results, including video interviews with
Sir Andrew Witty and other executives, are available on:
www.gsk.com/en-gb/investors.
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Contents
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Page
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Group
performance
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6
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Segmental
performance
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24
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Research
and development
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32
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Definitions
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36
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Outlook
assumptions and cautionary statements
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37
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Contacts
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38
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Income
statements
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39
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Statement
of comprehensive income – year ended 31 December
2016
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40
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Statement
of comprehensive income – three months ended 31 December
2016
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41
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Pharmaceuticals
turnover – year ended 31 December 2016
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42
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Vaccines
turnover – year ended 31 December 2016
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42
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Pharmaceuticals
and Vaccines turnover – three months ended 31 December
2016
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43
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Vaccines
turnover – three months ended 31 December 2016
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43
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Balance
sheet
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44
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Statement
of changes in equity
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45
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Cash
flow statement – year ended 31 December 2016
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46
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Segment
information
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47
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Legal
matters
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49
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Taxation
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49
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Additional
information
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50
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Reconciliation
of cash flow to movements in net debt
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54
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Net
debt analysis
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54
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Free
cash flow reconciliation
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54
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Non-controlling
interests in ViiV Healthcare
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55
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Core
results reconciliations
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57
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Pro-forma
growth rate reconciliations
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61
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Group performance
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The
Novartis transaction completed on 2 March 2015 and so the
Group’s reported results include twelve months of sales of
the Vaccines and Consumer Healthcare products acquired from
Novartis and exclude the former GSK Oncology business. The 2015
reported results included sales of the GSK Oncology products for
the two months to 2 March 2015 and sales of the acquired Vaccines
and Consumer Healthcare products for the ten months from that
date.
Accordingly,
for the year ended December 2016, in addition to reported growth
rates, the Group is presenting pro-forma growth rates for turnover,
core operating profit and core operating profit by business.
Pro-forma growth rates are calculated comparing reported turnover
and core operating profit for the year ended December 2016 with the
turnover and core operating profit for the year ended December 2015
adjusted to include the two months of sales for January and
February 2015 of the former Novartis Vaccines and Consumer
Healthcare products and exclude sales of the former GSK Oncology
business for January and February 2015. In addition, following the
Novartis transaction, the Group has restated its segment
information for the change in its segments described on page 47,
including in particular, now reporting the results of the
Pharmaceuticals operating segment as incorporating
HIV.
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Group turnover by business and
geographic region
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2016
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Q4 2016
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£m
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Reported
growth
CER%
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Pro-forma
growth
CER%
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£m
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Reported
growth
CER%
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Pharmaceuticals
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16,104
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3
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4
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4,575
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4
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Vaccines
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4,592
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14
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12
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1,137
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-
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Consumer
Healthcare
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7,193
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9
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5
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1,874
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2
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27,889
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6
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5
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7,586
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3
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Corporate
and other unallocated turnover
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-
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-
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Group
turnover
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27,889
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6
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5
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7,586
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3
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2016
|
|
Q4 2016
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||||||
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£m
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Reported
growth
CER%
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Pro-forma
growth
CER%
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£m
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Reported
growth
CER%
|
|
|
|
|
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|
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US
|
10,197
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10
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11
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2,901
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|
10
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Europe
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7,498
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6
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5
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1,957
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|
3
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International
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10,194
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|
1
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|
-
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|
2,728
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|
(4)
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|
|
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Group
turnover
|
27,889
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|
6
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|
5
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|
7,586
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|
3
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Turnover –
2016
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On a
reported basis, Group turnover for the year increased 17% in
Sterling terms and 6% CER to £27,889 million, with
Pharmaceuticals up 3%, Vaccines up 14% and Consumer Healthcare up
9%, the growth in all three businesses still reflecting the impact
of the Novartis transaction which completed on 2 March 2015. On a
pro-forma basis, Group turnover was up 5%, with Pharmaceuticals up
4%, Vaccines up 12% and Consumer Healthcare up 5%. Sales of New
Pharmaceutical and Vaccine products, as described on page 31, were
£4,453 million in the year, a Sterling increase of £2,465
million.
Pharmaceuticals
Pharmaceuticals
turnover was £16,104 million, up 3% reported, but adjusting
for the disposal of the Oncology business to Novartis, up 4%
pro-forma. HIV sales grew 37% in the year. The Respiratory
portfolio returned to growth with sales up 2%, continuing the
transition globally to newer products. Respiratory sales grew 7% in
the US and 3% in International, but declined 10% in Europe. Sales
of New Pharmaceutical products were £3,861 million, a Sterling
increase of £2,148 million, which more than offset the
Sterling decline in Seretide/Advair sales of £196
million. Sales of Established products declined 8%, with declines
in all regions, but particularly International, reflecting the loss
of exclusivity for Valtrex
in Canada, the impact of market reforms and the continued reshaping
of the business in China and the impact of biennial price revisions
in Japan. The overall impact of pricing to net sales of
Pharmaceuticals was around -1%.
US
Pharmaceuticals turnover of £4,705 million declined 1% in 2016
on a reported basis and grew 1% on a pro-forma basis. The pro-forma
performance reflected a 7% growth in the Respiratory portfolio,
partly offset by the impact of generic competition to Avodart, down 63% to £70 million,
and Lovaza, down 59% to
£43 million. Relenza
sales were also down 91% to £7 million following a
reallocation of government funding. Sales of new Respiratory
products totalled £654 million and the growth of these
products exceeded the decline in Advair. Advair sales fell 13% to £1,829
million, representing a 7% volume decline and a 6% negative impact
of price. Ventolin sales
were up 23% to £421 million, benefiting from competitor supply
constraints early in the year, while Flovent sales declined 11% to £378
million, reflecting pricing pressures in the ICS market.
Benlysta sales increased
18% to £277 million with ongoing demand growth.
In
Europe, Pharmaceuticals turnover declined 8% to £2,867 million
on a reported basis and 5% on a pro-forma basis. Respiratory sales
declined 10% to £1,383 million reflecting the ongoing
transition to the new Respiratory portfolio and generic competition
to Seretide which declined
24% (16% volume decline and an 8% negative impact of price) to
£835 million. This was partly offset by growth in the new
Respiratory products, which recorded sales of £225 million.
Established products sales were down 4% to £513
million.
International
Pharmaceuticals sales of £4,976 million were down 5% on a
reported basis and 4% on a pro-forma basis. Sales in Emerging
Markets declined 4% reported and 3% on a pro-forma basis, impacted
by the decline in the China business (down 12% primarily as a
result of the ongoing reshaping programme and broader Healthcare
reforms including price reductions) but also by recent divestments
in the International region, and the limitation of trading in
Venezuela. In Japan, Pharmaceutical sales were down 5% on a
reported basis and 5% pro-forma to £1,425 million, impacted by
biennial price revisions on older products as well as supply
interruptions to Avodart
early in the year.
Respiratory sales in Japan grew 3% with strong growth of the new
Respiratory products, up 57% to £118 million, more than
offsetting the decline in Adoair sales.
Worldwide
HIV sales increased 37% to £3,556 million, with the US up 46%,
Europe up 29% and International up 21%. The growth in all three
regions was primarily driven by strong performances from both
Triumeq and Tivicay, with sales of £1,735
million and £953 million, respectively in 2016. Epzicom/Kivexa sales declined 27% to
£568 million, reflecting the impact of generic competition
which began in several markets during H2 2016.
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|
Vaccines
Vaccines
sales grew 14% on a reported basis and 12% pro-forma to £4,592
million. On a reported basis, the US was up 13%, Europe up 18% and
International up 10%. Overall results benefited particularly from
the strong performance of Bexsero, as well as higher demand for
Fluarix/Flulaval in the US
and International and Menveo in International. Further growth
was driven by Synflorix,
due to market expansion in International and a tender award in
Europe, and Boostrix, which
grew in Europe and International. Growth was partly offset by a
decline in sales of Infanrix/Pediarix due to supply
constraints in International, as well as unfavourable CDC stockpile
movements for a number of products across the
portfolio.
In the
US, sales grew by 13% on a reported basis and 12% on a pro-forma
basis to £1,599 million. Growth was driven by market and share
growth for Bexsero,
Menveo and Boostrix, improved supply and higher
demand for Fluarix/Flulaval
and competitor supply issues that benefited Infanrix/Pediarix. Growth was partly
offset by the impact of unfavourable CDC stockpile movements on
Menveo, Infanrix/Pediarix, Boostrix and Rotarix.
In
Europe, sales grew 18% on a reported basis and 16% on a pro-forma
basis to £1,423 million. Growth was driven primarily by
Bexsero sales in private
market channels in several countries. Boostrix sales benefited from higher
demand and competitor supply issues. Sales increased in Germany,
driven by better supply of Hepatitis vaccines and higher demand for
Encepur and Rabipur. Sales growth was also helped
by a tender award for Synflorix, while Infanrix/Pediarix sales were impacted
by a competitor’s return to the market. Growth was also
partly offset by the unfavourable comparison with 2015 when
Menveo sales in the UK
benefited from a catch-up tender win.
In
International, sales grew 10% on a reported basis and 8% on a
pro-forma basis to £1,570 million. Growth was driven primarily
by Synflorix due to market
expansion in Nigeria, and higher demand in Africa and Asia.
Menveo sales also
contributed to growth driven by a tender award in Argentina.
Further growth was driven by Rotarix and Fluarix/FluLaval sales. Sales also
increased in Brazil due to strong demand for Bexsero, Menjugate, and Boostrix. Growth was partly offset by
lower sales of Infanrix/Pediarix due to supply
constraints and lower Hepatitis vaccines sales due to wholesaler
destocking in China.
Consumer Healthcare
Consumer
Healthcare sales were up 9% on a reported basis to £7,193
million, with growth broadly balanced across the regions; the US
was up 9%, Europe up 12%, and International up 8%. On a pro-forma
basis, sales increased by 5%, with growth driven by strong
performances in Oral health and Wellness power brands across all
regions.
US
sales increased 9% to £1,761 million on a reported basis and
5% pro-forma. Growth was driven by strong performances from the
Wellness and Oral health portfolios. Sensodyne delivered double-digit growth
driven by the launch of True
White combined with strong momentum from Pronamel. Within Wellness, Flonase OTC grew strongly in the first
half following line extensions, Excedrin benefited from the launch of
the Gel-tab format, and
Tums posted double-digit
growth following improved supply. This was partly offset by a
decline in Aquafresh sales
due to increased competition.
Sales
in Europe grew 12% to £2,191 million on a reported basis and
4% pro-forma. Good momentum in Germany, Scandinavia and Italy was
partly offset by the impact of challenging economic conditions in
CIS. Growth was driven primarily by Wellness and Oral health sales.
Within Wellness, Voltaren
grew in double-digits as a result of the continued success of the
12-hour variant across the region and in Germany, Italy and Central
& Eastern Europe in particular. Within the Oral health
category, Sensodyne and the
Gum health portfolio recorded strong growth as a result of
innovations and targeted promotional support.
International
sales of £3,241 million grew 8% on a reported basis and 5%
pro-forma. Growth was impacted by the sale of the Nigeria beverages
business on 30 September 2016 and the effective cessation of trade
in Venezuela at the end of 2015. Growth of the International region
was also affected by the combined impact on the Indian business of
the demonetisation implemented in November and a more general
slowing of the health food drink category in India which impacted
the performance of the Nutrition category and Horlicks in particular. Elsewhere, the
Middle East, Latin America and China grew particularly strongly as
a result of better pricing, new product introductions and channel
expansions. Strong growth was delivered by the power brands in the
Oral health and Wellness categories across the region.
|
|
Turnover – Q4
2016
|
|
Group
turnover for Q4 2016 increased 21% in Sterling terms and 3% CER to
£7,586 million, with Pharmaceuticals up 4%, Vaccines flat and
Consumer Healthcare up 2%. Sales of New Pharmaceutical and Vaccine
products, as described on page 31, were £1,370 million in the
quarter, an increase of 71%.
Pharmaceuticals
Pharmaceuticals
turnover was £4,575 million, up 4%, with HIV sales growing 25%
in the quarter. Total Respiratory sales grew 2% with 5% growth in
the US and 2% growth in International, partly offset by Europe
which was down 7%, as the Respiratory portfolio continued to
transition to newer products. Sales of New Pharmaceutical products
were £1,222 million, a Sterling increase of £602 million,
which more than offset the Sterling decline in Seretide/Advair sales in the quarter of
£54 million. Sales of Established products declined 6%,
primarily reflecting a decline in International, including the
impact of price revisions in Japan, and the unwinding of wholesaler
stocking in Q3 in a number of markets, particularly China, ahead of
systems upgrade projects in Q4. The overall impact of pricing to
net sales of Pharmaceuticals was around -1%.
US
Pharmaceuticals turnover of £1,446 million grew 6% in the
quarter, primarily driven by the Respiratory portfolio, which was
up 5% to £1,053 million. Sales of new Respiratory products
more than doubled to £234 million, with the growth more than
covering the decline in Advair. Advair sales declined 21% to £556
million, representing a 14% volume decline and a 7% negative impact
of price, reflecting a reduction in inventory in the channel.
Ventolin sales were up 78%
to £141 million, in part reflecting a comparison with
unfavourable payer rebate adjustments in Q4 2015. Flovent sales declined 8% to £115
million. Benlysta sales
increased 17% to £81 million with ongoing demand growth, while
sales of Relenza were down
44% to £6 million following a reallocation of government
funding.
In
Europe, Pharmaceuticals turnover declined 5% to £755 million.
Respiratory sales declined 7% to £360 million reflecting the
ongoing transition to the new Respiratory portfolio and generic
competition to Seretide,
which declined 24% (13% volume decline and a 11% negative impact of
price) to £201 million. This was partly offset by sales of the
new Respiratory products of £72 million in the quarter.
Established products sales were down 4% to £136
million.
International
Pharmaceuticals sales of £1,352 million were down 5%. Sales in
Emerging Markets declined 5%, primarily reflecting a decline of 23%
in China driven by the unwinding in Q4 2016 of wholesaler stocking
that occurred in Q3 ahead of a systems upgrade. In Emerging
Markets, Respiratory grew 5% as a result of new product launches
and strong performances by Flixotide and Ventolin. In Japan, Pharmaceutical
sales were down 1% to £423 million, primarily reflecting
mandatory price revisions. Respiratory sales in Japan were up 2%,
with growth in the new Respiratory products more than offsetting
the decline in Adoair
sales.
Worldwide
HIV sales increased 25% to £1,022 million, with the US up 32%,
Europe up 13% and International up 21%. The growth in all three
regions was driven primarily by continued strong performances from
both Triumeq and
Tivicay, with sales of
£530 million and £290 million, respectively, in the
quarter. Epzicom/Kivexa
sales declined 42% to £114 million, reflecting the impact of
generic competition.
|
|
Vaccines
Vaccines
sales were flat at £1,137 million with the US up 5%, Europe up
11% and International declining 11%. The overall performance
benefited from increased Bexsero sales in the US and Europe and
increased Menveo sales in
International. Growth was also driven by Infanrix/Pediarix, due to favourable
CDC stockpile movements and competitor supply shortages in the US,
partly offset by increased competition in Europe and the phasing of
shipments of Synflorix in
International and Fluarix/FluLaval in the US and
International.
In the
US, sales grew 5% to £354 million. Growth was driven by
Infanrix/Pediarix due to
favourable CDC stockpile movements as well as competitor supply
shortages in the quarter. Growth also benefited from market and
share gains for Bexsero.
Growth was partly offset by the phasing of shipments of
Fluarix/FluLaval and
Menveo share growth was
more than offset by adverse CDC stockpile movements.
In
Europe, sales grew 11% to £370 million. Growth was driven
primarily by Bexsero sales
in private market channels in several countries. Sales growth was
also helped by a tender award for Synflorix and strong demand for
Boostrix. Offsetting this
growth was a decline in sales of Infanrix/Pediarix, impacted by
increasing competitor supply, and an unfavourable comparison with
Q4 2015 when Menveo sales
in the UK benefited from a catch-up tender win.
In
International, sales declined 11% to £413 million. The decline
reflected the phasing of Synflorix sales in Pakistan and Brazil,
lower demand for Rotarix in
Latin America and the phasing of shipments of Fluarix/ FluLaval. This was partly
offset by growth from tender awards for Menveo in Argentina and Infanrix/Pediarix in Kazakhstan and
higher demand for Bexsero.
Consumer Healthcare
Consumer Healthcare sales were up 2% to £1,874 million, with
the US up 3%, Europe up 4%, and International flat. Growth was
primarily driven by strong performances in all regions across the
Oral health and Wellness power brands, with Sensodyne, Panadol
and Otrivin reporting particularly strong results. This growth
was partly offset by the impact of the sale of the Nigeria
beverages business at the end of Q3 2016 as well as the impact of
demonetisation and a slow-down in the Nutrition category in the
Indian business which when combined reduced global Consumer
Healthcare percentage growth by low single-digits in the
quarter.
US sales increased 3% to £467 million, reflecting strong
performances within Oral health and Pain management, partly offset
by Respiratory health due to increasing competition from private
label variants in the Allergy category, which impacted
Flonase OTC
within the quarter. Sensodyne grew in double-digits, building on the success of
recently launched innovations and benefiting from the new
Pronamel Strong
& Bright variant. Within
Wellness, Excedrin sales grew strongly, benefiting from the
Gel-tabs
format combined with promotional
efficiencies, and Tums recorded good growth as a result of supply improvements.
Sales
in Europe grew 4% to £565 million. Growth in the quarter was
driven primarily by high single-digit overall growth of the power
brands within the Oral health and Wellness categories. Double-digit
performances were delivered by Sensodyne, Otrivin and the Gum health portfolio.
On a geographical basis, Germany grew strongly, gaining share
within Wellness and Oral health, as did Southern Europe,
particularly Italy. This was partly offset by continued challenging
economic conditions in CIS.
International
sales of £842 million were flat in the quarter with
performance impacted by the combined impact of demonetisation and a
slower Nutrition category on the Indian business, as well as the
sale of the Nigeria beverages business on 30 September 2016.
Together these factors impacted the International percentage growth
in the quarter by mid-single digits. Elsewhere, the Middle East
grew strongly, with new Oral health innovations launched in Turkey
and Panadol momentum in the
Gulf, combined with a double-digit performance in Latin America
including the benefit of better pricing. There was strong growth
from the power brands, with a double-digit performance within Oral
health, driven by Sensodyne
and Denture care. Wellness also grew in mid single-digits,
primarily driven by Panadol,
Otrivin and Theraflu.
|
|
Total results
|
|
The
total results for the Group are set out below.
|
|
|
2016
£m
|
|
2015
£m
|
|
Growth
CER%
|
|
Q4
2016
£m
|
|
Q4
2015
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
27,889
|
|
23,923
|
|
6
|
|
7,586
|
|
6,286
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(9,290)
|
|
(8,853)
|
|
(1)
|
|
(2,508)
|
|
(2,541)
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
18,599
|
|
15,070
|
|
10
|
|
5,078
|
|
3,745
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(9,366)
|
|
(9,232)
|
|
(6)
|
|
(2,711)
|
|
(2,498)
|
|
(7)
|
|
Research
and development
|
(3,628)
|
|
(3,560)
|
|
(6)
|
|
(1,003)
|
|
(1,054)
|
|
(16)
|
|
Royalty income
|
398
|
|
329
|
|
|
|
117
|
|
91
|
|
|
|
Other
operating income/(expense)
|
(3,405)
|
|
7,715
|
|
|
|
(886)
|
|
(538)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit/(loss)
|
2,598
|
|
10,322
|
|
(86)
|
|
595
|
|
(254)
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
72
|
|
104
|
|
|
|
20
|
|
41
|
|
|
|
Finance
expense
|
(736)
|
|
(757)
|
|
|
|
(193)
|
|
(199)
|
|
|
|
Profit
on disposal of associates
|
-
|
|
843
|
|
|
|
-
|
|
1
|
|
|
|
Share
of after tax profits/(losses)
of
associates and joint ventures
|
5
|
|
14
|
|
|
|
1
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation
|
1,939
|
|
10,526
|
|
(92)
|
|
423
|
|
(416)
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(877)
|
|
(2,154)
|
|
|
|
(106)
|
|
(12)
|
|
|
|
Tax rate %
|
45.2%
|
|
20.5%
|
|
|
|
25.1%
|
|
(2.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after taxation
|
1,062
|
|
8,372
|
|
(98)
|
|
317
|
|
(428)
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss)
attributable to
non-controlling
interests
|
150
|
|
(50)
|
|
|
|
60
|
|
(74)
|
|
|
|
Profit/(loss)
attributable to
shareholders
|
912
|
|
8,422
|
|
|
|
257
|
|
(354)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,062
|
|
8,372
|
|
|
|
317
|
|
(428)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share
|
18.8p
|
|
174.3p
|
|
(99)
|
|
5.3p
|
|
(7.3)p
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total and core results
GSK
presents total results and core results in order to help
shareholders better understand the Group’s operational
performance.
Total
results represent the Group’s overall performance. However,
these results can contain material unusual or non-operational items
that may obscure the key trends and factors determining the
Group’s operational performance. GSK therefore also reports
core results to help shareholders identify and assess more clearly
the key drivers of the Group’s performance. This approach
aligns the presentation of the Group’s results more closely
with the majority of GSK’s peer group.
Core
results exclude the following items from total results:
amortisation and impairments of intangible assets and goodwill;
major restructuring costs; legal charges; transaction-related
accounting adjustments; disposals and other operating income other
than royalty income. Reconciliations between total and core results
are provided on pages 57 to 60.
The
adjustments that reconcile total operating profit, profit after tax
and earnings per share to the core results are as
follows:
|
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
£m
|
|
Profit
after tax
£m
|
|
Earnings
per share
p
|
|
Operating
profit
£m
|
|
Profit
after
tax
£m
|
|
EPS
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total results
|
2,598
|
|
1,062
|
|
18.8
|
|
10,322
|
|
8,372
|
|
174.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
asset amortisation
|
588
|
|
458
|
|
9.4
|
|
563
|
|
402
|
|
8.3
|
|
Intangible
asset impairment
|
20
|
|
15
|
|
0.3
|
|
206
|
|
156
|
|
3.2
|
|
Major
restructuring costs
|
970
|
|
757
|
|
15.6
|
|
1,891
|
|
1,455
|
|
30.1
|
|
Legal
costs
|
162
|
|
148
|
|
3.0
|
|
221
|
|
200
|
|
4.1
|
|
Transaction-related
items
|
3,919
|
|
3,480
|
|
61.6
|
|
2,238
|
|
1,886
|
|
28.8
|
|
Divestments
and other
|
(486)
|
|
(305)
|
|
(6.3)
|
|
(9,712)
|
|
(8,373)
|
|
(173.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,173
|
|
4,553
|
|
83.6
|
|
(4,593)
|
|
(4,274)
|
|
(98.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core results
|
7,771
|
|
5,615
|
|
102.4
|
|
5,729
|
|
4,098
|
|
75.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2016
|
|
Q4
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
£m
|
|
Profit
after tax
£m
|
|
Earnings
per share
p
|
|
Operating
profit
£m
|
|
Profit
after
tax
£m
|
|
EPS
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total results
|
595
|
|
317
|
|
5.3
|
|
(254)
|
|
(428)
|
|
(7.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
asset amortisation
|
144
|
|
117
|
|
2.4
|
|
148
|
|
71
|
|
1.5
|
|
Intangible
asset impairment
|
29
|
|
21
|
|
0.4
|
|
86
|
|
61
|
|
1.3
|
|
Major
restructuring costs
|
397
|
|
296
|
|
6.1
|
|
773
|
|
602
|
|
12.4
|
|
Legal
costs
|
47
|
|
43
|
|
0.9
|
|
14
|
|
(3)
|
|
(0.1)
|
|
Transaction-related
items
|
862
|
|
716
|
|
11.6
|
|
714
|
|
590
|
|
8.4
|
|
Divestments
and other
|
(12)
|
|
(27)
|
|
(0.6)
|
|
(124)
|
|
90
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,467
|
|
1,166
|
|
20.8
|
|
1,611
|
|
1,411
|
|
25.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core results
|
2,062
|
|
1,483
|
|
26.1
|
|
1,357
|
|
983
|
|
18.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full
reconciliations between total results and core results are set out
on pages 57 to 60 and
the definition of core results is set out on page 36.
|
|
Core operating profit and
margin
|
|
Core operating profit
|
|
|
2016
|
|
Q4 2016
|
||||||||||
|
|
£m
|
|
%
of
turnover
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
£m
|
|
%
of
turnover
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
27,889
|
|
100
|
|
6
|
|
5
|
|
7,586
|
|
100
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(8,351)
|
|
(29.9)
|
|
5
|
|
3
|
|
(2,195)
|
|
(28.9)
|
|
(2)
|
|
Selling,
general and administration
|
(8,697)
|
|
(31.2)
|
|
2
|
|
-
|
|
(2,429)
|
|
(32.0)
|
|
(1)
|
|
Research
and development
|
(3,468)
|
|
(12.4)
|
|
3
|
|
3
|
|
(1,017)
|
|
(13.4)
|
|
6
|
|
Royalty
income
|
398
|
|
1.4
|
|
16
|
|
17
|
|
117
|
|
1.5
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
operating profit
|
7,771
|
|
27.9
|
|
14
|
|
17
|
|
2,062
|
|
27.2
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
profit before tax
|
7,124
|
|
|
|
16
|
|
|
|
1,893
|
|
|
|
18
|
|
Core
profit after tax
|
5,615
|
|
|
|
14
|
|
|
|
1,483
|
|
|
|
12
|
|
Core
profit attributable to
shareholders
|
4,978
|
|
|
|
12
|
|
|
|
1,271
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
earnings per share
|
102.4p
|
|
|
|
12
|
|
|
|
26.1p
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core operating profit by business
|
|
|
2016
|
|
Q4 2016
|
||||||||||
|
|
£m
|
|
%
of
turnover
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
£m
|
|
%
of
turnover
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
7,979
|
|
49.5
|
|
6
|
|
8
|
|
2,347
|
|
51.3
|
|
14
|
|
Pharmaceuticals
R&D
|
(2,488)
|
|
|
|
6
|
|
8
|
|
(741)
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
5,491
|
|
34.1
|
|
6
|
|
8
|
|
1,606
|
|
35.1
|
|
14
|
|
Vaccines
|
1,454
|
|
31.7
|
|
38
|
|
47
|
|
284
|
|
25.0
|
|
41
|
|
Consumer
Healthcare
|
1,116
|
|
15.5
|
|
42
|
|
40
|
|
274
|
|
14.6
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,061
|
|
28.9
|
|
16
|
|
18
|
|
2,164
|
|
28.5
|
|
16
|
|
Corporate
&
unallocated
costs
|
(290)
|
|
|
|
|
|
|
|
(102)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
operating profit
|
7,771
|
|
27.9
|
|
14
|
|
17
|
|
2,062
|
|
27.2
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core operating profit – 2016
Core
operating profit was £7,771 million, 14% higher in CER terms
than in 2015 on a turnover increase of 6%. The core operating
margin of 27.9% was 3.9 percentage points higher than in 2015 and
1.9 percentage points higher on a CER basis.
On a
pro-forma basis, core operating profit was 17% higher in CER terms
compared with 2015 on turnover growth of 5%. The core operating
margin of 27.9% was 4.6 percentage points higher than in 2015 and
2.6 percentage points higher in CER terms on a pro-forma basis,
reflecting improved operating leverage driven by sales growth and a
more favourable mix across all three businesses as well as delivery
of restructuring and integration benefits and tight control of
ongoing costs, partly offset by continued price pressure,
particularly in Respiratory, and supply chain and R&D
investments.
Cost of
sales as a percentage of turnover was 29.9%, down 1.5 percentage
points in Sterling terms and 0.3 percentage points in CER terms
compared with 2015. On a pro-forma basis, the cost of sales
percentage decreased 1.8 percentage points compared with 2015 and
was down 0.6 percentage points in CER terms. This reflected
improved product mix, particularly the impact of higher HIV sales
in Pharmaceuticals, but also in Vaccines and Consumer Healthcare,
as well as an increased contribution from integration and
restructuring savings in all three businesses, partly offset by
continued adverse pricing pressure in Pharmaceuticals, primarily
Respiratory, as well as continued investments in the supply
chain.
SG&A
costs were 31.2% of turnover, 1.9 percentage points lower than in
2015 and 1.2 percentage points lower on a CER basis. On a pro-forma
basis, SG&A as a percentage of sales reduced by 2.2 percentage
points and 1.5 percentage points on a CER basis. This primarily
reflected tight control of ongoing costs as well as the benefits
from the Pharmaceuticals restructuring programme and integration
benefits in Vaccines and Consumer Healthcare, partly offset by
investment in promotional product support, particularly for new
launches in Respiratory, HIV, Vaccines and Consumer
Healthcare.
R&D
expenditure was £3,468 million (12.4% of turnover), 12% higher
than in 2015 and 3% higher on a CER basis. On a pro-forma basis,
R&D expenditure increased 3% on a CER basis reflecting
increased investment, particularly in Pharmaceuticals, with
investments in a number of new programmes and the cost of the
acquired BMS HIV programmes, partly offset by the benefit from cost
reduction programmes in Pharmaceuticals, Consumer Healthcare and
Vaccines R&D.
Royalty
income was £398 million (2015: £329 million) primarily
reflecting increased royalty income from Gardasil sales as well as
the benefit of a catch-up adjustment to prior-year
estimates.
Core operating profit by business – 2016
Pharmaceuticals
operating profit was £5,491 million, 6% higher in CER terms
than in 2015 on a turnover increase of 3%. The operating margin of
34.1% was 3.7 percentage points higher than in 2015 and 1.1
percentage points higher on a CER basis. On a pro-forma basis, the
operating margin increased 1.2 percentage points on a CER basis,
reflecting a more favourable product mix, primarily driven by the
growth in HIV sales, and the cost reduction benefit from the
Pharmaceuticals restructuring programme, partly offset by increased
investment in new product support, increased investment in R&D
in a number of new programmes, the continued impact of lower
prices, particularly in Respiratory, and the broader transition of
the Respiratory portfolio.
Vaccines
operating profit was £1,454 million, 38% higher than in 2015
in CER terms on a turnover increase of 14%. The operating profit
margin of 31.7% was 5.3 percentage points higher than in 2015 and
5.6 percentage points higher on a CER basis. On a pro-forma basis,
the operating margin improved by 7.3 percentage points and 7.6
points in CER terms primarily driven by improved product mix and
enhanced operating leverage from strong sales growth, together with
restructuring and integration benefits in cost of sales, SG&A
and R&D, and higher royalty income. These were partly offset by
SG&A investments to support business growth, a number of
inventory adjustments and additional supply chain
investments.
Consumer
Healthcare operating profit was £1,116 million, 42% higher
than in 2015 in CER terms on a turnover increase of 9%. The
operating margin of 15.5% was 4.2 percentage points higher than in
2015 and 3.4 percentage points higher on a CER basis. On a
pro-forma basis, the Consumer Healthcare operating margin was 3.7
percentage points higher on a CER basis due to improvements in
gross margin, reflecting mix benefits from the power brand strategy
and better pricing, as well as a strong contribution from
integration synergies benefiting both SG&A and R&D as a
percentage of sales.
|
|
Core operating profit – Q4 2016
Core
operating profit was £2,062 million, 16% higher in CER terms
than in Q4 2015 on a turnover increase of 3%. The core operating
margin of 27.2% was 5.6 percentage points higher than in Q4 2015
and 2.7 percentage points higher on a CER basis, reflecting
improved operating leverage driven by sales growth and a more
favourable mix across all three businesses, as well as continued
delivery of restructuring and integration benefits and tight
control of ongoing costs, partly offset by continued price
pressure, particularly in Respiratory, and supply chain and R&D
investments.
Cost of
sales as a percentage of turnover was 28.9%, down 3.9 percentage
points in Sterling terms and down 1.6 percentage points in CER
terms compared with Q4 2015. This reflected a more favourable
product mix in the quarter, particularly the impact of higher HIV
sales in Pharmaceuticals, but also in Vaccines, as well as a
continued contribution from integration and restructuring savings
in all three businesses, partly offset by adverse pricing pressure
in Pharmaceuticals, primarily Respiratory, and continued
investments in the supply chain.
SG&A
costs were 32.0% of turnover, 1.5 percentage points lower than in
Q4 2015 and 1.3 percentage points lower on a CER basis. This
primarily reflected continued delivery of benefits from integration
in Vaccines and Consumer Healthcare and the restructuring programme
in Pharmaceuticals, partly offset by reallocation of investment
behind promotional product support, particularly for new launches
in Respiratory, HIV, Vaccines, and Consumer
Healthcare.
R&D
expenditure was £1,017 million (13.4% of turnover), 20% higher
than Q4 2015 and 6% higher on a CER basis, reflecting increased
investment in a number of new programmes as well as the cost of the
acquired BMS HIV programmes partly offset by continued benefits
from cost reduction programmes in Pharmaceuticals, Consumer
Healthcare and Vaccines R&D.
Royalty
income was £117 million (Q4 2015: £91 million) primarily
reflecting increased royalty income from Gardasil
sales.
Core operating profit by business – Q4 2016
Pharmaceuticals
operating profit was £1,606 million, 14% higher in CER terms
on a turnover increase of 4%. The operating margin of 35.1% was 6.5
percentage points higher than in Q4 2015. On a CER basis the
operating margin was 2.9 percentage points higher, reflecting a
more favourable product mix, primarily driven by the growth in HIV
sales, and the continued cost reduction benefits of the
Pharmaceuticals restructuring programme, partly offset by the
impact of lower prices, particularly in Respiratory, and the
broader transition of the Respiratory portfolio to newer products,
continuing investments in new product support and additional
investment in a number of new programmes in the R&D
pipeline.
Vaccines
operating profit was £284 million, 41% higher than in Q4 2015
in CER terms on flat turnover. The operating margin of 25.0% was
8.2 percentage points higher than in Q4 2015 and 6.9 percentage
points higher in CER terms, primarily driven by favourable product
mix in cost of sales, a reduction in R&D expenses delivered
through restructuring and integration benefits, and higher royalty
income. This was partly offset by an increase in SG&A
investments to support business growth.
Consumer Healthcare operating profit was £274 million, 5%
higher than in Q4 2015 in CER terms on a turnover increase of 2%.
The operating margin of 14.6% was 3.0 percentage points higher than
in Q4 2015 and 0.3 percentage points higher on a CER basis. The
increase in operating margin primarily reflected contribution from
integration synergies benefiting both SG&A and R&D, partly
offset by increased investment behind power brands, particularly in
the Oral health and Wellness categories.
|
|
Core profit after tax and core earnings per share –
2016
Net
core finance expense was £652 million compared with £636
million in 2015, the increase reflecting the translation impact of
exchange rate movements on the reported Sterling costs of foreign
currency denominated interest-bearing instruments.
Tax on
core profit amounted to £1,509 million and represented an
effective core tax rate of 21.2% (2015: 19.5%). The increase in the
effective rate primarily reflected the Group’s changing
earnings mix. See ‘Taxation’ on page 49 for further
details.
The
allocation of earnings to non-controlling interests amounted to
£637 million (2015: £440 million), including the
non-controlling interest allocations of Consumer Healthcare profits
of £288 million (2015: £137 million) and the allocation
of ViiV Healthcare profits, which increased to £324 million
(2015: £224 million) including the impact of changes in the
proportions of preferential dividends due to each shareholder based
on the relative performance of different products in the year. The
allocation also reflected the impact on the contribution of some of
the Group’s other entities with non-controlling interests
primarily as a result of net losses in those entities arising from
exchange.
Core
EPS of 102.4p was up 12% in CER terms compared with a 14% increase
in operating profit, primarily reflecting the increased tax rate
compared with 2015 and the greater contribution to growth from
businesses in which there are significant non-controlling
interests.
Core profit after tax and core earnings per share – Q4
2016
Net
core finance expense was £170 million compared with £154
million in Q4 2015, reflecting increased net debt but primarily
impacted by the translation effect of exchange rate movements on
the costs of foreign currency interest-bearing
instruments.
Tax on
core profit amounted to £410 million and represented an
effective core tax rate of 21.7% (Q4 2015: 17.9%). The increase in
the effective rate primarily reflected the timing of resolution of
a number of matters that benefited the quarter in 2015 compared
with 2016 as well as the Group’s changing earnings mix. See
‘Taxation’ on page 49 for further details.
The
allocation of earnings to non-controlling interests amounted to
£212 million (Q4 2015: £109 million), including the
non-controlling interest allocations of Consumer Healthcare profits
of £103 million (Q4 2015: £40 million) and the allocation
of ViiV Healthcare profits, which increased to £93 million (Q4
2015: £46 million) including the impact of changes in the
proportions of preferential dividends due to each shareholder based
on the relative performance of different products in the quarter.
The allocation also reflected net losses in other entities with
non-controlling interests primarily as a result of adverse exchange
movements.
Core
EPS of 26.1p was up 11% in CER terms compared with a 16% increase
in operating profit, primarily reflecting the increased tax rate in
the quarter compared with Q4 2015 and the greater contribution to
growth from businesses in which there are significant
non-controlling interests.
|
|
Currency impact on 2016 results
The
2016 results are based on average exchange rates, principally
£1/$1.36, £1/€1.23 and £1/Yen 149. Comparative
exchange rates are given on page 51. The period-end exchange rates
were £1/$1.24, £1/€1.17 and £1/Yen
144.
In the
year, turnover increased 6% CER and 17% at actual exchange rates.
Core EPS of 102.4p was up 12% in CER terms and up 35% at actual
rates. The positive currency impact reflected the weakness of
Sterling against the majority of the Group’s trading
currencies relative to 2015. A reduction in losses on settled
intercompany transactions compared with 2015 contributed less than
1 percentage point of the positive currency impact of 23 percentage
points on core EPS.
Currency impact on Q4 2016 results
In the
quarter, turnover increased 3% CER and 21% at actual exchange
rates. Core EPS of 26.1p was up 11% in CER terms and up 45% at
actual rates. The positive currency impact reflected the weakness
of Sterling against the majority of the Group’s trading
currencies relative to Q4 2015. Losses on settled intercompany
transactions compared with Q4 2015 reduced the positive currency
impact by 4 percentage points, resulting in a positive currency
impact of 34 percentage points on core EPS.
|
|
Total operating profit and total earnings per share –
2016
Total
operating profit was £2,598 million in 2016 compared with a
total operating profit of £10,322 million in 2015, which
benefited from the net disposal gains recorded following the
disposal of the Oncology business as part of the Novartis
transaction.
Non-core
items resulted in an aggregate net charge of £5,173 million
primarily reflecting the impact of further accounting charges
related to re-measurement of the contingent consideration liability
related to the former Shionogi-ViiV Healthcare joint venture, along
with re-measurement in the year of the value attributable to the
Consumer Healthcare Joint Venture put option and the liabilities
first recognised in Q1 2016 for the Pfizer and Shionogi put options
and preferential dividends in ViiV Healthcare. The liability for
the Shionogi put option was de-recognised in Q4 2016 directly to
equity. An explanation of the accounting for the non-controlling
interests in ViiV Healthcare is set out on page 55. These
re-measurements were driven by the unwinding of the discount
applied to these future liabilities as well as updated trading
forecasts and changes in the exchange rate assumptions used,
updating them to period-end rates, which have increased the
estimated total Sterling values of GSK’s Consumer Healthcare
and ViiV Healthcare businesses. Non-core items also included the
continued impact of charges for restructuring costs related to the
integration of the former Novartis businesses and the
Pharmaceuticals restructuring programme and certain other adjusting
items.
Intangible asset
amortisation and impairment
Intangible
asset amortisation was £588 million, compared with £563
million in 2015. Intangible asset impairments of £20 million
(2015: £206 million) included impairments of R&D and
commercial assets. Both of these charges were non-cash
items.
Major restructuring and
integration
Major
restructuring and integration charges of £970 million have
been incurred (2015: £1,891 million), reflecting the phasing
of planned restructuring projects following the completion of the
Novartis transaction in Q1 2015, as well as reduced charges for
Pharmaceuticals restructuring projects as this programme enters its
later stages. Cash payments made were £1,077 million (2015:
£1,131 million) including the settlement of certain charges
accrued in previous quarters.
Charges
for the combined restructuring and integration programme to date
are £3.7 billion, with cash charges of £2.9 billion and
cash payments to date of £2.7 billion. The anticipated total
cash charges of the combined programme were expected to be up to
£3.65 billion and the non-cash charges up to £1.35
billion. The programme delivered incremental cost savings of
£1.4 billion in 2016, including a currency benefit of
£0.2 billion, and has now delivered approximately £3.0
billion of annual savings (including the currency benefit). The
programme remains on track to deliver the originally targeted total
annual savings of £3 billion on a constant currency basis
during 2017. Some residual costs, both cash and non-cash, will be
charged during 2017, to deliver the targeted £3 billion of
savings.
Legal
Legal
charges of £162 million (2015: £221 million) included the
benefit of the settlement of existing matters as well as provisions
for ongoing litigation. Cash payments were £233 million (2015:
£420 million).
Transaction-related
adjustments
Transaction-related
adjustments resulted in a net charge of £3,919 million (2015:
£2,238 million). This primarily reflected accounting charges
for the re-measurement of the liability and the unwinding of the
discounting effects on the value attributable to the Consumer
Healthcare Joint Venture put option held by Novartis, the
re-measurement and the unwinding of the discounting effects on the
contingent consideration relating to the acquisition of the former
Shionogi-ViiV Healthcare Joint Venture and the value attributable
to the put options and preferential dividends payable to Pfizer and
Shionogi.
|
|
Charge/(credit)
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
Consumer
Healthcare Joint Venture put option
|
1,133
|
|
83
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare Joint
Venture
(including
Shionogi preferential dividends)
|
2,162
|
|
1,874
|
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
577
|
|
-
|
|
Other
adjustments
|
47
|
|
281
|
|
|
|
|
|
|
Total
transaction-related charges
|
3,919
|
|
2,238
|
|
|
|
|
|
|
The
aggregate impact of unwinding the discount on these future and
potential liabilities was £905 million (2015: £757
million), including £464 million on the Consumer Healthcare
Joint Venture put option, £334 million on contingent
consideration on the former Shionogi-ViiV Healthcare Joint Venture,
and £58 million on the ViiV Healthcare put options and
preference dividends. The remaining charge of £3,014 million
was driven primarily by changes in exchange rate assumptions as
well as updates to trading forecasts.
In
December 2016, GSK and Shionogi agreed to amend the
Shareholders’ Agreement for ViiV Healthcare to remove the
Shionogi put option, as well as the first two exercise windows of
the GSK call option, which would have been exercisable in 2027 and
2030. The estimated liability for Shionogi’s put option was
initially recognised on GSK’s balance sheet at the end of Q1
2016, and stood at £1,244 million when it was de-recognised in
December 2016, directly to equity. An explanation of the accounting
for the non-controlling interests in ViiV Healthcare is set out on
page 55.
Divestments and other
items
Divestments
and other items included equity investment disposals, including the
disposal of the remaining Aspen Pharmacare investment, dividends
and impairments, milestone income on ofatumumab, a number of other
asset disposals, and certain other adjusting items. Divestments and
other items in 2015 included the profit on the disposal of the
Oncology business to Novartis.
Tax
A tax
charge of £877 million on total profit represented an
effective tax rate of 45.2% (2015: 20.5%) and reflected the
non-deductibility of certain items included within the
transaction-related adjustments, particularly the re-measurements
of the put options related to ViiV Healthcare and the Consumer
Healthcare Joint Venture, as well as differing tax effects of the
various other non-core items.
Earnings per
share
The
total earnings per share was 18.8p, compared with earnings per
share of 174.3p in 2015. The decrease primarily reflected the
benefit in 2015 from the disposal of the Oncology business to
Novartis that closed in Q1 2015, together with the impact in 2016
of charges arising from increases in the valuations of the
liabilities for contingent consideration and the put options
associated with increases in the Sterling value of the
Group’s HIV and Consumer Healthcare businesses, partly offset
by improved performance and reduced restructuring
costs.
|
|
Total operating profit and total earnings per share – Q4
2016
Total
operating profit was £595 million in Q4 2016 compared with a
total operating loss of £254 million in Q4 2015. Non-core
items in the quarter resulted in an aggregate net charge of
£1,467 million (Q4 2015: £1,611 million), primarily
reflecting the impact of further accounting charges related to
re-measurement of the contingent consideration liability related to
the former Shionogi-ViiV Healthcare joint venture, along with
re-measurement of the value attributable to the Consumer Healthcare
Joint Venture put option and liabilities for the Pfizer and
Shionogi put options and preferential dividends in ViiV Healthcare
in the quarter. The liability for the Shionogi put option was
de-recognised in Q4 2016 directly to equity. An explanation of the
accounting for the non-controlling interests in ViiV Healthcare is
set out on page 55. The significant re-measurements were driven
primarily by changes in exchange rate assumptions, which have been
updated to the period-end rates as well as updated trading
forecasts.
Intangible asset and
amortisation and impairment
Intangible
asset amortisation was £144 million compared with £148
million in Q4 2015. Intangible asset impairments were £29
million (Q4 2015: £86 million). Both are non-cash
items.
Major restructuring and
integration
Major
restructuring and integration charges incurred in the quarter were
£397 million (Q4 2015: £773 million), reflecting the
phasing of planned restructuring projects following the completion
of the Novartis transaction in Q1 2015, as well as reduced charges
for Pharmaceuticals restructuring projects as this programme enters
its later stages. Cash payments made in the quarter were £279
million (Q4 2015: £285 million) including the settlement of
certain charges accrued in previous quarters.
Legal
Legal
charges of £47 million (Q4 2015: £14 million) included
the benefit of the settlement of existing matters as well as
provisions for ongoing litigation. Legal cash payments in the
quarter were £67 million (Q4 2015: £141
million).
Transaction-related
adjustments
Transaction-related
adjustments resulted in a net charge of £862 million (Q4 2015:
£714 million). This primarily included accounting charges for
the re-measurement of the liability and the unwinding of the
discounting effects on the value attributable to the Consumer
Healthcare Joint Venture put option held by Novartis and the
re-measurement and the unwinding of the discounting effects on the
contingent consideration relating to the acquisition of the former
Shionogi-ViiV Healthcare Joint Venture, as well as the value
attributable to the put options and preferential dividends
attributable to Pfizer and Shionogi.
|
|
Charge/(credit)
|
Q4 2016
£m
|
|
Q4
2015
£m
|
|
|
|
|
|
|
Consumer
Healthcare Joint Venture put option
|
133
|
|
(95)
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare Joint
Venture
(including
Shionogi preferential dividends)
|
673
|
|
704
|
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
37
|
|
-
|
|
Other
adjustments
|
19
|
|
105
|
|
|
|
|
|
|
Total
transaction-related charges
|
862
|
|
714
|
|
|
|
|
|
|
The
aggregate impact of unwinding the discount on these future
potential liabilities was £256 million (Q4 2015: £260
million), including £124 million on the Consumer Healthcare
Joint Venture put option, £96 million on the contingent
consideration on the former Shionogi-ViiV Healthcare Joint Venture,
and £22 million on the ViiV Healthcare put options and
preference dividends. The remaining charge of £606 million was
driven by adjustments to trading forecasts and further changes in
exchange rate assumptions in the quarter. An explanation of the
accounting for the non-controlling interests in ViiV Healthcare is
set out on page 55.
Divestments and other
items
Divestments
and other items included equity investment disposals, including the
disposal of a number of other asset disposals, along with certain
other adjusting items.
Tax
A tax
charge of £106 million on total profit represented an
effective tax rate of 25.1% (Q4 2015: (2.9%)). This rate reflected
the non-deductibility of certain items included within
transaction-related adjustments, as well as the differing tax
effects of the various non-core items.
Earnings per
share
The
total earnings per share was 5.3p, compared with total loss per
share of 7.3p in Q4 2015. The increase primarily reflected improved
core performance and reduced restructuring costs, partly offset by
increased re-measurement charges from changes in the Sterling
valuations of the contingent consideration and the put options
liabilities associated with the Group’s Consumer Healthcare
and HIV businesses.
|
|
Cash generation and
conversion
|
|
Cash flow and net debt
|
|
|
2016
|
|
2015
|
|
Q4
2016
|
|
|
|
|
|
|
|
|
Net
cash inflow from operating activities (£m)
|
6,497
|
|
2,569
|
|
2,991
|
|
Adjusted
net cash inflow from operating activities* (£m)
|
6,730
|
|
2,989
|
|
3,058
|
|
Free
cash flow* (£m)
|
3,087
|
|
(155)
|
|
1,768
|
|
Adjusted
free cash flow* (£m)
|
3,320
|
|
265
|
|
1,835
|
|
Free
cash flow growth (%)
|
>100%
|
|
>(100)%
|
|
>100%
|
|
Free
cash flow conversion* (%)
|
>100%
|
|
3%
|
|
>100%
|
|
Net
debt (£m)**
|
13,804
|
|
10,727
|
|
13,804
|
|
*
|
Adjusted
net cash inflow from operating activities, free cash flow, adjusted
free cash flow and free cash flow conversion are defined on page
36.
|
|
**
|
The
analysis of net debt is presented on page 54.
|
|
2016
The net
cash inflow from operating activities for the year was £6,497
million (2015: £2,569 million). Excluding legal settlements of
£233 million (2015: £420 million) adjusted net cash
inflow from operating activities was £6,730 million (2015:
£2,989 million). In addition, there were payments of
restructuring and integration costs of £1,077 million (2015:
£1,131 million) and a further tax payment of £125 million
(2015: £1,071 million) on the sale of the Oncology business,
both of which have been funded from divestment proceeds. Excluding
these items, the adjusted net cash inflow from operating activities
would have been £7,932 million (2015: £5,191 million).
The increase primarily reflected the improved operating performance
across all segments and a positive currency benefit.
Total
cash payments made by ViiV Healthcare to Shionogi in relation to
its contingent consideration liability (including preferential
dividends) in the year were £417 million (2015: £159
million), of which £351 million (2015: £121 million) was
recognised in cash flows from operating activities and £66
million (2015: £38 million) was recognised within investing
cash flows.
Free
cash flow was £3,087 million for the year (2015: £155
million outflow). Excluding legal payments, adjusted free cash flow
was £3,320 million (2015: £265 million) but this is also
after making restructuring and integration payments, the additional
tax payment on the sale of the Oncology business and the purchase
of HIV Clinical assets for £221 million, which are treated as
intangible assets purchases. Excluding these items, which are being
funded from divestment proceeds, the adjusted free cash flow would
have been £4,743 million (2015: £2,467
million).
Net debt
At 31
December 2016, net debt was £13.8 billion, compared with
£10.7 billion at 31 December 2015, comprising gross debt of
£18.8 billion and cash and liquid investments of £5.0
billion. The increase in net debt primarily reflects a £2.2
billion adverse exchange impact from the translation of
non-Sterling denominated debt and exchange on other financing
items, dividends paid to shareholders of £4.9 billion
including the special dividend of £1.0 billion, partly offset
by free cash flow of £3.1 billion and asset disposals of
£1.0 billion.
At 31
December 2016, GSK had short-term borrowings (including overdrafts)
repayable within 12 months of £4,129 million with loans of
£2,216 million repayable in the subsequent year.
|
|
Q4 2016
The net
cash inflow from operating activities for the quarter was
£2,991 million (Q4 2015: £1,501 million). Excluding legal
settlements of £67 million (Q4 2015: £141 million)
adjusted net cash inflow from operating activities was £3,058
million (Q4 2015: £1,642 million). In addition, there were
payments of restructuring and integration costs of £279
million (Q4 2015: £285 million) and there was a tax payment of
£292 million in Q4 2015 on the sale of the Oncology business,
both of which have been funded from divestment proceeds. Excluding
these items, the adjusted net cash inflow from operating activities
would have been £3,337 million (Q4 2015: £2,219 million).
The increase primarily reflected the improved operating performance
across all segments together with an improvement in working capital
(including inventory levels) compared to Q4 2015, as well as a
positive currency benefit.
Total
cash payments made by ViiV Healthcare to Shionogi in relation to
its contingent consideration liability (including preferential
dividends) in the quarter were £137 million, of which
£118 million was recognised in cash flows from operating
activities and £19 million was recognised within investing
cash flows.
Free
cash flow was £1,768 million for the quarter (Q4 2015:
£553 million). Excluding legal payments, adjusted free cash
flow was £1,835 million (Q4 2015: £694 million) but this
is also after making restructuring and integration payments and the
additional tax payment on the sale of the Oncology business in
2015. Excluding these items, which are being funded from divestment
proceeds, the adjusted free cash flow would have been £2,114
million (Q4 2015: £1,271 million).
|
|
Working capital
|
|
|
31
December
2016
|
|
30
September
2016
|
|
30
June
2016
|
|
31
March
2016
|
|
31
December
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital conversion cycle* (days)
|
193
|
|
216
|
|
217
|
|
209
|
|
191
|
|
Working
capital percentage of turnover (%)
|
22
|
|
27
|
|
26
|
|
25
|
|
23
|
|
*
|
Working
capital conversion cycle is defined on page 36.
|
|
The reported working capital conversion cycle days in 2015 were
distorted by a temporary favourable impact of 15 days arising from
the Novartis transaction. Excluding this impact, the conversion
cycle for 2015 was around 206 days. The resulting reduction of 13
days in 2016 compared with 2015 was predominantly due to a
beneficial impact from exchange, reduced receivables days from
improved collections and reduced inventory days.
|
|
Returns to
shareholders
|
|
GSK
expects to pay an annual ordinary dividend of 80p for
2017.
In
April 2016, GSK returned approximately £1 billion (20p per
share) to shareholders via a special dividend paid alongside
GSK’s Q4 2015 ordinary dividend payment.
Any
future returns to shareholders of surplus capital will be subject
to the Group’s strategic progress, visibility on the put
options associated with ViiV Healthcare and the Consumer Healthcare
joint venture, and other capital requirements.
Quarterly dividends
The
Board has declared a fourth interim dividend of 23 pence per share
(Q4 2015: 23 pence per share).
Payment of dividends
The
equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 11 April 2017. An annual
fee of $0.02 per ADS (or $0.005 per ADS per quarter) will be
charged by the Depositary.
The
ex-dividend date will be 23 February 2017 (22 February 2017 for ADR
holders), with a record date of 24 February 2017 and a payment date
of 13 April 2017.
|
|
|
Paid/
payable
|
|
Pence
per
share
|
|
£m
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
First
interim
|
14 July
2016
|
|
19
|
|
923
|
|
Second
interim
|
13
October 2016
|
|
19
|
|
925
|
|
Third
interim
|
12
January 2017
|
|
19
|
|
925
|
|
Fourth
interim
|
13
April 2017
|
|
23
|
|
1,119
|
|
|
|
|
80
|
|
3,892
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
First
interim
|
9 July
2015
|
|
19
|
|
920
|
|
Second
interim
|
1
October 2015
|
|
19
|
|
919
|
|
Third
interim
|
14
January 2016
|
|
19
|
|
919
|
|
Fourth
interim
|
14
April 2016
|
|
23
|
|
1,114
|
|
|
|
|
|
|
|
|
|
|
|
80
|
|
3,872
|
|
|
|
|
|
|
|
|
Special
dividend
|
14
April 2016
|
|
20
|
|
969
|
|
|
|
|
|
|
|
|
GSK
made no share repurchases during the year. The company issued 7
million shares under employee share schemes amounting to £89
million (2015: £73 million).
The
weighted average number of shares for 2016 was 4,860 million,
compared with 4,831 in 2015.
The
weighted average number of shares for Q4 2016 was 4,867 million,
compared with 4,838 million in Q4 2015.
|
|
Segmental performance
|
|
Pharmaceuticals
|
|
|
2016
|
|
Q4 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
6,837
|
|
10
|
|
12
|
|
2,080
|
|
12
|
|
Europe
|
3,884
|
|
-
|
|
2
|
|
1,022
|
|
(1)
|
|
International
|
5,383
|
|
(3)
|
|
(3)
|
|
1,473
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
16,104
|
|
3
|
|
4
|
|
4,575
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
Q4 2016
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
6,510
|
|
2
|
|
1,918
|
|
2
|
|
Cardiovascular,
metabolic and urology
|
860
|
|
(11)
|
|
234
|
|
12
|
|
Immuno-inflammation
|
340
|
|
15
|
|
112
|
|
27
|
|
Other
pharmaceuticals
|
2,297
|
|
(14)
|
|
636
|
|
(12)
|
|
Established
products
|
2,541
|
|
(8)
|
|
653
|
|
(6)
|
|
HIV
|
3,556
|
|
37
|
|
1,022
|
|
25
|
|
|
|
|
|
|
|
|
|
|
Total
|
16,104
|
|
3
|
|
4,575
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Respiratory
2016 (£6,510 million; up 2%)
Respiratory
sales in 2016 increased 2% to £6,510 million, reflecting the
continuing transition of the Respiratory portfolio to newer
products. Growth in the new Respiratory products, which recorded
combined sales of £1,052
million, including Relvar/Breo
Ellipta sales of £620 million, more than offset the decline in
Seretide/
Advair. Flixotide/Flovent
sales decreased 8% to £637
million and Ventolin
sales grew 15% to £785 million.
In the
US, Respiratory sales increased 7% to £3,306 million (14%
volume growth and a 7% negative impact of price). The growth of new
Respiratory products more than offset the 13% decline in
Advair (7% volume decline
and a 6% negative impact of price). The new Ellipta products recorded combined
sales of £583 million, including Breo Ellipta sales of £344
million, with Nucala, the
treatment for severe asthma, reporting sales of £71 million.
Established Respiratory assets included Ventolin, with sales up 23% to
£421 million, and Flovent, which declined 11% to
£378 million. Ventolin
sales benefited from competitor supply constraints early in the
year, while Flovent
continued to be impacted by ongoing pricing pressures in the ICS
market.
European
Respiratory sales were down 10% to £1,383 million, with
Seretide sales down 24% to
£835 million (16% volume decline and an 8% negative impact of
price), reflecting continued competition from generics and the
transition of the Respiratory portfolio to newer products. The new
Respiratory products
recorded combined sales of £225 million in 2016, including
Relvar Ellipta sales of
£140 million.
Respiratory
sales in the International region increased 3% to £1,821
million with Emerging Markets up 7% and Japan up 3%. In Emerging
Markets, sales of Seretide
were down 3% at £476 million, while Ventolin grew 13% to £219 million.
In Japan, the growth in the new Respiratory products offset the
Adoair decline of
12%.
Q4 2016 (£1,918 million; up 2%)
Respiratory
sales in the quarter were up 2% at
£1,918 million, reflecting growth in the new Respiratory
products, which recorded combined sales of £364 million
in the quarter, including Relvar/Breo Ellipta sales of £207
million. Seretide/Advair
declined 20% to £975 million in the quarter, Flixotide/Flovent sales decreased 4% to
£190 million and Ventolin sales grew 43% to £245
million.
In the
US, Respiratory sales increased 5% to £1,053 million in the
quarter (8% volume growth and a 3% negative impact of price).
Growth of new Respiratory products in the quarter offset the 21%
decline in Advair (14%
volume decline and a 7% negative impact of price) which included
the impact of lower inventory in the channel. The new Ellipta products recorded combined
sales of £204 million in the quarter including Breo Ellipta sales of £122
million, with Nucala, the
treatment for severe asthma, reporting sales of £30 million.
Established Respiratory assets included Ventolin, with sales up 78% to
£141 million, and Flovent, which declined 8% to £115
million. Ventolin reported
sales growth included the impact of a comparison with unfavourable
payer rebate adjustments in Q4 2015.
European
Respiratory sales were down 7% to £360 million, with
Seretide sales down 24% to
£201 million (13% volume decline and a 11% negative impact of
price), reflecting continued competition from generics and the
transition of the Respiratory portfolio to newer products. The new
Respiratory products
recorded combined sales of £72 million in the quarter,
including Relvar Ellipta
sales of £42 million.
Respiratory
sales in the International region increased 2% to £505
million, with Emerging Markets up 5% and Japan up 2%, while sales
in Canada declined 4%. In Emerging Markets, sales of Seretide were down 7% at £122
million, including China down 10%, reflecting the unwinding in Q4
2016 of wholesaler stocking that occurred in Q3 ahead of a systems
upgrade. Excluding China, Emerging Markets Respiratory sales grew
8%, including Ventolin up
26% to £56 million. In Japan, the new Respiratory products
grew 47% to £31 million.
Cardiovascular, metabolic and urology
2016 (£860 million; down 11%)
Sales
in the category were down 11% to £860 million. The
Avodart franchise was down
14% to £635 million, primarily due to a 63% decline in the US
following the launch of generic competition in Q4 2015. Sales of
Eperzan/Tanzeum were
£121 million, primarily in the US. Prolia was divested at the end of 2015
and therefore no sales were recorded in 2016, compared with
£43 million in 2015.
Q4 2016 (£234 million; up 12%)
Sales
in the category were up 12% to £234 million. The Avodart franchise was up 23% to
£164 million, with a strong performance in Europe, up 27% to
£82 million. Sales of Eperzan/Tanzeum were £38 million
in the quarter, primarily in the US. Prolia was divested at the end of 2015
and therefore no sales were recorded in Q4 2016, compared with
£12 million in Q4 2015.
Immuno-inflammation
2016 (£340 million; up 15%)
Immuno-inflammation
sales grew 15% to £340 million. Sales of Benlysta were £306 million, up
19%, with sales in the US of £277 million, up
18%.
Q4 2016 (£112 million; up 27%)
Immuno-inflammation
sales grew 27% to £112 million. Sales of Benlysta were £89 million, up 17%,
with sales in the US of £81 million, up 17% on demand driven
volume growth.
Other pharmaceuticals
2016 (£2,297 million; down 14%)
Sales
in other therapy areas decreased 14% to £2,297 million.
Dermatology sales declined 12% to £393 million, adversely
affected by supply constraints, while Augmentin sales were flat at £563
million. Sales of products for Rare diseases were flat at £423
million, and included sales of Volibris, which were up 1% to £172
million.
Q4 2016 (£636 million; down 12%)
Sales
in other therapy areas decreased 12% to £636 million.
Dermatology sales declined 6% to £113 million, adversely
affected by supply constraints, while Augmentin sales were flat at £146
million. Sales of products for Rare diseases grew 1% to £117
million, and included sales of Volibris, which were down 3% to
£45 million.
Established products
2016 (£2,541 million; down 8%)
Established
products turnover fell 8% to £2,541 million, with Valtrex sales down 37% to £118
million driven by a decline in Canada, down 91% to £5 million,
following loss of exclusivity. Zeffix sales were down 24% to £111
million and Lovaza sales in
the US fell 59% to £43 million.
Q4 2016 (£653 million; down 6%)
Established
products turnover fell 6% to £653 million, primarily
reflecting a decline in International, including the impact in Q4
2016 of the unwinding of wholesaler stocking in China that occurred
in Q3 ahead of a systems upgrade. Sales of Lovaza in the US were down 73% to
£8 million, and sales of Zeffix in China were down 51% to
£13 million.
|
|
HIV
2016 (£3,556 million; up 37%)
HIV
sales increased 37% to £3,556 million in the year, with the US
up 46%, Europe up 29% and International up 21%. The growth in all
three regions was driven by Triumeq and Tivicay.
Triumeq and Tivicay
sales were £1,735 million and £953 million, respectively.
Epzicom/Kivexa sales
declined 27% to £568 million, and Selzentry sales declined 9% to
£125 million. There were also continued declines in the mature
portfolio, mainly driven by generic competition to both
Combivir, down 38% to
£23 million, and Lexiva, down 26% to £51
million.
Q4 2016 (£1,022 million; up 25%)
HIV
sales increased 25% to £1,022 million in the quarter, with the
US up 32%, Europe up 13% and International up 21%. The growth in
all three regions was driven by Triumeq and Tivicay.
The
ongoing roll-out of both Triumeq and Tivicay resulted in sales of £530
million and £290 million, respectively, in the quarter.
Epzicom/Kivexa sales
declined 42% to £114 million, reflecting increasing generic
competition, and Selzentry
sales declined 7% to £33 million.
|
|
Vaccines
|
|
|
2016
|
|
Q4 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
1,599
|
|
13
|
|
12
|
|
354
|
|
5
|
|
Europe
|
1,423
|
|
18
|
|
16
|
|
370
|
|
11
|
|
International
|
1,570
|
|
10
|
|
8
|
|
413
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4,592
|
|
14
|
|
12
|
|
1,137
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
Q4 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
469
|
|
1
|
|
1
|
|
106
|
|
(10)
|
|
Synflorix
|
504
|
|
19
|
|
19
|
|
122
|
|
(24)
|
|
Fluarix, FluLaval
|
414
|
|
38
|
|
38
|
|
63
|
|
(25)
|
|
Bexsero
|
390
|
|
>100
|
|
>100
|
|
98
|
|
>100
|
|
Menveo
|
202
|
|
16
|
|
8
|
|
50
|
|
72
|
|
Boostrix
|
470
|
|
18
|
|
18
|
|
127
|
|
19
|
|
Infanrix, Pediarix
|
769
|
|
(5)
|
|
(5)
|
|
219
|
|
15
|
|
Hepatitis
|
602
|
|
1
|
|
1
|
|
157
|
|
(1)
|
|
Priorix, Priorix Tetra, Varilrix
|
300
|
|
5
|
|
5
|
|
83
|
|
(12)
|
|
Cervarix
|
81
|
|
(14)
|
|
(14)
|
|
23
|
|
18
|
|
Other
|
391
|
|
6
|
|
(4)
|
|
89
|
|
(33)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4,592
|
|
14
|
|
12
|
|
1,137
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 (£4,592 million; up 14%)
Vaccines sales grew 14% on a reported basis and 12% pro-forma to
£4,592 million. On a reported basis, the US was up 13%, Europe
up 18% and International up 10%. Growth benefited from the strong
performance of Bexsero across all regions, higher demand for
Fluarix/Flulaval
in the US and International and a
tender award for Menveo in International. Further growth was driven
by Synflorix due to market expansion in International and a
tender award in Europe. Boostrix sales benefited from higher demand in Europe and
International. Growth was partly offset by Infanrix/Pediarix
due to supply constraints in
International, as well as unfavourable CDC stockpile movements for
a number of products across the portfolio.
In the US, sales grew by 13% on a reported basis and 12% on a
pro-forma basis to £1,599 million. Growth was driven by market
and share growth for Bexsero, Menveo and Boostrix, improved supply and higher demand for
Fluarix/Flulaval
and competitor supply issues that
benefited Infanrix/Pediarix.
This growth was partly offset by adverse stockpile movements
on Menveo and an unfavourable comparison with the benefit to
2015 from CDC stockpile movements on Infanrix/Pediarix,
Boostrix
and Rotarix.
In Europe, sales grew 18% on a reported basis and 16% on a
pro-forma basis to £1,423 million. Growth was driven primarily
by Bexsero sales in private market channels in several
countries including Spain and Italy, and in the UK following its
inclusion in the NHS immunisation programme. Boostrix sales benefited from higher demand and competitor
supply issues. Sales increased in Germany driven by improved supply
of Hepatitis vaccines and higher demand for Encepur and Rabipur. Sales growth was also helped by a tender award
for Synflorix in Poland but Infanrix/Pediarix
sales were adversely impacted, mainly
in Germany, France and Italy, by a competitor’s return to the
market during the year. Growth was also partly offset by the
unfavourable comparison with 2015 when Menveo sales in the UK benefited from a catch-up tender
win.
|
|
In International, sales grew 10% on a reported basis and 8% on a
pro-forma basis to £1,570 million. Growth was driven primarily
by Synflorix, due to market expansion in Nigeria, higher
demand in Africa and private market demand in Asia. The growth
in Menveo sales was driven by a tender award in Argentina
and Rotarix sales benefited from higher demand in Brazil and
Japan. Further growth in the region was driven by Brazil due to
strong demand for Bexsero, Menjugate, and Boostrix. Fluarix/Flulaval
sales grew due to higher uptake in
Australia. Growth in the region was partly offset by lower sales
of Infanrix/Pediarix,
due to supply constraints, and lower Hepatitis vaccines sales, due
to wholesaler destocking in China following the introduction of new
private market distribution regulations.
|
|
Q4 2016 (£1,137 million; flat)
Vaccines sales were flat at £1,137 million with the US up 5%,
Europe up 11% and International declining 11%. Growth benefited
from increased Bexsero sales in the US and in private market channels in
Europe, and Menveo in International. Growth was also driven by
Infanrix/Pediarix
due to favourable CDC stockpile
movements and competitor supply issues in the US, partly offset by
increased competition in Europe. Growth in Europe was driven by
higher demand for Boostrix and a tender award for Synflorix. Growth was partly offset by the phasing
of Synflorix sales in International and the phasing of
shipments of Fluarix/FluLaval
in the US and
International.
In the US, sales grew 5% to £354 million. Growth was driven
by Infanrix/Pediarix
due to favourable CDC stockpile
movements as well as competitor supply issues. Growth also
benefited from market and share gains for Bexsero. Growth was partly offset by the phasing of
shipments of Fluarix/FluLaval
and Menveo share growth was more than offset by an
unfavourable comparison with the benefit to Q4 2015 from CDC
stockpile movements.
In Europe, sales grew 11% to £370 million. Growth was driven
primarily by Bexsero sales in private market channels mainly in Spain
and Italy. Sales growth was also helped by a tender award
for Synflorix in Poland and strong demand for
Boostrix
mainly in Germany. Partly offsetting
this growth was a decline in Infanrix/Pediarix sales, which were impacted by increasing
competitor supply in Germany, France and Italy, and an unfavourable
comparison with Q4 2015, when Menveo sales in the UK benefited from a catch-up tender
win.
In International, sales declined 11% to £413 million. The
decline was driven by the phasing of Synflorix sales in Pakistan and Brazil, lower demand
for Rotarix in Latin America and the phasing of shipments
of Fluarix/FluLaval
in Korea and Canada. This was partly
offset by growth from tender awards for Menveo in Argentina and Infanrix/Pediarix
in Kazakhstan and higher demand
for Bexsero.
|
|
Consumer
Healthcare
|
|
Turnover
|
2016
|
|
Q4 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
1,761
|
|
9
|
|
5
|
|
467
|
|
3
|
|
Europe
|
2,191
|
|
12
|
|
4
|
|
565
|
|
4
|
|
International
|
3,241
|
|
8
|
|
5
|
|
842
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
7,193
|
|
9
|
|
5
|
|
1,874
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
2016
|
|
Q4 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellness
|
3,726
|
|
15
|
|
6
|
|
992
|
|
3
|
|
Oral
health
|
2,223
|
|
8
|
|
8
|
|
594
|
|
10
|
|
Nutrition
|
674
|
|
(8)
|
|
(9)
|
|
150
|
|
(23)
|
|
Skin
health
|
570
|
|
4
|
|
(2)
|
|
138
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
7,193
|
|
9
|
|
5
|
|
1,874
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 (£7,193 million; up 9%)
The
Consumer Healthcare business represents the Consumer Healthcare
Joint Venture with Novartis together with the GSK Consumer
Healthcare listed businesses in India and Nigeria, which are
excluded from the Joint Venture. Results do not include the trading
performance of the Nigeria beverages business in Q4 2016 following
its sale on 30 September 2016.
Reported
sales grew 9% to £7,193 million, benefiting significantly from
the inclusion of sales of the former Novartis products for the
first time for the first two months of the period. Pro-forma growth
was 5% of which price contributed 2%, and volume 3%. Strong
performances were delivered by the power brands within the Oral
health and Wellness categories and across all regions. Sales from
innovation within the last three years represented approximately
13% of sales, with a particular contribution for Flonase, which was switched to OTC in Q1
2015. Other notable launches in 2016 included Sensodyne True White and Excedrin Gel-tabs in the
US.
US
sales grew 9% on a reported basis to £1,761 million, 5%
pro-forma. Sensodyne
delivered double-digit growth, benefiting from the launch in 2015
of Repair and Protect and
the launch of True White in
the first quarter of 2016, together with distribution gains for
Pronamel and the newly
launched Pronamel Strong &
Bright variant. Flonase
OTC delivered high single-digit growth, with a strong
performance in the first half of 2016, driven by new formats, but
impacted in the second half by increasing private label
competition. Excedrin grew
in double-digits, driven by the Gel-tab launch and new digital
campaigns, and Tums also
delivered double-digit growth, benefiting from supply improvements.
This was partly offset by a decline in Aquafresh sales due to increased
competitive pressures and a re-alignment of investment behind power
brands.
Sales
in Europe grew 12% on a reported basis to £2,191 million and
were up 4% on a pro-forma basis, driven primarily by performances
within the Wellness and Oral health categories. Voltaren continued to deliver
double-digit growth, driven largely by the 12-hour variant and with strong
performances across all key markets. Oral health sales grew in mid
single-digits, with strong growth in Sensodyne and the Gum health portfolio,
partly offset by a flat performance in Aquafresh, due to increased competitive
pressures. At a market level, sales grew well in Italy,
Scandinavia, the UK and Germany, partly offset by a decline in
sales in CIS due to the impact on consumer spending of the weaker
economic environment.
|
|
International
sales of £3,241 million grew 8% on a reported basis with
pro-forma growth of 5%. Growth was delivered in many priority
markets, primarily through the power brands across the Oral health
and Wellness categories. This was partly offset by the impact of
the sale of the Nigeria beverages business at the end of Q3 2016 as
well as the affect of the restructuring of activity in Venezuela at
the end of 2015. Growth of the International region was also
affected by the combined impact on the Indian business of the
demonetisation implemented in November and a more general slowing
of the health food drink category which impacted the performance of
the Nutrition category and Horlicks in particular. Elsewhere,
strong growth was delivered in the Middle East, Latin America and
China. The growth in the Middle East was driven by strong momentum
across the power brands, particularly Otrivin, Panadol and Sensodyne. Double-digit performances
were delivered in Brazil and Argentina as a result of better
pricing and new product launches within Oral health. China
delivered high single-digit sales growth with contributions across
the portfolio and with Sensodyne and Voltaren in particular benefiting from
e-commerce and retail distribution expansion.
Q4 2016 (£1,874 million; up 2%)
Sales
grew 2% to £1,874 million with 1% price and 1% volume growth,
driven primarily by double-digit performances of power brands
overall and most significantly, Sensodyne, Panadol, Denture
care and Otrivin. These performances were partly
offset by the sale of the Nigeria beverages business and the impact
of demonetisation and a slower Nutrition category on the Indian
business, which together impacted percentage growth in the global
Consumer Healthcare business by low-single digits. Sales from new
GSK innovations (product introductions within the last three years
on a rolling basis) represented approximately 12% of sales in the
quarter. Notable launches within the quarter included Pronamel Strong & Bright in the US
and Parodontax Ultraclean
in Europe.
US sales increased 3% to £467 million, reflecting in
particular a strong performance within Oral health. Growth within
Wellness slowed, driven by increasing private label competition in
the Allergy category which impacted Flonase OTC.
This was partly offset by better
growth in the pain category. Excedrin delivered double-digit growth, driven by the
continued momentum of the Gel-tab variant, along with promotional efficiencies.
Within Oral health, Sensodyne and Denture care delivered double-digit
performances, although this was partly offset by increased
competition, which impacted Aquafresh. Sensodyne benefited from the launch of Pronamel Strong &
Bright in the quarter and
Denture care gained share as a result of targeted promotional
support. Tums grew in double-digits in the quarter benefiting
from supply improvements.
Sales
in Europe grew 4% to £565 million. Growth in the quarter was
driven by the Oral health and Wellness categories. Oral health
contributed the majority of the region’s growth with high
single-digit growths in all key markets driven by double-digit
growth of Sensodyne and Gum
health. Voltaren grew in
high single-digits, benefiting from continued strong performances
from the 12-hour variant,
media campaigns and distribution gains. Germany and Italy performed
particularly well, with broad-based growth across the categories
benefiting from targeted promotional support. These strong
performances were partly offset by the continuing economic downturn
in CIS that impacted consumer spending, together with a decline
within Nutrition following the re-alignment of investment behind
power brands.
International
sales of £842 million were flat in the quarter. The reported
performance of the region was impacted by the disposal of the
Nigeria beverages business on 30 September 2016 as well as the
impact on the Indian business of demonetisation and a slower
Nutrition category that together affected Horlicks in particular. Together these
factors impacted growth in International in the quarter by
mid-single digits percentages. Elsewhere, the Middle East and Latin
America performed particularly well. The Middle East region posted
double-digit growth, driven by Sensodyne, building on momentum from
the True White variant, and
Panadol, benefiting from line extensions.
Latin America grew strongly in the quarter driven by better pricing
and growth in the Oral health power brands. Together these
significantly impacted the growth rate of the International region
and the Nutrition category. Performance of the power brands
elsewhere in the region continued to be buoyant with a particularly
strong delivery within Oral health, driven by Sensodyne and Denture care. Wellness
also demonstrated good momentum, with Panadol, Otrivin and Theraflu all recording double-digit
growth.
|
|
New Pharmaceutical and Vaccine
products
|
|
Turnover
|
2016
|
|
Q4 2016
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
|
|
|
|
|
|
|
|
Relvar/Breo Ellipta
|
620
|
|
>100
|
|
207
|
|
77
|
|
Anoro Ellipta
|
201
|
|
>100
|
|
69
|
|
100
|
|
Arnuity Ellipta
|
15
|
|
>100
|
|
6
|
|
>100
|
|
Incruse Ellipta
|
114
|
|
>100
|
|
38
|
|
>100
|
|
Nucala
|
102
|
|
>100
|
|
44
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
CVMU
|
|
|
|
|
|
|
|
|
Eperzan/Tanzeum
|
121
|
|
>100
|
|
38
|
|
88
|
|
|
|
|
|
|
|
|
|
|
HIV
|
|
|
|
|
|
|
|
|
Tivicay
|
953
|
|
45
|
|
290
|
|
42
|
|
Triumeq
|
1,735
|
|
>100
|
|
530
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
3,861
|
|
>100
|
|
1,222
|
|
68
|
|
|
|
|
|
|
|
|
|
|
Vaccines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bexsero
|
390
|
|
>100
|
|
98
|
|
>100
|
|
Menveo
|
202
|
|
16
|
|
50
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
592
|
|
96
|
|
148
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
Total
|
4,453
|
|
>100
|
|
1,370
|
|
71
|
|
|
|
|
|
|
|
|
|
|
In
2015, GSK identified a series of New Pharmaceutical and Vaccine
products that were expected to deliver at least £6 billion of
revenues per annum on a CER basis by 2020. Those products, plus
current clinical pipeline asset, Shingrix, are as set out above. Sales
of the New Pharmaceutical and Vaccine products are now expected to
reach £6 billion of revenues per annum on a CER basis up to
two years earlier (2018).
2016
Sales of New Pharmaceutical and Vaccine products were £4,453 million, grew £2,465 million in Sterling terms and represented
approximately 22% of
Pharmaceuticals and Vaccines turnover in the
year.
Q4 2016
Sales of New Pharmaceutical and Vaccine products were £1,370 million, grew £688 million in Sterling terms and represented
approximately 24% of
Pharmaceuticals and Vaccines turnover in the
quarter.
|
|
Research and development
|
|
GSK
remains focused on delivering an improved return on its investment
in R&D. Sales contribution, reduced attrition and cost
reduction are all important drivers of an improving internal rate
of return. R&D expenditure is not determined as a percentage of
sales but instead capital is allocated using strict returns-based
criteria depending on the pipeline opportunities
available.
The
operations of Total Pharmaceuticals R&D, which includes HIV
R&D, are broadly split into Discovery activities (up to the
completion of Phase IIa trials) and Development work (from Phase
IIb onwards) each supported by specific and common infrastructure
and other shared services where appropriate. R&D expenditure
for 2016 is analysed below.
|
|
|
2016
£m
|
|
2015
£m
|
|
Growth
CER
%
|
|
|
|
|
|
|
|
|
Discovery
|
848
|
|
744
|
|
6
|
|
Development
|
1,275
|
|
1,136
|
|
4
|
|
Facilities
and central support functions
|
505
|
|
433
|
|
9
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
2,628
|
|
2,313
|
|
5
|
|
Vaccines
|
597
|
|
525
|
|
2
|
|
Consumer
Healthcare
|
243
|
|
258
|
|
(12)
|
|
|
|
|
|
|
|
|
Core
R&D
|
3,468
|
|
3,096
|
|
3
|
|
Amortisation
and impairment of intangible assets
|
54
|
|
93
|
|
|
|
Major
restructuring costs
|
159
|
|
319
|
|
|
|
Transaction-related,
divestments and other items
|
(53)
|
|
52
|
|
|
|
|
|
|
|
|
|
|
Total
R&D
|
3,628
|
|
3,560
|
|
(6)
|
|
|
|
|
|
|
|
|
Core
R&D expenditure increased 3% on a CER basis reflecting
increased investment, particularly in Total Pharmaceuticals, which
increased 5% CER. The most significant factor driving Total
Pharmaceuticals R&D growth was progression of the ViiV HIV
portfolio, including programmes acquired from BMS earlier in the
year. The increase in Discovery was also driven by progression of
the early stage Oncology portfolio and early investment in
Bioelectronics. Development growth was primarily due to the start
of new Phase III programmes, including HIV, respiratory and
anaemia, partly offset by the benefit from R&D cost reduction
programmes. The increase in facilities and central support
functions costs in the year partly reflected investment in new data
warehousing and analytics to transform the way data is harnessed
across R&D together with a re-allocation of central support
costs.
|
|
R&D pipeline
|
|
|
|
At a
presentation to investors in New York on 3 November 2015, GSK
described a deep portfolio of innovation, focussed across six core
areas of scientific research and development: HIV & Infectious
diseases, Respiratory, Vaccines, Immuno-Inflammation, Oncology and
Rare Diseases. Around 40 new potential medicines and vaccines were
profiled, supporting the Group’s outlook for growth in the
period 2016-2020 and the significant opportunity the Group has to
create value beyond 2020.
|
|
HIV and infectious diseases - including new options for
long-term control and prevention of HIV and opportunities designed
to cure or induce long-term remission in both Hepatitis B and
C
|
|
|
News
since Q3 2016:
|
|
|
●
|
Announced
start of FLAIR and ATLAS Phase III studies evaluating cabotegravir
+ rilpivirine long-acting injectable treatment regimens (18
November);
|
|
●
|
Announced
CHMP positive opinion to lower the age and weight limit for
Tivicay in children and
adolescents (16 December);
|
|
●
|
Announced
positive results from first Phase III studies (SWORD 1 and 2) of
two-drug HIV treatment regimen (dolutegravir + rilpivirine) (19
December);
|
|
●
|
Announced
start of Phase III study evaluating long-acting cabotegravir for
HIV prevention (20 December).
|
|
|
|
|
Respiratory - including the next generation of respiratory
medicines beyond inhaled treatments
|
|
|
News
since Q3 2016:
|
|
|
●
|
Announced
filing in US of once-daily closed triple FF/UMEC/VI for COPD (21
November);
|
|
●
|
Announced
filing in EU of once-daily closed triple FF/UMEC/VI for COPD (2
December);
|
|
●
|
Announced
approval in Japan for Relvar
Ellipta for patients with COPD (2 December);
|
|
●
|
Positive
data from the Phase IIa study of danirixin, a CXCR2 antagonist for
COPD, supported continuation into late-stage development (19
December);
|
|
●
|
Announced
start of Phase III study of once-daily closed triple FF/UMEC/VI in
asthma (19 December).
|
|
|
|
|
Vaccines - including a novel maternal immunisation platform
for vaccines
|
|
|
News
since Q3 2016:
|
|
|
●
|
Announced
presentation at Infectious Diseases Week of data of flexible dosing
and co-administration with flu vaccine for Shingrix (27 October);
|
|
●
|
Announced
EU filing of Shingrix for
prevention of shingles (25 November).
|
|
|
|
|
Immuno-inflammation - a
portfolio of new antibodies & novel orals for inflammatory
diseases including rheumatoid arthritis, Sjögren’s
syndrome, osteoarthritis and inflammatory bowel
disease
|
|
|
News
since Q3 2016:
|
|
|
●
|
Announced
data from NE Asia study of Benlysta in SLE presented at meeting of
ACR and ARHP (13 November);
|
|
●
|
Announced
data from 7 year study showing sustained benefit of Benlysta in SLE (16
November);
|
|
●
|
Achieved
start of Phase II for 2982772, an oral RIP1 kinase inhibitor, in
patients with moderate to severe rheumatoid arthritis (16
November);
|
|
●
|
Announced
data from two Phase III studies of sirukumab (SIRROUND-T and
SIRROUND-H) presented at meeting of ACR and ARHP (16
November);
|
|
●
|
Announced
filing in Japan of Benlysta
for SLE (13 December).
|
|
|
|
|
Oncology - leading-edge molecules in the field of
epigenetics and immuno-oncology for the treatment of
cancer
|
|
|
|
|
|
Rare diseases - breakthrough cell and gene therapies for
treatment of rare diseases
|
|
|
News
since Q3 2016:
|
|
|
●
|
Announced
Phase III study of mepolizumab met co-primary endpoints and all
secondary endpoints in patients with eosinophilic granulomatosis
with polyangiitis (23 November).
|
|
|
|
|
Other Pharma profiled at investor event
|
|
|
News
since Q3 2016:
|
|
|
●
|
Announced
start of Phase III programme with daprodustat for anaemia
associated with chronic kidney disease (24 November).
|
|
|
|
|
Pipeline news flow since Q3 2016 for other assets not profiled at
the Investor event:
|
|
|
●
|
Announced
EU approval for expanded indication for Boostrix and Boostrix Polio for use in pregnant
women (1 November);
|
|
●
|
Announced
FDA approval of Flulaval
quadrivalent flu vaccine for infants 6 months and older (18
November);
|
|
●
|
Positive
Phase I data for ’916, an antibody drug conjugate (ADC)
targeting B-cell maturation antigen (BCMA) for treatment of
multiple myeloma (MM), was presented to the American Society of
Hematology (5 December);
|
|
●
|
The
Phase IIb study in psoriasis patients of 2894512, a nonsteroidal,
topical treatment for psoriasis and atopic dermatitis, met its
primary endpoint (24 January).
|
|
Listed
below are the ~40 pipeline assets profiled at our R&D event in
November 2015 which are in active clinical development and/or other
assets acquired since the R&D event.
|
||
|
|
||
|
Respiratory
|
Phase
|
|
|
3772847A
(IL33R mAb)
|
Severe
asthma
|
Ph
I
|
|
3008348
(Alpha V beta 6 integrin antagonist)
|
Idiopathic
pulmonary fibrosis
|
Ph
I
|
|
2862277
(TNFR1 dAb)
|
Acute
lung injury
|
Ph
II
|
|
danirixin
(CXCR2 antagonist)
|
COPD
|
Ph
II
|
|
2269557
(PI3 kinase delta inhibitor)
|
COPD
& asthma
|
Ph
II
|
|
2245035
(TLR7 agonist)
|
Asthma
|
Ph
II
|
|
Nucala (mepolizumab)
|
COPD
|
Ph
III
|
|
Nasal
polyposis
|
Ph
II
|
|
|
Hypereosinophilic
syndrome
|
Ph
II
|
|
|
FF+UMEC+VI
(Closed Triple)
|
COPD
|
US:
Filed Nov 2016
EU:
Filed Dec 2016
|
|
Asthma
|
Ph
III
|
|
|
HIV/Infectious diseases
|
Phase
|
|
|
3389404
(HBV LICA antisense oligonucleotide)1
|
Hepatitis
B
|
Ph
I
|
|
3228836
(HBV antisense oligonucleotide)1
|
Hepatitis
B
|
Ph
I
|
|
2878175
+ RG-101 (NS5B inhibitor + anti-Mir122 antisense
oligonucleotide)
|
Hepatitis
C
|
Ph
II
|
|
gepotidacin
(Type 2 topoisomerase inhibitor)
|
Bacterial
infections
|
Ph
II
|
|
cabotegravir
+ rilpivirine (Integrase inhibitor + NNRTI, both
long-acting
parenteral formulations)
|
HIV
infections
|
Ph
III
|
|
cabotegravir
(long-acting integrase inhibitor)
|
HIV
pre-exposure prophylaxis
|
Ph
III
|
|
fostemsavir
(3684934) (HIV attachment inhibitor)
|
HIV
infections
|
Ph
III
|
|
dolutegravir
+ lamivudine
|
HIV
infections
|
Ph
III
|
|
dolutegravir
+ rilpivirine (Integrase inhibitor + NNRTI)
|
HIV
infections - two drug maintenance regimen
|
Ph
III
|
|
Immuno-inflammation
|
Phase
|
|
|
2982772
(RIP1 kinase inhibitor)
|
Ulcerative
colitis
|
Ph
I
|
|
Psoriasis
and rheumatoid arthritis
|
Ph
II
|
|
|
2618960
(IL7 receptor mAb)
|
Sjögren’s
syndrome
|
Ph
I
|
|
3050002
(CCL20 mAb)
|
Psoriatic
arthritis
|
Ph
I
|
|
2831781
(LAG3 mAb)
|
Autoimmune
diseases
|
Ph
I
|
|
2330811
(OSM mAb)
|
Systemic
sclerosis
|
Ph
I
|
|
3196165
(GM-CSF mAb)
|
Rheumatoid
arthritis and hand osteoarthritis
|
Ph
II
|
|
Benlysta + Rituxan
(BLyS mAb, s.c. + CD20 mAb)
|
Sjögren’s
syndrome
|
Ph
II
|
|
Benlysta (BLyS mAb, s.c.)
|
Systemic
lupus erythematosus
|
Filed
in EU & US
Sept
2016
|
|
sirukumab
(IL6 human mAb)
|
Giant
cell arteritis
|
Ph
III
|
|
Rheumatoid
arthritis
|
Filed
in EU & US
Sept
2016
|
|
|
Oncology
|
Phase
|
|
|
3359609
(ICOS agonist mAb)
|
Solid
tumours and haematological malignancies
|
Ph
I
|
|
525762
(BET inhibitor)
|
Solid
tumours and haematological malignancies
|
Ph
I
|
|
2879552
(LSD1 inhibitor)
|
Acute
myeloid leukaemia and small cell lung cancer
|
Ph
I
|
|
3174998
(OX40 agonist mAb)
|
Solid
tumours and haematological malignancies
|
Ph
I
|
|
3377794
(NY-ESO-1 T-cell receptor)2
|
Sarcoma,
multiple myeloma, non-small cell lung cancer, melanoma and ovarian
cancer
|
Ph
II
|
|
tarextumab
(Notch 2/3 mAb)3
|
Small
cell lung cancer
|
Ph
II
|
|
Vaccines
|
Phase
|
|
|
RSV
|
Respiratory
syncytial virus prophylaxis
|
Ph
II
|
|
RSV
|
Respiratory
syncytial virus prophylaxis (maternal immunisation)
|
Ph
II
|
|
Group B
Streptococcus
|
Group B
streptococcus prophylaxis (maternal immunisation)
|
Ph
II
|
|
Men
ABCWY
|
Meningococcal
A,B,C,W,Y disease prophylaxis in adolescents
|
Ph
II
|
|
COPD
|
Reduction
of COPD exacerbations associated with non-typeable Haemophilus
influenzae and Moraxella catarrhalis
|
Ph
II
|
|
Shingrix* (Zoster vaccine)
|
Shingles
prophylaxis
|
US:
Filed Oct 2016
EU:
Filed Nov 2016
|
|
Rare diseases
|
Phase
|
|
|
2696277
(ex-vivo stem cell gene therapy)4
|
Beta
thalassemia
|
Ph
I
|
|
2398852
+ 2315698 (SAP mAb + SAP depleter)
|
Amyloidosis
|
Ph
II
|
|
2696274
(ex-vivo stem cell gene therapy)
|
Metachromatic
leukodystrophy
|
Ph
II
|
|
2696275
(ex-vivo stem cell gene therapy)
|
Wiscott-Aldrich
syndrome
|
Ph
II
|
|
Strimvelis (ex-vivo stem cell gene therapy)
|
Adenosine
deaminase severe combined immune deficiency (ADA-SCID)
|
EU:
Approved May 2016
US: Ph
II/III
|
|
2998728
(TTR production inhibitor)1
|
Transthyretin
amyloidosis
|
Ph
III
|
|
mepolizumab
(IL5 mAb)
|
Eosinophilic
granulomatosis with polyangiitis
|
Ph
III
|
|
Other pharmaceuticals
|
||
|
daprodustat
(1278863) (Prolyl hydroxylase inhibitor)
|
Wound
healing
|
Ph
I
|
|
daprodustat
(1278863) (Prolyl hydroxylase inhibitor)
|
Anaemia
associated with chronic renal disease
|
Ph
III
|
|
1
|
Option-based
alliance with Ionis Pharmaceuticals
|
|
2
|
Option-based
alliance with Adaptimmune Ltd.
|
|
3
|
Option-based
alliance with OncoMed Pharmaceuticals
|
|
4
|
Option-based
alliance with Telethon and Ospedale San Raffaele
|
|
*
|
The
name Shingrix has not yet
been approved for use by any regulatory authority
|
|
The full version of the GSK product development pipeline chart with
all clinical assets in Phase I to Phase III can be found at:
https://gsk.com/media/1017505/product-pipeline-march-2016.pdf
|
|
Definitions
|
|
Core results
Total
reported results represent the Group’s overall performance.
However, these results can contain material unusual or
non-operational items that may obscure the key trends and factors
determining the Group’s operational performance. As a result,
GSK also reports core results.
Core
results exclude the following items from total results:
amortisation and impairment of intangible assets (excluding
computer software) and goodwill; major restructuring costs,
including those costs following material acquisitions; legal
charges (net of insurance recoveries) and expenses on the
settlement of litigation and government investigations,
transaction-related accounting adjustments for significant
acquisitions, and other items, including disposals of associates,
products and businesses and other operating income other than
royalty income, together with the tax effects of all of these
items. These items are excluded from core results either because
their impact can be significant and volatile or because their
exclusion improves comparabilities and consistency of reporting
with the majority of our peer companies.
Core
results reporting is utilised as one of the bases for internal
performance reporting alongside total results, cash flow generation
and a number other metrics. Core results are presented and
discussed in this Results Announcement as GSK believes that core
results are more representative of the performance of the
Group’s operations and allow the key trends and factors
driving that performance to be more easily and clearly identified
by shareholders. The definition of core results, as set out above,
also aligns the Group’s results more closely with the
majority of our peer companies and how they report
earnings.
Reconciliations
between total and core results, as set out on pages 12 and 57 to
60, including detailed breakdowns of the key non-core items, are
provided to shareholders to ensure greater visibility and
transparency as they assess the Group’s
performance.
CER growth
In
order to illustrate underlying performance, it is the Group’s
practice to discuss its results in terms of constant exchange rate
(CER) growth. This represents growth calculated as if the exchange
rates used to determine the results of overseas companies in
Sterling had remained unchanged from those used in the comparative
period. All commentaries are presented in terms of CER growth,
unless otherwise stated.
Pro-forma growth rates
The
Novartis transaction completed on 2 March 2015 and so GSK’s
reported results include the results of the former Novartis
Vaccines and Consumer Healthcare businesses and exclude the results
of the former GSK Oncology business, both from 2 March 2015. For
the Vaccines and Consumer Healthcare segments, pro-forma growth
rates are calculated comparing reported turnover and core operating
profits for the year ended December 2016 with the turnover and
operating profit for the year ended December 2015 adjusted to
include the two months of sales of the former Novartis Vaccines and
Consumer Healthcare products, respectively. For the Pharmaceuticals
segment, the turnover and operating profit for the year ended
December 2015 is adjusted to exclude the two months of sales of the
former GSK Oncology business for January and February
2015.
Free cash flow
Free
cash flow is the net cash inflow from operating activities less
capital expenditure, interest and dividends paid to non-controlling
interests plus proceeds from the sale of property, plant and
equipment and dividends received from joint ventures, associated
undertakings and equity investments. It is used by management for
planning and reporting purposes and in discussions with and
presentations to investment analysts and rating agencies. Free cash
flow growth is calculated on a reported basis. A reconciliation of
net cash inflow from operations to free cash flow is presented on
page 54.
Adjusted free cash flow
Adjusted
free cash flow excludes payments made to settle legal disputes.
Such payments could fluctuate significantly between reporting
periods and removing them allows the trends in free cash flow to be
more easily identified by shareholders.
Free cash flow conversion
Free
cash flow conversion is free cash flow as a percentage of earnings
excluding after-tax legal charges and legal
settlements.
Adjusted net cash inflow from operating activities
Adjusted
net cash inflow from operating activities excludes payments made to
settle legal disputes. Such payments could fluctuate significantly
between reporting periods and removing them allows the trends in
net cash inflow from operating activities to be more easily
identified by shareholders.
Working capital conversion cycle
The
working capital conversion cycle is calculated as the number of
days sales outstanding plus days inventory outstanding, less days
purchases outstanding.
|
|
Brand names and partner acknowledgements
Brand
names appearing in italics throughout this document are trademarks
of GSK or associated companies or used under licence by the
Group.
|
|
Outlook assumptions and cautionary statements
|
|
Assumptions related to 2017 guidance and 2016-2020
outlook
In
outlining the expectations for 2017 and the five-year period
2016-2020, the Group has made certain assumptions about the
healthcare sector, the different markets in which the Group
operates and the delivery of revenues and financial benefits from
its current portfolio, pipeline and restructuring
programmes.
For the
Group specifically, over the period to 2020 GSK expects further
declines in sales of Seretide/Advair. The introduction of a
generic alternative to Advair in the US has been factored into
the Group’s assessment of its future performance. The Group
assumes no premature loss of exclusivity for other key products
over the period. The Group’s expectation of at least £6
billion of revenues per annum on a CER basis by 2020 from the New
Pharmaceutical and Vaccine products listed on page 31 includes
contributions from the current pipeline asset Shingrix. This target is now expected
to be met up to two years earlier. The Group also expects volume
demand for its products to increase, particularly in Emerging
Markets.
The
assumptions for the Group’s revenue and earnings expectations
assume no material interruptions to supply of the Group’s
products and no material mergers, acquisitions, disposals,
litigation costs or share repurchases for the Company; and no
change in the Group’s shareholdings in ViiV Healthcare or
Consumer Healthcare. They also assume no material changes in the
macro-economic and healthcare environment.
The
Group’s expectations assume successful delivery of the
Group’s integration and restructuring plans over the period
2016-2020. Material costs for investment in new product launches
and R&D have been factored into the expectations given. The
expectations are given on a constant currency basis and assume no
material change to the Group’s effective tax rate or the tax
regulatory environment in which it operates.
|
|
Assumptions and cautionary statement regarding forward-looking
statements
The
Group’s management believes that the assumptions outlined
above are reasonable, and that the aspirational targets described
in this report are achievable based on those assumptions. However,
given the longer term nature of these expectations and targets,
they are subject to greater uncertainty, including potential
material impacts if the above assumptions are not realised, and
other material impacts related to foreign exchange fluctuations,
macro-economic activity, changes in regulation, government actions
or intellectual property protection, actions by our competitors,
and other risks inherent to the industries in which we
operate.
This
document contains statements that are, or may be deemed to be,
“forward-looking statements”. Forward-looking
statements give the Group’s current expectations or forecasts
of future events. An investor can identify these statements by the
fact that they do not relate strictly to historical or current
facts. They use words such as ‘anticipate’,
‘estimate’, ‘expect’, ‘intend’,
‘will’, ‘project’, ‘plan’,
‘believe’, ‘target’ and other words and
terms of similar meaning in connection with any discussion of
future operating or financial performance. In particular, these
include statements relating to future actions, prospective products
or product approvals, future performance or results of current and
anticipated products, sales efforts, expenses, the outcome of
contingencies such as legal proceedings, and financial results.
Other than in accordance with its legal or regulatory obligations
(including under the UK Listing Rules and the Disclosure and
Transparency Rules of the Financial Conduct Authority), the Group
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
The reader should, however, consult any additional disclosures that
the Group may make in any documents which it publishes and/or files
with the US Securities and Exchange Commission (SEC). All readers,
wherever located, should take note of these disclosures.
Accordingly, no assurance can be given that any particular
expectation will be met and investors are cautioned not to place
undue reliance on the forward-looking statements.
Forward-looking
statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the
Group’s control or precise estimate. The Group cautions
investors that a number of important factors, including those in
this document, could cause actual results to differ materially from
those expressed or implied in any forward-looking statement. Such
factors include, but are not limited to, those discussed under Item
3.D ‘Risk factors’ in the Group’s Annual Report
on Form 20-F for 2015 and those discussed in Part 2 of the Circular
to Shareholders and Notice of General Meeting furnished to the SEC
on Form 6-K on 24 November 2014. Any forward looking statements
made by or on behalf of the Group speak only as of the date they
are made and are based upon the knowledge and information available
to the Directors on the date of this report.
|
|
Cautionary statement regarding unaudited pro-forma financial
information
The
unaudited pro-forma financial information in this release has been
prepared to illustrate the effect of (i) the disposal of the
Oncology business, (ii) the Consumer Healthcare Joint Venture (i.e.
the acquisition of the Novartis OTC Business), and (iii) the
acquisition of the Vaccines business (which excludes the Novartis
influenza vaccines business) on the results of the Group as if they
had taken place as at 1 January 2015.
The
unaudited pro-forma financial information has been prepared for
illustrative purposes only and, by its nature, addresses a
hypothetical situation and, therefore, does not represent the
Group’s actual financial position or results. The unaudited
pro-forma financial information does not purport to represent what
the Group’s financial position actually would have been if
the disposal of the Oncology business, the Consumer Healthcare
Joint Venture and the Vaccines acquisition had been completed on
the dates indicated; nor does it purport to represent the financial
condition at any future date. In addition to the matters noted
above, the unaudited pro-forma financial information does not
reflect the effect of anticipated synergies and efficiencies
associated with the Oncology disposal, the Consumer Healthcare
Joint Venture and the Vaccines acquisition.
The
unaudited pro-forma financial information does not constitute
financial statements within the meaning of Section 434 of the
Companies Act 2006. The unaudited pro-forma financial information
in this release should be read in conjunction with the financial
statements included in (i) the Group’s Q4 2016 results
announcement dated 8 February 2017 and furnished to the SEC on Form
6-K, (ii) the Group’s Annual Report on Form 20-F for 2015 and
(iii) the Circular to Shareholders and Notice of General Meeting
furnished to the SEC on Form 6-K on 24 November 2014.
|
|
Contacts
|
|
GSK – one of the
world’s leading research-based pharmaceutical and healthcare
companies – is committed to improving the quality of human
life by enabling people to do more, feel better and live longer.
For further information please visit www.gsk.com.
|
|
GSK enquiries:
|
|
|
|
|
UK
Media enquiries:
|
David
Mawdsley
|
+44 (0)
20 8047 5502
|
(London)
|
|
|
Simon
Steel
|
+44 (0)
20 8047 5502
|
(London)
|
|
|
|
|
|
|
US
Media enquiries:
|
Sarah
Alspach
|
+1 215
715 1048
|
(Washington)
|
|
|
Sarah
Spencer
|
+1 215
751 3335
|
(Philadelphia)
|
|
|
|
|
|
|
Analyst/Investor
enquiries:
|
Sarah
Elton-Farr
|
+44 (0)
20 8047 5194
|
(London)
|
|
|
Gary
Davies
|
+44 (0)
20 8047 5503
|
(London)
|
|
|
James
Dodwell
|
+44 (0)
20 8047 2406
|
(London)
|
|
|
Sarah
Webster
|
+44 (0)
20 8047 0246
|
(London)
|
|
|
Tom
Curry
|
+1 215
751 5419
|
(Philadelphia)
|
|
|
Jeff
McLaughlin
|
+1 215
751 7002
|
(Philadelphia)
|
|
Registered in England & Wales:
No. 3888792
|
|
|
|
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
|
|
Financial information
|
|
Income statements
|
|
|
2016
£m
|
|
2015
£m
|
|
Q4 2016
£m
|
|
Q4
2015
£m
|
|
|
|
|
|
|
|
|
|
|
TURNOVER
|
27,889
|
|
23,923
|
|
7,586
|
|
6,286
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(9,290)
|
|
(8,853)
|
|
(2,508)
|
|
(2,541)
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
18,599
|
|
15,070
|
|
5,078
|
|
3,745
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(9,366)
|
|
(9,232)
|
|
(2,711)
|
|
(2,498)
|
|
Research
and development
|
(3,628)
|
|
(3,560)
|
|
(1,003)
|
|
(1,054)
|
|
Royalty income
|
398
|
|
329
|
|
117
|
|
91
|
|
Other
operating income/(expense)
|
(3,405)
|
|
7,715
|
|
(886)
|
|
(538)
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT/(LOSS)
|
2,598
|
|
10,322
|
|
595
|
|
(254)
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
72
|
|
104
|
|
20
|
|
41
|
|
Finance
expense
|
(736)
|
|
(757)
|
|
(193)
|
|
(199)
|
|
Profit
on disposal of associates
|
-
|
|
843
|
|
-
|
|
1
|
|
Share
of after tax profits/(losses) of associates
and
joint ventures
|
5
|
|
14
|
|
1
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
PROFIT/(LOSS) BEFORE TAXATION
|
1,939
|
|
10,526
|
|
423
|
|
(416)
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(877)
|
|
(2,154)
|
|
(106)
|
|
(12)
|
|
Tax rate %
|
45.2%
|
|
20.5%
|
|
25.1%
|
|
(2.9)%
|
|
|
|
|
|
|
|
|
|
|
PROFIT/(LOSS) AFTER TAXATION FOR
THE PERIOD
|
1,062
|
|
8,372
|
|
317
|
|
(428)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss)
attributable to non-controlling interests
|
150
|
|
(50)
|
|
60
|
|
(74)
|
|
Profit/(loss)
attributable to shareholders
|
912
|
|
8,422
|
|
257
|
|
(354)
|
|
|
|
|
|
|
|
|
|
|
|
1,062
|
|
8,372
|
|
317
|
|
(428)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER SHARE
|
18.8p
|
|
174.3p
|
|
5.3p
|
|
(7.3)p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings/(loss) per share
|
18.6p
|
|
172.3p
|
|
5.2p
|
|
(7.3)p
|
|
|
|
|
|
|
|
|
|
|
Statement of comprehensive
income
|
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
Profit
for the year
|
1,062
|
|
8,372
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
646
|
|
(618)
|
|
Fair
value movements on available-for-sale investments
|
251
|
|
416
|
|
Reclassification
of fair value movements on available-for-sale
investments
|
(245)
|
|
(346)
|
|
Deferred
tax on fair value movements on available-for-sale
investments
|
-
|
|
(91)
|
|
Deferred
tax reversed on reclassification of available-for-sale
investments
|
51
|
|
36
|
|
Fair
value movements on cash flow hedges
|
2
|
|
2
|
|
Deferred
tax on fair value movements on cash flow hedges
|
2
|
|
-
|
|
Reclassification
of cash flow hedges to income statement
|
1
|
|
2
|
|
Share
of other comprehensive expense of associates and joint
ventures
|
-
|
|
(77)
|
|
|
|
|
|
|
|
708
|
|
(676)
|
|
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
603
|
|
8
|
|
Re-measurement
(losses)/gains on defined benefit plans
|
(475)
|
|
261
|
|
Tax on
re-measurement of defined benefit plans
|
126
|
|
(80)
|
|
|
|
|
|
|
|
254
|
|
189
|
|
|
|
|
|
|
Other
comprehensive income/(expense) for the year
|
962
|
|
(487)
|
|
|
|
|
|
|
Total
comprehensive income for the year
|
2,024
|
|
7,885
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the year attributable to:
|
|
|
|
|
Shareholders
|
1,271
|
|
7,927
|
|
Non-controlling
interests
|
753
|
|
(42)
|
|
|
|
|
|
|
|
2,024
|
|
7,885
|
|
|
|
|
|
|
Statement of comprehensive
income
|
|
|
Q4 2016
£m
|
|
Q4
2015
£m
|
|
|
|
|
|
|
Profit/(loss)
for the period
|
317
|
|
(428)
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
(347)
|
|
(129)
|
|
Fair
value movements on available-for-sale investments
|
8
|
|
341
|
|
Reclassification
of fair value movements on available-for-sale
investments
|
5
|
|
(6)
|
|
Deferred
tax on fair value movements on available-for-sale
investments
|
(9)
|
|
(18)
|
|
Deferred
tax reversed on reclassification of available-for-sale
investments
|
1
|
|
6
|
|
Fair
value movements on cash flow hedges
|
(10)
|
|
3
|
|
Deferred
tax on fair value movements on cash flow hedges
|
2
|
|
-
|
|
Reclassification
of cash flow hedges to income statement
|
12
|
|
(2)
|
|
|
|
|
|
|
|
(338)
|
|
195
|
|
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
48
|
|
9
|
|
Re-measurement
gains on defined benefit plans
|
744
|
|
649
|
|
Tax on
re-measurement of defined benefit plans
|
(129)
|
|
(156)
|
|
|
|
|
|
|
|
663
|
|
502
|
|
|
|
|
|
|
Other
comprehensive income for the period
|
325
|
|
697
|
|
|
|
|
|
|
Total
comprehensive income for the period
|
642
|
|
269
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
|
Shareholders
|
534
|
|
334
|
|
Non-controlling
interests
|
108
|
|
(65)
|
|
|
|
|
|
|
|
642
|
|
269
|
|
|
|
|
|
|
Pharmaceuticals turnover – year
ended 31 December 2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
6,510
|
|
2
|
|
3,306
|
|
7
|
|
1,383
|
|
(10)
|
|
1,821
|
|
3
|
|
Anoro Ellipta
|
201
|
|
>100
|
|
139
|
|
>100
|
|
39
|
|
>100
|
|
23
|
|
>100
|
|
Arnuity Ellipta
|
15
|
|
>100
|
|
14
|
|
>100
|
|
-
|
|
-
|
|
1
|
|
(100)
|
|
Avamys/Veramyst
|
277
|
|
8
|
|
25
|
|
(12)
|
|
74
|
|
2
|
|
178
|
|
15
|
|
Flixotide/Flovent
|
637
|
|
(8)
|
|
378
|
|
(11)
|
|
94
|
|
(8)
|
|
165
|
|
-
|
|
Incruse Ellipta
|
114
|
|
>100
|
|
86
|
|
>100
|
|
23
|
|
>100
|
|
5
|
|
>100
|
|
Nucala
|
102
|
|
>100
|
|
71
|
|
>100
|
|
23
|
|
>100
|
|
8
|
|
-
|
|
Relvar/Breo Ellipta
|
620
|
|
>100
|
|
344
|
|
>100
|
|
140
|
|
60
|
|
136
|
|
67
|
|
Seretide/Advair
|
3,485
|
|
(15)
|
|
1,829
|
|
(13)
|
|
835
|
|
(24)
|
|
821
|
|
(7)
|
|
Ventolin
|
785
|
|
15
|
|
421
|
|
23
|
|
127
|
|
1
|
|
237
|
|
12
|
|
Other
|
274
|
|
(1)
|
|
(1)
|
|
(100)
|
|
28
|
|
(3)
|
|
247
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular, metabolic
and urology (CVMU)
|
860
|
|
(11)
|
|
288
|
|
(18)
|
|
323
|
|
12
|
|
249
|
|
(23)
|
|
Avodart
|
635
|
|
(14)
|
|
70
|
|
(63)
|
|
317
|
|
13
|
|
248
|
|
(8)
|
|
Eperzan/Tanzeum
|
121
|
|
>100
|
|
118
|
|
>100
|
|
3
|
|
100
|
|
-
|
|
-
|
|
Other
|
104
|
|
(42)
|
|
100
|
|
(17)
|
|
3
|
|
(60)
|
|
1
|
|
(98)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-inflammation
|
340
|
|
15
|
|
311
|
|
14
|
|
21
|
|
27
|
|
8
|
|
17
|
|
Benlysta
|
306
|
|
19
|
|
277
|
|
18
|
|
21
|
|
20
|
|
8
|
|
33
|
|
Other
|
34
|
|
(9)
|
|
34
|
|
(9)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other pharmaceuticals
|
2,297
|
|
(14)
|
|
98
|
|
(69)
|
|
627
|
|
(13)
|
|
1,572
|
|
(4)
|
|
Dermatology
|
393
|
|
(12)
|
|
16
|
|
(63)
|
|
146
|
|
(2)
|
|
231
|
|
(9)
|
|
Augmentin
|
563
|
|
-
|
|
-
|
|
-
|
|
177
|
|
(5)
|
|
386
|
|
2
|
|
Other
anti-bacterials
|
169
|
|
(15)
|
|
4
|
|
(50)
|
|
49
|
|
(14)
|
|
116
|
|
(13)
|
|
Rare
diseases
|
423
|
|
-
|
|
49
|
|
(4)
|
|
137
|
|
2
|
|
237
|
|
(1)
|
|
Oncology
|
161
|
|
(38)
|
|
(1)
|
|
(100)
|
|
-
|
|
-
|
|
162
|
|
73
|
|
Other
|
588
|
|
(23)
|
|
30
|
|
(72)
|
|
118
|
|
2
|
|
440
|
|
(19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established products
|
2,541
|
|
(8)
|
|
702
|
|
(3)
|
|
513
|
|
(4)
|
|
1,326
|
|
(12)
|
|
Coreg
|
131
|
|
(5)
|
|
131
|
|
(5)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Hepsera
|
58
|
|
(17)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
58
|
|
(16)
|
|
Imigran/Imitrex
|
177
|
|
3
|
|
85
|
|
8
|
|
62
|
|
4
|
|
30
|
|
(11)
|
|
Lamictal
|
614
|
|
5
|
|
313
|
|
5
|
|
106
|
|
1
|
|
195
|
|
9
|
|
Lovaza
|
43
|
|
(59)
|
|
43
|
|
(59)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Requip
|
116
|
|
8
|
|
13
|
|
>100
|
|
30
|
|
(7)
|
|
73
|
|
3
|
|
Serevent
|
96
|
|
(6)
|
|
49
|
|
-
|
|
35
|
|
(11)
|
|
12
|
|
(14)
|
|
Seroxat/Paxil
|
206
|
|
10
|
|
15
|
|
(100)
|
|
40
|
|
6
|
|
151
|
|
(8)
|
|
Valtrex
|
118
|
|
(37)
|
|
16
|
|
(30)
|
|
25
|
|
(4)
|
|
77
|
|
(45)
|
|
Zeffix
|
111
|
|
(24)
|
|
2
|
|
-
|
|
7
|
|
(14)
|
|
102
|
|
(25)
|
|
Other
|
871
|
|
(10)
|
|
35
|
|
(6)
|
|
208
|
|
(8)
|
|
628
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
3,556
|
|
37
|
|
2,132
|
|
46
|
|
1,017
|
|
29
|
|
407
|
|
21
|
|
Combivir
|
23
|
|
(38)
|
|
3
|
|
(75)
|
|
6
|
|
(35)
|
|
14
|
|
(16)
|
|
Epzicom/Kivexa
|
568
|
|
(27)
|
|
195
|
|
(32)
|
|
251
|
|
(25)
|
|
122
|
|
(21)
|
|
Lexiva/Telzir
|
51
|
|
(26)
|
|
29
|
|
(33)
|
|
8
|
|
(42)
|
|
14
|
|
4
|
|
Selzentry
|
125
|
|
(9)
|
|
65
|
|
(2)
|
|
41
|
|
(22)
|
|
19
|
|
4
|
|
Tivicay
|
953
|
|
45
|
|
635
|
|
46
|
|
228
|
|
40
|
|
90
|
|
47
|
|
Triumeq
|
1,735
|
|
>100
|
|
1,159
|
|
>100
|
|
434
|
|
>100
|
|
142
|
|
>100
|
|
Trizivir
|
16
|
|
(42)
|
|
5
|
|
(54)
|
|
10
|
|
(35)
|
|
1
|
|
(42)
|
|
Other
|
85
|
|
33
|
|
41
|
|
(4)
|
|
39
|
|
>100
|
|
5
|
|
(66)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
16,104
|
|
3
|
|
6,837
|
|
10
|
|
3,884
|
|
-
|
|
5,383
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – year ended
31 December 2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
469
|
|
1
|
|
129
|
|
(17)
|
|
75
|
|
8
|
|
265
|
|
10
|
|
Synflorix
|
504
|
|
19
|
|
-
|
|
-
|
|
68
|
|
59
|
|
436
|
|
15
|
|
Fluarix, FluLaval
|
414
|
|
38
|
|
315
|
|
42
|
|
32
|
|
26
|
|
67
|
|
31
|
|
Bexsero
|
390
|
|
>100
|
|
122
|
|
>100
|
|
236
|
|
>100
|
|
32
|
|
>100
|
|
Menveo
|
202
|
|
16
|
|
121
|
|
8
|
|
27
|
|
(31)
|
|
54
|
|
>100
|
|
Boostrix
|
470
|
|
18
|
|
238
|
|
1
|
|
139
|
|
43
|
|
93
|
|
39
|
|
Infanrix, Pediarix
|
769
|
|
(5)
|
|
338
|
|
12
|
|
335
|
|
(8)
|
|
96
|
|
(31)
|
|
Hepatitis
|
602
|
|
1
|
|
294
|
|
(4)
|
|
197
|
|
17
|
|
111
|
|
(8)
|
|
Priorix, Priorix Tetra, Varilrix
|
300
|
|
5
|
|
-
|
|
-
|
|
152
|
|
-
|
|
148
|
|
9
|
|
Cervarix
|
81
|
|
(14)
|
|
1
|
|
(67)
|
|
33
|
|
(22)
|
|
47
|
|
(4)
|
|
Other
|
391
|
|
6
|
|
41
|
|
(27)
|
|
129
|
|
19
|
|
221
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,592
|
|
14
|
|
1,599
|
|
13
|
|
1,423
|
|
18
|
|
1,570
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals turnover –
three months ended 31 December 2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
1,918
|
|
2
|
|
1,053
|
|
5
|
|
360
|
|
(7)
|
|
505
|
|
2
|
|
Anoro Ellipta
|
69
|
|
100
|
|
49
|
|
95
|
|
13
|
|
83
|
|
7
|
|
>100
|
|
Arnuity Ellipta
|
6
|
|
>100
|
|
5
|
|
>100
|
|
-
|
|
-
|
|
1
|
|
>(100)
|
|
Avamys/Veramyst
|
70
|
|
6
|
|
7
|
|
(14)
|
|
18
|
|
-
|
|
45
|
|
13
|
|
Flixotide/Flovent
|
190
|
|
(4)
|
|
115
|
|
(8)
|
|
27
|
|
(4)
|
|
48
|
|
8
|
|
Incruse Ellipta
|
38
|
|
>100
|
|
28
|
|
>100
|
|
8
|
|
>100
|
|
2
|
|
>100
|
|
Nucala
|
44
|
|
>100
|
|
30
|
|
>100
|
|
9
|
|
>100
|
|
5
|
|
-
|
|
Relvar/Breo Ellipta
|
207
|
|
77
|
|
122
|
|
>100
|
|
42
|
|
52
|
|
43
|
|
27
|
|
Seretide/Advair
|
975
|
|
(20)
|
|
556
|
|
(21)
|
|
201
|
|
(24)
|
|
218
|
|
(11)
|
|
Ventolin
|
245
|
|
43
|
|
141
|
|
78
|
|
36
|
|
3
|
|
68
|
|
20
|
|
Other
|
74
|
|
-
|
|
-
|
|
-
|
|
6
|
|
(3)
|
|
68
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular, metabolic
and urology (CVMU)
|
234
|
|
12
|
|
74
|
|
48
|
|
84
|
|
20
|
|
76
|
|
(15)
|
|
Avodart
|
164
|
|
23
|
|
7
|
|
>(100)
|
|
82
|
|
27
|
|
75
|
|
-
|
|
Eperzan/Tanzeum
|
38
|
|
88
|
|
37
|
|
82
|
|
1
|
|
>(100)
|
|
-
|
|
-
|
|
Other
|
32
|
|
(41)
|
|
30
|
|
(13)
|
|
1
|
|
(100)
|
|
1
|
|
(93)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-inflammation
|
112
|
|
27
|
|
104
|
|
27
|
|
6
|
|
25
|
|
2
|
|
-
|
|
Benlysta
|
89
|
|
17
|
|
81
|
|
17
|
|
6
|
|
-
|
|
2
|
|
>100
|
|
Other
|
23
|
|
82
|
|
23
|
|
82
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other pharmaceuticals
|
636
|
|
(12)
|
|
31
|
|
(43)
|
|
169
|
|
(13)
|
|
436
|
|
(8)
|
|
Dermatology
|
113
|
|
(6)
|
|
4
|
|
(69)
|
|
39
|
|
-
|
|
70
|
|
5
|
|
Augmentin
|
146
|
|
-
|
|
-
|
|
-
|
|
49
|
|
(4)
|
|
97
|
|
2
|
|
Other
anti-bacterials
|
39
|
|
(32)
|
|
1
|
|
(50)
|
|
12
|
|
(23)
|
|
26
|
|
(34)
|
|
Rare
diseases
|
117
|
|
1
|
|
14
|
|
20
|
|
36
|
|
-
|
|
67
|
|
(2)
|
|
Oncology
& Emesis
|
38
|
|
>100
|
|
(1)
|
|
>100
|
|
-
|
|
-
|
|
39
|
|
>100
|
|
Other
|
183
|
|
(36)
|
|
13
|
|
(53)
|
|
33
|
|
(37)
|
|
137
|
|
(34)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established products
|
653
|
|
(6)
|
|
184
|
|
-
|
|
136
|
|
(4)
|
|
333
|
|
(9)
|
|
Coreg
|
37
|
|
(6)
|
|
37
|
|
(6)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Hepsera
|
9
|
|
(30)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
9
|
|
(22)
|
|
Imigran/Imitrex
|
49
|
|
10
|
|
23
|
|
44
|
|
16
|
|
(6)
|
|
10
|
|
(25)
|
|
Lamictal
|
167
|
|
7
|
|
87
|
|
4
|
|
27
|
|
(4)
|
|
53
|
|
18
|
|
Lovaza
|
8
|
|
(73)
|
|
8
|
|
(73)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Requip
|
31
|
|
(4)
|
|
2
|
|
-
|
|
8
|
|
(22)
|
|
21
|
|
7
|
|
Serevent
|
27
|
|
(8)
|
|
16
|
|
-
|
|
9
|
|
(22)
|
|
2
|
|
-
|
|
Seroxat/Paxil
|
53
|
|
19
|
|
1
|
|
(100)
|
|
10
|
|
11
|
|
42
|
|
-
|
|
Valtrex
|
31
|
|
(24)
|
|
4
|
|
(25)
|
|
6
|
|
(17)
|
|
21
|
|
(25)
|
|
Zeffix
|
20
|
|
(45)
|
|
1
|
|
>100
|
|
2
|
|
(50)
|
|
17
|
|
(48)
|
|
Other
|
221
|
|
(6)
|
|
5
|
|
>100
|
|
58
|
|
6
|
|
158
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
1,022
|
|
25
|
|
634
|
|
32
|
|
267
|
|
13
|
|
121
|
|
21
|
|
Combivir
|
6
|
|
(37)
|
|
1
|
|
(60)
|
|
1
|
|
(29)
|
|
4
|
|
(33)
|
|
Epzicom/Kivexa
|
114
|
|
(42)
|
|
35
|
|
(52)
|
|
48
|
|
(42)
|
|
31
|
|
(23)
|
|
Lexiva/Telzir
|
11
|
|
(23)
|
|
7
|
|
(34)
|
|
2
|
|
(46)
|
|
2
|
|
58
|
|
Selzentry
|
33
|
|
(7)
|
|
18
|
|
(6)
|
|
8
|
|
(32)
|
|
7
|
|
78
|
|
Tivicay
|
290
|
|
42
|
|
198
|
|
47
|
|
63
|
|
25
|
|
29
|
|
51
|
|
Triumeq
|
530
|
|
56
|
|
362
|
|
57
|
|
122
|
|
46
|
|
46
|
|
76
|
|
Trizivir
|
3
|
|
(50)
|
|
1
|
|
(57)
|
|
2
|
|
(41)
|
|
-
|
|
-
|
|
Other
|
35
|
|
>100
|
|
12
|
|
(7)
|
|
21
|
|
>100
|
|
2
|
|
(41)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,575
|
|
4
|
|
2,080
|
|
12
|
|
1,022
|
|
(1)
|
|
1,473
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – three
months ended 31 December 2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
106
|
|
(10)
|
|
32
|
|
(4)
|
|
22
|
|
19
|
|
52
|
|
(22)
|
|
Synflorix
|
122
|
|
(24)
|
|
-
|
|
-
|
|
33
|
|
>100
|
|
89
|
|
(42)
|
|
Fluarix, FluLaval
|
63
|
|
(25)
|
|
33
|
|
(31)
|
|
14
|
|
20
|
|
16
|
|
(36)
|
|
Bexsero
|
98
|
|
>100
|
|
22
|
|
>100
|
|
66
|
|
>100
|
|
10
|
|
>100
|
|
Menveo
|
50
|
|
72
|
|
19
|
|
(13)
|
|
5
|
|
(64)
|
|
26
|
|
>100
|
|
Boostrix
|
127
|
|
19
|
|
60
|
|
(6)
|
|
33
|
|
>100
|
|
34
|
|
16
|
|
Infanrix, Pediarix
|
219
|
|
15
|
|
107
|
|
64
|
|
81
|
|
(22)
|
|
31
|
|
50
|
|
Hepatitis
|
157
|
|
(1)
|
|
76
|
|
(7)
|
|
48
|
|
3
|
|
33
|
|
12
|
|
Priorix, Prioruix Tetra
|
83
|
|
(12)
|
|
-
|
|
-
|
|
36
|
|
(19)
|
|
47
|
|
(7)
|
|
Cervarix
|
23
|
|
18
|
|
-
|
|
-
|
|
10
|
|
(20)
|
|
13
|
|
71
|
|
Other
|
89
|
|
(33)
|
|
5
|
|
(64)
|
|
22
|
|
(17)
|
|
62
|
|
(31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,137
|
|
-
|
|
354
|
|
5
|
|
370
|
|
11
|
|
413
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
|
|
|
|
|
31 December 2016
£m
|
|
31
December 2015
£m
|
|
ASSETS
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
10,808
|
|
9,668
|
|
Goodwill
|
|
|
5,965
|
|
5,162
|
|
Other
intangible assets
|
|
|
18,776
|
|
16,672
|
|
Investments
in associates and joint ventures
|
|
|
263
|
|
207
|
|
Other
investments
|
|
|
985
|
|
1,255
|
|
Deferred
tax assets
|
|
|
4,374
|
|
2,905
|
|
Other
non-current assets
|
|
|
1,199
|
|
990
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
42,370
|
|
36,859
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Inventories
|
|
|
5,102
|
|
4,716
|
|
Current
tax recoverable
|
|
|
226
|
|
180
|
|
Trade
and other receivables
|
|
|
6,026
|
|
5,615
|
|
Derivative
financial instruments
|
|
|
156
|
|
125
|
|
Liquid
investments
|
|
|
89
|
|
75
|
|
Cash
and cash equivalents
|
|
|
4,897
|
|
5,830
|
|
Assets
held for sale
|
|
|
215
|
|
46
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
16,711
|
|
16,587
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
59,081
|
|
53,446
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
(4,129)
|
|
(1,308)
|
|
Contingent
consideration liability
|
|
|
(561)
|
|
(306)
|
|
Trade
and other payables
|
|
|
(11,964)
|
|
(8,885)
|
|
Derivative
financial instruments
|
|
|
(194)
|
|
(153)
|
|
Current
tax payable
|
|
|
(1,305)
|
|
(1,421)
|
|
Short-term
provisions
|
|
|
(848)
|
|
(1,344)
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
(19,001)
|
|
(13,417)
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Long-term
borrowings
|
|
|
(14,661)
|
|
(15,324)
|
|
Deferred
tax liabilities
|
|
|
(1,934)
|
|
(1,522)
|
|
Pensions
and other post-employment benefits
|
|
(4,090)
|
|
(3,229)
|
|
|
Other
provisions
|
|
|
(652)
|
|
(420)
|
|
Contingent
consideration liability
|
|
|
(5,335)
|
|
(3,549)
|
|
Other
non-current liabilities
|
|
|
(8,445)
|
|
(7,107)
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
(35,117)
|
|
(31,151)
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
(54,118)
|
|
(44,568)
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
4,963
|
|
8,878
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
Share
capital
|
|
|
1,342
|
|
1,340
|
|
Share
premium account
|
|
|
2,954
|
|
2,831
|
|
Retained
earnings
|
|
|
(5,392)
|
|
(1,397)
|
|
Other
reserves
|
|
|
2,220
|
|
2,340
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
1,124
|
|
5,114
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
3,839
|
|
3,764
|
|
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
|
4,963
|
|
8,878
|
|
|
|
|
|
|
|
|
Statement of changes in
equity
|
|
|
Share
capital
£m
|
Share
premium
£m
|
Retained
earnings
£m
|
Other
reserves
£m
|
Share-
holder’s
equity
£m
|
Non-
controlling
interests
£m
|
Total
equity
£m
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2016
|
1,340
|
2,831
|
(1,397)
|
2,340
|
5,114
|
3,764
|
8,878
|
|
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
|
912
|
|
912
|
150
|
1,062
|
|
Other
comprehensive income for the year
|
|
|
284
|
75
|
359
|
603
|
962
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Total
comprehensive income for the year
|
|
|
1,196
|
75
|
1,271
|
753
|
2,024
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(534)
|
(534)
|
|
Dividends
to shareholders
|
|
|
(4,850)
|
|
(4,850)
|
|
(4,850)
|
|
Recognition
of liabilities with non-controlling
interests
|
|
|
(2,013)
|
|
(2,013)
|
(159)
|
(2,172)
|
|
De-recognition
of liabilities with non-controlling
interests
|
|
|
1,244
|
|
1,244
|
|
1,244
|
|
Changes
in non-controlling interests
|
|
|
17
|
|
17
|
15
|
32
|
|
Shares
issued
|
2
|
87
|
|
|
89
|
|
89
|
|
Shares
acquired by ESOP Trusts
|
|
36
|
466
|
(576)
|
(74)
|
|
(74)
|
|
Write-down
on shares held by ESOP Trusts
|
|
|
(381)
|
381
|
|
|
-
|
|
Share-based
incentive plans
|
|
|
319
|
|
319
|
|
319
|
|
Tax on
share-based incentive plans
|
|
|
7
|
|
7
|
|
7
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
At 31 December 2016
|
1,342
|
2,954
|
(5,392)
|
2,220
|
1,124
|
3,839
|
4,963
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2015
|
1,339
|
2,759
|
(2,074)
|
2,239
|
4,263
|
673
|
4,936
|
|
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
|
8,422
|
|
8,422
|
(50)
|
8,372
|
|
Other
comprehensive expense for the year
|
|
|
(520)
|
25
|
(495)
|
8
|
(487)
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Total
comprehensive income/(expense)
for
the year
|
|
|
7,902
|
25
|
7,927
|
(42)
|
7,885
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(237)
|
(237)
|
|
Dividends
to shareholders
|
|
|
(3,874)
|
|
(3,874)
|
|
(3,874)
|
|
Gain on
transfer of net assets into
Consumer
Healthcare Joint Venture
|
|
|
2,891
|
|
2,891
|
|
2,891
|
|
Consumer
Healthcare Joint Venture put option
|
|
|
(6,204)
|
|
(6,204)
|
|
(6,204)
|
|
Changes
in non-controlling interests
|
|
|
|
|
|
3,370
|
3,370
|
|
Loss on
transfer of equity investment to
investment
in associate
|
|
|
(229)
|
|
(229)
|
|
(229)
|
|
Shares
issued
|
1
|
72
|
|
|
73
|
|
73
|
|
Shares
acquired by ESOP Trusts
|
|
|
|
(99)
|
(99)
|
|
(99)
|
|
Write-down
on shares held by ESOP Trusts
|
|
|
(175)
|
175
|
|
|
-
|
|
Share-based
incentive plans
|
|
|
356
|
|
356
|
|
356
|
|
Tax on
share-based incentive plans
|
|
|
10
|
|
10
|
|
10
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
At 31
December 2015
|
1,340
|
2,831
|
(1,397)
|
2,340
|
5,114
|
3,764
|
8,878
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Cash flow
statement
|
|
Year ended 31 December
2016
|
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
|
|
Profit after tax
|
1,062
|
|
8,372
|
|
|
Tax on
profits
|
877
|
|
2,154
|
|
|
Share
of after tax profits of associates and joint ventures
|
(5)
|
|
(14)
|
|
|
Profit
on disposal of interest in associates
|
-
|
|
(843)
|
|
|
Net
finance expense
|
664
|
|
653
|
|
|
Profit
on disposal of Oncology business
|
-
|
|
(9,228)
|
|
|
Depreciation
and other adjusting items
|
1,861
|
|
1,862
|
|
|
(Increase)/decrease
in working capital
|
(22)
|
|
27
|
|
|
Contingent
consideration paid
|
(358)
|
|
(121)
|
|
|
Increase
in other net liabilities (excluding contingent consideration
paid)
|
4,027
|
|
1,769
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
8,106
|
|
4,631
|
|
|
Taxation
paid
|
(1,609)
|
|
(2,062)
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
6,497
|
|
2,569
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
Purchase
of property, plant and equipment
|
(1,543)
|
|
(1,380)
|
|
|
Proceeds
from sale of property, plant and equipment
|
98
|
|
72
|
|
|
Purchase
of intangible assets
|
(809)
|
|
(521)
|
|
|
Proceeds
from sale of intangible assets
|
283
|
|
236
|
|
|
Purchase
of equity investments
|
(96)
|
|
(82)
|
|
|
Proceeds
from sale of equity investments
|
683
|
|
357
|
|
|
Contingent
consideration paid
|
(73)
|
|
(338)
|
|
|
Purchase
of businesses, net of cash acquired
|
17
|
|
(3,203)
|
|
|
Disposal
of businesses
|
72
|
|
10,246
|
|
|
Investment
in associates and joint ventures
|
(11)
|
|
(16)
|
|
|
Proceeds
from disposal of associates and joint ventures
|
-
|
|
564
|
|
|
Decrease
in liquid investments
|
-
|
|
(2)
|
|
|
Interest
received
|
68
|
|
99
|
|
|
Dividends
from associates and joint ventures
|
42
|
|
5
|
|
|
|
|
|
|
|
|
Net cash (outflow)/inflow from investing activities
|
(1,269)
|
|
6,037
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
Issue
of share capital
|
89
|
|
73
|
|
|
Shares
acquired by ESOP Trusts
|
(74)
|
|
(99)
|
|
|
Increase
in short-term loans
|
1,067
|
|
-
|
|
|
Repayment
of short-term loans
|
(919)
|
|
(2,412)
|
|
|
Net
repayment of obligations under finance leases
|
(18)
|
|
(25)
|
|
|
Interest
paid
|
(732)
|
|
(762)
|
|
|
Dividends
paid to shareholders
|
(4,850)
|
|
(3,874)
|
|
|
Distributions
to non-controlling interests
|
(534)
|
|
(237)
|
|
|
Other
financing items
|
(421)
|
|
233
|
|
|
|
|
|
|
|
|
Net cash outflow from financing activities
|
(6,392)
|
|
(7,103)
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash and bank overdrafts in the
year
|
(1,164)
|
|
1,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and bank overdrafts at beginning of the year
|
5,486
|
|
4,028
|
|
|
Exchange
adjustments
|
283
|
|
(45)
|
|
|
(Decrease)/increase
in cash and bank overdrafts
|
(1,164)
|
|
1,503
|
|
|
|
|
|
|
|
|
Cash and bank overdrafts at end of the year
|
4,605
|
|
5,486
|
|
|
|
|
|
|
|
|
Cash
and bank overdrafts at end of the year comprise:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
4,897
|
|
5,830
|
|
|
Overdrafts
|
(292)
|
|
(344)
|
|
|
|
|
|
|
|
|
4,605
|
|
5,486
|
|
|
|
|
|
|
|
|
Segment
information
|
|
|
|
Operating
segments are reported based on the financial information provided
to the Chief Executive Officer and the responsibilities of the
Corporate Executive Team (CET). The completion of the Novartis
transaction on 2 March 2015 has changed the balance of the Group
and GSK changed its segment reporting to reflect this. With effect
from 1 January 2016, GSK is reporting results under four segments:
Pharmaceuticals, which now includes HIV; Pharmaceuticals R&D;
Vaccines, and Consumer Healthcare, and individual members of the
CET are responsible for each segment. Comparative information has
been restated accordingly.
The
Pharmaceuticals R&D segment is the responsibility of the
President, Pharmaceuticals R&D and is reported as a separate
segment.
The
Group’s management reporting process allocates intra-Group
profit on a product sale to the market in which that sale is
recorded, and the profit analyses below have been presented on that
basis.
Corporate
and other unallocated costs include the results of several Vaccines
and Consumer Healthcare products which were held for sale in a
number of markets in order to meet anti-trust approval requirements
and divested in Q3 2015, together with the costs of corporate
functions.
|
|
Turnover by
segment
|
|||||
|
|
2016
£m
|
|
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
16,104
|
|
14,157
|
|
3
|
|
Vaccines
|
4,592
|
|
3,656
|
|
14
|
|
Consumer
Healthcare
|
7,193
|
|
6,038
|
|
9
|
|
|
|
|
|
|
|
|
Segment
turnover
|
27,889
|
|
23,851
|
|
6
|
|
Corporate
and other unallocated turnover
|
-
|
|
72
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
27,889
|
|
23,923
|
|
6
|
|
|
|
|
|
|
|
|
Operating profit by
segment
|
|||||
|
|
2016
£m
|
|
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
7,979
|
|
6,466
|
|
6
|
|
Pharmaceuticals
R&D
|
(2,488)
|
|
(2,168)
|
|
6
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
5,491
|
|
4,298
|
|
6
|
|
Vaccines
|
1,454
|
|
964
|
|
38
|
|
Consumer
Healthcare
|
1,116
|
|
684
|
|
42
|
|
|
|
|
|
|
|
|
Segment
profit
|
8,061
|
|
5,946
|
|
16
|
|
Corporate
and other unallocated costs
|
(290)
|
|
(217)
|
|
|
|
|
|
|
|
|
|
|
Core
operating profit
|
7,771
|
|
5,729
|
|
14
|
|
Non-core
items
|
(5,173)
|
|
4,593
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
2,598
|
|
10,322
|
|
(86)
|
|
|
|
|
|
|
|
|
Finance
income
|
72
|
|
104
|
|
|
|
Finance
costs
|
(736)
|
|
(757)
|
|
|
|
Profit
on disposal of associates
|
-
|
|
843
|
|
|
|
Share
of after tax profits of associates and joint ventures
|
5
|
|
14
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
1,939
|
|
10,526
|
|
(92)
|
|
|
|
|
|
|
|
|
Turnover by
segment
|
|||||
|
|
Q4 2016
£m
|
|
Q4
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,575
|
|
3,761
|
|
4
|
|
Vaccines
|
1,137
|
|
962
|
|
-
|
|
Consumer
Healthcare
|
1,874
|
|
1,565
|
|
2
|
|
|
|
|
|
|
|
|
Segment
turnover
|
7,586
|
|
6,288
|
|
3
|
|
Corporate
and other unallocated turnover
|
-
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
7,586
|
|
6,286
|
|
3
|
|
|
|
|
|
|
|
|
Operating profit by
segment
|
|||||
|
|
Q4 2016
£m
|
|
Q4
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
2,347
|
|
1,651
|
|
14
|
|
Pharmaceuticals
R&D
|
(741)
|
|
(575)
|
|
14
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
1,606
|
|
1,076
|
|
14
|
|
Vaccines
|
284
|
|
162
|
|
41
|
|
Consumer
Healthcare
|
274
|
|
181
|
|
5
|
|
|
|
|
|
|
|
|
Segment
profit
|
2,164
|
|
1,419
|
|
16
|
|
Corporate
and other unallocated costs
|
(102)
|
|
(62)
|
|
|
|
|
|
|
|
|
|
|
Core
operating profit
|
2,062
|
|
1,357
|
|
16
|
|
Non-core
items
|
(1,467)
|
|
(1,611)
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit/(loss)
|
595
|
|
(254)
|
|
>100
|
|
|
|
|
|
|
|
|
Finance
income
|
20
|
|
41
|
|
|
|
Finance
costs
|
(193)
|
|
(199)
|
|
|
|
Profit
on disposal of associates
|
-
|
|
1
|
|
|
|
Share
of after tax profits/(losses) of associates and joint
ventures
|
1
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss)
before taxation
|
423
|
|
(416)
|
|
>100
|
|
|
|
|
|
|
|
|
Legal matters
The
Group is involved in significant legal and administrative
proceedings, principally product liability, intellectual property,
tax, anti-trust and governmental investigations as well as related
private litigation, which are more fully described in the
‘Legal Proceedings’ note in the Annual Report 2015, as
updated by the Legal matters section of the Results Announcements
for Q1, Q2 and Q3 2016.
At 31
December 2016, the Group’s aggregate provision for legal and
other disputes (not including tax matters described under
‘Taxation’ below) was £0.3 billion (31 December
2015: £0.4 billion). The Group may become involved in
significant legal proceedings in respect of which it is not
possible to make a reliable estimate of the expected financial
effect, if any, that could result from ultimate resolution of the
proceedings. In these cases, the Group would provide appropriate
disclosures about such cases, but no provision would be
made.
The
ultimate liability for legal claims may vary from the amounts
provided and is dependent upon the outcome of litigation
proceedings, investigations and possible settlement negotiations.
The Group’s position could change over time, and, therefore,
there can be no assurance that any losses that result from the
outcome of any legal proceedings will not exceed by a material
amount the amount of the provisions reported in the Group’s
financial accounts.
There
have been no significant legal developments since the quarter ended
30 September
2016.
Developments
with respect to tax matters are described in ‘Taxation’
below.
|
|
Taxation
In the
year to December 2016, tax on core profits amounted to £1,509
million, representing an effective core tax rate of 21.2% (2015:
19.5%).
The
reported charge for taxation on total profits amounted to £877
million, representing an effective tax rate of 45.2% (2015:
20.5%).
The
Group’s balance sheet at 31 December 2016 included deferred
tax assets of £4,374 million (31 December 2015: £2,905
million), deferred tax liabilities of £1,934 million (31
December 2015: £1,522 million), a tax payable liability of
£1,305 million (31 December 2015: £1,421 million) and a
tax recoverable asset of £226 million (31 December 2015:
£180 million). The deferred tax balances were impacted
significantly by the impact of foreign exchange on the translation
of non-sterling denominated items.
GSK
continues to believe that it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the
outcome of agreements with relevant tax authorities.
Transfer
pricing and other issues are as previously described in the
‘Taxation’ note in the Annual Report 2015. There have
been no other material changes to tax matters since the publication
of the Annual Report.
The core tax rate for 2017 is expected to be in the range of
21-22%. Given the Group’s momentum, changing earnings mix and
the challenging tax environment, some moderate upward pressure on
the rate is expected over the next few years.
|
|
Additional
information
|
|
Accounting policies and basis of preparation
|
|
This
unaudited Results Announcement contains condensed financial
information for the year and three months ended 31 December 2016, and should be read in
conjunction with the Annual Report 2015, which was prepared
in accordance with International Financial Reporting Standards as
adopted by the European Union. This Results Announcement has been
prepared applying consistent accounting policies to those applied
by the Group in the Annual Report 2015, except that an amendment to
IFRS 11 ‘Joint arrangements’ has been implemented from
1 January 2016. This revision has not had a material impact on the
results or financial position of the Group.
Following
an agenda decision by the IFRS Interpretations Committee regarding
offsetting and cash pooling arrangements, the Group has revised its
disclosure of its cash pooling arrangements. There is no change to
the results or cash flows for the year to 31 December 2015 and
there was no impact on the balance sheet at 31 December 2015. The
impact at 1 January 2015 was to increase both cash and cash
equivalents and short-term borrowings by £381
million.
In
addition, the segment information for 2015 has been restated to
reflect changes made to segments in 2016 as set out under
‘Segment information’ above.
The
Group is required to implement a new accounting standard, IFRS 15
‘Revenue from contracts with customers’, from 1 January
2018. The Group is currently assessing the new standard and does
not expect to be able to quantify the impact of any potential
changes until later in 2017.
The
Group is also assessing the potential impact of IFRS 9
‘Financial instruments’, which it is required to
implement from 1 January 2018 and does not expect to be able to
quantify the impact of any potential changes until later in
2017.
IFRS 16
‘Leases’ is required to be implemented by the Group
from 1 January 2019. The Group is in the early stages of assessing
the potential impact of the new standard.
This
Results Announcement does not constitute statutory accounts of the
Group within the meaning of sections 434(3) and 435(3) of the
Companies Act 2006. The full Group accounts for 2015 were published
in the Annual Report 2015, which has been delivered to the
Registrar of Companies and on which the report of the independent
auditors was unqualified and did not contain a statement under
section 498 of the Companies Act 2006.
|
|
Exchange rates
|
|
GSK
operates in many countries, and earns revenues and incurs costs in
many currencies. The results of the Group, as reported in Sterling,
are affected by movements in exchange rates between Sterling and
other currencies. Average exchange rates, as modified by specific
transaction rates for large transactions, prevailing during the
period, are used to translate the results and cash flows of
overseas subsidiaries, associates and joint ventures into Sterling.
Period-end rates are used to translate the net assets of those
entities. The currencies which most influenced these translations
and the relevant exchange rates were:
|
|
|
|
|
2016
|
|
2015
|
|
Q4 2016
|
|
Q4
2015
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Average
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
|
US$/£
|
|
|
1.36
|
|
1.53
|
|
1.27
|
|
1.53
|
|
|
|
Euro/£
|
|
|
1.23
|
|
1.37
|
|
1.17
|
|
1.37
|
|
|
|
Yen/£
|
|
|
149
|
|
185
|
|
137
|
|
185
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Period-end
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
|
US$/£
|
|
|
1.24
|
|
1.47
|
|
1.24
|
|
1.47
|
|
|
|
Euro/£
|
|
|
1.17
|
|
1.36
|
|
1.17
|
|
1.36
|
|
|
|
Yen/£
|
|
|
144
|
|
177
|
|
144
|
|
177
|
|
During Q4 2016, average sterling exchange rates were weaker against
the US Dollar, the Euro and the Yen, compared with the same period
in 2015. Similarly, during 2016, average sterling exchange rates
were weaker against the US Dollar, the Euro and the Yen compared
with 2015. Period-end sterling exchange rates were also weaker
against the US Dollar, the Euro and the Yen.
|
|
Weighted average number of shares
|
|
|
|
|
|
2016
millions
|
|
2015
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
4,860
|
|
4,831
|
|
Dilutive
effect of share options and share awards
|
49
|
|
57
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
4,909
|
|
4,888
|
|
|
|
|
|
|
|
Q4 2016
millions
|
|
Q4
2015
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
4,867
|
|
4,838
|
|
Dilutive
effect of share options and share awards
|
48
|
|
-
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
4,915
|
|
4,838
|
|
|
|
|
|
|
At 31
December 2016, 4,868 million shares were in free issue (excluding
Treasury shares and shares held by the ESOP Trusts). This compares
with 4,840 million shares at 31 December 2015.
|
|
Net assets
|
|
The
book value of net assets decreased by £3,915 million from
£8,878 million at 31 December 2015 to £4,963 million at
31 December 2016. This primarily reflected the recognition of the
transaction-related adjustments of £3,919 million in the year,
the impact of the dividends paid in the year and an increase in the
pension deficit of £500 million, partly offset by the
favourable exchange translation impact from the weaker Sterling
rates.
The
carrying value of investments in associates and joint ventures at
31 December 2016 was £263 million, with a market value of
£502 million.
At 31
December 2016, the net deficit on the Group’s pension plans
was £2,084 million compared with £1,584 million at 31
December 2015. The increase in the net deficit primarily arose from
decreases in the rates used to discount UK pension liabilities from
3.8% to 2.7%, and US pension liabilities from 4.2% to 3.9%; an
increase in the UK inflation rate from 3.1% to 3.2% and a stronger
US Dollar at the year end, partly offset by special funding
contributions to the UK schemes of £191 million, together with
significant UK asset gains.
At 31
December 2016, the post-retirement benefits provision was
£1,693 million compared with £1,387 million at 31
December 2015. The increase in the provision arose from the
decrease in the rate used to discount the US provision together
with the impact of the stronger US Dollar on the US liability at
the year end.
At 31
December 2016, the estimated present value of the potential
redemption amount of the Consumer Healthcare Joint Venture put
option recognised in Other non-current liabilities was £7,420
million (31 December 2015: £6,287 million). The estimated
present value of the potential redemption amount of the Pfizer put
option related to ViiV Healthcare was £1,319 million, which
was recorded in Other payables in Current liabilities. The
liabilities for the ViiV Healthcare put options held by both Pfizer
and Shionogi were recognised in Q1 2016, with £1,996 million
recorded directly in equity on initial recognition. The Shionogi
put option related to ViiV Healthcare was de-recognised in Q4 2016
with its carrying value of £1,244 million credited to equity.
The increases in put option liabilities in the year primarily
reflected the increased estimated Sterling values of the two
businesses.
Contingent
consideration amounted to £5,896 million at 31 December 2016
(31 December 2015: £3,855 million), of which £5,304
million (31 December 2015: £3,409 million) represented the
estimated present value of amounts payable to Shionogi relating to
ViiV Healthcare and £545 million (31 December 2015: £405
million) represented the estimated present value of contingent
consideration payable to Novartis related to the Vaccines
acquisition. The liability due to Shionogi included £224
million in respect of preferential dividends of which £154
million was recognised directly in equity in the year. The
liability for preferential dividends due to Pfizer at 31 December
2016 was £23 million. An explanation of the accounting for the
non-controlling interests in ViiV Healthcare is set out on page
55.
|
|
The
liabilities for the Consumer Healthcare Joint Venture put option,
the ViiV Healthcare put option and the ViiV Healthcare contingent
consideration at 31 December 2016 have been calculated based on the
closing exchange rates at 31 December 2016, primarily
US$1.24/£1 and Euro 1.17/£1. Movements in these exchange
rates would have the following approximate effects on the
liabilities:
|
|
Increase/(decrease) in liability
|
|
|
Consumer
Healthcare
Joint
Venture
put
option
|
|
ViiV
Healthcare
put
option
|
|
Shionogi-
ViiV
Healthcare
contingent
consideration
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
5 cent
appreciation of US Dollar
|
20
|
|
31
|
|
171
|
|
5 cent
depreciation of US Dollar
|
(19)
|
|
(29)
|
|
(158)
|
|
10 cent
appreciation of US Dollar
|
42
|
|
65
|
|
358
|
|
10 cent
depreciation of US Dollar
|
(36)
|
|
(55)
|
|
(304)
|
|
5 cent
appreciation of Euro
|
97
|
|
17
|
|
45
|
|
5 cent
depreciation of Euro
|
(89)
|
|
(16)
|
|
(41)
|
|
10 cent
appreciation of Euro
|
203
|
|
36
|
|
94
|
|
10 cent
depreciation of Euro
|
(171)
|
|
(30)
|
|
(79)
|
|
|
|
|
|
|
|
|
Movements in contingent consideration are as follows:
|
|||
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
Contingent
consideration at beginning of the year
|
3,855
|
|
1,724
|
|
Additions
|
194
|
|
594
|
|
Amount
reversed
|
(41)
|
|
-
|
|
Re-measurement
through income statement
|
2,239
|
|
1,986
|
|
Cash
settlement
|
(431)
|
|
(459)
|
|
Other
|
80
|
|
10
|
|
|
|
|
|
|
Contingent
consideration at end of the year
|
5,896
|
|
3,855
|
|
|
|
|
|
|
The additions in the year reflected the recognition of the
preferential dividend payable to Shionogi in relation to ViiV
Healthcare and contingent consideration on the acquisition of the
BMS HIV programmes.
The amount reversed in the year relates to a provision that had
been made in respect of a small acquisition in 2012 but that was no
longer required.
The re-measurement increases in contingent consideration in the
year primarily reflected changes in exchange rate assumptions on
forecast sales that will lead to increased future contingent
consideration payments.
The cash settlement in the year included £417 million (2015:
£159 million) of payments to Shionogi in relation to ViiV
Healthcare.
|
|
At 31
December, the ESOP Trusts held 42.7 million GSK shares against the
future exercise of share options and share awards. The carrying
value of £286 million has been deducted from other reserves.
The market value of these shares was £667
million.
At 31
December 2016, the company held 458.2 million Treasury shares at a
cost of £6,451 million, which has been deducted from retained
earnings.
|
|
Contingent liabilities
|
|
There
were contingent liabilities at 31 December 2016 in respect of
guarantees and indemnities entered into as part of the ordinary
course of the Group’s business. No material losses are
expected to arise from such contingent liabilities. Provision is
made for the outcome of legal and tax disputes where it is both
probable that the Group will suffer an outflow of funds and it is
possible to make a reliable estimate of that outflow. Descriptions
of the significant legal and tax disputes to which the Group is a
party are set out on page 49.
|
|
Reconciliation of cash flow to
movements in net debt
|
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
Net
debt at beginning of the year
|
(10,727)
|
|
(14,377)
|
|
|
|
|
|
|
(Decrease)/increase
in cash and bank overdrafts
|
(1,164)
|
|
1,503
|
|
Increase
on liquid investments
|
-
|
|
2
|
|
Net
(increase in)/repayment of short-term loans
|
(148)
|
|
2,412
|
|
Net
repayment of obligations under finance leases
|
18
|
|
25
|
|
Exchange
adjustments
|
(1,781)
|
|
(268)
|
|
Other
non-cash movements
|
(2)
|
|
(24)
|
|
|
|
|
|
|
(Increase)/decrease
in net debt
|
(3,077)
|
|
3,650
|
|
|
|
|
|
|
Net
debt at end of the year
|
(13,804)
|
|
(10,727)
|
|
|
|
|
|
|
Net debt analysis
|
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
Liquid
investments
|
89
|
|
75
|
|
Cash
and cash equivalents
|
4,897
|
|
5,830
|
|
Short-term
borrowings
|
(4,129)
|
|
(1,308)
|
|
Long-term
borrowings
|
(14,661)
|
|
(15,324)
|
|
|
|
|
|
|
Net
debt at end of the year
|
(13,804)
|
|
(10,727)
|
|
|
|
|
|
|
Free cash flow
reconciliation
|
|
|
2016
£m
|
|
2015
£m
|
|
Q4
2016
£m
|
|
|
|
|
|
|
|
|
Net
cash inflow from operating activities
|
6,497
|
|
2,569
|
|
2,991
|
|
Purchase
of property, plant and equipment
|
(1,543)
|
|
(1,380)
|
|
(600)
|
|
Proceeds
from sale of property, plant and equipment
|
98
|
|
72
|
|
87
|
|
Purchase
of intangible assets
|
(809)
|
|
(521)
|
|
(161)
|
|
Net
finance costs
|
(664)
|
|
(663)
|
|
(314)
|
|
Dividends
from associates and joint ventures
|
42
|
|
5
|
|
(1)
|
|
Distributions
to non-controlling interests
|
(534)
|
|
(237)
|
|
(234)
|
|
|
|
|
|
|
|
|
Free
cash flow/(outflow)
|
3,087
|
|
(155)
|
|
1,768
|
|
|
|
|
|
|
|
|
Legal
settlements paid
|
233
|
|
420
|
|
67
|
|
|
|
|
|
|
|
|
Adjusted
free cash flow
|
3,320
|
|
265
|
|
1,835
|
|
|
|
|
|
|
|
|
Non-controlling interests in ViiV
Healthcare
|
|
Trading profit allocations
Because
ViiV Healthcare is a subsidiary of the Group, 100% of its operating
results (turnover, operating profit, profit after tax) are included
within the Group income statement and then a portion of the
earnings is allocated to the non-controlling interests owned by the
other shareholders, in line with their respective equity
shareholdings (Pfizer 11.7% and Shionogi 10%). Each of the
shareholders, including GSK, is also entitled to preferential
dividends determined by the performance of certain products that
each shareholder contributed. As the relative performance of these
products changes over time, the proportion of the overall earnings
of ViiV Healthcare allocated to each shareholder will change. In
particular, the increasing sales of Tivicay and Triumeq have a favourable impact on the
proportion of the preferential dividends that is allocated to GSK.
GSK was entitled to approximately 80% of the core earnings of ViiV
Healthcare for 2016. Re-measurements of the liabilities for the
preferential dividends allocated to Pfizer and Shionogi are
included within other operating income.
Acquisition-related arrangements
As part
of the agreement reached to acquire Shionogi’s interest in
the former Shionogi-ViiV Healthcare joint venture in 2012, the
Group agreed to pay additional consideration to Shionogi contingent
on the performance of the products being developed by that joint
venture, principally dolutegravir. The liability for this
contingent consideration was estimated and recognised in the
balance sheet at the date of acquisition. Subsequent
re-measurements are reflected within non-core items in the income
statement.
Cash
payments are made to Shionogi by ViiV Healthcare each quarter which
reduce the balance sheet liability and are hence not recorded in
the income statement. The payments are calculated based on the
sales performance of the relevant products in the previous quarter
and are reflected in the cash flow statement partly in operating
cash flows and partly in purchases of businesses, within investing
activities. The tax relief on these payments is reflected in the
Group’s non-core and total tax charge. The part of each
payment relating to the original estimate of the fair value of the
contingent consideration on the acquisition of the Shionogi-ViiV
Healthcare joint venture in 2012 of £659 million is reported
within investing activities in the cash flow statement and the part
of each payment relating to the increase in the liability since the
acquisition is reported within operating cash flows.
|
|
Movements
in contingent consideration payable to Shionogi are as
follows:
|
|
|||
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
|
|
Contingent
consideration at beginning of the year
|
3,409
|
|
1,684
|
|
|
Additions
|
154
|
|
-
|
|
|
Re-measurement
through income statement
|
2,162
|
|
1,874
|
|
|
Cash
settlement
|
(417)
|
|
(159)
|
|
|
Other
movements
|
(4)
|
|
10
|
|
|
|
|
|
|
|
|
Contingent
consideration at end of the year
|
5,304
|
|
3,409
|
|
|
|
|
|
|
|
|
Cash
payments made are as follows:
|
|||
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
Reported
in operating cash flows
|
351
|
|
121
|
|
Reported
in investing activities
|
66
|
|
38
|
|
|
|
|
|
|
|
417
|
|
159
|
|
|
|
|
|
|
The
additions in the year represented the recognition in Q1 2016 of the
preferential dividends payable to Shionogi.
|
|
Exit rights
Pfizer
may request an IPO of ViiV Healthcare at any time and if either GSK
does not consent to such IPO or an offering is not completed within
nine months, Pfizer could require GSK to acquire its shareholding.
Under the original agreements, GSK had the unconditional right, so
long as it made no subsequent distribution to its shareholders, to
withhold its consent to the exercise of the Pfizer put options and,
as a result, in accordance with IFRS, GSK did not recognise a
liability for the put option on its balance sheet. However, during
Q1 2016, GSK notified Pfizer that it had irrevocably given up this
right and accordingly recognised the liability for the put option
on the Group’s balance sheet during Q1 2016 at an initial
value of £1,070 million. Consistent with this revised
treatment, at the end of Q1 2016 GSK also recognised liabilities
for the future preferential dividends anticipated to become payable
to Pfizer and Shionogi on the Group’s balance
sheet.
|
|
The
closing balances of the liabilities related to Pfizer’s
shareholding are as follows:
|
|
|||
|
|
2016
£m
|
|
2015
£m
|
|
|
|
|
|
|
|
|
Pfizer
put option
|
1,319
|
|
-
|
|
|
Pfizer
preferential dividend
|
23
|
|
-
|
|
|
|
|
|
|
|
|
Under
the original agreements, Shionogi could also have requested GSK to
acquire its shareholding in ViiV Healthcare in six month windows
commencing in 2017, 2020 and 2022. GSK had the unconditional right,
so long as it made no subsequent distribution to its shareholders,
to withhold its consent to the exercise of the Shionogi put option
and, as a result, GSK did not recognise a liability for the put
option on its balance sheet. However, during Q1 2016, GSK notified
Shionogi that it had irrevocably given up this right and
accordingly recognised the liability for the put option on the
Group’s balance sheet during Q1 2016 at an initial value of
£926 million. In Q4 2016, Shionogi irrevocably agreed to waive
its put option and as a result GSK de-recognised the liability for
this put option on the Group’s balance sheet directly to
equity. The value of the liability was £1,244 million when it
was de-recognised.
GSK
also has a call option over Shionogi’s shareholding in ViiV
Healthcare, which under the original agreements was exercisable in
six month windows commencing in 2027, 2030 and 2032. GSK has now
irrevocably agreed to waive the first two exercise windows, but the
last six month window in 2032 remains. As this call option is at
fair value, it has no value for accounting purposes.
|
|
Core results
reconciliations
|
|
The
reconciliations between total results and core results for 2016 and
2015 and also Q4 2016 and Q4 2015 are set out below.
|
|
Income statement – Core results reconciliation
Year ended 31 December 2016
|
|
|
Total
results
£m
|
Intangible
amortisation
£m
|
Intangible
impairment
£m
|
Major
restructuring
£m
|
Legal
costs
£m
|
Transaction
-related
£m
|
Divest-
ments
and other
£m
|
Core
results
£m
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Turnover
|
27,889
|
|
|
|
|
|
|
27,889
|
|
Cost of sales
|
(9,290)
|
547
|
7
|
297
|
|
86
|
2
|
(8,351)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
18,599
|
547
|
7
|
297
|
|
86
|
2
|
19,538
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(9,366)
|
|
|
514
|
162
|
|
(7)
|
(8,697)
|
|
Research and development
|
(3,628)
|
41
|
13
|
159
|
|
(81)
|
28
|
(3,468)
|
|
Royalty income
|
398
|
|
|
|
|
|
|
398
|
|
Other operating
income/(expense)
|
(3,405)
|
|
|
|
|
3,914
|
(509)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
2,598
|
588
|
20
|
970
|
162
|
3,919
|
(486)
|
7,771
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(664)
|
|
|
4
|
|
|
8
|
(652)
|
|
Share of after tax profits
of associates and joint
ventures
|
5
|
|
|
|
|
|
|
5
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
1,939
|
588
|
20
|
974
|
162
|
3,919
|
(478)
|
7,124
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(877)
|
(130)
|
(5)
|
(217)
|
(14)
|
(439)
|
173
|
(1,509)
|
|
Tax rate %
|
45.2%
|
|
|
|
|
|
|
21.2%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
1,062
|
458
|
15
|
757
|
148
|
3,480
|
(305)
|
5,615
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit
attributable to
non-controlling
interests
|
150
|
|
|
|
|
487
|
|
637
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
912
|
458
|
15
|
757
|
148
|
2,993
|
(305)
|
4,978
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
18.8p
|
9.4p
|
0.3p
|
15.6p
|
3.0p
|
61.6p
|
(6.3)p
|
102.4p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,860
|
|
|
|
|
|
|
4,860
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
Core results exclude the above items from total results as GSK
believes that core results are more representative of the
performance of the Group’s operations and allow the key
trends and factors driving performance to be more easily and
clearly identified by shareholders. For a fuller explanation of
core results, see ‘Definitions’ on page
36.
|
|
Income statement – Core results reconciliation
Year ended 31 December 2015
|
|
|
Total
results
£m
|
Intangible
amortisation
£m
|
Intangible
impairment
£m
|
Major
restructuring
£m
|
Legal
costs
£m
|
Transaction
-related
£m
|
Divest-
ments
and other
£m
|
Core
results
£m
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Turnover
|
23,923
|
|
|
|
|
|
|
23,923
|
|
Cost of sales
|
(8,853)
|
522
|
147
|
563
|
|
89
|
12
|
(7,520)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
15,070
|
522
|
147
|
563
|
|
89
|
12
|
16,403
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(9,232)
|
|
7
|
1,009
|
221
|
88
|
|
(7,907)
|
|
Research and development
|
(3,560)
|
41
|
52
|
319
|
221
|
88
|
52
|
(3,096)
|
|
Royalty income
|
329
|
|
|
|
|
|
|
329
|
|
Other operating
income/(expense)
|
7,715
|
|
|
|
|
2,061
|
(9,776)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
10,322
|
563
|
206
|
1,891
|
221
|
2,238
|
(9,712)
|
5,729
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(653)
|
|
|
5
|
|
|
12
|
(636)
|
|
Profit on disposal of
associates
|
843
|
|
|
|
|
|
(843)
|
-
|
|
Share of after tax profits/
(losses) of associates
and joint ventures
|
14
|
|
|
|
|
|
(16)
|
(2)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
10,526
|
563
|
206
|
1,896
|
221
|
2,238
|
(10,559)
|
5,091
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(2,154)
|
(161)
|
(50)
|
(441)
|
(21)
|
(352)
|
2,186
|
(993)
|
|
Tax rate %
|
20.5%
|
|
|
|
|
|
|
19.5%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
8,372
|
402
|
156
|
1,455
|
200
|
1,886
|
(8,373)
|
4,098
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
(Loss)/profit
attributable to
non-controlling
interests
|
(50)
|
|
|
|
|
500
|
(10)
|
440
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
8,422
|
402
|
156
|
1,455
|
200
|
1,386
|
(8,363)
|
3,658
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
174.3p
|
8.3p
|
3.2p
|
30.1p
|
4.1p
|
28.8p
|
(173.1)p
|
75.7p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,831
|
|
|
|
|
|
|
4,831
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
Core results exclude the above items from total results as GSK
believes that core results are more representative of the
performance of the Group’s operations and allow the key
trends and factors driving performance to be more easily and
clearly identified by shareholders. For a fuller explanation of
core results, see ‘Definitions’ on page
36.
|
|
Income statement – Core results reconciliation
Three months ended 31 December 2016
|
|
|
Total
results
£m
|
Intangible
amortisation
£m
|
Intangible
impairment
£m
|
Major
restructuring
£m
|
Legal
costs
£m
|
Transaction
-related
£m
|
Divest-
ments
and other
£m
|
Core
results
£m
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Turnover
|
7,586
|
|
|
|
|
|
|
7,586
|
|
Cost of sales
|
(2,508)
|
134
|
16
|
135
|
|
28
|
|
(2,195)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
5,078
|
134
|
16
|
135
|
|
28
|
|
5,391
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(2,711)
|
|
|
231
|
47
|
|
4
|
(2,429)
|
|
Research and development
|
(1,003)
|
10
|
13
|
31
|
|
(81)
|
13
|
(1,017)
|
|
Royalty income
|
117
|
|
|
|
|
|
|
117
|
|
Other operating
income/(expense)
|
(886)
|
|
|
|
|
915
|
(29)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
595
|
144
|
29
|
397
|
47
|
862
|
(12)
|
2,062
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(173)
|
|
|
1
|
|
|
2
|
(170)
|
|
Share of after tax profits
of associates and joint
ventures
|
1
|
|
|
|
|
|
|
1
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
423
|
144
|
29
|
398
|
47
|
862
|
(10)
|
1,893
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(106)
|
(27)
|
(8)
|
(102)
|
(4)
|
(146)
|
(17)
|
(410)
|
|
Tax rate %
|
25.1%
|
|
|
|
|
|
|
21.7%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
317
|
117
|
21
|
296
|
43
|
716
|
(27)
|
1,483
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit
attributable to
non-controlling
interests
|
60
|
|
|
|
|
152
|
|
212
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
257
|
117
|
21
|
296
|
43
|
564
|
(27)
|
1,271
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
5.3p
|
2.4p
|
0.4p
|
6.1p
|
0.9p
|
11.6p
|
(0.6)p
|
26.1p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,867
|
|
|
|
|
|
|
4,867
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
Core results exclude the above items from total results as GSK
believes that core results are more representative of the
performance of the Group’s operations and allow the key
trends and factors driving performance to be more easily and
clearly identified by shareholders. For a fuller explanation of
core results, see ‘Definitions’ on page
36.
|
|
Income statement – Core results reconciliation
Three months ended 31 December 2015
|
|
|
Total
results
£m
|
Intangible
amortisation
£m
|
Intangible
impairment
£m
|
Major
restructuring
£m
|
Legal
costs
£m
|
Transaction
-related
£m
|
Divest-
ments
and other
£m
|
Core
results
£m
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Turnover
|
6,286
|
|
|
|
|
|
|
6,286
|
|
Cost of sales
|
(2,541)
|
138
|
67
|
236
|
|
34
|
|
(2,066)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
3,745
|
138
|
67
|
236
|
|
34
|
|
4,220
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(2,498)
|
|
7
|
369
|
14
|
|
|
(2,108)
|
|
Research and development
|
(1,054)
|
10
|
12
|
169
|
|
|
17
|
(846)
|
|
Royalty income
|
91
|
|
|
|
|
|
|
91
|
|
Other operating
income/(expense)
|
(538)
|
|
|
(1)
|
|
680
|
(141)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
(254)
|
148
|
86
|
773
|
14
|
714
|
(124)
|
1,357
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(158)
|
|
|
1
|
|
|
3
|
(154)
|
|
Profit on disposal of
associates
|
1
|
|
|
|
|
|
(1)
|
-
|
|
Share of after tax losses
of associates and
joint ventures
|
(5)
|
|
|
|
|
|
|
(5)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
(416)
|
148
|
86
|
774
|
14
|
714
|
(122)
|
1,198
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(12)
|
(77)
|
(25)
|
(172)
|
(17)
|
(124)
|
212
|
(215)
|
|
Tax rate %
|
(2.9)%
|
|
|
|
|
|
|
17.9%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
(428)
|
71
|
61
|
602
|
(3)
|
590
|
90
|
983
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit
attributable to
non-controlling
interests
|
(74)
|
|
|
|
|
183
|
|
109
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
(354)
|
71
|
61
|
602
|
(3)
|
407
|
90
|
874
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
(7.3)p
|
1.5p
|
1.3p
|
12.4p
|
(0.1)p
|
8.4p
|
1.9p
|
18.1p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,838
|
|
|
|
|
|
|
4,838
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
Core results exclude the above items from total results as GSK
believes that core results are more representative of the
performance of the Group’s operations and allow the key
trends and factors driving performance to be more easily and
clearly identified by shareholders. For a fuller explanation of
core results, see ‘Definitions’ on page
36.
|
|
Pro-forma growth rate
reconciliations
|
|
For
2016, in addition to reported growth rates, the Group is presenting
pro-forma growth rates for turnover and core operating profit
items. Pro-forma growth rates are calculated comparing reported
turnover and core operating profit for 2016 with the turnover and
core operating profit for 2015 adjusted to include the two months
of sales for January and February 2015 of the former Novartis
Vaccines and Consumer Healthcare products and exclude sales of the
former GSK Oncology business for January and February
2015.
The
following table sets out reconciliations between reported CER
growth rates and pro-forma CER growth rates on the stated items of
turnover for 2016.
|
|
Turnover 2016
|
|||||||||
|
|
|||||||||
|
|
Reported
growth
rate
CER%
|
|
Adjustment
to
include
January
and
February
2015
turnover
of
former
Novartis
Vaccines
products
CER%
|
|
Adjustment
to
include
January
and
February
2015
turnover
of
former
Novartis
Consumer
Healthcare
products
CER%
|
|
Adjustment
to
exclude
January
and
February
2015
turnover
of
former
GSK
Oncology
products
CER%
|
|
Pro-forma
growth
rate
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Group turnover
|
6
|
|
-
|
|
(2)
|
|
1
|
|
5
|
|
US
|
10
|
|
-
|
|
-
|
|
1
|
|
11
|
|
Europe
|
6
|
|
-
|
|
(2)
|
|
1
|
|
5
|
|
International
|
1
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
3
|
|
|
|
|
|
1
|
|
4
|
|
US Pharmaceuticals
|
10
|
|
|
|
|
|
2
|
|
12
|
|
Europe Pharmaceuticals
|
-
|
|
|
|
|
|
2
|
|
2
|
|
International Pharmaceuticals
|
(3)
|
|
|
|
|
|
-
|
|
(3)
|
|
Emerging Markets Pharmaceuticals
|
(4)
|
|
|
|
|
|
1
|
|
(3)
|
|
Japan Pharmaceuticals
|
(5)
|
|
|
|
|
|
-
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines
|
14
|
|
(2)
|
|
|
|
|
|
12
|
|
US Vaccines
|
13
|
|
(1)
|
|
|
|
|
|
12
|
|
Europe Vaccines
|
18
|
|
(2)
|
|
|
|
|
|
16
|
|
International Vaccines
|
10
|
|
(2)
|
|
|
|
|
|
8
|
|
Bexsero
|
>100
|
|
|
|
|
|
|
|
>100
|
|
Menveo
|
16
|
|
(8)
|
|
|
|
|
|
8
|
|
Other Vaccines
|
6
|
|
(10)
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Healthcare
|
9
|
|
|
|
(4)
|
|
|
|
5
|
|
US Consumer Healthcare
|
9
|
|
|
|
(4)
|
|
|
|
5
|
|
Europe Consumer Healthcare
|
12
|
|
|
|
(8)
|
|
|
|
4
|
|
International Consumer Healthcare
|
8
|
|
|
|
(3)
|
|
|
|
5
|
|
Wellness
|
15
|
|
|
|
(9)
|
|
|
|
6
|
|
Oral health
|
8
|
|
|
|
-
|
|
|
|
8
|
|
Nutrition
|
(8)
|
|
|
|
(1)
|
|
|
|
(9)
|
|
Skin health
|
4
|
|
|
|
(6)
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table sets out reconciliations between reported CER
growth rates and pro-forma CER growth rates for the stated core
expense headings and core operating profit for 2016.
|
|
Core expenses and operating profit 2016
|
|||||||||
|
|
|||||||||
|
|
Reported
growth
rate
CER%
|
|
Adjustment
to
include
January
and
February
2015
of
Former
Novartis
Vaccines
products
CER%
|
|
Adjustment
to
include
January
and
February
2015
of
Former
Novartis
Consumer
Healthcare
products
CER%
|
|
Adjustment
to
exclude
January
and
February
2015
of
former
GSK
Oncology
products
CER%
|
|
Pro-forma
growth
rate
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
5
|
|
(1)
|
|
(2)
|
|
1
|
|
3
|
|
Selling, general and administration
|
2
|
|
(1)
|
|
(2)
|
|
1
|
|
-
|
|
Research and development
|
3
|
|
(1)
|
|
-
|
|
1
|
|
3
|
|
Royalty income
|
16
|
|
(1)
|
|
2
|
|
-
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
Core operating profit
|
14
|
|
1
|
|
-
|
|
2
|
|
17
|
|
Pharmaceuticals operating profit
|
6
|
|
-
|
|
-
|
|
2
|
|
8
|
|
Pharmaceuticals operating profit
excluding R&D
|
6
|
|
|
|
|
|
2
|
|
8
|
|
Pharmaceuticals R&D
|
6
|
|
|
|
|
|
2
|
|
8
|
|
Vaccines operating profit
|
38
|
|
9
|
|
-
|
|
-
|
|
47
|
|
Consumer Healthcare operating
profit
|
42
|
|
-
|
|
(2)
|
|
-
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GlaxoSmithKline plc
|
|
|
(Registrant)
|
|
|
|
|
Date: February
08, 2017
|
|
|
|
|
|
|
By: VICTORIA
WHYTE
--------------------------
|
|
|
|
|
|
Victoria Whyte
|
|
|
Authorised
Signatory for and on
|
|
|
behalf
of GlaxoSmithKline plc
|