|
Core results
|
|||||||||||
|
|
Q3 2016
|
|
Growth
|
|
9 months
2016
|
|
Growth
|
||||
|
|
£m
|
|
CER%
|
|
£%
|
|
£m
|
|
CER%
|
|
£%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
7,542
|
|
8
|
|
23
|
|
20,303
|
|
7
|
|
15
|
|
Core
operating profit
|
2,319
|
|
13
|
|
35
|
|
5,709
|
|
14
|
|
31
|
|
Core
earnings per share
|
32.0p
|
|
12
|
|
39
|
|
76.3p
|
|
12
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total results
|
|||||||||||
|
|
Q3 2016
|
|
Growth
|
|
9 months
2016
|
|
Growth
|
||||
|
|
£m
|
|
CER%
|
|
£%
|
|
£m
|
|
CER%
|
|
£%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
7,542
|
|
8
|
|
23
|
|
20,303
|
|
7
|
|
15
|
|
Operating
profit
|
1,431
|
|
5
|
|
40
|
|
2,003
|
|
(88)
|
|
(81)
|
|
Earnings
per share
|
16.6p
|
|
(1)
|
|
50
|
|
13.5p
|
|
(99)
|
|
(93)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
|
|||
|
|
|||
|
|
●
|
Group sales £7.5 billion, +8% CER, with continued growth
across all three businesses
|
|
|
|
|
-
|
Pharmaceuticals
£4.1 billion, +6%; Vaccines £1.6 billion, +20%; Consumer
Healthcare £1.9 billion, +5%
|
|
|
|
|
|
|
|
●
|
New product sales £1.21 billion +79% (Q1 2016: £821
million; Q2 2016: £1.05 billion) driven by HIV (Tivicay, Triumeq), Respiratory (Relvar/Breo, Anoro, Incruse, Nucala) and Meningitis vaccines
(Bexsero, Menveo)
|
|
|
|
|
-
|
New
Pharmaceutical product sales represent 25% of total Pharmaceutical
sales (Q3 2015: 14%)
|
|
|
|
|
|
|
|
●
|
Improved operating leverage driven by sales growth, delivery of
restructuring and integration benefits and continued tight control
of costs including targeted reinvestments
|
|
|
|
|
-
|
Q3
Group core operating profit margin 30.7% (Q3 2015:
28%)
|
|
|
|
-
|
Incremental
cost savings of £0.2 billion in Q3 2016, with total annual
cost savings now at £2.5 billion and on track to deliver
target of £3 billion in total
|
|
|
|
|
|
|
|
●
|
Q3 total earnings per share 16.6p, -1% CER, impacted by charges
resulting from increases in valuations of Consumer Healthcare and
HIV businesses
|
|
|
|
|
|
|
|
|
●
|
Q3 core earnings per share 32p, +12% CER
|
|
|
|
|
|
|
|
|
●
|
Continue to expect 2016 core EPS percentage growth to be 11-12%
CER
|
|
|
|
|
-
|
If FX
rates held at Q3 period end levels, estimated impact of +21% on
2016 Sterling core EPS growth
|
|
|
|
|
|
|
|
●
|
Q3 net cash inflow from operations of £1.8 billion (Q3 2015:
£0.5 billion)
|
|
|
|
|
|
|
|
|
●
|
19p dividend declared for Q3. Continue to expect 80p for FY 2016
and 2017
|
|
|
|
|
|
|
|
|
●
|
Sustained delivery in R&D pipeline:
|
|
|
|
|
-
|
H2 2016
filings: Shingrix filed in
US and on track to be filed in EU in Q4; Closed Triple for COPD on
track to be filed in US and EU in Q4; Benlysta subcutaneous for lupus and
sirukumab for RA both filed in US and EU
|
|
|
|
-
|
Veramyst Rx to OTC switch approved by FDA (expected launch
Q1 2017)
|
|
|
|
-
|
Phase
III trials started for two-drug regimen in HIV (dolutegravir and
lamivudine) in Q3; four Phase III trial starts for assets in HIV,
respiratory and anaemia expected in Q4
|
|
|
|
-
|
Key
data points expected on between 20-30 potential assets by end
2018
|
|
|
|||
|
The
full results are presented under ‘Income Statement’ on
page 37 and core results reconciliations are presented on pages 11
and 53 to 56. All commentaries are presented in terms of CER
growth, unless otherwise stated. See ‘Definitions’ on
page 34. 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
35.
|
|
Sir Andrew Witty, Chief Executive Officer, GSK said:
|
|
|
|
“Our
third quarter results reflect strong performances across the Group
and the sustained progress we have made over the course of 2016 to
deliver sales growth of new products, maintain effective cost
control and execute on our restructuring and integration plans.
With this positive momentum, we are confident in achieving our
earnings guidance for the year for core EPS growth of 11-12% on a
CER basis.
“Our
most recent review of the Group’s pipeline reinforces our
confidence in the near-term portfolio and the options we have in
early-to-mid stage development. With the filing of Shingrix in the US this week, we have
completed three of the four regulatory filings targeted for the
second half of 2016, and we expect to start four Phase III trials
for assets in HIV, respiratory and anaemia before the end of the
year. In earlier development, five assets have started Phase II
trials so far this year. In the remainder of this year and over the
course of 2017/18, we expect to see important data for between
20-30 assets in clinical development and in core therapy areas
including oncology and immuno-inflammation.”
|
|
Information
regarding today’s results, including video interviews with
Sir Andrew Witty and Simon Dingemans, are available on:
www.gsk.com/investors.
|
|
Q3 performance
|
|
|
|
Total
sales grew 8% to £7.5 billion. This performance was driven by
growth in all three businesses, but with particular contributions
from sales of New Pharmaceutical and Vaccine products, up 79% to
£1.21 billion, as well as from the broader vaccines portfolio
especially sales of seasonal flu vaccines.
Pharmaceutical
sales grew 6% to £4.1 billion. HIV medicines, Tivicay and Triumeq, continued to perform strongly
in the quarter with sales of £718 million, up 70%. Total
Respiratory sales grew 8% driven by the growth of new Respiratory
products which exceeded the decline in Seretide/Advair sales. Vaccine sales
grew 20% to £1.6 billion, benefiting from strong execution and
substantial market share gains for our flu vaccines in the US as
well as continued development of our Meningitis franchise,
particularly through improved supply and share gains for
Bexsero. Consumer
Healthcare sales grew 5% to £1.9 billion, with particular
contributions from key power brands, including Sensodyne and Voltaren.
Core
earnings per share for the quarter was up 12% CER to 32.0p and up
12% CER to 76.3p for the year to date. GSK continues to expect to
deliver 2016 core EPS percentage growth of 11-12% CER.
Total
earnings per share was 16.6p, down 1% CER, primarily reflecting
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 Consumer
Healthcare and HIV businesses, partly offset by improved core
performance and reduced restructuring costs.
The
Group declared a dividend of 19p for the quarter. The Board
continues to expect to pay a full year dividend for the Group of
80p for 2016 and 2017.
|
|
Group strategy
and
outlook
|
|
|
|
GSK has
created a Group of three world-leading businesses in
Pharmaceuticals, Vaccines and Consumer Healthcare, which aims 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. Revenues are
split across Pharmaceuticals 58%, Consumer Healthcare 26% and
Vaccines 16% on a 2015 pro-forma basis. 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 30 to 33 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.
|
|
Reporting the Group’s performance
|
|
|
|
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 53 to 56.
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. 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.
|
|
Contents
|
Page
|
|
|
|
|
Group
performance
|
5
|
|
Segmental
performance
|
22
|
|
Research
and development
|
30
|
|
Definitions
|
34
|
|
Outlook
assumptions and cautionary statements
|
35
|
|
Contacts
|
36
|
|
|
|
|
Income
statements
|
37
|
|
Statement
of comprehensive income – three months ended 30 September
2016
|
38
|
|
Statement
of comprehensive income – nine months ended 30 September
2016
|
39
|
|
Pharmaceuticals
turnover – three months ended 30 September 2016
|
40
|
|
Vaccines
turnover – three months ended 30 September 2016
|
40
|
|
Pharmaceuticals
and Vaccines turnover – nine months ended 30 September
2016
|
41
|
|
Vaccines
turnover – nine months ended 30 September 2016
|
41
|
|
Balance
sheet
|
42
|
|
Statement
of changes in equity
|
43
|
|
Cash
flow statement – nine months ended 30 September
2016
|
44
|
|
Segment
information
|
45
|
|
Legal
matters
|
47
|
|
Taxation
|
47
|
|
Additional
information
|
48
|
|
Reconciliation
of cash flow to movements in net debt
|
51
|
|
Net
debt analysis
|
51
|
|
Free
cash flow reconciliation
|
51
|
|
Non-controlling
interests in ViiV Healthcare
|
52
|
|
Core
results reconciliations
|
53
|
|
Independent
review report
|
57
|
|
The
Novartis transaction completed on 2 March 2015 and so the
Group’s reported year-to-date results include nine months of
sales of the Vaccines and Consumer Healthcare products acquired
from Novartis and exclude the former GSK Oncology business. The
2015 reported year-to-date 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
seven months from that date.
Accordingly,
for the nine months ended September 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 nine months ended
September 2016 with the turnover and core operating profit for the
nine months ended September 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 45, including in particular, now reporting the
results of the Pharmaceuticals operating segment as incorporating
HIV.
|
|
Group turnover by business and geographic region
|
|
|
Q3 2016
|
|
9 months 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Reported
growth
CER%
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,061
|
|
6
|
|
11,529
|
|
2
|
|
4
|
|
Vaccines
|
1,613
|
|
20
|
|
3,455
|
|
18
|
|
16
|
|
Consumer
Healthcare
|
1,868
|
|
5
|
|
5,319
|
|
12
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,542
|
|
8
|
|
20,303
|
|
7
|
|
6
|
|
Corporate
and other unallocated turnover
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
turnover
|
7,542
|
|
8
|
|
20,303
|
|
7
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2016
|
|
9 months 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Reported
growth
CER%
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
2,858
|
|
13
|
|
7,296
|
|
11
|
|
11
|
|
Europe
|
1,952
|
|
6
|
|
5,541
|
|
8
|
|
6
|
|
International
|
2,732
|
|
3
|
|
7,466
|
|
3
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
turnover
|
7,542
|
|
8
|
|
20,303
|
|
7
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover – Q3 2016
|
|
Group
turnover for Q3 2016 increased 23% in Sterling terms and 8% CER to
£7,542 million, with Pharmaceuticals up 6%, Vaccines up 20%
and Consumer Healthcare up 5%. Sales of New Pharmaceutical and
Vaccine products, as described on page 29, were £1,212 million
in the quarter, an increase of 79%.
Pharmaceuticals
Pharmaceuticals
turnover was £4,061 million, up 6%, with HIV sales growing 32%
in the quarter. Total Respiratory sales grew 8% with 14% growth in
the US and 11% growth in International, but Europe down 9%, as the
Respiratory portfolio continues to transition to newer products.
Sales of New Pharmaceutical products increased 89% to £1,016
million, a Sterling increase of £547 million, which more than
offset the decline in Seretide/Advair sales in the quarter of
7%. Sales of Established products declined 3%, primarily reflecting
a decline in International, including the loss of exclusivity for
Valtrex in Canada, partly
offset by improved supply, the phasing of tenders and the benefit
of wholesaler stocking in a number of markets, particularly China,
ahead of systems upgrade projects. The overall impact of pricing to
net sales of Pharmaceuticals was around -2%.
US
Pharmaceuticals turnover of £1,146 million grew 3% in the
quarter, primarily driven by the Respiratory portfolio, which was
up 14% to £806 million. Sales of new Respiratory products more
than doubled to £163 million, with the growth exceeding the
decline in Advair.
Advair sales declined 2% to
£447 million representing a 7% volume decline and a 5%
positive impact of price, including the benefit of favourable payer
rebate adjustments related to prior quarters. On an underlying
basis, Advair’s sales
performance in the quarter was more consistent with the first six
months of 2016. Ventolin
sales were up 4% to £93 million with strong volume growth
partly offset by the impact of pricing pressures and negative
adjustments to payer rebates in prior quarters. Flovent sales declined 4% to £99
million, reflecting pricing pressures in the ICS market. The net
impact of adjustments to prior quarters for payer rebates across
the Respiratory portfolio was broadly neutral to reported US
Respiratory sales. Growth from the Respiratory portfolio was partly
offset by the impact of generic competition to Avodart, down 84% to £10 million.
Benlysta sales increased 8%
to £66 million, despite adverse stocking patterns in the
quarter. The overall impact of pricing to net sales in the US was
neutral.
In
Europe, Pharmaceuticals turnover declined 2% to £711 million.
Respiratory sales declined 9% to £328 million reflecting the
ongoing transition to the new Respiratory portfolio and generic
competition to Seretide
which declined 24% (11% volume decline and a 13% negative impact of
price) to £195 million. This was partly offset by sales of the
new Respiratory products of £58 million in the quarter.
Established Products sales were down 1% to £129
million.
International
Pharmaceuticals sales of £1,264 million were down 2%. Sales in
Emerging Markets grew 4%, including an improved performance from
the China business, up 24%, that reflected particularly the benefit
of wholesaler stocking ahead of a systems upgrade but also the
recent restructuring and refocusing of the China business.
Excluding the benefit of wholesaler stocking, sales in China grew
around 4%. Emerging Markets growth was adversely impacted by
approximately four percentage points due to recent divestments and
the limitation of trading in Venezuela. Excluding the impact of the
China stocking benefit, the recent divestments and Venezuela,
Emerging Markets Pharmaceutical sales grew around 5%. In Emerging
Markets, excluding China, Respiratory grew 13% as a result of new
product launches and strong performances by Seretide, Avamys and Ventolin. In Japan, Pharmaceutical
sales were down 7% to £340 million, primarily reflecting
recent mandatory price revisions. Respiratory sales in Japan were
flat, with growth in new Respiratory products, Relvar Ellipta and Nucala, offsetting the decline in
Adoair sales.
Worldwide
HIV sales increased 32% to £940 million, with the US up 37%,
Europe up 28% and International up 11%. The growth in all three
regions was driven primarily by continued strong performances from
both Triumeq and
Tivicay, with sales of
£468 million and £250 million, respectively, in the
quarter. Epzicom/Kivexa
sales declined 30% to £143 million, reflecting the start of
generic competition.
Vaccines
Vaccines
sales grew 20% to £1,613 million with the US up 23%, Europe up
10% and International up 25%. Growth benefited from increased
demand for Fluarix/Flulaval, primarily in the US, and
Bexsero in both the US
and Europe. Further growth was driven
by Boostrix across all regions, as well as Synflorix in International boosted by the phasing of a
number of tenders. Vaccines growth was partly offset by
lower Menveo sales due to CDC stockpile movements in the
US.
In the
US, sales grew 23% to £725 million. Growth was driven by
improved supply and higher demand for Fluarix/Flulaval. Performance also benefited
from market growth and share gains for Bexsero and Boostrix, as well as higher Hepatitis A
vaccines sales. Menveo
market share growth was more than offset by adverse CDC stockpile
movements. Reported growth was also impacted by an unfavourable
comparison with the benefit to Q3 2015 from CDC stockpile movements
of Rotarix.
In
Europe, sales grew 10% to £389 million. Growth was driven
primarily by private market sales of Bexsero in several countries. Sales
growth was also helped by strong demand for Hepatitis A vaccines
and the benefit to Boostrix
of competitor supply issues. Infanrix/Pediarix sales were impacted by
increasing competition, slowing growth in the quarter.
In
International, sales grew 25% to £499 million. Growth
benefited from increased sales of Synflorix due to market expansion in
Nigeria and the timing of tender deliveries in Pakistan.
Rotarix sales growth was
driven particularly by higher demand in Latin America. Growth also
benefited from the timing of Boostrix orders and higher demand for
Bexsero and Menjugate in Brazil. Growth in the
region was partly offset by lower sales of Infanrix/Pediarix due to supply
constraints.
|
|
Consumer Healthcare
Consumer Healthcare sales were up 5% to £1,868 million, with
the US up 2%, Europe up 5%, and International up 5%. Growth was
primarily driven by strong performances in all regions across the
Oral health and Wellness power brands, with Sensodyne, Voltaren
and Otrivin reporting particularly strong
results.
US sales increased 2% to £425 million, reflecting good
performances within Wellness and continuing growth from
Sensodyne, but overall growth in the US was slower than in
previous quarters with Poligrip, Theraflu and Excedrin sales performances all reflecting challenging
comparisons with Q3 2015. Within Wellness, Flonase OTC
had another good quarter, with growth
provided by line extensions outweighing the impact of increasing
competition. Sensodyne growth slowed compared to the previous quarters in
this year which had benefited from the launch of the
True White
variant. Tums returned to growth, benefiting from supply
improvements.
Sales in Europe grew 5% to £578 million. Growth in the quarter
was driven primarily by the Oral health and Wellness categories.
Power brands grew in high single-digits overall, with strong
performances delivered by Sensodyne, Voltaren
and the Gum health portfolio. On a
geographical basis the UK, Italy and France grew particularly
strongly, offsetting continued challenging economic conditions in
CIS.
International
sales of £865 million grew 5%, driven primarily by
double-digit growth within Oral health. This reflected strong
performances from Sensodyne, Gum health and Denture care.
Wellness also grew strongly, driven particularly by power brands,
especially Voltaren,
Otrivin and Theraflu. Performance continued to
improve significantly in China as both Sensodyne and Voltaren grew market share with
improved distribution. The Middle East and Asia also recorded
strong performances. Overall growth for the International region
was impacted by lower growth in India, reflecting the slowing of
the health food drink category in the face of increased competition
and wider nutritional choices for consumers.
|
|
Turnover – 9 months 2016
|
|
On a
reported basis, Group turnover for the nine months increased 15% in
Sterling terms and 7% CER to £20,303 million, with
Pharmaceuticals up 2%, Vaccines up 18% and Consumer Healthcare up
12%, 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 6%, with Pharmaceuticals up
4%, Vaccines up 16% and Consumer Healthcare up 5%. Sales of New
Pharmaceutical and Vaccine products, as described on page 29, were
£3,083 million in the nine months, a Sterling increase of
£1,777 million.
Pharmaceuticals
Pharmaceuticals
turnover was £11,529 million, up 2% reported, but adjusting
for the disposal of the Oncology business to Novartis, up 4%
pro-forma. HIV sales grew 43% in the period. The Respiratory
portfolio returned to growth with sales up 2%, continuing the
transition globally to newer products. Respiratory sales grew 8% in
the US and 4% in International, but declined 11% in Europe. Sales
of New Pharmaceutical products were £2,639 million, a Sterling
increase of £1,546 million, which more than offset the
Sterling decline in Seretide/Advair sales of £142
million. Sales of Established products declined 9%, reflecting
declines in all regions, including 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 £3,259 million declined 3% in the
nine months on a reported basis and was flat on a pro-forma basis.
The pro-forma performance reflected the impact of generic
competition to Avodart,
down 67% to £63 million, and Lovaza, down 55% to £35 million.
Relenza sales were also
down 98% to £1 million following a reallocation of government
funding. Sales of new Respiratory products totalled £420
million and the growth of these products exceeded the decline in
Advair. Advair sales declined 9% to £1,273
million representing a 4% volume decline and a 5% negative impact
of price. Payer rebate adjustments related to prior periods
favourably impacted sales in the nine months. Ventolin sales were up 8% to £280
million driven by strong volume growth, while Flovent sales declined 13% to £263
million. Both products were impacted by pricing pressures and
negative adjustments to payer rebates related to prior periods. The
net impact of adjustments to prior quarters for payer rebates
across the Respiratory portfolio was broadly neutral to reported US
sales in the nine months. Benlysta sales increased 19% to
£196 million. The overall impact of pricing to net sales in
the US was around -2%.
In
Europe, Pharmaceuticals turnover declined 8% to £2,112 million
on a reported basis and 5% on a pro-forma basis. Respiratory sales
declined 11% to £1,023 million reflecting the ongoing
transition to the new Respiratory portfolio and generic competition
to Seretide which declined
24% (16% volume decline and a 8% negative impact of price) to
£634 million. This was partly offset by growth in the new
Respiratory products, which recorded sales of £153 million.
Established Products sales were down 4% to £377
million.
International
Pharmaceuticals sales of £3,624 million were down 5% on a
reported basis and 3% on a pro-forma basis, including the benefit
of an accelerated sale of inventory to Novartis of £33 million
following a restructuring of certain supply agreements. Sales in
Emerging Markets declined 3% and 2% on a pro-forma basis, impacted
by the decline in the China business, down 8% primarily as a result
of the ongoing reshaping programme and broader Healthcare reforms
including price reductions, as well as the recent divestments in
the region and the limitation of trading in Venezuela. In Japan,
Pharmaceutical sales were down 7% on a reported basis and 6%
pro-forma to £1,002 million, impacted by biennial price
revisions as well as supply interruptions to Avodart. Respiratory sales in Japan
grew 3% with strong growth of Relvar Ellipta, up 47% to £64
million, more than offsetting a decline in Adoair sales.
Worldwide
HIV sales increased 43% to £2,534 million, with the US up 52%,
Europe up 35% and International up 21%. The growth in all three
regions was driven primarily by strong performances from both
Triumeq and Tivicay, with sales of £1,205
million and £663 million, respectively in the nine months.
Epzicom/Kivexa sales
declined 22% to £454 million.
Vaccines
Vaccines
sales grew 18% on a reported basis and 16% pro-forma to £3,455
million. On a reported basis, the US was up 15%, Europe up 21% and
International up 19%. Growth benefited from the strong performance
of Bexsero and higher
demand for Fluarix/Flulaval. Growth was also driven by
increased sales of Synflorix due to market expansion and
tender volume growth in International as well as higher demand for
Boostrix across all
regions. Growth was partly offset by lower sales of Infanrix/Pediarix due to supply constraints in
International and unfavourable CDC stockpile movements for a number
of products in the US.
In the
US, sales grew by 15% on a reported basis and 13% on a pro-forma
basis to £1,245 million. Growth was driven by higher demand
for Fluarix/Flulaval and market and share gains for
Bexsero, Menveo and Boostrix, as well as a favourable
competitive situation for Infanrix/Pediarix during the period. Growth was
partly offset by the impact of unfavourable CDC stockpile movements
on Infanrix/Pediarix, Menveo, Boostrix and Rotarix.
In
Europe, sales grew 21% on a reported basis and 18% on a pro-forma
basis to £1,053 million. Growth was driven primarily by
Bexsero sales in a number
of private markets and in the UK following its inclusion in the NHS
immunisation programme. Boostrix sales grew strongly, driven by
higher demand and improved supply. Infanrix/Pediarix sales were impacted by the
increasing availability of supply from a competitor during the
period.
In
International, sales grew 19% on a reported basis and 17% on a
pro-forma basis to £1,157 million. Growth was driven primarily
by Synflorix due to market
expansion in Nigeria, and the timing of tender sales in Pakistan
and Brazil as well as broader private market demand in Asia.
Further growth was driven by Rotarix and Fluarix/Flulaval sales. Sales also increased
due to strong demand for Bexsero, Menjugate and the Priorix/Priorix-Tetra/Varilrix portfolio, particularly in
Brazil, as well as the timing of Boostrix orders. This growth was partly
offset by lower sales of Infanrix/Pediarix due to supply constraints,
lower Hepatitis vaccines sales in China and lower demand for
Cervarix.
Consumer Healthcare
Consumer Healthcare sales were up 12% on a reported basis to
£5,319 million, with the US up 12%, Europe up 15%, and
International up 10%. 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 12% to £1,294 million on a reported basis and
6% 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 following
line extensions, Excedrin
benefited from the launch of the Gel-tab format, and Tums posted better growth following
improved supply.
Sales in Europe grew 15% to £1,626 million on a reported basis
and 4% pro-forma. Good momentum in Germany 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. Within the Oral health category,
Sensodyne
and the Gum health portfolio recorded
strong growth, which was partly offset by a decline in
Aquafresh.
International
sales of £2,399 million grew 10% on a reported basis and 6%
pro-forma. Growth reflected double-digit growth in Oral health and
Wellness partly offset by lower sales in the Nutrition category.
The Oral health and Wellness category performances were driven by
double-digit sales growth of the power brands, particularly
Sensodyne, Denture care,
Voltaren and Otrivin. Nutrition was impacted by the
effective cessation of trade in Venezuela at the end of 2015,
slower growth in Africa functional beverages but primarily the
slowing health food drink category in India which affected
Horlicks.
|
|
Total results
|
|
The
total results for the Group are set out below.
|
|
|
Q3
2016
£m
|
|
Q3
2015
£m
|
|
Growth
CER%
|
|
9
months
2016
£m
|
|
9
months
2015
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
7,542
|
|
6,127
|
|
8
|
|
20,303
|
|
17,637
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,525)
|
|
(2,204)
|
|
3
|
|
(6,782)
|
|
(6,312)
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
5,017
|
|
3,923
|
|
10
|
|
13,521
|
|
11,325
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(2,292)
|
|
(1,968)
|
|
3
|
|
(6,655)
|
|
(6,734)
|
|
(6)
|
|
Research
and development
|
(922)
|
|
(827)
|
|
1
|
|
(2,625)
|
|
(2,506)
|
|
(1)
|
|
Royalty income
|
107
|
|
99
|
|
|
|
281
|
|
238
|
|
|
|
Other
operating income/(expense)
|
(479)
|
|
(202)
|
|
|
|
(2,519)
|
|
8,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
1,431
|
|
1,025
|
|
5
|
|
2,003
|
|
10,576
|
|
(88)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
16
|
|
19
|
|
|
|
52
|
|
63
|
|
|
|
Finance
expense
|
(179)
|
|
(173)
|
|
|
|
(543)
|
|
(558)
|
|
|
|
(Loss)/profit
on disposal of associates
|
-
|
|
(2)
|
|
|
|
-
|
|
842
|
|
|
|
Share
of after tax profits/(losses)
of
associates and joint ventures
|
6
|
|
(2)
|
|
|
|
4
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
1,274
|
|
867
|
|
6
|
|
1,516
|
|
10,942
|
|
(92)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(389)
|
|
(220)
|
|
|
|
(771)
|
|
(2,142)
|
|
|
|
Tax rate %
|
30.5%
|
|
25.4%
|
|
|
|
50.9%
|
|
19.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
885
|
|
647
|
|
(6)
|
|
745
|
|
8,800
|
|
(98)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
attributable to
non-controlling
interests
|
77
|
|
109
|
|
|
|
90
|
|
24
|
|
|
|
Profit
attributable to
shareholders
|
808
|
|
538
|
|
|
|
655
|
|
8,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
885
|
|
647
|
|
|
|
745
|
|
8,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
16.6p
|
|
11.1p
|
|
(1)
|
|
13.5p
|
|
181.7p
|
|
(99)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core adjustments
The
adjustments that reconcile core operating profit, profit after tax
and earnings per share to total results are as
follows:
|
|
|
Q3 2016
|
|
Q3
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
£m
|
|
Profit
after tax
£m
|
|
Earnings
per share
p
|
|
Operating
profit
£m
|
|
Profit
after
tax
£m
|
|
EPS
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total results
|
1,431
|
|
885
|
|
16.6
|
|
1,025
|
|
647
|
|
11.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
asset amortisation
|
165
|
|
121
|
|
2.5
|
|
139
|
|
109
|
|
2.3
|
|
Intangible
asset impairment
|
(9)
|
|
(6)
|
|
(0.1)
|
|
16
|
|
16
|
|
0.3
|
|
Major
restructuring costs
|
151
|
|
121
|
|
2.4
|
|
237
|
|
197
|
|
4.1
|
|
Legal
costs
|
67
|
|
60
|
|
1.3
|
|
72
|
|
69
|
|
1.4
|
|
Transaction-related
items
|
799
|
|
722
|
|
13.2
|
|
352
|
|
313
|
|
5.8
|
|
Divestments
and other
|
(285)
|
|
(189)
|
|
(3.9)
|
|
(123)
|
|
(97)
|
|
(2.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
888
|
|
829
|
|
15.4
|
|
693
|
|
607
|
|
11.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core results
|
2,319
|
|
1,714
|
|
32.0
|
|
1,718
|
|
1,254
|
|
23.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 months 2016
|
|
9
months 2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
£m
|
|
Profit
after tax
£m
|
|
Earnings
per share
p
|
|
Operating
profit
£m
|
|
Profit
after
tax
£m
|
|
EPS
p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total results
|
2,003
|
|
745
|
|
13.5
|
|
10,576
|
|
8,800
|
|
181.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
asset amortisation
|
444
|
|
341
|
|
7.0
|
|
415
|
|
331
|
|
6.8
|
|
Intangible
asset impairment
|
(9)
|
|
(6)
|
|
(0.1)
|
|
120
|
|
95
|
|
2.0
|
|
Major
restructuring costs
|
573
|
|
461
|
|
9.4
|
|
1,118
|
|
853
|
|
17.7
|
|
Legal
costs
|
115
|
|
105
|
|
2.2
|
|
207
|
|
203
|
|
4.2
|
|
Transaction-related
items
|
3,057
|
|
2,764
|
|
50.0
|
|
1,535
|
|
1,308
|
|
20.8
|
|
Divestments
and other
|
(474)
|
|
(278)
|
|
(5.7)
|
|
(9,599)
|
|
(8,475)
|
|
(175.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,706
|
|
3,387
|
|
62.8
|
|
(6,204)
|
|
(5,685)
|
|
(124.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core results
|
5,709
|
|
4,132
|
|
76.3
|
|
4,372
|
|
3,115
|
|
57.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full
reconciliations between core results and total results are set out
on pages 53 to 56 and
the definition of core results is set out on page 34.
|
|
Core operating profit and margin
|
|
Core operating profit
|
|
|
Q3 2016
|
|
9 months 2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
CER%
|
|
£m
|
|
%
of
turnover
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
7,542
|
|
100
|
|
8
|
|
20,303
|
|
100
|
|
7
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,289)
|
|
(30.4)
|
|
6
|
|
(6,156)
|
|
(30.3)
|
|
7
|
|
5
|
|
Selling,
general and administration
|
(2,165)
|
|
(28.7)
|
|
4
|
|
(6,268)
|
|
(30.9)
|
|
3
|
|
1
|
|
Research
and development
|
(876)
|
|
(11.6)
|
|
8
|
|
(2,451)
|
|
(12.1)
|
|
2
|
|
1
|
|
Royalty
income
|
107
|
|
1.4
|
|
1
|
|
281
|
|
1.4
|
|
13
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
operating profit
|
2,319
|
|
30.7
|
|
13
|
|
5,709
|
|
28.1
|
|
14
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
profit before tax
|
2,165
|
|
|
|
14
|
|
5,231
|
|
|
|
16
|
|
|
|
Core
profit after tax
|
1,714
|
|
|
|
13
|
|
4,132
|
|
|
|
14
|
|
|
|
Core
profit attributable to shareholders
|
1,557
|
|
|
|
13
|
|
3,707
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
earnings per share
|
32.0
|
|
|
|
12
|
|
76.3
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core operating profit by business
|
|
|
Q3 2016
|
|
9 months 2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
CER%
|
|
£m
|
|
%
of
turnover
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
2,001
|
|
49.3
|
|
4
|
|
5,632
|
|
48.9
|
|
4
|
|
7
|
|
Pharmaceuticals
R&D
|
(617)
|
|
|
|
11
|
|
(1,747)
|
|
|
|
3
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
1,384
|
|
34.1
|
|
-
|
|
3,885
|
|
33.7
|
|
4
|
|
7
|
|
Vaccines
|
647
|
|
40.1
|
|
30
|
|
1,170
|
|
33.9
|
|
37
|
|
48
|
|
Consumer
Healthcare
|
301
|
|
16.1
|
|
28
|
|
842
|
|
15.8
|
|
56
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,332
|
|
30.9
|
|
12
|
|
5,897
|
|
29.0
|
|
16
|
|
19
|
|
Corporate
& other unallocated costs
|
(13)
|
|
|
|
(25)
|
|
(188)
|
|
|
|
72
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
operating profit
|
2,319
|
|
30.7
|
|
13
|
|
5,709
|
|
28.1
|
|
14
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core operating profit – Q3 2016
Core
operating profit was £2,319 million, 13% higher in CER terms
than in Q3 2015 on a turnover increase of 8%. The core operating
margin of 30.7% was 2.7 percentage points higher than in Q3 2015
and 1.3 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 30.4%, down 1.2 percentage
points in Sterling terms and down 0.5 percentage points in CER
terms compared with Q3 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 28.7% of turnover, 1.4 percentage points lower than in
Q3 2015 and 1.0 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 £876 million (11.6% of turnover), 20% higher
than Q3 2015 and 8% higher on a CER basis, reflecting increased
investment in the pipeline, including the inclusion of the BMS HIV
acquisitions in Q1 2016, partly offset by continued benefits from
cost reduction programmes in Pharmaceuticals, Consumer Healthcare
and Vaccines R&D.
Royalty
income was £107 million (Q3 2015: £99 million) primarily
reflecting increased royalty income, from Gardasil
sales.
Core operating profit by business – Q3 2016
Pharmaceuticals
operating profit was £1,384 million, flat in CER terms on a
turnover increase of 6%. The operating margin of 34.1% was 1.4
percentage points higher than in Q3 2015. On a CER basis the
operating margin was 1.6 percentage points lower, reflecting 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 the R&D pipeline, partly offset by a more
favourable product mix, primarily driven by the growth in HIV
sales, and the continued cost reduction benefits of the
Pharmaceuticals restructuring programme.
Vaccines
operating profit was £647 million, 30% higher than in Q3 2015
in CER terms on a turnover increase of 20%. The operating margin of
40.1% was 0.8 percentage points higher than in Q3 2015 and 3.1
percentage points higher in CER terms, primarily driven by
favourable product mix in the quarter and enhanced operating
leverage from increased seasonal flu vaccine sales, together with a
reduction as a percentage of sales in cost of sales and R&D
expenses delivered through restructuring and integration benefits.
This was partly offset by an increase in SG&A investments to
support business growth.
Consumer
Healthcare operating profit was £301 million, 28% higher than
in Q3 2015 in CER terms on a turnover increase of 5%. The operating
margin of 16.1% was 2.7 percentage points higher than in Q3 2015
and 3.1 percentage points higher on a CER basis. This primarily
reflected an improvement in gross margin driven by continued mix
benefits from the power brand strategy and pricing as well as
continued strong contributions from integration synergies that
benefited both SG&A and R&D as a percentage of
sales.
|
|
Core operating profit – 9 months 2016
Core
operating profit was £5,709 million, 14% higher in CER terms
than in 2015 on a turnover increase of 7%. The core operating
margin of 28.1% was 3.3 percentage points higher than in 2015 and
1.6 percentage points higher on a CER basis.
On a
pro-forma basis, core operating profit was 18% higher in CER terms
compared with the 9 months to September 2015 on turnover growth of
6%. The core operating margin of 28.1% was 4.4 percentage points
higher than in the 9 months to September 2015 and 2.7 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 30.3%, down 0.6 percentage
points in Sterling terms but 0.2 percentage points higher in CER
terms than in 2015. On a pro-forma basis, the cost of sales
percentage decreased 1.1 percentage points compared with 2015 and
was down 0.3 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 30.9% of turnover, 2.0 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 2.5 percentage
points and 1.7 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
reallocation of investment in promotional product support,
particularly for new launches in Respiratory, HIV, Vaccines and
Consumer Healthcare.
R&D
expenditure was £2,451 million (12.1% of turnover), 9% higher
than in 2015 and 2% higher on a CER basis. On a pro-forma basis,
R&D expenditure increased 1% on a CER basis reflecting
increased investment, particularly in HIV following the BMS
acquisition, partly offset by the benefit from cost reduction
programmes in Pharmaceuticals, Consumer Healthcare and Vaccines
R&D.
Royalty
income was £281 million (9 months to September 2015: £238
million) primarily reflecting increased royalty income from
Gardasil sales as well as the benefit of a prior year catch-up
adjustment.
Core operating profit by business – 9 months
2016
Pharmaceuticals
core operating profit was £3,885 million, 4% higher in CER
terms than in 2015 on a turnover increase of 2%. The operating
margin of 33.7% was 2.7 percentage points higher than in 2015 and
0.5 percentage points higher on a CER basis. On a pro-forma basis,
the operating margin increased 0.8 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 of the
Pharmaceuticals restructuring programme, partly offset by increased
investment in new product support, the continued impact of lower
prices, particularly in Respiratory, and the broader transition of
the Respiratory portfolio.
Vaccines
operating profit was £1,170 million, 37% higher than in 2015
in CER terms on a turnover increase of 18%. The operating profit
margin of 33.9% was 4.1 percentage points higher than in 2015 and
4.7 percentage points higher on a CER basis. On a pro-forma basis,
the operating margin improved by 6.8 percentage points and 7.4
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, 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 £842 million, 56% higher than
in 2015 in CER terms on a turnover increase of 12%. The operating
margin of 15.8% was 4.6 percentage points higher than in 2015 and
4.4 percentage points higher on a CER basis. On a pro-forma basis,
the Consumer Healthcare operating margin was 4.8 percentage points
higher on a CER basis primarily driven by 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 as a percentage of sales both SG&A and
R&D.
Core profit after tax and core earnings per share – Q3
2016
Net
finance expense was £160 million compared with £148
million in Q3 2015, driven by increased net debt, primarily
impacted by exchange rate movements on foreign currency
interest-bearing instruments.
Tax on
core profit amounted to £451 million and represented an
effective core tax rate of 20.8% (Q3 2015: 20.0%). The increase in
the effective rate primarily reflected in particular the
Group’s changing earnings mix to the US, and also adverse
movements following the recent decline in Sterling. See
‘Taxation’ on page 47 for further details.
The
allocation of earnings to non-controlling interests amounted to
£157 million (Q3 2015: £141 million), including the
non-controlling interest allocations of Consumer Healthcare profits
of £73 million (Q3 2015: £57 million) and the allocation
of ViiV Healthcare profits, which increased to £86 million (Q3
2015: £65 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 losses in some
entities arising from exchange.
Core
EPS of 32.0p was up 12% in CER terms compared with a 13% increase
in operating profit, primarily reflecting the greater contribution
to growth from businesses in which there are significant
non-controlling interests as well as the increased tax rate in the
quarter compared with Q3 2015.
Core profit after tax and core earnings per share – 9 months
2016
Net
finance expense was £482 million compared with £482
million in 2015.
Tax on
core profit amounted to £1,099 million and represented an
effective core tax rate of 21.0% (2015: 20.0%). The increase in the
effective rate reflected in particular the Group’s changing
earnings mix to the US, and also adverse movements following the
recent decline in Sterling. See ‘Taxation’ on page 47
for further details.
The
allocation of earnings to non-controlling interests amounted to
£425 million (2015: £331 million), including the
non-controlling interest allocations of Consumer Healthcare profits
of £185 million (2015: £98 million) and the allocation of
ViiV Healthcare profits, which increased to £231 million
(2015: £178 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 higher losses in other entities with
non-controlling interests, primarily as a result of bad debt
provisions and exchange-related losses.
Core
EPS of 76.3p was up 12% in CER terms compared with a 14% increase
in operating profit, primarily reflecting the greater contribution
to growth from businesses in which there are significant
non-controlling interests as well as the increased tax rate in the
quarter compared with 2015.
|
|
Currency impact on Q3 2016 and 9 months 2016 results
The Q3
2016 results are based on average exchange rates for the period,
principally £1/$1.33, £1/€1.17 and £1/Yen 139.
Comparative exchange rates are given on page 48. The period-end
exchange rates were £1/$1.30, £1/€1.16 and
£1/Yen 132.
In the
quarter, turnover increased 8% CER and 23% at actual exchange
rates. Core EPS of 32.0p was up 12% in CER terms and up 39% at
actual rates. The positive currency impact reflected the weakness
of Sterling against the majority of the Group’s trading
currencies relative to Q3 2015. Gains on settled intercompany
transactions compared with Q3 2015 contributed less than one
percentage point of the positive currency impact of 27 percentage
points on core EPS.
In the
9 months to September 2016, turnover increased 7% CER and 15% at
actual exchange rates. Core EPS of 76.3p was up 12% in CER terms
and up 32% 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
two percentage points of the positive currency impact of 20
percentage points on core EPS.
|
|
2016 guidance for core EPS
GSK
continues to expect 2016 core EPS percentage growth to be 11-12% on
a CER basis.
If
exchange rates were to hold at the September period-end closing
rates (£1/$1.30, £1/€1.16 and £1/Yen 132) for
the rest of 2016, the estimated positive impact on full-year 2016
Sterling turnover growth would be around 10% and if exchange losses
were recognised at the same level as in 2015, the estimated
positive impact on full-year 2016 Sterling core EPS growth would be
around 21%.
|
|
Total operating profit and total earnings per share – Q3
2016
Total
operating profit was £1,431 million in Q3 2016 compared with
£1,025 million in Q3 2015. Non-core items in the quarter
resulted in an aggregate net charge of £888 million (Q3 2015:
£693 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 the Shionogi/Pfizer put options and preferential dividends in
ViiV Healthcare. These re-measurements were driven by the unwinding
of the discount applied to these future liabilities as well as
updated trading forecasts and further changes in the exchange rate
assumptions used to update them to the 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 was £165 million compared with £139
million in Q3 2015. There was an intangible asset impairment
reversal of £9 million (Q3 2015: £16 million impairment).
Both are non-cash items.
Major
restructuring and integration charges incurred in the quarter were
£151 million (Q3 2015: £237 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 £198
million (Q3 2015: £365 million) including the settlement of
certain charges accrued in previous quarters.
Legal
charges of £67 million (Q3 2015: £72 million) included
the benefit of the settlement of existing matters as well as
provisions for ongoing litigation. Legal cash payments in the
quarter were £62 million (Q3 2015: £43
million).
Transaction-related
adjustments resulted in a net charge of £799 million (Q3 2015:
£352 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.
|
|
|
Q3 2016
£m
|
|
Q3
2015
£m
|
|
|
|
|
|
|
Consumer
Healthcare Joint Venture put option
|
146
|
|
108
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare Joint
Venture
(including
Shionogi preferential dividends)
|
427
|
|
206
|
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
227
|
|
-
|
|
Other
adjustments
|
(1)
|
|
38
|
|
|
|
|
|
|
Total
transaction-related adjustments
|
799
|
|
352
|
|
|
|
|
|
|
The
aggregate impact of unwinding the discount on these future
potential liabilities was £243 million (Q3 2015: £206
million), including the Consumer Healthcare Joint Venture put
option (£123 million), the contingent consideration on the
former Shionogi-ViiV Healthcare Joint Venture (£91 million)
and the ViiV Healthcare put options and preference dividends
(£19 million). The remaining charge of £556 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 52.
Divestments
and other items included equity investment disposals and dividends,
including the disposal of the remaining Aspen Pharmacare
investment, milestone income on ofatumumab, and a number of other
asset disposals, along with certain other adjusting
items.
A tax
charge of £389 million on total profit represented an
effective tax rate of 30.5% (Q3 2015: 25.4%). 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.
The
total earnings per share was 16.6p, compared with earnings per
share of 11.1p in Q3 2015. On a CER basis, total EPS was down 1%
primarily reflecting increased re-measurement charges driven by
changes in the Sterling valuations of the contingent consideration
and the put options liabilities associated with the Group’s
Consumer Healthcare and HIV businesses, partly offset by improved
core performance and reduced restructuring costs.
|
|
Total operating profit and total earnings per share – 9
months 2016
Total
operating profit was £2,003 million in the 9 months to
September 2016 compared with a total operating profit of
£10,576 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 £3,706 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. The significant
re-measurements were primarily driven by changes in exchange rate
assumptions which have been updated to the rates as at the end of
September 2016.
Intangible
asset amortisation was £444 million, compared with £415
million in 2015. There was an intangible asset impairment reversal
of £9 million (2015: £120 million impairment). Both are
non-cash items.
Major
restructuring and integration charges of £573 million have
been incurred (2015: £1,118 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 £798 million (2015:
£867 million) including the settlement of certain charges
accrued in previous quarters.
Charges
for the combined restructuring and integration programme to date
are £3.3 billion with cash payments of £2.4 billion. The
total cash charges of the combined programme are expected to be
approximately £3.65 billion and the non-cash charges up to
£1.35 billion. The programme delivered incremental cost
savings of £0.9 billion in the 9 months to September 2016 and
has now delivered approximately £2.5 billion of annual savings
on a moving annual total basis. It remains on track to deliver
£3 billion of annual savings in total. The programme is
expected to be largely complete by the end of 2017.
Legal
charges of £115 million (2015: £207 million) included the
benefit of the settlement of existing matters as well as provisions
for ongoing litigation. Legal cash payments in the period were
£166 million (2015: £279 million).
Transaction-related
adjustments resulted in a net charge of £3,057 million (2015:
£1,535 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 value
attributable to the put option and preferential dividends payable
to Pfizer and Shionogi, 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.
|
|
|
9 months
2016
£m
|
|
9
months
2015
£m
|
|
|
|
|
|
|
Consumer
Healthcare Joint Venture put option
|
1,000
|
|
177
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare Joint
Venture
(including
Shionogi preferential dividends)
|
1,489
|
|
1,170
|
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
540
|
|
-
|
|
Other
adjustments
|
28
|
|
188
|
|
|
|
|
|
|
Total
transaction-related adjustments
|
3,057
|
|
1,535
|
|
|
|
|
|
|
The
aggregate impact of unwinding the discount on these future and
potential liabilities was £649 million (2015: £532
million), including the Consumer Healthcare Joint Venture put
option (£340 million), and the contingent consideration on the
former Shionogi-ViiV Healthcare Joint Venture (£238 million),
and the ViiV Healthcare put options and preference dividends
(£36 million) The remaining charge of £2,408 million was
driven by adjustments to trading forecasts and changes in exchange
rate assumptions in the period. An explanation of the accounting
for the non-controlling interests in ViiV Healthcare is set out on
page 52.
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.
A tax
charge of £771 million on total profit represented an
effective tax rate of 50.9% (2015: 19.6%) 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 non-core items.
The
total earnings per share was 13.5p, compared with earnings per
share of 181.7p in 2015. The decrease primarily reflected the
benefit in 2015 of the Novartis transaction that closed in Q1
2015.
|
|
Cash generation and conversion
|
|
Cash flow and net debt
|
|
|
Q3 2016
|
|
9 months
2016
|
|
9
months
2015
|
|
|
|
|
|
|
|
|
Net
cash inflow from operating activities (£m)
|
1,767
|
|
3,506
|
|
1,068
|
|
Adjusted
net cash inflow from operating activities* (£m)
|
1,829
|
|
3,672
|
|
1,347
|
|
Free
cash flow* (£m)
|
1,226
|
|
1,319
|
|
(708)
|
|
Adjusted
free cash flow* (£m)
|
1,288
|
|
1,485
|
|
(429)
|
|
Free
cash flow growth (%)
|
>100%
|
|
>100%
|
|
>(100)%
|
|
Free
cash flow conversion* (%)
|
>100%
|
|
>100%
|
|
(5)%
|
|
Net
debt (£m)**
|
14,663
|
|
14,663
|
|
10,551
|
|
*
|
Adjusted
net cash inflow from operating activities, free cash flow, adjusted
free cash flow and free cash flow conversion are defined on page
34.
|
|
**
|
The
analysis of net debt is presented on page 51.
|
|
Q3 2016
The net
cash inflow from operating activities for the quarter was
£1,767 million (Q3 2015: £481 million). Excluding legal
settlements of £62 million (Q3 2015: £43 million)
adjusted net cash inflow from operating activities was £1,829
million (Q3 2015: £524 million). In addition, there were
payments of restructuring and integration costs of £198
million (Q3 2015: £365 million) and there was an additional
tax payment of £8 million (Q3 2015: £268 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 £2,035
million (Q3 2015: £1,157 million). The increase primarily
reflected the improved operating performance across all segments,
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 £121 million, of which
£104 million was recognised in cash flows from operating
activities and £17 million was recognised in purchases of
businesses within investing cash flows.
Free
cash flow was £1,226 million for the quarter (Q3 2015:
£33 million outflow). Excluding legal payments, adjusted free
cash flow was £1,288 million (Q3 2015: £10 million
inflow) but this is also after making restructuring and integration
payments and the additional tax payment on the sale of the Oncology
business. Excluding these items, which are being funded from
divestment proceeds, the adjusted free cash flow would have been
£1,494 million (Q3 2015: £643 million).
9 months 2016
The net
cash inflow from operating activities for the nine months was
£3,506 million (2015: £1,068 million). Excluding legal
settlements of £166 million (2015: £279 million) adjusted
net cash inflow from operating activities was £3,672 million
(2015: £1,347 million). In addition, there were payments of
restructuring and integration costs of £798 million (2015:
£867 million) and a further tax payment of £125 million
(2015: £779 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 £4,595 million (2015: £2,993 million).
The increase primarily reflected the improved operating performance
across all segments, 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 nine months were £280 million, of which
£233 million was recognised in cash flows from operating
activities and £47 million was recognised in purchases of
businesses within investing cash flows.
Free
cash flow was £1,319 million for the nine months (2015:
£708 million outflow). Excluding legal payments, adjusted free
cash flow was £1,485 million (2015: £429 million outflow)
but this is also after making restructuring and integration
payments, an 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 £2,629
million (2015: £1,217 million).
Net debt
At 30
September 2016, net debt was £14.7 billion, compared with
£10.7 billion at 31 December 2015, comprising gross debt of
£19.4 billion and cash and liquid investments of £4.7
billion. The increase in net debt primarily reflects dividends paid
to shareholders of £3.9 billion, as well as a £1.4
billion adverse exchange impact from the translation of the
non-Sterling denominated debt, partly offset by free cash flow of
£1.3 billion.
At 30
September 2016, GSK had short-term borrowings (including
overdrafts) repayable within 12 months of £3,961 million with
loans of £3,191 million repayable in the subsequent
year.
|
|
Working capital
|
|
|
30
September
2016
|
|
30
June
2016
|
|
31
March
2016
|
|
31
December
2015
|
|
30
September
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital conversion cycle* (days)
|
216
|
|
217
|
|
209
|
|
191
|
|
216
|
|
Working
capital percentage of turnover (%)
|
27
|
|
26
|
|
25
|
|
23
|
|
27
|
|
*
|
Working
capital conversion cycle is defined on page 34.
|
|
Working
capital has increased by £670 million in Q3 primarily due to
an increase in receivables due to a seasonal increase in sales. The
reduction of one day in Q3 2016 was predominantly due to a one day
decrease in the cycle from exchange rates particularly impacting
the denominator.
|
|
Returns to shareholders
|
|
GSK
expects to pay an annual ordinary dividend of 80p for each of the
next two years (2016-2017).
In
April 2016, GSK also 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 third interim dividend of 19 pence per share
(Q3 2015: 19 pence per share).
Payment of dividends
The
equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 10 January 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 3 November 2016 (2 November 2016 for ADR
holders), with a record date of 4 November 2016 and a payment date
of 12 January 2017.
|
|
|
Paid/
payable
|
|
Pence
per
share
|
|
£m
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
First
interim
|
14 July
2016
|
|
19
|
|
923
|
|
Second
interim
|
13
October 2016
|
|
19
|
|
924
|
|
Third
interim
|
12
January 2017
|
|
19
|
|
924
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
The
fourth interim dividend for 2016 will be declared on 8 February
2017. 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. The equivalent interim dividend
receivable by ADR holders will be calculated based on the exchange
rate on 11 April 2017.
GSK
made no share repurchases during the quarter. The company issued
3.4 million shares under employee share schemes amounting to
£48 million (Q3 2015: £4 million).
The
weighted average number of shares for Q3 2016 was 4,865 million,
compared with 4,835 million in Q3 2015.
|
|
Segmental performance
|
|
Pharmaceuticals
|
|
|
Q3 2016
|
|
9 months 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
1,708
|
|
13
|
|
4,757
|
|
9
|
|
12
|
|
Europe
|
984
|
|
5
|
|
2,862
|
|
-
|
|
3
|
|
International
|
1,369
|
|
(1)
|
|
3,910
|
|
(3)
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4,061
|
|
6
|
|
11,529
|
|
2
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2016
|
|
9 months 2016
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
1,589
|
|
8
|
|
4,592
|
|
2
|
|
Cardiovascular,
metabolic and urology
|
206
|
|
(22)
|
|
626
|
|
(16)
|
|
Immuno-inflammation
|
85
|
|
4
|
|
228
|
|
11
|
|
Other
pharmaceuticals
|
564
|
|
(7)
|
|
1,661
|
|
(14)
|
|
Established
products
|
677
|
|
(3)
|
|
1,888
|
|
(9)
|
|
HIV
|
940
|
|
32
|
|
2,534
|
|
43
|
|
|
|
|
|
|
|
|
|
|
Total
|
4,061
|
|
6
|
|
11,529
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Respiratory
Q3 2016 (£1,589 million; up 8%)
Respiratory
sales in the quarter were up 8% at £1,589 million, reflecting
growth in the new Respiratory products, which recorded combined
sales of £269 million in the quarter, including Relvar/Breo Ellipta sales of £156
million, more than offsetting the 7% decline in Seretide/Advair. Flixotide/Flovent sales decreased 5% to
£158 million and Ventolin sales grew 5% to £182
million.
In the
US, Respiratory sales increased 14% to £806 million in the
quarter (15% volume growth and a 1% negative impact of price).
Growth of new Respiratory products in the quarter more than offset
the 2% decline in Advair
(7% volume decline and a 5% positive impact of price). Payer rebate
adjustments related to prior quarters favourably impacted sales of
Advair, with Advair’s underlying sales
performance in the quarter more consistent with the first half of
2016. The new Ellipta
products recorded combined sales of £142 million in the
quarter including Breo
Ellipta sales of £85 million, with Nucala, the newly launched treatment
for severe asthma, reporting sales of £21 million. Established
Respiratory assets included Ventolin, with sales up 4% to £93
million, and Flovent, which
declined 4% to £99 million. Ventolin sales reflected strong volume
growth largely offset by the impact of pricing pressures and
negative adjustments to payer rebates related to prior quarters.
Flovent sales also
continued to be impacted by ongoing pricing pressures in the ICS
market. The net impact of adjustments to prior quarters for payer
rebates across the Respiratory portfolio was broadly neutral to
reported US sales.
European
Respiratory sales were down 9% to £328 million, with
Seretide sales down 24% to
£195 million (11% volume decline and a 13% 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 £58 million in the quarter,
including Relvar Ellipta
sales of £35 million.
Respiratory
sales in the International region were up 11% to £455 million,
with Emerging Markets up 19% and Japan in line with last year,
while sales in Canada declined 1%. In Emerging Markets, sales of
Seretide were up 16% at
£130 million, including China up 48%, reflecting the benefit
of wholesaler stocking ahead of a systems upgrade but also the
recent restructuring and refocusing of the China business.
Excluding China, Emerging Markets Respiratory sales grew 13%,
including Ventolin up 8% to
£48 million. In Japan, Relvar
Ellipta sales grew 29% to £24 million.
9 months 2016 (£4,592 million; up 2%)
Respiratory
sales in the nine months were up 2% at £4,592 million,
reflecting the continuing transition of the Respiratory portfolio
to newer products. Growth in the new Respiratory products, which
recorded combined sales of £688 million, including
Relvar/Breo Ellipta sales
of £413 million, more than offset the decline in Seretide/Advair. Flixotide/Flovent sales decreased 10%
to £447 million and Ventolin sales grew 7% to £540
million.
In the
US, Respiratory sales increased 8% to £2,253 million in the
nine months (16% volume growth and a 8% negative impact of price).
Growth of new Respiratory products more than offset the 9% decline
in Advair (4% volume
decline and a 5% negative impact of price). Payer rebate
adjustments related to prior periods favourably impacted sales in
this period. The new Ellipta products recorded combined
sales of £379 million in the nine months, including
Breo Ellipta sales of
£222 million, with Nucala, the newly launched treatment
for severe asthma, reporting sales of £41 million. Established
Respiratory assets included Ventolin, with sales up 8% to £280
million, and Flovent, which
declined 13% to £263 million, with both products impacted by
pricing pressures and negative adjustments to payer rebates related
to prior periods. Flovent
sales also continued to be impacted by ongoing pricing pressures in
the ICS market. The net impact of adjustments to prior quarters for
payer rebates across the Respiratory portfolio was broadly neutral
to reported US sales.
European
Respiratory sales were down 11% to £1,023 million, with
Seretide sales down 24% to
£634 million (16% volume decline and a 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 £153 million in the nine months,
including Relvar Ellipta
sales of £98 million.
Respiratory
sales in the International region were up 4% to £1,316 million
with Emerging Markets up 7% and Japan up 3%. In Emerging Markets,
sales of Seretide were down
1% at £354 million, while Ventolin grew 10% to £157 million.
In Japan, the growth in sales of Relvar Ellipta of 47% to £64
million more than offset the Adoair decline of 10%.
Cardiovascular, metabolic and urology
Q3 2016 (£206 million; down 22%)
Sales
in the category were down 22% to £206 million. The
Avodart franchise was down
24% to £161 million, primarily due to a 84% decline in the US,
following the launch of generic competition in Q4 2015. Sales of
Eperzan/Tanzeum were
£29 million in the quarter, primarily in the US. Prolia was divested at the end of 2015
and therefore no sales were recorded in Q3 2016, compared with
£11 million in Q3 2015.
9 months 2016 (£626 million; down 16%)
Sales
in the category were down 16% to £626 million. The
Avodart franchise was down
21% to £471 million, primarily due to a 67% decline in the US
following the launch of generic competition in Q4 2015. Sales of
Eperzan/Tanzeum were
£83 million, primarily in the US. Prolia was divested at the end of 2015
and therefore no sales were recorded in 2016, compared with
£31 million in the nine months of 2015.
Immuno-inflammation
Q3 2016 (£85 million; up 4%)
Immuno-inflammation
sales grew 4% to £85 million. Sales of Benlysta were £74 million, up 10%,
with sales in the US of £66 million, up 8%, adversely impacted
by stocking patterns in the quarter.
9 months 2016 (£228 million; up 11%)
Immuno-inflammation
sales grew 11% to £228 million. Sales of Benlysta were £217 million, up 19%
with sales of £196 million, up 19%, in the US.
Other pharmaceuticals
Q3 2016 (£564 million; down 7%)
Sales
in other therapy areas decreased 7% to £564 million.
Dermatology sales declined 10% to £96 million, adversely
affected by supply constraints, while Augmentin sales grew 10% to £144
million. Sales of products for Rare diseases declined 1% to
£108 million, including sales of Volibris, which were up 3% to £45
million.
9 months 2016 (£1,661 million; down 14%)
Sales
in other therapy areas decreased 14% to £1,661 million.
Dermatology sales declined 14% to £280 million, adversely
affected by supply constraints, while Augmentin sales declined 1% to
£417 million. Sales of products for Rare diseases declined 1%
to £306 million, including sales of Volibris, which were up 3% to £127
million.
Established products
Q3 2016 (£677 million; down 3%)
Established
products turnover fell 3% to £677 million, primarily
reflecting a decline in International, including loss of
exclusivity in Canada for Valtrex, partly offset by the phasing
of tenders and phasing benefits ahead of systems upgrades. Sales of
Lovaza in the US were down
42% to £12 million, and sales of Zeffix in International were down 10%
to £30 million.
9 months 2016 (£1,888 million; down 9%)
Established
products turnover fell 9% to £1,888 million with Valtrex sales
down 40% to £87 million. Zeffix sales were down 18% to £91
million and Lovaza sales in
the US fell 55% to £35 million.
|
|
HIV
Q3 2016 (£940 million; up 32%)
HIV
sales increased 32% to £940 million in the quarter, with the
US up 37%, Europe up 28% and International up 11%. 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 £468
million and £250 million, respectively, in the quarter.
Epzicom/Kivexa sales
declined 30% to £143 million due to the start of generic
competition and Selzentry
sales declined 15% to £32 million. There were also continued
declines in the mature portfolio, mainly driven by generic
competition to both Combivir, down 14% to £7 million,
and Lexiva, down 39% to
£12 million.
9 months 2016 (£2,534 million; up 43%)
HIV
sales increased 43% to £2,534 million in the nine months, with
the US up 52%, Europe up 35% and International up 21%. The growth
in all three regions was driven by Triumeq and Tivicay.
Triumeq and Tivicay
sales were £1,205 million and £663 million, respectively.
Epzicom/Kivexa sales
declined 22% to £454 million, and Selzentry sales declined 10% to
£92 million.
|
|
Vaccines
|
|
|
Q3 2016
|
|
9 months 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
725
|
|
23
|
|
1,245
|
|
15
|
|
13
|
|
Europe
|
389
|
|
10
|
|
1,053
|
|
21
|
|
18
|
|
International
|
499
|
|
25
|
|
1,157
|
|
19
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
1,613
|
|
20
|
|
3,455
|
|
18
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2016
|
|
9 months 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
146
|
|
5
|
|
363
|
|
4
|
|
4
|
|
Synflorix
|
154
|
|
23
|
|
382
|
|
43
|
|
43
|
|
Fluarix, FluLaval
|
325
|
|
55
|
|
351
|
|
60
|
|
60
|
|
Bexsero
|
133
|
|
>100
|
|
292
|
|
>100
|
|
>100
|
|
Menveo
|
63
|
|
(31)
|
|
152
|
|
6
|
|
(3)
|
|
Boostrix
|
159
|
|
34
|
|
343
|
|
18
|
|
18
|
|
Infanrix, Pediarix
|
222
|
|
(1)
|
|
550
|
|
(11)
|
|
(11)
|
|
Hepatitis
|
179
|
|
11
|
|
445
|
|
1
|
|
1
|
|
Priorix, Priorix Tetra, Varilrix
|
75
|
|
(2)
|
|
217
|
|
12
|
|
12
|
|
Cervarix
|
24
|
|
(12)
|
|
58
|
|
(21)
|
|
(21)
|
|
Other
|
133
|
|
8
|
|
302
|
|
24
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
1,613
|
|
20
|
|
3,455
|
|
18
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2016 (£1,613 million; up 20%)
Vaccines
sales grew 20% to £1,613 million with the US up 23%, Europe up
10% and International up 25%. Growth benefited from a strong
increase in Fluarix/Flulaval sales, primarily in
the US, as well as increased Bexsero sales in the US and in private market channels in Europe. Growth
was also driven by Boostrix across all regions, as well as tender sales and
market expansion for Synflorix in International. Growth was partly offset by
lower Menveo sales due to CDC stockpile movements in the
US.
In the
US, sales grew 23% to £725 million. Growth was driven by
earlier supply and higher demand for Fluarix/Flulaval. Growth also benefited
from market and share gains for Bexsero and Boostrix, as well as higher Hepatitis A
vaccines sales. Menveo
market share growth was more than offset by adverse CDC stockpile
movements. Growth was also impacted by an unfavourable comparison
with the benefit to Q3 2015 from CDC stockpile movements of
Rotarix.
In
Europe, sales grew 10% to £389 million. Growth was driven
primarily by Bexsero sales
in private market channels in several countries including Spain and
Italy. Sales growth was also helped by strong demand for Hepatitis
A vaccines and the benefit to Boostrix of competitor supply issues.
Infanrix/Pediarix sales were impacted by
increasing competitor supply in Germany, Italy and
Belgium.
In
International, sales grew 25% to £499 million. Growth
benefited from sales of Synflorix due to market expansion in
Nigeria, tender phasing in Pakistan and higher sales in Columbia.
Rotarix sales growth
benefited from higher demand in Latin America. Growth was also
driven by the timing of Boostrix orders and higher demand for
Bexsero and Menjugate in Brazil. Growth in the
region was partly offset by lower sales of Infanrix/Pediarix in a number of
markets due to supply constraints.
|
|
9 months 2016 (£3,455 million; up 18%)
Vaccines
sales grew 18% on a reported basis and 16% pro-forma to £3,455
million. On a reported basis, the US was up 15%, Europe up 21% and
International up 19%. Growth benefited from the strong performance
of Bexsero across all
regions and higher demand for Fluarix/Flulaval in the US and
International. Further growth was driven by Synflorix due to the timing of tenders
and market expansion in International and higher demand for
Boostrix across all
regions. 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 15% on a reported basis and 13% on a pro-forma
basis to £1,245 million. Growth was driven by improved supply
and higher demand for Fluarix/Flulaval, market and share
growth for Bexsero,
Menveo and Boostrix and competitor supply issues
that benefited Infanrix/Pediarix. Growth was partly
offset by adverse stockpile movements on Infanrix/Pediarix and Menveo, and an unfavourable comparison
with the benefit to 2015 from CDC stockpile movements on
Infanrix/Pediarix,
Boostrix and Rotarix.
In
Europe, sales grew 21% on a reported basis and 18% on a pro-forma
basis to £1,053 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 competitor supply issues. Sales increased in
Germany, driven by better supply of Hepatitis vaccines and higher
demand for Encepur and
Rabipur. Favourable phasing
of Infanrix/Pediarix sales
was offset by a competitor’s return to the market during the
period.
In
International, sales grew 19% on a reported basis and 17% on a
pro-forma basis to £1,157 million. Growth was driven primarily
by Synflorix due to market
expansion in Nigeria, tender phasing in Pakistan and Brazil, and
broader private market demand in Asia. The growth in Rotarix sales was driven by higher
demand in Brazil and Japan. Fluarix/Flulaval sales grew due to
higher uptake in Australia and improved supply in Korea. Further
growth in the region was driven by Brazil due to strong demand for
Bexsero, Menjugate and Priorix/Priorix-Tetra/Varilrix
portfolio as well as the timing of Boostrix orders. Growth in the region
was partly offset by lower sales of Infanrix/Pediarix due to supply
constraints, lower Hepatitis vaccines sales due to wholesaler
destocking in China following new private market distribution
regulations, and lower demand for Cervarix.
|
|
Consumer Healthcare
|
|
Turnover
|
Q3 2016
|
|
9 months 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
425
|
|
2
|
|
1,294
|
|
12
|
|
6
|
|
Europe
|
578
|
|
5
|
|
1,626
|
|
15
|
|
4
|
|
International
|
865
|
|
5
|
|
2,399
|
|
10
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
1,868
|
|
5
|
|
5,319
|
|
12
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
Q3 2016
|
|
9 months 2016
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellness
|
964
|
|
5
|
|
2,734
|
|
20
|
|
7
|
|
Oral
health
|
570
|
|
8
|
|
1,629
|
|
8
|
|
8
|
|
Nutrition
|
187
|
|
(1)
|
|
524
|
|
(3)
|
|
(4)
|
|
Skin
health
|
147
|
|
(2)
|
|
432
|
|
4
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
1,868
|
|
5
|
|
5,319
|
|
12
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2016 (£1,868 million; up 5%)
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 included the trading
performance of the Nigeria beverages business until its sale on 30
September 2016.
Sales
grew 5% to £1,868 million with 2% price and 3% volume growth,
driven primarily by the power brands and most significantly,
Sensodyne, Voltaren and
Otrivin. 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 Dolex (Panadol) Extra with Optizorb in
Colombia and Theraflu Warming
Caplets in the US.
US sales increased 2% to £425 million, reflecting good
performances within Wellness and continuing growth from
Sensodyne, but overall growth in the US was slower than in
previous quarters with Poligrip, Theraflu and Excedrin sales reflecting a challenging comparator in Q3
2015, which benefited from re-supply and new product launches.
Within Wellness, Flonase OTC
had another good quarter, with growth
provided by line extensions outweighing the introduction of branded
competition and the increasing impact of private label
competition. Sensodyne growth slowed compared to the previous quarter,
which benefited from the recently launched True White variant. Tums returned to growth, benefiting from supply
improvements.
Sales
in Europe grew 5% to £578 million. Growth in the quarter was
driven by the Oral health and Wellness categories. Oral health
contributed more than half of the region’s growth with strong
performances across the region. Voltaren grew in double-digits,
benefiting from continued strong performances from the 12-hour variant, media campaigns and
distribution gains. Italy performed particularly well, with
broad-based growth across the categories benefiting from improved
visibility at the point of purchase and media support. These strong
performances were partly offset by the continuing economic downturn
in CIS.
International
sales of £865 million grew 5%, with a double-digit performance
delivered in Oral health and good momentum within Wellness. The
Oral health performance was driven by Sensodyne as a result of the continued
global roll out of the True
White variant as well as continued condition awareness
campaigns and format extensions. Wellness growth was driven by
Voltaren across the region,
with distribution gains and continued momentum from the
12-hour
variant.
On a
geographic basis, China and Middle East performed particularly
well. China benefited from E-commerce channel growth and retail
distribution expansion. The Middle East region posted double-digit
growth driven by key Wellness brands and Otrivin and Voltaren in particular. In India,
Horlicks sales continued to
be impacted by slower growth in the nutrition category, which is
experiencing increasing competition. This was partly offset by a
very strong quarter for Sensodyne following the previous
quarter’s launch of the Whitening variant, and Eno, which benefited from new media
campaigns. The overall growth for the region was also impacted by
the restructuring of activity in Venezuela at the end of 2015 and
the effective cessation of trade, which affected both the Skin
health and Nutrition categories.
|
|
9 months 2016 (£5,319 million; up 12%)
Reported
sales grew 12% to £5,319 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
innovations within the last three years represented approximately
14% of sales, primarily due to the performance of Flonase, which was switched to OTC in Q1
2015. Other notable launches this year included Sensodyne True White and Excedrin Gel-tabs in the
US.
US
sales grew 12% on a reported basis to £1,294 million, 6%
pro-forma. The largest growth driver was Sensodyne which continued to perform
well, growing in double-digits, benefiting from the launch last
year of Repair and Protect
and the launch of True
White in the first quarter of this year, together with distribution
gains for Pronamel. Flonase
OTC continued to contribute, driven by new formats and
despite increased competition from other branded and private label
products. Excedrin grew in
double-digits, fuelled by the Gel-tab launch and new digital
campaigns, and Tums
delivered better growth following supply improvements.
Sales
in Europe grew 15% on a reported basis to £1,626 million and
were up 4% on a pro-forma basis. The Wellness and Oral health
categories were the major drivers of growth. Voltaren continued to deliver
double-digit growth, driven largely by the 12-hour variant. Oral health sales grew
in mid single-digits, with strong growth in Sensodyne and the Gum health portfolio
partly offset by a decline in Aquafresh, due to increased competitive
pressures in Family oral health. At a market level, sales grew well
in Italy, the UK and Germany, partly offset by a double-digit
decline within CIS due to the impact on consumer spending of the
weaker economic environment.
International
sales of £2,399 million grew 10% on a reported basis with
pro-forma growth of 6%. 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 restructuring of activity in Venezuela at the end of 2015 and
the effective cessation of trade, which affected both the Skin
health and Nutrition categories. At a market level, India grew in
low single-digits as Horlicks was impacted by slower
category growth and competition from adjacent categories and
Crocin was subject to price
controls. This was partly offset by double-digit performances from
Sensodyne and Eno, driven by new product launches
and accompanying promotional investment. China delivered
double-digit sales growth with good performances across the
portfolio and with Sensodyne and Voltaren in particular benefiting from
E-commerce and retail distribution expansion. Double-digit
performances were also delivered in Brazil, as a result of price
increases within Wellness and new product launches within Oral
health, and in Russia, driven by price increases and momentum of
Theraflu and Voltaren.
|
|
New Pharmaceutical and Vaccine products
|
|
Turnover
|
Q3 2016
|
|
9 months 2016
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
|
|
|
|
|
|
|
|
Relvar/Breo Ellipta
|
156
|
|
>100
|
|
413
|
|
>100
|
|
Anoro Ellipta
|
53
|
|
>100
|
|
132
|
|
>100
|
|
Arnuity Ellipta
|
3
|
|
>100
|
|
9
|
|
>100
|
|
Incruse Ellipta
|
26
|
|
>100
|
|
76
|
|
>100
|
|
Nucala
|
31
|
|
>100
|
|
58
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
CVMU
|
|
|
|
|
|
|
|
|
Eperzan/Tanzeum
|
29
|
|
>100
|
|
83
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
HIV
|
|
|
|
|
|
|
|
|
Tivicay
|
250
|
|
39
|
|
663
|
|
46
|
|
Triumeq
|
468
|
|
94
|
|
1,205
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
1,016
|
|
89
|
|
2,639
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
Vaccines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bexsero
|
133
|
|
>100
|
|
292
|
|
>100
|
|
Menveo
|
63
|
|
(31)
|
|
152
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
196
|
|
43
|
|
444
|
|
94
|
|
|
|
|
|
|
|
|
|
|
Total
|
1,212
|
|
79
|
|
3,083
|
|
>100
|
|
|
|
|
|
|
|
|
|
|
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).
Q3 2016
Sales of New Pharmaceutical and Vaccine products were £1,212 million, grew £621 million in Sterling terms and represented
approximately 21% of
Pharmaceuticals and Vaccines turnover in the
quarter.
9 months 2016
Sales of New Pharmaceutical and Vaccine products were £3,083 million, grew £1,777 million in Sterling terms and represented
approximately 21% of
Pharmaceuticals and Vaccines turnover in the nine
months.
|
|
Research and development
|
|
GSK
remains focused on delivering an improved return on its investment
in R&D. Sales contribution, reduced attrition and cost
reduction are all important drivers of an improving internal rate
of return. R&D expenditure is not determined as a percentage of
sales but instead capital is allocated using strict returns-based
criteria depending on the pipeline opportunities
available.
The
operations of Pharmaceuticals R&D are broadly split into
Discovery activities (up to the completion of Phase IIa trials) and
Development work (from Phase IIb onwards) each supported by
specific and common infrastructure and other shared services where
appropriate. R&D expenditure for Q3 2016 is analysed
below.
|
|
|
Q3 2016
£m
|
|
9 months
2016
£m
|
|
9
months
2015
£m
|
|
|
|
|
|
|
|
|
Discovery
|
207
|
|
588
|
|
554
|
|
Development
|
335
|
|
884
|
|
844
|
|
Facilities
and central support functions
|
116
|
|
366
|
|
301
|
|
|
|
|
|
|
|
|
Pharmaceuticals
R&D
|
658
|
|
1,838
|
|
1,699
|
|
Vaccines
|
157
|
|
436
|
|
371
|
|
Consumer
Healthcare
|
61
|
|
177
|
|
180
|
|
|
|
|
|
|
|
|
Core
R&D
|
876
|
|
2,451
|
|
2,250
|
|
Amortisation
and impairment of intangible assets
|
11
|
|
31
|
|
71
|
|
Major
restructuring costs
|
28
|
|
128
|
|
150
|
|
Other
items
|
7
|
|
15
|
|
35
|
|
|
|
|
|
|
|
|
Total
R&D
|
922
|
|
2,625
|
|
2,506
|
|
|
|
|
|
|
|
|
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 Q2 2016:
|
|
|
●
|
Announced
start of the Phase III programme evaluating a two drug regimen of
dolutegravir and lamivudine for treatment of HIV in adults who have
not received prior antiretroviral therapy (16 August);
|
|
●
|
Terminated
development of 3532795 in favour of back-up HIV maturation
inhibitors which may have a better profile;
|
|
●
|
FDA
granted Qualified Infectious Disease Product (QIDP) designation to
gepotidacin, confirming fast-track status and granting up to five
years of additional exclusivity (1 September);
|
|
●
|
Positive
Phase II data received in-house for gepotidacin in treating
gonorrhoea – data to be presented at upcoming scientific
conference.
|
|
|
|
|
Respiratory - including the next generation of respiratory
medicines beyond inhaled treatments
|
|
|
News
since Q2 2016:
|
|
|
●
|
PI3K
inhibitor, 2269557, for treatment of acute COPD exacerbations met
its primary endpoint in a Phase II proof of concept study (28
July);
|
|
●
|
Announced
that positive data from the COPD Salford Lung Study, comparing
Relvar to ‘usual
care’ was published in NEJM and presented at the ERS
conference (4 September);
|
|
●
|
Announced
positive results presented at ERS conference from the Phase III
FULFIL study of Closed Triple (FF/UMEC/VI) versus Symbicort in COPD (6
September);
|
|
●
|
Announced
publication of a meta-analysis
in the ‘Journal of Allergy and Clinical Immunology’
showing a halving in the risk of
hospitalisation or emergency room visits in severe asthma patients
receiving Nucala compared to placebo in addition to standard of
care (7 October);
|
|
●
|
Positive
data received in-house from Nucala MUSCA study in severe asthma
– data to be presented at upcoming scientific
conference.
|
|
|
|
|
Vaccines - including a novel maternal immunisation platform
for vaccines
|
|
|
News
since Q2 2016:
|
|
|
●
|
Announced
publication in NEJM of the Shingrix Phase III ZOE-70 study data
(14 September);
|
|
●
|
Announced
US filing of Shingrix for
prevention of shingles (24 October).
|
|
|
|
|
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 Q2 2016:
|
|
|
●
|
Announced
filing in EU of sirukumab for rheumatoid arthritis (12
September);
|
|
●
|
Phase
II study commenced for 2982772, oral RIP1 kinase inhibitor, in
psoriasis patients (15 September);
|
|
●
|
Announced
filing in US of sirukumab for rheumatoid arthritis (23
September);
|
|
●
|
Announced
filing in EU and US for Benlysta subcutaneous formulation for
systemic lupus disease
(23
September).
|
|
|
|
|
Oncology - leading-edge molecules in the field of
epigenetics and immuno-oncology for the treatment of
cancer
|
|
|
●
|
3174998,
OX40 agonist mAb for cancer, was first dosed in combination with
Merck’s PD-1, Keytruda
(3
August).
|
|
|
|
|
Rare diseases - breakthrough cell and gene therapies for
treatment of rare diseases
|
|
|
|
|
|
Pipeline news flow since Q2 2016 for other assets not profiled at
the Investor event:
|
|
|
●
|
Announced
that ‘real world’ data shows 83% effectiveness for
Bexsero in infants in first
year of UK National Men B immunisation programme and that cases of
Men B halved after 10 months (5 September);
|
|
●
|
Decision
to terminate Iosmapimod development in COPD following analysis of
Phase II results.
|
|
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
|
Ph
III
|
|
Asthma
|
Ph
II
|
|
|
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
|
|
cabotegravir
+ rilpivirine (Integrase inhibitor + NNRTI, both
long-acting
parenteral formulations)
|
HIV
infections
|
Ph
II
|
|
cabotegravir
(long-acting integrase inhibitor)
|
HIV
pre-exposure prophylaxis
|
Ph
II
|
|
gepotidacin
(Type 2 topoisomerase inhibitor)
|
Bacterial
infections
|
Ph
II
|
|
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)
|
Rheumatoid
arthritis and ulcerative colitis
|
Ph
I
|
|
Psoriasis
|
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
I
|
|
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: Ph
III
|
|
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
II
|
|
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
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 11 and 53 to
56, 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 nine months ended September 2016 with the turnover
and operating profit for the nine months ended September 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
nine months ended September 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
free cash flow to net cash inflow from operations is presented on
page 51.
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 2016 guidance and 2016-2020
outlook
In
outlining the expectations for 2016 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 products
launched in the last three years 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.
|
|
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 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 Q3 2016 results
announcement dated 26 October 2016 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:
|
Tom
Curry
|
+1 215
751 5419
|
(Philadelphia)
|
|
|
Gary
Davies
|
+44 (0)
20 8047 5503
|
(London)
|
|
|
James
Dodwell
|
+44 (0)
20 8047 2406
|
(London)
|
|
|
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
|
|
|
Q3 2016
£m
|
|
Q3
2015
£m
|
|
9 months
2016
£m
|
|
9
months
2015
£m
|
|
|
|
|
|
|
|
|
|
|
TURNOVER
|
7,542
|
|
6,127
|
|
20,303
|
|
17,637
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,525)
|
|
(2,204)
|
|
(6,782)
|
|
(6,312)
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
5,017
|
|
3,923
|
|
13,521
|
|
11,325
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(2,292)
|
|
(1,968)
|
|
(6,655)
|
|
(6,734)
|
|
Research
and development
|
(922)
|
|
(827)
|
|
(2,625)
|
|
(2,506)
|
|
Royalty income
|
107
|
|
99
|
|
281
|
|
238
|
|
Other
operating income/(expense)
|
(479)
|
|
(202)
|
|
(2,519)
|
|
8,253
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
1,431
|
|
1,025
|
|
2,003
|
|
10,576
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
16
|
|
19
|
|
52
|
|
63
|
|
Finance
expense
|
(179)
|
|
(173)
|
|
(543)
|
|
(558)
|
|
(Loss)/profit
on disposal of associates
|
-
|
|
(2)
|
|
-
|
|
842
|
|
Share
of after tax profits/(losses) of associates
and
joint ventures
|
6
|
|
(2)
|
|
4
|
|
19
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION
|
1,274
|
|
867
|
|
1,516
|
|
10,942
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(389)
|
|
(220)
|
|
(771)
|
|
(2,142)
|
|
Tax rate %
|
30.5%
|
|
25.4%
|
|
50.9%
|
|
19.6%
|
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAXATION FOR THE PERIOD
|
885
|
|
647
|
|
745
|
|
8,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling interests
|
77
|
|
109
|
|
90
|
|
24
|
|
Profit
attributable to shareholders
|
808
|
|
538
|
|
655
|
|
8,776
|
|
|
|
|
|
|
|
|
|
|
|
885
|
|
647
|
|
745
|
|
8,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
|
16.6p
|
|
11.1p
|
|
13.5p
|
|
181.7p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
16.5p
|
|
11.0p
|
|
13.4p
|
|
180.1p
|
|
|
|
|
|
|
|
|
|
|
Statement of comprehensive income
|
|
|
Q3 2016
£m
|
|
Q3
2015
£m
|
|
|
|
|
|
|
Profit
for the period
|
885
|
|
647
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
71
|
|
(88)
|
|
Fair
value movements on available-for-sale investments
|
84
|
|
(127)
|
|
Reclassification
of fair value movements on available-for-sale
investments
|
(115)
|
|
(68)
|
|
Deferred
tax on fair value movements on available-for-sale
investments
|
(6)
|
|
(38)
|
|
Deferred
tax reversed on reclassification of available-for-sale
investments
|
6
|
|
27
|
|
Fair
value movements on cash flow hedges
|
3
|
|
11
|
|
Deferred
tax on fair value movements on cash flow hedges
|
2
|
|
(2)
|
|
Reclassification
of cash flow hedges to income statement
|
(5)
|
|
(6)
|
|
Share
of other comprehensive expense of associates and joint
ventures
|
(2)
|
|
-
|
|
|
|
|
|
|
|
38
|
|
(291)
|
|
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
124
|
|
5
|
|
Re-measurement
losses on defined benefit plans
|
(463)
|
|
(594)
|
|
Deferred
tax on re-measurement of defined benefit plans
|
71
|
|
146
|
|
|
|
|
|
|
|
(268)
|
|
(443)
|
|
|
|
|
|
|
Other
comprehensive expense for the period
|
(230)
|
|
(734)
|
|
|
|
|
|
|
Total
comprehensive income/(expense) for the period
|
655
|
|
(87)
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income/(expense) for the period attributable
to:
|
|
|
|
|
Shareholders
|
454
|
|
(201)
|
|
Non-controlling
interests
|
201
|
|
114
|
|
|
|
|
|
|
|
655
|
|
(87)
|
|
|
|
|
|
|
Statement of comprehensive income
|
|
|
9 months
2016
£m
|
|
9
months
2015
£m
|
|
|
|
|
|
|
Profit
for the period
|
745
|
|
8,800
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
993
|
|
(489)
|
|
Fair
value movements on available-for-sale investments
|
243
|
|
75
|
|
Reclassification
of fair value movements on available-for-sale
investments
|
(250)
|
|
(340)
|
|
Deferred
tax on fair value movements on available-for-sale
investments
|
9
|
|
(73)
|
|
Deferred
tax reversed on reclassification of available-for-sale
investments
|
50
|
|
30
|
|
Fair
value movements on cash flow hedges
|
12
|
|
(1)
|
|
Reclassification
of cash flow hedges to income statement
|
(11)
|
|
4
|
|
Share
of other comprehensive income/(expense) of associates and joint
ventures
|
-
|
|
(77)
|
|
|
|
|
|
|
|
1,046
|
|
(871)
|
|
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
555
|
|
(1)
|
|
Re-measurement
losses on defined benefit plans
|
(1,219)
|
|
(388)
|
|
Deferred
tax on re-measurement of defined benefit plans
|
255
|
|
76
|
|
|
|
|
|
|
|
(409)
|
|
(313)
|
|
|
|
|
|
|
Other
comprehensive income/(expense) for the period
|
637
|
|
(1,184)
|
|
|
|
|
|
|
Total
comprehensive income for the period
|
1,382
|
|
7,616
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
|
Shareholders
|
737
|
|
7,593
|
|
Non-controlling
interests
|
645
|
|
23
|
|
|
|
|
|
|
|
1,382
|
|
7,616
|
|
|
|
|
|
|
Pharmaceuticals turnover – three months ended 30 September
2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
1,589
|
|
8
|
|
806
|
|
14
|
|
328
|
|
(9)
|
|
455
|
|
11
|
|
Anoro Ellipta
|
53
|
|
>100
|
|
36
|
|
>100
|
|
10
|
|
100
|
|
7
|
|
33
|
|
Arnuity Ellipta
|
3
|
|
>100
|
|
3
|
|
>100
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Avamys/Veramyst
|
64
|
|
20
|
|
6
|
|
-
|
|
16
|
|
17
|
|
42
|
|
24
|
|
Flixotide/Flovent
|
158
|
|
(5)
|
|
99
|
|
(4)
|
|
20
|
|
(5)
|
|
39
|
|
(6)
|
|
Incruse Ellipta
|
26
|
|
>100
|
|
18
|
|
>100
|
|
6
|
|
>100
|
|
2
|
|
>100
|
|
Nucala
|
31
|
|
>100
|
|
21
|
|
-
|
|
7
|
|
>100
|
|
3
|
|
>100
|
|
Relvar/Breo Ellipta
|
156
|
|
>100
|
|
85
|
|
>100
|
|
35
|
|
50
|
|
36
|
|
76
|
|
Seretide/Advair
|
857
|
|
(7)
|
|
447
|
|
(2)
|
|
195
|
|
(24)
|
|
215
|
|
5
|
|
Ventolin
|
182
|
|
5
|
|
93
|
|
4
|
|
30
|
|
4
|
|
59
|
|
8
|
|
Other
|
59
|
|
(4)
|
|
(2)
|
|
-
|
|
9
|
|
(9)
|
|
52
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular, metabolic
and urology (CVMU)
|
206
|
|
(22)
|
|
54
|
|
(47)
|
|
83
|
|
4
|
|
69
|
|
(17)
|
|
Avodart
|
161
|
|
(24)
|
|
10
|
|
(84)
|
|
81
|
|
5
|
|
70
|
|
(7)
|
|
Eperzan/Tanzeum
|
29
|
|
>100
|
|
28
|
|
>100
|
|
1
|
|
-
|
|
-
|
|
-
|
|
Other
|
16
|
|
(58)
|
|
16
|
|
(54)
|
|
1
|
|
-
|
|
(1)
|
|
(67)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-inflammation
|
85
|
|
4
|
|
77
|
|
2
|
|
5
|
|
25
|
|
3
|
|
50
|
|
Benlysta
|
74
|
|
10
|
|
66
|
|
8
|
|
5
|
|
25
|
|
3
|
|
50
|
|
Other
|
11
|
|
(23)
|
|
11
|
|
(23)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other pharmaceuticals
|
564
|
|
(7)
|
|
23
|
|
(50)
|
|
166
|
|
7
|
|
375
|
|
(8)
|
|
Dermatology
|
96
|
|
(10)
|
|
5
|
|
(33)
|
|
36
|
|
(3)
|
|
55
|
|
(11)
|
|
Augmentin
|
144
|
|
10
|
|
-
|
|
-
|
|
41
|
|
(5)
|
|
103
|
|
18
|
|
Other
anti-bacterials
|
39
|
|
(27)
|
|
1
|
|
-
|
|
11
|
|
(10)
|
|
27
|
|
(29)
|
|
Rare
diseases
|
108
|
|
(1)
|
|
12
|
|
(14)
|
|
35
|
|
7
|
|
61
|
|
(2)
|
|
Oncology
|
28
|
|
>100
|
|
-
|
|
-
|
|
-
|
|
-
|
|
28
|
|
>100
|
|
Other
|
149
|
|
(26)
|
|
5
|
|
(75)
|
|
43
|
|
47
|
|
101
|
|
(33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established products
|
677
|
|
(3)
|
|
186
|
|
3
|
|
129
|
|
(1)
|
|
362
|
|
(7)
|
|
Coreg
|
32
|
|
(18)
|
|
32
|
|
(18)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Hepsera
|
18
|
|
23
|
|
-
|
|
-
|
|
-
|
|
-
|
|
18
|
|
23
|
|
Imigran/Imitrex
|
51
|
|
31
|
|
27
|
|
67
|
|
16
|
|
7
|
|
8
|
|
-
|
|
Lamictal
|
157
|
|
4
|
|
78
|
|
5
|
|
29
|
|
-
|
|
50
|
|
5
|
|
Lovaza
|
12
|
|
(42)
|
|
12
|
|
(42)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Requip
|
30
|
|
9
|
|
3
|
|
100
|
|
7
|
|
-
|
|
20
|
|
-
|
|
Serevent
|
25
|
|
5
|
|
13
|
|
22
|
|
8
|
|
-
|
|
4
|
|
(33)
|
|
Seroxat/Paxil
|
57
|
|
14
|
|
7
|
|
-
|
|
10
|
|
(11)
|
|
40
|
|
3
|
|
Valtrex
|
30
|
|
(42)
|
|
3
|
|
(60)
|
|
7
|
|
40
|
|
20
|
|
(52)
|
|
Zeffix
|
32
|
|
(12)
|
|
-
|
|
-
|
|
2
|
|
-
|
|
30
|
|
(10)
|
|
Other
|
233
|
|
(6)
|
|
11
|
|
-
|
|
50
|
|
(7)
|
|
172
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
940
|
|
32
|
|
562
|
|
37
|
|
273
|
|
28
|
|
105
|
|
11
|
|
Combivir
|
7
|
|
(14)
|
|
1
|
|
(50)
|
|
2
|
|
(34)
|
|
4
|
|
37
|
|
Epzicom/Kivexa
|
143
|
|
(30)
|
|
49
|
|
(40)
|
|
64
|
|
(22)
|
|
30
|
|
(24)
|
|
Lexiva/Telzir
|
12
|
|
(39)
|
|
7
|
|
(41)
|
|
2
|
|
(43)
|
|
3
|
|
(31)
|
|
Selzentry
|
32
|
|
(15)
|
|
17
|
|
-
|
|
10
|
|
(26)
|
|
5
|
|
(31)
|
|
Tivicay
|
250
|
|
39
|
|
165
|
|
36
|
|
61
|
|
40
|
|
24
|
|
58
|
|
Triumeq
|
468
|
|
94
|
|
311
|
|
93
|
|
118
|
|
89
|
|
39
|
|
>100
|
|
Trizivir
|
4
|
|
(33)
|
|
2
|
|
(60)
|
|
3
|
|
(27)
|
|
(1)
|
|
-
|
|
Other
|
24
|
|
24
|
|
10
|
|
(2)
|
|
13
|
|
>100
|
|
1
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,061
|
|
6
|
|
1,708
|
|
13
|
|
984
|
|
5
|
|
1,369
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – three months ended 30 September
2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
146
|
|
5
|
|
37
|
|
(35)
|
|
18
|
|
-
|
|
91
|
|
42
|
|
Synflorix
|
154
|
|
23
|
|
-
|
|
-
|
|
13
|
|
(15)
|
|
141
|
|
28
|
|
Fluarix, FluLaval
|
325
|
|
55
|
|
282
|
|
56
|
|
18
|
|
31
|
|
25
|
|
57
|
|
Bexsero
|
133
|
|
>100
|
|
53
|
|
>100
|
|
69
|
|
>100
|
|
11
|
|
>100
|
|
Menveo
|
63
|
|
(31)
|
|
46
|
|
(20)
|
|
4
|
|
(79)
|
|
13
|
|
(25)
|
|
Boostrix
|
159
|
|
34
|
|
87
|
|
16
|
|
39
|
|
22
|
|
33
|
|
>100
|
|
Infanrix, Pediarix
|
222
|
|
(1)
|
|
100
|
|
10
|
|
99
|
|
2
|
|
23
|
|
(40)
|
|
Hepatitis
|
179
|
|
11
|
|
100
|
|
6
|
|
51
|
|
25
|
|
28
|
|
9
|
|
Priorix, Priorix Tetra, Varilrix
|
75
|
|
(2)
|
|
-
|
|
-
|
|
38
|
|
(10)
|
|
37
|
|
9
|
|
Cervarix
|
24
|
|
(12)
|
|
-
|
|
-
|
|
8
|
|
(13)
|
|
16
|
|
(6)
|
|
Other
|
133
|
|
8
|
|
20
|
|
(14)
|
|
32
|
|
(13)
|
|
81
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,613
|
|
20
|
|
725
|
|
23
|
|
389
|
|
10
|
|
499
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals turnover – nine months ended 30 September
2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
4,592
|
|
2
|
|
2,253
|
|
8
|
|
1,023
|
|
(11)
|
|
1,316
|
|
4
|
|
Anoro Ellipta
|
132
|
|
>100
|
|
90
|
|
>100
|
|
26
|
|
>100
|
|
16
|
|
>100
|
|
Arnuity Ellipta
|
9
|
|
>100
|
|
9
|
|
>100
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Avamys/Veramyst
|
207
|
|
9
|
|
18
|
|
(11)
|
|
56
|
|
2
|
|
133
|
|
16
|
|
Flixotide/Flovent
|
447
|
|
(10)
|
|
263
|
|
(13)
|
|
67
|
|
(9)
|
|
117
|
|
(3)
|
|
Incruse Ellipta
|
76
|
|
>100
|
|
58
|
|
>100
|
|
15
|
|
>100
|
|
3
|
|
>100
|
|
Nucala
|
58
|
|
>100
|
|
41
|
|
-
|
|
14
|
|
>100
|
|
3
|
|
-
|
|
Relvar/Breo Ellipta
|
413
|
|
>100
|
|
222
|
|
>100
|
|
98
|
|
64
|
|
93
|
|
91
|
|
Seretide/Advair
|
2,510
|
|
(13)
|
|
1,273
|
|
(9)
|
|
634
|
|
(24)
|
|
603
|
|
(6)
|
|
Ventolin
|
540
|
|
7
|
|
280
|
|
8
|
|
91
|
|
-
|
|
169
|
|
9
|
|
Other
|
200
|
|
(2)
|
|
(1)
|
|
(100)
|
|
22
|
|
2
|
|
179
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular, metabolic
and urology (CVMU)
|
626
|
|
(16)
|
|
214
|
|
(28)
|
|
239
|
|
9
|
|
173
|
|
(25)
|
|
Avodart
|
471
|
|
(21)
|
|
63
|
|
(67)
|
|
235
|
|
9
|
|
173
|
|
(11)
|
|
Eperzan/Tanzeum
|
83
|
|
>100
|
|
81
|
|
>100
|
|
2
|
|
<(100)
|
|
-
|
|
-
|
|
Other
|
72
|
|
(42)
|
|
70
|
|
(18)
|
|
2
|
|
(33)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-inflammation
|
228
|
|
11
|
|
207
|
|
9
|
|
15
|
|
27
|
|
6
|
|
20
|
|
Benlysta
|
217
|
|
19
|
|
196
|
|
19
|
|
15
|
|
27
|
|
6
|
|
20
|
|
Other
|
11
|
|
(55)
|
|
11
|
|
(55)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other pharmaceuticals
|
1,661
|
|
(14)
|
|
67
|
|
(73)
|
|
458
|
|
(13)
|
|
1,136
|
|
(2)
|
|
Dermatology
|
280
|
|
(14)
|
|
12
|
|
(61)
|
|
107
|
|
(3)
|
|
161
|
|
(13)
|
|
Augmentin
|
417
|
|
(1)
|
|
-
|
|
-
|
|
128
|
|
(6)
|
|
289
|
|
2
|
|
Other
anti-bacterials
|
130
|
|
(8)
|
|
3
|
|
(50)
|
|
37
|
|
(11)
|
|
90
|
|
(5)
|
|
Rare
diseases
|
306
|
|
(1)
|
|
35
|
|
(11)
|
|
101
|
|
3
|
|
170
|
|
(1)
|
|
Oncology
|
123
|
|
(51)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
123
|
|
42
|
|
Other
|
405
|
|
(17)
|
|
17
|
|
(77)
|
|
85
|
|
30
|
|
303
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established products
|
1,888
|
|
(9)
|
|
518
|
|
(3)
|
|
377
|
|
(4)
|
|
993
|
|
(13)
|
|
Coreg
|
94
|
|
(4)
|
|
94
|
|
(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Hepsera
|
49
|
|
(15)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
49
|
|
(15)
|
|
Imigran/Imitrex
|
128
|
|
1
|
|
62
|
|
(2)
|
|
46
|
|
7
|
|
20
|
|
(5)
|
|
Lamictal
|
447
|
|
5
|
|
226
|
|
5
|
|
79
|
|
3
|
|
142
|
|
6
|
|
Lovaza
|
35
|
|
(55)
|
|
35
|
|
(55)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Requip
|
85
|
|
12
|
|
11
|
|
>100
|
|
22
|
|
-
|
|
52
|
|
2
|
|
Serevent
|
69
|
|
(6)
|
|
33
|
|
-
|
|
26
|
|
(7)
|
|
10
|
|
(20)
|
|
Seroxat/Paxil
|
153
|
|
8
|
|
14
|
|
>(100)
|
|
30
|
|
4
|
|
109
|
|
(10)
|
|
Valtrex
|
87
|
|
(40)
|
|
12
|
|
(31)
|
|
19
|
|
-
|
|
56
|
|
(49)
|
|
Zeffix
|
91
|
|
(18)
|
|
1
|
|
(50)
|
|
5
|
|
-
|
|
85
|
|
(18)
|
|
Other
|
650
|
|
(11)
|
|
30
|
|
(13)
|
|
150
|
|
(12)
|
|
470
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
2,534
|
|
43
|
|
1,498
|
|
52
|
|
750
|
|
35
|
|
286
|
|
21
|
|
Combivir
|
17
|
|
(38)
|
|
2
|
|
(78)
|
|
5
|
|
(37)
|
|
10
|
|
(9)
|
|
Epzicom/Kivexa
|
454
|
|
(22)
|
|
160
|
|
(26)
|
|
203
|
|
(19)
|
|
91
|
|
(21)
|
|
Lexiva/Telzir
|
40
|
|
(27)
|
|
22
|
|
(32)
|
|
6
|
|
(41)
|
|
12
|
|
(3)
|
|
Selzentry
|
92
|
|
(10)
|
|
47
|
|
(1)
|
|
33
|
|
(18)
|
|
12
|
|
(14)
|
|
Tivicay
|
663
|
|
46
|
|
437
|
|
46
|
|
165
|
|
47
|
|
61
|
|
45
|
|
Triumeq
|
1,205
|
|
>100
|
|
797
|
|
>100
|
|
312
|
|
>100
|
|
96
|
|
>100
|
|
Trizivir
|
13
|
|
(40)
|
|
4
|
|
(54)
|
|
8
|
|
(33)
|
|
1
|
|
(21)
|
|
Other
|
50
|
|
5
|
|
29
|
|
(2)
|
|
18
|
|
>100
|
|
3
|
|
(72)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
11,529
|
|
2
|
|
4,757
|
|
9
|
|
2,862
|
|
-
|
|
3,910
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – nine months ended 30 September
2016
|
|
|
Total
|
|
US
|
|
Europe
|
|
International
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
363
|
|
4
|
|
97
|
|
(21)
|
|
53
|
|
4
|
|
213
|
|
21
|
|
Synflorix
|
382
|
|
43
|
|
-
|
|
-
|
|
35
|
|
7
|
|
347
|
|
48
|
|
Fluarix, FluLaval
|
351
|
|
60
|
|
282
|
|
57
|
|
18
|
|
31
|
|
51
|
|
88
|
|
Bexsero
|
292
|
|
>100
|
|
100
|
|
>100
|
|
170
|
|
>100
|
|
22
|
|
>100
|
|
Menveo
|
152
|
|
6
|
|
102
|
|
12
|
|
22
|
|
(9)
|
|
28
|
|
-
|
|
Boostrix
|
343
|
|
18
|
|
178
|
|
4
|
|
106
|
|
29
|
|
59
|
|
56
|
|
Infanrix, Pediarix
|
550
|
|
(11)
|
|
231
|
|
(2)
|
|
254
|
|
(3)
|
|
65
|
|
(46)
|
|
Hepatitis
|
445
|
|
1
|
|
218
|
|
(3)
|
|
149
|
|
22
|
|
78
|
|
(14)
|
|
Priorix, Priorix Tetra, Varilrix
|
217
|
|
12
|
|
-
|
|
-
|
|
116
|
|
8
|
|
101
|
|
18
|
|
Cervarix
|
58
|
|
(21)
|
|
1
|
|
(67)
|
|
23
|
|
(22)
|
|
34
|
|
(17)
|
|
Other
|
302
|
|
24
|
|
36
|
|
(13)
|
|
107
|
|
30
|
|
159
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,455
|
|
18
|
|
1,245
|
|
15
|
|
1,053
|
|
21
|
|
1,157
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
|
|
|
30 September 2016
£m
|
|
30
September 2015
(restated)
£m
|
|
31
December 2015
£m
|
|
ASSETS
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Property,
plant and equipment
|
10,971
|
|
9,595
|
|
9,668
|
|
Goodwill
|
5,865
|
|
5,165
|
|
5,162
|
|
Other
intangible assets
|
18,471
|
|
16,668
|
|
16,672
|
|
Investments
in associates and joint ventures
|
255
|
|
213
|
|
207
|
|
Other
investments
|
947
|
|
1,123
|
|
1,255
|
|
Deferred
tax assets
|
3,751
|
|
2,687
|
|
2,905
|
|
Other
non-current assets
|
915
|
|
688
|
|
990
|
|
|
|
|
|
|
|
|
Total non-current assets
|
41,175
|
|
36,139
|
|
36,859
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Inventories
|
5,373
|
|
4,854
|
|
4,716
|
|
Current
tax recoverable
|
151
|
|
84
|
|
180
|
|
Trade
and other receivables
|
7,100
|
|
5,908
|
|
5,615
|
|
Derivative
financial instruments
|
154
|
|
118
|
|
125
|
|
Liquid
investments
|
85
|
|
71
|
|
75
|
|
Cash
and cash equivalents
|
4,614
|
|
7,073
|
|
5,830
|
|
Assets
held for sale
|
135
|
|
38
|
|
46
|
|
|
|
|
|
|
|
|
Total current assets
|
17,612
|
|
18,146
|
|
16,587
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
58,787
|
|
54,285
|
|
53,446
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Short-term
borrowings
|
(3,961)
|
|
(2,587)
|
|
(1,308)
|
|
Trade
and other payables
|
(11,714)
|
|
(8,514)
|
|
(9,191)
|
|
Derivative
financial instruments
|
(200)
|
|
(105)
|
|
(153)
|
|
Current
tax payable
|
(1,337)
|
|
(1,597)
|
|
(1,421)
|
|
Short-term
provisions
|
(925)
|
|
(1,112)
|
|
(1,344)
|
|
|
|
|
|
|
|
|
Total current liabilities
|
(18,137)
|
|
(13,915)
|
|
(13,417)
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Long-term
borrowings
|
(15,401)
|
|
(15,108)
|
|
(15,324)
|
|
Deferred
tax liabilities
|
(1,755)
|
|
(1,703)
|
|
(1,522)
|
|
Pensions
and other post-employment benefits
|
(4,620)
|
|
(3,654)
|
|
(3,229)
|
|
Other
provisions
|
(566)
|
|
(547)
|
|
(420)
|
|
Other
non-current liabilities
|
(14,310)
|
|
(10,027)
|
|
(10,656)
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
(36,652)
|
|
(31,039)
|
|
(31,151)
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
(54,789)
|
|
(44,954)
|
|
(44,568)
|
|
|
|
|
|
|
|
|
NET ASSETS
|
3,998
|
|
9,331
|
|
8,878
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
Share
capital
|
1,341
|
|
1,340
|
|
1,340
|
|
Share
premium account
|
2,905
|
|
2,795
|
|
2,831
|
|
Retained
earnings
|
(6,550)
|
|
(677)
|
|
(1,397)
|
|
Other
reserves
|
2,442
|
|
1,973
|
|
2,340
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
138
|
|
5,431
|
|
5,114
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
3,860
|
|
3,900
|
|
3,764
|
|
|
|
|
|
|
|
|
TOTAL EQUITY
|
3,998
|
|
9,331
|
|
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 period
|
|
|
655
|
|
655
|
90
|
745
|
|
Other
comprehensive income for the period
|
|
|
27
|
55
|
82
|
555
|
637
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Total
comprehensive income for the period
|
|
|
682
|
55
|
737
|
645
|
1,382
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(300)
|
(300)
|
|
Dividends
to shareholders
|
|
|
(3,925)
|
|
(3,925)
|
|
(3,925)
|
|
Recognition
of liabilities with non-controlling interests
|
|
|
(2,013)
|
|
(2,013)
|
(159)
|
(2,172)
|
|
Changes
in non-controlling interests
|
|
|
2
|
|
2
|
(90)
|
(88)
|
|
Shares
issued
|
1
|
74
|
|
|
75
|
|
75
|
|
Shares
acquired by ESOP Trusts
|
|
|
|
(70)
|
(70)
|
|
(70)
|
|
Write-down
on shares held by ESOP Trusts
|
|
|
(117)
|
117
|
-
|
|
-
|
|
Share-based
incentive plans
|
|
|
218
|
|
218
|
|
218
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
At 30 September 2016
|
1,341
|
2,905
|
(6,550)
|
2,442
|
138
|
3,860
|
3,998
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2015
|
1,339
|
2,759
|
(2,074)
|
2,239
|
4,263
|
673
|
4,936
|
|
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
|
8,776
|
|
8,776
|
24
|
8,800
|
|
Other
comprehensive expense for the period
|
|
|
(881)
|
(302)
|
(1,183)
|
(1)
|
(1,184)
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Total
comprehensive income/(expense)
for
the period
|
|
|
7,895
|
(302)
|
7,593
|
23
|
7,616
|
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(234)
|
(234)
|
|
Dividends
to shareholders
|
|
|
(2,986)
|
|
(2,986)
|
|
(2,986)
|
|
Gain on
transfer of net assets into
Consumer
Healthcare Joint Venture
|
|
|
2,794
|
|
2,794
|
|
2,794
|
|
Consumer
Healthcare Joint Venture put option
|
|
|
(6,204)
|
|
(6,204)
|
|
(6,204)
|
|
Changes
in non-controlling interests
|
|
|
|
|
|
3,438
|
3,438
|
|
Loss on
transfer of equity investment to
investment
in associate
|
|
|
(228)
|
|
(228)
|
|
(228)
|
|
Shares
issued
|
1
|
36
|
|
|
37
|
|
37
|
|
Shares
acquired by ESOP Trusts
|
|
|
|
(93)
|
(93)
|
|
(93)
|
|
Write-down
on shares held by ESOP Trusts
|
|
|
(129)
|
129
|
-
|
|
-
|
|
Share-based
incentive plans
|
|
|
255
|
|
255
|
|
255
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
At 30
September 2015
|
1,340
|
2,795
|
(677)
|
1,973
|
5,431
|
3,900
|
9,331
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Cash flow statement
|
|
Nine months ended 30 September 2016
|
|
|
9 months
2016
£m
|
|
9
months
2015
£m
|
||
|
|
|
|
|
||
|
Profit after tax
|
745
|
|
8,800
|
||
|
Tax on
profits
|
771
|
|
2,142
|
||
|
Share
of after tax profits of associates and joint ventures
|
(4)
|
|
(19)
|
||
|
Profit
on disposal of interest in associates
|
-
|
|
(842)
|
||
|
Net
finance expense
|
491
|
|
495
|
||
|
Profit
on disposal of Oncology business
|
-
|
|
(9,233)
|
||
|
Depreciation
and other adjusting items
|
1,150
|
|
1,346
|
||
|
Increase
in working capital
|
(1,322)
|
|
(1,075)
|
||
|
Increase
in other net liabilities
|
2,814
|
|
905
|
||
|
|
|
|
|
||
|
Cash generated from operations
|
4,645
|
|
2,519
|
||
|
Taxation
paid
|
(1,139)
|
|
(1,451)
|
||
|
|
|
|
|
||
|
Net cash inflow from operating activities
|
3,506
|
|
1,068
|
||
|
|
|
|
|
||
|
Cash flow from investing activities
|
|
|
|
||
|
Purchase
of property, plant and equipment
|
(943)
|
|
(846)
|
||
|
Proceeds
from sale of property, plant and equipment
|
11
|
|
44
|
||
|
Purchase
of intangible assets
|
(648)
|
|
(377)
|
||
|
Proceeds
from sale of intangible assets
|
286
|
|
-
|
||
|
Purchase
of equity investments
|
(71)
|
|
(65)
|
||
|
Proceeds
from sale of equity investments
|
192
|
|
342
|
||
|
Purchase
of businesses, net of cash acquired
|
(71)
|
|
(3,504)
|
||
|
Disposal
of businesses
|
63
|
|
10,253
|
||
|
Investment
in associates and joint ventures
|
(5)
|
|
(14)
|
||
|
Proceeds
from disposal of associates and joint ventures
|
-
|
|
564
|
||
|
Interest
received
|
48
|
|
60
|
||
|
Dividends
from associates and joint ventures
|
43
|
|
5
|
||
|
|
|
|
|
||
|
Net cash (outflow)/inflow from investing activities
|
(1,095)
|
|
6,462
|
||
|
|
|
|
|
||
|
Cash flow from financing activities
|
|
|
|
||
|
Issue
of share capital
|
75
|
|
37
|
||
|
Shares
acquired by ESOP Trusts
|
(70)
|
|
(93)
|
||
|
Increase
in short-term loans
|
1,358
|
|
-
|
||
|
Repayment
of short-term loans
|
(899)
|
|
(2,407)
|
||
|
Net
repayment of obligations under finance leases
|
(14)
|
|
(18)
|
||
|
Interest
paid
|
(398)
|
|
(428)
|
||
|
Dividends
paid to shareholders
|
(3,925)
|
|
(2,986)
|
||
|
Distributions
to non-controlling interests
|
(300)
|
|
(234)
|
||
|
Other
financing items
|
(276)
|
|
(8)
|
||
|
|
|
|
|
||
|
Net cash outflow from financing activities
|
(4,449)
|
|
(6,137)
|
||
|
|
|
|
|
||
|
(Decrease)/increase in cash and bank overdrafts in the
period
|
(2,038)
|
|
1,393
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
Cash
and bank overdrafts at beginning of the period
|
5,486
|
|
4,028
|
||
|
Exchange
adjustments
|
203
|
|
5
|
||
|
(Decrease)/increase
in cash and bank overdrafts
|
(2,038)
|
|
1,393
|
||
|
|
|
|
|
||
|
Cash and bank overdrafts at end of the period
|
3,651
|
|
5,426
|
||
|
|
|
|
|
||
|
Cash
and bank overdrafts at end of the period comprise:
|
|
|
|
||
|
|
Cash
and cash equivalents*
|
4,614
|
|
7,073
|
|
|
|
Overdrafts*
|
(963)
|
|
(1,647)
|
|
|
|
|
|
|
||
|
|
3,651
|
|
5,426
|
||
|
|
|
|
|
||
|
*
|
Comparative
figures have been restated, see page 48 for further
details.
|
||||
|
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
|
|||||
|
|
Q3 2016
£m
|
|
Q3
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,061
|
|
3,338
|
|
6
|
|
Vaccines
|
1,613
|
|
1,181
|
|
20
|
|
Consumer
Healthcare
|
1,868
|
|
1,578
|
|
5
|
|
|
|
|
|
|
|
|
Segment
turnover
|
7,542
|
|
6,097
|
|
8
|
|
Corporate
and other unallocated turnover
|
-
|
|
30
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
7,542
|
|
6,127
|
|
8
|
|
|
|
|
|
|
|
|
Operating profit by segment
|
|||||
|
|
Q3 2016
£m
|
|
Q3
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
2,001
|
|
1,593
|
|
4
|
|
Pharmaceuticals
R&D
|
(617)
|
|
(503)
|
|
11
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
1,384
|
|
1,090
|
|
-
|
|
Vaccines
|
647
|
|
464
|
|
30
|
|
Consumer
Healthcare
|
301
|
|
212
|
|
28
|
|
|
|
|
|
|
|
|
Segment
profit
|
2,332
|
|
1,766
|
|
12
|
|
Corporate
and other unallocated costs
|
(13)
|
|
(48)
|
|
(25)
|
|
|
|
|
|
|
|
|
Core
operating profit
|
2,319
|
|
1,718
|
|
13
|
|
Non-core
items
|
(888)
|
|
(693)
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
1,431
|
|
1,025
|
|
5
|
|
|
|
|
|
|
|
|
Finance
income
|
16
|
|
19
|
|
|
|
Finance
costs
|
(179)
|
|
(173)
|
|
|
|
Loss on
disposal of associates
|
-
|
|
(2)
|
|
|
|
Share
of after tax profits/(losses) of associates and joint
ventures
|
6
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
1,274
|
|
867
|
|
6
|
|
|
|
|
|
|
|
|
Turnover by segment
|
|||||
|
|
9 months
2016
£m
|
|
9
months
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
11,529
|
|
10,396
|
|
2
|
|
Vaccines
|
3,455
|
|
2,694
|
|
18
|
|
Consumer
Healthcare
|
5,319
|
|
4,473
|
|
12
|
|
|
|
|
|
|
|
|
Segment
turnover
|
20,303
|
|
17,563
|
|
7
|
|
Corporate
and other unallocated turnover
|
-
|
|
74
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
20,303
|
|
17,637
|
|
7
|
|
|
|
|
|
|
|
|
Operating profit by segment
|
|||||
|
|
9 months
2016
£m
|
|
9
months
2015
(restated)
£m
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
5,632
|
|
4,815
|
|
4
|
|
Pharmaceuticals
R&D
|
(1,747)
|
|
(1,593)
|
|
3
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
3,885
|
|
3,222
|
|
4
|
|
Vaccines
|
1,170
|
|
802
|
|
37
|
|
Consumer
Healthcare
|
842
|
|
503
|
|
56
|
|
|
|
|
|
|
|
|
Segment
profit
|
5,897
|
|
4,527
|
|
16
|
|
Corporate
and other unallocated costs
|
(188)
|
|
(155)
|
|
72
|
|
|
|
|
|
|
|
|
Core
operating profit
|
5,709
|
|
4,372
|
|
14
|
|
Non-core
items
|
(3,706)
|
|
6,204
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
2,003
|
|
10,576
|
|
(88)
|
|
|
|
|
|
|
|
|
Finance
income
|
52
|
|
63
|
|
|
|
Finance
costs
|
(543)
|
|
(558)
|
|
|
|
Profit
on disposal of associates
|
-
|
|
842
|
|
|
|
Share
of after tax profits of associates and joint ventures
|
4
|
|
19
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
1,516
|
|
10,942
|
|
(92)
|
|
|
|
|
|
|
|
|
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 Announcement
for Q2 2016.
At 30
September 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.
On 30
September 2016, the US Securities and Exchange Commission (SEC)
announced that it had reached a global resolution with the Group
regarding the SEC’s investigation under the US Foreign
Corrupt Practices Act into the Group’s commercial practices
in countries outside of the United States. The US Department of
Justice also confirmed that it had concluded its investigation into
the Group’s commercial practices and would take no action
against the Group.
Developments
with respect to tax matters are described in ‘Taxation’
below.
|
|
Taxation
There
have been no material changes to historical tax matters since the
publication of the Annual Report 2015.
Issues
related to taxation are described in the ‘Taxation’
note in the Annual Report 2015. The Group continues to believe it
has made adequate provision for the liabilities likely to arise
from periods which are open and not yet agreed by tax authorities.
The ultimate liability for such matters may vary from the amounts
provided and is dependent upon the outcome of agreements with
relevant tax authorities.
In the
quarter, tax on core profits amounted to £451 million and
represented an effective core tax rate of 20.8% (Q3 2015: 20.0%).
The charge for taxation on total profits amounted to £389
million and represented an effective tax rate of 30.5% (Q3 2015:
25.4%).
In the
nine months to September 2016, tax on core profits amounted to
£1,099 million and represented an effective core tax rate of
21.0% (2015 : 20.0%). The charge for taxation on total profits
amounted to £771 million and represented an effective tax rate
of 50.9% (2015: 19.6%). The Group’s balance sheet at 30
September 2016 included a tax payable liability of £1,337
million and a tax recoverable asset of £151
million.
The
core tax rate for the full year is also expected to be in the range
of 20-21%. Given the Group’s performance and changing
earnings mix, particularly in favour of the US, some moderate
upward pressure on the rate is expected over the next few years,
particularly if the recent depreciation of Sterling is
maintained.
|
|
Additional information
|
|
Accounting policies and basis of preparation
|
|
This
unaudited Results Announcement contains condensed financial
information for the three and nine months ended 30 September 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 in the comparative
balance sheet at 30 September 2015. This revision had the effect of
increasing both cash and cash equivalents and short-term borrowings
by £1,165 million. There is no change to the results or cash
flows for the nine months to 30 September 2015 and there was no
impact on the balance sheet at 31 December 2015. The impact at 31
December 2014 amounted to £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.
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:
|
|
|
Q3 2016
|
|
Q3
2015
|
|
9 months
2016
|
|
9
months
2015
|
|
2015
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Average
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
|
US$/£
|
1.33
|
|
1.53
|
|
1.39
|
|
1.53
|
|
1.53
|
|
|
|
Euro/£
|
1.17
|
|
1.39
|
|
1.25
|
|
1.37
|
|
1.37
|
|
|
|
Yen/£
|
139
|
|
187
|
|
153
|
|
185
|
|
185
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Period-end
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
|
US$/£
|
1.30
|
|
1.51
|
|
1.30
|
|
1.51
|
|
1.47
|
|
|
|
Euro/£
|
1.16
|
|
1.36
|
|
1.16
|
|
1.36
|
|
1.36
|
|
|
|
Yen/£
|
132
|
|
181
|
|
132
|
|
181
|
|
177
|
|
During Q3 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 the nine months ended 30 September 2016,
average sterling exchange rates were weaker against the US Dollar,
the Euro and the Yen compared with the same period in 2015.
Period-end sterling exchange rates were also weaker against the US
Dollar, the Euro and the Yen.
|
|
Weighted average number of shares
|
|
|
|
|
|
Q3 2016
millions
|
|
Q3
2015
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
4,865
|
|
4,835
|
|
Dilutive
effect of share options and share awards
|
37
|
|
42
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
4,902
|
|
4,877
|
|
|
|
|
|
|
|
9 months
2016
millions
|
|
9
months
2015
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
4,857
|
|
4,829
|
|
Dilutive
effect of share options and share awards
|
36
|
|
44
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
4,893
|
|
4,873
|
|
|
|
|
|
|
At 30
September 2016, 4,866 million shares were in free issue (excluding
Treasury shares and shares held by the ESOP Trusts). This compares
with 4,836 million shares at 30 September 2015.
|
|
Net assets
|
|
The
book value of net assets decreased by £4,880 million from
£8,878 million at 31 December 2015 to £3,998 million at
30 September 2016. This primarily reflected the recognition of the
transaction-related adjustments of £3,057 million in the nine
months, the impact of the dividends paid in the nine months and an
increase in the pension deficit of £1,329 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
30 September 2016 was £255 million, with a market value of
£311 million.
At 30
September 2016, the net deficit on the Group’s pension plans
was £2,913 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 2.4%, and US pension liabilities from 4.2% to 3.4%, partly
offset by a decrease in the UK inflation rate from 3.1% to 3.0%,
together with significant UK asset gains.
At 30
September 2016, the post-retirement benefits provision was
£1,672 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 a stronger US Dollar at the period end.
At 30
September 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 £7,287
million (31 December 2015: £6,287 million). The estimated
present value of the potential redemption amount of the put options
related to ViiV Healthcare was £2,523 million, of which
£1,314 million was recorded in Other payables in Current
liabilities and £1,209 million in Other non-current
liabilities. The ViiV Healthcare put options liability was
recognised in the nine months, with £1,996 million recorded
directly in equity on initial recognition, and the remainder
recognised in the income statement. The increases in both
liabilities in the nine months reflected the increased estimated
Sterling values of the two businesses.
Contingent
consideration amounted to £5,271 million at 30 September 2016
(31 December 2015: £3,855 million), of which £4,768
million (31 December 2015: £3,409 million) represented the
estimated present value of amounts payable to Shionogi relating to
ViiV Healthcare. This included £196 million in respect of
preferential dividends of which £154 million was recognised
directly in equity in the nine months. The liability for
preferential dividends due to Pfizer at 30 September 2016 was
£26 million. An explanation of the accounting for the
non-controlling interests in ViiV Healthcare is set out on page 52.
The estimated present value of amounts payable to Novartis related
to the Vaccines acquisition was £458 million (31 December
2015: £405 million).
|
|
The
liabilities for the Consumer Healthcare Joint Venture put option,
the ViiV Healthcare put options and the ViiV Healthcare contingent
consideration at 30 September 2016 have been calculated based on
the closing exchange rates at 30 September 2016, primarily
US$1.30/£1 and Euro 1.16/£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
options
|
|
Shionogi-
ViiV
Healthcare
contingent
consideration
|
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
5 cent
appreciation of US Dollar
|
77
|
|
56
|
|
141
|
|
5 cent
depreciation of US Dollar
|
(71)
|
|
(51)
|
|
(131)
|
|
10 cent
appreciation of US Dollar
|
159
|
|
117
|
|
294
|
|
10 cent
depreciation of US Dollar
|
(137)
|
|
(99)
|
|
(252)
|
|
5 cent
appreciation of Euro
|
63
|
|
39
|
|
46
|
|
5 cent
depreciation of Euro
|
(58)
|
|
(35)
|
|
(42)
|
|
10 cent
appreciation of Euro
|
131
|
|
81
|
|
97
|
|
10 cent
depreciation of Euro
|
(111)
|
|
(67)
|
|
(81)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in contingent consideration are as follows:
|
|
|
9 months
2016
£m
|
|
9
months
2015
£m
|
|
|
|
|
|
|
Contingent
consideration at beginning of the period
|
3,855
|
|
1,724
|
|
Additions
|
194
|
|
594
|
|
Re-measurement
through income statement
|
1,515
|
|
1,199
|
|
Settlement
|
(289)
|
|
(383)
|
|
Other
|
(4)
|
|
-
|
|
|
|
|
|
|
Contingent
consideration at end of the period
|
5,271
|
|
3,134
|
|
|
|
|
|
|
The re-measurement increases in contingent consideration in the
nine months primarily reflected changes in exchange rate
assumptions on forecast sales that will lead to increased future
contingent consideration payments.
|
|
At 30
September 2016, the ESOP Trusts held 9.9 million GSK shares against
the future exercise of share options and share awards. The carrying
value of £29 million has been deducted from other reserves.
The market value of these shares was £163
million.
At 30
September 2016, the company held 491.5 million Treasury shares at a
cost of £6,917 million, which has been deducted from retained
earnings.
|
|
Contingent liabilities
|
|
There
were contingent liabilities at 30 September 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 47.
|
|
Reconciliation of cash flow to movements in net debt
|
|
|
9 months
2016
£m
|
|
9
months
2015
£m
|
|
|
|
|
|
|
Net
debt at beginning of the period
|
(10,727)
|
|
(14,377)
|
|
|
|
|
|
|
(Decrease)/increase
in cash and bank overdrafts
|
(2,038)
|
|
1,393
|
|
Net
(increase in)/repayment of short-term loans
|
(459)
|
|
2,407
|
|
Net
repayment of obligations under finance leases
|
14
|
|
18
|
|
Exchange
adjustments
|
(1,449)
|
|
18
|
|
Other
non-cash movements
|
(4)
|
|
(10)
|
|
|
|
|
|
|
(Increase)/decrease
in net debt
|
(3,936)
|
|
3,826
|
|
|
|
|
|
|
Net
debt at end of the period
|
(14,663)
|
|
(10,551)
|
|
|
|
|
|
|
Net debt analysis
|
|
|
30 September
2016
£m
|
|
30
September
2015
(restated)
£m
|
|
|
|
|
|
|
Liquid
investments
|
85
|
|
71
|
|
Cash
and cash equivalents
|
4,614
|
|
7,073
|
|
Short-term
borrowings
|
(3,961)
|
|
(2,587)
|
|
Long-term
borrowings
|
(15,401)
|
|
(15,108)
|
|
|
|
|
|
|
Net
debt at end of the period
|
(14,663)
|
|
(10,551)
|
|
|
|
|
|
|
Free cash flow reconciliation
|
|
|
Q3 2016
£m
|
|
9
months
2016
£m
|
|
9
months
2015
£m
|
|
|
|
|
|
|
|
|
Net
cash inflow from operating activities
|
1,767
|
|
3,506
|
|
1,068
|
|
Purchase
of property, plant and equipment
|
(331)
|
|
(943)
|
|
(846)
|
|
Proceeds
from sale of property, plant and equipment
|
-
|
|
11
|
|
44
|
|
Purchase
of intangible assets
|
(164)
|
|
(648)
|
|
(377)
|
|
Net
finance costs
|
(27)
|
|
(350)
|
|
(368)
|
|
Dividends
from associates and joint ventures
|
3
|
|
43
|
|
5
|
|
Distributions
to non-controlling interests
|
(22)
|
|
(300)
|
|
(234)
|
|
|
|
|
|
|
|
|
Free
cash flow
|
1,226
|
|
1,319
|
|
(708)
|
|
|
|
|
|
|
|
|
Legal
settlements paid
|
62
|
|
166
|
|
279
|
|
|
|
|
|
|
|
|
Adjusted
free cash flow
|
1,288
|
|
1,485
|
|
(429)
|
|
|
|
|
|
|
|
|
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 2015. 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.
Payments
are made to Shionogi by ViiV Healthcare each quarter to reduce the
liability in instalments. 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 impact is reflected in the Group’s 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 in purchases of businesses and the
part of each payment relating to the increase in the liability
since the acquisition is reported within operating cash
flows.
Exit rights
In
certain circumstances, Pfizer and Shionogi may require GSK to
acquire their shareholdings at a price based on the likely
valuation of ViiV Healthcare if it were to conduct an initial
public offering (IPO). 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. Shionogi may also request GSK to
acquire its shareholding in ViiV Healthcare in six month windows
commencing in 2017, 2020 and 2022.
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 either of the Pfizer or
Shionogi put options and, as a result, in accordance with IFRS, GSK
did not recognise liabilities for these put options on its balance
sheet. However, during Q1 2016, GSK notified Pfizer and Shionogi
that it had irrevocably given up these rights and accordingly
recognised the liability for the put options on the Group’s
balance sheet at the end of Q1 2016. 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.
|
|
Core results reconciliations
|
|
The
reconciliations between total results and core results for Q3 2016
and Q3 2015 and also nine months 2016 and nine months 2015 are set
out below.
|
|
Income statement – Core results reconciliation
Three months ended 30 September 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
|
7,542
|
|
|
|
|
|
|
7,542
|
|
Cost of sales
|
(2,525)
|
154
|
(9)
|
66
|
|
23
|
2
|
(2,289)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
5,017
|
154
|
(9)
|
66
|
|
23
|
2
|
5,253
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(2,292)
|
|
|
57
|
67
|
|
3
|
(2,165)
|
|
Research and development
|
(922)
|
11
|
|
28
|
|
|
7
|
(876)
|
|
Royalty income
|
107
|
|
|
|
|
|
|
107
|
|
Other operating
income/(expense)
|
(479)
|
|
|
|
|
776
|
(297)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
1,431
|
165
|
(9)
|
151
|
67
|
799
|
(285)
|
2,319
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(163)
|
|
|
1
|
|
|
2
|
(160)
|
|
Share of after tax profits
of associates and joint
ventures
|
6
|
|
|
|
|
|
|
6
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
1,274
|
165
|
(9)
|
152
|
67
|
799
|
(283)
|
2,165
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(389)
|
(44)
|
3
|
(31)
|
(7)
|
(77)
|
94
|
(451)
|
|
Tax rate %
|
30.5%
|
|
|
|
|
|
|
20.8%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
885
|
121
|
(6)
|
121
|
60
|
722
|
(189)
|
1,714
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit
attributable to
non-controlling
interests
|
77
|
|
|
|
|
80
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
808
|
121
|
(6)
|
121
|
60
|
642
|
(189)
|
1,557
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
16.6p
|
2.5p
|
(0.1)p
|
2.4p
|
1.3p
|
13.2p
|
(3.9)p
|
32.0p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,865
|
|
|
|
|
|
|
4,865
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
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
34.
|
|
Income statement – Core results reconciliation
Three months ended 30 September 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
|
6,127
|
|
|
|
|
|
|
6,127
|
|
Cost of sales
|
(2,204)
|
130
|
2
|
116
|
|
20
|
|
(1,936)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
3,923
|
130
|
2
|
116
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
4,191
|
|
Selling, general and
administration
|
(1,968)
|
|
|
57
|
72
|
(3)
|
|
(1,842)
|
|
Research and development
|
(827)
|
9
|
14
|
63
|
|
|
11
|
(730)
|
|
Royalty income
|
99
|
|
|
|
|
|
|
99
|
|
Other operating
income/(expense)
|
(202)
|
|
|
1
|
|
335
|
(134)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
1,025
|
139
|
16
|
237
|
72
|
352
|
(123)
|
1,718
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(154)
|
|
|
1
|
|
|
5
|
(148)
|
|
Profit on disposal of
associates
|
(2)
|
|
|
|
|
|
2
|
-
|
|
Share of after tax profits
of associates and
joint ventures
|
(2)
|
|
|
|
|
|
-
|
(2)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
867
|
139
|
16
|
238
|
72
|
352
|
(116)
|
1,568
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(220)
|
(30)
|
|
(41)
|
(3)
|
(39)
|
19
|
(314)
|
|
Tax rate %
|
25.4%
|
|
|
|
|
|
|
20.0%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
647
|
109
|
16
|
197
|
69
|
313
|
(97)
|
1,254
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit
attributable to
non-controlling
interests
|
109
|
|
|
|
|
32
|
|
141
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
538
|
109
|
16
|
197
|
69
|
281
|
(97)
|
1,113
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
11.1p
|
2.3p
|
0.3p
|
4.1p
|
1.4p
|
5.8p
|
(2.0)p
|
23.0p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,835
|
|
|
|
|
|
|
4,835
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
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
34.
|
|
Income statement – Core results reconciliation
Nine months ended 30 September 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
|
20,303
|
|
|
|
|
|
|
20,303
|
|
Cost of sales
|
(6,782)
|
413
|
(9)
|
162
|
|
58
|
2
|
(6,156)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
13,521
|
413
|
(9)
|
162
|
|
58
|
2
|
14,147
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(6,655)
|
|
|
283
|
115
|
|
(11)
|
(6,268)
|
|
Research and development
|
(2,625)
|
31
|
|
128
|
|
|
15
|
(2,451)
|
|
Royalty income
|
281
|
|
|
|
|
|
|
281
|
|
Other operating
income/(expense)
|
(2,519)
|
|
|
|
|
2,999
|
(480)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
2,003
|
444
|
(9)
|
573
|
115
|
3,057
|
(474)
|
5,709
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(491)
|
|
|
3
|
|
|
6
|
(482)
|
|
Share of after tax profits
of associates and joint
ventures
|
4
|
|
|
|
|
|
|
4
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
1,516
|
444
|
(9)
|
576
|
115
|
3,057
|
(468)
|
5,231
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(771)
|
(103)
|
3
|
(115)
|
(10)
|
(293)
|
190
|
(1,099)
|
|
Tax rate %
|
50.9%
|
|
|
|
|
|
|
21.0%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
745
|
341
|
(6)
|
461
|
105
|
2,764
|
(278)
|
4,132
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit
attributable to
non-controlling
interests
|
90
|
|
|
|
|
335
|
|
425
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
655
|
341
|
(6)
|
461
|
105
|
2,429
|
(278)
|
3,707
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
13.5p
|
7.0p
|
(0.1)p
|
9.4p
|
2.2p
|
50.0p
|
(5.7)p
|
76.3p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,857
|
|
|
|
|
|
|
4,857
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
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
34.
|
|
Income statement – Core results reconciliation
Nine months ended 30 September 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
|
17,637
|
|
|
|
|
|
|
17,637
|
|
Cost of sales
|
(6,312)
|
384
|
80
|
327
|
|
62
|
5
|
(5,454)
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Gross profit
|
11,325
|
384
|
80
|
327
|
|
62
|
5
|
12,183
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(6,734)
|
|
|
640
|
207
|
88
|
|
(5,799)
|
|
Research and development
|
(2,506)
|
31
|
40
|
150
|
|
|
35
|
(2,250)
|
|
Royalty income
|
238
|
|
|
|
|
|
|
238
|
|
Other operating
income/(expense)
|
8,253
|
|
|
1
|
|
1,385
|
(9,639)
|
-
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Operating profit
|
10,576
|
415
|
120
|
1,118
|
207
|
1,535
|
(9,599)
|
4,372
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(495)
|
|
|
4
|
|
|
9
|
(482)
|
|
Profit on disposal of
associates
|
842
|
|
|
|
|
|
(842)
|
-
|
|
Share of after tax profits
of associates and
joint ventures
|
19
|
|
|
|
|
|
(16)
|
3
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit before taxation
|
10,942
|
415
|
120
|
1,122
|
207
|
1,535
|
(10,448)
|
3,893
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(2,142)
|
(84)
|
(25)
|
(269)
|
(4)
|
(227)
|
1,973
|
(778)
|
|
Tax rate %
|
19.6%
|
|
|
|
|
|
|
20.0%
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit after taxation
|
8,800
|
331
|
95
|
853
|
203
|
1,308
|
(8,475)
|
3,115
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
Profit
attributable to
non-controlling
interests
|
24
|
|
|
|
|
307
|
|
331
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
8,776
|
331
|
95
|
853
|
203
|
1,001
|
(8,475)
|
2,784
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
181.7p
|
6.8p
|
2.0p
|
17.7p
|
4.2p
|
20.8p
|
(175.5)p
|
57.7p
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (millions)
|
4,829
|
|
|
|
|
|
|
4,829
|
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
|
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
34.
|
|
Independent review report to GlaxoSmithKline plc
|
|
Report on the condensed financial information
Our conclusion
We have reviewed the condensed financial information, defined
below, in the Results Announcement of GlaxoSmithKline plc for the
three and nine months ended 30 September 2016. Based on our review,
nothing has come to our attention that causes us to believe that
the condensed financial information is not prepared, in all
material respects, in accordance with the accounting policies set
out in the accounting policies and basis of preparation section on
page 48 of the Results Announcement.
This
conclusion is to be read in the context of what we say in the
remainder of this report.
|
|
|
|
|
|
What we have reviewed
The
condensed financial information, which is prepared by
GlaxoSmithKline plc, comprises:
|
|
|
|
|
|
●
|
the
balance sheet at 30 September 2016;
|
|
●
|
the
income statement and statement of comprehensive income for the
three and nine month periods then ended;
|
|
●
|
the
cash flow statement for the nine month period then
ended;
|
|
●
|
the
statement of changes in equity for the nine month period then
ended; and
|
|
●
|
the
accounting policies and basis of preparation and related notes on
pages 45 to 52.
|
|
|
|
|
As
disclosed on page 48, the financial reporting framework that has
been applied in the preparation of the full annual financial
statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The
condensed financial information included in the Results
Announcement has been prepared in accordance with the accounting
policies set out in the accounting policies and basis of
preparation section on page 48.
What a review of condensed financial information
involves
We
conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 ‘Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity’ issued by the Auditing Practices Board for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have
read the other information contained in the Results Announcement
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed
financial information.
Responsibilities for the condensed financial information and the
review
Our responsibilities and those of the directors
The Results Announcement, including the condensed financial
information, is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the
Results Announcement in accordance with the accounting policies set
out in the accounting policies and basis of preparation section on
page 48 of the Results Announcement.
Our responsibility is to express to the Company a conclusion on the
condensed financial information in the Results Announcement based
on our review. This report, including the conclusion, has been
prepared for and only for the Company for management’s
stewardship purpose and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
|
|
|
PricewaterhouseCoopers
LLP
Chartered
Accountants
26
October 2016
London
|
|
Notes:
|
|
|
|
|
|
(a)
|
The
maintenance and integrity of the GlaxoSmithKline plc website is the
responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the condensed financial information since
it was initially presented on the website.
|
|
|
|
|
(b)
|
Legislation
in the United Kingdom governing the preparation and dissemination
of condensed financial information may differ from legislation in
other jurisdictions.
|
|
|
GlaxoSmithKline plc
|
|
|
(Registrant)
|
|
|
|
|
Date: October
26, 2016
|
|
|
|
|
|
|
By: VICTORIA
WHYTE--------------------------
|
|
|
|
|
|
Victoria Whyte
|
|
|
Authorised
Signatory for and on
|
|
|
behalf
of GlaxoSmithKline plc
|