|
Issued: Wednesday, 1 May 2019, London U.K.
|
|
GSK delivers sales of £7.7 billion +6% AER, +5%
CER
Total EPS 16.8p, +50% AER, +42% CER; Adjusted EPS 30.1p, +22% AER,
+18% CER
|
|
|
|||||
|
Financial highlights
|
|||||
|
|
|||||
|
●
|
Pharmaceuticals sales £4.2 billion, +4% AER, +2% CER; Vaccines
£1.5 billion, +23% AER, +20% CER; Consumer Healthcare
£2.0 billion, flat AER, +1% CER.
|
|
|||
|
●
|
Total Group operating margin 18.6%. Adjusted Group operating
margin 28.2%, +1.6 percentage points AER, +1.0 percentage point CER
(Pharmaceuticals 29.8%; Vaccines 40.3%; Consumer Healthcare
21.7%). Benefits from strong sales growth and phasing of
R&D.
|
|
|||
|
●
|
Total EPS 16.8p, +50% AER, +42% CER.
|
|
|||
|
●
|
Adjusted EPS 30.1p, +22% AER, +18% CER, driven by strong operating
performance, continued financial efficiencies, reduction in
minority share and a one-off benefit to associates.
|
|
|||
|
●
|
Net cash flow from operations £663 million. Free cash
flow £165 million.
|
|
|||
|
●
|
19p dividend declared for the quarter; continue to expect 80p for
full year 2019.
|
|
|||
|
●
|
2019 Guidance reaffirmed.
|
|
|||
|
|
|||||
|
Product and pipeline highlights
|
|||||
|
|
|
|
|
|
|
|
●
|
Total HIV sales £1.1 billion, +7% AER, +4% CER,
including Juluca sales of £70
million.
|
|
|||
|
|
-
|
Dovato (dolutegravir+lamivudine), first once-daily
2-drug regimen for treatment-naive HIV patients, launched in
US.
|
|
|
|
|
|
-
|
Long-acting cabotegravir+rilpivirine filed in the US for treatment
of HIV.
|
|
|
|
|
●
|
Total new Respiratory product sales £631 million, +29% AER,
+25% CER, including Trelegy £87 million; Nucala £152 million.
|
|
|||
|
●
|
Shingrix sales £357
million driven by continued strong launch execution in
US.
|
|
|||
|
●
|
Continued progress in immuno-oncology pipeline:
|
|
|||
|
|
-
|
Zejula sales of £42
million since 22 January following completion of Tesaro
acquisition
|
|
|
|
|
|
-
|
Positive data from GARNET study presented at the Society of
Gynecologic Oncology conference indicating robust activity of
PD-1 dostarlimab in patients with advanced or recurrent endometrial
cancer
|
|
|
|
|
|
-
|
Global alliance with Merck KGaA, Darmstadt, Germany completed to
jointly develop and commercialise M7824, a novel immunotherapy with
potential in multiple difficult-to-treat cancers
|
|
|
|
|
|
-
|
Further positive data announced from belantamab mafodotin (BCMA)
DREAMM-1 study and reported in Blood Cancer Journal
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
Q1 2019 results
|
||||||
|
|
|
Q1 2019
|
|
Growth
|
||
|
|
|
£m
|
|
£%
|
|
CER%
|
|
|
|
|
|
|
|
|
|
Turnover
|
|
7,661
|
|
6
|
|
5
|
|
|
|
|
|
|
|
|
|
Total operating profit
|
|
1,428
|
|
15
|
|
10
|
|
Total earnings per share
|
|
16.8p
|
|
50
|
|
42
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
|
2,163
|
|
12
|
|
9
|
|
Adjusted earnings per share
|
|
30.1p
|
|
22
|
|
18
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities
|
|
663
|
|
(23)
|
|
|
|
Free cash flow
|
|
165
|
|
(50)
|
|
|
|
|
|
|
|
|
|
|
|
Emma Walmsley, Chief Executive Officer, GSK said:
"We have made a strong start to 2019, which is an important year of
execution for GSK, with growth in sales, operating margins and
earnings per share in Q1, in line with our expectations.
Strengthening our pipeline remains our number one priority
and we reported positive data for several potential new medicines
in HIV and Oncology during the quarter. I am also pleased to
report that integration planning for our new proposed Consumer
Healthcare business is going well and, subject to relevant
approvals, we continue to expect to complete this transaction in
the second half of the year. We look forward to building on
the progress made this quarter."
|
|
The Total results are presented under 'Financial performance' on
page 9 and Adjusted results reconciliations are presented on pages
18 and 19. Adjusted results are a non-IFRS measure that may
be considered in addition to, but not as a substitute for, or
superior to, information presented in accordance with IFRS.
Adjusted results are defined on page 7 and £% or AER%
growth, CER% growth, free cash flow and other non-IFRS measures are
defined on page 36. GSK provides guidance on an Adjusted
results basis only for the reasons set out on page 8. All
expectations, guidance and targets regarding future performance and
dividend payments should be read together with "Outlook,
assumptions and cautionary statements" on pages 36 and
37.
|
|
2019 guidance
|
|
In 2019, we continue to expect Adjusted EPS to decline in the range
of -5% to -9% at CER. This guidance reflects the recent
approval of a substitutable generic competitor
to Advair in the US and the expected impact of the
Tesaro acquisition and assumes that the proposed Consumer
Healthcare nutrition disposal closes by the end of 2019 and the
proposed Consumer Healthcare Joint Venture with Pfizer closes
during H2 2019.
GSK expects to maintain the dividend for 2019 at the current level
of 80p per share.
All expectations, guidance and targets regarding future performance
and dividend payments should be read together with "Outlook,
assumptions and cautionary statements" on page 36.
If exchange rates were to hold at the closing rates on 31 March
2019 ($1.31/£1, €1.17/£1 and Yen 145/£1) for
the rest of 2019, the estimated negative impact on 2019 Sterling
turnover growth would be around 1% and if exchange gains or losses
were recognised at the same level as in 2018, the estimated impact
on 2019 Sterling Adjusted EPS growth would be
negligible.
|
|
Results presentation
|
|
A webcast of the quarterly results presentation hosted by Emma
Walmsley, GSK CEO, will be held at 2pm BST on 1 May 2019.
Presentation materials will be published
on www.gsk.com prior
to the webcast and a transcript of the webcast will be published
subsequently.
Information available on GSK's website does not form part of, and
is not incorporated by reference into, this Results
Announcement.
|
|
Operating performance - Q1 2019
|
|
Turnover
|
Q1 2019
|
||||
|
|
|
|
|
||
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,158
|
|
4
|
|
2
|
|
Vaccines
|
1,522
|
|
23
|
|
20
|
|
Consumer Healthcare
|
1,981
|
|
-
|
|
1
|
|
|
|
|
|
|
|
|
Group turnover
|
7,661
|
|
6
|
|
5
|
|
|
|
|
|
|
|
|
Group turnover increased 6% AER, 5% CER to £7,661 million,
with CER growth delivered by all three businesses.
Pharmaceuticals sales were up 4% AER, 2% CER, reflecting the
continued growth in HIV sales and growth
from Nucala and Trelegy. New Respiratory product sales
(Ellipta products and Nucala) were up 29% AER, 25% CER. Lower sales in
Established Pharmaceuticals were driven by Advair following its loss of exclusivity in the US,
partly offset by the launches of Advair and Ventolin authorised generics in the
US.
Vaccines sales were up 23% AER, 20% CER, primarily driven by strong
sales of Shingrix in the US as well as increased demand for
Meningitis and Hepatitis vaccines, partly offset by a decline in
Established Vaccines.
Consumer Healthcare sales were flat at AER but grew 1% CER, as
growth in Oral health and Nutrition were partly offset by declines
in Wellness and Skin health.
|
|
Operating profit
Total operating profit was £1,428 million in Q1 2019 compared
with £1,240 million in Q1 2018. Adjusted operating
profit was £2,163 million, 12% higher than Q1 2018 at AER and
9% higher at CER on a turnover increase of 5% CER. The
Adjusted operating margin of 28.2% was 1.6 percentage points higher
at AER, 1.0 percentage points higher on a CER basis than in Q1
2018.
Increased charges for major restructuring, primarily arising from
write downs in a number of manufacturing sites, and an unrealised
loss arising from the decrease in value of the shares in Hindustan
Unilever Limited were largely offset by re-measurement credits on
the contingent consideration liabilities.
Operating profit benefited from strong sales growth, particularly
in Vaccines, a more favourable mix in Vaccines and Consumer
Healthcare, a benefit from favourable inventory adjustments in the
quarter, the phasing of R&D investment and continued tight
control of ongoing costs across all three businesses. These
were partly offset by continuing price pressure, the impact of the
Tesaro acquisition and other investments in promotional product
support, particularly for new launches.
Earnings per share
Total earnings per share was 16.8p, compared with 11.2p in Q1
2018. Adjusted EPS was 30.1p compared with 24.6p in Q1 2018,
up 22% AER, 18% CER, on a 9% CER increase in Adjusted operating
profit. The improvement reflected an improved trading
performance, the reduced non-controlling interest allocation of
Consumer Healthcare profits following the buyout in Q2 2018 and a
one-off benefit to the share of after tax profit of the associate,
Innoviva.
Cash flow
Net cash inflow from operating activities was £663 million in
the quarter (Q1 2018: £863 million) and free cash flow was
£165 million (Q1 2018: £329 million). The reduction
primarily reflected the adverse phasing of payments for returns and
rebates, as well as the initial step-down impact
from Advair generic competition and an increase in trade
receivables as a result of strong sales in the quarter, partly
offset by improved operating profits and lower contingent
consideration payments compared with Q1 2018 which included a
milestone payment to Novartis.
|
|
R&D pipeline
|
|
Pipeline news flow highlights since Q4 2018:
|
|
Oncology
|
|
Dostarlimab
(TSR-042)
|
|
|
●
|
On 19 March, data from the phase I/II GARNET study evaluating
dostarlimab in women with recurrent or advanced endometrial cancer
who progressed on or after a platinum-based regimen were presented
at the 2019 Society for Gynecologic Oncology (SGO) Annual Meeting.
The preliminary results demonstrated clinically meaningful
and durable response rates of dostarlimab in this patient
population regardless of microsatellite instability
status.
|
|
Belantamab mafodotin
(GSK2857916)
|
|
|
●
|
On 21 March, further positive data from the DREAMM-1 study in
patients with relapsed/ refractory multiple myeloma were published
in Blood Cancer Journal. These new data showed that the
median progression-free survival (PFS) was twelve months, an
increase from the previously reported 7.9 months PFS.
|
|
●
|
In March, the first patient in the DREAMM-4 pilot study of
belantamab mafodotin (BCMA antibody drug conjugate) in combination
with pembrolizumab in relapsed/refractory multiple myeloma was
dosed.
|
|
HIV/Infectious diseases
|
|
Cabotegravir +
rilpivirine
|
|
|
●
|
On 29 April, a regulatory application was submitted to the US FDA
for the once monthly injectable, cabotegravir + rilpivirine for the
treatment of adults living with HIV-1 infection.
|
|
●
|
On 7 March, comprehensive data from the ATLAS and FLAIR studies
were presented at the 2019 Conference on Retroviruses and
Opportunistic Infections. These two studies showed that a
long-acting, injectable, two-drug regimen of cabotegravir and
rilpivirine has similar efficacy to daily, three-drug oral
treatment in adults living with HIV-1 infection.
|
|
Dovato (dolutegravir
+ lamivudine)
|
|
|
●
|
On 8 April, the US FDA approved Dovato, the first, once daily, single-tablet, two-drug
regimen for treatment naive HIV-1 adults.
|
|
●
|
On 26 April, the Committee for Medicinal Products for Human Use
(CHMP) of the European Medicines Agency (EMA) issued a positive
opinion for Dovato, for the treatment of HIV-1 infection in adults
and adolescents.
|
|
Juluca (dolutegravir
+ rilpivirine)
|
|
|
●
|
On 3 April, three-year results from the SWORD 1&2 studies
demonstrating that Juluca maintained HIV viral suppression at
148-weeks were presented at the 25th Annual Conference of the
British HIV Association.
|
|
Maturation inhibitor
(GSK3640254)
|
|
|
●
|
The first patient was dosed in a phase IIa study for GSK'254 in the
treatment of patients living with HIV-1 infection.
|
|
Immuno-inflammation
|
|
Benlysta (belimumab)
|
|
|
●
|
On 26 April, the US FDA approved
intravenous Benlysta for use in children aged 5 years and above
with lupus.
|
|
Respiratory
|
|
Trelegy
Ellipta
|
|
|
●
|
The Japan Ministry of Health, Labour and Welfare granted marketing
authorisation for Trelegy
Ellipta(FF/UMEC/VI) for the
treatment of COPD.
|
|
Other pharmaceuticals
|
|
Dectova (intravenous
zanamivir)
|
|
|
●
|
On 26 April, the European Commission granted marketing
authorisation for intravenous zanamivir for the treatment of
complicated influenza A or B in adult and paediatric patients (aged
>6 months).
|
|
GSK3036656
(leucyl t-RNA inhibitor)
|
|
|
●
|
The first patient was dosed in a phase II study to establish the
effect of GSK'656 in patients with drug-sensitive pulmonary
tuberculosis.
|
|
Vaccines
|
|
Vaccine
candidates
|
|
|
●
|
A decision has been made to terminate the clinical development of
our strep pneumonia (next generation) candidate vaccine and,
following an analysis of available research results, including
interim data from an ongoing phase I study, a decision has been
made to no longer pursue the clinical development of the candidate
universal flu vaccine. GSK remains committed to further
research in flu including pursuing other approaches.
|
|
Contents
|
Page
|
|
|
|
|
Total and Adjusted results
|
7
|
|
Financial performance
|
9
|
|
Cash generation
|
22
|
|
Returns to shareholders
|
23
|
|
|
|
|
Income statement
|
24
|
|
Statement of comprehensive income
|
25
|
|
Pharmaceuticals turnover
|
26
|
|
Vaccines turnover
|
27
|
|
Balance sheet
|
28
|
|
Statement of changes in equity
|
29
|
|
Cash flow statement
|
30
|
|
Segment information
|
31
|
|
Legal matters
|
32
|
|
Additional information
|
32
|
|
Reconciliation of cash flow to movements in net debt
|
35
|
|
Net debt analysis
|
35
|
|
Free cash flow reconciliation
|
35
|
|
Reporting definitions
|
36
|
|
Outlook, assumptions and cautionary statements
|
36
|
|
Independent review report
|
38
|
|
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:
|
Simon Steel
|
+44 (0) 20 8047 5502
|
(London)
|
|
|
Tim Foley
|
+44 (0) 20 8047 5502
|
(London)
|
|
|
Mary Hinks-Edwards
|
+44 (0) 20 8047 5502
|
(London)
|
|
|
|
|
|
|
US Media enquiries:
|
Kristen Neese
|
+1 215 751 3335
|
(Philadelphia)
|
|
|
|
|
|
|
Analyst/Investor enquiries:
|
Sarah Elton-Farr
|
+44 (0) 20 8047 5194
|
(London)
|
|
|
James Dodwell
|
+44 (0) 20 8047 2406
|
(London)
|
|
|
Danielle Smith
|
+44 (0) 20 8047 7562
|
(London)
|
|
|
Jeff McLaughlin
|
+1 215 751 7002
|
(Philadelphia)
|
|
Registered in England & Wales:
No. 3888792
|
|
|
|
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
|
|
Total and Adjusted results
|
|
Total reported results represent the Group's overall
performance.
GSK also uses a number of adjusted, non-IFRS, measures to report
the performance of its business. Adjusted results and other
non-IFRS measures may be considered in addition to, but not as a
substitute for or superior to, information presented in accordance
with IFRS. Adjusted results are defined below and other
non-IFRS measures are defined on page 36.
GSK believes that Adjusted results, when considered together with
Total results, provide investors, analysts and other stakeholders
with helpful complementary information to understand better the
financial performance and position of the Group from period to
period, and allow the Group's performance to be more easily
compared against the majority of its peer companies. These
measures are also used by management for planning and reporting
purposes. They may not be directly comparable with similarly
described measures used by other companies.
GSK encourages investors and analysts not to rely on any single
financial measure but to review GSK's quarterly results
announcements, including the financial statements and notes, in
their entirety.
GSK is committed to continuously improving its financial reporting,
in line with evolving regulatory requirements and best practice and
has made a number of changes in recent years. In line with
this practice, GSK expects to continue to review its reporting
framework.
Adjusted results exclude the following items from Total results,
together with the tax effects of all of these items:
|
|
●
|
amortisation of intangible assets (excluding computer
software)
|
|
●
|
impairment of intangible assets (excluding computer software) and
goodwill
|
|
●
|
major restructuring costs, which include impairments of tangible
assets and computer software, (under specific Board approved
programmes that are structural, of a significant scale and where
the costs of individual or related projects exceed £25
million), including integration costs following material
acquisitions
|
|
●
|
transaction-related accounting or other adjustments related to
significant acquisitions
|
|
●
|
proceeds and costs of disposals of associates, products and
businesses; significant legal charges (net of insurance recoveries)
and expenses on the settlement of litigation and government
investigations; other operating income other than royalty
income, and other items
|
|
●
|
the impact of the enactment of the US Tax Cuts and Jobs Act in
2017
|
|
Costs for all other ordinary course smaller scale restructuring and
legal charges and expenses are retained within both Total and
Adjusted results.
As Adjusted results include the benefits of Major restructuring
programmes but exclude significant costs (such as significant
legal, major restructuring and transaction items) they should not
be regarded as a complete picture of the Group's financial
performance, which is presented in Total results. The
exclusion of other Adjusting items may result in Adjusted earnings
being materially higher or lower than Total earnings. In
particular, when significant impairments, restructuring charges and
legal costs are excluded, Adjusted earnings will be higher than
Total earnings.
GSK has undertaken a number of Major restructuring programmes in
recent years in response to significant changes in the Group's
trading environment or overall strategy, or following material
acquisitions. Costs, both cash and non-cash, of these
programmes are provided for as individual elements are approved and
meet the accounting recognition criteria. As a result,
charges may be incurred over a number of years following the
initiation of a Major restructuring programme.
Significant legal charges and expenses are those arising from the
settlement of litigation or government investigations that are not
in the normal course and materially larger than more regularly
occurring individual matters. They also include certain major
legacy matters.
Reconciliations between Total and Adjusted results, providing
further information on the key Adjusting items, are set out on
pages 18 and 19.
GSK provides earnings guidance to the investor community on the
basis of Adjusted results. This is in line with peer
companies and expectations of the investor community, supporting
easier comparison of the Group's performance with its peers.
GSK is not able to give guidance for Total results as it cannot
reliably forecast certain material elements of the Total results,
particularly the future fair value movements on contingent
consideration and put options that can and have given rise to
significant adjustments driven by external factors such as currency
and other movements in capital markets.
|
|
ViiV Healthcare
ViiV Healthcare is a subsidiary of the Group and 100% of its
operating results (turnover, operating profit, profit after tax)
are included within the Group income statement.
Earnings are allocated to the three shareholders of ViiV Healthcare
on the basis of their respective equity shareholdings (GSK 78.3%,
Pfizer 11.7% and Shionogi 10%) and their entitlement to
preferential dividends, which are 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 allocated to each shareholder
also changes. In particular, the increasing sales of
dolutegravir-containing products have a favourable impact on the
proportion of the preferential dividends that is allocated to
GSK. Adjusting items are allocated to shareholders based on
their equity interests. GSK was entitled to approximately 85%
of the Total earnings and 82% of the Adjusted earnings of ViiV
Healthcare for 2018.
As consideration for the acquisition of Shionogi's interest in the
former Shionogi-ViiV Healthcare joint venture in 2012, Shionogi
received the 10% equity stake in ViiV Healthcare and ViiV
Healthcare also agreed to pay additional future cash consideration
to Shionogi, contingent on the future sales performance of the
products being developed by that joint venture, principally
dolutegravir. Under IFRS 3 'Business combinations', GSK was
required to provide for the estimated fair value of this contingent
consideration at the time of acquisition and is required to update
the liability to the latest estimate of fair value at each
subsequent period end. The liability for the contingent
consideration recognised in the balance sheet at the date of
acquisition was £659 million. Subsequent re-measurements
are reflected within other operating income/expense and within
Adjusting items in the income statement in each period. At 31
March 2019, the liability, which is discounted at 8.5%, stood at
£5,658 million, on a post-tax basis.
Cash payments to settle the contingent consideration are made to
Shionogi by ViiV Healthcare each quarter, based on the actual sales
performance of the relevant products in the previous quarter.
These payments reduce the balance sheet liability and hence
are not recorded in the income statement. The cash payments
made to Shionogi by ViiV Healthcare in Q1 2019 were £219
million.
Because the liability is required to be recorded at the fair value
of estimated future payments, there is a significant timing
difference between the charges that are recorded in the Total
income statement to reflect movements in the fair value of the
liability and the actual cash payments made to settle the
liability.
Further explanation of the acquisition-related arrangements with
ViiV Healthcare are set out on pages 41 and 42 of the Annual Report
2018.
|
|
Financial performance - Q1 2019
|
|
Total results
|
|
The Total results for the Group are set out below.
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
7,661
|
|
7,222
|
|
6
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
(2,733)
|
|
(2,391)
|
|
14
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
4,928
|
|
4,831
|
|
2
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(2,477)
|
|
(2,311)
|
|
7
|
|
6
|
|
Research and development
|
(1,006)
|
|
(904)
|
|
11
|
|
8
|
|
Royalty income
|
73
|
|
53
|
|
38
|
|
42
|
|
Other operating expense
|
(90)
|
|
(429)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
1,428
|
|
1,240
|
|
15
|
|
10
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
34
|
|
20
|
|
|
|
|
|
Finance expense
|
(224)
|
|
(162)
|
|
|
|
|
|
Share of after tax profits of associates
and joint ventures
|
57
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
1,295
|
|
1,107
|
|
17
|
|
11
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(310)
|
|
(348)
|
|
|
|
|
|
Tax rate %
|
23.9%
|
|
31.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
985
|
|
759
|
|
30
|
|
23
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to non-controlling
interests
|
155
|
|
210
|
|
|
|
|
|
Profit attributable to shareholders
|
830
|
|
549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
985
|
|
759
|
|
30
|
|
23
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
16.8p
|
|
11.2p
|
|
50
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Adjusted
results
The Adjusted results for the Group are set out below.
Reconciliations between Total results and Adjusted results
for Q1 2019 and Q1 2018 are set out on pages 18 and
19.
|
|
|
Q1 2019
|
||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
% of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
7,661
|
|
100
|
|
6
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
(2,203)
|
|
(28.8)
|
|
1
|
|
2
|
|
Selling, general and administration
|
(2,397)
|
|
(31.3)
|
|
5
|
|
4
|
|
Research and development
|
(971)
|
|
(12.7)
|
|
9
|
|
6
|
|
Royalty income
|
73
|
|
1.0
|
|
38
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
2,163
|
|
28.2
|
|
12
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Adjusted profit before tax
|
2,033
|
|
|
|
13
|
|
10
|
|
Adjusted profit after tax
|
1,633
|
|
|
|
14
|
|
10
|
|
Adjusted profit attributable to shareholders
|
1,484
|
|
|
|
23
|
|
19
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share
|
30.1p
|
|
|
|
22
|
|
18
|
|
|
|
|
|
|
|
|
|
|
Operating profit by business
|
Q1 2019
|
||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
% of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,968
|
|
47.3
|
|
1
|
|
(1)
|
|
Pharmaceuticals R&D*
|
(730)
|
|
|
|
19
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Total Pharmaceuticals
|
1,238
|
|
29.8
|
|
(7)
|
|
(8)
|
|
Vaccines
|
614
|
|
40.3
|
|
81
|
|
69
|
|
Consumer Healthcare
|
430
|
|
21.7
|
|
12
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
2,282
|
|
29.8
|
|
11
|
|
8
|
|
Corporate & other unallocated costs
|
(119)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
2,163
|
|
28.2
|
|
12
|
|
9
|
|
|
|
|
|
|
|
|
|
|
*
|
Operating profit of Pharmaceuticals R&D segment, which is the
responsibility of the President, Pharmaceuticals R&D. It
excludes ViiV Healthcare R&D expenditure, which is reported
within the Pharmaceuticals segment.
|
|
Turnover
|
|
Pharmaceuticals turnover
|
|
|
Q1 2019
|
||||
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Respiratory
|
631
|
|
29
|
|
25
|
|
HIV
|
1,121
|
|
7
|
|
4
|
|
Immuno-inflammation
|
121
|
|
21
|
|
15
|
|
Oncology
|
43
|
|
-
|
|
-
|
|
Established Pharmaceuticals
|
2,242
|
|
(5)
|
|
(6)
|
|
|
|
|
|
|
|
|
|
4,158
|
|
4
|
|
2
|
|
|
|
|
|
|
|
|
US
|
1,689
|
|
8
|
|
1
|
|
Europe
|
1,003
|
|
(2)
|
|
(1)
|
|
International
|
1,466
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
4,158
|
|
4
|
|
2
|
|
|
|
|
|
|
|
|
Pharmaceuticals turnover in the quarter was £4,158 million, up
4% AER, 2% CER. HIV sales were up 7% AER, 4% CER, to
£1,121 million, driven by growth of Tivicay and Juluca. Respiratory sales were up 29% AER, 25% CER,
to £631 million, on growth of Trelegy and Nucala. Sales of Established Pharmaceuticals
declined 5% AER, 6% CER to £2,242 million, including the
impact of the loss of exclusivity of Advair, partly offset by the launches of authorised
generics for Advair and Ventolin in the US.
In the US, sales grew 8% AER, 1% CER, reflecting growth in HIV,
Respiratory and Benlysta, more than offsetting the decline in Established
Products including the loss of exclusivity
of Advair. In Europe, sales declined 2% AER, 1% CER,
with strong growth in Respiratory offset by declines in Established
Pharmaceuticals. International grew 4% AER and 4%
CER, with growth in HIV and Respiratory.
Respiratory
New Respiratory sales (Ellipta products plus Nucala) were up 29% AER, 25% CER, with strong growth in
all regions. Higher demand for Trelegy
Ellipta and Nucala resulted in US growth of 27% AER, 19% CER
and Europe growth of 31% AER, 33% CER. International grew 31%
AER, 30% CER, including Relvar/Breo
Elliptaup
19%.
Sales of Nucala were £152 million in the quarter and
grew 46% AER, 41% CER, continuing to benefit from the global
rollout of the product. US sales of Nucala grew 44% AER, 36% CER to £85
million.
Sales of Ellipta products were up 24% AER, 20% CER to
£479 million driven by continued growth in all regions.
In the US, sales grew 22% AER, 14% CER, reflecting further market
share gains partly offset by the impact of continued competitive
pricing pressures, particularly for ICS/LABA products. In
Europe, sales grew 27% AER, 28% CER. In the US, sales
of Trelegy
Ellipta contributed
£66 million in the quarter, continuing to benefit from the
expanded US label.
Relvar/Breo Ellipta sales
were down 2% AER, 5% CER. In the US, Relvar/Breo
Ellipta declined 22% AER,
27% CER, impacted by competitive pricing pressures and the impact
of generic Advair on the ICS/LABA market. In Europe and
International, Relvar/Breo
Ellipta continued to grow,
up 8% AER, 10% CER and 23% AER, 19% CER
respectively.
HIV
HIV sales increased 7% AER, 4% CER to £1,121 million in the
quarter. The growth was driven by the dolutegravir franchise,
which grew 11% AER, 7% CER in the quarter, partly offset by a
decline in the rest of the portfolio. Sales of dolutegravir
products were £1,067 million in the quarter,
with Triumeq and Tivicay delivering sales of £614 million and
£383 million, respectively. Juluca, the first of our two drug regimens, recorded
sales of £70 million driven by continued share
growth.
The US and International regions grew 10% AER, 3% CER and 28% AER,
29% CER respectively, driven by Juluca in the US and a Tivicay tender in International. In Europe,
dolutegravir products declined 3% AER, 2% CER with volume growth
offset by price erosion and government clawback adjustments in Q1
2018.
The remaining portfolio delivered sales of £54 million,
representing 5% of total HIV sales, declining 36% AER, 35%
CER. This reflected continued competition from generic
products and transition to new regimens and reduced the overall
growth of total HIV by approximately three percentage
points.
Immuno-inflammation
Sales of Benlysta in the quarter were up 21% AER, 15% CER to
£121 million, including sales of the sub-cutaneous formulation
of £47 million. In the US, Benlysta grew 18% AER, 11% CER to £105
million.
Oncology
Zejula recorded sales of
£42 million, following the completion of the acquisition of
Tesaro on 22 January 2019.
Established
Pharmaceuticals
Sales of Established Pharmaceuticals in the quarter were
£2,242 million, down 5% AER, 6% CER.
Established Respiratory products were flat at AER but declined 2%
CER to £1,083 million, with the decline
in Advair/Seretide partially
offset by higher sales of Ventolin and allergy products. In the US, a generic version
of Advair was launched in February, resulting in 23%
AER, 27% CER decline in the quarter. In
Europe, Seretide sales were down 20% AER, 19% CER to £133
million, reflecting continued competition from generic
products and the transition of the Respiratory portfolio to newer
products. In International, sales of Seretide were up 4% AER and
CER. Ventolin grew by 36% AER, 33% CER driven by strong
initial sales from the launch of an authorised generic version in
the US.
The remainder of the Established Pharmaceuticals portfolio declined
by 10% AER, 9% CER, including Lamictal which declined 10% AER, 12% CER to £132
million due to generic competition in the US, together with
declines in Relenza, Coreg and Levitra.
|
|
Vaccines turnover
|
|
|
Q1 2019
|
||||
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Meningitis
|
209
|
|
16
|
|
18
|
|
Influenza
|
15
|
|
67
|
|
67
|
|
Shingles
|
357
|
|
>100
|
|
>100
|
|
Established Vaccines
|
941
|
|
-
|
|
(1)
|
|
|
|
|
|
|
|
|
|
1,522
|
|
23
|
|
20
|
|
|
|
|
|
|
|
|
US
|
777
|
|
59
|
|
49
|
|
Europe
|
339
|
|
(13)
|
|
(12)
|
|
International
|
406
|
|
13
|
|
16
|
|
|
|
|
|
|
|
|
|
1,522
|
|
23
|
|
20
|
|
|
|
|
|
|
|
|
Vaccines turnover grew 23% AER, 20% CER to £1,522 million,
primarily driven by growth in sales of Shingrix. Meningitis vaccines also contributed to
growth primarily due to favourable phasing
of Bexsero and stronger demand in International,
together with demand and share gains in the US. Established
Vaccines were flat at AER but declined 1% CER,
reflecting Cervarix year-on-year supply phasing and increased
competition in China, competitive pressures particularly in the EU
on Infanrix, Pediarix and supply constraints in MMRV vaccines,
partly offset by higher sales of Hepatitis vaccines
and Synflorix.
Meningitis
Meningitis sales grew 16% AER, 18% CER to £209
million. Bexsero sales grew 12% AER, 14% CER to £156
million, driven by favourable phasing and continued growth in
private market
sales in International, together with demand and share gains in the
US, partly offset by the completion of the vaccination of catch-up
cohorts in certain markets in Europe. Menveo sales declined 11% AER, 11% CER, primarily
reflecting the timing of CDC purchases in the
US.
Influenza
Fluarix/FluLaval sales
were up 67% AER, 67% CER to £15 million, primarily due to
favourable supply phasing in International.
Shingles
Shingrix recorded sales of
£357 million, primarily driven by the US, which benefited from
market growth in new patient populations now covered by
immunisation recommendations and the favourable benefit of prior
period payer rebate adjustments. Canada, as well as the
recent launch in Germany, also contributed to
growth.
Established
Vaccines
Sales of DTPa-containing vaccines (Infanrix, Pediarix and Boostrix) were flat at AER, down 2% CER.
Infanrix,Pediarix sales were down 11% AER, 14% CER to
£183 million, reflecting increased competitive pressures and
supply constraints in Europe, partly offset by favourable CDC
stockpile movements in the US. Boostrix sales grew 23% AER, 21% CER to £123
million, primarily driven by share gains in the US and favourable
tender phasing in International.
Hepatitis vaccines grew 23% AER, 18% CER to £239 million,
benefiting from a competitor supply shortage, favourable CDC
stockpile movements and stronger demand in the US, together with
higher demand in International, partly offset by supply constraints
in Europe.
Rotarix sales grew 3% AER,
2% CER to £134 million, reflecting favourable supply phasing
in International.
Synflorix sales grew 22%
AER, 23% CER to £121 million, primarily due to favourable
phasing and stronger demand in International.
MMRV vaccines sales declined 29% AER, 28% CER to £55 million,
mainly driven by supply constraints in Europe and
International.
Cervarix sales were down 62%
AER and CER, reflecting year-on-year supply phasing
and increased competition in China.
|
|
Consumer Healthcare turnover
|
|
|
Q1 2019
|
||||
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Wellness
|
1,006
|
|
(1)
|
|
(1)
|
|
Oral health
|
662
|
|
4
|
|
4
|
|
Nutrition
|
167
|
|
(1)
|
|
2
|
|
Skin health
|
146
|
|
(4)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
1,981
|
|
-
|
|
1
|
|
|
|
|
|
|
|
|
US
|
489
|
|
7
|
|
-
|
|
Europe
|
599
|
|
(4)
|
|
(3)
|
|
International
|
893
|
|
-
|
|
3
|
|
|
|
|
|
|
|
|
|
1,981
|
|
-
|
|
1
|
|
|
|
|
|
|
|
|
Consumer Healthcare sales were flat at AER but grew 1% CER in the
quarter to £1,981 million as growth in Oral health and
Nutrition were partly offset by declines in Wellness and Skin
health. Growth was generated in International markets,
particularly in India and South East Asia, while Europe was
impacted by on-going competitive pressures.
The divestments of small tail brands and Horlicks and MaxiNutrition in
the UK together with the phasing out of low margin contract
manufacturing reduced overall sales growth by approximately one
percentage point.
Wellness
Wellness sales declined 1% at AER and CER to £1,006 million.
Respiratory sales were down 3% AER, 4% CER with mid
single-digit growth in Flonase, benefiting from a strong pre-allergy season
sell-in in the US. This was more than offset by a decline
in Theraflu due to increased competitive pressures and a
strong comparator last year. Growth was also impacted by a
decline in non-strategic brands.
Pain relief was down 1% AER but flat at CER.
Panadol returned to growth following the prior year
discontinuation of slow-release Panadol products in the Nordic countries, but this
was offset by trade shipment phasing in other pain relief brands.
Voltaren had a flat quarter as a result of
manufacturing changes, but consumption reflected low
single-digit growth.
Oral
health
Oral health sales grew 4% AER and CER to £662 million
with Sensodyne continuing to drive performance, reporting
high single-digit CER growth. This reflected strong delivery
in the International region supported by innovation launches in the
quarter, including Sensodyne Pronamel Enamel
Repair in the US. An
improved performance in Europe resulted from responses to on-going
competitive pressures. Sales of Denture care
and parodontax grew in low and mid single digits
respectively, despite the tough prior year comparator due to
innovation launches such as Polident Max
Seal. Oral health
growth was also impacted by a decline in non-strategic
brands.
Nutrition
Nutrition sales declined 1% AER but grew 2% CER to £167
million, with India growing in mid single digits. Growth was
adversely impacted by the Horlicks and MaxiNutrition divestments
in the UK, which impacted overall Nutrition growth by three
percentage points.
Skin
health
Skin health sales declined 4% AER, 3% CER to £146 million,
largely due to divestments of small tail brands in the US, which
had a negative impact on growth of three percentage
points.
|
|
Operating
performance
|
|
Cost of sales
Total cost of sales as a percentage of turnover was 35.7%, 2.6
percentage points higher at AER and 3.2 percentage points higher in
CER terms compared with Q1 2018. This reflected an increase
in the costs of manufacturing restructuring programmes, primarily
as a result of write downs in a number of manufacturing sites, and
increased amortisation of intangible assets.
Excluding these and other Adjusting items, Adjusted cost of sales
as a percentage of turnover was 28.8%, down 1.4 percentage points
at AER, and 0.8 percentage points down at CER compared with Q1
2018. The reduction reflected a more favourable product mix
in Vaccines, primarily due to growth of Shingrix in the US, and Consumer Healthcare, a
favourable impact of inventory adjustments in Vaccines and a
further contribution from integration and restructuring savings in
Pharmaceuticals and Consumer Healthcare. This was partly
offset by continued adverse pricing pressure in Pharmaceuticals,
particularly in Respiratory, and an unfavourable product mix in
Pharmaceuticals.
Selling, general and administration
Total SG&A costs as a percentage of turnover were 32.3%, 0.3
percentage points higher compared with Q1 2018 at AER and 0.5
percentage points higher on a CER basis. This included
acquisition costs related to the announced agreement with Pfizer to
combine our consumer healthcare businesses.
Excluding these and other Adjusting items, Adjusted SG&A costs
as a percentage of turnover were 31.3%, 0.4 percentage points lower
at AER than in Q1 2018 and 0.2 percentage points lower on a CER
basis. The growth in Adjusted SG&A costs of 5% AER, 4%
CER reflected increased investment resulting from the acquisition
of Tesaro and in promotional product support, particularly for new
launches in Vaccines, Respiratory and HIV and targeted priority
markets. This was partly offset by the tight control of
ongoing costs, particularly in non-promotional spending across all
three businesses.
Research and development
Total R&D expenditure was £1,006 million (13.1% of
turnover), up 11% AER, 8% CER. Adjusted R&D expenditure
was £971 million (12.7% of turnover), 9% higher at AER, 6%
higher at CER than Q1 2018. Pharmaceuticals R&D
expenditure was £747 million, up 12% AER, 8% CER, primarily
reflecting increased Development investment resulting from the
acquisition of Tesaro and investment in the progression of a number
of mid and late-stage programmes, particularly in Oncology,
including the transition of certain programmes from Discovery into
Development. This was partly offset by the phasing of
investment in late-stage programmes, particularly in HIV, together
with a reduction in Discovery expenditure arising from completion
of the Bioelectronics phase I investment, the transition of certain
programmes into Development and the benefits of the
re-prioritisation of the R&D portfolio. R&D
expenditure in Vaccines and Consumer Healthcare was £162
million and £62 million, respectively.
|
|
Royalty income
Royalty income was £73 million (Q1 2018: £53 million), up
38% AER, 42% CER, primarily reflecting increased royalties on sales
of Gardasil.
Other operating expense
Net other operating expense of £90 million (Q1 2018: £429
million) primarily reflected a decrease in value of the shares in
Hindustan Unilever Limited to be received on the disposal
of Horlicks and other Consumer Healthcare brands of
£206 million in the quarter. The cumulative reduction in
value since the signing of the proposed transaction was £108
million. This was partly offset by the profit on a number of
asset disposals and accounting credits of £85 million (Q1
2018: £416 million charge) arising from the re-measurement of
the contingent consideration liabilities related to the
acquisitions of the former Shionogi-ViiV Healthcare joint venture
and the former Novartis Vaccines business and the liabilities for
the Pfizer put option and Pfizer and Shionogi preferential
dividends in ViiV Healthcare. This included a re-measurement
credit of £60 million for the contingent consideration
liability due to Shionogi, primarily arising from credits arising
from changes in exchange rate assumptions partly offset by the
unwind of the discount.
|
|
Operating profit
Total operating profit was £1,428 million in Q1 2019 compared
with £1,240 million in Q1 2018. Increased charges for
major restructuring, primarily arising from write downs in a number
of manufacturing sites, and a decrease in value of the shares in
Hindustan Unilever Limited to be received on the disposal
of Horlicks and other Consumer Healthcare brands, were
largely offset by re-measurement credits on the contingent
consideration liabilities.
Excluding these and other Adjusting items, Adjusted operating
profit was £2,163 million, 12% higher than Q1 2018 at AER and
9% higher at CER on a turnover increase of 5% CER. The
Adjusted operating margin of 28.2% was 1.6 percentage points higher
at AER, 1.0 percentage points higher on a CER basis than in Q1
2018. The increase in Adjusted operating profit primarily
reflected the benefit from sales growth in all three businesses,
particularly Vaccines, a more favourable mix in Vaccines and
Consumer Healthcare, a benefit from favourable inventory
adjustments in the quarter in Vaccines and continued tight control
of ongoing costs across all three businesses. This was partly
offset by continuing price pressure, particularly in Respiratory,
including an initial impact of the launch of a generic version
of Advair in February 2019, and investments in
promotional product support, particularly for new launches in
Vaccines, HIV and Respiratory.
Contingent consideration cash payments which are made to Shionogi
and other companies reduce the balance sheet liability and hence
are not recorded in the income statement. Total contingent
consideration cash payments in the quarter amounted to £217
million (Q1 2018: £517 million). This included cash
payments made to Shionogi of £219 million (Q1 2018: £197
million).
Operating profit by business
Pharmaceuticals operating profit was £1,238 million, down 7%
AER, 8% CER on a turnover increase of 2% CER. The operating
margin of 29.8% was 3.4 percentage points lower at AER than in Q1
2018 and 3.3 percentage points lower on a CER basis. This
primarily reflected the increase in cost of sales percentage due to
the continued impact of lower prices, particularly in Respiratory,
including the initial impact of the launch of a generic version
of Advair in February 2019, an unfavourable product
mix, primarily as a result of the growth in some lower margin
established products, together with investment in new product
support and targeted priority markets, and the impact of the
acquisition of Tesaro with increased investment in SG&A and
R&D. This was partly offset by continued tight control of
ongoing costs and the benefits of re-prioritisation of the R&D
portfolio.
Vaccines operating profit was £614 million, 81% higher than Q1
2018 at AER and 69% higher at CER on a turnover increase of 20%
CER. The operating margin of 40.3% was 13.0 percentage points
higher than in Q1 2018 at AER and 11.1 percentage points higher on
a CER basis. This was primarily driven by enhanced operating
leverage from strong sales
growth, particularly Shingrix in the US, improved product mix,
the favourable impact of inventory adjustments and higher
royalty income, with higher SG&A investment increased broadly
in line with sales to support new launches and business
growth.
Consumer Healthcare operating profit was £430 million, up 12%
AER, 12% CER, on a turnover increase of 1% CER. The operating
margin of 21.7% was 2.3 percentage points higher than in Q1 2018 at
AER, and 2.1 percentage points higher on a CER basis. This
primarily reflected continued manufacturing restructuring and
integration benefits and improved product mix as well as tight
control of promotional and other operating expenses compared with
Q1 2018.
Net finance costs
Total net finance costs were £190 million compared with
£142 million in Q1 2018. Adjusted net finance costs were
£187 million compared with £139 million in Q1
2018. The increase primarily reflected higher debt
levels following the acquisition from Novartis of its stake in the
Consumer Healthcare Joint Venture in June 2018 and the acquisition
of Tesaro in January 2019, as well as an adverse comparison with a
one-off accounting adjustment of £20 million to amortisation
of interest charges in Q1 2018. This was partly offset by the
benefit from older bonds being refinanced at lower interest
rates. Following the introduction of IFRS 16, 'Leases',
finance costs included an unwind of the discount on the lease
liability of £11 million in the quarter.
Share of after tax profits of associates and joint
ventures
The share of after tax profits of associates was £57 million
(Q1 2018: £9 million). This included a one-off
adjustment of £51 million to reflect GSK's share of increased
after tax profits of Innoviva primarily as a result of a
non-recurring income tax benefit.
Taxation
The charge of £310 million represented an effective tax rate
on Total results of 23.9% (Q1 2018: 31.4%) and reflected the
different tax effects of the various Adjusting items, including the
non-taxable loss arising from the decrease in value of the shares
in Hindustan Unilever Limited to be received on the disposal
of Horlicks and other Consumer Healthcare
brands. Tax on Adjusted profit amounted to £400
million and represented an effective Adjusted tax rate of 19.7% (Q1
2018: 20.2%).
Issues related to taxation are described in Note 14, 'Taxation' in
the Annual Report 2018. 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.
Non-controlling interests
The allocation of Total earnings to non-controlling interests
amounted to £155 million (Q1 2018: £210 million).
The reduction was primarily due to the ending of the
allocation of Consumer Healthcare profits (Q1 2018: £89
million) following the buyout of Novartis' interest. This was
partly offset by an increased allocation of ViiV Healthcare profits
to £129 million (Q1 2018: £110 million) as well as higher
net profits in some of the Group's other entities with
non-controlling interests.
The allocation of Adjusted earnings to non-controlling interests
amounted to £149 million (Q1 2018: £224
million). The reduction in allocation was again
primarily due to the ending of the allocation of Consumer
Healthcare profits, partly offset by an increased allocation of
ViiV Healthcare profits.
Earnings per share
Total earnings per share was 16.8p, compared with 11.2p in Q1 2018.
The increase in earnings per share primarily reflected an
improved trading performance, the reduced non-controlling interest
allocation of Consumer Healthcare profits and the increased share
of after tax profit of the associate, Innoviva.
Adjusted EPS of 30.1p compared with 24.6p in Q1 2018, up 22% AER,
18% CER, on a 9% CER increase in Adjusted operating profit.
The improvement primarily resulted from the reduced non-controlling
interest allocation of Consumer Healthcare profits following the
buyout in Q2 2018 and an increased share of after tax profits of
associates as a result of a non-recurring income tax benefit in
Innoviva, partly offset by increased net finance
costs.
Currency impact on Q1 2019 results
The Q1 2019 results are based on average exchange rates,
principally £1/$1.31, £1/€1.15 and £1/Yen
144. Comparative exchange rates are given on page 33.
The period-end exchange rates were £1/$1.31,
£1/€1.17 and £1/Yen 145.
In the quarter, turnover increased 6% AER, 5% CER. Total EPS
was 16.8p compared with 11.2p in Q1 2018. Adjusted EPS was
30.1p compared with 24.6p in Q1 2018, up 22% AER and up 18%
CER. The positive currency impact primarily reflected the
weakness of Sterling, particularly against the US$ and Yen, partly
offset by weakness in emerging market currencies and the Euro,
relative to Q1 2018. Exchange gains or losses on the
settlement of intercompany transactions contributed around one
percentage point of the positive currency impact of four percentage
points on Adjusted EPS.
|
|
Adjusting items
The reconciliations between Total results and Adjusted results for
Q1 2019 and Q1 2018 are set out below.
|
|
Three months ended 31 March
2019
|
|
|
Total
results
£m
|
Intangible
amortisation
£m
|
Intangible
impairment
£m
|
Major
restructuring
£m
|
Transaction
related
£m
|
Divestments, significant
legal andother items
£m
|
Adjusted
results
£m
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Turnover
|
7,661
|
|
|
|
|
|
7,661
|
|
Cost of sales
|
(2,733)
|
171
|
13
|
341
|
5
|
|
(2,203)
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Gross profit
|
4,928
|
171
|
13
|
341
|
5
|
|
5,458
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(2,477)
|
|
4
|
25
|
29
|
22
|
(2,397)
|
|
Research and development
|
(1,006)
|
17
|
2
|
15
|
|
1
|
(971)
|
|
Royalty income
|
73
|
|
|
|
|
|
73
|
|
Other operating (expense)/income
|
(90)
|
|
|
(1)
|
(87)
|
178
|
-
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Operating profit
|
1,428
|
188
|
19
|
380
|
(53)
|
201
|
2,163
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(190)
|
|
|
1
|
|
2
|
(187)
|
|
Share of after tax profits of associates and joint
ventures
|
57
|
|
|
|
|
|
57
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Profit before taxation
|
1,295
|
188
|
19
|
381
|
(53)
|
203
|
2,033
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(310)
|
(37)
|
(3)
|
(58)
|
8
|
-
|
(400)
|
|
Tax rate %
|
23.9%
|
|
|
|
|
|
19.7%
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Profit after taxation
|
985
|
151
|
16
|
323
|
(45)
|
203
|
1,633
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Profit attributable to non-controlling interests
|
155
|
|
|
|
(6)
|
|
149
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders
|
830
|
151
|
16
|
323
|
(39)
|
203
|
1,484
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
16.8p
|
3.1p
|
0.3p
|
6.5p
|
(0.7)p
|
4.1p
|
30.1p
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (millions)
|
4,936
|
|
|
|
|
|
4,936
|
|
|
------------
|
|
|
|
|
|
------------
|
|
Three months ended 31 March
2018
|
|
|
Total
results
£m
|
Intangible
amortisation
£m
|
Intangible
impairment
£m
|
Major
restructuring
£m
|
Transaction
related
£m
|
Divestments, significant
legal and other items
£m
|
Adjusted
results
£m
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Turnover
|
7,222
|
|
|
|
|
|
7,222
|
|
Cost of sales
|
(2,391)
|
139
|
27
|
43
|
3
|
|
(2,179)
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Gross profit
|
4,831
|
139
|
27
|
43
|
3
|
|
5,043
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(2,311)
|
|
|
19
|
|
6
|
(2,286)
|
|
Research and development
|
(904)
|
10
|
|
3
|
|
4
|
(887)
|
|
Royalty income
|
53
|
|
|
|
|
|
53
|
|
Other operating (expense)/income
|
(429)
|
|
|
|
434
|
(5)
|
-
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Operating profit
|
1,240
|
149
|
27
|
65
|
437
|
5
|
1,923
|
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(142)
|
|
|
1
|
|
2
|
(139)
|
|
Share of after tax profits of associates and joint
ventures
|
9
|
|
|
|
|
|
9
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Profit before taxation
|
1,107
|
149
|
27
|
66
|
437
|
7
|
1,793
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
(348)
|
(32)
|
(4)
|
(17)
|
20
|
19
|
(362)
|
|
Tax rate %
|
31.4%
|
|
|
|
|
|
20.2%
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Profit after taxation
|
759
|
117
|
23
|
49
|
457
|
26
|
1,431
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Profit attributable to non-controlling interests
|
210
|
|
|
|
14
|
|
224
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders
|
549
|
117
|
23
|
49
|
443
|
26
|
1,207
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
11.2p
|
2.4p
|
0.5p
|
1.0p
|
9.0p
|
0.5p
|
24.6p
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (millions)
|
4,903
|
|
|
|
|
|
4,903
|
|
|
------------
|
|
|
|
|
|
------------
|
|
Major restructuring and integration
Within the Pharmaceuticals sector, the highly regulated
manufacturing operations and supply chains and long lifecycle of
the business mean that restructuring programmes, particularly those
that involve the rationalisation or closure of manufacturing or
R&D sites are likely to take several years to
complete.
Major restructuring costs are those related to specific
Board approved Major restructuring programmes and are excluded from
Adjusted Results. Major restructuring programmes, including
integration costs following material acquisitions, are those that
are structural and are of a significant scale where the costs of
individual or related projects exceed £25 million. Other
ordinary course smaller scale restructuring costs are retained
within Total and Adjusted results.
The Board approved a new Major restructuring programme in July
2018, which is designed to significantly improve the
competitiveness and efficiency of the Group's cost base with
savings delivered primarily through supply chain
optimisation and
reductions in administrative costs.
The Group acquired Tesaro in January 2019, and is expected to incur
around £50 million of integration and restructuring cash
costs, leading to annual cost-saving benefits of around £50
million. This will be added to and reported as part of the
2018 Major restructuring programme.
The Group also announced in December that it had reached agreement
with Pfizer Inc to combine our consumer healthcare
businesses. The proposed transaction is expected to realise
substantial cost synergies, with the new Joint Venture expected to
generate total annual cost savings of £0.5 billion by 2022 for
expected total major restructuring cash costs of £0.9 billion
and non-cash charges of £0.3 billion. Up to 25% of the cost
savings are intended to be reinvested in the business to support
innovation and other growth opportunities.
|
|
Total Major restructuring charges incurred in the quarter were
£380 million (Q1 2018: £65 million), analysed as
follows:
|
|
|
Q1 2019
|
|
Q1
2018
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
restructuring and integration programme
|
22
|
|
12
|
|
34
|
|
48
|
|
17
|
|
65
|
|
2018
major restructuring programme (incl. Tesaro)
|
24
|
|
312
|
|
336
|
|
-
|
|
-
|
|
-
|
|
Consumer
Healthcare Joint Venture integration programme
|
10
|
|
-
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
324
|
|
380
|
|
48
|
|
17
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash charges arising under the 2018 major restructuring
programme primarily related to the write-down of assets as part of
the plans to reduce the manufacturing network. Cash charges
arose from restructuring of the manufacturing organisation, R&D
and some administrative functions. Non-cash charges under the
Combined restructuring and integration programme primarily related
to announced plans to restructure the manufacturing network, and
cash charges arose from restructuring in some manufacturing sites,
R&D and some administrative functions.
Total cash payments made in the quarter were £174 million,
£121 million for the existing Combined restructuring and
integration programme (Q1 2018: £104 million) and £53
million under the 2018 major restructuring programme including the
settlement of certain charges accrued in previous
quarters.
The analysis of Major restructuring charges by business was as
follows:
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
|
|
|
|
|
Pharmaceuticals
|
336
|
|
23
|
|
Vaccines
|
-
|
|
25
|
|
Consumer Healthcare
|
21
|
|
15
|
|
|
|
|
|
|
|
357
|
|
63
|
|
Corporate & central functions
|
23
|
|
2
|
|
|
|
|
|
|
Total Major restructuring costs
|
380
|
|
65
|
|
|
|
|
|
|
The analysis of Major restructuring charges by Income statement
line was as follows:
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
|
|
|
|
|
Cost of sales
|
341
|
|
43
|
|
Selling, general and administration
|
25
|
|
19
|
|
Research and development
|
15
|
|
3
|
|
Other operating income
|
(1)
|
|
-
|
|
|
|
|
|
|
Total Major restructuring costs
|
380
|
|
65
|
|
|
|
|
|
|
The Combined restructuring and integration programme delivered
incremental annual cost savings in the quarter of £0.1
billion. Given its relatively recent launch, the benefit
delivery in the quarter from the 2018 major restructuring programme
was not material.
Total cash charges for the Combined restructuring and integration
programme are now expected to be approximately £4.1 billion
with non-cash charges up to £1.6 billion. The programme
has now delivered approximately £4.0 billion of annual
savings, including an estimated currency benefit of £0.3
billion. The programme is now expected to deliver by 2020
total annual savings of £4.4 billion on a constant currency
basis, including an estimated benefit of £0.4 billion from
currency on the basis of Q1 2019 average exchange
rates.
The 2018 major restructuring programme, now including Tesaro, is
expected to cost £1.75 billion over the period to 2021, with
cash costs of £0.85 billion and non-cash costs of £0.9
billion, and is expected to deliver annual savings of around
£450 million by 2021 (at Q1 2019 rates). These savings
will be fully re-invested to help fund targeted increases in
R&D and commercial support of new products.
|
|
Transaction-related adjustments
Transaction-related adjustments resulted in a net credit of
£53 million (Q1 2018: £437 million charge). This
primarily reflected £85 million of accounting credits for the
re-measurement of the contingent consideration liabilities related
to the acquisitions of the former Shionogi-ViiV Healthcare joint
venture and the former Novartis Vaccines business and the
liabilities for the Pfizer put option and Pfizer and Shionogi
preferential dividends in ViiV Healthcare.
|
|
Charge/(credit)
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
|
|
|
|
|
Consumer Healthcare Joint Venture put option
|
-
|
|
495
|
|
Contingent consideration on former Shionogi-ViiV Healthcare Joint
Venture (including Shionogi preferential dividends)
|
(60)
|
|
(31)
|
|
ViiV Healthcare put options and Pfizer preferential
dividends
|
(24)
|
|
(61)
|
|
Contingent consideration on former Novartis Vaccines
business
|
(1)
|
|
13
|
|
Other adjustments
|
32
|
|
21
|
|
|
|
|
|
|
Total transaction-related (credits)/charges
|
(53)
|
|
437
|
|
|
|
|
|
|
The £60 million credit relating to the contingent
consideration for the former Shionogi-ViiV Healthcare Joint Venture
represented a reduction in the valuation of the contingent
consideration due to Shionogi, primarily as a result of updated
exchange rate assumptions, partly offset by a £108 million
unwind of the discount.
Other adjustments included transaction costs relating to the
agreement with Pfizer to combine our consumer healthcare
businesses.
An explanation of the accounting for the non-controlling interests
in ViiV Healthcare is set out on page 8.
Divestments, significant legal charges and other items
Divestments and other items included a loss in the quarter of
£206 million arising from the decrease in value of the shares
in Hindustan Unilever Limited to be received on the disposal
of Horlicks and other Consumer Healthcare brands, as
well as equity investment impairments and certain other Adjusting
items. This was partly offset by the profit on a number of
asset disposals. A charge of £22 million (Q1 2018:
£5 million) for significant legal matters included the benefit
of the settlement of existing matters as well as provisions for
ongoing litigation. Significant legal cash payments were
£4 million (Q1 2018: £5 million).
|
|
Cash generation
|
|
Cash flow
|
|
|
Q1 2019
|
|
Q1 2018
|
|
|
|
|
|
|
Net cash inflow from operating activities (£m)
|
663
|
|
863
|
|
Free cash flow* (£m)
|
165
|
|
329
|
|
Free cash flow growth (%)
|
(50)%
|
|
(49)%
|
|
Free cash flow conversion* (%)
|
20%
|
|
60%
|
|
Net debt** (£m)
|
27,058
|
|
13,377
|
|
*
|
Free cash flow and free cash flow conversion are defined on page
36.
As announced at Q2 2018, with the introduction of the new R&D
strategy, GSK has revised its definition of free cash flow to
include proceeds from disposals of intangible assets, as set out on
page 35. Comparative figures have been revised
accordingly.
|
|
|
|
|
**
|
Net debt is analysed on page 35.
|
|
Q1 2019
The net cash inflow from operating activities for the quarter was
£663 million (Q1 2018: £863 million). The reduction
primarily reflected the adverse timing of payments for returns and
rebates, as well as the initial step-down impact
from Advair generic competition and an increase in trade
receivables as a result of strong sales in the quarter, partly
offset by improved operating profits and lower contingent
consideration payments compared with Q1 2018 which included a
milestone payment to Novartis.
Total cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the quarter were £219
million (Q1 2018: £197 million), of which £195 million
was recognised in cash flows from operating activities and £24
million was recognised in contingent consideration paid within
investing cash flows. These payments are deductible for tax
purposes.
Free cash flow was £165 million for the quarter (Q1 2018:
£329 million). The reduction primarily reflected the
adverse timing of payments for returns and rebates, as well as the
initial step-down impact from Advair generic competition and an increase in trade
receivables as a result of strong sales in the quarter, partly
offset by improved operating profits, lower capital expenditure and
lower contingent consideration payments compared with Q1 2018 which
included a milestone payment to Novartis.
|
|
Net debt
At 31 March 2019, net debt was £27.1 billion, compared with
£21.6 billion at 31 December 2018, comprising gross debt of
£31.8 billion and cash and liquid investments of £4.7
billion, including £0.5 billion reported within Assets held
for sale. Net debt increased due to the £3.6 billion
acquisition of Tesaro Inc, together with the £1.3 billion
impact from the implementation of IFRS 16 and the dividend paid to
shareholders of £0.9 billion, partly offset by £0.8
billion of favourable exchange impacts from the translation of
non-Sterling denominated debt.
At 31 March 2019, GSK had short-term borrowings (including
overdrafts and lease liabilities) repayable within 12 months of
£8.4 billion with loans of £1.7 billion repayable in the
subsequent year.
|
|
Returns to shareholders
|
|
Quarterly dividends
The Board has declared a first interim dividend for 2019 of 19
pence per share (Q1 2018: 19 pence per share).
GSK recognises the importance of dividends to shareholders and aims
to distribute regular dividend payments that will be determined
primarily with reference to the free cash flow generated by the
business after funding the investment necessary to support the
Group's future growth.
The Board intends to maintain the dividend for 2019 at the current
level of 80p per share, subject to any material change in the
external environment or performance expectations. Over time,
as free cash flow strengthens, it intends to build free cash flow
cover of the annual dividend to a target range of 1.25-1.50x,
before returning the dividend to growth.
Payment of dividends
The equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 9 July 2019. An
annual fee of $0.03 per ADS (or $0.0075 per ADS per quarter) (2018:
$0.02 per ADS; $0.005 per ADS per quarter) is charged by the
Depositary.
The ex-dividend date will be 16 May 2019, with a record date of 17
May 2019 and a payment date of 11 July 2019.
|
|
|
Paid/payable
|
|
Pence per share
|
|
£m
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
First interim
|
11 July 2019
|
|
19
|
|
940
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
First interim
|
12 July 2018
|
|
19
|
|
934
|
|
Second interim
|
11 October 2018
|
|
19
|
|
934
|
|
Third interim
|
10 January 2019
|
|
19
|
|
935
|
|
Fourth interim
|
11 April 2019
|
|
23
|
|
1,138
|
|
|
|
|
|
|
|
|
|
|
|
80
|
|
3,941
|
|
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
Q1 2019
millions
|
|
Q1 2018
millions
|
|
|
|
|
|
|
Weighted average number of shares - basic
|
4,936
|
|
4,903
|
|
Dilutive effect of share options and share awards
|
42
|
|
42
|
|
|
|
|
|
|
Weighted average number of shares - diluted
|
4,978
|
|
4,945
|
|
|
|
|
|
|
At 31 March 2019, 4,946 million shares (31 March 2018: 4,913
million) were in free issue (excluding Treasury shares and shares
held by the ESOP Trusts). GSK made no share repurchases
during the period. The company issued 2.1 million shares
under employee share schemes for proceeds of £27 million (Q1
2018: £11 million).
|
|
At 31 March 2019, the ESOP Trust held 40.8 million GSK shares
against the future exercise of share options and share
awards. The carrying value of £286 million has been
deducted from other reserves. The market value of these
shares was £659 million.
At 31 March 2019, the company held 393.5 million Treasury shares at
a cost of £5,505 million, which has been deducted from
retained earnings.
|
|
Financial information
|
|
Income statement
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
|
|
|
|
|
TURNOVER
|
7,661
|
|
7,222
|
|
|
|
|
|
|
Cost of sales
|
(2,733)
|
|
(2,391)
|
|
|
|
|
|
|
Gross profit
|
4,928
|
|
4,831
|
|
|
|
|
|
|
Selling, general and administration
|
(2,477)
|
|
(2,311)
|
|
Research and development
|
(1,006)
|
|
(904)
|
|
Royalty income
|
73
|
|
53
|
|
Other operating expense
|
(90)
|
|
(429)
|
|
|
|
|
|
|
OPERATING PROFIT
|
1,428
|
|
1,240
|
|
|
|
|
|
|
Finance income
|
34
|
|
20
|
|
Finance expense
|
(224)
|
|
(162)
|
|
Share of after tax profits of associates and joint
ventures
|
57
|
|
9
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION
|
1,295
|
|
1,107
|
|
|
|
|
|
|
Taxation
|
(310)
|
|
(348)
|
|
Tax rate %
|
23.9%
|
|
31.4%
|
|
|
|
|
|
|
PROFIT AFTER TAXATION FOR THE PERIOD
|
985
|
|
759
|
|
|
|
|
|
|
Profit attributable to non-controlling interests
|
155
|
|
210
|
|
Profit attributable to shareholders
|
830
|
|
549
|
|
|
|
|
|
|
|
985
|
|
759
|
|
|
|
|
|
|
EARNINGS PER SHARE
|
16.8p
|
|
11.2p
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
16.7p
|
|
11.1p
|
|
|
|
|
|
|
Statement of comprehensive
income
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
|
|
|
|
|
Profit for the period
|
985
|
|
759
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
|
Exchange movements on overseas net assets and net investment
hedges
|
75
|
|
66
|
|
Fair value movements on cash flow hedges
|
-
|
|
22
|
|
Reclassification of cash flow hedges to income
statement
|
1
|
|
(31)
|
|
Deferred tax on fair value movements on cash flow
hedges
|
(1)
|
|
-
|
|
|
|
|
|
|
|
75
|
|
57
|
|
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
|
Exchange movements on overseas net assets of non-controlling
interests
|
(18)
|
|
(28)
|
|
Fair value movements on equity investments
|
38
|
|
97
|
|
Deferred tax on fair value movements on equity
investments
|
(10)
|
|
(9)
|
|
Re-measurement (losses)/gains on defined benefit plans
|
(442)
|
|
186
|
|
Tax on re-measurement (losses)/gains on defined benefit
plans
|
75
|
|
(38)
|
|
|
|
|
|
|
|
(357)
|
|
208
|
|
|
|
|
|
|
Other comprehensive (expense)/income for the period
|
(282)
|
|
265
|
|
|
|
|
|
|
Total comprehensive income for the period
|
703
|
|
1,024
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period attributable
to:
|
|
|
|
|
Shareholders
|
566
|
|
842
|
|
Non-controlling interests
|
137
|
|
182
|
|
|
|
|
|
|
|
703
|
|
1,024
|
|
|
|
|
|
|
Pharmaceuticals turnover - three months ended 31 March
2019
|
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
631
|
29
|
25
|
337
|
27
|
19
|
176
|
31
|
33
|
118
|
31
|
30
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Ellipta
products
|
479
|
24
|
20
|
252
|
22
|
14
|
131
|
27
|
28
|
96
|
26
|
26
|
|
Anoro Ellipta
|
102
|
5
|
2
|
58
|
(3)
|
(8)
|
27
|
13
|
13
|
17
|
31
|
31
|
|
Arnuity Ellipta
|
7
|
(36)
|
(36)
|
6
|
(40)
|
(40)
|
-
|
-
|
-
|
1
|
-
|
-
|
|
Incruse Ellipta
|
68
|
42
|
37
|
44
|
63
|
52
|
18
|
12
|
12
|
6
|
20
|
40
|
|
Relvar/Breo Ellipta
|
215
|
(2)
|
(5)
|
78
|
(22)
|
(27)
|
67
|
8
|
10
|
70
|
23
|
19
|
|
Trelegy Ellipta
|
87
|
>100
|
>100
|
66
|
>100
|
>100
|
19
|
>100
|
>100
|
2
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nucala
|
152
|
46
|
41
|
85
|
44
|
36
|
45
|
45
|
48
|
22
|
57
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
1,121
|
7
|
4
|
689
|
10
|
3
|
278
|
(7)
|
(6)
|
154
|
28
|
29
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Dolutegravir
products
|
1,067
|
11
|
7
|
670
|
11
|
4
|
262
|
(3)
|
(2)
|
135
|
50
|
50
|
|
Tivicay
|
383
|
10
|
7
|
223
|
(2)
|
(8)
|
94
|
7
|
8
|
66
|
>100
|
>100
|
|
Triumeq
|
614
|
1
|
(2)
|
386
|
5
|
(1)
|
160
|
(12)
|
(11)
|
68
|
17
|
17
|
|
Juluca
|
70
|
>100
|
>100
|
61
|
>100
|
>100
|
8
|
>100
|
>100
|
1
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Epzicom/Kivexa
|
19
|
(49)
|
(46)
|
1
|
(67)
|
(67)
|
6
|
(57)
|
(57)
|
12
|
(40)
|
(35)
|
|
Selzentry
|
23
|
(21)
|
(24)
|
13
|
(13)
|
(20)
|
7
|
(22)
|
(22)
|
3
|
(40)
|
(40)
|
|
Other
|
12
|
(33)
|
(28)
|
5
|
(29)
|
(29)
|
3
|
(50)
|
(33)
|
4
|
(20)
|
(20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-
inflammation
|
121
|
21
|
15
|
105
|
18
|
11
|
11
|
37
|
37
|
5
|
67
|
67
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Benlysta
|
121
|
21
|
15
|
105
|
18
|
11
|
11
|
22
|
22
|
5
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
43
|
-
|
-
|
26
|
-
|
-
|
17
|
-
|
-
|
-
|
-
|
-
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Zejula
|
42
|
-
|
-
|
26
|
-
|
-
|
16
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Pharmaceuticals
|
2,242
|
(5)
|
(6)
|
532
|
(9)
|
(14)
|
521
|
(11)
|
(10)
|
1,189
|
(1)
|
-
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Established
Respiratory
|
1,083
|
-
|
(2)
|
400
|
1
|
(5)
|
218
|
(14)
|
(13)
|
465
|
7
|
6
|
|
Seretide/Advair
|
486
|
(14)
|
(15)
|
176
|
(23)
|
(27)
|
133
|
(20)
|
(19)
|
177
|
4
|
4
|
|
Flixotide/Flovent
|
146
|
(8)
|
(10)
|
78
|
(9)
|
(15)
|
26
|
(4)
|
-
|
42
|
(7)
|
(7)
|
|
Ventolin
|
245
|
36
|
33
|
146
|
80
|
70
|
33
|
(3)
|
(3)
|
66
|
2
|
5
|
|
Avamys/Veramyst
|
115
|
17
|
15
|
-
|
-
|
-
|
19
|
(5)
|
(5)
|
96
|
23
|
21
|
|
Other
Respiratory
|
91
|
10
|
6
|
-
|
-
|
-
|
7
|
-
|
-
|
84
|
11
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatology
|
108
|
1
|
3
|
2
|
100
|
100
|
38
|
(3)
|
-
|
68
|
1
|
3
|
|
Augmentin
|
160
|
(2)
|
(1)
|
-
|
-
|
-
|
49
|
(11)
|
(9)
|
111
|
2
|
4
|
|
Avodart
|
143
|
1
|
1
|
1
|
(67)
|
(67)
|
56
|
(12)
|
(12)
|
86
|
16
|
16
|
|
Imigran/Imitrex
|
31
|
(3)
|
(6)
|
12
|
-
|
-
|
13
|
(13)
|
(13)
|
6
|
20
|
-
|
|
Lamictal
|
132
|
(10)
|
(12)
|
65
|
(8)
|
(14)
|
25
|
(4)
|
(4)
|
42
|
(14)
|
(14)
|
|
Seroxat/Paxil
|
40
|
-
|
-
|
-
|
-
|
-
|
9
|
(10)
|
(10)
|
31
|
3
|
3
|
|
Valtrex
|
27
|
(4)
|
(4)
|
5
|
67
|
33
|
7
|
-
|
-
|
15
|
(17)
|
(11)
|
|
Other
|
518
|
(17)
|
(16)
|
47
|
(53)
|
(56)
|
106
|
(9)
|
(7)
|
365
|
(11)
|
(10)
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Pharmaceuticals
|
4,158
|
4
|
2
|
1,689
|
8
|
1
|
1,003
|
(2)
|
(1)
|
1,466
|
4
|
4
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover - three months
ended 31 March 2019
|
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
209
|
16
|
18
|
71
|
29
|
20
|
83
|
(16)
|
(14)
|
55
|
>100
|
>100
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Bexsero
|
156
|
12
|
14
|
48
|
55
|
45
|
77
|
(16)
|
(14)
|
31
|
94
|
>100
|
|
Menveo
|
33
|
(11)
|
(11)
|
23
|
(4)
|
(13)
|
4
|
(20)
|
(20)
|
6
|
(25)
|
-
|
|
Other
|
20
|
>100
|
>100
|
-
|
-
|
-
|
2
|
-
|
-
|
18
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
15
|
67
|
67
|
-
|
-
|
-
|
1
|
-
|
-
|
14
|
56
|
56
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Fluarix, FluLaval
|
15
|
67
|
67
|
-
|
-
|
-
|
1
|
-
|
-
|
14
|
56
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
357
|
>100
|
>100
|
328
|
>100
|
>100
|
5
|
-
|
-
|
24
|
>100
|
>100
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Shingrix
|
357
|
>100
|
>100
|
328
|
>100
|
>100
|
5
|
-
|
-
|
24
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Vaccines
|
941
|
-
|
(1)
|
378
|
14
|
7
|
250
|
(13)
|
(12)
|
313
|
(1)
|
-
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Infanrix, Pediarix
|
183
|
(11)
|
(14)
|
103
|
(3)
|
(8)
|
47
|
(36)
|
(34)
|
33
|
22
|
22
|
|
Boostrix
|
123
|
23
|
21
|
61
|
33
|
24
|
37
|
-
|
-
|
25
|
47
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
239
|
23
|
18
|
157
|
40
|
31
|
50
|
(15)
|
(15)
|
32
|
33
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
134
|
3
|
2
|
45
|
(4)
|
(9)
|
29
|
-
|
3
|
60
|
11
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
121
|
22
|
23
|
-
|
-
|
-
|
18
|
38
|
46
|
103
|
20
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,
Varilrix
|
55
|
(29)
|
(28)
|
-
|
-
|
-
|
27
|
(32)
|
(32)
|
28
|
(25)
|
(22)
|
|
Cervarix
|
20
|
(62)
|
(62)
|
-
|
-
|
-
|
5
|
-
|
-
|
15
|
(68)
|
(68)
|
|
Other
|
66
|
(17)
|
(18)
|
12
|
(45)
|
(45)
|
37
|
12
|
12
|
17
|
(31)
|
(35)
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
Vaccines
|
1,522
|
23
|
20
|
777
|
59
|
49
|
339
|
(13)
|
(12)
|
406
|
13
|
16
|
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
|
|
|
31 March 2019
£m
|
|
31 December 2018
£m
|
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and equipment
|
10,271
|
|
11,058
|
|
Right of use assets
|
1,021
|
|
-
|
|
Goodwill
|
6,807
|
|
5,789
|
|
Other intangible assets
|
20,022
|
|
17,202
|
|
Investments in associates and joint ventures
|
292
|
|
236
|
|
Other investments
|
1,350
|
|
1,322
|
|
Deferred tax assets
|
3,622
|
|
3,887
|
|
Derivative financial instruments
|
104
|
|
69
|
|
Other non-current assets
|
1,352
|
|
1,576
|
|
|
|
|
|
|
Total non-current assets
|
44,841
|
|
41,139
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
5,678
|
|
5,476
|
|
Current tax recoverable
|
167
|
|
229
|
|
Trade and other receivables
|
6,551
|
|
6,423
|
|
Derivative financial instruments
|
144
|
|
188
|
|
Liquid investments
|
81
|
|
84
|
|
Cash and cash equivalents
|
4,132
|
|
3,874
|
|
Assets held for sale
|
771
|
|
653
|
|
|
|
|
|
|
Total current assets
|
17,524
|
|
16,927
|
|
|
|
|
|
|
TOTAL ASSETS
|
62,365
|
|
58,066
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current liabilities
|
|
|
|
|
Short-term borrowings
|
(8,413)
|
|
(5,793)
|
|
Contingent consideration liabilities
|
(830)
|
|
(837)
|
|
Trade and other payables
|
(13,424)
|
|
(14,037)
|
|
Derivative financial instruments
|
(249)
|
|
(127)
|
|
Current tax payable
|
(965)
|
|
(965)
|
|
Short-term provisions
|
(579)
|
|
(732)
|
|
|
|
|
|
|
Total current liabilities
|
(24,460)
|
|
(22,491)
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Long-term borrowings
|
(23,344)
|
|
(20,271)
|
|
Corporation tax payable
|
(265)
|
|
(272)
|
|
Deferred tax liabilities
|
(1,167)
|
|
(1,156)
|
|
Pensions and other post-employment benefits
|
(3,121)
|
|
(3,125)
|
|
Other provisions
|
(631)
|
|
(691)
|
|
Derivative financial instruments
|
-
|
|
(1)
|
|
Contingent consideration liabilities
|
(5,170)
|
|
(5,449)
|
|
Other non-current liabilities
|
(836)
|
|
(938)
|
|
|
|
|
|
|
Total non-current liabilities
|
(34,534)
|
|
(31,903)
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
(58,994)
|
|
(54,394)
|
|
|
|
|
|
|
NET ASSETS
|
3,371
|
|
3,672
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Share capital
|
1,345
|
|
1,345
|
|
Share premium account
|
3,151
|
|
3,091
|
|
Retained earnings
|
(2,438)
|
|
(2,137)
|
|
Other reserves
|
1,956
|
|
2,061
|
|
|
|
|
|
|
Shareholders' equity
|
4,014
|
|
4,360
|
|
|
|
|
|
|
Non-controlling interests
|
(643)
|
|
(688)
|
|
|
|
|
|
|
TOTAL EQUITY
|
3,371
|
|
3,672
|
|
|
|
|
|
|
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
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
1,345
|
3,091
|
(2,137)
|
2,061
|
4,360
|
(688)
|
3,672
|
|
Implementation of IFRS 16
|
-
|
-
|
(93)
|
-
|
(93)
|
-
|
(93)
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
At 1 January 2019, as adjusted
|
1,345
|
3,091
|
(2,230)
|
2,061
|
4,267
|
(688)
|
3,579
|
|
Profit for the period
|
|
|
830
|
-
|
830
|
155
|
985
|
|
Other comprehensive (expense)/income
for the period
|
|
|
(302)
|
38
|
(264)
|
(18)
|
(282)
|
|
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Total comprehensive income for the period
|
|
|
528
|
38
|
566
|
137
|
703
|
|
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Distributions to non-controlling interests
|
|
|
|
|
|
(92)
|
(92)
|
|
Dividends to shareholders
|
|
|
(935)
|
|
(935)
|
|
(935)
|
|
Shares issued
|
-
|
27
|
|
|
27
|
|
27
|
|
Realised after tax profits on disposal of
equity investments
|
|
|
6
|
(6)
|
-
|
|
-
|
|
Shares acquired by ESOP Trusts
|
|
33
|
295
|
(328)
|
-
|
|
-
|
|
Write-down on shares held by ESOP Trusts
|
|
|
(191)
|
191
|
-
|
|
-
|
|
Share-based incentive plans
|
|
|
89
|
-
|
89
|
|
89
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
At 31 March 2019
|
1,345
|
3,151
|
(2,438)
|
1,956
|
4,014
|
(643)
|
3,371
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
1,343
|
3,019
|
(6,477)
|
2,047
|
(68)
|
3,557
|
3,489
|
|
Implementation of IFRS 15
|
|
|
(4)
|
|
(4)
|
|
(4)
|
|
Implementation of IFRS 9
|
|
|
277
|
(288)
|
(11)
|
|
(11)
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
At 1 January 2018, as adjusted
|
1,343
|
3,019
|
(6,204)
|
1,759
|
(83)
|
3,557
|
3,474
|
|
Profit for the period
|
|
|
549
|
|
549
|
210
|
759
|
|
Other comprehensive income/(expense)
for the period
|
|
|
198
|
95
|
293
|
(28)
|
265
|
|
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Total comprehensive income for the period
|
|
|
747
|
95
|
842
|
182
|
1,024
|
|
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Distributions to non-controlling interests
|
|
|
|
|
|
(80)
|
(80)
|
|
Dividends to shareholders
|
|
|
(929)
|
|
(929)
|
|
(929)
|
|
Shares issued
|
-
|
11
|
|
|
11
|
|
11
|
|
Realised profits on disposal of equity
investments
|
|
|
14
|
(14)
|
-
|
|
-
|
|
Write-down on shares held by ESOP Trusts
|
|
|
(71)
|
71
|
-
|
|
-
|
|
Share-based incentive plans
|
|
|
90
|
|
90
|
|
90
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
At 31 March 2018
|
1,343
|
3,030
|
(6,353)
|
1,911
|
(69)
|
3,659
|
3,590
|
|
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
------------
|
|
Cash flow statement - three months
ended 31 March 2019
|
|
|
Q1 2019
£m
|
|
Q1
2018
£m
|
|
|
|
|
|
|
|
|
Profit after tax
|
985
|
|
759
|
|
|
Tax on
profits
|
310
|
|
348
|
|
|
Share
of after tax profits of associates and joint ventures
|
(57)
|
|
(9)
|
|
|
Net
finance expense
|
190
|
|
142
|
|
|
Depreciation,
amortisation and other adjusting items
|
1,183
|
|
478
|
|
|
Increase
in working capital
|
(789)
|
|
(523)
|
|
|
Contingent
consideration paid
|
(194)
|
|
(445)
|
|
|
(Decrease)/increase
in other net liabilities (excluding contingent
consideration
paid)
|
(771)
|
|
311
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
857
|
|
1,061
|
|
|
Taxation
paid
|
(194)
|
|
(198)
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
663
|
|
863
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
Purchase
of property, plant and equipment
|
(222)
|
|
(258)
|
|
|
Proceeds
from sale of property, plant and equipment
|
7
|
|
9
|
|
|
Purchase
of intangible assets
|
(82)
|
|
(97)
|
|
|
Proceeds
from sale of intangible assets
|
8
|
|
5
|
|
|
Purchase
of equity investments
|
(14)
|
|
(25)
|
|
|
Proceeds
from sale of equity investments
|
20
|
|
22
|
|
|
Purchase
of businesses, net of cash acquired
|
(3,642)
|
|
-
|
|
|
Contingent
consideration paid
|
(23)
|
|
(72)
|
|
|
Disposal
of businesses
|
(23)
|
|
(9)
|
|
|
Investment
in associates and joint ventures
|
(4)
|
|
(1)
|
|
|
Interest
received
|
23
|
|
16
|
|
|
Dividends
from associates and joint ventures
|
-
|
|
39
|
|
|
|
|
|
|
|
|
Net cash outflow from investing activities
|
(3,952)
|
|
(371)
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
Issue
of share capital
|
27
|
|
11
|
|
|
Increase
in short-term loans
|
5,711
|
|
701
|
|
|
Increase
in long-term loans
|
2,622
|
|
-
|
|
|
Repayment
of short-term loans
|
(3,502)
|
|
-
|
|
|
Net
repayment of obligations under finance leases
|
(49)
|
|
(7)
|
|
|
Interest
paid
|
(117)
|
|
(96)
|
|
|
Dividends
paid to shareholders
|
(935)
|
|
(929)
|
|
|
Distributions
to non-controlling interests
|
(92)
|
|
(80)
|
|
|
Other
financing items
|
(4)
|
|
117
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from financing activities
|
3,661
|
|
(283)
|
|
|
|
|
|
|
|
|
Increase in cash and bank overdrafts in the period
|
372
|
|
209
|
|
|
|
|
|
|
|
|
Cash
and bank overdrafts at beginning of the period
|
4,087
|
|
3,600
|
|
|
Exchange
adjustments
|
(40)
|
|
(52)
|
|
|
Increase
in cash and bank overdrafts
|
372
|
|
209
|
|
|
|
|
|
|
|
|
Cash and bank overdrafts at end of the period
|
4,419
|
|
3,757
|
|
|
|
|
|
|
|
|
Cash
and bank overdrafts at end of the period comprise:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
4,132
|
|
4,004
|
|
|
Cash
and cash equivalents reported in assets held for sale
|
486
|
|
-
|
|
|
|
|
|
|
|
|
|
4,618
|
|
4,004
|
|
|
Overdrafts
|
(199)
|
|
(247)
|
|
|
|
|
|
|
|
|
4,419
|
|
3,757
|
|
|
|
|
|
|
|
|
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). GSK reports results under
four segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines
and Consumer Healthcare, and individual members of the CET are
responsible for each segment.
The Pharmaceuticals R&D segment is the responsibility of the
President, Pharmaceuticals R&D and is reported as a separate
segment. The operating profit of this segment excludes the
ViiV Healthcare operating profit (including R&D expenditure)
that is reported within the Pharmaceuticals 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.
|
|
Turnover by
segment
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,158
|
|
4,009
|
|
4
|
|
2
|
|
Vaccines
|
1,522
|
|
1,238
|
|
23
|
|
20
|
|
Consumer Healthcare
|
1,981
|
|
1,975
|
|
-
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total turnover
|
7,661
|
|
7,222
|
|
6
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Operating profit by
segment
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,968
|
|
1,941
|
|
1
|
|
(1)
|
|
Pharmaceuticals R&D
|
(730)
|
|
(612)
|
|
19
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals including R&D
|
1,238
|
|
1,329
|
|
(7)
|
|
(8)
|
|
Vaccines
|
614
|
|
339
|
|
81
|
|
69
|
|
Consumer Healthcare
|
430
|
|
384
|
|
12
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Segment profit
|
2,282
|
|
2,052
|
|
11
|
|
8
|
|
Corporate and other unallocated costs
|
(119)
|
|
(129)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit
|
2,163
|
|
1,923
|
|
12
|
|
9
|
|
Adjusting items
|
(735)
|
|
(683)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating profit
|
1,428
|
|
1,240
|
|
15
|
|
10
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
34
|
|
20
|
|
|
|
|
|
Finance costs
|
(224)
|
|
(162)
|
|
|
|
|
|
Share of after tax profits of associates
and joint ventures
|
57
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
1,295
|
|
1,107
|
|
17
|
|
11
|
|
|
|
|
|
|
|
|
|
|
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 2018.
At 31 March 2019, the Group's aggregate provision for legal and
other disputes (not including tax matters described on page 17) was
£0.2 billion (31 December 2018: £0.2 billion).
The Group may become involved in significant legal
proceedings in respect of which it is not possible to make a
reliable estimate of the expected financial effect, if any, that
could result from ultimate resolution of the proceedings. In
these cases, the Group would provide appropriate disclosures about
such cases, but no provision would be made.
The ultimate liability for legal claims may vary from the amounts
provided and is dependent upon the outcome of litigation
proceedings, investigations and possible settlement negotiations.
The Group's position could change over time, and, therefore,
there can be no assurance that any losses that result from the
outcome of any legal proceedings will not exceed by a material
amount the amount of the provisions reported in the Group's
financial accounts.
There have been no significant legal developments since the date of
the Annual Report 2018.
|
|
Additional information
|
|
Accounting policies and basis of preparation
|
|
This unaudited Results Announcement contains condensed financial
information for the three months ended 31 March 2019, and
should be read in conjunction with the Annual Report
2018, 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 2018, except for the implementation of IFRS 16
'Leases' from 1 January 2019. The new Standard has not had a
material impact on the reported results of the Group.
IFRS 16 'Leases' was implemented by the Group from 1 January
2019. The new standard replaces IAS 17 'Leases' and requires
lease liabilities and right of use assets to be recognised on the
balance sheet for almost all leases. GSK has applied the
modified transition approach on adoption with no restatement of
comparative information. The adjustment made on the
transition date of 1 January 2019 to each balance sheet line item
is as follows:
|
|
|
31 December 2018
as previously reported
£m
|
|
IFRS 16
adjustments
£m
|
|
1 January 2019
as adjusted
£m
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
11,058
|
|
(98)
|
|
10,960
|
|
Right of use assets
|
-
|
|
1,071
|
|
1,071
|
|
Other non-current assets
|
1,576
|
|
(11)
|
|
1,565
|
|
Trade and other receivables
|
6,423
|
|
3
|
|
6,426
|
|
Deferred tax assets
|
3,887
|
|
39
|
|
3,926
|
|
Short-term borrowings
|
(5,793)
|
|
(229)
|
|
(6,022)
|
|
Long-term borrowings
|
(20,271)
|
|
(1,074)
|
|
(21,345)
|
|
Trade and other payables
|
(14,037)
|
|
10
|
|
(14,027)
|
|
Current and non-current provisions
|
(1,423)
|
|
35
|
|
(1,388)
|
|
Other non-current liabilities
|
(938)
|
|
160
|
|
(778)
|
|
Deferred tax liabilities
|
(1,156)
|
|
1
|
|
(1,155)
|
|
|
|
|
|
|
|
|
Total effect on net assets
|
3,672
|
|
(93)
|
|
3,579
|
|
|
|
|
|
|
|
|
Retained earnings
|
(2,137)
|
|
(93)
|
|
(2,230)
|
|
|
|
|
|
|
|
|
Total effect on equity
|
3,672
|
|
(93)
|
|
3,579
|
|
|
|
|
|
|
|
|
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 2018 were
published in the Annual Report 2018, 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:
|
|
|
|
|
|
|
Q1 2019
|
|
Q1 2018
|
|
2018
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Average rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
|
US$/£
|
|
|
|
|
1.31
|
|
1.39
|
|
1.33
|
|
|
|
Euro/£
|
|
|
|
|
1.15
|
|
1.13
|
|
1.13
|
|
|
|
Yen/£
|
|
|
|
|
144
|
|
151
|
|
147
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Period-end rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
|
US$/£
|
|
|
|
|
1.31
|
|
1.40
|
|
1.27
|
|
|
|
Euro/£
|
|
|
|
|
1.17
|
|
1.14
|
|
1.11
|
|
|
|
Yen/£
|
|
|
|
|
145
|
|
149
|
|
140
|
|
During Q1 2019 average Sterling exchange rates were weaker against
the US Dollar and Yen but stronger against the Euro compared with
the same period in 2018. Similarly, period-end Sterling
exchange rates were weaker against the US Dollar and Yen but
stronger against the Euro compared with the 2017 period-end
rates.
|
|
Net assets
|
|
The book value of net assets decreased by £301 million from
£3,672 million at 31 December 2018 to £3,371 million at
31 March 2019. This primarily reflected the re-measurement
losses on defined benefit plans and the dividend paid in the period
exceeding the Total profit for the period.
The carrying value of investments in associates and joint ventures
at 31 March 2019 was £292 million (31 December 2018: £236
million), with a market value of £392 million (31 December
2018: £487 million).
At 31 March 2019, the net deficit on the Group's pension plans was
£1,282 million compared with £995 million at 31 December
2018. The increase in the net deficit primarily arose from
decreases in the rates used to discount UK pension liabilities from
2.9% to 2.4%, and US pension liabilities from 4.2% to 3.8%, partly
offset by higher UK assets.
The estimated present value of the potential redemption amount of
the Pfizer put option related to ViiV Healthcare, recorded in Other
payables in Current liabilities, was £1,218 million (31
December 2018: £1,240 million).
Contingent consideration amounted to £6,000 million at 31
March 2019 (31 December 2018: £6,286 million), of which
£5,658 million (31 December 2018: £5,937 million)
represented the estimated present value of amounts payable to
Shionogi relating to ViiV Healthcare and £292 million (31
December 2018: £296 million) represented the estimated present
value of contingent consideration payable to Novartis related to
the Vaccines acquisition.
Of the contingent consideration payable (on a post-tax basis) to
Shionogi at 31 March 2019, £800 million (31 December 2018:
£815 million) is expected to be paid within one
year.
|
|
Movements
in contingent consideration are as follows:
|
|
Q1 2019
|
ViiV Healthcare
£m
|
|
Group
£m
|
|
|
|
|
|
|
Contingent consideration at beginning of the period
|
5,937
|
|
6,286
|
|
Re-measurement through income statement
|
(60)
|
|
(69)
|
|
Cash payments: operating cash flows
|
(195)
|
|
(194)
|
|
Cash payments: investing activities
|
(24)
|
|
(23)
|
|
|
|
|
|
|
Contingent consideration at end of the period
|
5,658
|
|
6,000
|
|
|
|
|
|
|
Q1
2018
|
ViiV Healthcare
£m
|
|
Group
£m
|
|
|
|
|
|
|
Contingent consideration at beginning of the period
|
5,542
|
|
6,172
|
|
Re-measurement through income statement
|
(31)
|
|
(45)
|
|
Cash payments: operating cash flows
|
(174)
|
|
(445)
|
|
Cash payments: investing activities
|
(23)
|
|
(72)
|
|
|
|
|
|
|
Contingent consideration at end of the period
|
5,314
|
|
5,610
|
|
|
|
|
|
|
Contingent liabilities
|
|
There were contingent liabilities at 31 March 2019 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 disputes to which the Group
is a party are set out on page 32.
|
|
Business acquisition
|
|
On 22 January 2019, GSK completed the acquisition of Tesaro, Inc.,
an oncology focused biopharmaceutical company, for $5.0 billion
(£3.9 billion).
The fair value of intangible assets acquired was approximately
£3.0 billion, including Zejula at £2.2 billion. Net debt of
£0.2 billion was assumed. Goodwill of £1.2 billion
and a deferred tax liability of £0.2 billion were also
recognised. Other assets and liabilities acquired amounted to
a net £0.1 billion. These valuations are provisional and
may be subject to change.
|
|
Reconciliation of cash flow to
movements in net debt
|
|
|
Q1 2019
£m
|
|
Q1 2018
£m
|
|
|
|
|
|
|
Net debt, as previously reported
|
(21,621)
|
|
(13,178)
|
|
Implementation of IFRS 16
|
(1,303)
|
|
-
|
|
|
|
|
|
|
Net debt at beginning of the period, as adjusted
|
(22,924)
|
|
(13,178)
|
|
|
|
|
|
|
Increase in cash and bank overdrafts
|
372
|
|
209
|
|
Net increase in short-term loans
|
(2,209)
|
|
(701)
|
|
Increase in long-term loans
|
(2,622)
|
|
-
|
|
Net repayment of obligations under finance leases
|
49
|
|
7
|
|
Debt of subsidiary undertakings acquired
|
(482)
|
|
-
|
|
Exchange adjustments
|
763
|
|
267
|
|
Other non-cash movements
|
(5)
|
|
19
|
|
|
|
|
|
|
Increase in net debt
|
(4,134)
|
|
(199)
|
|
|
|
|
|
|
Net debt at end of the period
|
(27,058)
|
|
(13,377)
|
|
|
|
|
|
|
Net debt analysis
|
|
|
31 March 2019
£m
|
|
31 December
2018
£m
|
|
|
|
|
|
|
Liquid investments
|
81
|
|
84
|
|
Cash and cash equivalents
|
4,132
|
|
3,874
|
|
Cash and cash equivalents reported in assets held for
sale
|
486
|
|
485
|
|
Short-term borrowings
|
(8,413)
|
|
(5,793)
|
|
Long-term borrowings
|
(23,344)
|
|
(20,271)
|
|
|
|
|
|
|
Net debt at end of the period
|
(27,058)
|
|
(21,621)
|
|
|
|
|
|
|
Free cash flow
reconciliation
|
|
|
Q1 2019
£m
|
|
Q1 2018
(revised)
£m
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
663
|
|
863
|
|
Purchase of property, plant and equipment
|
(222)
|
|
(258)
|
|
Proceeds from sale of property, plant and equipment
|
7
|
|
9
|
|
Purchase of intangible assets
|
(82)
|
|
(97)
|
|
Proceeds from disposals of intangible assets
|
8
|
|
5
|
|
Net finance costs
|
(94)
|
|
(80)
|
|
Dividends from joint ventures and associates
|
-
|
|
39
|
|
Contingent consideration paid (reported in investing
activities)
|
(23)
|
|
(72)
|
|
Distributions to non-controlling interests
|
(92)
|
|
(80)
|
|
|
|
|
|
|
Free cash flow
|
165
|
|
329
|
|
|
|
|
|
|
With the introduction of the new R&D strategy in Q2 2018, GSK
has revised its definition of free cash flow, a non-IFRS measure,
to include proceeds from the sale of intangible
assets.
|
|
Reporting definitions
|
|
Total and Adjusted results
Total reported results represent the Group's overall
performance.
GSK also uses a number of adjusted, non-IFRS, measures to report
the performance of its business. Adjusted results and other
non-IFRS measures may be considered in addition to, but not as a
substitute for or superior to, information presented in accordance
with IFRS. Adjusted results are defined on page 7 and other
non-IFRS measures are defined below.
Free cash flow
Free cash flow is defined as the net cash inflow from operating
activities less capital expenditure on property, plant and
equipment and intangible assets, contingent consideration payments,
net interest, and dividends paid to non-controlling interests plus
proceeds from the sale of property, plant and equipment and
intangible assets, and dividends received from joint ventures and
associates. It is used by management for planning and
reporting purposes and in discussions with and presentations to
investment analysts and rating agencies. Free cash flow
growth is calculated on a reported basis. A reconciliation of
net cash inflow from operations to free cash flow is set out on
page 35.
Free cash flow conversion
Free cash flow conversion is free cash flow as a percentage of
earnings.
Working capital
Working capital represents inventory and trade receivables less
trade payables.
CER and AER 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. CER% represents growth at constant
exchange rates. £% or AER% represents growth at actual
exchange rates.
|
|
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. Gardasil is a trademark of Merck Sharp & Dohme
Corp.
|
|
Outlook, assumptions and cautionary statements
|
|
2016-2020 outlook
In May 2015, GSK announced that it expected Group sales to grow at
CER at a low-to-mid single digits percentage CAGR and Adjusted EPS
to grow at CER at a mid-to-high single digit percentage CAGR for
the period 2016-2020. On 3 December 2018, GSK announced that
it continued to expect to deliver on its previously published Group
outlooks to 2020, but, following the acquisition of Tesaro,
expected Adjusted EPS growth at CER for the period 2016-2020 to be
at the bottom end of the mid-to-high single digit percentage CAGR
range. These outlooks are based on 2015 exchange
rates.
Assumptions related to 2019 guidance and 2016-2020
outlook
In outlining the expectations for 2019 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 assumptions for the Group's revenue, earnings and dividend
expectations assume no material interruptions to supply of the
Group's products, no material mergers, acquisitions or disposals,
except for the acquisition of Tesaro, the proposed divestment of
Horlicks and other Consumer Healthcare products to Unilever and the
proposed formation of a new Consumer Healthcare Joint Venture with
Pfizer, all announced in December 2018, no material litigation or
investigation costs for the Company (save for those that are
already recognised or for which provisions have been made), no
share repurchases by the Company, and no change in the Group's
shareholdings in ViiV Healthcare. The assumptions also assume
no material changes in the macro-economic and healthcare
environment. The 2019 guidance and 2016-2020 outlook have
factored in all divestments and product exits since 2015, including
the divestment and exit of more than 130 non-core tail brands
(£0.5 billion in annual sales) as announced on 26 July
2017 and the product divestments planned in connection with the
proposed Consumer Healthcare transaction with Pfizer.
The Group's expectations assume successful delivery of the Group's
integration and restructuring plans over the period 2016-2020,
including the extension and enhancement to the combined programme
announced on 26 July 2017 as well as the new major restructuring
plan announced on 25 July 2018. They also assume that the
proposed Consumer Healthcare nutrition disposal closes by the end
of 2019 and the proposed Consumer Healthcare Joint Venture with
Pfizer closes during H2 2019 and that the integration and
investment programmes following the Tesaro acquisition and the
proposed Consumer Healthcare Joint Venture with Pfizer over this
period are delivered successfully. Material costs for
investment in new product launches and R&D have been factored
into the expectations given. Given the potential development
options in the Group's pipeline, the outlook may be affected by
additional data-driven R&D investment decisions. The
expectations are given on a constant currency basis (2016-2020
outlook at 2015 CER).
Subject to material changes in the product mix, the Group's
medium-term effective tax rate is expected to be around 19% of
Adjusted profits. This incorporates management's best
estimates of the impact of US tax reform on the Group based on the
information currently available. As more information on the
detailed application of the US Tax Cuts and Jobs Act becomes
available, the assumptions underlying these estimates could change
with consequent adjustments to the charges taken that could have a
material impact on the results of the Group.
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,
dividend payments and financial results. Other than in
accordance with its legal or regulatory obligations (including
under the Market Abuse Regulation, 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 2018. 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.
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Independent
review report to GlaxoSmithKline plc
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We have been engaged by GlaxoSmithKline plc ("the Company") to
review the condensed financial information in the Results
Announcement for the three months ended 31 March 2019.
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What we have reviewed
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The condensed financial information comprises:
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the income statement and statement of comprehensive income for the
three month period ended 31 March 2019 on pages 24 and 25
respectively;
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the balance sheet as at 31 March 2019 on page 28;
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the statement of changes in equity for the three month period then
ended on page 29;
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the cash flow statement for the three month period then ended on
page 30 and;
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the accounting policies and basis of preparation and the
explanatory notes to the condensed financial information on
pages 31 to 35 that have been prepared applying consistent
accounting policies to those applied by the Group in the Annual
Report 2018, which was prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union, except for the implementation of IFRS 16 "Leases" from 1
January 2019.
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We have read the other information contained in the Results
Announcement, including the non-IFRS measures contained on pages 31
to 35, and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed financial statements.
This report is made solely to the Company 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. Our work has been undertaken so that we might state to
the Company those matters we are required to state to it in an
independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have
formed.
Directors' responsibilities
The Results Announcement of GlaxoSmithKline plc, 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 by applying
consistent accounting policies to those applied by the Group in the
Annual Report 2018, which was prepared in accordance with IFRS as
adopted by the European Union, except for the implementation of
IFRS 16 "Leases" from 1 January 2019.
Our responsibility
Our responsibility is to express to the Company a conclusion on the
interim financial information in the Results Announcement based on
our review.
Scope of review
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board for use in the
United Kingdom. A review of interim financial information
consists of making inquiries, 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 consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the condensed interim financial information in
the Results Announcement for the three months ended 31 March 2019
are 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 32.
Deloitte LLP
Statutory Auditor
London, United Kingdom
1 May 2019
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GlaxoSmithKline plc
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(Registrant)
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Date: May
01, 2019
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By:/s/ VICTORIA
WHYTE
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Victoria Whyte
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Authorised
Signatory for and on
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behalf
of GlaxoSmithKline plc
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