Final Results - Part 2

GlaxoSmithKline PLC 21 February 2001 PART 2 Preliminary Announcement of Results for the year ended 31st December 2000 ------------------------------------------------------------------------- Merger items, restructuring costs and divested businesses --------------------------------------------------------- The analysis and discussion below is given in respect of items excluded from business performance. 2000 ------------------------------------------------- Restruct- Divested Merger uring Associate businesses Total £m £m £m £m £m ----- ----- ----- ----- ----- Manufacturing and other - (171) - - (171) restructuring Merger integration costs (400) - - - (400) ----- ----- ----- ----- ----- (400) (171) - - (571) HCS restructuring - - - - - Share of associate - - (8) - (8) Divestments 1,416 - - (14) 1,402 Merger transaction costs (121) - - - (121) ----- ----- ----- ----- ----- 895 (171) (8) (14) 702 ----- ----- ----- ----- Taxation (245) ----- Earnings 457 ===== 1999 ----------------------------------------- Restruct- Divested uring Associate businesses Total £m £m £m £m ----- ----- ----- ----- Manufacturing and other (443) - - (443) restructuring Merger integration costs - - - - ----- ----- ----- ----- (443) - - (443) HCS restructuring - - (30) (30) Share of associate - (8) - (8) Divestments - - 9 9 Merger transaction costs - - - - ----- ----- ----- ----- (443) (8) (21) (472) ----- ----- ----- Taxation 109 ----- Earnings (363) ===== Merger ------ The costs of effecting the merger, referred to as 'transaction costs', amounted to £121 million. The costs comprise the expenses and fees in preparing and implementing the Scheme of Arrangement for the merger, including obtaining approvals from shareholders and regulatory authorities and securing the admission of GSK shares to the Official List of the UK Listing Authority. The costs are higher than estimated at the time of issue of the Listing Particulars in July 2000, because of the delay in completion of the merger pending regulatory approvals. Costs incurred in planning for, and arising from, the integration of the GW and SB businesses into a unified GSK business, referred to as 'integration costs', amounted in 2000 to £400 million. The costs in 2000 include consultancy fees in support of integration planning; severance costs recognised in 2000 arising from the initial stages of the integration appointment process; some initial asset write-offs; costs of £156 million recognised by SB in respect of the accelerated vesting of share options and share incentive awards as a result of the merger; and costs recognised by GW arising from the lapse of performance conditions attaching to share incentive awards as a result of the merger. Implementation of integration plans in respect of business operations will commence substantively in 2001, and further significant costs are expected to be recognised in 2001 and the subsequent two years. In order to obtain regulatory approval for the merger, GW and SB agreed to a number of product divestments. The most significant of these divestments were Famvir and Kytril, which were sold in December 2000. Famvir was sold to Novartis and Kytril was sold to Roche. As part of the sale of Kytril to Roche, GSK purchased the exclusive rights to Coreg in the USA and Canada. The net effect on profit before tax of all product divestments was income of £1,416 million. Manufacturing and other restructuring ------------------------------------- Costs of £120 million were incurred by GW and £51 million by SB in implementation of their previously announced plans for restructuring of manufacturing and other activities. Associate --------- These costs represent the Group's share of restructuring costs incurred by the associate, Quest Diagnostics. Divested businesses ------------------- The impact of the disposal of the Healthcare Services businesses in August 1999 was £14 million in 2000 and £9 million credit in 1999. Restructuring costs incurred by Healthcare Services in 1999 were £30 million. Trading profit - business performance ------------------------------------- To illustrate GSK business performance in 2000, the analysis below of trading profit and the subsequent discussion exclude merger items, restructuring costs and the costs arising from the disposal of the Healthcare Services businesses in 1999. The analysis and discussion focus on the retained businesses of Pharmaceuticals and Consumer Healthcare; the performance of Healthcare Services in 1999 is dealt with separately. 2000 1999 --------------- --------------- GROWTH £m % £m % CER% ------ ------ ------ ------ ------ Sales 18,079 100.0 16,164 100.0 9 Cost of sales (3,811) (21.1) (3,499) (21.6) (8) Selling, general and (6,732) (37.2) (6,002) (37.2) (9) administration Research and development (2,510) (13.9) (2,285) (14.1) (7) ------ ------ ------ ------ ------ Trading profit 5,026 27.8 4,378 27.1 12 ====== ====== ====== ====== ====== Cost of sales ------------- Cost of sales increased less than the increase in sales. In SB this reflects the benefits of manufacturing rationalisation; changes in product mix, with benefit from newly launched products; and reduced external royalties. In GW cost of sales increased as a percentage of sales, reflecting lower production volumes following stockbuild in 1999, with a reduced rate of increase in the second half of the year as manufacturing rationalisation delivered efficiencies. Selling, general and administration ----------------------------------- Selling, general and administration (SG&A) increased in line with sales growth. Higher selling costs, particularly to support product launches of Avandia, Seretide and Paxil, were offset by savings in administration costs. Research and development ------------------------ Research and development (R&D) expenditure increased less than the increase in sales. Pharmaceuticals R&D was £2,435 million and Consumer Healthcare R&D was £75 million. Trading profit -------------- Trading profit increased 12 per cent, more than the increase in sales, reflecting management of SG&A in line with sales growth and lower rates of increase on cost of sales and R&D. Healthcare Services ------------------- The Healthcare Services businesses, divested during 1999, contributed £25m of trading profit up to the dates of divestment in 1999. Profit before taxation - business performance --------------------------------------------- The analysis and discussion below of profit before taxation relates to business performance. Other operating income/(expense) ------------------------------- 2000 1999 £m £m ----- ----- Royalties and other income 153 387 Other operating expense (63) (138) ----- ----- 90 249 Income from equity investments 184 164 ----- ----- 274 413 ===== ===== Other operating income/expense consists of operating items and investment profits. Operating items comprise: a core of recurring income in the form of royalties from the out-licensing of Group intellectual property; the proceeds of disposal of non-core commercial assets, such as older products; non-recurring costs of defending Group intellectual property or the Group's commercial assets. Income from investments arises from management and disposal of investments in the Group's equity investment portfolio. Net operating income was lower in 2000 than in 1999 due to fewer disposals of older products. Income from equity investments includes further disposals of Affymetrix shares in the second half of the year, reducing the Group's holding to 16 per cent. Disposal of associates ---------------------- GW reduced its investment in Affymetrix Inc in the first half of 2000, realising a gain of £144 million which is accounted as the disposal of an interest in an associate. Subsequently GW ceased to have significant influence over Affymetrix and at that time ceased to equity account for the investment. GW made further disposals of shares in Affymetrix in the second half of 2000, which are included as investment disposals in other operating income. Profits/losses of associates and joint ventures ----------------------------------------------- The share of profits of associates arises principally from SB's holding in Quest Diagnostics, Incorporated, which has been held throughout 2000 but only from August in 1999. Net interest payable -------------------- 2000 1999 £m £m ----- ----- Interest payable (317) (293) Investment income 158 138 ----- ----- (159) (155) Share of interest payable of associate (23) (7) ----- ----- (182) (162) ===== ===== Net interest payable includes the Group's share of the net interest of the associate, Quest Diagnostics, for the whole of 2000 but only from August in 1999. Apart from the Quest interest, interest payable less investment income was broadly stable in 2000 compared to 1999, reflecting a consistent average level of net debt in 2000 and in 1999. The proceeds from the major product divestments were received in late December 2000, with only a minor benefit to net interest payable in 2000. Profit before taxation ---------------------- Other operating income, together with the disposal of the interest in an associate, added £418 million to profit before taxation in 2000, compared to £452 million in 1999. Taking account of the contribution from associates, comprising share of profit less share of interest, less the Group's own net interest payable, profit before tax was £5,327 million, compared to £4,708 million in 1999, an increase of 11 per cent. Taxation -------- 2000 1999 £m £m ----- ----- UK corporation tax (544) (489) Overseas taxation (1,258) (733) Deferred taxation 103 4 ----- ----- (1,699) (1,218) ===== ===== Business performance (1,454) (1,327) Merger, restructuring and business disposals (245) 109 ----- ----- (1,699) (1,218) ===== ===== The charge for taxation on business performance profit amounting to £1,454 million represents an effective tax rate of 27.3 per cent. This is consistent with the rate of 27.5 per cent expected by GW for 2000 and the rate of 27 per cent expected by SB. The tax rate benefits from lower rates of tax applicable to manufacturing operations in Singapore, Puerto Rico and Ireland. The tax rate benefits additionally from reduced uncertainties following resolution in 1999 of GW's long-standing UK transfer pricing issues and from lower statutory rates in a number of overseas territories. Transfer pricing issues are nonetheless inevitable for a global business such as GSK. The integrated nature of the Group's worldwide operations, involving significant investment in research and strategic manufacture at a limited number of locations, with consequential cross- border supply routes into numerous end-markets, gives rise to complexity and delay in negotiations with revenue authorities as to the profits on which individual Group companies are liable to tax. Disagreements with, and between, revenue authorities as to the price at which goods should be transferred between Group companies in different tax jurisdictions can produce conflicting claims from revenue authorities as to the profits that fall to be taxed in individual territories. Resolution of such issues is a continuing fact-of-life for GSK. In the USA for a number of years GW has had significant open issues relating to transfer pricing. These issues, although principally relating to the success of Zantac, cover all years from 1989 to the present, and there remains a wide variation between the claims of the US Internal Revenue Service and the Group's estimation of its taxation liabilities. The issues are currently the subject of discussions between the US and UK tax authorities under the terms of the double taxation convention between the two countries. GSK uses the best advice in determining its transfer pricing methodology and in seeking to manage transfer pricing issues to a satisfactory conclusion and continues to believe that it has made adequate provision for the liabilities likely to arise from open assessments. The charge for taxation on merger and restructuring items amounting to £245 million reflects the estimated actual tax rate applicable to the transactions in the territories in which they arise. Earnings 2000 1999 -------- ----- ----- Net profit attributable to shareholders £m £m ----- ----- Earnings 4,154 2,859 Adjustment for merger and restructuring (457) 363 costs and divested businesses ----- ----- Adjusted earnings 3,697 3,222 ===== ===== Weighted average number of shares in issue millions millions -------- -------- 6,065 6,118 Earnings per share pence pence ----- ----- Basic earnings per share 68.5 46.7 Adjustment for merger items and (7.5) 6.0 restructuring costs ----- ----- Adjusted earnings per share 61.0 52.7 ===== ===== Earnings per share has been calculated by dividing earnings (profit attributable to shareholders) by the weighted average number of shares in issue during the period. In order to illustrate business performance, excluding merger items and restructuring costs, adjusted earnings and adjusted earnings per share are presented. The numbers used in calculating basic and adjusted earnings per share are reconciled above. Adjusted earnings in 2000 increased by 13 per cent CER. Adjusted earnings per share in 2000 increased by 14 per cent CER, reflecting the lower weighted average number of shares in issue. The weighted average number of shares, for the purpose of earnings per share, decreased, due to purchases of shares by the Employee Share Ownership Trust to satisfy future exercises of share options. Appropriations 2000 1999 -------------- £m £m ----- ----- Earnings (profit attributable to shareholders) 4,154 2,859 Dividends (2,097) (2,005) ----- ----- Retained profit 2,057 854 ===== ===== STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES ============================================== 2000 1999 £m £m ----- ----- PROFIT ATTRIBUTABLE TO SHAREHOLDERS 4,154 2,859 Exchange movements on overseas net assets 2 (316) UK tax on exchange movements (9) - ----- ----- TOTAL RECOGNISED GAINS AND LOSSES 4,147 2,543 ===== ===== SUMMARY STATEMENT OF CASH FLOW AND MOVEMENT IN NET DEBT ======================================================= 2000 1999 £m £m ----- ----- BUSINESS PERFORMANCE OPERATING PROFIT 5,300 4,816 Depreciation and other non-cash items 626 549 Increase in working capital (297) (582) Increase in net liabilities 271 208 ----- ----- 5,900 4,991 Restructuring/integration costs paid (362) (175) Merger transaction costs (97) - ----- ----- NET CASH INFLOW FROM OPERATING ACTIVITIES 5,441 4,816 Earnings from joint ventures and associates 1 2 Returns on investment and servicing of finance (322) (315) Taxation paid (1,240) (1,095) ----- ----- FREE CASH FLOW 3,880 3,408 ----- ----- Purchase of tangible fixed assets (1,007) (1,139) Sale of tangible fixed assets 46 116 Purchase of intangible fixed assets (96) (105) ----- ----- (1,057) (1,128) Proceeds from product divestments 1,529 - Purchase of own shares (1,232) (1,291) Proceeds from own shares for staff options 206 45 Purchase of equity investments (62) (37) Sale of equity investments 289 170 ----- ----- Capital expenditure and financial investment (327) (2,241) ----- ----- Purchase of businesses (net of cash acquired) (25) (67) Business disposal (62) 1,002 Investment in joint ventures and associates (2) (3) Disposal of interest in associate 155 41 ----- ----- Acquisitions and disposals 66 973 ----- ----- Equity dividends paid (2,028) (1,833) ----- ----- NET CASH INFLOW 1,591 307 Issue of ordinary share capital 185 171 Other financing cash flow (47) 1 Other non-cash movements (7) (6) Exchange movements 24 (113) ----- ----- DECREASE IN NET DEBT IN YEAR 1,746 360 NET DEBT AT BEGINNING OF YEAR (2,357) (2,717) ----- ----- NET DEBT AT END OF YEAR (611) (2,357) ===== ===== FINANCIAL REVIEW - CASH FLOW AND NET DEBT ========================================= The net cash inflow from business performance operating activities was £5,900 million, an increase of nearly £1 billion over 1999. This reflects the increase in operating profit together with a lower increase in working capital. Free cashflow was more than sufficient to fund: capital expenditure on tangible and intangible fixed assets, which was marginally lower than in 1999 reflecting a curtailment of projects pending completion of the merger; purchase of own shares for share options; dividend payments. Proceeds of £1,529 million from regulatory divestments were received in late December 2000. Excluding these proceeds GSK activities in 2000 resulted in a decrease in net debt of £217 million. BALANCE SHEET ============= 2000 1999 £m £m ----- ----- Goodwill 170 160 Intangible fixed assets 966 926 Tangible fixed assets 6,642 6,402 Investments 2,544 1,804 ----- ----- FIXED ASSETS 10,322 9,292 ----- ----- Equity investments 171 52 Stocks 2,277 2,243 Debtors 5,399 4,828 Liquid investments 2,138 1,780 Cash at bank 1,283 579 ----- ----- CURRENT ASSETS 11,268 9,482 ----- ----- Loans and overdrafts (2,281) (2,819) Other creditors (6,803) (5,629) ----- ----- CREDITORS: amounts due within one year (9,084) (8,448) ----- ----- NET CURRENT ASSETS 2,184 1,034 ----- ----- TOTAL ASSETS LESS CURRENT LIABILITIES 12,506 10,326 ----- ----- Loans (1,751) (1,897) Other creditors (143) (147) ----- ----- CREDITORS: amounts due after one year (1,894) (2,044) ----- ----- PROVISIONS FOR LIABILITIES AND CHARGES (1,657) (1,675) ----- ----- NET ASSETS 8,955 6,607 ===== ===== Called up share capital 1,556 1,549 Share premium account 30 - Other reserves 6,125 3,915 ----- ----- EQUITY SHAREHOLDERS' FUNDS 7,711 5,464 Non-equity minority interest 1,039 961 Equity minority interests 205 182 ----- ----- CAPITAL EMPLOYED 8,955 6,607 ===== ===== RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS ========================================================= 2000 1999 £m £m ----- ----- Balance at the beginning of the period 5,464 4,449 Total recognised gains and losses for the period 4,147 2,543 Dividends (2,097) (2,005) Ordinary Shares issued 185 171 Exchange movements on goodwill written off to reserves 10 (29) Goodwill written off to profit and loss account 2 335 ----- ----- Balance at the end of the period 7,711 5,464 ===== ===== FINANCIAL REVIEW - BALANCE SHEET ================================ Net assets ---------- The book value of GSK net assets increased from £6,607 million at 31st December 1999 to £8,955 million at 31st December 2000, an increase of £2,348 million. There was no significant net effect from exchange rate movements. The increase is represented principally by an increase in own shares purchased by Employee Share Ownership Trusts (ESOTs) and, following receipt of the proceeds of the product divestments, a reduction in net debt. Investments ----------- Fixed asset investments comprise investment in associates, trade investments and an investment of £2,327 million in own shares held by ESOTs. At 31st December 2000 the ESOTs held 161.3 million GSK ordinary shares, with a market value of £3,049 million, against future exercise of share options and share awards. The market value of associates, trade investments and equity investments at 31st December 2000 was approximately £1.7 billion. Legal matters ------------- GSK is involved in various legal and administrative proceedings of a nature considered normal to its business, principally product liability, intellectual property and commercial cases and governmental investigations. In particular, GSK is engaged in litigation in the USA and Europe regarding infringement of the Group's patents related to Paxil/Seroxat and Wellbutrin/Zyban. GSK has become aware of authorisations issued by regulatory authorities in Europe for paroxetine hydrochloride anhydrate, a variant of paroxetine hydrochloride hemihydrate, the active ingredient in Seroxat/Paxil, following the expiration of the data exclusivity period in European markets. GSK believes that marketing of a paroxetine hydrochloride anhydrate product by third parties in European countries would infringe its patents and expects to vigorously litigate its position should a third party launch such a product. GW and SB, along with numerous other pharmaceutical manufacturers and wholesalers, are parties in several antitrust actions brought in the USA by retail pharmacies and consumers, alleging conspiracies in restraint of trade and challenging pricing and purchasing practices, one of which has been certified as a federal class action and a number of which have been certified as state class actions. A number of defendants, including GW and SB, have settled the federal retail class action. Both GW and SB have settled a number of the remaining cases. Additionally, GSK is responding to government investigations in the USA into pricing, marketing and reimbursement of several prescription drug products. These investigations may involve related civil false claims act litigation on behalf of the federal or state government. Although the outcome of claims, legal proceedings and other matters in which GSK is involved cannot be predicted with any certainty, the company's directors do not expect GSK's ultimate liability for such matters, after taking into account provisions, tax benefits and insurance, to have a material adverse effect on its financial condition, results of its operations or cash flows. Equity shareholders' funds -------------------------- Equity shareholders' funds have increased from £5,464 million at 31st December 1999 to £7,711 million at 31st December 2000. This is primarily due to retained profits, and also to shares issued under share option schemes. EXCHANGE RATES ============== The results and net assets of the Group, as reported in sterling, are affected by movements in exchange rates between sterling and overseas currencies. GSK uses the average of exchange rates prevailing during the period to translate the results and cash flow of overseas Group subsidiary and associated undertakings into sterling and period end rates to translate the net assets of those undertakings. The currencies which most influence these translations, and the relevant exchange rates, were: Q4 2000 Q4 1999 2000 1999 ------- ------- ------ ------ Average rates: £/US$ 1.45 1.63 1.52 1.62 £/Euro 1.66 1.57 1.64 1.52 £/Yen 159.05 169.94 163.46 184.05 Period end rates: £/US$ 1.49 1.61 1.49 1.61 £/Euro 1.61 1.61 1.61 1.61 £/Yen 171.00 164.97 171.00 164.97 On average during 2000 sterling exchange rates were weaker against the US dollar and the yen and stronger against European currencies than in 1999. In aggregate currency movements had a net favourable effect on sterling results in 2000 compared to 1999 of 3 per cent in respect of sales and 2 per cent in respect of business performance earnings per share. At 2000 period-end rates compared to 1999 period-end rates sterling was weaker against the US dollar, stable against the Euro and stronger against the yen. In order to illustrate underlying business performance, excluding any effect of exchange rate movements, it is the company's practice to discuss the Group results in terms of constant exchange rate growth (CER). This represents growth calculated as if the exchange rates used to translate the results of overseas companies into sterling had remained unchanged from those used in the corresponding period. In this Announcement growth rates are at constant exchange rates (CER) unless otherwise stated. ACCOUNTING PRESENTATION AND POLICIES ==================================== This Announcement contains a summarised presentation of the financial statements of GSK plc (GSK) for the year to 31st December 2000 - comprising presentations of profit and loss, total recognised gains and losses, cash flow, balance sheet and movements in equity shareholders' funds - together with a Financial Review of key issues. GSK plc acquired GW plc (GW) and SB plc (SB) under a Scheme of Arrangement for the merger of the two companies which became effective on 27th December 2000. The financial statements of GSK for the year 2000 have been prepared under UK Generally Accepted Accounting Principles as a merger of GW and SB, by combining the results of GW and SB from 1st January 2000. The comparative figures for 1999 have been stated on a comparable basis. The financial statements of GSK are prepared in accordance with GSK's accounting policies. A number of adjustments have been made to align the accounting policies and classifications previously adopted by GW and SB and these are reflected in the combined results of GSK. The principal adjustments, which are not individually or in aggregate significant to the Group results, are: Accounting policies and presentation: ------------------------------------ - Interest on finance for major construction projects, previously capitalised by SB, is now expensed for all years presented - Standard sales discounts in the USA, previously classified by SB to selling, general and administration expenditure, are now reclassified as a deduction from sales for all years presented - Royalty and other recurring income and significant one-off items of income and expense, previously classified by SB to selling, general and administration expenditure, are now classified to other operating income/expense for all years presented - Deferred tax relief is recognised on SB pension costs as well as on other post-retirement benefits for all years presented Segment classification: ---------------------- - GW's over-the-counter products - including OTC Zantac, OTC Zovirax and OTC Beconase as well as a number of products in Rest of the World markets - will be managed in GSK by Consumer Healthcare. The sales and profits of these products have been reclassified to the Consumer Healthcare sector. Sales analysis: -------------- - Some therapeutic and geographic area reclassifications of products and markets have been implemented to reflect the new GSK management basis. In addition, certain equity investments acquired by SB have been reclassified during 2000 from fixed assets to current assets to reflect the fact that GSK now considers these investments to be available for sale. GSK trading profit is stated after cost of sales, SG&A and R&D, but before other operating income/expense. In 2000 GSK implemented the following new Financial Reporting Standards: FRS 15 'Tangible fixed assets' and FRS 16 'Current tax'. Both FRSs update, and provide additional guidance on, existing accounting practice. Neither FRS is expected to have a significant effect on the measurement or classification of existing assets or liabilities. FRS 15 permits, but does not require, the revaluation of properties and the capitalisation of interest on capital projects in progress. The company has adopted a policy of not revaluing properties and not capitalising interest. Throughout the Announcement the results for the year to 31st December 2000 (2000) are compared primarily with the results for the year to 31st December 1999 (1999). Figures quoted for market share and market growth rates relate to the year ended 30th September 2000 (or later where available). These are GSK estimates based on the most recent data from independent external sources, valued in sterling at relevant exchange rates. Figures quoted for product market share reflect sales by GSK and licensees. The profit and loss account and cash flow statement for the year ended, and the balance sheet at, 31st December 1999 are an abridged statement of the combined accounts for that period of GW plc and of SB plc, each of whose accounts have been delivered to the Registrar of Companies and on which the reports of the auditors were unqualified and did not contain statements under either section 237 (2) or section 237 (3) of the Companies Act 1985. SHAREHOLDER DIVIDENDS ===================== 2000 1999 2000 1999 Glaxo Wellcome plc declared the following dividends in respect of 2000: £m £m ----- ----- Interim 538 545 Second interim 827 - Final - 796 ----- ----- 1,365 1,341 ----- ----- Equivalent Per GW share per GSK share pence pence pence pence ----- ----- ----- ----- Interim 15 15 15 15 Second interim 23 - 23 - Final - 22 - 22 ----- ----- ----- ----- 38 37 38 37 ===== ===== ===== ===== SmithKline Beecham plc declared the following interim dividends in respect of 2000: £m £m ----- ----- 1st quarter 162 148 2nd quarter 162 148 3rd quarter 163 147 4th quarter 245 221 ----- ----- 732 664 ===== ===== Equivalent Per SB share per GSK share pence pence pence pence ----- ----- ----- ----- 1st quarter 3.0 2.70 6.59 5.93 2nd quarter 3.0 2.70 6.59 5.93 3rd quarter 3.0 2.70 6.59 5.93 4th quarter 4.5 4.05 9.89 8.90 ----- ----- ----- ----- 13.5 12.15 29.66 26.69 ===== ===== ===== ===== Both GW and SB announced dividends, respectively a second interim dividend 2000 and a fourth interim dividend 2000, prior to the effective date of the merger on 27th December 2000. In view of the short period of time between the effective date of the merger and the year-end, the second interim dividend 2000 of GW plc and the fourth interim dividend 2000 of SB plc were in respect of the period to 31st December 2000. GW declared a second interim dividend in respect of the period from 1st July 2000 to 31st December 2000 of 23 pence per GW share. This makes a total dividend of 38 pence for 2000, compared with 37 pence for 1999. The record date for the second interim dividend was 22nd December 2000 in relation to GW shares and 26th December 2000 in relation to GW ADRs. The second interim dividend will be paid on 17th April 2001 to shareholders of GW at the record date and on 27th April 2001 to ADR holders of GW at the record date. SB declared a fourth interim dividend in respect of the period from 1st October 2000 to 31st December 2000 of 4.5 pence per SB share. This makes a total dividend of 13.5 pence for 2000, compared with 12.15 pence for 1999. The record date for the fourth interim dividend was 22nd December 2000 in relation to SB shares and 26th December 2000 in relation to SB ADRs. The fourth interim dividend will be paid on 17th April 2001 to shareholders and ADR holders of SB at the respective record dates. INVESTOR INFORMATION ==================== Preliminary Announcement of Annual Results 2000 ----------------------------------------------- The Preliminary Announcement was approved by the Board of Directors on Wednesday 21st February 2001. The profit and loss account and the cash flow statement for the year ended, and the balance sheet at, 31st December 2000 are subject to completion of the audit of the full Group accounts for 2000. Financial Record 2000, 1999, 1998 --------------------------------- A Financial Record of GSK Earnings and Sales for 2000 (by quarter), 1999 and 1998 is being issued simultaneously with this Announcement and is available on the GSK website at www.gsk.com. GlaxoSmithKline Inaugural Investor Meetings ------------------------------------------- Following the Preliminary Announcement of Results for 2000 at 12 noon in London on Wednesday 21st February, reflecting the combined results of what were effectively the separate businesses of GW and SB in 2000, the company will be holding investor meetings in London on Thursday 22nd February and in New York on Friday 23rd February at which members of the company's executive team will present GSK's future strategy and an update on the research and development pipeline. The presentations will include the company's expectations of future earnings growth. The key information from these presentations will be released to the London Stock Exchange at 7am on Thursday 22nd February 2001 and at the same time posted on the GSK website at www.gsk.com. Annual Report and Annual Review ------------------------------- The Annual Report and the Annual Review will be issued to shareholders on 12th April 2001 and will be available from that date on the GSK website and from the company's registrar, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA. Telephone (Annual Report Orderline) 01903 833412. Annual General Meeting ---------------------- The Annual General Meeting will be held at the Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE on 21st May 2001. Internet -------- This Announcement, and other information about GSK, is available on the World Wide Web at the company's site at: http://www.gsk.com.

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