Final Results
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Issued: Thursday, 3rd February 2011, London, UK
Unaudited Preliminary Results Announcement for the year ended 31st December 2010
Strategic progress drives positive underlying sales growth*, increasing pipeline potential and improved cash generation
Increased dividend and new long-term share buy-back programme enhance returns to shareholders |
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Results before major restructuring** |
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2010 |
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Q4 2010 |
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£m |
CER% |
£% |
£m |
CER% |
£% |
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Turnover |
28,392 |
(1) |
- |
7,197 |
(13) |
(11) |
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Earnings/(loss) per share |
53.9p |
(59) |
(56) |
(7.5)p |
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EPS excluding legal charges |
120.7p |
(11) |
(8) |
28.2p |
(34) |
(33) |
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Total results |
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2010 |
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Q4 2010 |
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£m |
CER% |
£% |
£m |
CER% |
£% |
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Turnover |
28,392 |
(1) |
- |
7,197 |
(13) |
(11) |
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Restructuring charges |
1,345 |
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283 |
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Legal charges |
4,001 |
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2,165 |
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Earnings/(loss) per share |
32.1p |
(75) |
(71) |
(13.6)p |
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The full results are presented under 'Income Statement' on pages 10 and 17. * Underlying sales growth excludes pandemic products, Avandia and Valtrex, see page 9. ** For explanations of the measures 'results before major restructuring' and 'CER growth', see page 9. |
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Summary |
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Continuing focus on ROI and capital allocation: |
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Restructuring benefits of £1.7 billion delivered; on track for 2012 £2.2 billion target |
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Investment drives sales in Emerging Markets, Vaccines and Consumer Healthcare |
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Consumer Healthcare to increase focus around 'priority' brands and emerging markets; non-core OTC brands with annual sales of around £500 million to be divested |
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Delivering diversified underlying sales growth: |
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2010 sales -1%; underlying sales growth 4.5%* |
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- |
Sales generated in 'white pills/western markets' 25% of 2010 sales (40% in 2007) |
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- |
Underlying sales momentum expected to continue in 2011 and translate to reported growth in 2012 at CER |
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Increasing pipeline potential: |
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- |
Sustained portfolio of ~30 opportunities in late-stage development |
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- |
10 new molecules and vaccines enter Phase III in last 12 months |
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Respiratory LABA/LAMA combination enters Phase III development for COPD |
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Phase III data expected on ~15 assets by end of 2012 |
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Improved cash generation: |
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- |
Adjusted net cash inflow from operating activities £8.8 billion up 9% (excludes £2 billion of cash outflow for legal matters) |
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- |
Net debt £8.9 billion; £0.6 billion lower than 2009 |
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Working capital improvement programme delivers £1.3 billion of net cash (including £600 million from lower pandemic receivables) |
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Enhancing returns to shareholders: |
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2010 dividend up 7% to 65p; priority is to deliver further growth |
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Long-term share buy-back programme initiated (£1-2 billion expected in 2011) |
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GSK's strategic priorities |
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GSK has focused its business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve GSK's long-term financial performance: |
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Grow a diversified global business |
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Deliver more products of value |
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Simplify GSK's operating model |
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Chief Executive Officer's Review |
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We have substantially re-engineered GSK's business model over the last two and a half years, through major restructuring and a rigorous returns-based approach to capital allocation.
We are also having to deal with long-standing legal cases. There is no doubt that the scale of legal provisioning that has been required is significant. However, I continue to believe that it is in the company's best interests to resolve this inherent unpredictability and reduce our overall litigation exposure.
The changes we have made are delivering diversified underlying sales growth, increasing pipeline potential and improved cash generation.
These elements are at the core of our strategy to address the market challenges we identified and to deliver sustained financial performance. They also speak to what we have created - a balanced, synergistic business with a lower risk profile and the option for significant potential upside from the pipeline.
All of this is being done with the direct aim of enhancing returns to shareholders through continued dividend growth and other measures such as the new long-term share buy-back programme we initiated today.
Continuing focus on ROI and capital allocation Reinvestment of costs saved through our restructuring programme has enabled us to diversify and strengthen GSK's sales base. £1.7 billion of cost has been extracted from our developed country sales & marketing, support functions, R&D and manufacturing infrastructure since 2008. We are on track to deliver £2.2 billion of annual savings by 2012.
We have taken cost out from lower returning activities and reinvested it in areas such as Emerging Markets, Vaccines and Consumer Healthcare. The benefit of this reinvestment is evident. 2010 reported sales for these businesses were up 22%, 15% and 5% respectively. Excluding sales of pandemic products, Avandia and Valtrex underlying sales in Emerging Markets were up 20%, and Vaccines sales were up 10%.
Bolt-on acquisitions are also contributing meaningfully to sales in these areas. In 2010, we spent £354 million on acquisitions. This compares with £2.8 billion in 2009 and reflects our disciplined approach to investment in what is a highly competitive market. We continue to evaluate returns from these investments. Assessment of earlier acquisitions such as Stiefel and the emerging market portfolios of UCB and BMS all indicate that they are on track to meet, or exceed, the targets we set at acquisition.
All this is fundamentally reducing GSK's dependency on sales of products in 'white pills/western markets.' Sales generated from these markets and products have decreased from 40% in 2007, to 25% in 2010. Over time, this should help to reduce the adverse impact of patent expirations on the Group.
Reinvestment and cost reduction has also helped to mitigate the impact of what has been a significant 'patent cliff' for GSK with more than £4 billion of patented sales being lost to generic competition over the last 4 years. This is in addition to the £1 billion of Avandia sales decline over the same period.
Our drive for change, and to improve returns on investment through restructuring and effective capital allocation, will not stop.
Today, we are announcing our intention to accelerate growth and focus our Consumer Healthcare business around a portfolio of 'priority' brands and the emerging markets. These two dimensions represent around 90% of our current sales base. We intend to divest the remaining 10% of sales (£500 million) which consist of European and American non-core OTC brands. Our aim is to divest these products by late 2011, subject to interest and realising appropriate value for shareholders. We expect to use the proceeds to fund increased returns to shareholders.
Divestments of non-core assets to create value for shareholders will continue. This week, we completed the divestment of our total shareholding in Quest Diagnostics for net proceeds after tax of $1.1 billion (£0.7 billion) and the sale of our remaining interests in Zovirax cream and ointment formulations in North America to Valeant Pharmaceuticals for $300 million (£190 million).
Delivering diversified underlying sales growth In 2010, reported sales were down 1%; however, underlying sales growth (sales excluding pandemic products, Avandia and Valtrex) was 4.5%. This growth was achieved despite the ongoing impacts of US healthcare reform and EU government austerity measures which reduced sales by approximately £380 million.
In 2011, we expect underlying sales momentum to continue and translate into sustainable reported growth in 2012. This expectation includes our assessment for further pricing reductions in the USA and Europe which is expected to amount to an incremental £325 million in 2011.
We recognise that tracking GSK's performance in 2011 will be difficult. The 'washout' of pandemic products, Avandia and Valtrex, which altogether represented sales of more than £2 billion in 2010, will clearly impact our reported sales and margin for the year and especially during the first half.
Given the minimal sales and marketing support for these products, we expect this to reduce our operating margin (excluding legal charges and other operating income) during 2011 by around 1 percentage point. This reduction also takes into account the industry levy associated with US healthcare reform. We expect the Group margin (on the same basis) to improve from 2012 onwards reflecting delivery of our underlying sales momentum and cost savings realised through our restructuring programme.
Offsetting this impact to SG&A expenditure, would require us to reduce investment in growth areas of the business, and we do not believe this is in the long-term interests of the business.
Increasing pipeline potential GSK has a peer-leading portfolio of around 30 opportunities in phase III and registration.
This portfolio is diverse with 5 biopharmaceuticals and 5 vaccines in addition to NCEs, all targeting multiple disease areas. The portfolio is also innovative with more than 20 assets not currently on the market for any indication.
Importantly, we are delivering sustained asset progression with 10 NCEs and new vaccines entering phase III since the start of 2010. 7 assets are filed with regulators or pending filing. By the end of 2012, we expect Phase III data on around 15 additional assets, including treatments for type 1 and 2 diabetes, rare diseases and multiple cancer types.
Looking at asset progression, one particular area I want to mention here is our respiratory pipeline. Today, we are announcing that a new LAMA/LABA combination product ('719/'444), will join Relovair in Phase III development. We have also announced the initiation of an extensive clinical outcomes study to assess the potential for Relovair to improve survival in patients with COPD. With more than 50 years of experience in this field, respiratory remains a very important part of GSK's research.
Improving returns on investment is key to how we are running our R&D operations. Our previously announced target is to deliver an aspirational rate of return for GSK's R&D of around 14%. We have made fundamental changes to how we allocate our R&D expenditure, directing it to our late stage pipeline and reducing cost and risk through externalising parts of early-stage discovery; dismantling infrastructure; and terminating development in areas with low financial and scientific return.
Improved cash generation Improvements in business efficiency are also helping drive cash generation. Adjusted 2010 net cash inflow before legal settlements was £8.8 billion, up 9% in sterling terms, reflecting the benefits of our ongoing restructuring programme and the success of our working capital initiatives. During 2010, working capital reduced by £1.3 billion (including £600 million of cash from lower pandemic receivables).
Cash outflow in respect of the settlement of legal matters was £2 billion in the year, resulting in net cash inflow from operating activities of £6.8 billion.
Net debt was £8.9 billion, £0.6 billion lower than the previous year. This positions the Group well to accommodate the already provided for legal costs as they become payable, whilst continuing to support our ongoing investment programmes and delivery of targeted returns to shareholders.
Increasing returns to shareholders With improvements in our cash position, we are increasing returns to shareholders.
We increased GSK's dividend by 7% to 65p in 2010 and our priority is to deliver further growth in the dividend. Since 2005, dividends have increased each year with average growth of 8% over the five-year period.
Today, we are announcing that we will buy back shares again. In 2011, as part of a new long-term share buy-back programme and depending on market conditions, we expect to repurchase £1-2 billion of shares.
Our commitment is to use free cash flow to support increasing dividends, undertake share repurchases or, where returns are more attractive, invest in bolt-on acquisitions.
Summary In conclusion, whilst our operating environment remains challenging, I believe we have made significant progress through restructuring and a rigorous returns-based approach to capital allocation. Our business is more balanced and is generating underlying sales growth. Our broad and diverse pipeline is generating increasing potential. Our cash generation is strong and we are enhancing returns to shareholders. With the rest of GSK's management team, I remain confident that we can generate increased value for shareholders and deliver even better outcomes to patients and consumers. |
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Andrew Witty Chief Executive Officer |
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A short video interview with Andrew Witty discussing today's results and GSK's strategic progress is available on www.gsk.com and cantos.com |
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Full year trading update |
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Turnover and key product movements impacting growth for full year 2010 Total Group turnover for the year declined 1% to £28.4 billion, with pharmaceutical turnover down 2% to £23.4 billion and Consumer Healthcare sales up 5% to £5.0 billion. Excluding pandemic products, Valtrex and Avandia, Group sales were up 4.5% for the year.
Regional pharmaceutical turnover US pharmaceuticals sales declined 11% to £7.6 billion, primarily due to generic competition to Valtrex, a significant reduction in sales of pandemic related products and lower sales of Avandia. Excluding these products, sales grew 3%, despite the discontinuation of GSK's promotion of Boniva, the sale of Wellbutrin XL in May 2009, and the impact of US healthcare reform across the product range. New products launched since 2007 grew 29% and contributed 8% of 2010 sales.
Europe pharmaceuticals sales declined 6% to £6.5 billion, primarily due to the impact of a significant reduction in sales of pandemic related products, generic competition to Valtrex and lower sales of Avandia. Excluding these products, sales were flat, reflecting the impact of government austerity measures.
Emerging Markets pharmaceutical sales grew 22% to £3.6 billion, with strong growth across most product categories and also helped by pandemic related product sales of £227 million (2009: £89 million). Asia Pacific/Japan pharmaceutical sales grew 9% to £3.1 billion. Excluding pandemic related products, Valtrex and Avandia, sales grew 20% in Emerging Markets and 7% in Asia Pacific/Japan.
Pharmaceutical products Seretide/Advair sales grew 2% to £5.1 billion, with strong growth in Japan (+17% to £246 million) and Emerging Markets (+16% to £328 million). Sales in the USA were level at £2.6 billion and grew 2% in Europe to £1.6 billion.
Several other respiratory products delivered growth including Avamys/Veramyst (+33% to £193 million), Ventolin (+8% to £522 million) and Flovent (+2% to £804 million).
Total vaccine sales grew 15% to £4.3 billion, including £1.2 billion of pandemic vaccine sales (2009: £883 million). Several new vaccines contributed to this growth including Synflorix (more than doubling to £221 million), Boostrix (+29% to £181 million) and Cervarix (+26% to £242 million). Sales of Hepatitis vaccines grew 7% to £720 million, Infanrix/Pediarix grew 8% to £700 million and seasonal flu sales grew 14% to £241 million. Rotarix sales were down 18% to £235 million, as the product continues to recover market share lost following its temporary suspension from several markets earlier in the year.
Relenza sales were £121 million (2009: £720 million), down 84%, against the previous year where significant government orders were received.
Dermatology sales were £1,087 million, including heritage GSK products and those acquired through business acquisitions, principally Stiefel in July 2009. The estimated sales growth in 2010 for the business on a pro-forma basis (excluding 2010 acquisitions) is approximately 6%. In addition, GSK's heritage consumer dermatology portfolio, reported within Consumer Healthcare, contributed sales of £256 million (+8%).
Other strong pharmaceutical performances during the year included Tykerb (+34% to £227 million), Arixtra (+19% to £301 million), Avodart (+18% to £629 million), and Lovaza (+17% to £530 million). Newly launched oncology products Votrient and Arzerra delivered sales of £38 million and £31 million, respectively.
Valtrex sales (-60% to £532 million) were impacted by generic competition in the USA and Europe. Boniva's reported sales of £78 million were down 69%, primarily reflecting the transfer to Genentech of the exclusive promotion rights in the USA on 1st January 2010. Reported sales of Wellbutrin declined 39% to £81 million, reflecting the sale of Wellbutrin XL in the USA to Biovail in Q2 2009.
Avandia sales declined by 44% to £440 million. On 23rd September 2010 the European Medicines Agency suspended marketing authorisation for all Avandia containing products and the US Food and Drug Administration announced additional measures to ensure continued safe use of Avandia, including a Risk Evaluation and Mitigation Strategy (REMS) programme. As a result, GSK expects global sales of Avandia containing products to be minimal in the future.
Sales of HIV products by ViiV Healthcare were down 3% to £1.6 billion. Sales of the former Pfizer products Selzentry and Viracept (combined sales of £118 million) and growth from Epzicom/Kivexa (+1% to £555 million) partially offset reductions in the sales from other HIV products including Trizivir (-28% to £144 million) and Combivir (-16% to £363 million).
Consumer Healthcare Total Consumer Healthcare sales were up 5% to £5.0 billion, significantly outgrowing market growth estimated to be approximately 2%.
Sales in the Rest of World grew 13% to £2.0 billion, driven by strong growth in India and China, which grew by 19% and 18%, respectively. Europe sales were level with last year with sales of £2.0 billion and the business in the USA grew 1% to £1.0 billion.
On a category basis, global Oral care sales grew 6% to £1,602 million led by growth of Sensodyne in all regions and Nutritional healthcare sales grew 9% to £952 million. Sales of OTC medicines were £2,456 million, up 3%, with strong growth of Panadol and smoking control products partly offset by lower sales of alli in both the USA and Europe and lower sales of respiratory tract products due in part to a relatively weak flu season earlier in 2010. |
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Operating profit and earnings per share commentary - year ended 31st December 2010
Results before major restructuring Operating profit before major restructuring for the year ended 31st December 2010 was £5,128 million, a 48% decline in CER terms (a decrease of 45% in sterling terms). Excluding legal costs of £4,001 million, operating profit was £9,129 million, an 11% decline in CER terms (a decrease of 7% in sterling terms) principally reflecting a 1% decline in turnover, higher cost of sales and lower other operating income partly offset by reduced SG&A costs. Operating profit margin excluding legal costs and other operating income was 30.4% in 2010. The company expects the operating profit margin excluding legal costs and other operating income to be around 1 percentage point lower in 2011.
Cost of sales increased to 26.1% of turnover (2009: 25.0%) reflecting the impact of generic competition to higher margin products in the USA (principally Valtrex), lower Avandia sales, US healthcare reforms and European austerity price cuts, and inventory and other asset write-downs, partially offset by savings from the Operational Excellence programme. The company expects cost of sales as a percentage of turnover in 2011 to remain around 26%.
SG&A costs as a percentage of turnover increased by 11.2 percentage points to 43.6%. Excluding legal costs of £4,001 million (2009: £591 million), SG&A costs were 29.5% of turnover (2009: 30.3%). This reflected operational excellence savings in the USA and Europe and lower exchange losses on inter-company transactions, partially offset by investment in growth markets and the full year impact of the acquisition of Stiefel. The company expects SG&A costs excluding legal charges to be around 30.5% of turnover in 2011.
R&D expenditure was 14.0% of total turnover (2009: 13.9%) and included savings from the Operational Excellence programme, partially offset by higher ViiV R&D investment. The comparison to prior year was unfavourably impacted by the one-off recognition of a recoverable balance in 2009, partly offset by lower intangible asset impairments of £126 million (2009: £167 million). The company expects R&D costs as a percentage of turnover to remain around 14% in 2011.
Other operating income was £493 million (2009: £1,135 million) primarily reflecting royalty income of £296 million (2009: £296 million), income from the transfer to Genentech of the exclusive promotion rights to Boniva in the USA, and asset disposals of £134 million (2009: £875 million), partially offset by equity investment impairments of £65 million (2009: £135 million). The 2009 income included the disposal of Wellbutrin XL, various asset disposals to Aspen Pharmacare, a royalty dispute settlement gain of £78 million and the accounting gain of £296 million on the creation of ViiV Healthcare. In 2011 the company expects other operating income to be around £600 million, excluding the profit arising on the proposed Consumer Healthcare divestments of non-core OTC brands.
Net interest payable for the year was £712 million (2009: £710 million) and the company expects a similar charge in 2011.
Profit on disposal of interests in associates was £8 million. The 2009 profit of £115 million arose from the sale of 5.7 million Quest shares. Subsequent to the year-end, the company sold its entire shareholding in Quest, which will give rise to a pre-tax profit on disposal of associates of approximately £600 million (£250 million after tax).
The charge for taxation on profit before major restructuring charges amounted to £1,544 million and represents an effective tax rate of 34.3% (2009: 28.0%). The company currently expects an underlying tax rate in 2011 of around 27%. The tax due on the profit realised on the disposal of the shareholding in Quest will increase the overall tax rate for 2011 to around 29.5%. This excludes the effect of any tax that may arise on the proposed Consumer Healthcare divestments of non-core brands.
EPS before major restructuring of 53.9p decreased 59% in CER terms (a 56% decrease in sterling terms) compared with 2009. Excluding legal costs EPS before major restructuring decreased 11% in CER terms. The favourable currency impact of three percentage points reflected the weakness of Sterling against most major international currencies compared with last year, partially offset by the strengthening of Sterling against the Euro. |
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Total results after restructuring Operating profit after restructuring for the year ended 31st December 2010 was £3,783 million, a decrease of 59% CER (a decrease of 55% in sterling terms) compared with 2009. This included £1,345 million of restructuring charges (2009: £832 million); £187 million was charged to cost of sales (2009: £285 million), £665 million to SG&A (2009: £392 million) and £493 million to R&D (2009: £155 million). EPS after restructuring of 32.1p decreased 75% in CER terms (a decrease of 71% in sterling terms) compared with 2009.
The current £4.5 billion Operational Excellence restructuring programme delivered £1.7 billion of cumulative annual savings in 2010, and remains on track to deliver full year savings of £2.2 billion by 2012. The cumulative charge incurred to 31st December 2010 was £3.6 billion which includes £0.2 billion of charges for integration of new businesses. |
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Cash flow and net debt The adjusted net cash inflow from operating activities before legal settlements of £2,047 million (2009: £254 million) was £8,844 million, a 9% increase in sterling terms over 2009. The 2010 cash flow benefited from a net working capital reduction of £1,297 million. This net inflow was used to fund net interest of £668 million, capital expenditure on property, plant and equipment and intangible assets of £1,635 million, equity investments of £279 million, acquisitions of £354 million, repayment of short-term loans of £1,296 million and the dividends paid to shareholders of £3,205 million.
Net debt decreased by £585 million during the year to £8.9 billion, comprising gross debt of £15.1 billion and cash and liquid investments of £6.2 billion.
At 31st December 2010, GSK had short-term borrowings (including overdrafts) repayable within 12 months of £291 million with loans of £2,559 million repayable in the subsequent year. |
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Dividends The Board has declared a fourth interim dividend of 19 pence per share resulting in a dividend for the year of 65 pence, a 4 pence increase on the 61 pence per share for 2009. The equivalent interim dividend receivable by ADR holders is 61.5296 cents per ADS based on an exchange rate of £1/$1.6192. The ex-dividend date will be 9th February 2011, with a record date of 11th February 2011 and a payment date of 7th April 2011. |
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Currency impact The 2010 results are based on average exchange rates, principally £1/$1.55, £1/€1.16 and £1/Yen 136. Comparative exchange rates are given on page 31. The period end exchange rates were £1/$1.56, £1/€1.17 and £1/Yen 127. If exchange rates were to hold at these period end levels for the rest of 2011 and there were no exchange gains or losses, the estimated positive impact on 2011 sterling EPS before major restructuring would be approximately 0.9p. |
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Additional income statement information To improve transparency and understanding of our increasingly diversified business additional detailed financial information is provided on pages 32 to 35. |
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GlaxoSmithKline (GSK) together with its subsidiary undertakings, the 'Group' - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer. GlaxoSmithKline's website www.gsk.com gives additional information on the Group. Information made available on the website does not constitute part of this document. |
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Enquiries:
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UK Media |
David Mawdsley Claire Brough Alexandra Harrison Stephen Rea |
(020) 8047 5502 (020) 8047 5502 (020) 8047 5502 (020) 8047 5502 |
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USA Media |
Nancy Pekarek Mary Anne Rhyne Kevin Colgan Jennifer Armstrong |
(919) 483 2839 (919) 483 2839 (919) 483 2839 (919) 483 2839 |
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European Analyst / Investor |
Sally Ferguson Gary Davies Ziba Shamsi |
(020) 8047 5543 (020) 8047 5503 (020) 8047 3289 |
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US Analyst / Investor |
Tom Curry |
(215) 751 5419 |
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Results before major restructuring Results before major restructuring is a measure used by management to assess the Group's financial performance and is presented after excluding restructuring charges relating to the Operational Excellence programme, which commenced in October 2007 and the acquisitions of Reliant Pharmaceuticals in December 2007 and Stiefel in July 2009. Management believes that this presentation assists shareholders in gaining a clearer understanding of the Group's financial performance and in making projections of future financial performance, as results that include such costs, by virtue of their size and nature, have limited comparative value.
CER growth In order to illustrate underlying performance, it is the Group's practice to discuss its results in terms of constant exchange rate (CER) growth. This represents growth calculated as if the exchange rates used to determine the results of overseas companies in Sterling had remained unchanged from those used in the comparative period. All commentaries are presented in terms of CER growth, unless otherwise stated.
Underlying sales growth Underlying sales growth excludes the sales of pandemic products, Avandia and Valtrex. Management believes this measure assists shareholders in gaining a clearer understanding of the Group's sales performance and prospects because of the size and nature of the loss of sales from these products in 2010 and 2011. Sales of these products were: |
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2010 |
2009 |
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£m |
£m |
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Pandemic products |
1,313 |
1,603 |
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Avandia |
440 |
771 |
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Valtrex |
532 |
1,294 |
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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.
White pills/western markets White pills/western markets refers to sales of tablets and simple injectables (excluding biopharmaceuticals and vaccines) in North America and Europe.
Cautionary statement regarding forward-looking statements Under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, the company cautions investors that any forward-looking statements or projections made by the company, including those made in this Announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect the Group's operations are described under 'Risk Factors' in the 'Business Review' in the company's Annual Report on Form 20-F for 2009. |
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GlaxoSmithKline plc, 980 Great West Road, Brentford, Middlesex TW8 9GS, United Kingdom Registered in England and Wales. Registered number: 3888792 |
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Income statement |
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Year ended 31st December 2010 |
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Results |
Growth |
Major |
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Results |
Major |
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£m |
CER% |
£m |
£m |
£m |
£m |
£m |
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______ |
______ |
______ |
______ |
______ |
______ |
______ |
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TURNOVER |
28,392 |
(1) |
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28,392 |
28,368 |
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28,368 |
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Cost of sales |
(7,405) |
4 |
(187) |
(7,592) |
(7,095) |
(285) |
(7,380) |
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______ |
|
______ |
______ |
______ |
______ |
______ |
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Gross profit |
20,987 |
(3) |
(187) |
20,800 |
21,273 |
(285) |
20,988 |
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Selling, general and |
(12,388) |
35 |
(665) |
(13,053) |
(9,200) |
(392) |
(9,592) |
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Research and development |
(3,964) |
- |
(493) |
(4,457) |
(3,951) |
(155) |
(4,106) |
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Other operating income |
493 |
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493 |
1,135 |
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1,135 |
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______ |
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______ |
______ |
______ |
______ |
______ |
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OPERATING PROFIT |
5,128 |
(48) |
(1,345) |
3,783 |
9,257 |
(832) |
8,425 |
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Finance income |
116 |
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116 |
70 |
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70 |
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Finance expense |
(828) |
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(3) |
(831) |
(780) |
(3) |
(783) |
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Profit on disposal of interest |
8 |
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8 |
115 |
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115 |
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Share of after tax profits of |
81 |
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81 |
64 |
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64 |
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______ |
|
______ |
______ |
______ |
______ |
______ |
|
PROFIT BEFORE TAXATION |
4,505 |
(52) |
(1,348) |
3,157 |
8,726 |
(835) |
7,891 |
|
|
|
|
|
|
|
|
|
|
Taxation |
(1,544) |
|
240 |
(1,304) |
(2,443) |
221 |
(2,222) |
|
Tax rate % |
34.3% |
|
|
41.3% |
28.0% |
|
28.2% |
|
|
______ |
|
______ |
______ |
______ |
______ |
______ |
|
PROFIT AFTER TAXATION FOR THE YEAR |
2,961 |
(56) |
(1,108) |
1,853 |
6,283 |
(614) |
5,669 |
|
|
______ |
|
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
Profit attributable to |
219 |
|
|
219 |
138 |
|
138 |
|
Profit attributable to |
2,742 |
|
(1,108) |
1,634 |
6,145 |
(614) |
5,531 |
|
|
______ |
|
______ |
______ |
______ |
______ |
______ |
|
|
2,961 |
|
(1,108) |
1,853 |
6,283 |
(614) |
5,669 |
|
|
______ |
|
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE |
53.9p |
(59) |
|
32.1p |
121.2p |
|
109.1p |
|
|
______ |
|
|
______ |
______ |
|
______ |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
53.5p |
|
|
31.9p |
120.3p |
|
108.2p |
|
|
______ |
|
|
______ |
______ |
|
______ |
|
Pharmaceuticals turnover |
|
Year ended 31st December 2010 |
|
|
Total |
USA |
Europe |
Emerging Markets |
Rest of World |
|||||
|
|
------------------------------ |
------------------------------ |
------------------------------ |
----------------------------- |
--------------------------- |
|||||
|
|
£m |
CER% |
£m |
CER% |
£m |
CER% |
£m |
CER% |
£m |
CER% |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
Respiratory |
7,238 |
3 |
3,394 |
1 |
2,149 |
- |
616 |
19 |
1,079 |
4 |
|
Avamys/Veramyst |
193 |
33 |
69 |
- |
56 |
27 |
31 |
>100 |
37 |
94 |
|
Flixonase/Flonase |
164 |
(5) |
37 |
37 |
40 |
(7) |
39 |
11 |
48 |
(30) |
|
Flixotide/Flovent |
804 |
2 |
431 |
8 |
159 |
(9) |
48 |
38 |
166 |
(10) |
|
Seretide/Advair |
5,139 |
2 |
2,604 |
- |
1,601 |
2 |
328 |
16 |
606 |
10 |
|
Serevent |
201 |
(16) |
64 |
(12) |
98 |
(16) |
2 |
(33) |
37 |
(23) |
|
Ventolin |
522 |
8 |
179 |
16 |
142 |
(3) |
112 |
19 |
89 |
(2) |
|
Zyrtec |
82 |
4 |
- |
- |
- |
- |
14 |
- |
68 |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-virals |
1,086 |
(56) |
370 |
(68) |
109 |
(73) |
223 |
(3) |
384 |
(44) |
|
Hepsera |
128 |
6 |
- |
- |
1 |
- |
58 |
10 |
69 |
2 |
|
Relenza |
121 |
(84) |
43 |
(69) |
6 |
(97) |
1 |
(97) |
71 |
(80) |
|
Valtrex |
532 |
(60) |
252 |
(73) |
68 |
(56) |
28 |
8 |
184 |
2 |
|
Zeffix |
233 |
4 |
13 |
(24) |
26 |
(10) |
136 |
17 |
58 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Central nervous system |
1,753 |
(8) |
505 |
(23) |
540 |
(4) |
223 |
17 |
485 |
(2) |
|
Imigran/Imitrex |
212 |
(21) |
75 |
(39) |
85 |
(10) |
5 |
- |
47 |
2 |
|
Lamictal |
504 |
1 |
257 |
(4) |
143 |
(6) |
57 |
23 |
47 |
42 |
|
Requip |
233 |
11 |
44 |
69 |
137 |
2 |
3 |
50 |
49 |
2 |
|
Seroxat/Paxil |
482 |
(12) |
27 |
(36) |
82 |
(15) |
73 |
(3) |
300 |
(9) |
|
Treximet |
56 |
2 |
55 |
2 |
- |
- |
- |
- |
1 |
- |
|
Wellbutrin |
81 |
(39) |
24 |
(73) |
39 |
33 |
13 |
30 |
5 |
(25) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular and urogenital |
2,570 |
11 |
1,571 |
10 |
610 |
7 |
134 |
25 |
255 |
23 |
|
Arixtra |
301 |
19 |
177 |
25 |
99 |
8 |
10 |
43 |
15 |
18 |
|
Avodart |
629 |
18 |
337 |
5 |
175 |
22 |
33 |
50 |
84 |
90 |
|
Coreg |
171 |
(1) |
170 |
(1) |
- |
- |
- |
- |
1 |
- |
|
Fraxiparine |
222 |
(2) |
- |
- |
154 |
(9) |
55 |
29 |
13 |
(7) |
|
Lovaza |
530 |
17 |
528 |
17 |
- |
- |
- |
- |
2 |
- |
|
Vesicare |
114 |
9 |
113 |
8 |
- |
- |
- |
- |
1 |
- |
|
Volibris |
46 |
>100 |
- |
- |
40 |
>100 |
1 |
- |
5 |
>100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Metabolic |
678 |
(44) |
238 |
(59) |
166 |
(38) |
91 |
(24) |
183 |
(17) |
|
Avandia products |
440 |
(44) |
237 |
(45) |
88 |
(48) |
42 |
(43) |
73 |
(32) |
|
Bonviva/Boniva |
78 |
(69) |
- |
(100) |
64 |
(26) |
2 |
- |
12 |
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-bacterials |
1,396 |
(4) |
75 |
(28) |
536 |
(14) |
609 |
10 |
176 |
1 |
|
Augmentin |
625 |
(6) |
11 |
(76) |
240 |
(17) |
291 |
15 |
83 |
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology and emesis |
688 |
9 |
350 |
13 |
201 |
1 |
62 |
7 |
75 |
17 |
|
Arzerra |
31 |
>100 |
26 |
>100 |
4 |
- |
- |
- |
1 |
- |
|
Hycamtin |
144 |
(16) |
83 |
(17) |
48 |
(17) |
7 |
17 |
6 |
(14) |
|
Promacta |
31 |
>100 |
25 |
92 |
5 |
- |
- |
- |
1 |
- |
|
Tyverb/Tykerb |
227 |
34 |
70 |
28 |
94 |
28 |
30 |
36 |
33 |
72 |
|
Votrient |
38 |
>100 |
33 |
>100 |
4 |
- |
- |
- |
1 |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines |
4,326 |
15 |
763 |
(7) |
1,681 |
(2) |
927 |
38 |
955 |
85 |
|
Boostrix |
181 |
29 |
110 |
51 |
43 |
10 |
9 |
29 |
19 |
(16) |
|
Cervarix |
242 |
26 |
13 |
>100 |
116 |
(14) |
25 |
4 |
88 |
>100 |
|
Fluarix, FluLaval |
241 |
14 |
110 |
51 |
63 |
(8) |
40 |
(5) |
28 |
- |
|
Flu Pandemic |
1,192 |
31 |
1 |
(99) |
488 |
(6) |
226 |
>100 |
477 |
>100 |
|
Hepatitis |
720 |
7 |
307 |
19 |
242 |
(6) |
88 |
8 |
83 |
15 |
|
Infanrix, Pediarix |
700 |
8 |
146 |
8 |
429 |
8 |
50 |
13 |
75 |
3 |
|
Rotarix |
235 |
(18) |
74 |
(4) |
38 |
(28) |
102 |
(22) |
21 |
(17) |
|
Synflorix |
221 |
>100 |
- |
- |
43 |
38 |
149 |
>100 |
29 |
>100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatologicals |
1,087 |
51 |
358 |
70 |
246 |
48 |
286 |
52 |
197 |
26 |
|
Bactroban |
119 |
(3) |
51 |
(14) |
27 |
8 |
28 |
7 |
13 |
- |
|
Dermovate |
74 |
- |
- |
- |
19 |
- |
30 |
- |
25 |
- |
|
Duac |
116 |
>100 |
67 |
>100 |
23 |
>100 |
11 |
>100 |
15 |
>100 |
|
Soriatane |
71 |
>100 |
71 |
>100 |
- |
- |
- |
- |
- |
- |
|
Zovirax |
152 |
15 |
53 |
>100 |
27 |
(10) |
26 |
9 |
46 |
(14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
994 |
16 |
24 |
53 |
310 |
9 |
385 |
37 |
275 |
- |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
21,816 |
(2) |
7,648 |
(11) |
6,548 |
(6) |
3,556 |
22 |
4,064 |
6 |
|
|
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
ViiV Healthcare (HIV) |
1,566 |
(3) |
660 |
(8) |
585 |
(5) |
146 |
35 |
175 |
7 |
|
Combivir |
363 |
(16) |
143 |
(24) |
117 |
(21) |
63 |
22 |
40 |
(3) |
|
Epivir |
115 |
(12) |
40 |
(17) |
37 |
(22) |
18 |
31 |
20 |
- |
|
Epzicom/Kivexa |
555 |
1 |
210 |
(7) |
245 |
3 |
29 |
38 |
71 |
14 |
|
Lexiva |
155 |
(12) |
80 |
(19) |
51 |
(15) |
13 |
86 |
11 |
- |
|
Selzentry |
80 |
>100 |
34 |
- |
41 |
>100 |
2 |
- |
3 |
- |
|
Trizivir |
144 |
(28) |
73 |
(30) |
60 |
(26) |
4 |
(43) |
7 |
(13) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
23,382 |
(2) |
|
|
|
|
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
|
|
|
Pharmaceutical turnover includes co-promotion income. |
||||||||||
|
Consumer Healthcare turnover |
|||||
|
Year ended 31st December 2010 |
|
||||
|
|
|
Total |
|
||
|
|
|
-------------------- |
|
||
|
|
|
£m |
CER% |
|
|
|
|
|
------ |
------ |
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter medicines |
2,456 |
3 |
|
|
|
|
Oral healthcare |
1,602 |
6 |
|
|
|
|
Nutritional healthcare |
952 |
9 |
|
|
|
|
|
------ |
------ |
|
|
|
|
|
5,010 |
5 |
|
|
|
|
|
------ |
------ |
|
|
|
|
Total |
|
|
|
-------------------- |
|
|
|
£m |
CER% |
|
|
------ |
------ |
|
|
|
|
|
USA |
1,037 |
1 |
|
Europe |
1,958 |
- |
|
Rest of World |
2,015 |
13 |
|
|
------ |
------ |
|
|
5,010 |
5 |
|
|
------ |
------ |
|
Statement of comprehensive income |
||
|
|
2010 |
2009 |
|
|
---- |
---- |
|
Profit for the year |
1,853 |
5,669 |
|
|
|
|
|
Exchange movements on overseas net assets and net investment hedges |
166 |
(194) |
|
Reclassification of exchange on liquidation or disposal of overseas subsidiaries |
(2) |
(44) |
|
Tax on exchange movements |
- |
19 |
|
Fair value movements on available-for-sale investments |
94 |
42 |
|
Deferred tax on fair value movements on available-for-sale investments |
(25) |
(24) |
|
Reclassification of fair value movements on available-for-sale investments |
1 |
- |
|
Deferred tax reversed on reclassification of available-for-sale investments |
(3) |
13 |
|
Actuarial losses on defined benefit plans |
(1) |
(659) |
|
Deferred tax on actuarial movements in defined benefit plans |
1 |
183 |
|
Fair value movements on cash flow hedges |
(8) |
(6) |
|
Deferred tax on fair value movements on cash flow hedges |
1 |
2 |
|
Reclassification of cash flow hedges to income statement |
3 |
1 |
|
Fair value movement in subsidiary acquisition |
- |
(6) |
|
Cash flow hedge re-allocated on subsidiary acquisition |
6 |
- |
|
|
---- |
---- |
|
Other comprehensive income/(expense) for the year |
233 |
(673) |
|
|
---- |
---- |
|
Total comprehensive income for the year |
2,086 |
4,996 |
|
|
---- |
---- |
|
|
|
|
|
Total comprehensive income for the year attributable to: |
|
|
|
Shareholders |
1,847 |
4,895 |
|
Non-controlling interests |
239 |
101 |
|
|
---- |
---- |
|
|
2,086 |
4,996 |
|
|
---- |
---- |
|
GSK's late-stage pharmaceuticals and vaccines pipeline |
||||
|
|
||||
|
The table below is provided as part of GSK's quarterly update to show events and changes to the late stage pipeline during the quarter and up to the date of announcement.
The following assets were listed as terminated in the last quarterly update and are no longer included in the table: Avandamet XR, Avandia+statin and Simplirix. Additionally, development of almorexant was discontinued in January 2011.
The table includes 5 new late stage assets that entered Phase III since the last update: IPX066 (from Impax) for Parkinson's disease '444+'719 (LABA/LAMA combination) for COPD 1605786 (CCX282) for Crohn's disease migalastat HCl (from Amicus) for Fabry disease '572+Kivexa FDC (from ViiV/Shionogi) for HIV
By the end of 2012, Phase III data is expected on the following 15 assets: migalastat HCl, 2118436, 1349572, IPX066, '444+'719, Mosquirix, 1120212, otelixizumab, pazopanib, Promacta, 2402968, Relovair, albiglutide, Tykerb, MAGE-A3 - event driven
|
||||
|
Biopharmaceuticals |
USA |
EU |
News update in the quarter |
|
|
Arzerra |
CLL (first line & relapsed) |
Ph III |
Ph III |
|
|
NHL (FL) |
Ph III |
Ph III |
|
|
|
NHL (DLBCL) |
Ph III |
Ph III |
|
|
|
Benlysta |
Systemic lupus |
Filed Jun 2010 |
Filed Jun 2010 |
Positive AdCom on 16th November 2010. PDUFA date extended to 10th March 2011. |
|
otelixizumab |
Type 1 diabetes |
Ph III |
Ph III |
|
|
albiglutide (formerly known as Syncria) |
Type 2 diabetes |
Ph III |
Ph III |
Recruitment complete in all 8 Phase III studies. |
|
Prolia (denosumab) |
Post menopausal osteoporosis |
n/a |
Launched |
Filings taking place in expansion territory emerging markets. |
|
Cardiovascular & Metabolic |
USA |
EU |
News update in the quarter |
|
|
darapladib |
Atherosclerosis |
Ph III |
Ph III |
|
|
Neurosciences |
|
USA |
EU |
News update in the quarter |
|
Horizant |
RLS |
Filed |
n/a |
Response to CR letter accepted by FDA 5th November 2010. PDUFA date 6th April 2011. Ex-US rights returned to Xenoport. |
|
almorexant |
Primary insomnia |
n/a |
n/a |
Discontinued in January 2011 following review of tolerability data from additional studies. |
|
Potiga (ezogabine)/ Trobalt (retigabine) |
Epilepsy |
Filed |
Filed |
Received CR letter from FDA |
|
IPX066 |
Parkinson's disease |
Ph III |
Ph III |
Co-development agreement |
|
Oncology |
|
USA |
EU |
News update in the quarter |
|
Promacta/Revolade |
Hepatitis C |
Ph III |
Ph III |
|
|
CLD |
Ph III |
Ph III |
Next steps under review. |
|
|
Avodart |
Prostate cancer prevention |
Filed |
Filed |
Negative AdCom on 1st December 2010. Received CR letter from FDA on 26th January 2011. |
|
Votrient |
Sarcoma |
Ph III |
Ph III |
|
|
(pazopanib) |
Ovarian |
Ph III |
Ph III |
|
|
|
First-line metastatic breast cancer |
Ph III |
Ph III |
|
|
Tykerb |
Adjuvant breast cancer |
Ph III |
Ph III |
Positive data from '535 study and Tykerb+Herceptin combination in neo-ALTTO study presented at San Antonio Breast Cancer Symposium, December 2010. |
|
|
Head & neck cancer |
Ph III |
Ph III |
|
|
|
Gastric cancer |
Ph III |
Ph III |
|
|
1120212 (MEK inhibitor) |
Metastatic melanoma |
Ph III |
Ph III |
Phase III study commenced in January 2011. |
|
2118436 (BRaf inhibitor) |
Metastatic melanoma |
Ph III |
Ph III |
Phase III study commenced in January 2011. |
|
Respiratory & Immuno-inflammation |
USA |
EU |
News update in the quarter |
|
|
Relovair |
COPD |
Ph III |
Ph III |
Phase III outcomes study commenced January 2011. |
|
Asthma |
Ph III |
Ph III |
|
|
|
1605786 (CCX282) |
Crohn's disease |
Ph III |
Ph III |
Phase III study commenced in January 2011. |
|
'444+'719 |
COPD |
Ph III |
Ph III |
Phase III study commenced in February 2011. |
|
Rare Diseases |
|
USA |
EU |
News update in the quarter |
|
migalastat HCl |
Fabry disease |
Ph III |
Ph III |
Co-development agreement with Amicus announced 29th October 2010. |
|
2402968 (PRO051) |
Duchenne muscular dystrophy |
|
Ph III |
Phase III study commenced in January 2011. |
|
2696273 |
adenosine deaminase severe combined immune deficiency (ADA-SCID) |
|
Ph II/III |
|
|
Vaccines |
|
USA |
EU |
News update in the quarter |
|
Menhibrix |
MenCY and Hib prophylaxis |
Filed |
n/a |
Expect to respond to FDA Complete Response letter in H1 2011. |
|
MAGE-A3 |
Melanoma |
Ph III |
Ph III |
|
|
|
NSCLC |
Ph III |
Ph III |
|
|
Nimenrix |
MenACWY prophylaxis |
Ph III |
Ph III |
|
|
Herpes zoster |
Shingles prophylaxis |
Ph III |
Ph III |
|
|
Mosquirix |
Malaria prophylaxis |
n/a |
n/a |
Phase III study ongoing in Africa. |
|
HIV (ViiV Healthcare) |
USA |
EU |
News update in the quarter |
|
|
1349572 |
HIV integrase inhibitor |
Ph III |
Ph III |
|
|
'572+Kivexa FDC |
HIV integrase inhibitor + abacavir + lamivudine FDC |
Ph III |
Ph III |
Phase III study commenced in February 2011. |
|
Turnover and key product movements impacting growth - Q4 2010 Total Group turnover for the quarter declined 13% to £7,197 million, with pharmaceutical turnover down 16% to £5,930 million and Consumer Healthcare sales up 4% to £1,267 million. Excluding pandemic products, Valtrex and Avandia, Group sales were up 2% in the quarter.
Regional pharmaceutical turnover US pharmaceuticals sales declined 22% to £1,854 million, primarily due to a significant reduction in sales of pandemic related products, generic competition to Valtrex and lower sales of Avandia. Excluding these products, sales fell 6% reflecting the discontinuation of GSK's promotion of Boniva, and the impact of US Healthcare Reform on other products.
Europe pharmaceutical sales declined 24% to £1,647 million, primarily due to the impact of a significant reduction in sales of pandemic related products, generic competition to Valtrex and lower sales of Avandia. Excluding these products, sales were down 1%, reflecting the impact of government austerity measures.
Emerging Markets pharmaceutical sales grew 16% to £969 million, with strong growth across most product categories partly offset by a reduction in pandemic sales. Excluding sales of pandemic products, Valtrex and Avandia, sales grew 28%.
Asia Pacific/Japan pharmaceutical sales declined 11% to £797 million. Excluding sales of pandemic related products, Valtrex and Avandia, sales were £724 million (+8%).
Pharmaceutical products Sales of Seretide/Advair declined 4% to £1,346 million in the quarter, with growth in Emerging Markets (+14% to £85 million) and Japan (+6% to £81 million) offset by reductions in the USA (-7% to £670 million) and Europe (-3% to £416 million). Higher levels of discounts required as a result of US Healthcare Reform and austerity measures by European governments negatively impacted growth for the product in both the USA and in Europe.
Other respiratory products sales during the quarter were: Avamys/Veramyst (+45% to £50 million), Ventolin (-1% to £142 million) and Flovent (-5% to £220 million). The reported growth rates for both Ventolin and Flovent were negatively impacted by variations in US shipping patterns.
Total vaccine sales (excluding pandemic sales) were £833 million (+20%), with strong growth in Asia Pacific/Japan (+48% to £88 million), Emerging Markets (+34% to £235 million), the USA (+26% to £171 million) and Europe (+10% to £303 million). Contributions from new vaccines included Cervarix (+68% to £67 million, including £23 million in Japan) and Boostrix (+37% to £49 million). Synflorix sales were down 2% to £48 million, following large shipments in Q3 2010. Sales of the Hepatitis vaccines grew 5% to £164 million and seasonal flu sales grew 64% to £69 million. Rotarix sales were up 11% to £79 million, as the product continues to recover market share lost following its temporary suspension from several markets earlier in the year.
Pandemic vaccines sales were £161 million compared with Q4 2009 sales of £836 million. Relenza sales were £11 million compared with Q4 2009 sales of £256 million, which benefited from significant government orders.
Dermatology sales grew 10% to £288 million in the quarter. In addition, GSK's heritage consumer dermatology portfolio, reported within Consumer Healthcare, contributed sales of £63 million (+11%).
Other strong pharmaceutical performances in the quarter included Tykerb (+23% to £60 million), Avodart (+22% to £177 million), Lovaza (+11% to £147 million) and Arixtra (+8% to £80 million). Newly launched oncology products Votrient and Arzerra delivered sales in the quarter of £14 million and £9 million, respectively.
Valtrex sales (-60% to £96 million) continued to be impacted by generic competition in the USA and Europe. Boniva's reported sales of £18 million were down 73%, primarily reflecting the transfer to Genentech of the exclusive promotion rights in the USA on 1st January 2010.
Avandia sales declined by 76% to £49 million. On 23rd September 2010 the European Medicines Agency suspended marketing authorisation for all Avandia containing products and the US Food and Drug Administration announced additional measures to ensure continued safe use of Avandia, including a Risk and Evaluation and Mitigation Strategy (REMS) programme. As a result, GSK expects global sales of products containing Avandia to be minimal in the future.
Sales of HIV products by ViiV Healthcare were down 4% to £403 million. Sales of the former Pfizer products Selzentry and Viracept (combined sales of £30 million in the quarter) partly offset reductions in the sales from other HIV products including Trizivir (-35% to £32 million), Combivir (-11% to £99 million) and Epzicom/Kivexa (-3% to £146 million).
Consumer Healthcare Total Consumer Healthcare sales were up 4% to £1,267 million, ahead of market growth for the quarter estimated to be approximately 3%.
On a regional basis, sales in the Rest of World markets continued to perform strongly (+13% to £485 million) with growth across all major categories. Sales in Brazil and Japan were particularly strong, helped by growth of smoking control product sales. In Europe, sales were down 3% to £503 million, mainly due to lower sales of alli and a challenging comparison to Q4 2009 which saw strong growth of Cold and flu products. US sales were up 5% to £279 million, with strong performances from Tums, Abreva, Breathe Right and smoking control products, which were driven by innovation and enhanced consumer marketing.
On a category basis, global Oral healthcare sales grew 7% to £411 million led by Sensodyne, which grew strongly in all regions. Nutritional healthcare sales grew 7% to £211 million, as a result of geographic expansion and enhanced marketing behind the Horlicks brand. Sales of OTC medicines were £645 million, up 1%. Strong growth in Rest of World markets was partially offset by lower sales of alli in both the USA and Europe. |
|
Operating profit and earnings per share commentary - Q4 2010
Results before major restructuring The operating loss before major restructuring for Q4 2010 was £37 million, compared with an operating profit of £2,677 million in Q4 2009. Excluding legal costs of £2,165 million, the operating profit for Q4 2010 was £2,128 million, a 33% decrease, principally reflecting reduced sales of pandemic vaccines, Valtrex and Avandia, a higher cost of sales as a percentage of turnover and lower other operating income, partially offset by lower SG&A costs.
Cost of sales was 27.5% of turnover, higher than the prior year (Q4 2009: 25.9%), reflecting the impact of generic competition to higher margin products in the USA (principally Valtrex), lower pandemic and Avandia sales, the impact of US healthcare reforms and European austerity price cuts on net sales, partially offset by savings from the Operational Excellence programme.
SG&A costs as a percentage of turnover increased to 59.6% in the quarter (Q4 2009: 34.3%). Excluding legal costs of £2,165 million, SG&A costs were 29.5% of turnover which was unchanged from 2009. This reflected investment in growth markets, offset by Operational Excellence savings in the USA and Europe.
R&D expenditure was 15.0% of turnover in the quarter (Q4 2009: 13.5%) reflecting higher intangible asset impairments offset by savings from the restructuring programme on lower turnover.
Other operating income in the quarter was £118 million (2009: £553 million) primarily comprising royalty income of £74 million (Q4 2009: £67 million), asset disposals of £60 million (Q4 2009: £511 million) and offset by £31 million of equity impairments (Q4 2009: £36 million). Various asset disposals to Aspen Pharmacare and the accounting gain from the creation of ViiV Healthcare contributed to the profit from asset disposals in 2009.
The loss per share before major restructuring was 7.5p compared with earnings per share of 35.4p in Q4 2009. |
|
Total results after restructuring The operating loss after restructuring for Q4 2010 was £320 million, compared with an operating profit of £2,447 million in Q4 2009. This included £283 million of restructuring charges related to the restructuring programme (Q4 2009: £230 million); £97 million was charged to cost of sales (Q4 2009: £21 million), £172 million to SG&A (Q4 2009: £174 million) and £14 million to R&D (Q4 2009: £35 million). The loss per share after restructuring was 13.6p compared with earnings per share of 32.1p in Q4 2009. |
|
Income statement |
|
Three months ended 31st December 2010 |
|
|
Results |
Growth |
Major |
|
Results |
Major |
|
|
|
£m |
CER% |
£m |
£m |
£m |
£m |
£m |
|
|
------ |
------ |
------ |
------ |
------ |
------ |
------ |
|
|
|
|
|
|
|
|
|
|
TURNOVER |
7,197 |
(13) |
|
7,197 |
8,094 |
|
8,094 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
(1,980) |
(6) |
(97) |
(2,077) |
(2,098) |
(21) |
(2,119) |
|
|
------ |
|
------ |
------ |
------ |
------ |
------ |
|
Gross profit |
5,217 |
(16) |
(97) |
5,120 |
5,996 |
(21) |
5,975 |
|
|
|
|
|
|
|
|
|
|
Selling, general and |
(4,289) |
51 |
(172) |
(4,461) |
(2,780) |
(174) |
(2,954) |
|
Research and development |
(1,083) |
(3) |
(14) |
(1,097) |
(1,092) |
(35) |
(1,127) |
|
Other operating income |
118 |
|
|
118 |
553 |
|
553 |
|
|
------ |
|
------ |
------ |
------ |
------ |
------ |
|
OPERATING (LOSS)/PROFIT |
(37) |
(>100) |
(283) |
(320) |
2,677 |
(230) |
2,447 |
|
|
|
|
|
|
|
|
|
|
Finance income |
58 |
|
|
58 |
5 |
|
5 |
|
Finance expense |
(240) |
|
|
(240) |
(213) |
|
(213) |
|
Profit on disposal of interest |
8 |
|
|
8 |
|
|
|
|
Share of after tax profits of |
18 |
|
|
18 |
11 |
|
11 |
|
|
------ |
|
------ |
------ |
------ |
------ |
------ |
|
(LOSS)/PROFIT BEFORE TAXATION |
(193) |
(>100) |
(283) |
(476) |
2,480 |
(230) |
2,250 |
|
|
|
|
|
|
|
|
|
|
Taxation |
(134) |
|
(23) |
(157) |
(646) |
64 |
(582) |
|
Tax rate % |
(69.4)% |
|
|
(33.0)% |
26.0% |
|
25.9% |
|
|
------ |
|
------ |
------ |
------ |
------ |
------ |
|
(LOSS)/PROFIT AFTER TAXATION FOR THE PERIOD |
(327) |
(>100) |
(306) |
(633) |
1,834 |
(166) |
1,668 |
|
|
------ |
|
------ |
------ |
------ |
------ |
------ |
|
|
|
|
|
|
|
|
|
|
Profit attributable to |
57 |
|
|
57 |
38 |
|
38 |
|
(Loss)/profit attributable to |
(384) |
|
(306) |
(690) |
1,796 |
(166) |
1,630 |
|
|
------ |
|
------ |
------ |
------ |
------ |
------ |
|
|
(327) |
(>100) |
(306) |
(633) |
1,834 |
(166) |
1,668 |
|
|
------ |
|
------ |
------ |
------ |
------ |
------ |
|
|
|
|
|
|
|
|
|
|
(LOSS)/EARNINGS PER SHARE |
(7.5)p |
(>100) |
|
(13.6)p |
35.4p |
|
32.1p |
|
|
------ |
|
|
------ |
------ |
|
------ |
|
|
|
|
|
|
|
|
|
|
Diluted (loss)/earnings |
(7.5)p |
|
|
(13.4)p |
35.1p |
|
31.8p |
|
|
------ |
|
|
------ |
------ |
|
------ |
|
Pharmaceuticals turnover |
|
Three months ended 31st December 2010 |
|
|
Total |
USA |
Europe |
Emerging Markets |
Rest of World |
|||||
|
|
------------------------------ |
------------------------------ |
------------------------------ |
----------------------------- |
--------------------------- |
|||||
|
|
£m |
CER% |
£m |
CER% |
£m |
CER% |
£m |
CER% |
£m |
CER% |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
Respiratory |
1,917 |
(2) |
875 |
(6) |
557 |
(4) |
162 |
17 |
323 |
5 |
|
Avamys/Veramyst |
50 |
45 |
17 |
7 |
12 |
9 |
9 |
100 |
12 |
>100 |
|
Flixonase/Flonase |
37 |
3 |
5 |
(17) |
10 |
(10) |
11 |
38 |
11 |
- |
|
Flixotide/Flovent |
220 |
(5) |
118 |
- |
42 |
(10) |
12 |
33 |
48 |
(16) |
|
Seretide/Advair |
1,346 |
(4) |
670 |
(7) |
416 |
(3) |
85 |
14 |
175 |
2 |
|
Serevent |
50 |
(21) |
15 |
(25) |
24 |
(17) |
- |
(100) |
11 |
(18) |
|
Ventolin |
142 |
(1) |
49 |
- |
38 |
(7) |
30 |
20 |
25 |
(13) |
|
Zyrtec |
23 |
(5) |
- |
- |
- |
- |
4 |
- |
19 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-virals |
224 |
(64) |
41 |
(82) |
24 |
(73) |
61 |
(13) |
98 |
(59) |
|
Hepsera |
33 |
- |
- |
- |
1 |
- |
15 |
8 |
17 |
(12) |
|
Relenza |
11 |
(96) |
(5) |
- |
- |
- |
(1) |
- |
17 |
(89) |
|
Valtrex |
96 |
(60) |
24 |
(83) |
15 |
(61) |
8 |
- |
49 |
(2) |
|
Zeffix |
64 |
9 |
3 |
(25) |
6 |
(14) |
39 |
28 |
16 |
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Central nervous system |
450 |
(14) |
114 |
(37) |
132 |
(8) |
62 |
22 |
142 |
(4) |
|
Imigran/Imitrex |
50 |
(40) |
15 |
(65) |
20 |
(20) |
1 |
(50) |
14 |
18 |
|
Lamictal |
130 |
(3) |
66 |
(11) |
34 |
(10) |
16 |
42 |
14 |
33 |
|
Requip |
60 |
(9) |
10 |
(38) |
33 |
(8) |
1 |
- |
16 |
27 |
|
Seroxat/Paxil |
128 |
(15) |
- |
(100) |
19 |
(9) |
19 |
5 |
90 |
(11) |
|
Treximet |
14 |
- |
14 |
- |
- |
- |
- |
- |
- |
- |
|
Wellbutrin |
22 |
(5) |
7 |
(30) |
11 |
22 |
4 |
33 |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular and urogenital |
696 |
11 |
422 |
10 |
159 |
6 |
36 |
28 |
79 |
23 |
|
Arixtra |
80 |
8 |
49 |
12 |
24 |
- |
3 |
50 |
4 |
- |
|
Avodart |
177 |
22 |
86 |
1 |
50 |
31 |
9 |
50 |
32 |
100 |
|
Coreg |
41 |
29 |
41 |
29 |
- |
- |
- |
- |
- |
- |
|
Fraxiparine |
55 |
(8) |
- |
- |
38 |
(13) |
15 |
25 |
2 |
(67) |
|
Lovaza |
147 |
11 |
146 |
11 |
- |
- |
- |
- |
1 |
- |
|
Vesicare |
31 |
3 |
31 |
3 |
- |
- |
- |
- |
- |
- |
|
Volibris |
16 |
>100 |
- |
- |
13 |
86 |
- |
- |
3 |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Metabolic |
110 |
(65) |
40 |
(75) |
13 |
(80) |
17 |
(43) |
40 |
(32) |
|
Avandia products |
49 |
(76) |
40 |
(65) |
(4) |
- |
3 |
(76) |
10 |
(64) |
|
Bonviva/Boniva |
18 |
(73) |
- |
(100) |
14 |
(35) |
- |
- |
4 |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-bacterials |
370 |
(2) |
16 |
(38) |
153 |
(11) |
159 |
14 |
42 |
(2) |
|
Augmentin |
168 |
(2) |
- |
(100) |
69 |
(13) |
78 |
29 |
21 |
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology and emesis |
172 |
- |
75 |
(16) |
55 |
10 |
17 |
13 |
25 |
41 |
|
Arzerra |
9 |
>100 |
6 |
>100 |
3 |
- |
- |
- |
- |
- |
|
Hycamtin |
29 |
(36) |
14 |
(46) |
12 |
(20) |
1 |
- |
2 |
(33) |
|
Promacta |
10 |
80 |
6 |
20 |
3 |
- |
- |
- |
1 |
- |
|
Tyverb/Tykerb |
60 |
23 |
17 |
14 |
25 |
24 |
9 |
50 |
9 |
14 |
|
Votrient |
14 |
>100 |
11 |
>100 |
3 |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines |
994 |
(36) |
171 |
(44) |
393 |
(49) |
260 |
11 |
170 |
(28) |
|
Boostrix |
49 |
37 |
28 |
65 |
11 |
- |
4 |
>100 |
6 |
(17) |
|
Cervarix |
67 |
68 |
1 |
(75) |
25 |
37 |
7 |
- |
34 |
>100 |
|
Fluarix, FluLaval |
69 |
64 |
28 |
>100 |
13 |
18 |
20 |
43 |
8 |
(33) |
|
Flu Pandemic |
161 |
(82) |
- |
(100) |
90 |
(82) |
25 |
(60) |
46 |
(67) |
|
Hepatitis |
164 |
5 |
56 |
6 |
63 |
- |
23 |
17 |
22 |
11 |
|
Infanrix, Pediarix |
190 |
24 |
36 |
30 |
120 |
22 |
13 |
56 |
21 |
13 |
|
Rotarix |
79 |
11 |
21 |
18 |
9 |
(36) |
45 |
36 |
4 |
(33) |
|
Synflorix |
48 |
(2) |
- |
- |
8 |
(27) |
35 |
13 |
5 |
(33) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatologicals |
288 |
10 |
94 |
1 |
62 |
14 |
82 |
39 |
50 |
(12) |
|
Bactroban |
29 |
4 |
12 |
(14) |
7 |
33 |
7 |
17 |
3 |
- |
|
Dermovate |
22 |
- |
- |
- |
5 |
- |
11 |
- |
6 |
- |
|
Duac |
27 |
13 |
15 |
(7) |
6 |
- |
3 |
>100 |
3 |
>100 |
|
Soriatane |
17 |
- |
17 |
- |
- |
- |
- |
- |
- |
- |
|
Zovirax |
39 |
(3) |
14 |
8 |
7 |
(14) |
6 |
20 |
12 |
(15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
306 |
19 |
6 |
>100 |
99 |
- |
113 |
62 |
88 |
- |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
5,527 |
(17) |
1,854 |
(22) |
1,647 |
(24) |
969 |
16 |
1,057 |
(16) |
|
|
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
ViiV Healthcare (HIV) |
403 |
(4) |
163 |
(16) |
145 |
(5) |
50 |
57 |
45 |
5 |
|
Combivir |
99 |
(11) |
34 |
(30) |
28 |
(22) |
26 |
67 |
11 |
- |
|
Epivir |
29 |
(3) |
10 |
(17) |
8 |
(27) |
6 |
25 |
5 |
100 |
|
Epzicom/Kivexa |
146 |
(3) |
55 |
(16) |
63 |
2 |
9 |
14 |
19 |
19 |
|
Lexiva |
36 |
(18) |
20 |
(20) |
10 |
(21) |
2 |
- |
4 |
- |
|
Selzentry |
22 |
>100 |
9 |
- |
11 |
>100 |
1 |
- |
1 |
- |
|
Trizivir |
32 |
(35) |
16 |
(38) |
14 |
(32) |
- |
(50) |
2 |
- |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
5,930 |
(16) |
|
|
|
|
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
|
|
|
Pharmaceutical turnover includes co-promotion income. |
||||||||||
|
Consumer Healthcare turnover |
||||
|
Three months ended 31st December 2010 |
||||
|
|
|
Total |
|
|
|
|
|
-------------------- |
|
|
|
|
|
£m |
CER% |
|
|
|
|
------ |
------ |
|
|
|
|
|
|
|
|
|
Over-the-counter medicines |
645 |
1 |
|
|
|
Oral healthcare |
411 |
7 |
|
|
|
Nutritional healthcare |
211 |
7 |
|
|
|
|
------ |
------ |
|
|
|
|
1,267 |
4 |
|
|
|
|
------ |
------ |
|
|
|
Total |
|
|
|
-------------------- |
|
|
|
£m |
CER% |
|
|
------ |
------ |
|
|
|
|
|
USA |
279 |
5 |
|
Europe |
503 |
(3) |
|
Rest of World |
485 |
13 |
|
|
------ |
------ |
|
|
1,267 |
4 |
|
|
------ |
------ |
|
Statement of comprehensive income |
||
|
|
Q4 2010 |
Q4 2009 |
|
|
---- |
---- |
|
(Loss)/profit for the period |
(633) |
1,668 |
|
|
|
|
|
Exchange movements on overseas net assets and net investment hedges |
113 |
(52) |
|
Reclassification of exchange on liquidation or disposal of overseas subsidiaries |
- |
(44) |
|
Tax on exchange movements |
- |
19 |
|
Fair value movements on available-for-sale investments |
54 |
(23) |
|
Deferred tax on fair value movements on available-for-sale investments |
(21) |
(8) |
|
Reclassification of fair value movements on available-for-sale-investments |
19 |
(28) |
|
Deferred tax reversed on reclassification of available-for-sale investments |
(6) |
6 |
|
Actuarial gains/(losses) on defined benefit plans |
371 |
(173) |
|
Deferred tax on actuarial movements in defined benefit plans |
(138) |
36 |
|
Fair value movements on cash flow hedges |
(3) |
- |
|
Deferred tax on fair value movements on cash flow hedges |
(1) |
- |
|
Reclassification of cash flow hedges to income statement |
3 |
1 |
|
Cash flow hedge re-allocated on subsidiary acquisition |
6 |
- |
|
Fair value movement on subsidiary acquisition |
- |
(6) |
|
|
---- |
---- |
|
Other comprehensive income/(expense) for the period |
397 |
(272) |
|
|
---- |
---- |
|
Total comprehensive (expense)/income for the period |
(236) |
1,396 |
|
|
---- |
---- |
|
|
|
|
|
Total comprehensive (expense)/income for the period attributable to: |
|
|
|
Shareholders |
(295) |
1,357 |
|
Non-controlling interests |
59 |
39 |
|
|
---- |
---- |
|
|
(236) |
1,396 |
|
|
---- |
---- |
|
Balance sheet |
|
|
|
31st December |
31st December |
|
ASSETS |
|
---- |
---- |
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
|
9,108 |
9,374 |
|
Goodwill |
|
3,606 |
3,361 |
|
Other intangible assets |
|
8,469 |
8,183 |
|
Investments in associates and joint ventures |
|
1,081 |
895 |
|
Other investments |
|
711 |
454 |
|
Deferred tax assets |
|
2,388 |
2,374 |
|
Derivative financial instruments |
|
97 |
68 |
|
Other non-current assets |
|
556 |
583 |
|
|
|
---- |
---- |
|
Total non-current assets |
|
26,016 |
25,292 |
|
|
|
---- |
---- |
|
Current assets |
|
|
|
|
Inventories |
|
3,837 |
4,064 |
|
Current tax recoverable |
|
56 |
58 |
|
Trade and other receivables |
|
5,793 |
6,492 |
|
Derivative financial instruments |
|
93 |
129 |
|
Liquid investments |
|
184 |
268 |
|
Cash and cash equivalents |
|
6,057 |
6,545 |
|
Assets held for sale |
|
16 |
14 |
|
|
|
---- |
---- |
|
Total current assets |
|
16,036 |
17,570 |
|
|
|
---- |
---- |
|
TOTAL ASSETS |
|
42,052 |
42,862 |
|
|
|
---- |
---- |
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Short-term borrowings |
|
(291) |
(1,471) |
|
Trade and other payables |
|
(6,888) |
(6,772) |
|
Derivative financial instruments |
|
(188) |
(168) |
|
Current tax payable |
|
(869) |
(1,451) |
|
Short-term provisions |
|
(4,380) |
(2,256) |
|
|
|
---- |
---- |
|
Total current liabilities |
|
(12,616) |
(12,118) |
|
|
|
---- |
---- |
|
Non-current liabilities |
|
|
|
|
Long-term borrowings |
|
(14,809) |
(14,786) |
|
Deferred tax liabilities |
|
(707) |
(645) |
|
Pensions and other post-employment benefits |
|
(2,672) |
(2,981) |
|
Other provisions |
|
(904) |
(985) |
|
Derivative financial instruments |
|
(5) |
- |
|
Other non-current liabilities |
|
(594) |
(605) |
|
|
|
---- |
---- |
|
Total non-current liabilities |
|
(19,691) |
(20,002) |
|
|
|
---- |
---- |
|
TOTAL LIABILITIES |
|
(32,307) |
(32,120) |
|
|
|
---- |
---- |
|
NET ASSETS |
|
9,745 |
10,742 |
|
|
|
---- |
---- |
|
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital |
|
1,418 |
1,416 |
|
Share premium account |
|
1,428 |
1,368 |
|
Retained earnings |
|
4,779 |
6,321 |
|
Other reserves |
|
1,262 |
900 |
|
|
|
---- |
---- |
|
Shareholders' equity |
|
8,887 |
10,005 |
|
|
|
|
|
|
Non-controlling interests |
|
858 |
737 |
|
|
|
---- |
---- |
|
TOTAL EQUITY |
|
9,745 |
10,742 |
|
|
|
---- |
---- |
|
Cash flow statement |
|
Year ended 31st December 2010 |
|
|
|
2010 |
2009 |
|
|
|
|
---- |
---- |
|
|
Profit after tax |
|
1,853 |
5,669 |
|
|
Tax on profits |
|
1,304 |
2,222 |
|
|
Share of after tax profits of associates and joint ventures |
|
(81) |
(64) |
|
|
Profit on disposal of interest in associates |
|
(8) |
(115) |
|
|
Net finance expense |
|
715 |
713 |
|
|
Depreciation and other non-cash items |
|
2,071 |
1,271 |
|
|
Decrease/(increase) in working capital |
|
1,297 |
(106) |
|
|
Increase/(decrease) in other net liabilities |
|
1,480 |
(45) |
|
|
|
|
---- |
---- |
|
|
Cash generated from operations |
|
8,631 |
9,545 |
|
|
Taxation paid |
|
(1,834) |
(1,704) |
|
|
|
|
---- |
---- |
|
|
Net cash inflow from operating activities |
|
6,797 |
7,841 |
|
|
|
|
---- |
---- |
|
|
Cash flow from investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(1,077) |
(1,418) |
|
|
Proceeds from sale of property, plant and equipment |
|
92 |
48 |
|
|
Purchase of intangible assets |
|
(558) |
(455) |
|
|
Proceeds from sale of intangible assets |
|
126 |
356 |
|
|
Purchase of equity investments |
|
(279) |
(154) |
|
|
Proceeds from sale of equity investments |
|
27 |
59 |
|
|
Purchase of businesses, net of cash acquired |
|
(354) |
(2,792) |
|
|
Investment in associates and joint ventures |
|
(61) |
(29) |
|
|
Proceeds from disposal of interest in associates |
|
- |
178 |
|
|
Decrease in liquid investments |
|
91 |
87 |
|
|
Interest received |
|
107 |
90 |
|
|
Dividends from associates and joint ventures |
|
18 |
17 |
|
|
|
|
---- |
---- |
|
|
Net cash outflow from investing activities |
|
(1,868) |
(4,013) |
|
|
|
|
---- |
---- |
|
|
Cash flow from financing activities |
|
|
|
|
|
Proceeds from own shares for employee share options |
|
17 |
13 |
|
|
Issue of share capital |
|
62 |
43 |
|
|
Shares acquired by ESOP Trusts |
|
(16) |
(57) |
|
|
Increase in long-term loans |
|
- |
1,358 |
|
|
Repayment of short-term loans |
|
(1,296) |
(748) |
|
|
Increase in short-term loans |
|
6 |
646 |
|
|
Net repayment of obligations under finance leases |
|
(45) |
(48) |
|
|
Interest paid |
|
(775) |
(780) |
|
|
Dividends paid to shareholders |
|
(3,205) |
(3,003) |
|
|
Distributions to non-controlling interests |
|
(118) |
(89) |
|
|
Other financing items |
|
(201) |
(109) |
|
|
|
|
---- |
---- |
|
|
Net cash outflow from financing activities |
|
(5,571) |
(2,774) |
|
|
|
|
---- |
---- |
|
|
|
|
|
|
|
|
(Decrease)/increase in cash and bank overdrafts in the year |
|
(642) |
1,054 |
|
|
|
|
|
|
|
|
Exchange adjustments |
|
81 |
(158) |
|
|
Cash and bank overdrafts at beginning of year |
|
6,368 |
5,472 |
|
|
|
|
---- |
---- |
|
|
Cash and bank overdrafts at end of year |
|
5,807 |
6,368 |
|
|
|
|
---- |
---- |
|
|
|
|
|
|
|
|
Cash and bank overdrafts at end of year comprise: |
|
|
|
|
|
|
Cash and cash equivalents |
|
6,057 |
6,545 |
|
|
Overdrafts |
|
(250) |
(177) |
|
|
|
---- |
---- |
|
|
|
|
5,807 |
6,368 |
|
|
|
|
---- |
---- |
|
|
Statement of changes in equity |
|||||||
|
|
Share |
Share |
Retained |
Other |
Share- |
Non- |
Total |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
At 1st January 2010 |
1,416 |
1,368 |
6,321 |
900 |
10,005 |
737 |
10,742 |
|
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
1,634 |
- |
1,634 |
219 |
1,853 |
|
Other comprehensive income for the year |
- |
- |
144 |
69 |
213 |
20 |
233 |
|
Distributions to non-controlling interests |
- |
- |
- |
- |
- |
(118) |
(118) |
|
Dividends to shareholders |
- |
- |
(3,205) |
- |
(3,205) |
- |
(3,205) |
|
Shares issued |
2 |
60 |
- |
- |
62 |
- |
62 |
|
Consideration received for shares |
- |
- |
- |
17 |
17 |
- |
17 |
|
Shares acquired by ESOP Trusts |
- |
- |
- |
(16) |
(16) |
- |
(16) |
|
Write-down on shares held by ESOP |
- |
- |
(292) |
292 |
- |
- |
- |
|
Share-based incentive plans |
- |
- |
175 |
- |
175 |
- |
175 |
|
Tax on share-based incentive plans |
- |
- |
2 |
- |
2 |
- |
2 |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
At 31st December 2010 |
1,418 |
1,428 |
4,779 |
1,262 |
8,887 |
858 |
9,745 |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
At 1st January 2009 |
1,415 |
1,326 |
4,622 |
568 |
7,931 |
387 |
8,318 |
|
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
5,531 |
- |
5,531 |
138 |
5,669 |
|
Other comprehensive (expense)/income |
- |
- |
(663) |
27 |
(636) |
(37) |
(673) |
|
Distributions to non-controlling interests |
- |
- |
- |
- |
- |
(89) |
(89) |
|
Changes in non-controlling interests |
- |
- |
- |
- |
- |
338 |
338 |
|
Put option over minority interest |
- |
- |
- |
(2) |
(2) |
- |
(2) |
|
Dividends to shareholders |
- |
- |
(3,003) |
- |
(3,003) |
- |
(3,003) |
|
Shares issued |
1 |
42 |
- |
- |
43 |
- |
43 |
|
Consideration received for shares |
- |
- |
- |
13 |
13 |
- |
13 |
|
Shares acquired by ESOP Trusts |
- |
- |
- |
(57) |
(57) |
- |
(57) |
|
Write-down on shares held by ESOP |
- |
- |
(351) |
351 |
- |
- |
- |
|
Share-based incentive plans |
- |
- |
171 |
- |
171 |
- |
171 |
|
Tax on share-based incentive plans |
- |
- |
14 |
- |
14 |
- |
14 |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
At 31st December 2009 |
1,416 |
1,368 |
6,321 |
900 |
10,005 |
737 |
10,742 |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
Segmental information |
|
|
|
GSK has revised its segmental information disclosures to reflect changes in the internal reporting structures with effect from 1st January 2010. ViiV Healthcare is now shown as a separate segment. Stiefel has been integrated with the GSK heritage dermatology business and is reported within the relevant geographical pharmaceutical segments. The other trading and other unallocated pharmaceuticals information has been combined. Comparative information has been restated on a consistent basis.
GSK's operating segments are being reported based on the financial information provided to the Chief Executive Officer and the responsibilities of the Corporate Executive Team (CET). Individual members of the CET are responsible for geographic regions of the Pharmaceuticals business, ViiV Healthcare and for the Consumer Healthcare business as a whole, respectively.
R&D investment is essential for the sustainability of the pharmaceutical businesses. However, for segment reporting, the USA, Europe, Emerging Markets and Asia Pacific/Japan pharmaceutical operating profits exclude allocations of globally funded R&D as well as central costs, principally corporate functions and unallocated manufacturing costs. GSK'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.
The Other trading and unallocated pharmaceuticals segment includes Canada, Puerto Rico, central vaccine tender sales and contract manufacturing sales, together with costs such as vaccines R&D, central dermatology costs and central manufacturing costs not attributed to other segments.
The Pharmaceuticals R&D segment is the responsibility of the Chairman, Research & Development and is therefore being reported as a separate segment.
Corporate and other unallocated costs and disposal profits include corporate functions, costs for legal matters, fair value movements on financial instruments and investments and profits on global asset disposals. |
|
Turnover by segment |
2010 |
2009 |
|
|
|
---- |
---- |
---- |
|
US pharmaceuticals |
7,648 |
8,578 |
(11) |
|
Europe pharmaceuticals |
6,548 |
7,087 |
(6) |
|
Emerging Markets pharmaceuticals |
3,556 |
2,895 |
22 |
|
Asia Pacific/Japan pharmaceuticals |
3,102 |
2,628 |
9 |
|
ViiV Healthcare |
1,566 |
1,605 |
(3) |
|
Other trading and unallocated pharmaceuticals |
962 |
901 |
(1) |
|
|
---- |
---- |
|
|
Pharmaceuticals turnover |
23,382 |
23,694 |
(2) |
|
Consumer Healthcare turnover |
5,010 |
4,674 |
5 |
|
|
---- |
---- |
|
|
|
28,392 |
28,368 |
(1) |
|
|
---- |
---- |
|
|
Operating profit by segment |
2010 |
2009 |
|
|
|
---- |
---- |
---- |
|
US pharmaceuticals |
5,043 |
5,933 |
(16) |
|
Europe pharmaceuticals |
3,744 |
3,993 |
(4) |
|
Emerging Markets pharmaceuticals |
1,271 |
948 |
31 |
|
Asia Pacific/Japan pharmaceuticals |
1,730 |
1,352 |
15 |
|
ViiV Healthcare |
851 |
1,071 |
(21) |
|
Pharmaceuticals R&D |
(3,105) |
(3,082) |
- |
|
Other trading and unallocated pharmaceuticals |
(783) |
(705) |
33 |
|
|
---- |
---- |
|
|
Pharmaceuticals operating profit |
8,751 |
9,510 |
(11) |
|
Consumer Healthcare operating profit |
1,043 |
931 |
8 |
|
|
---- |
---- |
|
|
Segment profit |
9,794 |
10,441 |
|
|
Corporate and other unallocated costs and disposal profits |
(4,666) |
(1,184) |
>100 |
|
|
---- |
---- |
|
|
Operating profit before major restructuring |
5,128 |
9,257 |
(48) |
|
Major restructuring |
(1,345) |
(832) |
|
|
|
---- |
---- |
|
|
Total operating profit |
3,783 |
8,425 |
|
|
|
|
|
|
|
Finance income |
116 |
70 |
|
|
Finance costs |
(831) |
(783) |
|
|
Profit on disposal of interest in associates |
8 |
115 |
|
|
Share of after tax profits of associates and joint ventures |
81 |
64 |
|
|
|
---- |
______ |
|
|
Profit before taxation |
3,157 |
7,891 |
|
|
|
---- |
---- |
|
|
Segmental commentary - 2010 |
|
|
|
US pharmaceuticals turnover declined 11% reflecting lower turnover as a result of generic competition to Valtrex, lower pandemic sales, the impact of healthcare reforms, the discontinuation of promotion of Boniva and lower sales of Avandia partially offset by the performance of newer products. The reduced turnover was partially offset by lower SG&A costs reflecting savings from the restructuring programme and a receipt for the exclusive promotion rights to Boniva for 2010 in the USA. Operating profit declined by 16%.
Europe pharmaceuticals turnover declined 6% as a result of accelerated pricing reductions across Europe and lower sales of pandemic products, Avandia and Valtrex. An 11% reduction in SG&A costs, reflecting savings from the restructuring programme, helped to limit the decline in operating profit to 4%.
Emerging Markets pharmaceuticals operating profit increased by 31% on a turnover increase of 22%, reflecting strong Synflorix and pandemic vaccine sales, together with the benefit of acquisitions, partially offset by increased SG&A investment across the region.
Asia Pacific and Japan pharmaceuticals turnover increased 9% as a result of higher Cervarix and pandemic vaccine sales, partially offset by lower sales of Relenza. Operating profits increased 15% reflecting the impact of the mix of sales on cost of goods and cost containment on SG&A, which only increased 1%.
ViiV Healthcare operating profits decreased 21% primarily as a result of US healthcare reform and higher SG&A and R&D costs partially offset by a one-time royalty settlement. The higher SG&A costs were primarily due to the amortisation of acquired intangible assets.
Pharmaceuticals R&D costs were unchanged, reflecting savings from the restructuring programme and lower intangible asset impairments offset by an unfavourable comparison with 2009, which included the settlement of a royalty dispute and a provision release due to the reassessment of a receivable balance.
Other unallocated pharmaceuticals costs increased 33% in 2010 principally due to higher costs from the full-year inclusion of Stiefel and centrally held manufacturing costs partially offset by lower exchange losses on inter-company trading.
Consumer Healthcare operating profit increased 8% on a turnover increase of 5%, reflecting efficiencies of scale in SG&A costs which grew more slowly than sales.
The increase in Corporate and other unallocated costs primarily reflects higher legal costs and lower asset disposals. |
|
Turnover by segment |
Q4 2010 |
Q4 2009 |
|
|
|
---- |
---- |
---- |
|
US pharmaceuticals |
1,854 |
2,322 |
(22) |
|
Europe pharmaceuticals |
1,647 |
2,231 |
(24) |
|
Emerging Markets pharmaceuticals |
969 |
817 |
16 |
|
Asia Pacific/Japan pharmaceuticals |
797 |
794 |
(11) |
|
ViiV Healthcare |
403 |
415 |
(4) |
|
Other trading and unallocated pharmaceuticals |
260 |
331 |
(27) |
|
|
---- |
---- |
|
|
Pharmaceuticals turnover |
5,930 |
6,910 |
(16) |
|
Consumer Healthcare turnover |
1,267 |
1,184 |
4 |
|
|
---- |
---- |
|
|
|
7,197 |
8,094 |
(13) |
|
|
---- |
---- |
|
|
Operating profit by segment |
Q4 2010 |
Q4 2009 |
|
|
|
---- |
---- |
---- |
|
US pharmaceuticals |
1,256 |
1,544 |
(21) |
|
Europe pharmaceuticals |
927 |
1,296 |
(27) |
|
Emerging Markets pharmaceuticals |
345 |
276 |
19 |
|
Asia Pacific/Japan pharmaceuticals |
426 |
409 |
(12) |
|
ViiV Healthcare |
216 |
250 |
(16) |
|
Pharmaceuticals R&D |
(809) |
(826) |
(4) |
|
Other trading and unallocated pharmaceuticals |
(391) |
(163) |
>100 |
|
|
---- |
---- |
|
|
Pharmaceuticals operating profit |
1,970 |
2,786 |
(31) |
|
Consumer Healthcare operating profit |
302 |
261 |
13 |
|
|
---- |
---- |
|
|
Segment profit |
2,272 |
3,047 |
|
|
Corporate and other unallocated costs and disposal profits |
(2,309) |
(370) |
>100 |
|
|
---- |
---- |
|
|
Operating (loss)/profit before major restructuring |
(37) |
2,677 |
|
|
Major restructuring |
(283) |
(230) |
|
|
|
---- |
---- |
|
|
Total operating (loss)/profit |
(320) |
2,447 |
|
|
|
|
|
|
|
Finance income |
58 |
5 |
|
|
Finance costs |
(240) |
(213) |
|
|
Profit on disposal of interest in associate |
8 |
- |
|
|
Share of after tax profits of associates and joint ventures |
18 |
11 |
|
|
|
------ |
------ |
|
|
(Loss)/profit before taxation |
(476) |
2,250 |
|
|
|
---- |
---- |
|
|
Segmental commentary - Q4 2010 |
|
|
|
US pharmaceuticals operating profit declined 21% in the quarter on a turnover decrease of 22%. This reflected generic competition to Valtrex, lower pandemic sales, the impact of healthcare reforms and lower sales of Avandia. SG&A costs decreased by 22%, reflecting savings from the restructuring programme.
Europe operating profit declined 27% in the quarter on a turnover decrease of 24% reflecting lower sales of pandemic products, Avandia and Valtrex and accelerated pricing reductions across Europe.
Emerging Markets operating profit increased 19% on a turnover increase of 16%.
Asia Pacific and Japan turnover and operating profit decreased 11% and 12% respectively principally as a result of lower sales of Relenza in the quarter.
ViiV Healthcare operating profits decreased 16% as a result of US healthcare reforms and higher SG&A and R&D costs, partially offset by a one-time royalty settlement.
Pharmaceuticals R&D costs reduced by 4% reflecting savings from the Operational Excellence programme partly offset by higher intangible asset impairments.
Other unallocated pharmaceuticals costs increased in the quarter principally due to higher exchange losses of £51 million (2009: £18 million), higher central vaccines costs and lower pandemic sales in Canada.
Consumer Healthcare turnover increased 4% and operating profits increased by 13% as a result of gains on asset disposals in the quarter.
Corporate and other unallocated costs increased significantly as a result of the higher legal charges in the quarter and the unfavourable comparison with Q4 2009, which included the accounting gain on the creation of ViiV Healthcare and the disposal of assets to Aspen. |
|
Legal matters The Group is involved in various legal and administrative proceedings, principally product liability, intellectual property, tax, anti-trust and governmental investigations and related private litigation concerning sales, marketing and pricing which are more fully described in the 'Legal Proceedings' note in the Annual Report 2009.
At 31st December 2010, the Group's aggregate provision for legal and other disputes (not including tax matters described under 'Taxation' on page 28) was £4.0 billion which includes the provision for Q4 2010 of £2.2 billion for legal and other disputes, primarily in respect of additional provisions for the investigation by the US Attorney's Office for the District of Colorado into the Group's US sales and promotional practices and for product liability cases regarding Avandia (rosiglitazone), as announced on 17th January 2011.
In respect of a number of legal proceedings in which the Group is involved, it is not possible to make a reliable estimate of the expected financial effect, if any, that will result from ultimate resolution of the proceedings. In these cases, the Group may disclose information with respect to the nature and facts of the cases but no provision is typically 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 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 the amount of the provisions reported in the Group's financial accounts by a material amount.
Significant developments since the date of the 2009 Annual Report (as previously updated by the Legal matters section of the Results Announcements for Q1, Q2 and Q3 2010 and the 17th January 2011 announcement) are as follows:
On 26th October 2010, the Group finalised a previously reported agreement with the US Attorney's Office for the District of Massachusetts and the US Department of Justice with respect to the investigation of the Group's former manufacturing facility in Cidra, Puerto Rico. Under the agreement and as a comprehensive settlement of pending claims against the Group arising from the investigation, the Group paid a total of $750 million (£500 million) in civil and criminal penalties, and SB Pharmco Puerto Rico, Inc., a subsidiary of the Group, pleaded guilty to certain charges. As previously disclosed, the Group is in the process of negotiating a Corporate Integrity Agreement with the Office of Inspector General that will cover manufacturing compliance matters. The Group has received Civil Investigative Demands and a subpoena from several State Attorneys General offices relating to the matters at issue in the federal investigation. The enquiries are at an early stage, and the Group is co-operating with these offices.
As previously reported, the Group has continued to receive new product liability cases regarding Avandia in the USA and has increased its provision for legal disputes including for Avandia cases filed since Q2 2010 and an estimate of future claims. The Group has reached agreements to settle the majority of Avandia product liability claims known as at 31st January 2011.
On 11th November 2010, GSK was served with a suit by the Utah Attorney General's Office asserting various statutory and common law claims relating to the Group's development and marketing of Avandia. The suit is in its early stages.
In November 2010, Banner Pharmacaps, Inc. (Banner) sent the Group notice that it had filed an Abbreviated New Drug Application (ANDA) to market a generic version of Avodart (dutasteride). The notification contained a "Paragraph IV" certification alleging that two Group patents expiring in 2013 and one patent expiring in 2015 covering dutasteride, the active ingredient in Avodart, and its use were invalid or not infringed by Banner's proposed generic dutasteride product. These patents are the same patents that were the subject of the Group's settlement with Teva Pharmaceuticals, Inc. (Teva) in March 2010. Since Teva was the first to file an ANDA with a Paragraph IV certification, it holds 180-day exclusivity as to all later filers. Banner cannot obtain final FDA approval until the expiration or forfeiture of Teva's 180 days of exclusivity. The Group sued Banner in the US District Court for the District of Delaware in January 2011.
In December 2010, Anchen Pharmaceuticals, Inc. (Anchen) sent the Group notices that it had filed ANDAs with Paragraph IV certifications for Avodart and Jalyn, challenging the Group patent expiring in 2015 that covers dutasteride. Jalyn is a combination of dutasteride and tamsulosin, and is covered by the same patents that cover Avodart. Anchen cannot obtain final FDA approval of Jalyn until at least September 2013 since they have not challenged the Group's patents that cover dutasteride which expire at that time. Anchen cannot obtain FDA approval of Avodart until the later of September 2013 or expiration or forfeiture of Teva's 180-day exclusivity. The Group sued Anchen in the US District Court for the District of Delaware in January 2011.
On 26th January 2011, the District Court of The Hague issued a decision in the invalidity action brought by Sandoz (acting with Hexal) against the Dutch part of the Group's European Seretide patent together with the corresponding Supplementary Protection Certificate (SPC). The District Court revoked the SPC based upon the patent. The Group is reviewing the decision and determining whether to file an appeal. To date, no generic Seretide product has been approved in any major European market despite the revocation of certain patents covering Seretide in some countries. |
|
Developments with respect to tax matters are described in 'Taxation' below. |
|
Taxation The charge for taxation on profit before major restructuring charges amounted to £1,544 million and represented an effective tax rate of 34.3% (2009: 28.0%). This was impacted by the significant legal charges in the year.
The charge for taxation on total profits amounted to £1,304 million and represented an effective tax rate of 41.3% (2009: 28.2%). The Group's balance sheet at 31st December 2010 included a tax payable liability of £869 million and a tax recoverable asset of £56 million.
During the year, GSK agreed and settled further open years with major tax authorities up to and including 2008. In Canada, the Federal Court of Appeal overturned a judgment of the Tax Court of Canada in respect of GSK's transfer pricing in the early 1990's and remanded the case back to the Tax Court for reconsideration. The parties seeking leave to appeal to the Supreme Court of Canada. Otherwise transfer pricing and other issues are as previously described in the 'Taxation' note to the Financial Statements included in the Annual Report 2009.
GSK continues to believe that it has made adequate provision for the liabilities likely to arise from periods which are open and not yet agreed by tax authorities. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of agreements with relevant tax authorities or litigation where appropriate. |
|
Dividends |
Paid/ |
Pence per |
|
|
|
---- |
---- |
---- |
|
2010 |
|
|
|
|
First interim |
8th July 2010 |
15 |
764 |
|
Second interim |
7th October 2010 |
15 |
759 |
|
Third interim |
6th January 2011 |
16 |
816 |
|
Fourth interim |
7th April 2011 |
19 |
967 |
|
|
|
---- |
---- |
|
|
|
65 |
3,306 |
|
|
|
---- |
---- |
|
2009 |
|
|
|
|
First interim |
9th July 2009 |
14 |
701 |
|
Second interim |
8th October 2009 |
14 |
713 |
|
Third interim |
7th January 2010 |
15 |
763 |
|
Fourth interim |
8th April 2010 |
18 |
919 |
|
|
|
---- |
---- |
|
|
|
61 |
3,096 |
|
|
|
---- |
---- |
|
Weighted average number of shares |
|
|
|
|
|
|
2010 |
2009 |
|
|
|
---- |
---- |
|
Weighted average number of shares - basic |
|
5,085 |
5,069 |
|
Dilutive effect of share options and share awards |
|
43 |
39 |
|
|
|
---- |
---- |
|
Weighted average number of shares - diluted |
|
5,128 |
5,108 |
|
|
|
---- |
---- |
|
|
|
|
|
|
|
|
Q4 2010 |
Q4 2009 |
|
|
|
---- |
---- |
|
Weighted average number of shares - basic |
|
5,090 |
5,072 |
|
Dilutive effect of share options and share awards |
|
42 |
44 |
|
|
|
---- |
---- |
|
Weighted average number of shares - diluted |
|
5,132 |
5,116 |
|
|
|
---- |
---- |
|
Net assets |
|
The book value of net assets decreased by £997 million from £10,742 million at 31st December 2009 to £9,745 million at 31st December 2010. This reflects dividend payments and the increased provision for legal charges, partially offset by the operating activities in the year. At 31st December 2010, the net deficit on the Group's pension plans was £1,224 million compared with £1,745 million at 31st December 2009. The decrease in the pension deficit arose predominantly from a net increase in asset values in the UK and the USA, deficit reduction contributions by the company and a decrease in the long-term inflation rate, partly offset by reductions in the rate used to discount UK pension liabilities from 5.7% to 5.5% and the rate used to discount US pension liabilities from 5.75% to 5.2%.
The carrying value of investments in associates and joint ventures at 31st December 2010 was £1,081 million, with a market value of £1,977 million.
At 31st December 2010, the ESOP Trusts held 105 million GSK shares against the future exercise of share options and share awards. The carrying value of £845 million has been deducted from other reserves. The market value of these shares was £1,308 million.
GSK did not purchase any shares for cancellation in the year. At 31st December, the company held 474.2 million Treasury shares at a cost of £6,286 million, which has been deducted from retained earnings. |
|
Reconciliation of cash flow to movements in net debt |
|
2010 |
2009 |
|
|
|
---- |
---- |
|
Net debt at beginning of the year |
|
(9,444) |
(10,173) |
|
|
|
|
|
|
(Decrease)/increase in cash and bank overdrafts |
|
(642) |
1,054 |
|
Cash inflow from liquid investments |
|
(91) |
(87) |
|
Net increase in long-term loans |
|
- |
(1,358) |
|
Net repayment of short-term loans |
|
1,290 |
102 |
|
Net repayment of obligations under finance leases |
|
45 |
48 |
|
Debt of subsidiary undertakings acquired |
|
(20) |
(9) |
|
Exchange adjustments |
|
61 |
1,041 |
|
Other non-cash movements |
|
(58) |
(62) |
|
|
|
---- |
---- |
|
Decrease in net debt |
|
585 |
729 |
|
|
|
---- |
---- |
|
Net debt at end of the year |
|
(8,859) |
(9,444) |
|
|
|
---- |
---- |
|
Related party transactions |
|
The Group's significant related parties are its joint ventures and associates as disclosed in the Annual Report 2009, apart from JCR Pharmaceutical Co. Limited, a Japanese pharmaceutical company, which is now being accounted for as an associate following the acquisition of further shares in May 2010.
There were no material transactions with any of the Group's joint ventures and associates in the year. There were also no material transactions with Directors.
Subsequent to the year-end, the Group sold its entire shareholding in Quest Diagnostics Inc. The sale comprised a secondary public offering and an accompanying repurchase of shares by Quest Diagnostics which together are expected to generate gross proceeds of $1.1 billion (£0.7 billion) after tax. |
|
Contingent liabilities |
|
There were contingent liabilities at 31st December 2010 in respect of guarantees and indemnities entered into as part of the ordinary course of the Group's business. No material losses are expected to arise from such contingent liabilities. |
|
Exchange rates |
|
The Group operates in many countries and earns revenues and incurs costs in many currencies. The results of the Group, as reported in Sterling, are affected by movements in exchange rates between Sterling and other currencies. Average exchange rates, as modified by specific transaction rates for large transactions, prevailing during the period are used to translate the results and cash flows of overseas subsidiaries, associates and joint ventures into Sterling. Period-end rates are used to translate the net assets of those entities. The currencies which most influenced these translations and the relevant exchange rates were: |
|
|
|
2010 |
2009 |
Q4 2010 |
Q4 2009 |
|
|
|
|
---- |
---- |
---- |
---- |
|
|
Average rates: |
|
|
|
|
|
|
|
|
£/US$ |
|
1.55 |
1.56 |
1.58 |
1.62 |
|
|
£/Euro |
|
1.16 |
1.12 |
1.16 |
1.12 |
|
|
£/Yen |
|
136 |
146 |
130 |
149 |
|
|
|
|
|
|
|
|
|
Period end rates: |
|
|
|
|
|
|
|
|
£/US$ |
|
1.56 |
1.61 |
1.56 |
1.61 |
|
|
£/Euro |
|
1.17 |
1.13 |
1.17 |
1.13 |
|
|
£/Yen |
|
127 |
150 |
127 |
150 |
|
During 2010, average Sterling exchange rates in both the full year and Q4 were stronger against the Euro but weaker against the US Dollar and the Yen compared with the same periods in 2009. Period end Sterling exchange rates were also stronger against the Euro but weaker against the US Dollar and the Yen. |
|
Accounting presentation and policies This unaudited Results Announcement containing condensed financial information for the three and twelve months ended 31st December 2010 is prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and the accounting policies set out in the Annual Report 2009, except that GSK has implemented IFRS 3 (Revised) 'Business combinations', IAS 27 (Revised) 'Consolidated and separate financial statements: recognition and measurement' and IFRIC 17 'Distributions of non-cash assets to owners'. None of these changes has had a material impact on the results for the periods under review.
The income statement, statement of comprehensive income, cash flow statement and statement of changes in equity for the year ended 31st December 2010 and the balance sheet at that date, are subject to completion of the audit and may also change should a significant adjusting event occur before the approval of the Annual Report 2010 on 1st March 2011.
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 balance sheet at 31st December 2009 has been derived from the full Group accounts published in the Annual Report 2009, 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. |
|
Internet This Announcement and other information about GSK are available on the company's website at: http://www.gsk.com. |
|
Additional income statement information |
|
Year ended 31st December 2010 |
|
|
|
|
Turnover |
Cost of sales |
SG&A costs |
R&D costs |
Other operating income |
Operating profit |
Operating margin % |
|
|
|
|
--- |
--- |
-- |
-- |
--- |
--- |
--- |
|
US pharmaceuticals |
2010 |
£m |
7,648 |
(935) |
(1,856) |
- |
186 |
5,043 |
65.9 |
|
2009 (restated) |
£m |
8,578 |
(952) |
(2,065) |
- |
372 |
5,933 |
69.2 |
|
|
Growth CER |
% |
(11) |
(2) |
(11) |
- |
(50) |
(16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe pharmaceuticals |
2010 |
£m |
6,548 |
(1,427) |
(1,395) |
- |
18 |
3,744 |
57.2 |
|
2009 (restated) |
£m |
7,087 |
(1,493) |
(1,609) |
(2) |
10 |
3,993 |
56.3 |
|
|
Growth CER |
% |
(6) |
(2) |
(11) |
- |
80 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Markets pharmaceuticals |
2010 |
£m |
3,556 |
(1,252) |
(1,054) |
(3) |
24 |
1,271 |
35.7 |
|
2009 (restated) |
£m |
2,895 |
(1,031) |
(915) |
(4) |
3 |
948 |
32.7 |
|
|
Growth CER |
% |
22 |
21 |
16 |
(25) |
>100 |
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific / Japan pharmaceuticals |
2010 |
£m |
3,102 |
(633) |
(733) |
(28) |
22 |
1,730 |
55.8 |
|
2009 (restated) |
£m |
2,628 |
(595) |
(669) |
(22) |
10 |
1,352 |
51.4 |
|
|
Growth CER |
% |
9 |
4 |
1 |
18 |
>100 |
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ViiV Healthcare |
2010 |
£m |
1,566 |
(323) |
(274) |
*(93) |
(25) |
851 |
54.3 |
|
2009 (restated) |
£m |
1,605 |
(327) |
(168) |
*(27) |
(12) |
1,071 |
66.7 |
|
|
Growth CER |
% |
(3) |
(1) |
63 |
>100 |
>100 |
(21) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals R&D |
2010 |
£m |
- |
- |
(160) |
(2,954) |
9 |
(3,105) |
|
|
2009 (restated) |
£m |
- |
- |
(182) |
(3,019) |
119 |
(3,082) |
|
|
|
Growth CER |
% |
- |
- |
(13) |
(3) |
(92) |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other trading and unallocated pharmaceuticals |
2010 |
£m |
962 |
(863) |
(495) |
(652) |
265 |
(783) |
|
|
2009 (restated) |
£m |
901 |
(873) |
(509) |
(641) |
417 |
(705) |
|
|
|
Growth CER |
% |
(1) |
- |
12 |
2 |
(36) |
33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pharmaceuticals |
2010 |
£m |
23,382 |
(5,433) |
(5,967) |
(3,730) |
499 |
8,751 |
37.4 |
|
2009 (restated) |
£m |
23,694 |
(5,271) |
(6,117) |
(3,715) |
919 |
9,510 |
40.1 |
|
|
Growth CER |
% |
(2) |
4 |
(2) |
- |
(46) |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Healthcare |
2010 |
£m |
5,010 |
(1,902) |
(1,939) |
(158) |
32 |
1,043 |
20.8 |
|
2009 (restated) |
£m |
4,674 |
(1,755) |
(1,850) |
(150) |
12 |
931 |
19.9 |
|
|
Growth CER |
% |
5 |
6 |
3 |
5 |
>100 |
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other unallocated costs |
2010 |
£m |
- |
(70) |
(4,482) |
(76) |
(38) |
(4,666) |
|
|
2009 (restated) |
£m |
- |
(69) |
(1,233) |
(86) |
204 |
(1,184) |
|
|
|
Growth CER |
% |
- |
1 |
>100 |
(13) |
(>100) |
>100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results before major restructuring |
2010 |
£m |
28,392 |
(7,405) |
(12,388) |
(3,964) |
493 |
5,128 |
18.1 |
|
2009 (restated) |
£m |
28,368 |
(7,095) |
(9,200) |
(3,951) |
1,135 |
9,257 |
32.6 |
|
|
Growth CER |
% |
(1) |
4 |
35 |
- |
(57) |
(48) |
|
|
|
|
|||||||||
|
* Note: This excludes HIV discovery research (pre-Phase IIb) which is conducted by GSK and Pfizer and R&D expenditure related to the Shionogi JV and Phase IV clinical expenditure which are reported within the ViiV Healthcare OOI and SG&A lines respectively. |
|||||||||
|
The following table provides additional financial analysis for worldwide vaccines and worldwide dermatologicals which are not segments for financial reporting purposes and are managed within the geographical pharmaceutical segments. Consequently, these results are included within the financial information of the relevant geographical pharmaceuticals segments as reported to the CEO and presented in the tables on pages 23 to 26. |
|
Year ended 31st December 2010 |
|
|
|
|
Turnover |
Cost of sales |
SG&A costs |
R&D costs |
Other operating income |
Operating profit |
Operating margin % |
|
|
|
|
--- |
--- |
--- |
-- |
--- |
--- |
--- |
|
Worldwide vaccines |
2010 |
£m |
4,326 |
(1,394) |
(664) |
(538) |
85 |
1,815 |
42.0 |
|
2009 (restated) |
£m |
3,706 |
(1,154) |
(671) |
(529) |
105 |
1,457 |
39.3 |
|
|
Growth CER |
% |
15 |
23 |
(3) |
3 |
(19) |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide dermatologicals |
2010 |
£m |
1,087 |
(250) |
(339) |
(47) |
(5) |
446 |
41.0 |
|
2009 (restated) |
£m |
707 |
(191) |
(152) |
(30) |
2 |
336 |
47.5 |
|
|
Growth CER |
% |
51 |
29 |
>100 |
53 |
(>100) |
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other pharmaceuticals |
2010 |
£m |
17,969 |
(3,789) |
(4,964) |
(3,145) |
419 |
6,490 |
36.1 |
|
|
(restated) |
£m |
19,281 |
(3,926) |
(5,294) |
(3,156) |
812 |
7,717 |
40.0 |
|
|
Growth CER |
% |
(8) |
(3) |
(5) |
(1) |
(48) |
(19) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pharmaceuticals |
2010 |
£m |
23,382 |
(5,433) |
(5,967) |
(3,730) |
499 |
8,751 |
37.4 |
|
|
(restated) |
£m |
23,694 |
(5,271) |
(6,117) |
(3,715) |
919 |
9,510 |
40.1 |
|
|
Growth CER |
% |
(2) |
4 |
(2) |
- |
(46) |
(11) |
|
|
Three months ended 31st December 2010 |
|
|
|
|
Turnover |
Cost of sales |
SG&A costs |
R&D costs |
Other operating income |
Operating profit |
Operating margin % |
|
|
|
|
--- |
--- |
-- |
-- |
--- |
--- |
--- |
|
US pharmaceuticals |
Q4 2010 |
£m |
1,854 |
(225) |
(412) |
- |
39 |
1,256 |
67.7 |
|
Q4 2009 (restated) |
£m |
2,322 |
(270) |
(513) |
- |
5 |
1,544 |
66.5 |
|
|
Growth CER |
% |
(22) |
(16) |
(22) |
- |
>100 |
(21) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe pharmaceuticals |
Q4 2010 |
£m |
1,647 |
(383) |
(344) |
- |
7 |
927 |
56.3 |
|
Q4 2009 (restated) |
£m |
2,231 |
(476) |
(461) |
(2) |
4 |
1,296 |
58.1 |
|
|
Growth CER |
% |
(24) |
(18) |
(23) |
- |
75 |
(27) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Markets pharmaceuticals |
Q4 2010 |
£m |
969 |
(338) |
(276) |
(1) |
(9) |
345 |
35.6 |
|
Q4 2009 (restated) |
£m |
817 |
(294) |
(246) |
(2) |
1 |
276 |
33.8 |
|
|
Growth CER |
% |
16 |
16 |
11 |
(50) |
(>100) |
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific / Japan pharmaceuticals |
Q4 2010 |
£m |
797 |
(163) |
(205) |
(7) |
4 |
426 |
53.5 |
|
Q4 2009 (restated) |
£m |
794 |
(189) |
(191) |
(7) |
2 |
409 |
51.5 |
|
|
Growth CER |
% |
(11) |
(16) |
(4) |
(14) |
50 |
(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ViiV Healthcare |
Q4 2010 |
£m |
403 |
(68) |
(80) |
*(30) |
(9) |
216 |
53.6 |
|
Q4 2009 (restated) |
£m |
415 |
(89) |
(58) |
*(15) |
(3) |
250 |
60.2 |
|
|
Growth CER |
% |
(4) |
(24) |
38 |
100 |
>100 |
(16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals R&D |
Q4 2010 |
£m |
- |
1 |
(40) |
(777) |
7 |
(809) |
|
|
Q4 2009 (restated) |
£m |
- |
- |
(45) |
(781) |
- |
(826) |
|
|
|
Growth CER |
% |
- |
- |
(13) |
(3) |
- |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other trading and unallocated pharmaceuticals |
Q4 2010 |
£m |
260 |
(315) |
(197) |
(209) |
70 |
(391) |
|
|
Q4 2009 (restated) |
£m |
331 |
(331) |
(181) |
(227) |
245 |
(163) |
|
|
|
Growth CER |
% |
(27) |
(6) |
(19) |
(8) |
(71) |
>100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pharmaceuticals |
Q4 2010 |
£m |
5,930 |
(1,491) |
(1,554) |
(1,024) |
109 |
1,970 |
33.2 |
|
Q4 2009 (restated) |
£m |
6,910 |
(1,649) |
(1,695) |
(1,034) |
254 |
2,786 |
40.3 |
|
|
Growth CER |
% |
(16) |
(9) |
(13) |
(3) |
(57) |
(31) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Healthcare |
Q4 2010 |
£m |
1,267 |
(477) |
(475) |
(42) |
29 |
302 |
23.8 |
|
Q4 2009 (restated) |
£m |
1,184 |
(436) |
(453) |
(45) |
11 |
261 |
22.0 |
|
|
Growth CER |
% |
4 |
6 |
2 |
(7) |
>100 |
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other unallocated costs |
Q4 2010 |
£m |
- |
(12) |
(2,260) |
(17) |
(20) |
(2,309) |
|
|
Q4 2009 (restated) |
£m |
- |
(13) |
(632) |
(13) |
288 |
(370) |
|
|
|
Growth CER |
% |
- |
(8) |
>100 |
23 |
(>100) |
>100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results before major restructuring |
Q4 2010 |
£m |
7,197 |
(1,980) |
(4,289) |
(1,083) |
118 |
(37) |
(0.5) |
|
Q4 2009 (restated) |
£m |
8,094 |
(2,098) |
(2,780) |
(1,092) |
553 |
2,677 |
33.1 |
|
|
Growth CER |
% |
(13) |
(6) |
51 |
(3) |
(79) |
(>100) |
|
|
|
|
|||||||||
|
* Note: This excludes HIV discovery research (pre-Phase IIb) which is conducted by GSK and Pfizer and R&D expenditure related to the Shionogi JV and Phase IV clinical expenditure which are reported within the ViiV Healthcare OOI and SG&A lines respectively. |
|||||||||
|
The following table provides additional financial analysis for worldwide vaccines and worldwide dermatologicals which are not segments for financial reporting purposes and are managed within the geographical pharmaceutical segments. Consequently, these results are included within the financial information of the relevant geographical pharmaceuticals segments as reported to the CEO and presented in the tables on pages 23 to 26. |
|
Three months ended 31st December 2010 |
|
|
|
|
Turnover |
Cost of sales |
SG&A costs |
R&D costs |
Other operating income |
Operating profit |
Operating margin % |
|
|
|
|
--- |
--- |
--- |
-- |
--- |
--- |
--- |
|
Worldwide vaccines |
Q4 2010 |
£m |
994 |
(421) |
(175) |
(162) |
14 |
250 |
25.2 |
|
Q4 2009 (restated) |
£m |
1,523 |
(404) |
(195) |
(179) |
21 |
766 |
50.3 |
|
|
Growth CER |
% |
(36) |
7 |
(13) |
(9) |
(33) |
(71) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide dermatologicals |
Q4 2010 |
£m |
288 |
(68) |
(98) |
(10) |
(8) |
104 |
36.1 |
|
Q4 2009 (restated) |
£m |
255 |
(72) |
(67) |
(19) |
1 |
98 |
38.4 |
|
|
Growth CER |
% |
10 |
(7) |
40 |
(53) |
(>100) |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other pharmaceuticals |
Q4 2010 |
£m |
4,648 |
(1,002) |
(1,281) |
(852) |
103 |
1,616 |
34.8 |
|
|
Q4 2009 (restated) |
£m |
5,132 |
(1,173) |
(1,433) |
(836) |
232 |
1,922 |
37.5 |
|
|
Growth CER |
% |
(12) |
(15) |
(15) |
- |
(56) |
(17) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pharmaceuticals |
Q4 2010 |
£m |
5,930 |
(1,491) |
(1,554) |
(1,024) |
109 |
1,970 |
33.2 |
|
|
Q4 2009 (restated) |
£m |
6,910 |
(1,649) |
(1,695) |
(1,034) |
254 |
2,786 |
40.3 |
|
|
Growth CER |
% |
(16) |
(9) |
(13) |
(3) |
(57) |
(31) |
|
This information is provided by RNS
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