REG - GlaxoSmithKline PLC - 3rd Quarter Results <Origin Href="QuoteRef">GSK.L</Origin> - Part 4
29/10/2014 13:59
- Part 4: For the preceding part double click ID:nRSV9890Uc
Avamys/Veramyst 180 2 23 (31) 54 8 53 15 37 8
Flixotide/Flovent 513 (5) 319 (4) 75 (10) 39 10 21 (20)
Relvar/Breo Ellipta 29 - 14 - 9 - 1 - 5 -
Seretide/Advair 3,110 (14) 1,424 (24) 1,014 (4) 289 5 166 (2)
Ventolin 484 13 241 23 90 (1) 118 8 5 -
Other 201 (7) 7 100 24 - 60 (18) 106 (6)
Oncology 867 34 359 39 311 29 122 39 46 13
Arzerra 42 (20) 22 (27) 17 (18) - - 2 100
Mekinist 47 >100 46 >100 - - - - - -
Promacta 165 34 64 28 53 41 20 44 24 27
Tafinlar 92 >100 40 >100 46 - - - - -
Tyverb/Tykerb 129 (11) 33 (20) 53 (13) 34 18 6 (46)
Votrient 295 33 127 30 114 25 33 54 11 86
Other 97 - 27 (15) 28 (10) 35 46 3 (25)
Cardiovascular, metabolic and urology (CVMU) 705 (3) 256 (19) 223 2 103 18 81 16
Avodart 593 2 184 (15) 211 9 80 18 81 16
Other 112 (24) 72 (28) 12 (54) 23 18 - -
Immuno-inflammation 153 43 140 41 9 50 2 100 - -
Benlysta 124 23 111 19 9 50 2 100 - -
Other 29 >100 29 >100 - - - - - -
Other pharmaceuticals 1,742 - 110 (44) 468 (6) 778 5 182 15
Dermatology 358 (21) 36 (63) 114 (8) 177 (10) 17 (5)
Augmentin 436 2 1 - 143 (1) 271 3 8 -
Other anti-bacterials 156 1 4 (20) 45 (2) 104 3 1 -
Rare diseases 308 (7) 48 (41) 101 11 31 3 114 (2)
Other 484 29 21 69 65 (29) 195 30 42 >100
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Innovative Pharmaceuticals 7,984 (2) 2,893 (13) 2,277 - 1,565 8 649 5
Vaccines 2,346 3 701 3 738 (1) 747 11 21 (11)
Boostrix 260 42 134 22 64 32 46 >100 - -
Cervarix 87 (24) 4 (20) 36 (10) 46 (21) - -
Fluarix, FluLaval 137 (10) 96 (6) 15 14 22 19 - -
Hepatitis 410 (8) 167 (13) 139 - 73 (9) - -
Infanrix, Pediarix 616 1 221 13 272 (4) 81 (9) - -
Rotarix 291 15 77 (1) 50 18 132 24 21 47
Synflorix 268 16 - - 34 - 231 20 - -
Other 277 (6) 2 - 128 (10) 116 1 - -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Innovative Pharmaceuticals and Vaccines 10,330 (1) 3,594 (10) 3,015 - 2,312 9 670 5
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
ViiV Healthcare (HIV) 1,036 12 439 24 386 3 102 (8) 43 28
Combivir 44 (44) 8 (63) 15 (52) 18 (17) 2 (9)
Epzicom/Kivexa 563 10 197 12 249 8 53 5 26 14
Lexiva/Agenerase 64 (18) 33 (20) 16 (24) 12 - 1 (20)
Selzentry 101 1 38 (6) 45 1 5 14 2 (12)
Tivicay 173 >100 127 >100 32 - - - 8 -
Trizivir 27 (59) 7 (82) 18 (26) 1 (50) - -
Other 64 (28) 29 (5) 11 (49) 13 (42) 4 (29)
Established Products 2,234 (17) 626 (31) 457 (13) 780 (2) 329 (14)
Coreg 88 (7) 88 (7) - - - - - -
Hepsera 63 (5) - - - - 47 (7) 15 (5)
Imigran/Imitrex 128 (5) 61 2 46 - 5 - 12 (22)
Lamictal 382 3 180 (3) 79 1 55 7 62 20
Lovaza 185 (55) 184 (55) - - - - - -
Requip 81 (7) 5 - 32 (20) 10 - 34 5
Serevent 80 (12) 30 (16) 37 (5) 2 (33) 7 (20)
Seroxat/Paxil 155 (19) - - 31 (22) 47 (12) 73 (18)
Valtrex 110 (25) 19 (30) 21 (5) 25 (3) 38 (45)
Zeffix 127 (1) 2 (70) 6 (22) 108 9 9 (8)
Other 835 (13) 57 (33) 205 (18) 481 (3) 79 (13)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
13,600 (3)
---------- ----------
The table above includes the sales by product reported in the Other trading and unallocated pharmaceuticals segment (which includes Canada, Puerto Rico, Australasia, central vaccine tender sales and contract manufacturing sales) in the total column only.
Balance sheet
30 September 2014 30 September 2013 31 December 2013
£m £m £m
------------ ------------ ------------
ASSETS
Non-current assets
Property, plant and equipment 8,828 8,766 8,872
Goodwill 3,733 4,316 4,205
Other intangible assets 8,370 9,865 9,283
Investments in associates and joint ventures 328 520 323
Other investments 1,068 1,322 1,202
Deferred tax assets 2,226 2,097 2,084
Derivative financial instruments - 1 1
Other non-current assets 889 751 889
------------ ------------ ------------
Total non-current assets 25,442 27,638 26,859
------------ ------------ ------------
Current assets
Inventories 4,274 4,167 3,900
Current tax recoverable 114 91 129
Trade and other receivables 5,071 5,206 5,442
Derivative financial instruments 213 155 155
Liquid investments 67 67 66
Cash and cash equivalents 4,104 3,252 5,534
Assets held for sale 1,018 534 1
------------ ------------ ------------
Total current assets 14,861 13,472 15,227
------------ ------------ ------------
TOTAL ASSETS 40,303 41,110 42,086
------------ ------------ ------------
LIABILITIES
Current liabilities
Short-term borrowings (5,340) (2,752) (2,789)
Trade and other payables (7,541) (7,795) (8,317)
Derivative financial instruments (246) (143) (127)
Current tax payable (1,284) (1,194) (1,452)
Short-term provisions (859) (948) (992)
------------ ------------ ------------
Total current liabilities (15,270) (12,832) (13,677)
------------ ------------ ------------
Non-current liabilities
Long-term borrowings (13,619) (15,655) (15,456)
Deferred tax liabilities (633) (1,018) (693)
Pensions and other post-employment benefits (2,384) (2,569) (2,189)
Other provisions (551) (634) (552)
Derivative financial instruments (24) (4) (3)
Other non-current liabilities (2,072) (1,597) (1,704)
------------ ------------ ------------
Total non-current liabilities (19,283) (21,477) (20,597)
------------ ------------ ------------
TOTAL LIABILITIES (34,553) (34,309) (34,274)
------------ ------------ ------------
NET ASSETS 5,750 6,801 7,812
------------ ------------ ------------
EQUITY
Share capital 1,338 1,341 1,336
Share premium account 2,717 2,507 2,595
Retained earnings (1,190) (129) 913
Other reserves 2,178 2,255 2,153
------------ ------------ ------------
Shareholders' equity 5,043 5,974 6,997
Non-controlling interests 707 827 815
------------ ------------ ------------
TOTAL EQUITY 5,750 6,801 7,812
------------ ------------ ------------
Statement of changes in equity
Share Share Retained Other Share- Non- Total
capital premium earnings reserves holder's controlling equity
£m £m £m £m equity interests £m
£m £m
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 1 January 2014 1,336 2,595 913 2,153 6,997 815 7,812
Profit for the period 1,723 1,723 83 1,806
Other comprehensive (602) (156) (758) 9 (749)
(expense)/income for the period
------------ ------------ ------------ ------------ ------------
Total comprehensive income/(expense) 1,121 (156) 965 92 1,057
for the period
------------ ------------ ------------ ------------ ------------
Distributions to non-controlling interests (170) (170)
Dividends to shareholders (2,925) (2,925) (2,925)
Changes in non-controlling interests (52) (52) (30) (82)
Shares issued 2 122 124 124
Forward contract relating to 21 21 21
non-controlling interest
Ordinary shares purchased (238) (238) (238)
and held as Treasury shares
Shares acquired by ESOP Trusts (90) (90) (90)
Write-down on shares held by ESOP (250) 250 -
Trusts
Share-based incentive plans 241 241 241
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 30 September 2014 1,338 2,717 (1,190) 2,178 5,043 707 5,750
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 1 January 2013 1,349 2,022 642 1,787 5,800 937 6,737
Profit for the period 2,975 2,975 148 3,123
Other comprehensive 248 416 664 (28) 636
income for the period
------------ ------------ ------------ ------------ ------------
Total comprehensive income 3,223 416 3,639 120 3,759
for the period
------------ ------------ ------------ ------------ ------------
Distributions to non-controlling interests (232) (232)
Dividends to shareholders (2,816) (2,816) (2,816)
Changes in non-controlling interests 46 46 2 48
Shares issued 10 485 495 495
Ordinary shares purchased (18) (1,341) 18 (1,341) (1,341)
and held as Treasury shares
Shares acquired by ESOP Trusts (45) (45) (45)
Write-down on shares held by ESOP (79) 79 -
Trusts
Share-based incentive plans 196 196 196
------------ ------------ ------------ ------------ ------------ ------------ ------------
At 30 September 2013 1,341 2,507 (129) 2,255 5,974 827 6,801
------------ ------------ ------------ ------------ ------------ ------------ ------------
Cash flow statement
Nine months ended 30 September 2014
9 months 2014 9 months 2013
£m £m
------------ ------------
Profit after tax 1,806 3,123
Tax on profits 631 978
Share of after tax profits of associates and joint ventures (19) (32)
Profit on disposal of interest in associates - (29)
Net finance expense 488 547
Depreciation and other adjusting items 1,329 1,836
Increase in working capital (599) (437)
Increase in other net liabilities 145 28
------------ ------------
Cash generated from operations 3,781 6,014
Taxation paid (815) (979)
------------ ------------
Net cash inflow from operating activities 2,966 5,035
------------ ------------
Cash flow from investing activities
Purchase of property, plant and equipment (774) (821)
Proceeds from sale of property, plant and equipment 24 30
Purchase of intangible assets (391) (380)
Proceeds from sale of intangible assets 256 104
Purchase of equity investments (54) (115)
Proceeds from sale of equity investments 27 31
Purchase of businesses, net of cash acquired (28) (205)
Disposal of businesses 194 -
Investment in associates and joint ventures (4) (8)
Decrease in liquid investments - 15
Interest received 46 43
Dividends from associates and joint ventures 5 2
------------ ------------
Net cash outflow from investing activities (699) (1,304)
------------ ------------
Cash flow from financing activities
Issue of share capital 124 494
Shares acquired by ESOP Trusts (90) (45)
Shares purchased and cancelled or held as Treasury shares (238) (905)
Purchase of non-controlling interests (668) (588)
Increase in long-term loans - 1,913
Repayment of short-term loans (899) (1,975)
Increase in short-term loans 1,607 -
Net repayment of obligations under finance leases (17) (23)
Interest paid (413) (454)
Dividends paid to shareholders (2,925) (2,816)
Distributions to non-controlling interests (170) (232)
Other financing items (33) (25)
------------ ------------
Net cash outflow from financing activities (3,722) (4,656)
------------ ------------
Decrease in cash and bank overdrafts in the period (1,455) (925)
------------ ------------
Cash and bank overdrafts at beginning of the period 5,231 3,906
Exchange adjustments 23 (75)
Decrease in cash and bank overdrafts (1,455) (925)
------------ ------------
Cash and bank overdrafts at end of the period 3,799 2,906
------------ ------------
Cash and bank overdrafts at end of the period comprise:
Cash and cash equivalents 4,104 3,252
Overdrafts (305) (346)
------------ ------------
3,799 2,906
------------ ------------
Segment information
Operating segments are reported based on the financial information provided to the Chief Executive Officer and the responsibilities of the Corporate Executive Team (CET). Individual members of the CET are responsible for each geographic segment of the Pharmaceuticals and Vaccines business, ViiV Healthcare, Established Products and the Consumer Healthcare business as a whole, respectively. Certain product reclassifications, principally the OTC dermatology brands acquired with the Stiefel business, have
been made between the Pharmaceuticals and Consumer Healthcare segments in the majority of Emerging Markets with effect from 1 January 2014. Comparative information has been restated accordingly. In addition, 2014 core results growth rates have been calculated by measuring against 2013 core results excluding the divestments completed during 2013. R&D investment is essential for the sustainability of the pharmaceutical businesses. However, for segment reporting, the US, Europe, Emerging Markets, Japan and
Established Products Pharmaceuticals and Vaccines operating profits exclude allocations of globally funded R&D as well as central costs, principally corporate functions and unallocated manufacturing costs. The Group's management reporting process allocates intra-Group profit on a product sale to the market in which that sale is recorded, and the profit analyses below have been presented on that basis. Other trading and unallocated pharmaceuticals and vaccines includes Canada, Puerto Rico, Australasia,
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 reported as a separate segment. Corporate and other unallocated costs and disposal profits include the costs of corporate functions.
Turnover by segment
Q3 2014 Q3 2013 Growth
£m (restated) CER%
£m
------------ ------------ ------------
USA 1,271 1,522 (10)
Europe 972 1,049 (2)
Emerging Markets 799 781 12
Japan 198 210 6
ViiV Healthcare 373 344 18
Established Products 724 906 (14)
Other trading and unallocated pharmaceuticals and vaccines 238 272 (4)
------------ ------------ ------------
Pharmaceuticals and Vaccines 4,575 5,084 (3)
Consumer Healthcare 1,071 1,190 (3)
------------ ------------ ------------
Segment turnover excluding divestments 5,646 6,274 (3)
------------ ------------ ------------
Segment turnover including divestments 5,646 6,510 (6)
------------ ------------ ------------
Operating profit by segment
Q3 2014 Q3 2013 Growth
£m (restated) CER%
£m
------------ ------------ ------------
USA 782 1,000 (15)
Europe 537 571 -
Emerging Markets 275 196 49
Japan 104 107 5
ViiV Healthcare 246 228 19
Established Products 438 548 (12)
Pharmaceuticals R&D (648) (697) (1)
Other trading and unallocated pharmaceuticals and vaccines (51) (219) (34)
------------ ------------ ------------
Pharmaceuticals and Vaccines 1,683 1,734 -
Consumer Healthcare 174 211 -
------------ ------------ ------------
Segment profit 1,857 1,945 -
Corporate and other unallocated costs and disposal profits 30 52 (54)
------------ ------------ ------------
Core operating profit 1,887 1,997 (1)
Non-core items (1,184) (428)
------------ ------------ ------------
Total operating profit 703 1,569 (52)
Finance income 14 10
Finance costs (179) (191)
Profit on disposal of interest in associates and joint ventures - -
Share of after tax profits of associates and joint ventures 10 14
------------ ------------ ------------
Profit before taxation 548 1,402 (58)
------------ ------------ ------------
Turnover by segment
9 months 9 months(restated) Growth
2014 2013 CER%
£m £m
------------ ------------ ------------
USA 3,594 4,303 (10)
Europe 3,015 3,126 -
Emerging Markets 2,312 2,387 9
Japan 670 742 5
ViiV Healthcare 1,036 1,001 12
Established Products 2,234 2,927 (17)
Other trading and unallocated pharmaceuticals and vaccines 739 787 5
------------ ------------ ------------
Pharmaceuticals and Vaccines 13,600 15,273 (3)
Consumer Healthcare 3,220 3,629 (2)
------------ ------------ ------------
Segment turnover excluding divestments 16,820 18,902 (3)
------------ ------------ ------------
Segment turnover including divestments 16,820 19,599 (7)
------------ ------------ ------------
Operating profit by segment
9 months 9 months(restated) Growth
2014 2013 CER%
£m £m
------------ ------------ ------------
USA 2,251 2,927 (17)
Europe 1,664 1,705 2
Emerging Markets 700 634 31
Japan 332 376 5
ViiV Healthcare 675 662 12
Established Products 1,325 1,769 (17)
Pharmaceuticals R&D (1,959) (2,088) (1)
Other trading and unallocated pharmaceuticals and vaccines (257) (458) (48)
------------ ------------ ------------
Pharmaceuticals and Vaccines 4,731 5,527 (4)
Consumer Healthcare 480 631 (8)
------------ ------------ ------------
Segment profit 5,211 6,158 (5)
Corporate and other unallocated costs and disposal profits (387) (407) 1
------------ ------------ ------------
Core operating profit 4,824 5,751 (5)
Non-core items (1,918) (1,164)
------------ ------------ ------------
Total operating profit 2,906 4,587 (24)
Finance income 50 44
Finance costs (538) (591)
Profit on disposal of interest in associates and joint ventures - 29
Share of after tax profits of associates and joint ventures 19 32
------------ ------------ ------------
Profit before taxation 2,437 4,101 (27)
------------ ------------ ------------
Legal matters The Group is involved in significant legal and administrative proceedings, principally product liability, intellectual property, tax, anti-trust and governmental investigations as well as related private litigation, which are more fully described in the 'Legal Proceedings' note in the Annual Report 2013, as updated by the Legal matters section of the Results Announcements for Q2 2014. At 30 September 2014, the Group's aggregate provision for legal and other disputes (not including tax matters
described under 'Taxation' below) was £0.5 billion. The Group may become involved in significant legal proceedings in respect of which it is not possible to make a reliable estimate of the expected financial effect, if any, that could result from ultimate resolution of the proceedings. In these cases, the Group would provide appropriate disclosures about such cases, but no provision would be made. The ultimate liability for legal claims may vary from the amounts provided and is dependent upon the outcome
of litigation proceedings, investigations and possible settlement negotiations. The Group's position could change over time, and, therefore, there can be no assurance that any losses that result from the outcome of any legal proceedings will not exceed by a material amount the amount of the provisions reported in the Group's financial accounts. Significant developments since the quarter ended 30 June 2014 are as follows: On 19 September 2014, the Group announced that the Changsha Intermediate People's
Court in Hunan Province, China ruled that GSK China Investment Co. Ltd ("GSKCI"), according to Chinese law, had offered money or property to non-government personnel in order to obtain improper commercial gains, and been found guilty of bribing non-government personnel. The verdict followed investigations initiated by China's Ministry of Public Security in June 2013. As a result of the Court's verdict, GSKCI has paid a fine of RMB 3 billion (£301 million) to the Chinese government. The Group has informed
the US Department of Justice, the US Securities and Exchange Commission and the UK Serious Fraud Office (SFO) regarding the outcome of the China investigation and is co-operating with these agencies. Developments with respect to tax matters are described in 'Taxation' below.
TaxationTransfer pricing and other issues are as previously described in the 'Taxation' note in the Annual Report 2013. There have been no material changes to tax matters since the publication of the Annual Report. In the quarter, tax on core profits amounted to £348 million and represented an effective core tax rate of 20.0% (Q3 2013: 23.5%). The charge for taxation on total profits amounted to £163 million and represented an effective tax rate of 29.7% (Q3 2013: 28.0%). In the nine months to September
2014, tax on core profits amounted to £926 million and represented an effective core tax rate of 21.2% (2013: 23.3%). The charge for taxation on total profits amounted to £631 million and represented an effective tax rate of 25.9% (2013: 23.8%). The expected core tax rate for the full year is now expected to be somewhat lower than the previously indicated 22%. The Group's balance sheet at 30 September 2014 included a tax payable liability of £1,284 million and a tax recoverable asset of £114 million. 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.
Additional information
Accounting policies and basis of preparation
This unaudited Results Announcement contains condensed financial information for the three and nine months ended 30 September 2014, and should be read in conjunction with the Annual Report 2013, which was prepared in accordance with International Financial Reporting Standards as adopted by the European Union. This Results Announcement has been prepared applying consistent accounting policies to those applied by the Group in the Annual Report 2013, except that an amendment to IAS 32 'Offsetting financial
assets and financial liabilities' has been implemented from 1 January 2014. This revision has not had a material impact on the results or financial position of the Group. In addition, the segment information for 2013 has been restated to reflect changes made to segments in 2014 as set out under 'Segment information' above. This Results Announcement does not constitute statutory accounts of the Group within the meaning of sections 434(3) and 435(3) of the Companies Act 2006. The full Group accounts for
2013 were published in the Annual Report 2013, 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.
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