REG - GlaxoSmithKline PLC - Final Results <Origin Href="QuoteRef">GSK.L</Origin> - Part 3
03/02/2016 12:10
- Part 3: For the preceding part double click ID:nRSC9559Nb
US 1,430 56 22 380 50 13
Europe 1,788 70 3 473 75 2
International 2,810 27 2 709 32 3
Total 6,028 44 6 1,562 47 5
Turnover 2015 Q4 2015
£m Growth £m Growth
CER% CER%
Wellness 2,970 95 824 >100
Oral health 1,866 8 459 5
Nutrition 684 7 165 12
Skin health 508 67 114 40
Total 6,028 44 1,562 47
2015 (£6,028 million; up 44%)The Consumer Healthcare business represents the Consumer Healthcare Joint Venture with Novartis together with the GSK Consumer Healthcare listed businesses in India and Nigeria, which are excluded from the Joint Venture. Turnover grew 44% to £6,028 million, benefiting significantly from the sales of the newly-acquired products included in the Joint Venture. On a pro-forma basis, growth was 6% (4% volume and 2% price), primarily reflecting strong growth in the US following the
launch of OTC Flonase, buoyant sales in India driven by Horlicks as well as global specialist Oral health growth, partly due to a recovery from supply disruptions in 2014. Sales from new GSK innovations (product introductions within the last three years on a rolling basis) represented approximately 14% of sales, higher than in prior years primarily due to the Flonase switch to OTC earlier in the year. Other key 2015 launches included Sensodyne Repair and Protect Whitening in the US and Germany, Voltaren
12 hour and the roll-out of Sensodyne mouthwash. US sales grew 56% on a reported basis to £1,430 million, and 22% on a pro-forma basis. Flonase was the region's principal growth driver. Oral health sales continued to be driven by Sensodyne, up 13%, with the launch of Sensodyne Repair and Protect Whitening, supply recovery and distribution gains for Sensodyne Pronamel. Excedrin grew 9% following the launch of the gel tablet format combined with momentum in the tension headache variant. Theraflu posted
strong growth due to its re-launch, the new warming syrups format and price increases. Nicorette lozenges, Nicorette Mini lozenges and alli returned to the market but Tums was impacted by supply constraints and increased competitive pressure during the year. Sales in Europe grew 70% on a reported basis to £1,788 million and grew 3% pro-forma. The pro-forma performance was driven by Oral health products, which reported growth of 6%, reflecting strong performances from both Sensodyne and Gum health
following an improved supply position compared with 2014, new advertising in key markets, and the roll out of new Sensodyne variants across the region. In Wellness, pain relief recorded a strong double-digit pro-forma performance, driven by Voltaren which also benefited from new marketing campaigns. The brand recorded its highest market shares in many of the major European markets, including Germany, Italy, Poland and France. These strong performances were partly offset by an adverse performance from the
Nutrition and Skin health categories, following the re-alignment of resources across the brand portfolio following the integration of the businesses and the termination of a number of third party supply arrangements as part of a supply chain simplification initiative. International sales of £2,810 million grew 27% on a reported basis and were up 2% pro-forma. Oral health sales grew strongly across the region with double-digit growth on Sensodyne and Denture care products. Wellness sales declined 3% on a
pro-forma basis, largely a result of the impact of the excess channel inventories in parts of the acquired consumer businesses, most notably China, Russia and Middle East, together with generic competition which impacted PanadolOsteo in Australia, and economic and political uncertainties in Venezuela. India led the growth amongst the priority markets, reporting double-digit performances from Eno, Sensodyne and Horlicks, driven by distribution gains and new marketing campaigns and the re-launch of the
improved chocolate flavoured Horlicks. Sales in Brazil were down low-single digit as the business transitioned to new product formulations in the sun care business.
Q4 2015 (£1,562 million; up 47%)Turnover grew 47% to £1,562 million, benefiting significantly from sales of the newly-acquired products. On a pro-forma basis, growth was 5% (3% volume and 2% price), reflecting strong growth in the US following the launch of Flonase as well as globally strong growth in Sensodyne. Momentum from first half launches continued to drive innovation contribution, with sales from product introductions in the last three years representing approximately 13% of the quarter's sales.
US sales grew 50% on a reported basis to £380 million, and 13% on a pro-forma basis, with Flonase being the biggest growth contributor in the period. Theraflu delivered double-digit growth, driven by the launch of the warming syrups range earlier in the year, together with some price increases. Distribution gains contributed to the strong performance of Sensodyne Pronamel. The ongoing re-launches of Nicorette lozenge, Nicorette Minis and alli also contributed to the strong quarterly growth. The growth
was partly offset by an adverse comparison on Denture care, where re-supply boosted Q4 2014, as well as the continuing impact of supply constraints and increased competition on Tums. Sales in Europe grew 75% on a reported basis to £473 million and 2% pro-forma. The pro-forma performance was driven by Voltaren which recorded market share highs in a number of markets, driven by a new advertising campaign and the Voltaren 12 Hour topical innovation which has now launched in 35 markets. In Oral health,
Sensodyne continued to report double-digit growth due to new advertising in key markets and the roll-out of Sensodyne True White in the UK, Sensodyne Repair and ProtectWhitening in Germany and Sensodyne mouthwash across a number of markets. Parodontax delivered double-digit growth in the period driven by a new condition awareness advertising campaign and consumer sampling. These strong performances were offset by Denture care which reported an 11% decline due to an adverse comparison with Q4 2014 which
benefitted from supply recovery. While sales increased by mid-single digits in most major markets, sales declined 6% in Central and Eastern Europe, where continued softness in consumer spending was compounded by the low incidence of colds and flu. International sales of £709 million grew 32% on a reported basis and 3% pro-forma. The pro-forma performance was driven by India which continued to perform well with Horlicks reporting growth of 18%, reflecting seasonal marketing campaigns which drove a record
high market share. Sensodyne delivered broad based growth of 19% across the region with Japan showing the benefits of the launch of Sensodyne Complete earlier in the year. Wellness sales continued to recover from earlier integration activities in many markets but were offset by economic and political uncertainty in Venezuela, where sales were down 97%, and the weak consumer environment in Russia, where sales were down 10% as a result of consumers switching to value offerings as well as the adverse impact
of the mild cold and flu season.
Sales from New Pharmaceutical and Vaccine products
2015 2015 Q4 2015 Q4 2015
£m Reported Pro-forma £m Reported Pro-forma
growth growth growth growth
CER% CER% CER% CER%
Respiratory
Relvar/Breo Ellipta 257 >100 >100 99 >100 >100
Anoro Ellipta 79 >100 >100 30 >100 >100
Arnuity Ellipta 3 - - 1 - -
Incruse Ellipta 14 >100 >100 9 >100 >100
Nucala 1 - - 1 - -
CVMU
Eperzan/Tanzeum 41 >100 >100 17 >100 >100
Global Pharmaceuticals 395 >100 >100 157 >100 >100
Tivicay 588 >100 >100 174 58 58
Triumeq 730 >100 >100 289 >100 >100
Pharmaceuticals 1,713 >100 >100 620 >100 >100
Bexsero 115 - >100 37 - >100
Menveo 160 - (4) 25 - (50)
Vaccines 275 - 43 62 - 2
Total 1,988 >100 >100 682 >100 >100
At its Investor Day on 6 May 2015, GSK identified a series of New Pharmaceutical and Vaccine products that were expected to deliver at least £6 billion of revenues per annum on a CER basis by 2020. Those products, plus current clinical pipeline asset, Shingrix, are as set out above and, as a group are defined as New Pharmaceutical and Vaccine products. Sales of the New Pharmaceutical Vaccine products are now expected to reach £6 billion of revenues per annum on a CER basis up to two years earlier (2018).
2015Sales of New Pharmaceutical and Vaccine products were £1,988 million, grew £1,364 million pro-forma in Sterling terms and represented approximately 11% of Pharmaceuticals and Vaccines turnover in the year. Q4 2015Sales of New Pharmaceutical and Vaccine products were £682 million, grew £410 million pro-forma in Sterling terms and represented approximately 14% of Pharmaceuticals and Vaccines turnover in the quarter.
Research and development
GSK remains focused on delivering an improved return on its investment in R&D. Sales contribution, reduced attrition and cost reduction are all important drivers of an improving internal rate of return. R&D expenditure is not determined as a percentage of sales but instead capital is allocated using strict returns-based criteria depending on the pipeline opportunities available. The operations of Pharmaceuticals R&D are broadly split into Discovery activities (up to the completion of Phase IIa trials) and
Development work (from Phase IIb onwards) each supported by specific and common infrastructure and other shared services where appropriate. The R&D expenditure is analysed below.
2015 2014
£m £m
Discovery 744 739
Development 1,136 1,317
Facilities and central support functions 433 455
Pharmaceuticals R&D 2,313 2,511
Vaccines 525 443
Consumer Healthcare 258 159
Core R&D 3,096 3,113
Amortisation and impairment of intangible assets 93 144
Major restructuring costs 319 116
Disposals and other 52 77
Total R&D 3,560 3,450
In 2009, we committed to publishing our estimated rate of return in R&D based on the investment made in our late-stage pipeline and our expectations regarding long-term sales performance. This was estimated to be 11% in 2009 and 2011, and 13% in 2013. Applying the same methodology, the estimated rate of return in 2015 has remained at 13%. This reflected positive progress, especially on Nucala, Shingrix, Tivicay and Triumeq, offsetting the termination of some programmes, for example Mage A3 and darapladib.
We continue to target 14% on a longer-term basis. This IRR estimate factored in applicable components of the Novartis transaction, including the acquisition costs and forecast cash flows of Bexsero and Men ABCWY, as well as cash flows for the relevant oncology assets divested (i.e. products launched since 2013 and AKT inhibitor). The oncology cash flows included estimated attributable R&D costs and an estimated proportion of the after-tax sale proceeds. Proceeds for products launched before 2013 are
excluded for consistency with our overall methodology. The net impact of the acquisitions and disposals on the estimated IRR is not material.
R&D pipeline
At a presentation to investors in New York on 4 November 2015, GSK described a deep portfolio of innovation, focussed across six core areas of scientific research and development: HIV & Infectious diseases, Respiratory, Vaccines, Immuno-Inflammation, Oncology and Rare Diseases. Around 40 new potential medicines and vaccines were profiled, supporting the Group's outlook for growth in the period 2016-2020 and the significant opportunity the Group has to create value beyond 2020.
HIV and infectious diseases - including new options for long-term control and prevention of HIV and opportunities designed to cure or induce long-term remission in both Hepatitis B and C
News since Q3:
· Announced that Phase IIb LATTE 2 study of long-acting, injectable formulations of cabotegravir and rilpivirine (Edurant, Janssen) met its primary endpoint at 32 weeks (3 November);
· Announced agreements with BMS to acquire late stage HIV assets and portfolio of preclinical HIV research assets (18 December). The two transactions are anticipated to complete independently during the first half of 2016;
· Announced collaboration with Janssen for the Phase III investigation and commercialisation of the long-acting, injectable formulations of cabotegravir and rilpivirine for treatment of HIV (7 January 2016);
· Ionis Pharmaceuticals announced 3389404 (HBV LICA antisense oligonucleotide) started Phase I studies (13 January 2016) as part of a collaboration with GSK.
Respiratory - including the next generation of respiratory medicines beyond inhaled treatments
News since Q3:
· Announced FDA approval of Nucala (mepolizumab) for severe eosinophilic asthma (4 November);
· Announced EU approval of Nucala (mepolizumab) for severe eosinophilic asthma (2 December);
· 3008348 (inhaled alpha-v-beta-6 inhibitor) advanced to Phase I (December).
Vaccines - including a novel maternal immunisation platform for vaccines
· Announced US filing to expand paediatric age indication for FluLaval Quadrivalent (2 February 2016).
Immuno-inflammation - a portfolio of new antibodies for inflammatory diseases including rheumatoid arthritis, Sjogren's syndrome and osteoarthritis
News since Q3:
· Announced positive results from the Phase III BLISS-SC study of Benlysta administered subcutaneously in patients with systemic lupus erythematosus (8 November);
· Announced positive top-line results from sirukumab Phase III programme supporting regulatory filings for rheumatoid arthritis in 2016 (16 December);
· Announced initiation of a Phase III study of sirukumab in Giant Cell Arteritis (25 November).
Oncology - leading-edge molecules in the field of epigenetics and immuno-oncology for the treatment of cancer
News since Q3:
· Announced initiation of a Phase I study to evaluate GSK's OX40 agonist (3174998) as monotherapy and in combination with Merck's anti-PD-1 therapy, Keytruda (pembrolizumab) (3 November);
· Oncomed announced stopping and unblinding the current tarextumab pancreatic cancer trial after interim read-out by the independent data safety monitoring board (25 January);
· Announced expansion of agreement with Adaptimmune (2 February 2016).
Rare diseases - breakthrough cell and gene therapies for treatment of rare diseases.
Pipeline news flow since Q3 for other assets not profiled at the Investor event:
· Announced EU approval of a variation to expand the indication of Volibris to include use in combination treatment for PAH (24 November);
· Discontinued US Toctino programme (21 January 2016).
Listed below are the ~40 pipeline assets profiled at our R&D event in November which are in active clinical development.
Respiratory Phase
3008348 (Alpha V beta 6 integrin antagonist) Idiopathic pulmonary fibrosis Ph I
2862277 (TNFR1 dAb) Acute lung injury Ph II
danirixin (CXCR2 antagonist) COPD Ph II
2269557 (PI3 kinase delta inhibitor) COPD & asthma Ph II
2245035 (TLR7 agonist) Asthma Ph II
Nucala (mepolizumab) Severe eosinophilic asthma Approved (US & EU) Nov/Dec 2015
COPD Ph III
Nasal polyposis Ph II
FF+UMEC+VI COPD Ph III
HIV/Infectious diseases Phase
3389404 (HBV LICA antisense oligonucleotide)1 Hepatitis B Ph I
2878175 (NS5B inhibitor) Hepatitis C Ph I
3228836 (HBV antisense oligonucleotide)1 Hepatitis B Ph I
cabotegravir (Long acting integrase inhibitor) HIV infections and pre-exposure prophylaxis Ph II
gepotidacin (Type 2 topoisomerase inhibitor) Bacterial infections Ph II
dolutegravir + rilpivirine (Integrase inhibitor + NNRTI) HIV infections - two drug maintenance regimen Ph III
Immuno-inflammation Phase
2982772 (RIP1 kinase inhibitor) Rheumatoid arthritis, Psoriasis, Ulcerative colitis Ph I
2618960 (IL7 receptor mAb) Sjogren's syndrome Ph I
3050002 (CCL20 mAb) Psoriatic arthritis Ph I
2831781 (LAG3 mAb) Autoimmune diseases Ph I
2330811 (OSM mAb) Systemic sclerosis Ph I
3196165 (GM-CSF mAb) Rheumatoid arthritis Ph II
Benlysta (s.c.) Systemic lupus erythematosus Ph III
sirukumab (IL6 human mAb) Rheumatoid arthritis, Giant cell arteritis Ph III
Oncology Phase
525762 (BET inhibitor) Solid tumours and haematological malignancies Ph I
2879552 (LSD1 inhibitor) Acute myeloid leukemia and small cell lung cancer Ph I
3174998 (OX40 agonist mAb) Solid tumours and haematological malignancies Ph I
3377794 (NY-ESO-1 T-cell receptor)2 Sarcoma, multiple myeloma, non-small cell lung cancer, melanoma and ovarian cancer Ph II
tarextumab (Notch 2/3 mAb)3 Pancreatic and small cell lung cancer Ph II (Oncomed have stopped pancreatic cancer trial after interim readout)
Vaccines Phase
RSV Respiratory syncytial virus prophylaxis Ph I
RSV Respiratory syncytial virus prophylaxis (maternal immunisation) Ph II
Group B Streptococcus Group B streptococcus prophylaxis (maternal immunisation) Ph II
Men ABCWY Meningococcal A,B,C,W,Y disease prophylaxis in adolescents Ph II
COPD Reduction of COPD exacerbations associated with non-typeable Haemophilus influenzae and Moraxella catarrhalis Ph II
Shingrix Shingles prophylaxis Ph III
Rare diseases Phase
2696277 (ex-vivo stem cell gene therapy)4 Beta thalassemia Ph I
2398852 + 2315698 (SAP mAb + SAP depleter) Amyloidosis Ph II
2696274 (ex-vivo stem cell gene therapy) Metachromatic leukodystrophy Ph II
2696275 (ex-vivo stem cell gene therapy) Wiscott-Aldrich syndrome Ph II
2696273 (ex-vivo stem cell gene therapy) Adenosine deaminase severe combined immune deficiency (ADA-SCID) Filed (EU) May 2015US: Ph II/III
2998728 (TTR production inhibitor)1 Transthyretin amyloidosis Ph III
mepolizumab Eosinophilic granulomatosis with polyangiitis Ph III
Other pharmaceuticals
daprodustat (1278863, prolyl hydroxylase inhibitor) Wound healing Ph I
daprodustat (1278863, prolyl hydroxylase inhibitor) Anaemia associated with chronic renal disease Ph II
1 Option-based alliance with Ionis Pharmaceuticals
2 Option-based alliance with Adaptimmune Ltd.
3 Option-based alliance with OncoMed Pharmaceuticals
4 Option-based alliance with Telethon and Ospedale San Raffaele
The full version of the GSK product development pipeline chart with all clinical assets in Phase I to Phase III can be found at: http://www.gsk.com/media/850046/product-pipeline-november-2015.pdf
Definitions
Core resultsTotal reported results represent the Group's overall performance. However, these results can contain material unusual or non-operational items that may obscure the key trends and factors determining the Group's operational performance. As a result, GSK also reports core results. Core results exclude the following items from total results: amortisation and impairment of intangible assets (excluding computer software) and goodwill; major restructuring costs, including those costs following
material acquisitions; legal charges (net of insurance recoveries) and expenses on the settlement of litigation and government investigations, and acquisition accounting adjustments for material acquisitions, disposals of associates, products and businesses, other operating income other than royalty income, and other items, together with the tax effects of all of these items. GSK believes that core results are more representative of the performance of the Group's operations and allow the key trends and
factors driving that performance to be more easily and clearly identified by shareholders. The definition of core results, as set out above, also aligns the Group's results with the majority of its peer companies and how they report earnings. Reconciliations between total and core results, as set out on pages 10 and 53 to 56, including detailed breakdowns of the key non-core items, are provided to shareholders to ensure greater visibility and transparency as they assess the Group's performance. CER
growthIn order to illustrate underlying performance, it is the Group's practice to discuss its results in terms of constant exchange rate (CER) growth. This represents growth calculated as if the exchange rates used to determine the results of overseas companies in Sterling had remained unchanged from those used in the comparative period. All commentaries are presented in terms of CER growth, unless otherwise stated. Pro-forma growthThe Novartis transaction completed on 2 March 2015 and so GSK's reported
results include the results of the former Novartis Vaccines and Consumer Healthcare businesses and exclude the results of the former GSK Oncology products, both from 2 March. Pro-forma growth rates are calculated comparing reported turnover for Q4 2015 or the year to December 2015 with the turnover for Q4 2014 or the year to December 2014 adjusted to include the equivalent results of the former Novartis Vaccines and Consumer Healthcare businesses and to exclude the results of the former GSK Oncology
products from 2 March 2014. Full-year 2014 pro-forma resultsPro-forma results for the full-year 2014, where provided, include the following major adjustments: (i) the exclusion of Oncology, (ii) the inclusion of 12 months of the acquired Novartis Consumer and Vaccines businesses, (iii) reallocation of most corporate costs to more accurately reflect the profitability of each segment and (iv) the reallocation of divestments required to Corporate and other unallocated costs. Pro-forma 2014 Corporate and other
unallocated operating profit includes a structural benefit of £219 million realised in Q3 2014. See "Cautionary statement regarding unaudited pro-forma financial information" on page 35. Free cash flowFree cash flow is the net cash inflow from operating activities less capital expenditure, interest and dividends paid to non-controlling interests plus proceeds from the sale of property, plant and equipment and dividends received from joint ventures and associated undertakings. It is used by management for
planning and reporting purposes and in discussions with and presentations to investment analysts and rating agencies. Free cash flow growth is calculated on a reported basis. Adjusted free cash flowAdjusted free cash flow excludes payments made to settle legal disputes. Free cash flow conversionFree cash flow conversion is free cash flow as a percentage of earnings excluding after-tax legal charges and legal settlements. Adjusted net cash inflow from operating activitiesAdjusted net cash inflow from
operating activities excludes payments made to settle legal disputes. Working capital conversion cycleThe working capital conversion cycle is calculated as the number of days sales outstanding plus days inventory outstanding, less days purchases outstanding.
Brand names and partner acknowledgementsBrand names appearing in italics throughout this document are trademarks of GSK or associated companies or used under licence by the Group.
Outlook assumptions and cautionary statements
Assumptions related to 2016-2020 outlookIn outlining the expectations for the five-year period 2016-2020, the Group has made certain assumptions about the healthcare sector, the different markets in which the Group operates and the delivery of revenues and financial benefits from its current portfolio, pipeline and restructuring programmes. For the Group specifically, over the period to 2020 GSK expects further declines in sales of Seretide/Advair. The introduction of a generic alternative to Advair in the
US has been factored into the Group's assessment of its future performance. The Group assumes no premature loss of exclusivity for other key products over the period. The Group's expectation of at least £6 billion of revenues per annum on a CER basis by 2020 from products launched in the last three years includes contributions from the current pipeline asset Shingrix. This target is now expected to be met up to two years earlier. The Group also expects volume demand for its products to increase,
particularly in Emerging Markets. The assumptions for the Group's revenue and earnings expectations assume no material mergers, acquisitions, disposals, litigation costs or share repurchases for the Company; and no change in the Group's shareholdings in ViiV Healthcare or Consumer Healthcare. They also assume no material changes in the macro-economic and healthcare environment. The Group's expectations assume successful delivery of the Group's integration and restructuring plans over the period 2016-2020.
Material costs for investment in new product launches and R&D have been factored into the expectations given. The expectations are given on a constant currency basis and assume no material change to the Group's effective tax rate.
Assumptions and cautionary statement regarding forward-looking statementsThe Group's management believes that the assumptions outlined above are reasonable, and that the aspirational targets described in this report are achievable based on those assumptions. However, given the longer term nature of these expectations and targets, they are subject to greater uncertainty, including potential material impacts if the above assumptions are not realised, and other material impacts related to foreign exchange
fluctuations, macroeconomic activity, changes in regulation, government actions or intellectual property protection, actions by our competitors, and other risks inherent to the industries in which we operate. This document contains statements that are, or may be deemed to be, "forward-looking statements". Forward-looking statements give the Group's current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or
current facts. They use words such as 'anticipate', 'estimate', 'expect', 'intend', 'will', 'project', 'plan', 'believe', 'target' and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal
proceedings, and financial results. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority), the Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The reader should, however, consult any additional disclosures that the Group may make in any documents which it publishes and/or files with the
SEC. All readers, wherever located, should take note of these disclosures. Accordingly, no assurance can be given that any particular expectation will be met and investors are cautioned not to place undue reliance on the forward-looking statements. Forward-looking statements are subject to assumptions, inherent risks and uncertainties, many of which relate to factors that are beyond the Group's control or precise estimate. The Group cautions investors that a number of important factors, including those
in this document, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such factors include, but are not limited to, those discussed under Item 3.D 'Risk factors' in the Group's Annual Report on Form 20-F for 2014 and those discussed in Part 2 of the Circular to Shareholders and Notice of General Meeting furnished to the SEC on Form 6-K on 24 November 2014. Any forward looking statements made by or on behalf of the Group speak only as of the
date they are made and are based upon the knowledge and information available to the Directors on the date of this report.
Cautionary statement regarding unaudited pro-forma financial informationThe unaudited pro-forma financial information in this release has been prepared to illustrate the effect of (i) the disposal of the Oncology assets, (ii) the Consumer Healthcare Joint Venture (i.e. the acquisition of the Novartis OTC Business), and (iii) the acquisition of the Vaccines business (which excludes the Novartis influenza vaccines business) on the results of the Group as if they had taken place as at 1 January 2014. The
unaudited pro-forma financial information has been prepared for illustrative purposes only and, by its nature, addresses a hypothetical situation and, therefore, does not represent the Group's actual financial position or results. The unaudited pro-forma financial information does not purport to represent what the Group's financial position actually would have been if the disposal of the Oncology assets, the Consumer Healthcare Joint Venture and the Vaccines acquisition had been completed on the dates
indicated; nor does it purport to represent the financial condition at any future date. In addition to the matters noted above, the unaudited pro-forma financial information does not reflect the effect of anticipated synergies and efficiencies associated with the Oncology disposal, the Consumer Healthcare Joint Venture and the Vaccines acquisition. The unaudited pro-forma financial information does not constitute financial statements within the meaning of Section 434 of the Companies Act 2006. The
unaudited pro-forma financial information in this release should be read in conjunction with the financial statements included in (i) the Group's Q4 2015 results announcement dated 3 February 2016 and furnished to the SEC on Form 6-K, (ii) the Group's Annual Report on Form 20-F for 2014 and (iii) the Circular to Shareholders and Notice of General Meeting furnished to the SEC on Form 6-K on 24 November 2014.
Contacts
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Financial information
Income statements
2015 2014 Q4 2015 Q4 2014
£m £m £m £m
TURNOVER 23,923 23,006 6,286 6,186
Cost of sales (8,853) (7,323) (2,541) (2,029)
Gross profit 15,070 15,683 3,745 4,157
Selling, general and administration (9,232) (8,246) (2,498) (2,207)
Research and development (3,560) (3,450) (1,054) (979)
Royalty income 329 310 91 67
Other operating income/(expense) 7,715 (700) (538) (347)
OPERATING PROFIT/(LOSS) 10,322 3,597 (254) 691
Finance income 104 68 41 18
Finance expense (757) (727) (199) (189)
Profit on disposal of associates 843 - 1 -
Share of after tax profits/(losses) of associates 14 30 (5) 11
and joint ventures
PROFIT/(LOSS) BEFORE TAXATION 10,526 2,968 (416) 531
Taxation (2,154) (137) (12) 494
Tax rate % 20.5% 4.6% (2.9)% (93.0)%
PROFIT/(LOSS) AFTER TAXATION FOR 8,372 2,831 (428) 1,025
THE PERIOD
(Loss)/profit attributable to non-controlling interests (50) 75 (74) (8)
Profit/(loss) attributable to shareholders 8,422 2,756 (354) 1,033
8,372 2,831 (428) 1,025
EARNINGS/(LOSS) PER SHARE 174.3p 57.3p
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