Report of Foreign Issuer (6-k)

Date : 05/01/2019 @ 6:19PM
Source : Edgar (US Regulatory)
Stock : Glaxosmithkline (GSK)
Quote : 40.96  -0.45 (-1.09%) @ 1:00AM

Report of Foreign Issuer (6-k)

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the month of May, 2019
 
Commission File Number 001-15170
 
 
GlaxoSmithKline plc
(Translation of registrant's name into English)
 
 
 980 Great West Road, Brentford, Middlesex, TW8 9GS
(Address of principal executive office)
 
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F . . . .X. . . . Form 40-F . . . . . . . .
 
 
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
 
 
 
 
 
Issued: Wednesday, 1 May 2019, London U.K.
 
GSK delivers sales of £7.7 billion +6% AER, +5% CER
Total EPS 16.8p, +50% AER, +42% CER; Adjusted EPS 30.1p, +22% AER, +18% CER
 
 
Financial highlights
 
●      
Pharmaceuticals sales £4.2 billion, +4% AER, +2% CER; Vaccines £1.5 billion, +23% AER, +20% CER; Consumer Healthcare £2.0 billion, flat AER, +1% CER.
 
Total Group operating margin 18.6%.  Adjusted Group operating margin 28.2%, +1.6 percentage points AER, +1.0 percentage point CER (Pharmaceuticals 29.8%; Vaccines 40.3%; Consumer Healthcare 21.7%).  Benefits from strong sales growth and phasing of R&D.
 
Total EPS 16.8p, +50% AER, +42% CER.
 
Adjusted EPS 30.1p, +22% AER, +18% CER, driven by strong operating performance, continued financial efficiencies, reduction in minority share and a one-off benefit to associates.
 
Net cash flow from operations £663 million.  Free cash flow £165 million.
 
19p dividend declared for the quarter; continue to expect 80p for full year 2019.
 
2019 Guidance reaffirmed.
 
 
Product and pipeline highlights
 
 
 
 
 
Total HIV sales £1.1 billion, +7% AER, +4% CER, including  Juluca  sales of £70 million.
 
 
-
Dovato  (dolutegravir+lamivudine), first once-daily 2-drug regimen for treatment-naive HIV patients, launched in US.
 
 
 
-
Long-acting cabotegravir+rilpivirine filed in the US for treatment of HIV.
 
 
Total new Respiratory product sales £631 million, +29% AER, +25% CER, including  Trelegy  £87 million;  Nucala  £152 million.
 
Shingrix  sales £357 million driven by continued strong launch execution in US.
 
Continued progress in immuno-oncology pipeline:
 
 
-
Zejula  sales of £42 million since 22 January following completion of Tesaro acquisition
 
 
 
-
Positive data from GARNET study presented at the Society of Gynecologic Oncology conference indicating robust activity of PD-1 dostarlimab in patients with advanced or recurrent endometrial cancer
 
 
 
-
Global alliance with Merck KGaA, Darmstadt, Germany completed to jointly develop and commercialise M7824, a novel immunotherapy with potential in multiple difficult-to-treat cancers
 
 
 
-
Further positive data announced from belantamab mafodotin (BCMA) DREAMM-1 study and reported in Blood Cancer Journal
 
 
 
 
 
 
 
 
 
 
Q1 2019 results
 
 
Q1 2019
 
Growth
 
 
£m
 
£%
 
CER%
 
 
 
 
 
 
 
Turnover
 
7,661   
 
 
 
 
 
 
 
 
 
Total operating profit
 
1,428   
 
15 
 
10 
Total earnings per share
 
16.8p
 
50 
 
42 
 
 
 
 
 
 
 
Adjusted operating profit
 
2,163   
 
12 
 
Adjusted earnings per share
 
30.1p
 
22 
 
18 
 
 
 
 
 
 
 
Net cash from operating activities
 
663   
 
(23)
 
 
Free cash flow
 
165   
 
(50)
 
 
 
 
 
 
 
 
 
 
Emma Walmsley, Chief Executive Officer, GSK said:
 
"We have made a strong start to 2019, which is an important year of execution for GSK, with growth in sales, operating margins and earnings per share in Q1, in line with our expectations.  Strengthening our pipeline remains our number one priority and we reported positive data for several potential new medicines in HIV and Oncology during the quarter.  I am also pleased to report that integration planning for our new proposed Consumer Healthcare business is going well and, subject to relevant approvals, we continue to expect to complete this transaction in the second half of the year.  We look forward to building on the progress made this quarter."
 
 
The Total results are presented under 'Financial performance' on page 9 and Adjusted results reconciliations are presented on pages 18 and 19.  Adjusted results are a non-IFRS measure that may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS.  Adjusted results are defined on page 7 and £% or AER% growth, CER% growth, free cash flow and other non-IFRS measures are defined on page 36.  GSK provides guidance on an Adjusted results basis only for the reasons set out on page 8.  All expectations, guidance and targets regarding future performance and dividend payments should be read together with "Outlook, assumptions and cautionary statements" on pages 36 and 37.
 
 
2019 guidance
 
In 2019, we continue to expect Adjusted EPS to decline in the range of  -5%  to  -9 % at CER.  This guidance reflects the recent approval of a substitutable generic competitor to  Advair  in the US and the expected impact of the Tesaro acquisition and assumes that the proposed Consumer Healthcare nutrition disposal closes by the end of 2019 and the proposed Consumer Healthcare Joint Venture with Pfizer closes during H2 2019.
 
GSK expects to maintain the dividend for 2019 at the current level of 80p per share.
 
All expectations, guidance and targets regarding future performance and dividend payments should be read together with "Outlook, assumptions and cautionary statements" on page 36.
 
If exchange rates were to hold at the closing rates on 31 March 2019 ($1.31/£1, €1.17/£1 and Yen 145/£1) for the rest of 2019, the estimated negative impact on 2019 Sterling turnover growth would be around 1% and if exchange gains or losses were recognised at the same level as in 2018, the estimated impact on 2019 Sterling Adjusted EPS growth would be negligible.
 
 
Results presentation
 
A webcast of the quarterly results presentation hosted by Emma Walmsley, GSK CEO, will be held at 2pm BST on 1 May 2019.  Presentation materials will be published on  www.gsk.com  prior to the webcast and a transcript of the webcast will be published subsequently.
 
Information available on GSK's website does not form part of, and is not incorporated by reference into, this Results Announcement.
 
 
Operating performance - Q1 2019
 
Turnover
Q1 2019
 
 
 
 
 
£m
 
Growth
£%
 
Growth
CER%
 
 
 
 
 
 
Pharmaceuticals
4,158
 
4
 
2
Vaccines
1,522
 
23
 
20
Consumer Healthcare
1,981
 
-
 
1
 
 
 
 
 
 
Group turnover
7,661
 
6
 
5
 
 
 
 
 
 
 
Group turnover increased 6% AER, 5% CER to £7,661 million, with CER growth delivered by all three businesses.
 
Pharmaceuticals sales were up 4% AER, 2% CER, reflecting the continued growth in HIV sales and growth from  Nucala  and  Trelegy .  New Respiratory product sales ( Ellipta  products and  Nucala ) were up 29% AER, 25% CER.  Lower sales in Established Pharmaceuticals were driven by  Advair  following its loss of exclusivity in the US, partly offset by the launches of  Advair  and  Ventolin  authorised generics in the US. 
 
Vaccines sales were up 23% AER, 20% CER, primarily driven by strong sales of  Shingrix  in the US as well as increased demand for Meningitis and Hepatitis vaccines, partly offset by a decline in Established Vaccines.
 
Consumer Healthcare sales were flat at AER but grew 1% CER, as growth in Oral health and Nutrition were partly offset by declines in Wellness and Skin health.
 
Operating profit
Total operating profit was £1,428 million in Q1 2019 compared with £1,240 million in Q1 2018.  Adjusted operating profit was £2,163 million, 12% higher than Q1 2018 at AER and 9% higher at CER on a turnover increase of 5% CER.  The Adjusted operating margin of 28.2% was 1.6 percentage points higher at AER, 1.0 percentage points higher on a CER basis than in Q1 2018.
 
Increased charges for major restructuring, primarily arising from write downs in a number of manufacturing sites, and an unrealised loss arising from the decrease in value of the shares in Hindustan Unilever Limited were largely offset by re-measurement credits on the contingent consideration liabilities. 
 
Operating profit benefited from strong sales growth, particularly in Vaccines, a more favourable mix in Vaccines and Consumer Healthcare, a benefit from favourable inventory adjustments in the quarter, the phasing of R&D investment and continued tight control of ongoing costs across all three businesses.  These were partly offset by continuing price pressure, the impact of the Tesaro acquisition and other investments in promotional product support, particularly for new launches.
 
Earnings per share
Total earnings per share was 16.8p, compared with 11.2p in Q1 2018.  Adjusted EPS was 30.1p compared with 24.6p in Q1 2018, up 22% AER, 18% CER, on a 9% CER increase in Adjusted operating profit.  The improvement reflected an improved trading performance, the reduced non-controlling interest allocation of Consumer Healthcare profits following the buyout in Q2 2018 and a one-off benefit to the share of after tax profit of the associate, Innoviva.
 
Cash flow
Net cash inflow from operating activities was £663 million in the quarter (Q1 2018: £863 million) and free cash flow was £165 million (Q1 2018: £329 million).  The reduction primarily reflected the adverse phasing of payments for returns and rebates, as well as the initial step-down impact from  Advair  generic competition and an increase in trade receivables as a result of strong sales in the quarter, partly offset by improved operating profits and lower contingent consideration payments compared with Q1 2018 which included a milestone payment to Novartis.
 
 
R&D pipeline
 
Pipeline news flow highlights since Q4 2018:
 
 
Oncology
 
Dostarlimab (TSR-042)
On 19 March, data from the phase I/II GARNET study evaluating dostarlimab in women with recurrent or advanced endometrial cancer who progressed on or after a platinum-based regimen were presented at the 2019 Society for Gynecologic Oncology (SGO) Annual Meeting.  The preliminary results demonstrated clinically meaningful and durable response rates of dostarlimab in this patient population regardless of microsatellite instability status.
 
Belantamab mafodotin (GSK2857916)
On 21 March, further positive data from the DREAMM-1 study in patients with relapsed/ refractory multiple myeloma were published in Blood Cancer Journal.  These new data showed that the median progression-free survival (PFS) was twelve months, an increase from the previously reported 7.9 months PFS.
 
In March, the first patient in the DREAMM-4 pilot study of belantamab mafodotin (BCMA antibody drug conjugate) in combination with pembrolizumab in relapsed/refractory multiple myeloma was dosed.
 
 
HIV/Infectious diseases
 
Cabotegravir + rilpivirine
On 29 April, a regulatory application was submitted to the US FDA for the once monthly injectable, cabotegravir + rilpivirine for the treatment of adults living with HIV-1 infection.
 
On 7 March, comprehensive data from the ATLAS and FLAIR studies were presented at the 2019 Conference on Retroviruses and Opportunistic Infections.  These two studies showed that a long-acting, injectable, two-drug regimen of cabotegravir and rilpivirine has similar efficacy to daily, three-drug oral treatment in adults living with HIV-1 infection.
 
Dovato  (dolutegravir + lamivudine)
On 8 April, the US FDA approved  Dovato , the first, once daily, single-tablet, two-drug regimen for treatment naive HIV-1 adults.
 
On 26 April, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued a positive opinion for  Dovato , for the treatment of HIV-1 infection in adults and adolescents.
 
Juluca  (dolutegravir + rilpivirine)
On 3 April, three-year results from the SWORD 1&2 studies demonstrating that  Juluca  maintained HIV viral suppression at 148-weeks were presented at the 25th Annual Conference of the British HIV Association.
 
Maturation inhibitor (GSK3640254)
The first patient was dosed in a phase IIa study for GSK'254 in the treatment of patients living with HIV-1 infection.
 
 
Immuno-inflammation
 
Benlysta  (belimumab)
On 26 April, the US FDA approved intravenous  Benlysta  for use in children aged 5 years and above with lupus.
 
 
Respiratory
 
Trelegy Ellipta
The Japan Ministry of Health, Labour and Welfare granted marketing authorisation for  Trelegy Ellipta (FF/UMEC/VI) for the treatment of COPD.
 
 
Other pharmaceuticals
 
Dectova  (intravenous zanamivir)
On 26 April, the European Commission granted marketing authorisation for intravenous zanamivir for the treatment of complicated influenza A or B in adult and paediatric patients (aged >6 months).
 
GSK3036656 (leucyl t-RNA inhibitor)
The first patient was dosed in a phase II study to establish the effect of GSK'656 in patients with drug-sensitive pulmonary tuberculosis.
 
 
Vaccines
 
Vaccine candidates
A decision has been made to terminate the clinical development of our strep pneumonia (next generation) candidate vaccine and, following an analysis of available research results, including interim data from an ongoing phase I study, a decision has been made to no longer pursue the clinical development of the candidate universal flu vaccine.  GSK remains committed to further research in flu including pursuing other approaches.
 
 
Contents
Page
 
 
Total and Adjusted results
7
Financial performance
9
Cash generation
22
Returns to shareholders
23
 
 
Income statement
24
Statement of comprehensive income
25
Pharmaceuticals turnover
26
Vaccines turnover
27
Balance sheet
28
Statement of changes in equity
29
Cash flow statement
30
Segment information
31
Legal matters
32
Additional information
32
Reconciliation of cash flow to movements in net debt
35
Net debt analysis
35
Free cash flow reconciliation
35
Reporting definitions
36
Outlook, assumptions and cautionary statements
36
Independent review report
38
 
 
Contacts
 
GSK  - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer.  For further information please visit www.gsk.com .
 
 
GSK enquiries:
 
 
 
UK Media enquiries:
Simon Steel
+44 (0) 20 8047 5502
(London)
 
Tim Foley
+44 (0) 20 8047 5502
(London)
 
Mary Hinks-Edwards
+44 (0) 20 8047 5502
(London)
 
 
 
 
US Media enquiries:
Kristen Neese
+1 215 751 3335
(Philadelphia)
 
 
 
 
Analyst/Investor enquiries:
Sarah Elton-Farr
+44 (0) 20 8047 5194
(London)
 
James Dodwell
+44 (0) 20 8047 2406
(London)
 
Danielle Smith
+44 (0) 20 8047 7562
(London)
 
Jeff McLaughlin
+1 215 751 7002
(Philadelphia)
 
 
Registered in England & Wales:
No. 3888792
 
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
 
 
Total and Adjusted results
 
Total reported results represent the Group's overall performance.
 
GSK also uses a number of adjusted, non-IFRS, measures to report the performance of its business.  Adjusted results and other non-IFRS measures may be considered in addition to, but not as a substitute for or superior to, information presented in accordance with IFRS.  Adjusted results are defined below and other non-IFRS measures are defined on page 36.
 
GSK believes that Adjusted results, when considered together with Total results, provide investors, analysts and other stakeholders with helpful complementary information to understand better the financial performance and position of the Group from period to period, and allow the Group's performance to be more easily compared against the majority of its peer companies.  These measures are also used by management for planning and reporting purposes.  They may not be directly comparable with similarly described measures used by other companies.
 
GSK encourages investors and analysts not to rely on any single financial measure but to review GSK's quarterly results announcements, including the financial statements and notes, in their entirety.
 
GSK is committed to continuously improving its financial reporting, in line with evolving regulatory requirements and best practice and has made a number of changes in recent years.  In line with this practice, GSK expects to continue to review its reporting framework.
 
Adjusted results exclude the following items from Total results, together with the tax effects of all of these items:
 
●     
amortisation of intangible assets (excluding computer software)
impairment of intangible assets (excluding computer software) and goodwill
major restructuring costs, which include impairments of tangible assets and computer software, (under specific Board approved programmes that are structural, of a significant scale and where the costs of individual or related projects exceed £25 million), including integration costs following material acquisitions
transaction-related accounting or other adjustments related to significant acquisitions
proceeds and costs of disposals of associates, products and businesses; significant legal charges (net of insurance recoveries) and expenses on the settlement of litigation and government investigations; other operating income other than royalty income, and other items
the impact of the enactment of the US Tax Cuts and Jobs Act in 2017
 
Costs for all other ordinary course smaller scale restructuring and legal charges and expenses are retained within both Total and Adjusted results.
 
As Adjusted results include the benefits of Major restructuring programmes but exclude significant costs (such as significant legal, major restructuring and transaction items) they should not be regarded as a complete picture of the Group's financial performance, which is presented in Total results.  The exclusion of other Adjusting items may result in Adjusted earnings being materially higher or lower than Total earnings.  In particular, when significant impairments, restructuring charges and legal costs are excluded, Adjusted earnings will be higher than Total earnings.
 
GSK has undertaken a number of Major restructuring programmes in recent years in response to significant changes in the Group's trading environment or overall strategy, or following material acquisitions.  Costs, both cash and non-cash, of these programmes are provided for as individual elements are approved and meet the accounting recognition criteria.  As a result, charges may be incurred over a number of years following the initiation of a Major restructuring programme.
 
Significant legal charges and expenses are those arising from the settlement of litigation or government investigations that are not in the normal course and materially larger than more regularly occurring individual matters.  They also include certain major legacy matters.
 
Reconciliations between Total and Adjusted results, providing further information on the key Adjusting items, are set out on pages 18 and 19.
 
GSK provides earnings guidance to the investor community on the basis of Adjusted results.  This is in line with peer companies and expectations of the investor community, supporting easier comparison of the Group's performance with its peers.  GSK is not able to give guidance for Total results as it cannot reliably forecast certain material elements of the Total results, particularly the future fair value movements on contingent consideration and put options that can and have given rise to significant adjustments driven by external factors such as currency and other movements in capital markets.
 
ViiV Healthcare
ViiV Healthcare is a subsidiary of the Group and 100% of its operating results (turnover, operating profit, profit after tax) are included within the Group income statement.  
 
Earnings are allocated to the three shareholders of ViiV Healthcare on the basis of their respective equity shareholdings (GSK 78.3%, Pfizer 11.7% and Shionogi 10%) and their entitlement to preferential dividends, which are determined by the performance of certain products that each shareholder contributed.  As the relative performance of these products changes over time, the proportion of the overall earnings allocated to each shareholder also changes.  In particular, the increasing sales of dolutegravir-containing products have a favourable impact on the proportion of the preferential dividends that is allocated to GSK.  Adjusting items are allocated to shareholders based on their equity interests.  GSK was entitled to approximately 85% of the Total earnings and 82% of the Adjusted earnings of ViiV Healthcare for 2018.
 
As consideration for the acquisition of Shionogi's interest in the former Shionogi-ViiV Healthcare joint venture in 2012, Shionogi received the 10% equity stake in ViiV Healthcare and ViiV Healthcare also agreed to pay additional future cash consideration to Shionogi, contingent on the future sales performance of the products being developed by that joint venture, principally dolutegravir.  Under IFRS 3 'Business combinations', GSK was required to provide for the estimated fair value of this contingent consideration at the time of acquisition and is required to update the liability to the latest estimate of fair value at each subsequent period end.  The liability for the contingent consideration recognised in the balance sheet at the date of acquisition was £659 million.  Subsequent re-measurements are reflected within other operating income/expense and within Adjusting items in the income statement in each period.  At 31 March 2019, the liability, which is discounted at 8.5%, stood at £5,658 million, on a post-tax basis.
 
Cash payments to settle the contingent consideration are made to Shionogi by ViiV Healthcare each quarter, based on the actual sales performance of the relevant products in the previous quarter.  These payments reduce the balance sheet liability and hence are not recorded in the income statement.  The cash payments made to Shionogi by ViiV Healthcare in Q1 2019 were £219 million.
 
Because the liability is required to be recorded at the fair value of estimated future payments, there is a significant timing difference between the charges that are recorded in the Total income statement to reflect movements in the fair value of the liability and the actual cash payments made to settle the liability.
 
Further explanation of the acquisition-related arrangements with ViiV Healthcare are set out on pages 41 and 42 of the Annual Report 2018.
 
 
Financial performance - Q1 2019
 
Total results
 
The Total results for the Group are set out below.
 
 
Q1 2019
£m
 
Q1 2018
£m
 
Growth
£%
 
Growth
CER%
 
 
 
 
 
 
 
 
Turnover
7,661  
 
7,222 
 
6
 
5
 
 
 
 
 
 
 
 
Cost of sales
(2,733)
 
(2,391)
 
14
 
15
 
 
 
 
 
 
 
 
Gross profit
4,928  
 
4,831 
 
2
 
-
 
 
 
 
 
 
 
 
Selling, general and administration
(2,477)
 
(2,311)
 
7
 
6
Research and development
(1,006)
 
(904)
 
11
 
8
Royalty income
73  
 
53 
 
38
 
42
Other operating expense
(90)
 
(429)
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit
1,428  
 
1,240 
 
15
 
10
 
 
 
 
 
 
 
 
Finance income
34  
 
20 
 
 
 
 
Finance expense
(224)
 
(162)
 
 
 
 
Share of after tax profits of associates
  and joint ventures
57  
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before taxation
1,295  
 
1,107 
 
17
 
11
 
 
 
 
 
 
 
 
Taxation
(310)
 
(348)
 
 
 
 
Tax rate %
23.9 %
 
31.4%
 
 
 
 
 
 
 
 
 
 
 
 
Profit after taxation
985  
 
759 
 
30
 
23
 
 
 
 
 
 
 
 
Profit attributable to non-controlling
  interests
155  
 
210 
 
 
 
 
Profit attributable to shareholders
830  
 
549 
 
 
 
 
 
 
 
 
 
 
 
 
 
985  
 
759 
 
30
 
23
 
 
 
 
 
 
 
 
Earnings per share
16.8p
 
11.2p
 
50
 
42
 
 
 
 
 
 
 
 
 
 
Adjusted results
 
The Adjusted results for the Group are set out below.  Reconciliations between Total results and Adjusted results for Q1 2019 and Q1 2018 are set out on pages 18 and 19.
 
 
Q1 2019
 
 
 
 
 
 
 
 
 
£m
 
% of
turnover
 
Growth
£%
 
Growth
CER%
 
 
 
 
 
 
 
 
Turnover
7,661 
 
100 
 
 
 
 
 
 
 
 
 
 
Cost of sales
(2,203)
 
(28.8)
 
 
Selling, general and administration
(2,397)
 
(31.3)
 
 
Research and development
(971)
 
(12.7)
 
 
Royalty income
73 
 
1.0 
 
38 
 
42 
 
 
 
 
 
 
 
 
Adjusted operating profit
2,163 
 
28.2 
 
12 
 
 
 
 
 
 
 
 
 
Adjusted profit before tax
2,033 
 
 
 
13 
 
10 
Adjusted profit after tax
1,633 
 
 
 
14 
 
10 
Adjusted profit attributable to shareholders
1,484 
 
 
 
23 
 
19 
 
 
 
 
 
 
 
 
Adjusted earnings per share
30.1p
 
 
 
22 
 
18 
 
 
 
 
 
 
 
 
 
Operating profit by business
Q1 2019
 
 
 
 
 
 
 
 
 
£m
 
% of
turnover
 
Growth
£%
 
Growth
CER%
 
 
 
 
 
 
 
 
Pharmaceuticals
1,968 
 
47.3 
 
 
(1)
Pharmaceuticals R&D*
(730)
 
 
 
19 
 
15 
 
 
 
 
 
 
 
 
Total Pharmaceuticals
1,238 
 
29.8 
 
(7)
 
(8)
Vaccines
614 
 
40.3 
 
81 
 
69 
Consumer Healthcare
430 
 
21.7 
 
12 
 
12 
 
 
 
 
 
 
 
 
 
2,282 
 
29.8 
 
11 
 
Corporate & other unallocated costs
(119)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted operating profit
2,163 
 
28.2 
 
12 
 
 
 
 
 
 
 
 
 
 
*
Operating profit of Pharmaceuticals R&D segment, which is the responsibility of the President, Pharmaceuticals R&D.  It excludes ViiV Healthcare R&D expenditure, which is reported within the Pharmaceuticals segment.
 
 
Turnover
 
Pharmaceuticals turnover
 
 
Q1 2019
 
 
 
 
 
 
 
£m
 
Growth
£%
 
Growth
CER%
 
 
 
 
 
 
Respiratory
631
 
29
 
25
HIV
1,121
 
7
 
4
Immuno-inflammation
121
 
21
 
15
Oncology
43
 
-
 
-
Established Pharmaceuticals
2,242
 
(5)
 
(6)
 
 
 
 
 
 
 
4,158
 
4
 
2
 
 
 
 
 
 
US
1,689
 
8
 
1
Europe
1,003
 
(2)
 
(1)
International
1,466
 
4
 
4
 
 
 
 
 
 
 
4,158
 
4
 
2
 
 
 
 
 
 
 
Pharmaceuticals turnover in the quarter was £4,158 million, up 4% AER, 2% CER.  HIV sales were up 7% AER, 4% CER, to £1,121 million, driven by growth of  Tivicay  and  Juluca.   Respiratory sales were up 29% AER, 25% CER, to £631 million, on growth of  Trelegy  and  Nucala .  Sales of Established Pharmaceuticals declined 5% AER, 6% CER to £2,242 million, including the impact of the loss of exclusivity of  Advair , partly offset by the launches of authorised generics for  Advair  and  Ventolin  in the US.
 
In the US, sales grew 8% AER, 1% CER, reflecting growth in HIV, Respiratory and  Benlysta , more than offsetting the decline in Established Products including the loss of exclusivity of  Advair .  In Europe, sales declined 2% AER, 1% CER, with strong growth in Respiratory offset by declines in Established Pharmaceuticals.  International grew 4% AER and 4% CER, with growth in HIV and Respiratory.
 
Respiratory
New Respiratory sales ( Ellipta  products plus  Nucala ) were up 29% AER, 25% CER, with strong growth in all regions.  Higher demand for  Trelegy Ellipta  and  Nucala  resulted in US growth of 27% AER, 19% CER and Europe growth of 31% AER, 33% CER.  International grew 31% AER, 30% CER, including  Relvar/Breo Ellipta up 19%.
 
Sales of  Nucala  were £152 million in the quarter and grew 46% AER, 41% CER, continuing to benefit from the global rollout of the product.  US sales of  Nucala  grew 44% AER, 36% CER to £85 million.
 
Sales of  Ellipta  products were up 24% AER, 20% CER to £479 million driven by continued growth in all regions.  In the US, sales grew 22% AER, 14% CER, reflecting further market share gains partly offset by the impact of continued competitive pricing pressures, particularly for ICS/LABA products.  In Europe, sales grew 27% AER, 28% CER.  In the US, sales of  Trelegy Ellipta  contributed £66 million in the quarter, continuing to benefit from the expanded US label.
 
Relvar/Breo Ellipta  sales were down 2% AER, 5% CER.  In the US,  Relvar/Breo Ellipta  declined 22% AER, 27% CER, impacted by competitive pricing pressures and the impact of generic  Advair  on the ICS/LABA market.  In Europe and International,  Relvar/Breo Ellipta  continued to grow, up 8% AER, 10% CER and 23% AER, 19% CER respectively.
 
HIV
HIV sales increased 7% AER, 4% CER to £1,121 million in the quarter.  The growth was driven by the dolutegravir franchise, which grew 11% AER, 7% CER in the quarter, partly offset by a decline in the rest of the portfolio.  Sales of dolutegravir products were £1,067 million in the quarter, with  Triumeq  and  Tivicay  delivering sales of £614 million and £383 million, respectively.   Juluca , the first of our two drug regimens, recorded sales of £70 million driven by continued share growth.
 
The US and International regions grew 10% AER, 3% CER and 28% AER, 29% CER respectively, driven by  Juluca  in the US and a  Tivicay  tender in International.  In Europe, dolutegravir products declined 3% AER, 2% CER with volume growth offset by price erosion and government clawback adjustments in Q1 2018.
 
The remaining portfolio delivered sales of £54 million, representing 5% of total HIV sales, declining 36% AER, 35% CER.  This reflected continued competition from generic products and transition to new regimens and reduced the overall growth of total HIV by approximately three percentage points.
 
Immuno-inflammation
Sales of  Benlysta  in the quarter were up 21% AER, 15% CER to £121 million, including sales of the sub-cutaneous formulation of £47 million.  In the US,  Benlysta  grew 18% AER, 11% CER to £105 million.
 
Oncology
Zejula  recorded sales of £42 million, following the completion of the acquisition of Tesaro on 22 January 2019.
 
Established Pharmaceuticals
Sales of Established Pharmaceuticals in the quarter were £2,242 million, down 5% AER, 6% CER.
 
Established Respiratory products were flat at AER but declined 2% CER to £1,083 million, with the decline in  Advair/Seretide  partially offset by higher sales of  Ventolin  and allergy products  In the US, a generic version of  Advair  was launched in February, resulting in 23% AER, 27% CER decline in the quarter.  In Europe,  Seretide sales were down 20% AER, 19% CER to £133 million, reflecting continued competition from generic products and the transition of the Respiratory portfolio to newer products.  In International, sales of  Seretide  were up 4% AER and CER.   Ventolin  grew by 36% AER, 33% CER driven by strong initial sales from the launch of an authorised generic version in the US.
 
The remainder of the Established Pharmaceuticals portfolio declined by 10% AER, 9% CER, including  Lamictal  which declined 10% AER, 12% CER to £132 million due to generic competition in the US, together with declines in  Relenza Coreg  and  Levitra .
 
 
Vaccines turnover
 
 
Q1 2019
 
 
 
 
 
 
 
£m
 
Growth
£%
 
Growth
CER%
 
 
 
 
 
 
Meningitis
209
 
16 
 
18 
Influenza
15
 
67 
 
67 
Shingles
357
 
>100 
 
>100 
Established Vaccines
941
 
 
(1)
 
 
 
 
 
 
 
1,522
 
23 
 
20 
 
 
 
 
 
 
US
777
 
59 
 
49 
Europe
339
 
(13)
 
(12)
International
406
 
13 
 
16 
 
 
 
 
 
 
 
1,522
 
23 
 
20 
 
 
 
 
 
 
 
Vaccines turnover grew 23% AER, 20% CER to £1,522 million, primarily driven by growth in sales of  Shingrix .  Meningitis vaccines also contributed to growth primarily due to favourable phasing of  Bexsero  and stronger demand in International, together with demand and share gains in the US.  Established Vaccines were flat at AER but declined 1% CER, reflecting  Cervarix  year-on-year supply phasing and increased competition in China, competitive pressures particularly in the EU on  Infanrix Pediarix  and supply constraints in MMRV vaccines, partly offset by higher sales of Hepatitis vaccines and  Synflorix .
 
Meningitis
Meningitis sales grew 16% AER, 18% CER to £209 million.  Bexsero  sales grew 12% AER, 14% CER to £156 million, driven by favourable phasing and continued growth in private   market sales in International, together with demand and share gains in the US, partly offset by the completion of the vaccination of catch-up cohorts in certain markets in Europe.   Menveo  sales declined 11% AER, 11% CER, primarily reflecting the timing of CDC purchases in the US.
 
Influenza
Fluarix/FluLaval  sales were up 67% AER, 67% CER to £15 million, primarily due to favourable supply phasing in International.
 
Shingles
Shingrix  recorded sales of £357 million, primarily driven by the US, which benefited from market growth in new patient populations now covered by immunisation recommendations and the favourable benefit of prior period payer rebate adjustments.  Canada, as well as the recent launch in Germany, also contributed to growth.
 
Established Vaccines
Sales of DTPa-containing vaccines ( Infanrix Pediarix  and  Boostrix ) were flat at AER, down 2% CER.   Infanrix , Pediarix  sales were down 11% AER, 14% CER to £183 million, reflecting increased competitive pressures and supply constraints in Europe, partly offset by favourable CDC stockpile movements in the US.   Boostrix  sales grew 23% AER, 21% CER to £123 million, primarily driven by share gains in the US and favourable tender phasing in International.
 
Hepatitis vaccines grew 23% AER, 18% CER to £239 million, benefiting from a competitor supply shortage, favourable CDC stockpile movements and stronger demand in the US, together with higher demand in International, partly offset by supply constraints in Europe.
 
Rotarix  sales grew 3% AER, 2% CER to £134 million, reflecting favourable supply phasing in International.
 
Synflorix  sales grew 22% AER, 23% CER to £121 million, primarily due to favourable phasing and stronger demand in International.
 
MMRV vaccines sales declined 29% AER, 28% CER to £55 million, mainly driven by supply constraints in Europe and International.
 
Cervarix s ales were down 62% AER and CER, reflecting year-on-year supply phasing and increased competition in China.
 
 
Consumer Healthcare turnover
 
 
 
Q1 2019
 
 
 
 
 
 
 
£m
 
Growth
£%
 
Growth
CER%
 
 
 
 
 
 
Wellness
1,006
 
(1)
 
(1)
Oral health
662
 
 
Nutrition
167
 
(1)
 
Skin health
146
 
(4)
 
(3)
 
 
 
 
 
 
 
1,981
 
 
 
 
 
 
 
 
US
489
 
 
Europe
599
 
(4)
 
(3)
International
893
 
 
 
 
 
 
 
 
 
1,981
 
 
 
 
 
 
 
 
 
Consumer Healthcare sales were flat at AER but grew 1% CER in the quarter to £1,981 million as growth in Oral health and Nutrition were partly offset by declines in Wellness and Skin health.  Growth was generated in International markets, particularly in India and South East Asia, while Europe was impacted by on-going competitive pressures.
 
The divestments of small tail brands and  Horlicks  and  MaxiNutrition  in the UK together with the phasing out of low margin contract manufacturing reduced overall sales growth by approximately one percentage point.
 
Wellness
Wellness sales declined 1% at AER and CER to £1,006 million.  Respiratory sales were down 3% AER, 4% CER with mid single-digit growth in  Flonase , benefiting from a strong pre-allergy season sell-in in the US.  This was more than offset by a decline in  Theraflu  due to increased competitive pressures and a strong comparator last year.  Growth was also impacted by a decline in non-strategic brands.
 
Pain relief was down 1% AER but flat at CER.   Panadol  returned to growth following the prior year discontinuation of slow-release  Panadol  products in the Nordic countries, but this was offset by trade shipment phasing in other pain relief brands.   Voltaren  had a flat quarter as a result of manufacturing changes, but consumption reflected low single-digit growth.
 
Oral health
Oral health sales grew 4% AER and CER to £662 million with  Sensodyne  continuing to drive performance, reporting high single-digit CER growth.  This reflected strong delivery in the International region supported by innovation launches in the quarter, including  Sensodyne Pronamel Enamel Repair  in the US.  An improved performance in Europe resulted from responses to on-going competitive pressures.  Sales of Denture care and  parodontax  grew in low and mid single digits respectively, despite the tough prior year comparator due to innovation launches such as  Polident Max Seal.   Oral health growth was also impacted by a decline in non-strategic brands.
 
Nutrition
Nutrition sales declined 1% AER but grew 2% CER to £167 million, with India growing in mid single digits. Growth was adversely impacted by the  Horlicks  and  MaxiNutrition  divestments in the UK, which impacted overall Nutrition growth by three percentage points.
 
Skin health
Skin health sales declined 4% AER, 3% CER to £146 million, largely due to divestments of small tail brands in the US, which had a negative impact on growth of three percentage points.
 
 
Operating performance
 
Cost of sales
Total cost of sales as a percentage of turnover was 35.7%, 2.6 percentage points higher at AER and 3.2 percentage points higher in CER terms compared with Q1 2018.  This reflected an increase in the costs of manufacturing restructuring programmes, primarily as a result of write downs in a number of manufacturing sites, and increased amortisation of intangible assets.
 
Excluding these and other Adjusting items, Adjusted cost of sales as a percentage of turnover was 28.8%, down 1.4 percentage points at AER, and 0.8 percentage points down at CER compared with Q1 2018.  The reduction reflected a more favourable product mix in Vaccines, primarily due to growth of  Shingrix  in the US, and Consumer Healthcare, a favourable impact of inventory adjustments in Vaccines and a further contribution from integration and restructuring savings in Pharmaceuticals and Consumer Healthcare.  This was partly offset by continued adverse pricing pressure in Pharmaceuticals, particularly in Respiratory, and an unfavourable product mix in Pharmaceuticals.
 
Selling, general and administration
Total SG&A costs as a percentage of turnover were 32.3%, 0.3 percentage points higher compared with Q1 2018 at AER and 0.5 percentage points higher on a CER basis.  This included acquisition costs related to the announced agreement with Pfizer to combine our consumer healthcare businesses. 
 
Excluding these and other Adjusting items, Adjusted SG&A costs as a percentage of turnover were 31.3%, 0.4 percentage points lower at AER than in Q1 2018 and 0.2 percentage points lower on a CER basis.  The growth in Adjusted SG&A costs of 5% AER, 4% CER reflected increased investment resulting from the acquisition of Tesaro and in promotional product support, particularly for new launches in Vaccines, Respiratory and HIV and targeted priority markets.  This was partly offset by the tight control of ongoing costs, particularly in non-promotional spending across all three businesses.
 
Research and development
Total R&D expenditure was £1,006 million (13.1% of turnover), up 11% AER, 8% CER.  Adjusted R&D expenditure was £971 million (12.7% of turnover), 9% higher at AER, 6% higher at CER than Q1 2018.  Pharmaceuticals R&D expenditure was £747 million, up 12% AER, 8% CER, primarily reflecting increased Development investment resulting from the acquisition of Tesaro and investment in the progression of a number of mid and late-stage programmes, particularly in Oncology, including the transition of certain programmes from Discovery into Development.  This was partly offset by the phasing of investment in late-stage programmes, particularly in HIV, together with a reduction in Discovery expenditure arising from completion of the Bioelectronics phase I investment, the transition of certain programmes into Development and the benefits of the re-prioritisation of the R&D portfolio.  R&D expenditure in Vaccines and Consumer Healthcare was £162 million and £62 million, respectively.
 
Royalty income
Royalty income was £73 million (Q1 2018: £53 million), up 38% AER, 42% CER, primarily reflecting increased royalties on sales of Gardasil.
 
Other operating expense
Net other operating expense of £90 million (Q1 2018: £429 million) primarily reflected a decrease in value of the shares in Hindustan Unilever Limited to be received on the disposal of  Horlicks  and other Consumer Healthcare brands of £206 million in the quarter.  The cumulative reduction in value since the signing of the proposed transaction was £108 million.  This was partly offset by the profit on a number of asset disposals and accounting credits of £85 million (Q1 2018: £416 million charge) arising from the re-measurement of the contingent consideration liabilities related to the acquisitions of the former Shionogi-ViiV Healthcare joint venture and the former Novartis Vaccines business and the liabilities for the Pfizer put option and Pfizer and Shionogi preferential dividends in ViiV Healthcare.  This included a re-measurement credit of £60 million for the contingent consideration liability due to Shionogi, primarily arising from credits arising from changes in exchange rate assumptions partly offset by the unwind of the discount.
 
Operating profit
Total operating profit was £1,428 million in Q1 2019 compared with £1,240 million in Q1 2018.  Increased charges for major restructuring, primarily arising from write downs in a number of manufacturing sites, and a decrease in value of the shares in Hindustan Unilever Limited to be received on the disposal of  Horlicks  and other Consumer Healthcare brands, were largely offset by re-measurement credits on the contingent consideration liabilities.
 
Excluding these and other Adjusting items, Adjusted operating profit was £2,163 million, 12% higher than Q1 2018 at AER and 9% higher at CER on a turnover increase of 5% CER.  The Adjusted operating margin of 28.2% was 1.6 percentage points higher at AER, 1.0 percentage points higher on a CER basis than in Q1 2018.  The increase in Adjusted operating profit primarily reflected the benefit from sales growth in all three businesses, particularly Vaccines, a more favourable mix in Vaccines and Consumer Healthcare, a benefit from favourable inventory adjustments in the quarter in Vaccines and continued tight control of ongoing costs across all three businesses.  This was partly offset by continuing price pressure, particularly in Respiratory, including an initial impact of the launch of a generic version of  Advair  in February 2019, and investments in promotional product support, particularly for new launches in Vaccines, HIV and Respiratory.
 
Contingent consideration cash payments which are made to Shionogi and other companies reduce the balance sheet liability and hence are not recorded in the income statement.  Total contingent consideration cash payments in the quarter amounted to £217 million (Q1 2018: £517 million).  This included cash payments made to Shionogi of £219 million (Q1 2018: £197 million).
 
Operating profit by business
Pharmaceuticals operating profit was £1,238 million, down 7% AER, 8% CER on a turnover increase of 2% CER.  The operating margin of 29.8% was 3.4 percentage points lower at AER than in Q1 2018 and 3.3 percentage points lower on a CER basis.  This primarily reflected the increase in cost of sales percentage due to the continued impact of lower prices, particularly in Respiratory, including the initial impact of the launch of a generic version of  Advair  in February 2019, an unfavourable product mix, primarily as a result of the growth in some lower margin established products, together with investment in new product support and targeted priority markets, and the impact of the acquisition of Tesaro with increased investment in SG&A and R&D.  This was partly offset by continued tight control of ongoing costs and the benefits of re-prioritisation of the R&D portfolio.
 
Vaccines operating profit was £614 million, 81% higher than Q1 2018 at AER and 69% higher at CER on a turnover increase of 20% CER.  The operating margin of 40.3% was 13.0 percentage points higher than in Q1 2018 at AER and 11.1 percentage points higher on a CER basis.  This was primarily driven by enhanced operating leverage from strong sales growth, particularly  Shingrix  in the US, improved product mix, the favourable impact of inventory adjustments and higher royalty income, with higher SG&A investment increased broadly in line with sales to support new launches and business growth.
 
Consumer Healthcare operating profit was £430 million, up 12% AER, 12% CER, on a turnover increase of 1% CER.  The operating margin of 21.7% was 2.3 percentage points higher than in Q1 2018 at AER, and 2.1 percentage points higher on a CER basis.  This primarily reflected continued manufacturing restructuring and integration benefits and improved product mix as well as tight control of promotional and other operating expenses compared with Q1 2018.
 
Net finance costs
Total net finance costs were £190 million compared with £142 million in Q1 2018.  Adjusted net finance costs were £187 million compared with £139 million in Q1 2018.  The increase primarily reflected higher debt levels following the acquisition from Novartis of its stake in the Consumer Healthcare Joint Venture in June 2018 and the acquisition of Tesaro in January 2019, as well as an adverse comparison with a one-off accounting adjustment of £20 million to amortisation of interest charges in Q1 2018.  This was partly offset by the benefit from older bonds being refinanced at lower interest rates.  Following the introduction of IFRS 16, 'Leases', finance costs included an unwind of the discount on the lease liability of £11 million in the quarter.
 
Share of after tax profits of associates and joint ventures
The share of after tax profits of associates was £57 million (Q1 2018: £9 million).  This included a one-off adjustment of £51 million to reflect GSK's share of increased after tax profits of Innoviva primarily as a result of a non-recurring income tax benefit.
 
Taxation
The charge of £310 million represented an effective tax rate on Total results of 23.9% (Q1 2018: 31.4%) and reflected the different tax effects of the various Adjusting items, including the non-taxable loss arising from the decrease in value of the shares in Hindustan Unilever Limited to be received on the disposal of  Horlicks  and other Consumer Healthcare brands.  Tax on Adjusted profit amounted to £400 million and represented an effective Adjusted tax rate of 19.7% (Q1 2018: 20.2%).
 
Issues related to taxation are described in Note 14, 'Taxation' in the Annual Report 2018.  The Group continues to believe it has made adequate provision for the liabilities likely to arise from periods which are open and not yet agreed by tax authorities.  The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of agreements with relevant tax authorities.
 
Non-controlling interests
The allocation of Total earnings to non-controlling interests amounted to £155 million (Q1 2018: £210 million).  The reduction was primarily due to the ending of the allocation of Consumer Healthcare profits (Q1 2018: £89 million) following the buyout of Novartis' interest. This was partly offset by an increased allocation of ViiV Healthcare profits to £129 million (Q1 2018: £110 million) as well as higher net profits in some of the Group's other entities with non-controlling interests.
 
The allocation of Adjusted earnings to non-controlling interests amounted to £149 million (Q1 2018: £224 million).  The reduction in allocation was again primarily due to the ending of the allocation of Consumer Healthcare profits, partly offset by an increased allocation of ViiV Healthcare profits.
 
Earnings per share
Total earnings per share was 16.8p, compared with 11.2p in Q1 2018.  The increase in earnings per share primarily reflected an improved trading performance, the reduced non-controlling interest allocation of Consumer Healthcare profits and the increased share of after tax profit of the associate, Innoviva.
 
Adjusted EPS of 30.1p compared with 24.6p in Q1 2018, up 22% AER, 18% CER, on a 9% CER increase in Adjusted operating profit.  The improvement primarily resulted from the reduced non-controlling interest allocation of Consumer Healthcare profits following the buyout in Q2 2018 and an increased share of after tax profits of associates as a result of a non-recurring income tax benefit in Innoviva, partly offset by increased net finance costs.
 
Currency impact on Q1 2019 results
The Q1 2019 results are based on average exchange rates, principally £1/$1.31, £1/€1.15 and £1/Yen 144.  Comparative exchange rates are given on page 33.  The period-end exchange rates were £1/$1.31, £1/€1.17 and £1/Yen 145.
 
In the quarter, turnover increased 6% AER, 5% CER.  Total EPS was 16.8p compared with 11.2p in Q1 2018.  Adjusted EPS was 30.1p compared with 24.6p in Q1 2018, up 22% AER and up 18% CER.  The positive currency impact primarily reflected the weakness of Sterling, particularly against the US$ and Yen, partly offset by weakness in emerging market currencies and the Euro, relative to Q1 2018.  Exchange gains or losses on the settlement of intercompany transactions contributed around one percentage point of the positive currency impact of four percentage points on Adjusted EPS.
 
 
Adjusting items
The reconciliations between Total results and Adjusted results for Q1 2019 and Q1 2018 are set out below.
 
Three months ended 31 March 2019
 
 
Total
results
£m
Intangible
amortisation
£m
Intangible
impairment
£m
Major
restructuring
£m
Transaction
related
£m
Divestments, significant
legal andother items
£m
Adjusted
results
£m
 
------------
------------
------------
------------
------------
------------
------------
Turnover
7,661  
 
 
 
 
 
7,661  
Cost of sales
(2,733)
171  
13  
341  
5  
 
(2,203)
 
------------
------------
------------
------------
------------
------------
------------
Gross profit
4,928  
171  
13  
341  
5  
 
5,458  
 
 
 
 
 
 
 
 
Selling, general and administration
(2,477)
 
4  
25  
29  
22  
(2,397)
Research and development
(1,006)
17  
2  
15  
 
1  
(971)
Royalty income
73  
 
 
 
 
 
73  
Other operating (expense)/income
(90)
 
 
(1)
(87)
178  
-  
 
------------
------------
------------
------------
------------
------------
------------
Operating profit
1,428  
188  
19  
380  
(53)
201  
2,163  
 
 
 
 
 
 
 
 
Net finance costs
(190)
 
 
1  
 
2  
(187)
Share of after tax profits of associates and joint ventures
57  
 
 
 
 
 
57  
 
------------
------------
------------
------------
------------
------------
------------
Profit before taxation
1,295  
188  
19  
381  
(53)
203  
2,033  
 
 
 
 
 
 
 
 
Taxation
(310)
(37)
(3)
(58)
8  
-  
(400)
Tax rate %
23.9%
 
 
 
 
 
19.7%
 
------------
------------
------------
------------
------------
------------
------------
Profit after taxation
985  
151  
16  
323  
(45)
203  
1,633  
 
------------
------------
------------
------------
------------
------------
------------
Profit attributable to non-controlling interests
155  
 
 
 
(6)
 
149  
 
 
 
 
 
 
 
 
Profit attributable to shareholders
830  
151  
16  
323  
(39)
203  
1,484  
 
------------
------------
------------
------------
------------
------------
------------
 
 
 
 
 
 
 
 
Earnings per share
16.8p
3.1p
0.3p
6.5p
(0.7)p
4.1p
30.1p
 
------------
------------
------------
------------
------------
------------
------------
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares (millions)
4,936  
 
 
 
 
 
4,936 
 
------------
 
 
 
 
 
------------
 
 
Three months ended 31 March 2018
 
 
Total
results
£m
Intangible
amortisation
£m
Intangible
impairment
£m
Major
restructuring
£m
Transaction
related
£m
Divestments, significant
legal and other items
£m
Adjusted
results
£m
 
------------
------------
------------
------------
------------
------------
------------
Turnover
7,222  
 
 
 
 
 
7,222  
Cost of sales
(2,391)
139 
27 
43 
 
(2,179)
 
------------
------------
------------
------------
------------
------------
------------
Gross profit
4,831 
139 
27 
43 
 
5,043 
 
 
 
 
 
 
 
 
Selling, general and administration
(2,311)
 
 
19 
 
(2,286)
Research and development
(904)
10 
 
 
(887)
Royalty income
53 
 
 
 
 
 
53 
Other operating (expense)/income
(429)
 
 
 
434 
(5)
 
------------
------------
------------
------------
------------
------------
------------
Operating profit
1,240  
149  
27  
65  
437  
5  
1,923  
 
 
 
 
 
 
 
 
Net finance costs
(142)
 
 
 
(139)
Share of after tax profits of associates and joint ventures
 
 
 
 
 
 
------------
------------
------------
------------
------------
------------
------------
Profit before taxation
1,107  
149  
27  
66  
437  
7  
1,793  
 
 
 
 
 
 
 
 
Taxation
(348)
(32)
(4)
(17)
20 
19 
(362)
Tax rate %
31.4%
 
 
 
 
 
20.2%
 
------------
------------
------------
------------
------------
------------
------------
Profit after taxation
759  
117  
23  
49  
457  
26  
1,431  
 
------------
------------
------------
------------
------------
------------
------------
Profit attributable to non-controlling interests
210 
 
 
 
14 
 
224 
 
 
 
 
 
 
 
 
Profit attributable to shareholders
549  
117  
23  
49  
443  
26  
1,207  
 
------------
------------
------------
------------
------------
------------
------------
 
 
 
 
 
 
 
 
Earnings per share
11.2p
2.4p
0.5p
1.0p
9.0p
0.5p
24.6p
 
------------
------------
------------
------------
------------
------------
------------
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares (millions)
4,903 
 
 
 
 
 
4,903 
 
------------
 
 
 
 
 
------------
 
Major restructuring and integration
Within the Pharmaceuticals sector, the highly regulated manufacturing operations and supply chains and long lifecycle of the business mean that restructuring programmes, particularly those that involve the rationalisation or closure of manufacturing or R&D sites are likely to take several years to complete.
 
Major restructuring costs are those related to   specific Board approved Major restructuring programmes and are excluded from Adjusted Results.  Major restructuring programmes, including integration costs following material acquisitions, are those that are structural and are of a significant scale where the costs of individual or related projects exceed £25 million.  Other ordinary course smaller scale restructuring costs are retained within Total and Adjusted results.
 
The Board approved a new Major restructuring programme in July 2018, which is designed to significantly improve the competitiveness and efficiency of the Group's cost base with savings delivered primarily through supply chain optimisation   and reductions in administrative costs.
 
The Group acquired Tesaro in January 2019, and is expected to incur around £50 million of integration and restructuring cash costs, leading to annual cost-saving benefits of around £50 million.  This will be added to and reported as part of the 2018 Major restructuring programme.
 
The Group also announced in December that it had reached agreement with Pfizer Inc to combine our consumer healthcare businesses.  The proposed transaction is expected to realise substantial cost synergies, with the new Joint Venture expected to generate total annual cost savings of £0.5 billion by 2022 for expected total major restructuring cash costs of £0.9 billion and non-cash charges of £0.3 billion. Up to 25% of the cost savings are intended to be reinvested in the business to support innovation and other growth opportunities.
 
Total Major restructuring charges incurred in the quarter were £380 million (Q1 2018: £65 million), analysed as follows:
 
Q1 2019
 
Q1 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
£m
 
Non-cash
£m
 
Total
£m
 
Cash
£m
 
Non-cash
£m
 
Total
£m
 
 
 
 
 
 
 
 
 
 
 
 
Combined restructuring and integration programme
22
 
12
 
34
 
48
 
17
 
65
2018 major restructuring programme (incl. Tesaro)
24
 
312
 
336
 
-
 
-
 
-
Consumer Healthcare Joint Venture integration programme
10
 
-
 
10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
56
 
324
 
380
 
48
 
17
 
65
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-cash charges arising under the 2018 major restructuring programme primarily related to the write-down of assets as part of the plans to reduce the manufacturing network.  Cash charges arose from restructuring of the manufacturing organisation, R&D and some administrative functions.  Non-cash charges under the Combined restructuring and integration programme primarily related to announced plans to restructure the manufacturing network, and cash charges arose from restructuring in some manufacturing sites, R&D and some administrative functions.
 
Total cash payments made in the quarter were £174 million, £121 million for the existing Combined restructuring and integration programme (Q1 2018: £104 million) and £53 million under the 2018 major restructuring programme including the settlement of certain charges accrued in previous quarters.
 
The analysis of Major restructuring charges by business was as follows:
 
 
Q1 2019
£m
 
Q1 2018
£m
 
 
 
 
Pharmaceuticals
336  
 
23 
Vaccines
-  
 
25 
Consumer Healthcare
21  
 
15 
 
 
 
 
 
357  
 
63 
Corporate & central functions
23  
 
 
 
 
 
Total Major restructuring costs
380  
 
65 
 
 
 
 
 
The analysis of Major restructuring charges by Income statement line was as follows:
 
 
Q1 2019
£m
 
Q1 2018
£m
 
 
 
 
Cost of sales
341  
 
43
Selling, general and administration
25  
 
19
Research and development
15  
 
3
Other operating income
(1)
 
-
 
 
 
 
Total Major restructuring costs
380  
 
65
 
 
 
 
 
The Combined restructuring and integration programme delivered incremental annual cost savings in the quarter of £0.1 billion.  Given its relatively recent launch, the benefit delivery in the quarter from the 2018 major restructuring programme was not material.
 
Total cash charges for the Combined restructuring and integration programme are now expected to be approximately £4.1 billion with non-cash charges up to £1.6 billion.  The programme has now delivered approximately £4.0 billion of annual savings, including an estimated currency benefit of £0.3 billion.  The programme is now expected to deliver by 2020 total annual savings of £4.4 billion on a constant currency basis, including an estimated benefit of £0.4 billion from currency on the basis of Q1 2019 average exchange rates.
 
The 2018 major restructuring programme, now including Tesaro, is expected to cost £1.75 billion over the period to 2021, with cash costs of £0.85 billion and non-cash costs of £0.9 billion, and is expected to deliver annual savings of around £450 million by 2021 (at Q1 2019 rates).  These savings will be fully re-invested to help fund targeted increases in R&D and commercial support of new products.
 
Transaction-related adjustments
Transaction-related adjustments resulted in a net credit of £53 million (Q1 2018: £437 million charge).  This primarily reflected £85 million of accounting credits for the re-measurement of the contingent consideration liabilities related to the acquisitions of the former Shionogi-ViiV Healthcare joint venture and the former Novartis Vaccines business and the liabilities for the Pfizer put option and Pfizer and Shionogi preferential dividends in ViiV Healthcare.
 
Charge/(credit)
Q1 2019
£m
 
Q1 2018
£m
 
 
 
 
Consumer Healthcare Joint Venture put option
-  
 
495
Contingent consideration on former Shionogi-ViiV Healthcare Joint Venture (including Shionogi preferential dividends)
(60)
 
(31)
ViiV Healthcare put options and Pfizer preferential dividends
(24)
 
(61)
Contingent consideration on former Novartis Vaccines business
(1)
 
13
Other adjustments
32  
 
21
 
 
 
 
Total transaction-related (credits)/charges
(53)
 
437
 
 
 
 
 
The £60 million credit relating to the contingent consideration for the former Shionogi-ViiV Healthcare Joint Venture represented a reduction in the valuation of the contingent consideration due to Shionogi, primarily as a result of updated exchange rate assumptions, partly offset by a £108 million unwind of the discount.
 
Other adjustments included transaction costs relating to the agreement with Pfizer to combine our consumer healthcare businesses.
 
An explanation of the accounting for the non-controlling interests in ViiV Healthcare is set out on page 8.
 
Divestments, significant legal charges and other items
Divestments and other items included a loss in the quarter of £206 million arising from the decrease in value of the shares in Hindustan Unilever Limited to be received on the disposal of  Horlicks  and other Consumer Healthcare brands, as well as equity investment impairments and certain other Adjusting items.  This was partly offset by the profit on a number of asset disposals.  A charge of £22 million (Q1 2018: £5 million) for significant legal matters included the benefit of the settlement of existing matters as well as provisions for ongoing litigation.  Significant legal cash payments were £4 million (Q1 2018: £5 million).
 
 
Cash generation
 
Cash flow
 
 
Q1 2019
 
Q1 2018
 
 
 
 
Net cash inflow from operating activities (£m)
663    
 
863   
Free cash flow* (£m)
165    
 
329   
Free cash flow growth (%)
(50)%
 
(49)%
Free cash flow conversion* (%)
20%
 
60%
Net debt** (£m)
27,058    
 
13,377   
 
*
Free cash flow and free cash flow conversion are defined on page 36.
As announced at Q2 2018, with the introduction of the new R&D strategy, GSK has revised its definition of free cash flow to include proceeds from disposals of intangible assets, as set out on page 35.  Comparative figures have been revised accordingly.
 
 
** 
Net debt is analysed on page 35.
 
Q1 2019
The net cash inflow from operating activities for the quarter was £663 million (Q1 2018: £863 million).  The reduction primarily reflected the adverse timing of payments for returns and rebates, as well as the initial step-down impact from  Advair  generic competition and an increase in trade receivables as a result of strong sales in the quarter, partly offset by improved operating profits and lower contingent consideration payments compared with Q1 2018 which included a milestone payment to Novartis.
 
Total cash payments to Shionogi in relation to the ViiV Healthcare contingent consideration liability in the quarter were £219 million (Q1 2018: £197 million), of which £195 million was recognised in cash flows from operating activities and £24 million was recognised in contingent consideration paid within investing cash flows.  These payments are deductible for tax purposes.
 
Free cash flow was £165 million for the quarter (Q1 2018: £329 million).  The reduction primarily reflected the adverse timing of payments for returns and rebates, as well as the initial step-down impact from  Advair  generic competition and an increase in trade receivables as a result of strong sales in the quarter, partly offset by improved operating profits, lower capital expenditure and lower contingent consideration payments compared with Q1 2018 which included a milestone payment to Novartis.
 
Net debt
At 31 March 2019, net debt was £27.1 billion, compared with £21.6 billion at 31 December 2018, comprising gross debt of £31.8 billion and cash and liquid investments of £4.7 billion, including £0.5 billion reported within Assets held for sale.  Net debt increased due to the £3.6 billion acquisition of Tesaro Inc, together with the £1.3 billion impact from the implementation of IFRS 16 and the dividend paid to shareholders of £0.9 billion, partly offset by £0.8 billion of favourable exchange impacts from the translation of non-Sterling denominated debt.
 
At 31 March 2019, GSK had short-term borrowings (including overdrafts and lease liabilities) repayable within 12 months of £8.4 billion with loans of £1.7 billion repayable in the subsequent year.
 
 
Returns to shareholders
 
Quarterly dividends
The Board has declared a first interim dividend for 2019 of 19 pence per share (Q1 2018: 19 pence per share).
 
GSK recognises the importance of dividends to shareholders and aims to distribute regular dividend payments that will be determined primarily with reference to the free cash flow generated by the business after funding the investment necessary to support the Group's future growth.
 
The Board intends to maintain the dividend for 2019 at the current level of 80p per share, subject to any material change in the external environment or performance expectations.  Over time, as free cash flow strengthens, it intends to build free cash flow cover of the annual dividend to a target range of 1.25-1.50x, before returning the dividend to growth.
 
Payment of dividends
The equivalent interim dividend receivable by ADR holders will be calculated based on the exchange rate on 9 July 2019.  An annual fee of $0.03 per ADS (or $0.0075 per ADS per quarter) (2018: $0.02 per ADS; $0.005 per ADS per quarter) is charged by the Depositary.
 
The ex-dividend date will be 16 May 2019, with a record date of 17 May 2019 and a payment date of 11 July 2019.
 
 
Paid/payable
 
Pence per share
 
£m
 
 
 
 
 
 
2019
 
 
 
 
 
First interim
11 July 2019
 
19
 
940
 
 
 
 
 
 
 
2018
 
 
 
 
 
First interim
12 July 2018
 
19
 
934
Second interim
11 October 2018
 
19
 
934
Third interim
10 January 2019
 
19
 
935
Fourth interim
11 April 2019
 
23
 
1,138
 
 
 
 
 
 
 
 
 
80
 
3,941
 
 
 
 
 
 
 
Weighted average number of shares
 
 
 
 
Q1 2019
millions
 
Q1 2018
millions
 
 
 
 
Weighted average number of shares - basic
4,936
 
4,903
Dilutive effect of share options and share awards
42
 
42
 
 
 
 
Weighted average number of shares - diluted
4,978
 
4,945
 
 
 
 
 
At 31 March 2019, 4,946 million shares (31 March 2018: 4,913 million) were in free issue (excluding Treasury shares and shares held by the ESOP Trusts).  GSK made no share repurchases during the period.  The company issued 2.1 million shares under employee share schemes for proceeds of £27 million (Q1 2018: £11 million).
 
At 31 March 2019, the ESOP Trust held 40.8 million GSK shares against the future exercise of share options and share awards.  The carrying value of £286 million has been deducted from other reserves.  The market value of these shares was £659 million.
 
At 31 March 2019, the company held 393.5 million Treasury shares at a cost of £5,505 million, which has been deducted from retained earnings.
 
 
Financial information
 
Income statement
 
 
Q1 2019
£m
 
Q1 2018
£m
 
 
 
 
TURNOVER
7,661  
 
7,222 
 
 
 
 
Cost of sales
(2,733)
 
(2,391)
 
 
 
 
Gross profit
4,928  
 
4,831 
 
 
 
 
Selling, general and administration
(2,477)
 
(2,311)
Research and development
(1,006)
 
(904)
Royalty income
73  
 
53 
Other operating expense
(90)
 
(429)
 
 
 
 
OPERATING PROFIT
1,428  
 
1,240 
 
 
 
 
Finance income
34  
 
20 
Finance expense
(224)
 
(162)
Share of after tax profits of associates and joint ventures
57  
 
 
 
 
 
PROFIT BEFORE TAXATION
1,295  
 
1,107 
 
 
 
 
Taxation
(310)
 
(348)
Tax rate %
23.9%
 
31.4%
 
 
 
 
PROFIT AFTER TAXATION FOR THE PERIOD
985  
 
759 
 
 
 
 
Profit attributable to non-controlling interests
155  
 
210 
Profit attributable to shareholders
830  
 
549 
 
 
 
 
 
985  
 
759 
 
 
 
 
EARNINGS PER SHARE
16.8p
 
11.2p
 
 
 
 
 
 
 
 
Diluted earnings per share
16.7p
 
11.1p
 
 
 
 
 
 
Statement of comprehensive income
 
 
Q1 2019
£m
 
Q1 2018
£m
 
 
 
 
Profit for the period
985  
 
759 
 
 
 
 
Items that may be reclassified subsequently to income statement:
 
 
 
Exchange movements on overseas net assets and net investment hedges
75  
 
66 
Fair value movements on cash flow hedges
-  
 
22 
Reclassification of cash flow hedges to income statement
1  
 
(31)
Deferred tax on fair value movements on cash flow hedges
(1)
 
 
 
 
 
 
75  
 
57 
 
 
 
 
Items that will not be reclassified to income statement:
 
 
 
Exchange movements on overseas net assets of non-controlling interests
(18)
 
(28)
Fair value movements on equity investments
38  
 
97 
Deferred tax on fair value movements on equity investments
(10)
 
(9)
Re-measurement (losses)/gains on defined benefit plans
(442)
 
186 
Tax on re-measurement (losses)/gains on defined benefit plans
75  
 
(38)
 
 
 
 
 
(357)
 
208 
 
 
 
 
Other comprehensive (expense)/income for the period
(282)
 
265 
 
 
 
 
Total comprehensive income for the period
703  
 
1,024 
 
 
 
 
 
 
 
 
Total comprehensive income for the period attributable to:
 
 
 
  Shareholders
566  
 
842 
  Non-controlling interests
137  
 
182 
 
 
 
 
 
703  
 
1,024 
 
 
 
 
 
 
Pharmaceuticals turnover - three months ended 31 March 2019
 
 
Total
US
Europe
International
 
–––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––
 
 
Growth
 
Growth
 
Growth
 
Growth
 
 
–––––––––––––––––––––––
 
–––––––––––––––––––––––
 
–––––––––––––––––––––––
 
–––––––––––––––––––––––
 
£m
£%
CER%
£m
£%
CER%
£m
£%
CER%
£m
£%
CER%
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
 
 
 
 
 
 
 
 
 
 
 
 
 
Respiratory
631
29  
25  
337
27  
19  
176
31  
33  
118
31  
30  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Ellipta products
479
24 
20 
252
22 
14 
131
27 
28 
96
26 
26 
  Anoro Ellipta
102
58
(3)
(8)
27
13 
13 
17
31 
31 
  Arnuity Ellipta
7
(36)
(36)
6
(40)
(40)
-
1
  Incruse Ellipta
68
42 
37 
44
63 
52 
18
12 
12 
6
20 
40 
  Relvar/Breo Ellipta
215
(2)
(5)
78
(22)
(27)
67
10 
70
23 
19 
  Trelegy Ellipta
87
>100 
>100 
66
>100 
>100 
19
>100
>100 
2
 
 
 
 
 
 
 
 
 
 
 
 
 
Nucala
152
46 
41 
85
44 
36 
45
45
48 
22
57 
50 
 
 
 
 
 
 
 
 
 
 
 
 
 
HIV
1,121
7  
4  
689
10  
3  
278
(7)
(6)
154
28  
29  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Dolutegravir products
1,067
11 
670
11 
262
(3)
(2)
135
50 
50 
  Tivicay
383
10 
223
(2)
(8)
94
66
>100 
>100 
  Triumeq
614
(2)
386
(1)
160
(12)
(11)
68
17 
17 
  Juluca
70
>100 
>100 
61
>100 
>100 
8
>100 
>100 
1
>100 
>100 
 
 
 
 
 
 
 
 
 
 
 
 
 
Epzicom/Kivexa
19
(49)
(46)
1
(67)
(67)
6
(57)
(57)
12
(40)
(35)
Selzentry
23
(21)
(24)
13
(13)
(20)
7
(22)
(22)
3
(40)
(40)
Other
12
(33)
(28)
5
(29)
(29)
3
(50)
(33)
4
(20)
(20)
 
 
 
 
 
 
 
 
 
 
 
 
 
Immuno-
inflammation
121
21  
15  
105
18  
11  
11
37  
37  
5
67  
67  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Benlysta
121
21 
15 
105
18 
11 
11
22 
22 
5
>100 
>100 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oncology
43
-  
-  
26
-  
-  
17
-  
-  
-
-  
-  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Zejula
42
26
16
-
 
 
 
 
 
 
 
 
 
 
 
 
 
Established
Pharmaceuticals
2,242
(5)
(6)
532
(9)
(14)
521
(11)
(10)
1,189
(1)
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Established
Respiratory
1,083
(2)
400
(5)
218
(14)
(13)
465
  Seretide/Advair
486
(14)
(15)
176
(23)
(27)
133
(20)
(19)
177
  Flixotide/Flovent
146
(8)
(10)
78
(9)
(15)
26
(4)
42
(7)
(7)
  Ventolin
245
36 
33 
146
80 
70 
33
(3)
(3)
66
  Avamys/Veramyst
115
17 
15 
-
19
(5)
(5)
96
23 
21 
  Other Respiratory
91
10 
-
7
84
11 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dermatology
108
2
100 
100 
38
(3)
68
Augmentin
160
(2)
(1)
-
49
(11)
(9)
111
Avodart
143
1
(67)
(67)
56
(12)
(12)
86
16 
16 
Imigran/Imitrex
31
(3)
(6)
12
13
(13)
(13)
6
20 
Lamictal
132
(10)
(12)
65
(8)
(14)
25
(4)
(4)
42
(14)
(14)
Seroxat/Paxil
40
-
9
(10)
(10)
31
Valtrex
27
(4)
(4)
5
67 
33 
7
15
(17)
(11)
Other
518
(17)
(16)
47
(53)
(56)
106
(9)
(7)
365
(11)
(10)
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Pharmaceuticals
4,158
4  
2  
1,689
8  
1  
1,003
(2)
(1)
1,466
4  
4  
 
––––––––
––––––––
––––––––
––––––––
––––––––––
––––––––
––––––––
–––––––––
––––––––
––––––––
–––––––––
––––––––
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vaccines turnover - three months ended 31 March 2019
 
 
Total
US
Europe
International
 
–––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––
 
 
Growth
 
Growth
 
Growth
 
Growth
 
 
–––––––––––––––––––––––
 
–––––––––––––––––––––––
 
–––––––––––––––––––––––
 
–––––––––––––––––––––––
 
£m
£%
CER%
£m
£%
CER%
£m
£%
CER%
£m
£%
CER%
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
 
 
 
 
 
 
 
 
 
 
 
 
 
Meningitis
209
16  
18  
71
29  
20  
83
(16)
(14)
55
>100  
>100  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Bexsero
156
12 
14 
48
55 
45 
77
(16)
(14)
31
94 
>100 
Menveo
33
(11)
(11)
23
(4)
(13)
4
(20)
(20)
6
(25)
Other
20
>100 
>100 
-
-
2
18
>100 
>100 
 
 
 
 
 
 
 
 
 
 
 
 
 
Influenza
15
67  
67  
-
-  
-  
1
-  
-  
14
56  
56  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Fluarix, FluLaval
15
67 
67 
-
1
14
56 
56 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shingles
357
>100  
>100  
328
>100  
>100  
5
-  
-  
24
>100  
>100  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Shingrix
357
>100 
>100 
328
>100 
>100 
5
24
>100 
>100 
 
 
 
 
 
 
 
 
 
 
 
 
 
Established
Vaccines
941
-  
(1)
378
14  
7  
250
(13)
(12)
313
(1)
-  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Infanrix, Pediarix
183
(11)
(14)
103
(3)
(8)
47
(36)
(34)
33
22 
22 
Boostrix
123
23 
21 
61
33 
24 
37
25
47 
59 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hepatitis
239
23 
18 
157
40 
31 
50
(15)
(15)
32
33 
42 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rotarix
134
45
(4)
(9)
29
60
11 
11 
 
 
 
 
 
 
 
 
 
 
 
 
 
Synflorix
121
22 
23 
-
18
38 
46 
103
20 
20 
 
 
 
 
 
 
 
 
 
 
 
 
 
Priorix, Priorix Tetra,
Varilrix
55
(29)
(28)
-
27
(32)
(32)
28
(25)
(22)
Cervarix
20
(62)
(62)
-
5
15
(68)
(68)
Other
66
(17)
(18)
12
(45)
(45)
37
12 
12 
17
(31)
(35)
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Vaccines
1,522
23  
20  
777
59  
49  
339
(13)
(12)
406
13  
16  
 
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet
 
 
31 March 2019
£m
 
31 December 2018
£m
ASSETS
 
 
 
Non-current assets
 
 
 
Property, plant and equipment
10,271  
 
11,058 
Right of use assets
1,021  
 
Goodwill
6,807  
 
5,789 
Other intangible assets
20,022  
 
17,202 
Investments in associates and joint ventures
292  
 
236 
Other investments
1,350  
 
1,322 
Deferred tax assets
3,622  
 
3,887 
Derivative financial instruments
104  
 
69 
Other non-current assets
1,352  
 
1,576 
 
 
 
 
Total non-current assets
44,841  
 
41,139 
 
 
 
 
Current assets
 
 
 
Inventories
5,678  
 
5,476 
Current tax recoverable
167  
 
229 
Trade and other receivables
6,551  
 
6,423 
Derivative financial instruments
144  
 
188 
Liquid investments
81  
 
84 
Cash and cash equivalents
4,132  
 
3,874 
Assets held for sale
771  
 
653 
 
 
 
 
Total current assets
17,524  
 
16,927 
 
 
 
 
TOTAL ASSETS
62,365  
 
58,066 
 
 
 
 
LIABILITIES
 
 
 
Current liabilities
 
 
 
Short-term borrowings
(8,413)
 
(5,793)
Contingent consideration liabilities
(830)
 
(837)
Trade and other payables
(13,424)
 
(14,037)
Derivative financial instruments
(249)
 
(127)
Current tax payable
(965)
 
(965)
Short-term provisions
(579)
 
(732)
 
 
 
 
Total current liabilities
(24,460)
 
(22,491)
 
 
 
 
Non-current liabilities
 
 
 
Long-term borrowings
(23,344)
 
(20,271)
Corporation tax payable
(265)
 
(272)
Deferred tax liabilities
(1,167)
 
(1,156)
Pensions and other post-employment benefits
(3,121)
 
(3,125)
Other provisions