Information  X 
Enter a valid email address

GlaxoSmithKline PLC (GSK)

  Print      Mail a friend       Annual reports

Wednesday 29 July, 2015

GlaxoSmithKline PLC

Half Yearly Report

RNS Number : 4273U
GlaxoSmithKline PLC
29 July 2015
 



 

Issued: Wednesday, 29 July 2015, London U.K.

Results Announcement for the second quarter 2015 and Half-yearly Financial Report for the half-year 2015

 

GSK delivers Q2 Group sales of £5.9 billion +7% CER and core EPS of 17.3p (flat CER) in first full quarter of performance since transaction

 

Group on track to achieve guidance for 2015 and remains confident in outlook for 2016

 

New product momentum accelerates across all three businesses with further innovation to be presented at investor R&D event in November

 

Core results

 

Q2 2015

 

Growth

 

H1 2015

 

Growth

 

£m

 

CER%

 

£%

 

£m

 

CER%

 

£%













Turnover

5,888 

 

7 

 

6 

 

11,510 

 

4 

 

3 

Core operating profit

1,349 

 

3 

 

(4)

 

2,654 

 

(6)

 

(10)

Core earnings per share

17.3p

 

- 

 

(9)

 

34.6p

 

(8)

 

(14)













 

Total results

 

Q2 2015

 

Growth

 

H1 2015

 

Growth

 

£m

 

CER%

 

£%

 

£m

 

CER%

 

£%













Turnover

5,888 

 

7 

 

6 

 

11,510 

 

4 

 

3 

Operating profit

335 

 

(61)

 

(71)

 

9,551 

 

>100 

 

>100 

Earnings per share

3.1p

 

(63)

 

(77)

 

170.7p

 

>100 

 

>100 













 

Summary



·

Group sales +7% CER on a reported basis and +2% CER pro-forma



-

Pharmaceuticals £3.5 billion, -6% (+2% pro-forma); Vaccines £0.8 billion, +11% (-5% pro-forma); Consumer Healthcare £1.5 billion, +51% (+6% pro-forma)



-

New Pharmaceutical and Vaccine sales of £446 million in Q2





·

Q2 core EPS of 17.3p, flat in CER terms



-

EPS reflects dilution of Novartis transaction, ongoing pricing pressure partly offset by cost reductions



-

Integration of new Consumer and Vaccine businesses on track



-

On track to deliver targeted annual cost savings of £3 billion from all restructuring programmes






·

Total Q2 EPS of 3.1p and H1 EPS of 170.7p



-

Reflects phasing of pre-tax transaction gains and accelerated restructuring charges





·

2015 earnings guidance and 2016 outlook reiterated



-

Expect 2015 core EPS to decline at a high teen percentage rate (CER)



-

2016 core EPS percentage growth expected to reach double digits (CER)





·

Q2 dividend of 19p declared



-

Continued expectation for full year dividend of 80p





·

R&D innovation with significant potential to drive long-term Group performance



-

Progress of new respiratory portfolio continues with positive FDA AdCom recommendation for Nucala and regulatory filing for approval in Japan



-

Positive CHMP decision received for Mosquirix



-

Group has ~40 NMEs (drugs and vaccines) in Phase II/III clinical development, primarily focused on HIV, Oncology, Vaccines, Cardiovascular, Immuno-inflammation and Respiratory diseases



-

New data and prospects for advanced/early-stage pipeline to be reviewed at R&D event in November


 

The full results are presented under 'Income Statement' on page 31 and core results reconciliations are presented on pages 51 to 54.  All commentaries are presented in terms of CER growth as defined on page 28, unless otherwise stated. 

All expectations and targets regarding future performance should be read together with the "Assumptions related to 2016-2020 outlook", "Assumptions and cautionary statement regarding forward-looking statements" and "Principal risks and uncertainties" sections.

 

 

Sir Andrew Witty, Chief Executive Officer, GSK said:


"This is our first full quarter of performance since completion of the transaction with Novartis and it is encouraging.  Our integration and restructuring plans are on track and we remain confident that we can achieve our targets for this year and return the Group to earnings growth in 2016.

 

"Sales grew 7% on a reported basis and 2% pro-forma.  New product performance was positive in all three of GSK's businesses, with the standout performance for the quarter coming from our new HIV drugs, Tivicay and Triumeq.  Both of these are tracking ahead of recent best-in-class launches, and together generated sales of £294 million.  Elsewhere, we saw continued strong uptake for Flonase OTC, an improving market share for Breo Ellipta following the indication for asthma granted in April, and continued uptake of the newly acquired Meningitis vaccines Bexsero and Menveo.  Importantly the growth of our new pharmaceutical products is now more than offsetting sales declines of Seretide/Advair.

 

"We will be showcasing further product innovation at our event for investors in November at which we expect to review new data and prospects for advanced and early-stage development projects in HIV, Oncology, Vaccines, Cardiovascular, Immuno-inflammation and Respiratory diseases."

 

Information and details regarding today's results, including a video interview with CFO Simon Dingemans is available on: www.gsk.com/investors.

 

 

Strategy and outlook

 

GSK has created a Group of three world-leading businesses in Pharmaceuticals, Vaccines and Consumer Healthcare, which aims to deliver sustainable and improving returns to shareholders through development of innovative healthcare options for patients and consumers.

 

GSK has a strong portfolio of innovative products across these three businesses, enabling the Group to access the fast growing global demand for healthcare and to balance its exposure to future changes in the industry pricing environment.

 

The Group has a presence in more than 150 markets, with revenues split across Pharmaceuticals 59%, Consumer Healthcare 25% and Vaccines 16% on a full-year 2014 historic pro-forma basis.  Demand for the Group's products is expected to increase worldwide, particularly in Emerging Markets.

 

R&D innovation underpins all three businesses.  The Group has a pipeline of ~40 NMEs (drugs and vaccines) in Phase II/III clinical development, primarily focused on HIV, Oncology, Vaccines, Cardiovascular, Immuno-inflammation and Respiratory diseases.  All three businesses are supported by proprietary technologies and manufacturing capabilities in areas such as devices, adjuvants, bio-electronics and formulations.  The Group aims to improve returns from its R&D innovation by striking a balance between pricing and volume generation.

 

At its Investor Day on 6 May 2015, GSK outlined a series of expectations for its performance over the five year period 2016-2020.  This included an expectation that Group core EPS would grow at a CAGR of mid-to-high single digits on a CER basis.  The introduction of a generic alternative to Advair in the US was factored into the Group's assessment of its future performance.  The Group also stated its intention to pay an annual ordinary dividend of 80p for each of the next three years (2015-2017).

 

For more information see www.gsk.com/en-gb/investors/investor-event.

 

 

Contents

Page

 


Q2 2015 results summary

1

Group performance

4

Segmental performance

16

Research and development

25

Definitions

28

Outlook assumptions and cautionary statements

29

Contacts

30

 

 

Income statements

31

Statement of comprehensive income - three months ended 30 June 2015

32

Statement of comprehensive income - six months ended 30 June 2015

33

Pharmaceuticals and Vaccines turnover - three months ended 30 June 2015

34

Pharmaceuticals and Vaccines turnover - six months ended 30 June 2015

35

Balance sheet

36

Statement of changes in equity

37

Cash flow statement - six months ended 30 June 2015

38

Segment information

39

Legal matters

42

Taxation

42

Additional information

43

Reconciliation of cash flow to movements in net debt

50

Core results reconciliations

51

Principal risks and uncertainties

55

Directors' responsibility statement

56

Independent review report

57

 

 

Group performance

 

The Novartis transaction completed on 2 March 2015 and so GSK's reported year to date results include four month's turnover of the former Novartis Vaccines and Consumer Healthcare products and exclude sales of the former GSK Oncology business from 2 March.  The Group has restated its segment information for the change in its segments described on page 39.

 

In addition, the Group has presented pro-forma growth rates for turnover, core operating profit and core operating profit by business.  Pro-forma growth rates are calculated comparing reported turnover and core operating profit for Q2 2015 with the turnover and core operating profit for Q2 2014 adjusted to include the equivalent three month's sales of the former Novartis Vaccines and Consumer Healthcare products and exclude the sales of the former GSK Oncology business during Q2 2014.  Similarly, pro-forma growth rates for the half-year are calculated comparing reported turnover and core operating profit for H1 2015 with the turnover and core operating profit for H1 2014 adjusted to include the equivalent four month's sales of the former Novartis Vaccines and Consumer Healthcare products and exclude the sales of the former GSK Oncology products from March to June 2014.

 

 

Group turnover by business and geographic region

 

Group turnover by business

 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













Global Pharmaceuticals

2,981

 

(12)

 

(4)

 

6,058

 

(12)

 

(7)

HIV

559

 

59 

 

59 

 

1,005

 

51 

 

51 













Pharmaceuticals

3,540

 

(6)

 

2 

 

7,063

 

(7)

 

(2)

Vaccines

814

 

11 

 

(5)

 

1,513

 

11 

 

(1)

Consumer Healthcare

1,509

 

51 

 

6 

 

2,890

 

37 

 

7 













 

5,863

 

7 

 

2 

 

11,466

 

4 

 

1 

Corporate and other unallocated turnover

25

 

87 

 

87 

 

44

 

29 

 

20 













Group turnover

5,888

 

7 

 

2 

 

11,510

 

4 

 

1 













 

 

Group turnover by geographic region

 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













US

1,992

 

5 

 

7 

 

3,787

 

- 

 

1 

Europe

1,612

 

13 

 

4 

 

3,169

 

9 

 

3 

International

2,284

 

5 

 

(2)

 

4,554

 

3 

 

(1)













Group turnover

5,888

 

7 

 

2 

 

11,510

 

4 

 

1 













 

HIV turnover represents the sales of ViiV Healthcare.

 

 

Turnover - Q2 2015

 

Group turnover for Q2 2015 increased 7% on a reported basis to £5,888 million, with Pharmaceuticals down 6%, Vaccines up 11% and Consumer Healthcare up 51%, all three businesses reflecting the impact of the Novartis transaction.  On a pro-forma basis, Group turnover increased 2%, with Pharmaceuticals up 2%, Vaccines down 5% and Consumer Healthcare up 6%.  Sales of New Pharmaceutical and Vaccine products as set out on page 24 were £446 million in the quarter.

 

Pharmaceuticals

Pharmaceuticals turnover was £3,540 million, down 6% on a reported basis, primarily reflecting the disposal of the Oncology business to Novartis.  Adjusting for the impact of the disposal, pro-forma turnover was up 2%.  Respiratory sales declined 6%, reflecting further declines in Seretide/Advair in both the US and Europe and the continuing transition of the portfolio to newer products.  Sales of Established Products declined 5%, with growth of 3% in International offset by declines in the US and Europe.  HIV products grew 59%.

 

US Global Pharmaceuticals turnover of £1,084 million declined 16% in the quarter and 7% on a pro-forma basis.  The pro-forma decline primarily reflected a 12% fall in Respiratory sales and a 16% fall in Established Products sales.  Within Respiratory, Advair sales were down 17% to £484 million and Flovent sales declined 15% to £100 million.  Breo Ellipta and Anoro Ellipta sales were £19 million and £12 million respectively in the quarter.  Benlysta sales increased 21% to £51 million and Relenza sales more than doubled to £33 million partly reflecting the timing of US CDC orders.  Lovaza sales were down 22% to £24 million following the introduction of generic competition in April 2014.

 

In Europe, Global Pharmaceuticals turnover declined 18% to £696 million on a reported basis and was down 8% on a pro-forma basis.  Respiratory sales declined 8% to £369 million as a 16% decline in Seretide was partly offset by Relvar Ellipta sales of £19 million in the quarter.  Established Products sales were down 13% to £121 million reflecting increased generic competition combined with some capacity constraints to supply for a number of products.

 

International Global Pharmaceuticals sales of £1,201 million were down 4% on a reported basis and up 1% on a pro-forma basis.  Sales in Emerging Markets of £771 million declined 6% reported and 1% pro-forma.  Continued growth in Respiratory sales of 4%, including Veramyst, up 27%, was more than offset by a decline in Established Products, down 5%, and Dermatology products, down 10%, both of which were impacted by capacity constraints to supply, as well as increased competition to Seretide.  Sales in China were also down 14% pro-forma, reflecting the implementation of new pricing policies as part of the ongoing reshaping of the business and the disposal of a number of peripheral parts of the portfolio.  In Japan, Global Pharmaceutical sales were up 13% on a pro-forma basis to £283 million, including a 9% increase in Adoair sales which partly benefited from the comparison with a Q2 2014, impacted by significant destocking.  With sales of Relvar Ellipta of £13 million, total Respiratory sales in Japan were up 17% for the quarter.

 

HIV turnover increased 59% to £559 million, with the US up 84%, Europe up 46% and International up 26%.  The growth in all three regions was driven primarily by strong performances from both Tivicay and Triumeq, with sales of £145 million and £149 million respectively in the quarter.  Epzicom/Kivexa sales increased 1% to £185 million, benefiting from use in combination with Tivicay.

 

Vaccines

Vaccines turnover of £814 million grew 11% on a reported basis, but declined 5% on a pro-forma basis, with strong growth in Europe being offset by declines in the US and International after a strong performance in Q2 2014.

 

In the US, reported growth of 13% primarily reflected the contribution of the recently acquired Meningitis portfolio.  The pro-forma decline of 5% resulted primarily from lower sales of Infanrix/Pediarix following the return to the market of a competitor vaccine during 2014.

 

In Europe, sales grew 27% on a reported basis, benefiting from the strong performance of Bexsero which also contributed to pro-forma growth of 12%.  Sales of Boostrix, up 31%, were helped by improved supply.

 

In International, sales fell 2% to £300 million on a reported basis and 16% on a pro-forma basis.  The pro-forma decline primarily reflected the phasing of tenders of Synflorix and a number of other products relative to Q2 2014.

 

 

Consumer Healthcare

Consumer Healthcare turnover grew 51% on a reported basis and 6% on a pro-forma basis to £1,509 million, with strong growth in the US and Europe being offset by a weaker performance in International.

 

US turnover increased 66% to £360 million, with 28% pro-forma growth primarily reflecting the continuing benefit of the recent launch of OTC Flonase and comparison with a Q2 2014 impacted by supply constraints.

 

Sales in Europe grew 90% to £470 million (up 7% pro-forma), largely driven by strong Oral health sales which were boosted by improved supply relative to Q2 2014 but also market share gains following recent new launches.

 

Reported International sales of £679 million grew 27%, but declined 2% pro-forma, with growth in Oral health products and continued momentum in India offset by the negative impact of reducing channel inventories in the acquired consumer businesses, most notably in China, Russia and the Middle East.

 

Corporate and other unallocated turnover

The Corporate and unallocated turnover of £25 million represented sales of several Vaccines and Consumer Healthcare products, which are being held for sale in a number of markets.  GSK is required to dispose of these products in specific markets in order to meet the requirements of the anti-trust approvals for the Novartis transaction.  Agreements to divest these products have been reached and the transactions are expected to complete in H2 2015.

 

 

Turnover - H1 2015

 

Group turnover for H1 2015 increased 4% on a reported basis to £11,510 million, with Pharmaceuticals down 7%, Vaccines up 11% and Consumer Healthcare up 37%, all three businesses reflecting the impact of the Novartis transaction.  On a pro-forma basis, Group turnover increased 1%, with Pharmaceuticals down 2%, Vaccines down 1% and Consumer Healthcare up 7%.  Sales of New Pharmaceutical and Vaccine products as set out on page 24 were £715 million in the six months.

 

Pharmaceuticals

Pharmaceuticals turnover was £7,063 million, down 7% on a reported basis, primarily reflecting the disposal of the Oncology business.  Adjusting for the impact of the disposal, pro-forma turnover was down 2%, reflecting an 8% decline in Respiratory sales and a 13% decline in sales of Established Products, partly offset by growth in HIV sales of 51%.

 

US Global Pharmaceuticals reported turnover of £2,103 million declined 20% in the six months and 14% on a pro-forma basis.  This decline primarily reflected a 16% fall in Respiratory sales and a 31% fall in Established Products sales.  Within Respiratory, Advair sales were down 19% to £876 million and Flovent sales declined 27% to £183 million.  Breo Ellipta and Anoro Ellipta sales were £33 million and £21 million, respectively, in the period.  The primary driver of the decline in Established Products was Lovaza, which was down 64% to £52 million following the launch of generic competition in April 2014.  Relenza sales more than doubled to £44 million, partly reflecting the timing of US CDC orders, while Benlysta continued its strong growth with sales of £97 million, up 24%.

 

In Europe, Global Pharmaceuticals turnover declined 12% to £1,511 million and was down 5% on a pro-forma basis after adjusting for the impact of the Oncology disposal.  Respiratory sales declined 6% to £761 million as a 14% decline in Seretide was partly offset by Relvar Ellipta sales of £35 million in the period.  Established Products sales were down 14% to £253 million reflecting increased generic competition and some capacity constraints to supply of a number of products.

 

International Pharmaceuticals sales were £2,444 million, down 5% on a reported basis and down 2% on a pro-forma basis, driven by a decline of 4% (1% pro-forma) in Emerging Markets to £1,551 million and a 3% decline (flat pro-forma) in sales in Japan to £618 million.  Emerging Markets saw continued growth in Respiratory, up 5%, including Seretide, up 3%, but this was more than offset by declines in Established Products, down 9%, and Dermatology products, both of which were impacted by capacity constraints to supply, as well as increased competition to Seretide.  China, down 8% pro-forma, also impacted Emerging Markets performance.  In Japan, pro-forma Pharmaceutical sales were flat as a 7% increase in Respiratory sales, primarily driven by Relvar Ellipta, was offset by lower sales of Relenza and Established Products.

 

HIV turnover increased 51% to £1,005 million, with the US up 76%, Europe up 40% and International up 18%.  The growth in all three regions was driven primarily by the strong performances of both Tivicay and Triumeq, with sales of £257 million and £230 million, respectively in the six months.  Epzicom/ Kivexa sales increased 1% to £361 million, benefiting from use in combination with Tivicay.

 

Vaccines

Vaccines turnover of £1,513 million grew 11% on a reported basis, benefiting from the newly acquired products from Novartis, but fell 1% on a pro-forma basis as growth in the US and Europe was offset by a decline in International sales.

 

In the US, reported growth of 14% (2% pro-forma) primarily reflected strong growth in the Meningitis portfolio as well as in Hepatitis vaccines, which partly benefited from favourable stocking patterns.  This growth was partly offset by lower sales of Infanrix/Pediarix as a result of the return to the market of a competitor vaccine during 2014.

 

In Europe, sales grew 15% on a reported basis and 5% pro-forma.  This reflected strong performances from Boostrix and Bexsero, partly offset by lower Infanrix/Pediarix sales, which were impacted by the introduction of a competitor vaccine in 2014 and the phasing of shipments in several countries.

 

In International, sales grew 5% to £558 million on a reported basis but declined 8% pro-forma primarily reflecting the phasing of tenders of a number of products, particularly Synflorix and Boostrix relative to H1 2014.

 

Consumer Healthcare

Consumer Healthcare sales in the six months grew 37% on a reported basis and 7% on a pro-forma basis to £2,890 million, with strong pro-forma growth in the US and Europe while International pro-forma sales were flat.

 

US turnover increased 56% to £690 million (31% pro-forma growth), primarily reflecting the launch of OTC Flonase, with sales of £110 million in the six months, and a favourable comparison with H1 2014 which was impacted by supply constraints.  Sensodyne gained a percentage point of market share.

 

Sales of £834 million in Europe grew 60% (6% pro-forma) primarily as a result of double-digit growth in Oral health sales, benefiting from improved supply and a number of new product introductions, together with strong Voltaren sales following a new advertising campaign.

 

International sales of £1,366 million grew 19% but were flat on a pro-forma basis.  Strong growth in Oral health sales and the India business were offset by the negative impact of reducing channel inventories in the acquired consumer businesses, most notably in China, Russia and the Middle East.

 

Corporate and other unallocated turnover

The Corporate and unallocated turnover of £44 million represented sales of several Vaccines and Consumer Healthcare products, which are being held for sale in a number of markets.  GSK is required to dispose of these products in specific markets in order to meet the requirements of the anti-trust approvals for the Novartis transaction.

 

 

Core operating profit and margin

 

Core operating profit

 


Q2 2015


Q2 2015


H1 2015


H1 2015


















£m


% of
turnover


Reported
growth
CER%


Pro-forma
growth
CER%


£m


% of
turnover


Reported
growth
CER%


Pro-forma
growth
CER%

















Turnover

5,888 


100 


7 


2 


11,510 


100 


4 


1 

















Cost of sales

(1,779)


(30.2)


18 


3 


(3,518)


(30.6)


16 


5 

Selling, general and administration

(2,091)


(35.5)


7 


(2)


(3,957)


(34.4)


5 


(1)

Research and development

(731)


(12.4)


(6)


(10)


(1,520)


(13.2)


(4)


(7)

Royalty income

62 


1.0 


(14)


(33)


139 


1.3 


(1)


(16)

















Core operating profit

1,349 


22.9 


3 


14 


2,654 


23.1 


(6)


- 

















Core profit before tax

1,169 




1 




2,325 




(7)



Core profit after tax

936 




4 




1,861 




(4)



Core profit attributable to shareholders

837 




- 




1,671 




(8)



















Core earnings per share

17.3p




- 




34.6p




(8)



















 

 

Core operating profit by business

 


Q2 2015


Q2 2015


H1 2015


H1 2015


















£m


% of
turnover


Reported
growth
CER%


Pro-forma
growth
CER%


£m


% of
turnover


Reported
growth
CER%


Pro-forma
growth
CER%

















Global Pharmaceuticals

1,212 


40.7 


(18)


(8)


2,468 


40.7 


(20)


(14)

HIV

413 


73.9 


84 


84 


731 


72.7 


70 


70 

Pharmaceuticals R&D

(509)




(15)


(6)


(1,090)




(8)


(2)

















Pharmaceuticals

1,116 


31.5 


(1)


11 


2,109 


29.9 


(9)


(3)

Vaccines

177 


21.7 


(32)


(10)


338 


22.3 


(32)


(17)

Consumer Healthcare

108 


7.2 


41 


- 


290 


10.0 


47 


17 


















1,401 


23.9 


(3)


7 


2,737 


23.9 


(8)


(4)

Corporate & other unallocated costs

(52)




(93)


(94)


(83)




(59)


(59)

















Core operating profit

1,349 


22.9 


3 


14 


2,654 


23.1 


(6)


- 

















 

HIV operating profit represents the operating profit of ViiV Healthcare.

 

 

Core operating profit - Q2 2015

Core operating profit was £1,349 million, 3% higher in CER terms than in Q2 2014 on a turnover increase of 7%.  The core operating margin of 22.9% was 2.4 percentage points lower than in Q2 2014 and 1.0 percentage point lower on a CER basis.  The decrease included a 3.5 percentage point impact from the Novartis transaction, reflecting the disposal of GSK's higher margin Oncology business and the acquisition of lower margin Vaccines and Consumer Healthcare businesses from Novartis. 

 

On a pro-forma basis core operating profit grew 14% in CER terms compared to Q2 2014 on a turnover increase of 2%.  The core operating margin increased on a pro-forma basis by 2.5 percentage points in CER terms, primarily benefiting from the initial phases of the Pharmaceuticals restructuring programme, although an improved product mix offset continued pricing pressure on the cost of sales margin. 

 

Cost of sales as a percentage of turnover was 30.2%, up 2.5 percentage points in sterling terms and 2.6 percentage points higher in CER terms than in Q2 2014.  On a pro-forma basis the cost of sales percentage decreased 0.1 percentage points and was flat in CER terms.  This reflected a more favourable product mix in the quarter driven by strong growth in new products, particularly Tivicay and Triumeq, and a benefit from the Group's cost reduction programmes, offset by adverse price pressure in Pharmaceuticals, primarily respiratory, and increased investments in Vaccines to improve the reliability and capacity of the supply chain.

 

SG&A costs were 35.5% of turnover, 0.9 percentage points higher than in Q2 2014 but 0.2% lower on a CER basis.  On a pro-forma basis, SG&A as a percentage of sales decreased by 0.4 percentage points and 1.5 percentage points on a CER basis.  This primarily reflected savings in Global Pharmaceuticals, including the initial benefits of the Pharmaceuticals cost reduction programme, partly offset by the inherited costs in Consumer Healthcare where synergies are still in the very early stages of delivery.

 

R&D expenditure declined 6% CER to £731 million (12.4% of turnover) compared with £766 million (13.8% of turnover) in Q2 2014.  On a pro-forma basis, R&D expenditure declined 10% reflecting the benefit of cost reduction programmes in Pharmaceuticals and Vaccines as well as the phasing of ongoing project spending.

 

Royalty income was £62 million (Q2 2014: £72 million).

 

 

Core operating profit by business - Q2 2015

Following the completion of the transaction with Novartis, GSK has reorganised the Group to reflect the greater balance between its Pharmaceuticals, Vaccines and Consumer Healthcare businesses and responsibilities for some parts of these respective businesses have been realigned.  GSK is reporting these three businesses separately with corporate costs reallocated to each accordingly so that the profitability of each business is reflected more accurately.

 

Pharmaceuticals core operating profit was £1,116 million, 1% lower than in Q2 2014 in CER terms on a turnover decrease of 6%.  The core operating margin of 31.5% was 1.0 percentage points higher than in Q2 2014 and 1.7 percentage points higher on a CER basis.  On a pro-forma basis, core operating margin increased 2.5 percentage points on a CER basis, primarily reflecting strong growth in HIV, partly offset by continued pricing pressure in Global Pharmaceuticals, primarily respiratory products, and the initial benefits of the restructuring programmes in Pharmaceuticals and R&D.

 

Vaccines operating profit was £177 million, 32% lower than in Q2 2014 in CER terms on a turnover increase of 11%.  The core operating margin of 21.7% was 10.7 percentage points lower than in Q2 2014 and down 12.5% on a CER basis, primarily driven by the cost base of the former Novartis Vaccines business.  The pro-forma margin declined 1.3 percentage points which primarily reflected mix changes in the quarter and additional supply chain investments, partly offset by reductions in R&D.

 

Consumer Healthcare core operating profit was £108 million, 41% higher than in Q2 2014 in CER terms on a turnover increase of 51%.  The core operating margin of 7.2% was 2.9 percentage points lower than in Q2 2014, and 0.7 percentage points lower on a CER basis.  On a pro-forma basis, the Consumer Healthcare operating margin was 0.6 percentage points lower, driven by a one-off sales tax settlement which impacted the operating margin by 1.3%, along with the net effect of the inherited Novartis cost base and the limited integration benefits to date, given the early stage of this programme.

 

 

Core operating profit - H1 2015

Core operating profit was £2,654 million, 6% lower than in H1 2014 in CER terms on a turnover increase of 4%.  The core operating margin of 23.1% was 3.2 percentage points lower than in H1 2014, 2.5 percentage points lower on a CER basis.  This decline included a 2.4 percentage point impact of the Novartis transaction reflecting the disposal of GSK's higher margin Oncology business and the acquisition of lower margin Vaccines and Consumer Healthcare businesses from Novartis. 

 

On a pro-forma basis the operating margin declined 0.1 percentage points which primarily reflected an increase in cost of sales as a percentage of turnover partly offset by reduced SG&A and R&D percentages.

 

Cost of sales as a percentage of turnover was 30.6%, 2.9 percentage points higher than in H1 2014.  On a pro-forma basis, the cost of sales percentage increased 1.1 percentage points and 1.3 percentage points on a CER basis.  This reflected adverse price movements, particularly in US Global Pharmaceuticals, increased investments in Vaccines to improve the reliability and capacity of the supply chain and an adverse comparison to the reduced cost of sales in Vaccines in H1 2014, which benefited from a number of inventory adjustments.  These declines were partly offset by improved product mix, as a result of the growth in HIV products, and the benefits of the Group's ongoing cost reduction programmes.

 

SG&A costs as a percentage of sales were 34.4%, 1.0 percentage points higher than in H1 2014 and 0.5 percentage points higher on a CER basis.  On a pro-forma basis, SG&A costs increased 0.1 percentage point, but decreased 0.4 percentage points on a CER basis, This primarily reflected declines in Global Pharmaceuticals, including the initial benefits of the Pharmaceuticals cost reduction programme, partly offset by the inherited costs in the Novartis Consumer Healthcare businesses where synergies are still in the early stages of delivery.

 

R&D expenditure declined 4% CER to £1,520 million (13.2% of turnover) compared with £1,550 million (13.9% of turnover) in H1 2014.  On a pro-forma basis, R&D expenditure declined 7% reflecting the benefit of cost reduction programmes in Pharmaceuticals and Vaccines as well as the phasing of ongoing project spending.

 

Royalty income was £139 million (H1 2014: £142 million).

 

 

Core operating profit by business - H1 2015

Pharmaceuticals core operating profit was £2,109 million, 9% lower than in H1 2014 in CER terms on a turnover decrease of 7%.  The core operating margin of 29.9% was 1.6 percentage points lower than in H1 2014 and 0.8 percentage points lower on a CER basis.  Excluding the impact of the Novartis transaction, on a pro-forma basis, the core operating margin declined 0.5 percentage points on a CER basis, which reflected an increase in cost of sales as a percentage of turnover primarily due to adverse price movements partly offset by favourable mix from growth in HIV products, and declines in the SG&A and R&D percentages, reflecting the benefits of the cost reduction programmes.

 

Vaccines operating profit was £338 million, 32% lower than in H1 2014 in CER terms on a turnover increase of 11%.  The core operating margin of 22.3% was 10.1 percentage points lower than in H1 2014 and 12.3% lower on a CER basis, primarily driven by the cost base of the former Novartis Vaccines business.  The pro-forma margin declined 3.8 percentage points which reflected an increase in cost of sales as a percentage of turnover due to mix changes in the six months, additional supply chain investments and the benefit to H1 2014 of a number of inventory adjustments.

 

Consumer Healthcare core operating profit was £290 million, 47% higher than in H1 2014 in CER terms on a turnover increase of 37%.  The core operating margin of 10.0% was 0.6 percentage points lower than in H1 2014, but improved 0.9 percentage points on a CER basis.  On a pro-forma basis the operating margin increased 1.0 percentage points on a CER basis, due to a significant improvement in gross margin, reflecting benefits from both improved supply and pricing and the US Flonase launch, partly offset by increased investment in SG&A behind new product launches, with synergies on track but still in the early stages of delivery.

 

 

Core profit after tax and core earnings per share - Q2 2015

Net finance expense was £178 million compared with £156 million in Q2 2014, reflecting the change in the mix of gross debt.  The share of losses of associates and joint ventures was £2 million (Q2 2014: £8 million profit).

 

Tax on core profit amounted to £233 million and represented an effective core tax rate of 20.0% (Q2 2014: 22.0%).

 

The allocation of earnings to non-controlling interests amounted to £99 million (Q2 2014: £61 million), the increase reflecting the Consumer Healthcare non-controlling interest allocation together with an increase in the allocation of ViiV Healthcare profits.

 

Core EPS of 17.3p was flat in CER terms compared with a 3% increase in the operating profit primarily as a result of the increased non-controlling interest allocation, partly offset by a lower tax charge.

 

 

Core profit after tax and core earnings per share - H1 2015

Net finance expense was £334 million compared with £317 million in H1 2014, reflecting the change in the mix of gross debt.

 

The share of profits of associates and joint ventures was £5 million (H1 2014: £9 million).  In March 2015, GSK reduced its shareholding in its one significant associate, Aspen Pharmacare Holdings Limited, from 12.4% to 6.2% of the issued share capital.  As a result, GSK no longer accounts for Aspen as an associate and the contribution from associates and joint ventures in 2015 is expected to be minimal.

 

Tax on core profit amounted to £464 million and represented an effective core tax rate of 20.0% (H1 2014: 22.0%).

 

The allocation of earnings to non-controlling interests amounted to £190 million (H1 2014: £123 million), the increase reflecting the Consumer Healthcare non-controlling interest allocation together with an increase in the allocation of ViiV Healthcare profits.

 

Core EPS of 34.6p decreased 8% in CER terms compared with a 6% decline in the operating profit primarily as a result of the increase in the non-controlling interest allocation, partly offset by a lower tax charge.

 

 

Guidance for 2015

Core EPS for 2015 is expected to decline at a percentage rate in the high teens (CER) primarily due to continued pricing pressure on Seretide/Advair in US/Europe, the dilutive effect of the Novartis transaction and the inherited cost base of the Novartis businesses

 

 

2016 outlook

In 2016, GSK expects to see a significant recovery in core EPS with percentage growth expected to reach double digits on a CER basis as the adverse impacts seen in 2015 diminish and the sales and synergy benefits of the Novartis transaction contribute more meaningfully.

 

 

Currency impact

The Q2 2015 results are based on average exchange rates, principally £1/$1.54, £1/€1.38 and £1/Yen 186.  Comparative exchange rates are given on page 43.  The period-end exchange rates were £1/$1.57, £1/€1.41 and £1/Yen 192.

 

In the quarter, turnover increased 7% CER and 6% at actual exchange rates.  Core EPS of 17.3p was flat in CER terms and down 9% at actual rates.  The negative currency impact reflected the strength of Sterling against the majority of the Group's trading currencies relative to Q2 2014 partly offset by a weakening of Sterling against the US Dollar.  Losses on settled intercompany transactions contributed three percentage points of the negative currency impact of nine percentage points on core EPS.

 

In H1 2015, turnover increased 4% CER and 3% at actual exchange rates.  Core EPS of 34.6p was down 8% in CER terms and down 14% at actual rates.  The negative currency impact reflected the strength of Sterling against the majority of the Group's trading currencies relative to H1 2014 partly offset by a weakening of Sterling against the US Dollar.  Losses on settled intercompany transactions contributed one percentage point of the negative currency impact of six percentage points on core EPS.

 

If exchange rates were to hold at the Q2 2015 period-end rates for the rest of 2015, the estimated adverse impact on 2015 Sterling turnover would be around 2%, and if there were no further exchange gains or losses, the estimated adverse impact on 2015 Sterling core EPS would be around 6%.

 

 

Core adjustments

The adjustments that reconcile core operating profit, profit after tax and earnings per share to total results are as follows:

 


Q2 2015


Q2 2014














Operating
profit
£m


Profit
after tax
£m


EPS
p


Operating
profit
£m


Profit
after tax
£m


EPS
p













Core results

1,349 

 

936 

 

17.3 

 

1,407 

 

982 

 

19.1 

 

 

 

 

 

 

 

 

 

 

 

 

   Intangible asset amortisation

(125)

 

(108)

 

(2.2)

 

(152)

 

(115)

 

(2.3)

   Intangible asset impairment

(2)

 

(2)

 

 

(1)

 

(1)

 

- 

   Major restructuring costs

(515)

 

(390)

 

(8.1)

 

(101)

 

(79)

 

(1.6)

   Legal costs

(50)

 

(49)

 

(1.0)

 

(47)

 

(42)

 

(0.9)

   Acquisition accounting and other

(322)

 

(272)

 

(2.9)

 

31 

 

(43)

 

(0.7)













 

(1,014)

 

(821)

 

(14.2)

 

(270)

 

(280)

 

(5.5)













Total results

335 

 

115 

 

3.1 

 

1,137 

 

702 

 

13.6 













 

 


H1 2015


H1 2014














Operating
profit
£m


Profit
after tax
£m


EPS
p


Operating
profit
£m


Profit
after tax
£m


EPS
p













Core results

2,654 

 

1,861 

 

34.6 

 

2,937 

 

2,051 

 

40.1 

 

 

 

 

 

 

 

 

 

 

 

 

   Intangible asset amortisation

(276)

 

(222)

 

(4.6)

 

(322)

 

(241)

 

(5.0)

   Intangible asset impairment

(104)

 

(79)

 

(1.6)

 

(49)

 

(40)

 

(0.8)

   Major restructuring costs

(881)

 

(656)

 

(13.6)

 

(180)

 

(140)

 

(2.9)

   Legal costs

(135)

 

(134)

 

(2.8)

 

(155)

 

(128)

 

(2.7)

   Acquisition accounting and other

8,293 

 

7,383 

 

158.7 

 

(28)

 

(81)

 

(1.2)













 

6,897 

 

6,292 

 

136.1 

 

(734)

 

(630)

 

(12.6)













Total results

9,551 

 

8,153 

 

170.7 

 

2,203 

 

1,421 

 

27.5 













 

Full reconciliations between core results and total results are set out on pages 51 to 54 and the definition of core results is set out on page 28.

 

 

Total operating profit and total earnings per share - Q2 2015

Total operating profit was £335 million compared with £1,137 million in Q2 2014.  The non-core items resulted in a net charge of £1,014 million (Q2 2014: £270 million), reflecting the impact of an acceleration in restructuring costs driven by the Novartis transaction and the Pharmaceuticals restructuring programme as well as the impact of further adjustments related to ViiV Healthcare and Consumer Healthcare.

 

The intangible asset amortisation decreased to £125 million from £152 million in Q2 2014, which included accelerated amortisation on Lovaza.  Intangible asset impairments were £2 million (Q2 2014: £1 million).

 

Major restructuring charges accrued in the quarter were £515 million (Q2 2014: £101 million), the majority of which are expected to be cash items, reflecting the acceleration of a number of restructuring projects following the completion of the Novartis transaction, as well as further charges for Pharmaceuticals restructuring projects.

 

Legal charges of £50 million (Q2 2014: £47 million) included settlement of existing anti-trust matters and higher litigation costs.

 

Acquisition accounting and other adjustments resulted in a net charge of £322 million (Q2 2014: credit of £31 million).  This included the unwinding of the discounting effects on both the contingent consideration for the acquisition of the former Shionogi-ViiV Healthcare Joint Venture and on the Consumer Healthcare Joint Venture put option.  Other items also included equity investment and asset disposals, one-off required regulatory charges in R&D and certain other adjusting items.  The net credit in Q2 2014 included a gain of £106 million arising from the termination in Europe of the commercialisation agreement for Prolia with Amgen.

 

A tax charge of £37 million on total profits represented an effective tax rate of 24.3% (Q2 2014: 28.8%) and reflected the differing tax effects of the various non-core items.  See 'Taxation' on page 42 for further details.

 

Total EPS was 3.1p, compared with 13.6p in Q2 2014, primarily reflecting accelerated investments in transaction benefits in the quarter.

 

 

Total operating profit and total earnings per share - H1 2015

Total operating profit was £9,551 million compared with £2,203 million in H1 2014.  The non-core items resulted in a net credit of £6,897 million (H1 2014: net charge of £734 million), primarily reflecting the impact of the Novartis transaction.

 

The intangible asset amortisation decreased to £276 million from £322 million in H1 2014, which included accelerated amortisation on Lovaza.

 

Intangible asset impairments of £104 million (H1 2014: £49 million) included impairments of several R&D and commercial assets.

 

Major restructuring charges of £881 million have been accrued (H1 2014: £180 million), the majority of which are expected to be cash items, and reflected the acceleration of a number of restructuring projects following completion of the Novartis transaction.  The programmes have delivered £0.4 billion of incremental benefit compared with H1 2014.  

 

Charges to date are £1.8 billion, predominantly cash.  The total cash charges of the combined restructuring programmes are expected to be approximately £3.65 billion and the non-cash charges up to £1.35 billion.  The combined programmes have delivered approximately £1.0 billion of annual savings on a moving annual total basis and are on track to deliver £3 billion of benefits.  The combined programme is expected to be largely complete by 2017.

 

Legal charges of £135 million (H1 2014: £155 million) included settlement of existing anti-trust matters and litigation costs.

 

Acquisition accounting and other adjustments resulted in a net credit of £8,293 million (H1 2014: charge of £28 million).  This included the profit on disposal of the Oncology business to Novartis of £9,247 million, partly offset by an increase in the liability for the contingent consideration for the acquisition of the former Shionogi-ViiV Healthcare joint venture from remeasurements and the unwinding of the discounting effect of £964 million.

 

Other items also included equity investment and asset disposals, one-off required regulatory charges in R&D and certain other adjusting items.

 

The profit on disposal of associates of £844 million arose from the disposal of half of GSK's investment in Aspen Pharmacare and the remeasurement of the remaining holding to market value on its reclassification to equity investments.

 

The charge for taxation on total profits amounted to £1,922 million and represented a total effective tax rate of 19.1% (H1 2014: 24.8%), reflecting the differing tax effects of the various non-core items.  See 'Taxation' on page 42 for further details.

 

Total EPS was 170.7p, compared with 27.5p in H1 2014, the increase primarily reflecting the profits on disposal of the Oncology business and the Aspen Pharmacare shares, partly offset by the increase in the liability for the contingent consideration for the acquisition of the former Shionogi-ViiV Healthcare joint venture and increased major restructuring expenditure.

 

 

Cash generation and conversion

 

Cash flow and net debt

 


Q2 2015


H1 2015


H1 2014







Net cash inflow from operating activities (£m)

217 

 

587 

 

1,693 

Adjusted net cash inflow from operating activities* (£m)

291 

 

823 

 

1,939 

Free cash flow* (£m)

(606)

 

(675)

 

507 

Adjusted free cash flow* (£m)

(532)

 

(439)

 

753 

Free cash flow growth (%)

>(100)%

 

>(100)%

 

(70)%

Free cash flow conversion* (%)

>(100)%

 

(5)%

 

52%

Net debt (£m)

9,553 

 

9,553 

 

14,423 

 

*

Adjusted net cash inflow from operating activities, free cash flow, adjusted free cash flow and free cash flow conversion are defined on page 28.

 

 

Q2 2015

The net cash inflow from operating activities for the quarter was £217 million (Q2 2014: £766 million).  This was after the payment of non-core restructuring and integration and transaction costs of £248 million (Q2 2014: £107 million), legal settlements of £74 million (Q2 2014: £205 million) and the initial tax payment of £511 million in the quarter arising on the sale of the Oncology business.  Adjusting for these items, each of which has been funded from divestment proceeds, the net cash inflow from operating activities would have been £1,050 million, broadly similar to the Q2 2014 cash flow of £1,078 million.

 

H1 2015

The net cash inflow from operating activities for the six months was £587 million (H1 2014: £1,693 million).  This included the payment of non-core restructuring and integration costs of £502 million (H1 2014: £208 million), legal settlements of £236 million (H1 2014: £246 million) and the initial tax payment arising on the sale of the Oncology business.  Adjusting for these items, each of which has been funded from divestment proceeds, the net cash inflow from operating activities would have been £1,836 million (H1 2014: £2,147 million).  The decrease primarily reflected the impact of lower operating profits in the first half.

 

Free cash outflow was £675 million for the first half.  Excluding non-core restructuring and integration costs, legal payments and the initial tax payment on the sale of the Oncology business, the free cash inflow was £574 million (H1 2014: £961 million).  The decrease primarily reflected the impact of lower operating profits, together with higher payments to non-controlling interests in the six months. 

 

Free cash flow conversion was impacted by the profits on the disposals of the Oncology business and the Aspen investments.

 

Net debt

At 30 June 2015, net debt was £9.6 billion, compared with £14.4 billion at 31 December 2014, comprising gross debt of £17.2 billion and cash and liquid investments of £7.6 billion.  The decrease in net debt reflected the impact of the Novartis transaction in which GSK sold its Oncology business for net cash proceeds of £10.0 billion and paid £3.3 billion, net of cash acquired, to purchase the Novartis businesses.  An initial tax payment of £511 million on the transaction has been made with a significant proportion of the remainder expected to be settled before the end of the year.  In addition, GSK sold part of its shareholding in Aspen for cash proceeds of £564 million and paid dividends to shareholders of £2,035 million.  At 30 June 2015, GSK had short-term borrowings (including overdrafts) repayable within 12 months of £2,472 million with loans of £1,271 million repayable in the subsequent year.

 

 

Working capital

 


30 June

2015


31 March

2015


31 December

2014


30 September

2014


30 June

2014











Working capital conversion cycle* (days)

215

 

215

 

209

 

216

 

208

Working capital percentage of turnover (%)

25

 

24

 

22

 

24

 

22

 

*  Working capital conversion cycle is defined on page 28.

 

Although working capital increased by £245 million in the quarter, this had no overall effect on the working capital conversion cycle.  In the six months, working capital was significantly impacted by the inclusion of inventory acquired with the former Novartis Vaccines business.  The increase was partly offset by favourable exchange effects.

 

 

Returns to shareholders

 

GSK expects to pay an annual ordinary dividend of 80p for each of the next three years (2015-2017).

 

GSK also plans to return approximately £1 billion (20p per share) to shareholders via a special dividend to be paid alongside GSK's Q4 2015 ordinary dividend payment.

 

Any future returns to shareholders of surplus capital will be subject to the Group's strategic progress, visibility on the put options associated with ViiV Healthcare and the Consumer Healthcare joint venture and other capital requirements.

 

Quarterly dividends

The Board has declared a second interim dividend of 19 pence per share (Q2 2014: 19 pence per share).

 

Payment of dividends

The equivalent interim dividend receivable by ADR holders will be calculated based on the exchange rate on 29 September 2015.  An annual fee of $0.02 per ADS (or $0.005 per ADS per quarter) will be charged by the Depositary.

 

The ex-dividend date will be 13 August 2015 (12 August 2015 for ADR holders), with a record date of 14 August 2015 and a payment date of 1 October 2015.

 

 


Paid/
payable


Pence per
share


£m







2015

 

 

 

 

 

First interim

9 July 2015

 

19

 

918

Second interim

1 October 2015

 

19

 

918







2014

 

 

 

 

 

First interim

10 July 2014

 

19

 

916

Second interim

2 October 2014

 

19

 

918

Third interim

8 January 2015

 

19

 

924

Fourth interim

9 April 2015

 

23

 

1,111







 

 

 

80

 

3,869







 

GSK made no share repurchases during the quarter.  The company issued 0.6 million shares under employee share schemes amounting to £5 million (Q2 2014: £32 million).

 

The weighted average number of shares for Q2 2015 was 4,832 million, compared with 4,812 million in Q2 2014.

 

 

Segmental performance

 

Pharmaceuticals

 

 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













US

1,084

 

(16)

 

(7)

 

2,103

 

(20)

 

(14)

Europe

696

 

(18)

 

(8)

 

1,511

 

(12)

 

(5)

International

1,201

 

(4)

 

1 

 

2,444

 

(5)

 

(2)













Global Pharmaceuticals

2,981

 

(12)

 

(4)

 

6,058

 

(12)

 

(7)













 

 


 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













US

308

 

84 

 

84 

 

537

 

76 

 

76 

Europe

172

 

46 

 

46 

 

326

 

40 

 

40 

International

79

 

26 

 

26 

 

142

 

18 

 

18 













HIV

559

 

59 

 

59 

 

1,005

 

51 

 

51 













 

 


 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













US

1,392

 

(5)

 

4 

 

2,640

 

(10)

 

(4)

Europe

868

 

(10)

 

- 

 

1,837

 

(6)

 

- 

International

1,280

 

(3)

 

2 

 

2,586

 

(4)

 

(1)













Pharmaceuticals

3,540

 

(6)

 

2 

 

7,063

 

(7)

 

(2)













 

 






Q2 2015


H1 2015













 

 

 

 

 

£m

 

Reported
growth
CER%

 

£m

 

Reported
growth
CER%













Respiratory

 

 

 

 

1,467

 

(6)

 

2,875

 

(8)

Cardiovascular, metabolic and urology

 

 

 

242

 

5 

 

460

 

(2)

Immuno-inflammation

 

 

 

 

56

 

27 

 

116

 

23 

Oncology

 

 

 

 

19

 

(94)

 

235

 

(58)

Other pharmaceuticals

 

 

 

 

542

 

(6)

 

1,067

 

(7)

Established Products

 

 

 

 

655

 

(5)

 

1,305

 

(13)













Global Pharmaceuticals

 

 

 

 

2,981

 

(12)

 

6,058

 

(12)

HIV

 

 

 

 

559

 

59 

 

1,005

 

51 













Pharmaceuticals

 

 

 

 

3,540

 

(6)

 

7,063

 

(7)













 

 

Respiratory

 

Q2 2015 (£1,467 million; down 6%)

Respiratory sales in the quarter declined 6% to £1,467 million.  Seretide/Advair sales were down 13% to £960 million, Flixotide/Flovent sales decreased 10% to £159 million and Ventolin sales rose 2% to £160 million.  Relvar/Breo Ellipta recorded sales of £53 million and Anoro Ellipta, now launched in the US, Europe and Japan, recorded sales of £15 million in the quarter.

 

In the US, Respiratory sales declined 12% to £704 million in the quarter (5% volume growth and a 17% negative impact of price and mix).  This decline included the price and mix impact of new contracts agreed in 2014 in response to competitive pressures in the ICS/LABA combination market, where Advair and Breo Ellipta compete.  Sales of Advair were £484 million, down 17% (2% volume decline and a 15% negative impact of price and mix)Flovent sales were down 15% to £100 million while Ventolin sales rose 3% to £81 million.  The reported growth rates for both Flovent and Ventolin reflected the net negative impact of true up adjustments to accruals for returns and rebates recorded in both Q2 2014 and Q2 2015.  Excluding the impact of true up adjustments and stocking patterns, on an estimated underlying basis Flovent sales declined 6% while Ventolin grew 19%.  Breo Ellipta recorded sales of £19 million, and Anoro Ellipta, recorded sales of £12 million in the quarter.

 

European Respiratory sales were down 8% to £369 million, with Seretide sales down 16% to £267 million, reflecting the expected pressures of increased competition from generics and the transition of the Respiratory portfolio to newer products.  Relvar Ellipta, approved in Europe for both COPD and asthma, recorded sales of £19 million in the quarter, while Anoro Ellipta, with launches now underway in many countries throughout the region, recorded sales of £3 million.

 

Respiratory sales in the International region grew 5% to £394 million with Emerging Markets up 4% and Japan, benefiting from comparison with a weak Q2 2014, up 17%.  In Emerging Markets, sales of Seretide were in line with last year at £121 million, while Ventolin grew 5% to £47 million.  In Japan, sales of Relvar Ellipta of £13 million in the quarter and a 9% increase in Adoair sales, drove overall Respiratory performance.

 

H1 2015 (£2,875 million; down 8%)

Respiratory sales in the six months declined 8% to £2,875 million.  Seretide/Advair sales were down 14% to £1,858 million, Flixotide/Flovent sales decreased 16% to £312 million and Ventolin sales fell 4% to £321 million.  Relvar/Breo Ellipta recorded sales of £94 million and Anoro Ellipta £27 million.

 

In the US, Respiratory sales declined 16% to £1,287 million in the six months (3% volume growth and a 19% negative impact of price and mix).  Sales of Advair were £876 million, down 19% (2% volume decline and a 17% negative impact of price and mix).  Flovent sales were down 27% to £183 million and Ventolin sales fell 12% to £159 million. The reported declines for both Flovent and Ventolin reflected the net negative impact of true up adjustments to accruals for returns and rebates recorded in both H1 2014 and H1 2015.  Excluding the impact of true up adjustments and stocking patterns, on an estimated underlying basis Flovent sales declined 6% while Ventolin grew 20%.  Breo Ellipta recorded sales of £33 million, and Anoro Ellipta, recorded sales of £21 million in the first half of 2015.

 

European Respiratory sales were down 6% to £761 million, with Seretide sales down 14% to £558 million, reflecting the expected pressures of increased competition from generics and the transition of the Respiratory portfolio to newer products.  Relvar Ellipta, approved in Europe for both COPD and asthma, recorded sales of £35 million in the six months while Anoro Ellipta recorded sales of £5 million.

 

Respiratory sales in the International region grew 5% to £827 million with Emerging Markets up 5% and Japan up 7%.  In Emerging Markets, sales of Seretide increased 3% to £247 million, while Ventolin grew 6% to £93 million.  In Japan, sales of Relvar Ellipta of £22 million, together with strong Avamys and Xyzal sales growth more than offset a 13% decline in Adoair sales.

 

 

Cardiovascular, metabolic and urology

 

Q2 2015 (£242 million; up 5%)

Sales in the category rose 5% to £242 million.  The Avodart franchise fell 2% to £192 million, with 9% growth in sales of Duodart/Jalyn offset by a 6% decline in sales of Avodart.  In the US, generic competition to both Avodart and Jalyn is expected to begin in Q4 2015.  Sales of Prolia increased 38% to £11 million, reflecting the impact of the termination of the joint commercialisation agreement with Amgen in a number of European markets, Mexico and Russia in Q2 2014 on the prior period comparative.

 

H1 2015 (£460 million; down 2%)

Sales in the category fell 2% to £460 million in the six months.  The Avodart franchise fell 4% to £371 million, with 11% growth in sales of Duodart/Jalyn more than offset by a 10% decline in sales of Avodart.  Sales of Prolia declined 9% to £20 million, reflecting the termination in Q2 2014 of the joint commercialisation agreement with Amgen.

 

 

Immuno-inflammation

 

Q2 2015 (£56 million; up 27%)

Immuno-inflammation sales grew 27% to £56 million.  Benlysta turnover in the quarter was £56 million, up 30%.  In the US, Benlysta sales were £51 million, up 21%.

 

H1 2015 (£116 million; up 23%)

Immuno-inflammation sales grew 23% to £116 million.  Benlysta turnover in the first half was £107 million, up 27%.  In the US, Benlysta sales were £97 million, up 24%.

 

 

Other pharmaceuticals

 

Q2 2015 (£542 million; down 6%)

Sales in other therapy areas fell 6% to £542 million.  Dermatology sales declined 8% to £105 million adversely affected by supply constraints due to capacity limitations, while Augmentin sales increased 2% to £143 million.  Relenza sales more than doubled in the quarter to £33 million, partly driven by the timing of US CDC orders.  Sales of products for Rare diseases rose 2% to £94 million, including sales of Volibris which were up 8% compared with Q2 2014.

 

H1 2015 (£1,067 million; down 7%)

Sales in other therapy areas fell 7% to £1,067 million in the six months.  Augmentin sales were down 1% at £283 million and Dermatology sales declined 10% to £214 million in part adversely affected by supply constraints due to capacity limitations.  Relenza sales were up 33% to £63 million driven by the timing of US CDC orders.  Sales of products for Rare diseases declined 4% to £185 million, primarily as a result of generic competition to Mepron in the US.

 

 

Established Products

 

Q2 2015 (£655 million; down 5%)

Established Products turnover fell 5% to £655 million with sales in the US down 16% to £168 million.  Lovaza sales fell 22% to £24 million, as the impact of generic competition started to annualise.

 

Europe was down 13% to £121 million, with Serevent sales down 23% to £9 million.  International was up 3% to £366 million, with higher sales of Amoxil, up 77% to £22 million, and Valtrex, up 71% to £33 million, following the regaining of exclusivity in Canada until October 2015.  These gains were partly offset by a 26% decline in sales of Zeffix in China.

 

H1 2015 (£1,305 million; down 13%)

Established Products turnover fell 13% to £1,305 million in the six months.  Sales in the US were down 31% to £331 million, primarily reflecting a 64% fall in sales of Lovaza.

 

Europe was down 14% to £253 million, with Seroxat sales falling 18% to £17 million, reflecting increased generic competition to a number of other products and a number of supply constraints.  International was down 3% to £721 million, primarily reflecting lower sales of Seroxat/Paxil due to generic competition in Japan and of Zeffix in China, partly offset by increased Valtrex sales following the regaining of exclusivity in Canada in late 2014.

 

 

HIV

 

Q2 2015 (£559 million; up 59%)

HIV sales increased 59% to £559 million in the quarter, with the US up 84%, Europe up 46% and International up 26%.  The growth in all three regions was driven by Tivicay and Triumeq.

 

The ongoing roll-out of Tivicay resulted in sales of £145 million and Triumeq, now launched in the US and much of Europe recorded sales of £149 million in the quarter.  Epzicom/Kivexa, which benefited from use in combination with Tivicay, increased 1% to £185 million, but Selzentry sales fell 18% to £31 million.  There were also continued declines in the mature portfolio, mainly driven by generic competition to both Combivir, down 44% to £9 million, and Lexiva, down 10% to £18 million.

 

H1 2015 (£1,005 million; up 51%)

Sales increased 51% to £1,005 million in the six months, with the US up 76%, Europe up 40% and International up 18%.

 

Tivicay sales were £257 million in the six months and Triumeq sales were £230 million.  Epzicom/Kivexa sales increased 1% to £361 million, but Selzentry declined 14% to £61 million.  Combivir and Lexiva sales fell 41% and 19%, respectively.

 

 

Vaccines

 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













US

240

 

13 

 

(5)

 

457

 

14 

 

2 

Europe

274

 

27 

 

12 

 

498

 

15 

 

5 

International

300

 

(2)

 

(16)

 

558

 

5 

 

(8)













 

814

 

11 

 

(5)

 

1,513

 

11 

 

(1)













 

 

 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













Rotarix

101

 

2 

 

2 

 

199

 

7 

 

7 

Synflorix

77

 

(20)

 

(20)

 

137

 

(10)

 

(10)

Fluarix, FluLaval

7

 

29 

 

29 

 

11

 

(20)

 

(20)

 

 

 

 

 

 

 

 

 

 

 

 

Bexsero

30

 

- 

 

>100 

 

37

 

- 

 

>100 

Menveo

43

 

- 

 

8 

 

54

 

- 

 

6 

 

 

 

 

 

 

 

 

 

 

 

 

Boostrix

96

 

3 

 

3 

 

162

 

5 

 

5 

Infanrix, Pediarix

187

 

(4)

 

(4)

 

373

 

(5)

 

(5)

Hepatitis

121

 

(15)

 

(15)

 

264

 

(1)

 

(1)

Cervarix

18

 

(14)

 

(14)

 

46

 

(14)

 

(14)

Other

134

 

65 

 

(15)

 

230

 

52 

 

(10)













 

814

 

11 

 

(5)

 

1,513

 

11 

 

(1)













 

Q2 2015 (£814 million; up 11%)

Vaccines sales grew 11% to £814 million with the US up 13%, Europe up 27% and International down 2%.  The business benefited from the sales of the newly-acquired products, primarily Bexsero in Europe and Menveo in the US.  On a pro-forma basis, sales for the quarter declined by 5%, primarily reflecting the phasing of tenders in International markets for Synflorix and Havrix, together with competitive pressures on Infanrix/Pediarix.

 

In the US, reported sales grew 13% to £240 million but declined 5% on a pro-forma basis.  This was largely attributable to the 12% decline in Infanrix/Pediarix sales as a result of the return to the market of a competitor vaccine during 2014, partly offset by growth in the Meningitis portfolio and in Rotarix and Boostrix sales.

 

In Europe, sales grew 27% on a reported basis (12% pro-forma) to £274 million.  This growth primarily reflected increased sales of Bexsero, mainly driven by the UK NHS immunisation programme, Portugal and Italy.  The quarter also benefited from improved supplies of Boostrix, up 31%.  The growth was partly offset by a 15% decline in sales of Hepatitis vaccines, reflecting supply constraints as well as tender phasing, together with an Infanrix/Pediarix sales decline of 3%, impacted by the introduction of a competitor vaccine during 2014 and the phasing of shipments in several countries.

 

International sales of £300 million declined 2% on a reported basis and 16% on a pro-forma basis.  This primarily reflected a decline in sales in Brazil, the Middle East and North Asia due to the phasing of tenders, partly offset by growth of Synflorix in Africa.

 

 

H1 2015 (£1,513 million; up 11%)

Vaccines sales grew 11% to £1,513 million with the US up 14%, Europe up 15% and International up 5%.  The business benefited from the sales of the newly acquired products, particularly the Meningitis portfolio in Europe and the US.  Pro-forma sales declined by 1% primarily due to the phasing of Synflorix shipments in International markets and a decline in Infanrix/Pediarix, following the return to the market of a competitor vaccine during 2014, partly offset by strong growth in Bexsero.

 

In the US, reported growth of 14% (2% pro-forma) to £457 million mainly reflected growth in Hepatitis vaccines, Rotarix and Boostrix, benefiting from CDC stockpile order timing, and wholesaler inventory replenishment.  Infanrix/Pediarix sales declined 12% as a result of the return to the market of a competitor vaccine during 2014.

 

In Europe, sales grew 15% on a reported basis (5% pro-forma) to £498 million.  This growth primarily reflected increased Bexsero sales mainly driven by the UK NHS immunisation programme, Portugal and Italy.  The six months also benefited from the improved supply of Boostrix (up 29%) and MMRV (up 8%).  The growth was partly offset by a 10% decline in sales of Hepatitis vaccines, largely due to supply constraints as well as tender phasing, together with a 6% decline in Infanrix/Pediarix sales resulting from the introduction of a competitor vaccine during 2014 and the phasing of shipments in several countries.

 

International sales of £558 million grew 5% on a reported basis but declined 8% on a pro-forma basis.  Sales of a number of products, including Boostrix and Synflorix, declined as a result of the phasing of tenders in Brazil, the Middle East and North Asia.

 

 

Consumer Healthcare

 

Turnover

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













US

360

 

66

 

28 

 

690

 

56

 

31

Europe

470

 

90

 

7 

 

834

 

60

 

6

International

679

 

27

 

(2)

 

1,366

 

19

 

-













Total

1,509

 

51

 

6 

 

2,890

 

37

 

7













 

 

Turnover





Q2 2015


H1 2015













 

 

 

 

 

£m

 

Growth
CER%

 

£m

 

Growth
CER%













Wellness

 

 

 

 

740 

 

>100

 

1,333

 

75

Oral health

 

 

 

 

462 

 

11

 

947

 

10

Nutrition

 

 

 

 

165 

 

7

 

347

 

4

Skin health

 

 

 

 

142 

 

>100

 

263

 

70













Total

 

 

 

 

1,509 

 

51

 

2,890

 

37













 

Q2 2015 (£1,509 million; up 51%)

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 51% to £1,509 million, benefiting significantly from the first full quarter's sales of the newly-acquired products.  On a pro-forma basis, growth was 6% (4% volume and 2% price), principally reflecting strong growth in the US following the launch of Flonase OTC.  Momentum from key Q1 launches continued to drive innovation contribution, with sales from product introductions in the last three years representing approximately 15% of the quarter's sales.  Estimated in-market consumption of GSK Consumer Healthcare brands grew slightly ahead of the global market growth of approximately 6% in the quarter.

 

US sales grew 66% on a reported basis to £360 million, and 28% on a pro-forma basis.  Flonase was the region's primary growth driver and with quarterly sales of £45 million the brand has contributed to the category growth of 15%, achieving 11% market share in the quarter.  Oral health sales were driven by Sensodyne, which continued its strong performance with growth of 27%, helped by improved supply and the launch of Sensodyne Repair and Protect Whitening.  Excedrin grew 25% in the quarter, outperforming the category which grew at 6%, due to a strong base business performance combined with new variant launches and a price increase.  Nicorette Mini lozenges and alli continued their recovery from supply shortages in 2014 and Tums started to recover from the Q1 interruptions.

 

Sales in Europe grew 90% on a reported basis to £470 million and 7% pro-forma.  Oral health products reported growth of 11%, helped by improved supply relative to Q2 2014, but also reflecting strong performances from Sensodyne due to new advertising in key markets and the roll-out of Sensodyne True White in the UK, Sensodyne Repair and Protect in Germany, and Sensodyne Mouthwash across a number of markets together with some supply recovery of Aquafresh.  In Wellness, Voltaren grew 18% pro-forma, with strong performances across the region particularly in Germany, with strong marketing support behind a new advertising campaign.

 

International sales of £679 million grew 27% on a reported basis but declined 2% pro-forma.  India continued to perform well with double-digit pro-forma growth reflecting distribution expansion, enhanced marketing campaigns ("Drink Daily, Grow Daily" and "Power of Milk") and the achievement of a four-year market share high for Horlicks.  Oral health sales continued to grow in the region, up 9%, driven by Sensodyne.  Sales in Wellness were affected by the negative impact of reducing channel inventories in the acquired consumer businesses.

 

 

H1 2015 (£2,890 million; up 37%)

Turnover grew 37% to £2,890 million, benefiting significantly from the sales of the newly-acquired products included in the Joint Venture.  On a pro-forma basis, growth was 7% (5% volume and 2% price), primarily reflecting strong growth in the US following the launch of Flonase OTC.  Sales from new GSK innovations (product introductions within the last three years on a rolling basis) represented approximately 15% of sales.  Other key 2015 launches to date include Fenbid Chewable in China, Sensodyne Repair and Protect Whitening in the US and Germany, and the roll-out of Sensodyne Mouthwash.

 

US sales grew 56% on a reported basis to £690 million, and 31% on a pro-forma basis, partly reflecting a favourable comparison with H1 2014 which was impacted by supply constraints.  Flonase was the region's principal growth driver with year to date sales of £110 million.  Oral health sales were again driven by Sensodyne, up 20%, with the launch of Sensodyne Repair and Protect Whitening.  Sensodyne gained a percentage point of market share in the six months.  Excedrin grew 17% as a result of the launch of new variants and a price increase.  Nicorette Mini lozenges and alli returned to the market but Tums supply was constrained.

 

Sales in Europe grew 60% on a reported basis to £834 million and grew 6% pro-forma.  Oral health products reported growth of 10%, reflecting strong performances from both Sensodyne and Aquafresh following an improved supply position compared with H1 2014, new advertising in key markets, and the roll out of new Sensodyne variants across the region.  Wellness recorded 7% pro-forma growth, driven by regional Respiratory brands, which benefited from a strong cold and flu season, and a strong Voltaren performance across the region with 16% pro-forma growth.

 

International sales of £1,366 million grew 19% on a reported basis and were flat pro-forma.  India and South Africa reported double-digit pro-forma growth.  Oral health sales grew strongly at 10% across the region and Gastro-intestinal health sales grew 8%, driven by Eno in India and Brazil.  Overall Wellness growth was affected by a 20% decline in Panadol sales in Australia, largely due to private label competition and lower sales of Contac in China due to consumer trends towards milder remedies, combined with the negative impacts of reducing channel inventories in the acquired consumer businesses.  In Nutrition, Horlicks was up 4%, with strong sales growth in India of 9% as a result of new marketing campaigns, partly offset by some retailer destocking in South East Asia.

 

 

Sales from New Pharmaceutical and Vaccine products

 

 

Q2 2015

 

Q2 2015

 

H1 2015

 

H1 2015













 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%

 

£m

 

Reported
growth
CER%

 

Pro-forma
growth
CER%













Respiratory

 

 

 

 

 

 

 

 

 

 

 

Relvar/Breo Ellipta

53

 

>100

 

>100

 

94

 

>100

 

>100

Anoro Ellipta

15

 

>100

 

>100

 

27

 

>100

 

>100

Arnuity

1

 

-

 

-

 

1

 

-

 

-

Incruse Ellipta

1

 

-

 

-

 

2

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

CVMU

 

 

 

 

 

 

 

 

 

 

 

Eperzan/Tanzeum

9

 

-

 

-

 

13

 

-

 

-













Global Pharmaceuticals

79

 

>100

 

>100

 

137

 

>100

 

>100

 

 

 

 

 

 

 

 

 

 

 

 

Tivicay

145

 

>100

 

>100

 

257

 

>100

 

>100

Triumeq

149

 

-

 

-

 

230

 

-

 

-













Pharmaceuticals

373

 

>100

 

>100

 

624

 

>100

 

>100

 

 

 

 

 

 

 

 

 

 

 

 

Bexsero

30

 

-

 

>100

 

37

 

-

 

>100

Menveo

43

 

-

 

8

 

54

 

-

 

6













Vaccines

73

 

-

 

67

 

91

 

-

 

58

























Total

446

 

>100

 

>100

 

715

 

>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 assets, Nucala and Shingrix, are as set out above and, as a group are defined as New Pharmaceutical and Vaccine products.

 

Sales of New Pharmaceutical and Vaccine products were £446 million, grew £322 million pro-forma in Sterling terms, a rate in excess of 100% CER, in the quarter and represented approximately 10% of Pharmaceuticals and Vaccines turnover.

 

In the six months, sales of New Pharmaceutical and Vaccine products were £715 million, grew £542 million pro-forma in Sterling terms, a rate in excess of 100% CER, and represented approximately 8% of Pharmaceuticals and Vaccines turnover.

 

 

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.  R&D expenditure for Q2 2015 is analysed below.

 


Q2 2015
£m


H1 2015
£m


H1 2014
£m







Discovery

199

 

387

 

355

Development

253

 

567

 

653

Facilities and central support functions

91

 

199

 

232







Pharmaceuticals R&D

543

 

1,153

 

1,240

Vaccines

124

 

248

 

234

Consumer Healthcare

64

 

119

 

76







Core R&D

731

 

1,520

 

1,550

Amortisation and impairment of intangible assets

14

 

48

 

75

Major restructuring costs

55

 

87

 

9

Acquisition accounting and other

12

 

24

 

34







Total R&D

812

 

1,679

 

1,668







 

 

Pipeline of GSK's Phase II/III assets


Listed below is our quarterly update to show events and changes to the late-stage pipeline during the quarter and up to the date of this announcement.  The table comprises the ~40 NMEs in Phase II/III clinical development, plus significant line extensions in Phase III.

 

Since the Q1 2015 Results Announcement, the following pipeline milestones have been achieved:



·

Announced start of Phase III study of combination use of dolutegravir and rilpivirine on 6 May 2015;

·

FDA AdCom recommended US approval of Nucala (mepolizumab) for adult patients with severe asthma with eosinophilic inflammation on 11 June 2015;

·

Nucala filed in Japan for severe eosinophilic asthma on 22 May 2015;

·

Announced CHMP positive opinion for Mosquirix on 24 July 2015.

 

Respiratory

Phase

'277 (TNFR1 domain antibody)

Acute lung injury

Ph II

'081 (MABA)

COPD

Ph II

danirixin (CXCR2 chemokine receptor antagonist)

COPD

Ph II

'557 (PI3K inhibitor)

COPD & asthma

Ph II

'035 (toll-like receptor 7 agonist)

Asthma

Ph II

'881 (recombinant human angiotensin converting enzyme 2)

Acute lung injury

Ph II

Nucala (mepolizumab)

Severe eosinophilic asthma

Filed (US & EU) Nov 2014.

COPD

Ph III

FF+UMEC+VI

COPD

Ph III

Cardiovascular & Metabolic

Phase

otelixizumab (CD3 monoclonal antibody)

New Onset Type I Diabetes

Ph II

'863 (prolyl hydroxylase inhibitor)

Anaemia associated with chronic renal disease

Ph II

'672 (ileal bile acid transport inhibitor)

Type 2 diabetes & cholestatic pruritis

Ph II

camicinal (motilin receptor agonist)

Delayed gastric emptying

Ph II

losmapimod (p38 kinase inhibitor)

Acute coronary syndrome (ACS)

Ph III

retosiban (oxytocin antagonist)

Threatened pre-term labour

Ph III

HIV/Infectious Diseases

Phase

cabotegravir (HIV integrase inhibitor)

HIV treatment and pre-exposure prophylaxis

Ph II

'944 (type 2 topoisomerase inhibitor)

Bacterial infections

Ph II

tafenoquine (8-aminoquinoline)

Plasmodium vivax malaria

Ph III

dolutegravir+ rilpivirine (HIV integrase inhibitor + NNRTI)

HIV infection - two drug maintenance regimen

Ph III

Immuno-inflammation

Phase

'165 (granulocyte macrophage colony-stimulating factor monoclonal antibody)

Rheumatoid arthritis

Ph II

Benlysta (s.c.)

Systemic lupus erythematosus

Ph III

sirukumab (IL6 human monoclonal antibody)

Rheumatoid arthritis

Ph III

Oncology

Phase

'794 (NY-ESO-1 T cell receptor)1

Cancer

Ph II

tarextumab (Anti-Notch 2/3 Mab)2

Cancer

Ph II

Vaccines


Phase

RSV

Respiratory syncytial virus prophylaxis (maternal immunisation)

Ph II

Group B Streptococcus

Group B Streptococcus prophylaxis (maternal immunisation)

Ph II

Pseudomonas3

Prevention of Pseudomonas infection

Ph II

S. pneumoniae next generation

Streptococcus pneumoniae disease prophylaxis

Ph II

Men ABCWY

Meningococcal A,B,C,W,Y disease prophylaxis

Ph II

Malaria next generation

Malaria prophylaxis (Plasmodium falciparum)

Ph II

Tuberculosis

Tuberculosis prophylaxis

Ph II

Hepatitis C

Hepatitis C virus prophylaxis

Ph II

NTHi

Non-typeable Haemophilus influenza prophylaxis

Ph II

MMR

Measles, mumps and rubella prophylaxis

Ph III (US)

MAGE-A3

Melanoma

Ph III

Ebola

Ebola Zaire virus

Ph III

Shingrix

Shingles prophylaxis

Ph III

Mosquirix (RTS,S)

Malaria prophylaxis

Filed (EU) July 2014

Rare diseases

Phase

'852 + '898 (SAP monoclonal antibody + SAP depleter (CPHPC))

Amyloidosis

Ph II

'274 (ex-vivo stem cell gene therapy)

Metachromatic leukodystrophy

Ph II

'275 (ex-vivo stem cell gene therapy)

Wiscott-Aldrich syndrome

Ph II

'273 (ex-vivo stem cell gene therapy)

Adenosine deaminase severe combined immune deficiency (ADA-SCID)

Filed (EU) May 2015

US: Ph II/III

'728 (antisense oligonucleotide)4

Transthyretin amyloidosis

Ph III

Other Pharmaceuticals

Dermatology

Phase

'512 (non-steroidal anti-inflammatory)

Atopic dermatitis & psoriasis

Ph II

Toctino

Chronic hand eczema

Ph III (US)

Neurosciences

Phase

rilapladib (Lp-PLA2 inhibitor)

Alzheimer's disease

Ph II

'776 (beta amyloid monoclonal antibody)

Geographic retinal atrophy/Alzheimer's disease

Ph II

 

1

Option-based alliance with Adaptimmune Ltd.

2

Option-based alliance with OncoMed Pharmaceuticals

3

Option-based alliance with Valneva

4

Option-based alliance with ISIS Pharmaceuticals

 

 

Definitions

 

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 this approach provides a clearer view of the underlying performance of the core business and should make the Group's results more comparable with the majority of its peers.

 

CER growth

In order to illustrate underlying performance, it is the Group's practice to discuss its results in terms of constant exchange rate (CER) growth.  This represents growth calculated as if the exchange rates used to determine the results of overseas companies in Sterling had remained unchanged from those used in the comparative period.  All commentaries are presented in terms of CER growth, unless otherwise stated.

 

Pro-forma growth

The 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 Q2 or H1 2015 with the turnover for Q2 or H1 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 results

Pro-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 29.

 

Free cash flow

Free 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 flow

Adjusted free cash flow excludes payments made to settle legal disputes.

 

Free cash flow conversion

Free 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 activities

Adjusted net cash inflow from operating activities excludes payments made to settle legal disputes.

 

Working capital conversion cycle

The 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 acknowledgements

Brand 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 outlook

In 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 current pipeline assets mepoluzimab and Shingrix.  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.

 

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 statements

The 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 information

The 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 Q2 2015 earnings report dated 29 July 2015 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

 

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:

David Mawdsley

+44 (0) 20 8047 5502

(London)


Simon Steel

+44 (0) 20 8047 5502

(London)





US Media enquiries:

Sarah Alspach

+1 215 715 1048

(Washington)


Jenni Ligday

+1 202 715 1049

(Washington)





Analyst/Investor enquiries:

Ziba Shamsi

+44 (0) 20 8047 5543

(London)


Tom Curry

+1 215 751 5419

(Philadelphia)


Gary Davies

+44 (0) 20 8047 5503

(London)


James Dodwell

+44 (0) 20 8047 2406

(London)


Jeff McLaughlin

+1 215 751 7002

(Philadelphia)

 

 

 

Registered in England & Wales:

No. 3888792


Registered Office:

980 Great West Road

Brentford, Middlesex

TW8 9GS

 

 

Financial information

 

Income statements

 


Q2 2015
£m


Q2 2014
£m


H1 2015
£m


H1 2014
£m









TURNOVER

5,888 

 

5,561 

 

11,510 

 

11,174 

 








Cost of sales

(2,005)


(1,722)


(4,108)


(3,465)









Gross profit

3,883 

 

3,839 

 

7,402 

 

7,709 

 








Selling, general and administration

(2,541)


(2,055)


(4,766)


(4,026)

Research and development

(812)


(809)


(1,679)


(1,668)

Royalty income

62 

 

72 

 

139 

 

142 

Other operating income/(expense)

(257)


90 


8,455 


46 









OPERATING PROFIT

335 

 

1,137 

 

9,551 

 

2,203 

 

 

 

 

 

 

 

 

Finance income

12 

 

18 

 

44 

 

36 

Finance expense

(194)

 

(177)

 

(385)

 

(359)

Profit on disposal of associates

 

- 

 

844 

 

Share of after tax (losses)/profits of associates
  and joint ventures

(2)

 

 

21 

 









PROFIT BEFORE TAXATION

152 

 

986 

 

10,075 

 

1,889 

 

 

 

 

 

 

 

 

Taxation

(37)

 

(284)

 

(1,922)

 

(468)

Tax rate %

24.3%

 

28.8%

 

19.1%

 

24.8%









PROFIT AFTER TAXATION FOR THE PERIOD

115 

 

702 

 

8,153 

 

1,421 









 

 

 

 

 

 

 

 

(Loss)/profit attributable to non-controlling interests

(34)

 

48 

 

(85)

 

99 

Profit attributable to shareholders

149 

 

654 

 

8,238 

 

1,322 









 

115 

 

702 

 

8,153 

 

1,421 









 

 

 

 

 

 

 

 

EARNINGS PER SHARE

3.1p

 

13.6p

 

170.7p

 

27.5p









 

 

 

 

 

 

 

 

Diluted earnings per share

3.1p

 

13.4p

 

169.2p

 

27.1p









 

 

Statement of comprehensive income

 

 

Q2 2015
£m

 

Q2 2014
£m





Profit for the period

115 

 

702 

 

 

 

 

Items that may be reclassified subsequently to income statement:

 

 

 

Exchange movements on overseas net assets and net investment hedges

(69)

 

(70)

Fair value movements on available-for-sale investments

(39)

 

105 

Reclassification of fair value movements on available-for-sale investments

(10)

 

(3)

Deferred tax on fair value movements on available-for-sale investments

(11)

 

Deferred tax reversed on reclassification of available-for-sale investments

 

2 

Fair value movements on cash flow hedges

(6)

 

(2)

Deferred tax on fair value movements on cash flow hedges

 

Reclassification of cash flow hedges to income statement

 





 

(126)

 

37 





Items that will not be reclassified to income statement:

 

 

 

Exchange movements on overseas net assets of non-controlling interests

(26)

 

(10)

Remeasurement gains on defined benefit plans

534 

 

30 

Deferred tax on remeasurement gains on defined benefit plans

(145)

 

(2)





 

363 

 

18 





Other comprehensive income for the period

237 

 

55 





Total comprehensive income for the period

352 

 

757 





 

 

 

 

Total comprehensive income for the period attributable to:

 

 

 

   Shareholders

412 

 

719 

   Non-controlling interests

(60)

 

38 





 

352 

 

757 





 

 

Statement of comprehensive income

 

 

H1 2015
£m

 

H1 2014
£m





Profit for the period

8,153 

 

1,421 

 

 

 

 

Items that may be reclassified subsequently to income statement:

 

 

 

Exchange movements on overseas net assets and net investment hedges

(401)

 

(87)

Fair value movements on available-for-sale investments

202 

 

75 

Reclassification of fair value movements on available-for-sale investments

(272)

 

(4)

Deferred tax on fair value movements on available-for-sale investments

(35)

 

(14)

Deferred tax reversed on reclassification of available-for-sale investments

 

2 

Fair value movements on cash flow hedges

(12)

 

(3)

Deferred tax on fair value movements on cash flow hedges

 

Reclassification of cash flow hedges to income statement

10 

 

Share of other comprehensive expense of associates and joint ventures

(77)

 

13 





 

(580)

 

(16)





Items that will not be reclassified to income statement:

 

 

 

Exchange movements on overseas net assets of non-controlling interests

(6)

 

(5)

Remeasurement gains/(losses) on defined benefit plans

206 

 

(147)

Deferred tax on remeasurement gains/(losses) on defined benefit plans

(70)

 

40 





 

130 

 

(112)





Other comprehensive expense for the period

(450)

 

(128)





Total comprehensive income for the period

7,703 

 

1,293 





 

 

 

 

Total comprehensive income for the period attributable to:

 

 

 

   Shareholders

7,794 

 

1,199 

   Non-controlling interests

(91)

 

94 





 

7,703 

 

1,293 





 

 

Pharmaceuticals and Vaccines turnover

Three months ended 30 June 2015

 


Total 


US 


Europe 


International 


















£m


Growth
CER%


£m


Growth
CER%


£m


Growth
CER%


£m


Growth
CER%

















Respiratory

1,467


(6)


704 


(12)


369 


(8)


394


5 

Anoro Ellipta

15


>100 


12 


>100 


3 


- 


-


- 

Avamys/Veramyst

59


9 


7 


(14)


22 


- 


30


21 

Flixotide/Flovent

159


(10)


100 


(15)


22 


8 


37


(8)

Relvar/Breo Ellipta

53


>100 


19 


>100 


19 


>100 


15


>100 

Seretide/Advair

960


(13)


484 


(17)


267 


(16)


209


- 

Ventolin

160


2 


81 


3 


28 


- 


51


2 

Other

61


5 


1 


- 


8 


(11)


52


4 

















Cardiovascular, metabolic and urology (CVMU)

242


5 


102 


2 


66 


4 


74


10 

Avodart

192


(2)


66 


(9)


66 


6 


60


(2)

Other

50


45 


36 


33 


- 


(100)


14


100 


-


-


-


-


-


-


-


-

Immuno-inflammation

56


27 


51 


21 


3 


33 


2


- 

Benlysta

56


30 


51 


21 


3 


33 


2


>100 

Other

-


(100)


- 


- 


- 


- 


-


(100)


-


-

-


-


-

-

-

-

Oncology

19


(94)


(2)


<(100)


(1)


(100)


22


(71)


-


-

-


-


-

-

-

-

Other pharmaceuticals

542


(6)


61 


>100 


138 


(7)


343


(13)

Dermatology

105


(8)


10 


(9)


34 


(12)


61


(5)

Augmentin

143


2 


- 


- 


37 


(5)


106


4 

Other anti-bacterials

42


(19)


2 


- 


12 


- 


28


(26)

Rare diseases

94


2 


11 


22 


30 


(3)


53


2 

Other

158


(11)


38 


>100 


25 


(14)


95


(30)

















Innovative Pharmaceuticals

2,326


(14)


916 


(16)


575 


(19)


835


(7)

















Established Products

655


(5)


168 


(16)


121 


(13)


366


3 

Coreg

29


(10)


29 


(10)


- 


- 


-


- 

Hepsera

18


(14)


- 


- 


- 


- 


18


(14)

Imigran/Imitrex

46


7 


27 


23 


13 


(7)


6


(14)

Lamictal

132


6 


67 


2 


23 


- 


42


16 

Lovaza

24


(22)


24 


(22)


- 


- 


-


- 

Requip

23


(12)


- 


(100)


7 


(36)


16


14 

Serevent

24


(8)


11 


11 


9 


(23)


4


- 

Seroxat/Paxil

43


(6)


(7)


- 


9 


- 


41


8 

Valtrex

46


30 


6 


(38)


7 


(13)


33


71 

Zeffix

33


(23)


1 


- 


1 


- 


31


(24)

Other

237


(11)


10 


(65)


52 


(15)


175


(1)

















Global Pharmaceuticals

2,981


(12)


1,084 


(16)


696 


(18)


1,201


(4)

















HIV

559


59 


308 


84 


172 


46 


79


26 

Combivir

9


(44)


3 


(1)


2 


(44)


4


(56)

Epzicom/Kivexa

185


1 


67 


(10)


80 


4 


38


17 

Lexiva/Agenerase

18


(10)


10 


(23)


3 


(27)


5


53 

Selzentry

31


(18)


15 


(3)


13 


(6)


3


(67)

Tivicay

145


>100 


95 


83 


37 


>100 


13


>100 

Triumeq

149


- 


109 


- 


31 


- 


9


- 

Trizivir

7


- 


2 


>100 


4 


(23)


1


5 

Other

15


(11)


7 


14 


2 


(50)


6


(22)

















Pharmaceuticals

3,540


(6)


1,392 


(5)


868 


(10)


1,280


(3)

































Vaccines

814


11 


240 


13 


274 


27 


300


(2)

Bexsero

30


- 


2 


- 


24 


- 


4


- 

Boostrix

96


3 


52 


9 


31 


31 


13


(38)

Cervarix

18


(14)


1 


- 


9 


- 


8


(30)

Fluarix, FluLaval

7


29 


(4)


<(100)


- 


- 


11


83 

Hepatitis

121


(15)


58 


(7)


37 


(15)


26


(29)

Infanrix, Pediarix

187


(4)


64 


(12)


81 


(3)


42


7 

Menveo

43


- 


25 


- 


7 


- 


11


- 

Rabipur/Rabivert

15


- 


5 


- 


6 


- 


4


- 

Rotarix

101


2 


30 


17 


15 


7 


56


(5)

Synflorix

77


(20)


- 


- 


8 


- 


69


(22)

Other

119


48 


7 


- 


56 


63 


56


29 


















4,354


(3)


1,632 


(3)


1,142 


(3)


1,580


(3)

















 

 

Pharmaceuticals and Vaccines turnover

Six months ended 30 June 2015

 


Total 


US 


Europe 


International 


















£m


Growth
CER%


£m


Growth
CER%


£m


Growth
CER%


£m


Growth
CER%

















Respiratory

2,875


(8)


1,287 


(16)


761


(6)


827


5 

Anoro Ellipta

27


>100 


21 


>100 


5


- 


1


- 

Avamys/Veramyst

130


8 


13 


(20)


39


2 


78


17 

Flixotide/Flovent

312


(16)


183 


(27)


49


2 


80


4 

Relvar/Breo Ellipta

94


>100 


33 


>100 


35


>100 


26


>100 

Seretide/Advair

1,858


(14)


876 


(19)


558


(14)


424


(2)

Ventolin

321


(4)


159 


(12)


60


3 


102


6 

Other

133


5 


2 


- 


15


(6)


116


4 

















Cardiovascular, metabolic and urology (CVMU)

460


(2)


185 


(3)


134


(3)


141


1 

Avodart

371


(4)


122 


(11)


132


4 


117


(7)

Other

89


12 


63 


19 


2


(91)


24


59 

















Immuno-inflammation

116


23 


106 


21 


7


33 


3


50 

Benlysta

107


27 


97 


24 


7


33 


3


>100 

Other

9


(11)


9 


- 


-


- 


-


(100)

















Oncology

235


(58)


91 


(63)


69


(62)


75


(40)

















Other pharmaceuticals

1,067


(7)


103 


29 


287


(3)


677


(12)

Dermatology

214


(10)


22 


(13)


71


(8)


121


(10)

Augmentin

283


(1)


- 


- 


88


(4)


195


1 

Other anti-bacterials

89


(17)


3 


- 


28


(9)


58


(22)

Rare diseases

185


(4)


23 


(33)


62


1 


100


1 

Other

296


(10)


55 


>100 


38


5 


203


(26)

















Innovative Pharmaceuticals

4,753


(12)


1,772 


(17)


1,258


(12)


1,723


(5)

















Established Products

1,305


(13)


331 


(31)


253


(14)


721


(3)

Coreg

56


(16)


56 


(16)


-


- 


-


- 

Hepsera

40


(11)


- 


- 


-


- 


40


(11)

Imigran/Imitrex

84


(4)


45 


(4)


26


(7)


13


- 

Lamictal

259


2 


130 


1 


46


(6)


83


9 

Lovaza

52


(64)


52 


(64)


-


- 


-


- 

Requip

45


(13)


1 


(75)


14


(27)


30


7 

Serevent

47


(11)


21 


6 


19


(23)


7


(11)

Seroxat/Paxil

86


(13)


(7)


- 


17


(18)


76


(4)

Valtrex

88


24 


11 


(29)


13


(13)


64


53 

Zeffix

72


(19)


1 


(50)


3


- 


68


(19)

Other

476


(14)


21 


(60)


115


(14)


340


(8)

















Global Pharmaceuticals

6,058


(12)


2,103 


(20)


1,511


(12)


2,444


(5)

















HIV

1,005


51 


537 


76 


326


40 


142


18 

Combivir

19


(41)


6 


(9)


5


(48)


8


(47)

Epzicom/Kivexa

361


1 


127 


(10)


162


6 


72


10 

Lexiva/Agenerase

34


(19)


20 


(21)


7


(32)


7


4 

Selzentry

61


(14)


29 


(1)


25


(9)


7


(50)

Tivicay

257


>100 


167 


>100 


66


>100 


24


>100 

Triumeq

230


- 


171 


- 


49


- 


10


- 

Trizivir

14


(22)


4 


(6)


8


(27)


2


(26)

Other

29


(23)


13 


(19)


4


(38)


12


(20)

















Pharmaceuticals

7,063


(7)


2,640 


(10)


1,837


(6)


2,586


(4)

































Vaccines

1,513


11 


457 


14 


498


15 


558


5 

Bexsero

37


- 


2 


- 


30


- 


5


- 

Boostrix

162


5 


89 


11 


48


29 


25


(33)

Cervarix

46


(14)


2 


- 


19


(16)


25


(14)

Fluarix, FluLaval

11


(20)


(1)


<(100)


-


- 


12


(7)

Hepatitis

264


(1)


122 


12 


78


(10)


64


(7)

Infanrix, Pediarix

373


(5)


133 


(12)


158


(6)


82


10 

Menveo

54


- 


32 


- 


8


- 


14


- 

Rabipur/Rabivert

20


- 


8 


- 


7


- 


5


- 

Rotarix

199


7 


62 


14 


32


3 


105


6 

Synflorix

137


(10)


- 


- 


17


(10)


120


(10)

Other

210


40 


8 


>100 


101


47 


101


29 


















8,576


(4)


3,097


(7)


2,335


(2)


3,144


(2)

















 

 

Balance sheet

 


30 June 2015
£m


30 June 2014
£m


31 December 2014
£m

ASSETS






Non-current assets






Property, plant and equipment

9,319 


8,667 


9,052 

Goodwill

5,072 


3,666 


3,724 

Other intangible assets

16,614 


8,413 


8,320 

Investments in associates and joint ventures

85 


319 


340 

Other investments

1,666 


1,283 


1,114 

Deferred tax assets

2,452 


2,108 


2,688 

Other non-current assets

794 


841 


735







Total non-current assets

36,002 


25,297 


25,973 







Current assets






Inventories

4,797 


4,111 


4,231 

Current tax recoverable

96 

-

120 


138 

Trade and other receivables

5,314 


5,000 


4,600 

Derivative financial instruments

90 


93 


146 

Liquid investments

69 


64 


69 

Cash and cash equivalents

7,546 


3,163 


4,338 

Assets held for sale

204 


1,002 


1,156 







Total current assets

18,116 


13,553 


14,678 







TOTAL ASSETS

54,118 


38,850 


40,651 







LIABILITIES






Current liabilities






Short-term borrowings

(2,472)


(3,143)


(2,943)

Trade and other payables

(8,155)


(6,949)


(7,958)

Derivative financial instruments

(117)


(96)


(404)

Current tax payable

(1,827)


(1,215)


(945)

Short-term provisions

(1,225)


(849)


(1,045)







Total current liabilities

(13,796)


(12,252)


(13,295)







Non-current liabilities






Long-term borrowings

(14,696)


(14,507)


(15,841)

Deferred tax liabilities

(1,721)


(698)


(445)

Pensions and other post-employment benefits

(3,143)


(2,264)


(3,179)

Other provisions

(469)


(515)


(545)

Derivative financial instruments

(7)


(23)


(9)

Other non-current liabilities

(9,734)


(1,755)


(2,401)







Total non-current liabilities

(29,770)


(19,762)


(22,420)







TOTAL LIABILITIES

(43,566)


(32,014)


(35,715)







NET ASSETS

10,552 


6,836 


4,936 







EQUITY






Share capital

1,339 


1,338 


1,339 

Share premium account

2,792 


2,706 


2,759 

Retained earnings

556 


(158)


(2,074)

Other reserves

2,133 


2,232 


2,239 







Shareholders' equity

6,820 


6,118 


4,263 







Non-controlling interests

3,732 


718 


673 







TOTAL EQUITY

10,552 


6,836 


4,936 







 

 

Statement of changes in equity

 


Share
capital
£m

Share
premium
£m

Retained
earnings
£m

Other
reserves
£m

Share-
holder's
equity
£m

Non-
controlling
interests
£m

Total
equity
£m


------------

------------

------------

------------

------------

------------

------------

 








At 1 January 2015

1,339 

2,759 

(2,074)

2,239 

4,263 

673 

4,936 









   Profit/(loss) for the period



8,238 


8,238 

(85)

8,153 

   Other comprehensive expense for the period



(338)

(106)

(444)

(6)

(450)




------------

------------

------------

------------

------------

Total comprehensive income/(expense)
   for the period



7,900 

(106)

7,794 

(91)

7,703 




------------

------------

------------

------------

------------

Distributions to non-controlling interests






(210)

(210)

Dividends to shareholders



(2,035)


(2,035)


(2,035)

Gain on transfer of net assets into
   Consumer Healthcare Joint Venture



2,881 


2,881 


2,881 

Consumer Healthcare Joint Venture
   put option



(6,204)


(6,204)


(6,204)

Changes in non-controlling interests






3,360 

3,360 

Shares issued

- 

33 



33 


33 

Shares acquired by ESOP Trusts




(78)

(78)


(78)

Write-down on shares held by ESOP
   Trusts



(78)

78 


Share-based incentive plans



166 


166 


166 


------------

------------

------------

------------

------------

------------

------------

At 30 June 2015

1,339 

2,792 

556 

2,133 

6,820 

3,732 

10,552 


------------

------------

------------

------------

------------

------------

------------

 

 








At 1 January 2014

1,336 

2,595 

913 

2,153 

6,997 

815 

7,812 









   Profit for the period



1,322 


1,322 

99 

1,421 

   Other comprehensive
     (expense)/income for the period



(182)

59 

(123)

(5)

(128)




------------

------------

------------

------------

------------

Total comprehensive income
   for the period



1,140 

59 

1,199 

94 

1,293 




------------

------------

------------

------------

------------

Distributions to non-controlling interests






(160)

(160)

Dividends to shareholders



(2,009)


(2,009)


(2,009)

Changes in non-controlling interests



(54)


(54)

(31)

(85)

Shares issued

111 



113 


113 

Forward contract relating to non-controlling
   interest




21 

21 


21 

Ordinary shares purchased and held as
   Treasury shares



(238)


(238)


(238)

Shares acquired by ESOP Trusts




(73)

(73)


(73)

Write-down on shares held by ESOP Trusts



(72)

72 


Share-based incentive plans



162 


162 


162 


------------

------------

------------

------------

------------

------------

------------

At 30 June 2014

1,338 

2,706