Issued:
Wednesday, 3 February 2021, London U.K.
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GSK delivers FY 2020 reported sales of £34 billion, +1% AER,
+3% CER and Adjusted
EPS of 115.9p, -6% AER, -4% CER, in line with guidance; Total EPS
115.5p, +23% AER
Strong
growth of new and specialty products; on track to deliver two
exciting new companies
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Highlights
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Strong sales performance from key growth drivers in HIV,
Respiratory, Oncology and Consumer Healthcare offset disruption
from COVID-19 to adult vaccinations
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●
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Pharmaceuticals
£17 billion -3% AER, -1% CER; new and specialty products
£9.7 billion +11% AER, +12% CER
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●
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Vaccines
£7 billion -2% AER, -1% CER. Shingrix £2 billion +10% AER, +11%
CER
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●
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Consumer
Healthcare £10 billion +12% AER, +14% CER (pro-forma -2%
CER*)
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●
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New
Biopharma product portfolio strengthened with 9 approvals in 2020
and Cabenuva in the US in January 2021
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Effective cost control supports delivery of adjusted earnings per
share in line with FY 2020 guidance
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●
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Total
Group operating margin 22.8%. Total EPS 115.5p +23% AER, +26%
CER
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●
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Adjusted
Group operating margin 26.1%. Adjusted EPS 115.9p -6% AER, -4%
CER
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●
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Q4 net
cash flow from operations £4 billion. Free cash flow £3
billion
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Significant progress on Biopharma pipeline with over 20 assets now
in late-stage clinical trials
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20+ new
product launches planned by 2026, 10+ with potential peak annual
revenues in excess of $1 billion
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Pivotal
study starts/data expected in 2021 for RSV vaccine in older adults,
COVID-19 assets, long-acting anti IL-5 antagonist, daprodustat and
dostarlimab
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Oncology
momentum building: 15 potential medicines in trials, including 9
immuno-oncology and 3 cell therapies
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20+
deals executed, including acquisitions of new antibody, mRNA and
genetics/genomics technologies
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On track for separation into new standalone Biopharma and Consumer
Healthcare companies in 2022
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●
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2020
targets met with £0.3 billion annual cost savings and
£1.1 billion divestment proceeds achieved
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●
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Biopharma
investor update in June to set out progress on innovation,
commercial execution and growth outlook together with capital
allocation priorities
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Sustained progress and leadership in ESG
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Sector
leading in key indices, including DJSI and Sustainalytics, and #1
rank in 2021 Access to Medicines Index
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New
environmental targets set to achieve net zero impact on climate and
net positive impact on nature by 2030
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2021 Adjusted EPS expected to decline by a mid to high-single digit
percentage in CER
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●
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Reflects
further growth in new and specialty products and Consumer
Healthcare, increased investment in our pipeline and deferral of
strong growth in Vaccines performance due to impact of COVID-19
immunisation programmes
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●
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2022
outlook remains unchanged. Continue to expect meaningful
improvement in revenues and margins
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Dividend of 23p/share declared for Q4 2020; 80p/share for FY 2020.
Expected dividend of 80p/share for FY 2021
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●
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Distribution
policy for new GSK to be implemented in 2022 to support growth and
investment. Aggregate distributions expected to be lower than at
present
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Emma Walmsley, Chief Executive Officer, GSK: “2020 was an extraordinary year
for all of us, and one of significant progress for GSK. We invested
in our pipeline and new launches, readied the company for
separation, and had to rapidly mobilise and respond to the
pandemic. I am extremely proud of the agility and resilience our
teams have shown. We delivered our guidance for the year,
offsetting the significant impact of COVID-19 on adult
vaccinations, with strong performances of new products and
effective cost control.
“Importantly,
progress against our strategic goals remains firmly on track. We
are building a high value biopharma pipeline, have substantially
integrated our Consumer JV and have delivered all our first year
targets for our two year separation programme. This means we are in
a strong position to launch new competitive, standalone Biopharma
and Consumer healthcare companies in 2022. In doing so, we have
high confidence that we can achieve meaningful global impact to
health and significant value creation for
shareholders.”
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The
Total results are presented in summary on page 2 and under
‘Financial performance’ on pages 12 and 29 and Adjusted
results reconciliations are presented on pages 24, 25, 39 and 40.
Adjusted results are a non-IFRS measure that may be considered in
addition to, but not as a substitute for, or superior to,
information presented in accordance with IFRS. Adjusted results are
defined on page 10 and £% or AER% growth, CER% growth, free
cash flow and other non-IFRS measures are defined on page 63. GSK
provides guidance on an Adjusted results basis only, for the
reasons set out on page 11. All expectations, guidance and targets
regarding future performance and dividend payments should be read
together with ‘Outlook, assumptions and cautionary
statements’ on pages 64 and 65.
This announcement contains inside
information.
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*
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Reported
AER and CER growth rates for 2020 include five months’
results of the former Pfizer consumer healthcare business in 2019.
Pro-forma CER growth rates are calculated as if the equivalent
seven months of Pfizer consumer healthcare business results, as
reported by Pfizer, were included in the comparative period of
2019. See ‘Pro-forma growth’ on page 11.
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2020 results
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2020
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Growth
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Q4 2020
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Growth
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£m
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£%
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CER%
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£m
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£%
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CER%
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Turnover
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34,099
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1
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3
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8,739
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(2)
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(1)
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Total
operating profit
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7,783
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12
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15
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1,061
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(44)
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(44)
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Total
earnings per share
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115.5p
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23
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26
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13.6p
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(48)
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(48)
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Adjusted
operating profit
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8,906
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(1)
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2
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1,817
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(2)
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(1)
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Adjusted
earnings per share
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115.9p
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(6)
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(4)
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23.3p
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(6)
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(5)
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Net
cash from operating activities
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8,441
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5
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3,855
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12
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Free
cash flow
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5,406
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7
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3,106
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20
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2021 guidance
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We set out below earnings guidance for 2021.
We
delivered on our strategic priorities in 2020. In 2021, as planned
we will continue to increase investment in our pipeline, build on
our top-line momentum for key growth drivers and largely complete
readiness for separation. Assuming healthcare systems and consumer
trends approach normality in the second half of the year, we expect
Pharmaceutical revenue to grow flat to low-single digits and
Consumer Healthcare revenue to grow low to mid-single digits
excluding brands divested/under review with above market growth.
For our Vaccines business, we now anticipate further disruption
during the first half of the year, given governments’
prioritisation of COVID-19 vaccination programmes and the
resurgence in late 2020 of the pandemic. This is expected to impact
adult and adolescent immunisations, including Shingrix, notably in the US. Despite
this short-term impact we remain very confident in demand for these
products, and expect strong recovery and contribution to growth
from Shingrix in the second
half of the year. We expect Vaccines revenue for 2021 to grow flat
to low-single digits. Reflecting these factors, our guidance range
for 2021 is a decline of mid to high-single digit percent Adjusted
EPS at CER.
At our
Biopharma investor update in June we plan to set out in detail the
growth prospects and financial outlook for the new Biopharma
company over the medium term, including a detailed review of the
pipeline we have been building over recent years. Alongside these
we will provide details of a new distribution policy which reflects
the optimised capital structure and investment priorities focused
on delivering sustainable long-term shareholder value. We anticipate that this new policy will
deliver competitive and attractive returns informed by appropriate
earnings pay-out ratios through the investment cycle well covered
by Free Cash Flow and, importantly, expected growth potential. We
expect that aggregate distributions for GSK will be lower than at
present. This new policy will be implemented for dividends paid in
respect of 2022.
All
expectations, guidance and targets regarding future performance and
dividend payments should be read together with ‘Outlook,
assumptions and cautionary statements’ on pages 64 and 65. If
exchange rates were to hold at the closing rates on 31 January 2021
($1.37/£1, €1.13/£1 and Yen 144/£1) for the
rest of 2021, the estimated negative impact on 2021 Sterling
turnover growth would be 4% and if exchange gains or losses were
recognised at the same level as in 2020, the estimated negative
impact on 2021 Sterling Adjusted EPS growth would be around
7%.
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Results presentation
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A
webcast of the quarterly results presentation hosted by Emma
Walmsley, GSK CEO, will be held at 2pm GMT on 3 February 2021.
Presentation materials will be published on www.gsk.com prior to
the webcast and a transcript of the webcast will be published
subsequently.
Information
available on GSK’s website does not form part of, and is not
incorporated by reference into, this Results
Announcement.
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Operating performance – 2020
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Turnover
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2020
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||||||
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£m
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Growth
£%
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Growth
CER%
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Pro-forma
growth
CER%
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Pharmaceuticals
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17,056
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(3)
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(1)
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(1)
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Vaccines
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6,982
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(2)
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(1)
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(1)
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Consumer
Healthcare
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10,033
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12
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14
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(2)
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34,071
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1
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3
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(2)
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Corporate
and other unallocated turnover
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28
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Group
turnover
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34,099
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1
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3
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(2)
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Group turnover was £34,099 million in the year, up 1% AER, 3%
CER but down 2% CER on a pro-forma basis. On a pro-forma basis,
Group turnover was down 2% CER, but up 1% at CER excluding the
impact of divestments in Vaccines and brands divested or under
review in Consumer Healthcare.
Pharmaceuticals
turnover in the year was £17,056 million, down 3% AER, 1% CER.
Respiratory sales were up 22% AER, 23% CER, to £3,749 million,
on growth of Trelegy,
Nucala and Relvar/Breo. HIV sales were flat at
AER, up 1% CER, to £4,876 million, with growth in Juluca and Dovato partly offset by declines in
Tivicay and Triumeq. Sales of Established
Pharmaceuticals declined 16% AER, 15% CER to £7,332
million.
Vaccines turnover declined 2% AER, 1% CER to £6,982 million,
primarily driven by the adverse impact of the COVID-19 pandemic on
Hepatitis vaccines, DTPa-containing vaccines, Synflorix and Bexsero, together with the divestment of
Rabipur
and Encepur. This decline was partly offset by higher sales
of Influenza vaccines across all regions and by Shingrix growth in Europe, China and the US together
with Cervarix strong performance in China.
Reported Consumer Healthcare sales grew 12% AER and 14% CER to
£10,033 million for the full year, largely driven by the
inclusion of the Pfizer portfolio, partly offset by brands
divested/under review. On a pro-forma basis, sales declined 2% CER,
but grew 4% CER excluding brands divested/under review, reflecting
the underlying strength of brands across the portfolio and
categories, strong growth in e-commerce, and successful execution
meeting evolving consumer demand as a result of the
pandemic.
Operating profit
Total
operating profit was £7,783 million in 2020 compared with
£6,961 million in 2019. The total operating margin was 22.8%.
Adjusted operating profit was £8,906 million, 1% lower than
2019 at AER and 2% higher at CER on a turnover increase of 3% CER.
The Adjusted operating margin of 26.1% was 0.5 percentage points
lower at AER, and 0.2 percentage points lower on a CER basis than
in 2019. This reflected the profit on disposal of the Horlicks and other Consumer Healthcare
brands and resultant sale of shares in Hindustan Unilever as well
as increased income from asset disposals. This was partly offset by
higher re-measurement charges on the contingent consideration
liabilities.
The
reduction in pro-forma Adjusted operating profit primarily
reflected the adverse impact from the reduction in sales in
Vaccines as a result of the COVID-19 pandemic, continuing price
pressure, particularly in Respiratory, investment in R&D, and
investments in promotional product support, particularly for new
launches in Vaccines, HIV and Respiratory. This was partly offset
by reduced promotional and variable spending across all three
businesses as a result of the COVID-19 lockdowns, the continuing
benefit of restructuring in Pharmaceuticals, Consumer Healthcare
and the tight control of ongoing costs, particularly in
non-promotional spending across all three businesses.
Earnings per share
Total
EPS was 115.5p, compared with 93.9p in 2019. The increase in EPS
primarily reflected the net profit on disposal of Horlicks and other Consumer Healthcare
brands as well as increased income from asset disposals, partly
offset by higher re-measurement charges on the contingent
consideration liabilities, higher major restructuring charges and a
one-off benefit in 2019 from increased share of after tax profits
of the associate Innoviva.
Adjusted
EPS was 115.9p compared with 123.9p in 2019, down 6% AER, 4% CER,
on a 2% CER increase in Adjusted operating profit. The reduction
primarily resulted from a higher non-controlling interest
allocation of Consumer Healthcare profits, higher investment in
R&D and reduced share of after tax profits of associates
resulting from a non-recurring income tax benefit in
Innoviva.
Cash flow
The net cash inflow from operating activities for the year was
£8,441 million (2019: £8,020 million). Free cash flow was
£5,406 million for the year (2019: £5,073 million). The
increase in free cash flow primarily reflected increased proceeds
from disposal of intangible assets, beneficial timing of payments
for returns and rebates, reduced legal payments and improved
operating profits, partly offset by higher dividends to
non-controlling interests, increase in trade receivables, increased
tax payments including tax on disposals and adverse exchange
impacts.
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Operating performance – Q4 2020
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Turnover
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Q4 2020
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£m
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Growth
£%
|
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Growth
CER%
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Pharmaceuticals
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4,366
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(4)
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(3)
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Vaccines
|
2,012
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15
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16
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Consumer
Healthcare
|
2,360
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(8)
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(7)
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8,738
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(1)
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-
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Corporate
and other unallocated turnover
|
1
|
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Group
turnover
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8,739
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(2)
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(1)
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Group turnover was £8,739 million in the quarter, down 2% AER,
1% CER. Excluding the impact of divestments in Vaccines and brands
divested or under review in Consumer Healthcare, Group turnover was
up 2% CER.
Pharmaceuticals
turnover in the quarter was £4,366 million, down 4% AER, 3%
CER. Respiratory sales were up 14% AER, 15% CER, to £1,017
million, on growth of Trelegy and Nucala. HIV sales were up 1% AER, 2%
CER, to £1,268 million, with growth in Juluca and Dovato partly offset by Tivicay and Triumeq. Sales of Established
Pharmaceuticals declined 19% AER, 18% CER, to £1,760
million.
Vaccines turnover grew 15% AER, 16% CER to £2,012 million,
primarily driven by double-digit growth in Shingrix and a strong demand across all regions for
Influenza vaccine. Meningitis vaccines
also contributed to growth mainly due to favourable CDC demand in
the US.
Reported
Consumer Healthcare sales declined 8%
AER and declined 7% CER to £2,360 million in the quarter.
Brands divested/under review declined 76% AER, 75% CER to
£62 million given successful execution of the divestment
programme. Sales grew 1% CER, excluding brands divested/under
review, with underlying brand strength combined with the strength
of the portfolio and successful execution driving growth, and
offsetting a weak quarter in Respiratory health.
Operating profit
Total operating profit was £1,061 million in Q4 2020 compared
with £1,902 million in Q4 2019. The total operating margin was
12.1%. Adjusted operating profit was £1,817 million, 2% lower
than Q4 2019 at AER, 1% lower at CER on a turnover decline of 1%
CER. The Adjusted operating margin of 20.8% was flat at AER, and
0.1 percentage points lower on a CER basis than in Q4
2019.
The decrease in Total operating profit primarily reflected lower
re-measurement credits on the contingent consideration liabilities,
lower profit on asset disposals and increased major restructuring
costs, partly offset by favourable comparisons to a decrease in
value of the shares in Hindustan Unilever and unwind of the fair
market value uplift on inventory arising on completion of the
Consumer Healthcare Joint Venture with Pfizer.
The reduction in Adjusted operating profit primarily reflected
increased investment in R&D as well as targeted investments in
promotional product support and increased costs for a number of
legal settlements, partly offset by benefits from continued
restructuring across the business and tight control of ongoing
costs including reduced promotional and variable spending across
all three businesses as a result of the COVID-19
lockdowns.
Earnings per share
Total
EPS was 13.6p, compared with 26.2p in Q4 2019. The reduction in EPS
primarily reflected lower re-measurement credits on the contingent
consideration liabilities, lower profit on asset disposals and
increased major restructuring costs, partly offset by favourable
comparisons to a decrease in value of the shares in Hindustan
Unilever and lower unwind of the fair market value uplift on
inventory arising on completion of the Consumer Healthcare Joint
Venture with Pfizer.
Adjusted
EPS was 23.3p compared with 24.8p in Q4 2019, down 6% AER and 5%
CER, on a 1% CER decrease in Adjusted operating profit reflecting
higher investment in R&D, higher interest costs and a higher
effective tax rate partly offset by a lower non-controlling
interest allocation of Consumer Healthcare and ViiV
profits.
Cash flow
The net cash inflow from operating activities for the quarter was
£3,855 million (Q4 2019: £3,453 million). Free cash flow
was £3,106 million for the quarter (Q4 2019: £2,599
million). The increase in free cash flow primarily reflected
increased proceeds from disposal of intangible assets and reduced
legal and tax payments, partly offset by a lower seasonal reduction
in inventory and trade receivables and higher dividends to
non-controlling interests.
|
R&D pipeline
|
Our
approach to R&D focuses on the science of the immune system,
genetics and advanced technologies. The pipeline currently
comprises 57 vaccines and medicines, predominantly in the areas of
infectious diseases, oncology and immune-mediated
diseases.
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As
detailed in the FY 2020 presentation to analysts and investors on
3 February 2021,
the company has identified over 20 potential product approvals
which could take place by 2026, of which more than 10 could
significantly change medical practice and potentially generate peak
annual sales in excess of one billion dollars.
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Pipeline news flow highlights since Q3 2020
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Vaccine collaborations
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●
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Medicago
and GSK announced the start of Phase II/III clinical trials of the
adjuvanted COVID-19 vaccine candidate.
|
●
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Sanofi
and GSK announced a delay with their adjuvanted recombinant
protein-based COVID-19 vaccine programme to improve immune response
in the elderly. On track to initiate Phase IIb start in Q1
2021.
|
●
|
Clover
and GSK announced they will not continue with their collaboration.
Clover to move into Phase II/III studies with an alternative
adjuvant.
|
●
|
Announced
new strategic partnership with CureVac to develop a next generation
mRNA vaccine for COVID-19 and to support manufacture of 100 million
doses of CureVac’s first generation COVID-19 vaccine
candidate in 2021
|
VIR-7831 (GSK4182136) / VIR-7832
|
|
●
|
Phase
III study started of NIH-sponsored ACTIV-3 trial evaluating the
safety and efficacy of VIR-7831 in hospitalised adults with
COVID-19.
|
●
|
Agreement
reached with the UK-based AGILE initiative to evaluate VIR-7832 in
patients with mild to moderate COVID-19 in a Phase Ib/IIa clinical
trial.
|
●
|
Announced
a collaboration with Lilly to expand the BLAZE-4 trial to evaluate
a combination of bamlanivimab (LY-CoV555) with VIR-7831
(GSK4182136) in low-risk patients with mild to moderate
COVID-19.
|
Oncology
|
Blenrep
(GSK2857916, anti-BCMA immunoconjugate)
|
|
●
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New
data at the American Society of Hematology Annual Meeting
highlighted progress from the Blenrep (belantamab mafodotin-blmf)
development programme in multiple myeloma. The 13 abstracts
included data from GSK’s extensive DREAMM (DRiving Excellence
in Approaches to Multiple Myeloma) clinical trial programme, which
is evaluating belantamab mafodotin in different lines of therapy,
and in combination with standard of care and novel
therapies.
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●
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Phase
III start of the DREAMM-8 trial (belantamab mafodotin in
combination with pomalidomide and dexamethasone) in 2L+ multiple
myeloma.
|
Zejula
(GSK3985771, PARP inhibitor)
|
|
●
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Phase
III start of the ZEAL-1L trial (niraparib in combination with
pembrolizumab) as maintenance therapy in 1L NSCLC.
|
●
|
EU
Marketing Authorisation received for first line maintenance
treatment in advanced ovarian cancer; becoming the first PARP
inhibitor approved as monotherapy in Europe for patients with
platinum-responsive advanced ovarian cancer, regardless of
biomarker status.
|
Dostarlimab (TSR-042, PD-1)
|
|
●
|
Positive
efficacy data of dostarlimab in mismatch repair-deficient (dMMR)
solid cancers were presented at ASCO Gastrointestinal Cancers
Symposium.
|
Bintrafusp alfa (TGF beta trap/ PD-1 agonist)
|
|
●
|
Merck
KGaA announced the decision to discontinue the clinical trial
INTR@PID Lung 037 in the first-line treatment of patients with
stage IV non-small cell lung cancer that have high expression of
PD-L1, as the study is unlikely to meet the primary efficacy
endpoint.
|
Cobolimab (TSR-022, TIM-3 antagonist)
|
|
●
|
Phase
II start of the COSTAR Lung trial (cobolimab in combination with
dostarlimab) in advanced NSCLC.
|
GSK3174998 (OX40 agonist)
|
|
●
|
GSK’998
was terminated due to lack of sufficient clinical
activity.
|
HIV/Infectious diseases
|
Cabotegravir (long acting integrase inhibitor)
|
|
●
|
Investigational
injectable cabotegravir was superior to oral standard of care for
HIV prevention in women. The study showed cabotegravir was 89% more
effective than daily oral FTC/TDF for pre-exposure prophylaxis
(PrEP).
|
●
|
US FDA
granted Breakthrough Therapy Designation for long-acting,
injectable cabotegravir for HIV pre-exposure prophylaxis
(PrEP).
|
Cabenuva (cabotegravir + rilpivirine)
|
|
●
|
EU
Marketing Authorisation received for Vocabria (cabotegravir
injection and tablets) to be used with Janssen’s Rekambys
(rilpivirine injection) and Edurant (rilpivirine
tablets).
|
●
|
US FDA
approved Cabenuva as the first and only complete long-acting
regimen for the treatment of HIV-1 infection in
adults.
|
Tivicay
(dolutegravir)
|
|
●
|
CHMP
positive opinion announced for the first-ever dispersible-tablet
formulation of dolutegravir, Tivicay, a treatment for children
living with HIV in Europe. The positive opinion followed an FDA
approval for Tivicay PD in
June 2020.
|
●
|
EU
Marketing Authorisation received for the first-ever
dispersible-tablet formulation of dolutegravir, Tivicay, a treatment for children
living with HIV in Europe.
|
Rukobia
(fostemsavir)
|
|
●
|
CHMP
positive opinion announced for Rukobia (fostemsavir), a first-in-class
attachment inhibitor for the treatment of adults with
multidrug-resistant HIV with few treatment options
available.
|
Kozenis
(tafenoquine)
|
|
●
|
Positive
data on treatment for Plasmodium vivax (P. vivax) malaria in
children from 6 months up to 15 years of age presented at American
Society of Tropical Medicine & Hygiene 2020.
|
●
|
Australian
Therapeutic Goods Administration (TGA) accepted submission of a
Category 1 application to extend the indication of single-dose
Kozenis (tafenoquine) to
paediatric populations for the radical cure (prevention of relapse)
of Plasmodium vivax (P. vivax) malaria.
|
GSK2556286 (Mtb inhibitor)
|
|
●
|
The
first patient was dosed in a Phase I study of GSK’286 for the
treatment of tuberculosis.
|
GSK3729098 (Ethionamide booster)
|
|
●
|
The
first patient was dosed in a Phase I study of GSK’098 for the
treatment of tuberculosis.
|
Immuno-inflammation
|
Benlysta
(belimumab)
|
|
●
|
US FDA
approved Benlysta as the
first medicine for adult patients with active lupus nephritis in
the US.
|
●
|
The
Benlysta-Rituxan
combination in Sjogren’s Syndrome was terminated for not
meeting efficacy criteria.
|
GSK2330811 (OSM antagonist)
|
|
●
|
GSK’811
in systemic sclerosis was terminated for meeting the proof of
mechanism study’s stop criteria.
|
GSK2831781 (aLAG3 depleting) in ulcerative
colitis
|
|
●
|
Termination
of GSK Study 204869 in patients with active ulcerative colitis as
pre-determined futility criteria were met.
|
GSK3915393 (TG2 inhibitor)
|
|
●
|
The
first patient was dosed in a Phase I study of GSK’393 for the
treatment of coeliac disease.
|
Respiratory
|
Nucala
(mepolizumab)
|
|
●
|
US FDA
accepted a regulatory submission seeking approval for the use of
its anti-IL5 biologic Nucala (mepolizumab) as a treatment for
patients with chronic rhinosinusitis with nasal
polyps.
|
●
|
European
Medicines Agency accepted filing for three additional
eosinophil-driven diseases (hypereosinophilic syndrome, chronic
rhinosinusitis with nasal polyps and eosinophilic granulomatosis
with polyangiitis).
|
Vaccines
|
Respiratory Syncytial Virus (RSV)
|
|
●
|
RSV
candidate vaccine for maternal immunisation (GSK3888550A) started
Phase III after presentation of positive Phase I/II safety,
reactogenicity and immunogenicity data.
|
RTS,S (malaria)
|
|
●
|
Announced
product transfer of RTS,S malaria vaccine to Bharat (India) to
ensure long term viability and sustainability of supply of the
vaccine.
|
Other Pharmaceuticals
|
Linerixibat
|
|
●
|
Phase
IIb data on linerixibat for the treatment of cholestatic pruritus
in primary biliary cholangitis (PBC) was presented as a
late-breaking session at The Liver Meeting® 2020. Plans
underway to progress linerixibat to Phase III in 2021 with
potential to be the first new treatment in 60 years for cholestatic
pruritus in PBC.
|
Contents
|
Page
|
|
|
Total
and Adjusted results
|
10
|
Financial
performance – 2020
|
12
|
Financial
performance – three months ended 31 December
2020
|
29
|
Cash
generation
|
43
|
Returns
to shareholders
|
44
|
|
|
Income
statements
|
46
|
Statement
of comprehensive income – year ended 31 December
2020
|
47
|
Statement
of comprehensive income – three months ended 31 December
2020
|
48
|
Pharmaceuticals
turnover – year ended 31 December 2020
|
49
|
Pharmaceuticals
turnover – three months ended 31 December 2020
|
50
|
Vaccines
turnover – year ended 31 December 2020
|
51
|
Vaccines
turnover – three months ended 31 December 2020
|
52
|
Balance
sheet
|
53
|
Statement
of changes in equity
|
54
|
Cash
flow statement – year ended 31 December 2020
|
55
|
Segment
information
|
56
|
Legal
matters
|
58
|
Additional
information
|
59
|
Reconciliation
of cash flow to movements in net debt
|
62
|
Net
debt analysis
|
62
|
Free
cash flow reconciliation
|
62
|
Reporting
definitions
|
63
|
Outlook,
assumptions and cautionary statements
|
64
|
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:
|
|
|
|
Media
enquiries:
|
Simon
Steel
|
+44 (0)
20 8047 5502
|
(London)
|
|
Tim
Foley
|
+44 (0)
20 8047 5502
|
(London)
|
|
Kristen
Neese
|
+1 215
751 3335
|
(Philadelphia)
|
|
Kathleen
Quinn
|
+1 202
603 5003
|
(Washington)
|
|
|
|
|
Analyst/Investor
enquiries:
|
Sarah
Elton-Farr
|
+44 (0)
20 8047 5194
|
(London)
|
|
Sonya
Ghobrial
|
+44 (0)
7392 784784
|
(Consumer)
|
|
James
Dodwell
|
+44 (0)
20 8047 2406
|
(London)
|
|
Jeff
McLaughlin
|
+1 215
751 7002
|
(Philadelphia)
|
|
Frannie
DeFranco
|
+1 215
751 4855
|
(Philadelphia)
|
Registered in England &
Wales:
No. 3888792
|
|
Registered Office:
980 Great West
Road
Brentford,
Middlesex
TW8
9GS
|
Total and Adjusted results
|
Total
reported results represent the Group’s overall
performance.
GSK
also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS
measures may be considered in addition to, but not as a substitute
for or superior to, information presented in accordance with IFRS.
Adjusted results are defined below and pro-forma growth and other
non-IFRS measures are defined on page 63.
GSK
believes that Adjusted results, when considered together with Total
results, provide investors, analysts and other stakeholders with
helpful complementary information to understand better the
financial performance and position of the Group from period to
period, and allow the Group’s performance to be more easily
compared against the majority of its peer companies. These measures
are also used by management for planning and reporting purposes.
They may not be directly comparable with similarly described
measures used by other companies.
GSK
encourages investors and analysts not to rely on any single
financial measure but to review GSK’s quarterly results
announcements, including the financial statements and notes, in
their entirety.
GSK is
committed to continuously improving its financial reporting, in
line with evolving regulatory requirements and best practice. In
line with this practice, GSK expects to continue to review and
refine its reporting framework.
Adjusted
results exclude the following items from Total results, together
with the tax effects of all of these items:
|
●
|
amortisation
of intangible assets (excluding computer software)
|
●
|
impairment
of intangible assets (excluding computer software) and
goodwill
|
●
|
Major
restructuring costs, which include impairments of tangible assets
and computer software, (under specific Board approved programmes
that are structural, of a significant scale and where the costs of
individual or related projects exceed £25 million), including
integration costs following material acquisitions
|
●
|
transaction-related
accounting or other adjustments related to significant
acquisitions
|
●
|
proceeds
and costs of disposal of associates, products and businesses;
significant legal charges (net of insurance recoveries) and
expenses on the settlement of litigation and government
investigations; other operating income other than royalty income,
and other items
|
●
|
separation
costs
|
●
|
the
impact of the enactment of the US Tax Cuts and Jobs Act in
2017
|
Costs
for all other ordinary course smaller scale restructuring and legal
charges and expenses are retained within both Total and Adjusted
results.
As
Adjusted results include the benefits of Major restructuring
programmes but exclude significant costs (such as significant
legal, major restructuring and transaction items) they should not
be regarded as a complete picture of the Group’s financial
performance, which is presented in Total results. The exclusion of
other Adjusting items may result in Adjusted earnings being
materially higher or lower than Total earnings. In particular, when
significant impairments, restructuring charges and legal costs are
excluded, Adjusted earnings will be higher than Total
earnings.
GSK has
undertaken a number of Major restructuring programmes in response
to significant changes in the Group’s trading environment or
overall strategy, or following material acquisitions. Costs, both
cash and non-cash, of these programmes are provided for as
individual elements are approved and meet the accounting
recognition criteria. As a result, charges may be incurred over a
number of years following the initiation of a Major restructuring
programme.
Significant
legal charges and expenses are those arising from the settlement of
litigation or government investigations that are not in the normal
course and materially larger than more regularly occurring
individual matters. They also include certain major legacy
matters.
Reconciliations
between Total and Adjusted results, providing further information
on the key Adjusting items, are set out on pages 24, 25, 39 and
40.
GSK
provides earnings guidance to the investor community on the basis
of Adjusted results. This is in line with peer companies and
expectations of the investor community, supporting easier
comparison of the Group’s performance with its peers. GSK is
not able to give guidance for Total results as it cannot reliably
forecast certain material elements of the Total results,
particularly the future fair value movements on contingent
consideration and put options that can and have given rise to
significant adjustments driven by external factors such as currency
and other movements in capital markets.
|
Pro-forma growth
The
acquisition of the Pfizer consumer healthcare business completed on
31 July 2019 and so GSK’s reported results for the year ended
31 December 2019 include five months of results of the former
Pfizer consumer healthcare business compared with twelve months in
2020.
The
Group has presented pro-forma growth rates at CER for turnover,
Adjusted operating profit and operating profit by business taking
account of this transaction. Pro-forma growth rates at CER for the
year ended 31 December 2020 are calculated comparing reported
results for the year ended 31 December 2020, calculated applying
the exchange rates used in the comparative period, with the results
for the year ended 31 December 2019, adjusted to include the
equivalent seven months of results to 31 July 2019 of the former
Pfizer consumer healthcare business, as consolidated (in US$) and
included in Pfizer’s US GAAP results.
ViiV Healthcare
ViiV
Healthcare is a subsidiary of the Group and 100% of its operating
results (turnover, operating profit, profit after tax) are included
within the Group income statement.
Earnings
are allocated to the three shareholders of ViiV Healthcare on the
basis of their respective equity shareholdings (GSK 78.3%, Pfizer
11.7% and Shionogi 10%) and their entitlement to preferential
dividends, which are determined by the performance of certain
products that each shareholder contributed. As the relative
performance of these products changes over time, the proportion of
the overall earnings allocated to each shareholder also changes. In
particular, the increasing proportion of sales of
dolutegravir-containing products has a favourable impact on the
proportion of the preferential dividends that is allocated to GSK.
Adjusting items are allocated to shareholders based on their equity
interests. GSK was entitled to approximately 86% of the Total
earnings and 83% of the Adjusted earnings of ViiV Healthcare for
2020.
As
consideration for the acquisition of Shionogi’s interest in
the former Shionogi-ViiV Healthcare joint venture in 2012, Shionogi
received the 10% equity stake in ViiV Healthcare and ViiV
Healthcare also agreed to pay additional future cash consideration
to Shionogi, contingent on the future sales performance of the
products being developed by that joint venture, principally
dolutegravir. Under IFRS 3 ‘Business combinations’, GSK
was required to provide for the estimated fair value of this
contingent consideration at the time of acquisition and is required
to update the liability to the latest estimate of fair value at
each subsequent period end. The liability for the contingent
consideration recognised in the balance sheet at the date of
acquisition was £659 million. Subsequent re-measurements are
reflected within other operating income/(expense) and within
Adjusting items in the income statement in each period. At 31
December 2020, the liability, which is discounted at 8.5%, stood at
£5,359 million, on a post-tax basis.
Cash
payments to settle the contingent consideration are made to
Shionogi by ViiV Healthcare each quarter, based on the actual sales
performance of the relevant products in the previous quarter. These
payments reduce the balance sheet liability and hence are not
recorded in the income statement. The cash payments made to
Shionogi by ViiV Healthcare in 2020 were £858
million.
Because
the liability is required to be recorded at the fair value of
estimated future payments, there is a significant timing difference
between the charges that are recorded in the Total income statement
to reflect movements in the fair value of the liability and the
actual cash payments made to settle the liability.
Further
explanation of the acquisition-related arrangements with ViiV
Healthcare are set out on pages 41 and 42 of the Annual Report
2019.
|
Financial performance – 2020
|
Total results
|
The
Total results for the Group are set out below.
|
|
2020
£m
|
|
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
34,099
|
|
33,754
|
|
1
|
|
3
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(11,704)
|
|
(11,863)
|
|
(1)
|
|
-
|
|
|
|
|
|
|
|
|
Gross
profit
|
22,395
|
|
21,891
|
|
2
|
|
4
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(11,456)
|
|
(11,402)
|
|
-
|
|
2
|
Research
and development
|
(5,098)
|
|
(4,568)
|
|
12
|
|
12
|
Royalty income
|
318
|
|
351
|
|
(9)
|
|
(9)
|
Other
operating income/(expense)
|
1,624
|
|
689
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
7,783
|
|
6,961
|
|
12
|
|
15
|
|
|
|
|
|
|
|
|
Finance
income
|
44
|
|
98
|
|
|
|
|
Finance
expense
|
(892)
|
|
(912)
|
|
|
|
|
Share
of after tax profits of
associates
and joint ventures
|
33
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
6,968
|
|
6,221
|
|
12
|
|
16
|
|
|
|
|
|
|
|
|
Taxation
|
(580)
|
|
(953)
|
|
|
|
|
Tax rate %
|
8.3%
|
|
15.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
6,388
|
|
5,268
|
|
21
|
|
25
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
639
|
|
623
|
|
|
|
|
Profit
attributable to shareholders
|
5,749
|
|
4,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,388
|
|
5,268
|
|
21
|
|
25
|
|
|
|
|
|
|
|
|
Earnings per share
|
115.5p
|
|
93.9p
|
|
23
|
|
26
|
|
|
|
|
|
|
|
|
Adjusted results
|
The
Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for 2020 and 2019 are
set out on pages 24 and 25.
|
|
2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
34,099
|
|
100
|
|
1
|
|
3
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(10,191)
|
|
(29.9)
|
|
1
|
|
2
|
|
(3)
|
Selling,
general and
administration
|
(10,717)
|
|
(31.4)
|
|
-
|
|
2
|
|
(3)
|
Research
and development
|
(4,603)
|
|
(13.5)
|
|
6
|
|
7
|
|
6
|
Royalty
income
|
318
|
|
0.9
|
|
(9)
|
|
(9)
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
8,906
|
|
26.1
|
|
(1)
|
|
2
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
profit before tax
|
8,095
|
|
|
|
(2)
|
|
1
|
|
|
Adjusted
profit after tax
|
6,800
|
|
|
|
(2)
|
|
1
|
|
|
Adjusted
profit attributable to
shareholders
|
5,769
|
|
|
|
(6)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share
|
115.9p
|
|
|
|
(6)
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit by business
|
2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
7,723
|
|
45.3
|
|
(3)
|
|
(2)
|
|
(2)
|
Pharmaceuticals
R&D*
|
(3,538)
|
|
|
|
5
|
|
6
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
4,185
|
|
24.5
|
|
(9)
|
|
(7)
|
|
(7)
|
Vaccines
|
2,713
|
|
38.9
|
|
(9)
|
|
(6)
|
|
(6)
|
Consumer
Healthcare
|
2,213
|
|
22.1
|
|
18
|
|
22
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
9,111
|
|
26.7
|
|
(3)
|
|
(1)
|
|
(5)
|
Corporate
& other unallocated
costs
|
(205)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
8,906
|
|
26.1
|
|
(1)
|
|
2
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
*
|
Operating
profit of Pharmaceuticals R&D segment, which is the
responsibility of the Chief Scientific Officer and President,
R&D. It excludes ViiV Healthcare R&D expenditure, which is
reported within the Pharmaceuticals segment.
|
Turnover
|
Pharmaceuticals turnover
|
|
2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Respiratory
|
3,749
|
|
22
|
|
23
|
HIV
|
4,876
|
|
-
|
|
1
|
Immuno-inflammation
|
727
|
|
19
|
|
20
|
Oncology
|
372
|
|
62
|
|
62
|
|
9,724
|
|
11
|
|
12
|
Established
Pharmaceuticals
|
7,332
|
|
(16)
|
|
(15)
|
|
|
|
|
|
|
|
17,056
|
|
(3)
|
|
(1)
|
|
|
|
|
|
|
US
|
7,451
|
|
1
|
|
2
|
Europe
|
4,104
|
|
(1)
|
|
(1)
|
International
|
5,501
|
|
(9)
|
|
(5)
|
|
|
|
|
|
|
|
17,056
|
|
(3)
|
|
(1)
|
|
|
|
|
|
|
Pharmaceuticals
turnover in the year was £17,056 million, down 3% AER, 1% CER.
Respiratory sales were up 22% AER, 23% CER, to £3,749 million,
on growth of Trelegy,
Nucala and Relvar/Breo. HIV sales were flat at
AER, up 1% CER, to £4,876 million, with growth in Juluca and Dovato partly offset by Tivicay and Triumeq. Sales of Established
Pharmaceuticals declined 16% AER, 15% CER to £7,332
million.
Towards
the end of the first quarter, additional demand related to the
COVID-19 pandemic had a positive impact on growth of HIV and
Respiratory products. This effect broadly reversed in the second
quarter, which saw lower levels of new patient prescriptions in the
US and Europe and reduced market demand for allergy and antibiotic
products in International and Europe. These effects have continued
to be seen in the second half of the year.
In the
US, sales grew 1% AER, 2% CER. Continued growth of Nucala, Trelegy, Benlysta, Zejula and the HIV two-drug
regimens was partly offset by the decline in Tivicay, Triumeq and Established Products,
including the impact of generic albuterol substitutes.
In
Europe, sales declined 1% AER, 1% CER, with growth from
Respiratory, HIV and Oncology offset by the decline of Established
Pharmaceutical sales, impacted by generic competition and lower
demand for antibiotics during the COVID-19 pandemic period.
Approximately one percentage point of decline was due to the impact
of a one-off UK Relenza
contract in the comparator.
International
declined 9% AER, 5% CER, with Respiratory and Benlysta growth partly offset by lower
Established Pharmaceutical sales. This included the impact of a
weaker allergy season and generic competition for Avolve in Japan, slower market growth
during the COVID-19 pandemic period and government mandated changes
increasing the use of generics in China.
Respiratory
Total
Respiratory sales were up 22% AER, 23% CER, with strong growth in
all regions. International Respiratory sales grew 24% AER, 27% CER
including Nucala, up 45%
AER 46% CER and Relvar/Breo, up 6% AER, 9% CER to
£328 million. In Europe, Respiratory sales grew to £944
million up 21% AER, 20% CER. In the US, Respiratory grew 21% AER,
23% CER including Trelegy
and Nucala. US Relvar/Breo sales grew 24% AER, 25%
CER, mainly due to the effect of a prior period RAR
adjustment.
Sales
of Nucala were £994
million in the year and grew 29% AER, 30% CER, with US sales up 32%
AER, 33% CER to £598 million. Europe sales of £238
million grew 16% AER, 15% CER and International sales of £158
million grew 45% AER, 46% CER.
Trelegy sales were up 58% AER, 59% CER to £819 million
driven by growth in all regions. In the US, the new asthma
indication was approved and launched in Q3 2020, with sales up 47%
AER, 48% CER to £561 million. In Europe, sales grew 65% AER,
65% CER and in International, where Trelegy asthma was approved in Japan in
the quarter, sales grew to £90 million in the
year.
Relvar/Breo sales were up 16% AER, 17% CER to £1,124
million in the year. In the US, Relvar/Breo grew 24% AER, 25% CER,
mainly due to the effect of a prior period RAR adjustment. In
Europe and International, Relvar/Breo continued to grow, up 14%
AER, 13% CER and 6% AER, 9% CER respectively.
HIV
HIV
sales were £4,876 million, flat at AER, up 1% CER in the
twelve months. The dolutegravir franchise grew 1% AER, 2% CER,
delivering sales of £4,702 million. The remaining portfolio,
with sales of £174 million and 4% of total HIV sales, declined
21% AER, 20% CER and reduced the overall growth of total HIV by one
percentage point.
Sales
of dolutegravir products were £4,702 million in the twelve
months. Tivicay delivered
sales of £1,527 million, down 8% AER, 7% CER and Triumeq sales were £2,306 million,
down 10% AER, 9% CER. The two-drug regimens, Juluca and Dovato delivered sales of £869
million in the twelve months, with combined growth more than
offsetting decline in the three-drug regimen, Triumeq.
In the
US, dolutegravir sales were flat at AER, up 1% CER, and in Europe
dolutegravir sales grew 7% AER, 6% CER. Following recent launches
of Dovato, combined sales
of the two-drug regimens were £616 million in the US and
£227 million in Europe, with growth offsetting the decline in
Triumeq. International
dolutegravir sales declined 2% AER but grew 3% CER driven by
Tivicay tender
business.
Oncology
Sales
of Zejula, the PARP
inhibitor asset acquired from Tesaro in Q1 2019 were £339
million in the year, up 48% AER, 48% CER, driven by volume growth
compared with the prior year.
Blenrep for the treatment of patients with relapsed or
refractory multiple myeloma was approved and launched in the US and
Europe in Q3 2020 and reported sales of £33
million.
Immuno-inflammation
Sales
of Benlysta in the year
were up 17% AER, 19% CER to £719 million, including sales of
the sub-cutaneous formulation of £354 million up 32% AER, 33%
CER.
Duvroq for patients with anaemia due to chronic kidney
disease was launched in Japan in Q3 2020 and reported sales in the
International region of £8 million.
Established Pharmaceuticals
Sales
of Established Pharmaceuticals in the year were £7,332
million, down 16% AER, 15% CER.
Established
Respiratory products declined 17% AER, 15% CER to £3,251
million. Advair/Seretide
and Ventolin were impacted
by generic substitutes in the US and Europe, and Flovent experienced price pressure in
the US. In the International region, allergy sales were impacted by
market contraction and generic launch in Japan.
The
remainder of the Established Pharmaceuticals portfolio declined 16%
AER, 14% CER to £4,081 million on lower demand for antibiotics
during the COVID-19 pandemic period, the impact of government
mandated changes increasing the use of generics in markets
including Japan, France and China, and a strong comparator,
including a European Relenza contract.
|
Vaccines turnover
|
|
2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Meningitis
|
1,029
|
|
1
|
|
3
|
Influenza
|
733
|
|
35
|
|
37
|
Shingles
|
1,989
|
|
10
|
|
11
|
Established
Vaccines
|
3,231
|
|
(15)
|
|
(14)
|
|
|
|
|
|
|
|
6,982
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
US
|
3,697
|
|
(5)
|
|
(4)
|
Europe
|
1,441
|
|
(3)
|
|
(4)
|
International
|
1,844
|
|
5
|
|
7
|
|
|
|
|
|
|
|
6,982
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
Vaccines turnover declined 2% AER, 1% CER to £6,982 million,
primarily driven by the adverse impact of the COVID-19 pandemic on
Hepatitis vaccines, DTPa-containing vaccines, Synflorix and Bexsero, together with the divestment of
Rabipur
and Encepur. This decline was partly offset by higher sales
of Influenza vaccines across all regions and by Shingrix growth in Europe, China and the US together
with Cervarix strong performance in China.
Vaccines performance across all regions was affected by lower
demand due to limited visits to healthcare practitioners and points
of vaccination during the pandemic and government stay-at-home
directives. In areas where lockdowns were lifted, wellness visits
and vaccination rates recovered, with paediatric vaccination near
pre-COVID levels by the end of Q2 2020, while adolescent and adult
immunisations improved at a slower pace. US back-to-school vaccinations were disrupted
because schools and universities delayed or reversed in-person
tuition, which elongated the back-to-school vaccination season into
Q4 2020. Adult wellness visits returned to prior year levels
at the end of Q3 2020 supported by seasonal flu vaccination and
declined late in Q4 2020 as pandemic conditions
worsened.
Lower demand year-to-date was related to COVID-19 pandemic
conditions unless stated otherwise.
Meningitis
Meningitis sales grew 1% AER, 3% CER to £1,029 million.
Bexsero
sales declined 4% AER, 2% CER to
£650 million, reflecting lower demand in the US and International, partly
offset by lower US returns and rebates.
Menveo sales declined 1% AER but grew 1% CER to
£265 million, primarily driven by higher demand in Europe and
lower US returns and rebates, partly
offset by lower demand in the US and competitive pressure in
International.
In the US, Bexsero and Menveo both grew market share.
Influenza
Fluarix/FluLaval sales were
£733 million, up 35% AER, 37% CER, primarily reflecting robust
demand across all regions resulting from strong government
recommendations that prioritised flu vaccination during COVID-19
pandemic conditions, together with the reversal of a prior
year returns provision in the
US.
Shingles
Shingrix grew 10% AER, 11% CER to £1,989
million, primarily driven by a strong performance in Europe
reflecting robust underlying demand in Germany. The launch of
Shingrix in China also
contributed to sales growth. In the US, a decline in demand in Q2
and Q3 2020 due to lower adult wellness visits and vaccination
rates was partially offset by strong uptake in Q1 2020 and return
to growth, as expected, in Q4 2020 supported by co-administration
with seasonal flu vaccination programmes.
Established Vaccines
Sales of DTPa-containing vaccines (Infanrix, Pediarix and Boostrix) declined by 16% AER, 15% CER.
Infanrix/Pediarix
sales declined 14% AER, 13% CER to
£629 million, reflecting lower demand in the US, unfavourable
year-on-year US CDC stockpile movements, together with supply
constraints and competitive pressures in
Europe.
Boostrix sales were down 18%
AER 18% CER to £476 million primarily due to lower vaccination
rates across all regions.
Hepatitis vaccines declined 34% AER, 33% CER to £576 million,
adversely impacted in the US and Europe by lower demand and travel
restrictions, together with competition returning to the market in
the US.
Synflorix sales declined by 14%
AER, 14% CER to £402 million, primarily due to lower demand in
International and supply constraints in Emerging
Markets.
Rotarix sales were flat
at AER but grew 1% at CER to £559 million, reflecting improved supply in Emerging Markets
and higher demand in Europe, partly offset by lower channel
inventory in the US.
MMRV vaccines sales grew 13% AER, 14% CER to £261 million,
largely driven by improved supply and increased market shares in
Europe.
|
Consumer Healthcare turnover
|
|
|
|
2020
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Oral
health
|
|
|
2,753
|
|
3
|
|
6
|
Pain
relief
|
|
|
2,219
|
|
25
|
|
27
|
Vitamins,
minerals and supplements
|
|
|
1,506
|
|
>100
|
|
>100
|
Respiratory
health
|
|
|
1,209
|
|
2
|
|
4
|
Digestive
health and other
|
|
|
1,824
|
|
11
|
|
14
|
|
|
|
9,511
|
|
20
|
|
23
|
|
|
|
|
|
|
|
|
Brands
divested/under review
|
|
|
522
|
|
(52)
|
|
(51)
|
|
|
|
|
|
|
|
|
|
|
|
10,033
|
|
12
|
|
14
|
|
|
|
|
|
|
|
|
US
|
|
|
3,408
|
|
32
|
|
33
|
Europe
|
|
|
2,619
|
|
7
|
|
6
|
International
|
|
|
4,006
|
|
1
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
10,033
|
|
12
|
|
14
|
|
|
|
|
|
|
|
|
Pro-forma
growth/(decline)
|
|
|
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
On a reported basis, sales grew 12% AER and 14% CER to £10,033
million for the full year, largely driven by the inclusion of the
Pfizer portfolio, partly offset by brands divested/under
review.
On a pro-forma basis, sales declined 2% CER, but grew 4% CER
excluding brands divested/under review, reflecting the underlying
strength of brands across the portfolio and categories, strong
growth in e-commerce, and successful execution meeting evolving
consumer demand as a result of the pandemic.
Overall results benefited from very strong growth in Vitamins,
minerals and supplements as well as continued growth in Oral
health, Pain relief and Digestive health and other. Although
Respiratory health sales were up 4% CER for the full year this
benefited from increased consumption in the first quarter, with
sales declines throughout the rest of the year which were
particularly pronounced in the fourth quarter as a result of the
historically weak cold and flu season.
Quarterly performance was volatile during the year as a direct
result of the COVID-19 pandemic, with sales pro-forma CER excluding
brands divested/under review up 14% in the first quarter given
accelerated purchases, flat in the second quarter as most of this
reversed, up 3% in the third quarter, and up 1% in the final
quarter of the year.
Oral health
Oral health sales grew 3% AER, 6% CER to £2,753
million. Sensodyne continued to outperform with low double digit
growth, reflecting underlying brand strength, successful innovation
including Sensodyne Sensitivity & Gum
and strong consumer up take in
traditional retail and e-commerce channels in the
US. Gum health continued to deliver double digit
growth, consistent with trends throughout the year, whilst Denture
care declined in low single digits given challenging market
conditions consistent with prior quarters.
Pain relief
Pain relief grew 25% AER, 27% CER to £2,219 million. On a
pro-forma basis, sales grew in mid-single digits, driven by the
successful Rx to OTC switch with Voltaren in the US. Panadol increased in mid-single digits with increased
consumption earlier in the year offsetting brand decline in the
final quarter. Advil delivered improved performance in the US in the
second half of the year and ended the year up in low single
digits.
Vitamins, minerals and supplements
Vitamins,
minerals and supplements more than doubled at AER and CER to
£1,506 million. On a pro-forma basis, sales continued to grow
in the high-teens per cent, consistent with prior quarters, due to
strong performance by Centrum,
Caltrate and Emergen-C. The particularly strong
category growth reflected the continued consumer focus on health
and wellness, consistent with previous quarters and as a result of
the COVID-19 pandemic, combined with the business’s ability
to successfully and quickly adapt, execute and deliver to meet
consumer needs.
Respiratory health
Respiratory health sales grew 2% AER, 4% CER to £1,209
million. On a pro-forma basis, sales declined in mid-single digits,
driven by a lower cold and flu season in the final quarter which
more than offset the benefit from increased consumption in the
first quarter due to the COVID-19 pandemic, as a result
Robitussin,
Contac and Theraflu all declined for the full year. Allergy and nasal
product performance was more mixed with Flonase growth in low single digits and
Otrivin
declining in mid-single
digits.
Digestive health and other
Digestive health and other brands grew 11% AER, 14% CER to
£1,824 million. On a pro-forma basis, sales declined in
low-single digits with growth in Digestive health products offset
by a decline in Skin health products and other non-strategic
brands. Smokers’ health products were flat for the
year.
|
Operating performance
|
Cost of sales
Total
cost of sales as a percentage of turnover was 34.3%, 0.8 percentage
points lower at AER and 1.0 percentage points lower in CER terms
compared with 2019. This primarily reflected lower unwinding of the
fair market value uplift on inventory arising on completion of the
Consumer Healthcare Joint Venture with Pfizer in Q3
2019.
Excluding
these and other Adjusting items, Adjusted cost of sales as a
percentage of turnover was 29.9%, flat at AER, but 0.1 percentage
points lower at CER compared with 2019. On a pro-forma basis,
Adjusted cost of sales as a percentage of turnover was 29.9%, 0.3
percentage points lower at CER, compared with 2019. This reflected
a more favourable product mix in Pharmaceuticals and a further
contribution from restructuring savings in Pharmaceuticals and
Vaccines and integration savings in Consumer Healthcare, partly
offset by adverse product mix in Vaccines and continued adverse
pricing pressure in Pharmaceuticals, principally in Established
Respiratory.
Selling, general and administration
Total
SG&A costs as a percentage of turnover were 33.6%, 0.2
percentage points lower at AER and 0.2 percentage points lower at
CER compared with 2019. This reflected increased Major
restructuring costs and separation costs partly offset by lower
significant legal and transaction costs.
Excluding
these and other Adjusting items, Adjusted SG&A costs as a
percentage of turnover were 31.4%, 0.3 percentage points lower at
AER than in 2019 and 0.3 percentage points lower on a CER basis. On
a pro-forma basis, Adjusted SG&A costs as a percentage of
turnover were 31.4%, 0.4 percentage points lower at CER, compared
with 2019.
The
growth in Adjusted SG&A costs, although flat at AER, grew 2%
CER. On a pro-forma basis costs reduced 3% CER and reflected the
benefits from restructuring including one-off benefits from
restructuring of post-retirement benefits and the continuing
benefit of restructuring in Pharmaceuticals, Consumer Healthcare
and support functions, reduced variable spending across all three
businesses as a result of the COVID-19 lockdowns and the tight
control of ongoing costs, particularly in non-promotional spending
across all three businesses. This was partly offset by increased
investment in promotional product support, particularly for new
launches in Vaccines, Respiratory and HIV.
Research and development
Total
R&D expenditure was £5,098 million (15.0% of turnover), up
12% AER, 12% CER, including an increase in Major restructuring
costs and intangible impairments. Adjusted R&D expenditure was
£4,603 million (13.5% of turnover), 6% higher at AER, 7%
higher at CER than in 2019. On a pro-forma basis, Adjusted R&D
expenditure grew 6% CER compared with 2019.
Pharmaceuticals
R&D expenditure was £3,636 million, up 9% AER, 9% CER,
primarily driven by the significant increase in investment in
Oncology, reflecting the progression of a number of key programmes
including Blenrep,
feladilimab and bintrafusp alfa, as well as progression of COVID-19
treatment programmes (VIR-7831, otilimab). This has been partly
offset by a reduction in investment in research and several
Specialty and Primary Care programmes (daprodustat, Trelegy, HIV) as well as efficiency
savings from the implementation of the One Development programme
for Pharma and Vaccines as part of the Separation Preparation
restructuring programme and reductions in variable spending as a
result of COVID-19 lockdowns.
R&D
expenditure in Vaccines was £686 million, down 4% AER, 4% CER
reflecting efficiency savings from the implementation of the One
Development programme and reductions in variable spending as a
result of COVID-19 lockdowns. R&D expenditure in Consumer
Healthcare was £281 million.
Royalty income
Royalty
income was £318 million (2019: £351 million), down 9%
AER, 9% CER, primarily reflecting genericisation of Transderm Scop in Consumer Healthcare
and lower sales of Gardasil.
|
Other operating income/(expense)
Net
other operating income of £1,624 million (2019: £689
million) primarily reflected the net profit on disposal of the
Horlicks and other Consumer
Healthcare brands of £2,815 million in Q2 2020, which was
after reversal of £240 million of embedded derivative gains on
the value of the shares taken in prior years. This was partly
offset by the related loss on sale of the shares in Hindustan
Unilever in Q2 2020 of £476 million. Other operating income
also included an increase in profit and milestone income from a
number of asset disposals.
This
was partly offset by accounting charges of £1,234 million
(2019: £127 million credits) arising from the re-measurement
of the contingent consideration liabilities related to the
acquisitions of the former Shionogi-ViiV Healthcare joint venture
and the former Novartis Vaccines business and the liabilities for
the Pfizer put option and Pfizer and Shionogi preferential
dividends in ViiV Healthcare. This included a re-measurement charge
of £1,114 million (2019: £31 million) for the contingent
consideration liability due to Shionogi, primarily arising from
changes in sales forecasts, exchange rate assumptions and the
unwind of discounting.
|
Operating profit
Total
operating profit was £7,783 million in 2020 compared with
£6,961 million in 2019. This reflected the profit on disposal
of the Horlicks and other
Consumer Healthcare brands and resultant sale of shares in
Hindustan Unilever as well as increased income from asset
disposals. This was partly offset by higher re-measurement charges
on the contingent consideration liabilities.
Excluding
these and other Adjusting items, Adjusted operating profit was
£8,906 million, 1% lower than 2019 at AER and 2% higher at CER
on a turnover increase of 3% CER. The Adjusted operating margin of
26.1% was 0.5 percentage points lower at AER, and 0.2 percentage
points lower on a CER basis than in 2019. On a pro-forma basis,
Adjusted operating profit was 3% lower at CER on a turnover
decrease of 2% at CER. The Adjusted pro-forma operating margin of
26.1% was 0.4 percentage points lower on a CER basis than in
2019.
The
reduction in pro-forma Adjusted operating profit reflects the
adverse impact from the reduction in sales in Vaccines as a result
of the COVID-19 pandemic, investment in R&D including a
significant increase in Oncology, partly on the assets from the
Tesaro acquisition and initiation of several COVID-19 programmes,
continuing price pressure, principally in Established Respiratory,
including the impact of the launch of a generic version of
Advair in the US in
February 2019 and investments in promotional product support,
particularly for new launches in Vaccines, HIV and Respiratory.
This was offset by reduced promotional and variable spending across
all three businesses as a result of the COVID-19 lockdowns, a
one-off benefit in Q3 2020 from restructuring of post-retirement
benefits and the continuing benefit of restructuring in
Pharmaceuticals, Consumer Healthcare and support functions and the
tight control of ongoing costs, particularly in non-promotional
spending across all three businesses.
Contingent
consideration cash payments which are made to Shionogi and other
companies reduce the balance sheet liability and hence are not
recorded in the income statement. Total contingent consideration
cash payments in 2020 amounted to £885 million (2019:
£893 million). This included cash payments made to Shionogi of
£858 million (2019: £865 million).
Operating profit by business
Pharmaceuticals
operating profit was £4,185 million, down 9% AER, 7% CER on a
turnover decrease of 1% CER. The operating margin of 24.5% was 1.6
percentage points lower at AER than in 2019 and 1.5 percentage
points lower on a CER basis. This primarily reflected a significant
increase in Oncology R&D as well as the continued impact of
lower prices, including the impact of the launch of a generic
version of Advair in the US
in February 2019, and investment in new product support and
targeted priority markets. This was partly offset by the reduced
promotional and variable spending as a result of the COVID-19
lockdowns and the continued benefit of restructuring and tight
control of ongoing costs.
Vaccines operating profit was £2,713 million, down 9% AER, 6%
CER on a turnover decrease of 1% CER. The operating margin of 38.9%
was 2.6 percentage points lower at AER than in 2019 and 1.9
percentage points lower on a CER basis. This was primarily driven
by the negative operating leverage from the COVID-19 related sales
decline and investment behind key brands.
Consumer
Healthcare operating profit was £2,213 million, up 18% AER,
22% CER on a turnover increase of 14% CER. On a pro-forma basis,
operating profit was £2,213 million, 1% CER lower on a
turnover decrease of 2% CER. The operating margin of 22.1% was 1.2
percentage points higher at AER and 1.5 percentage points higher on
a CER basis than in 2019. The pro-forma operating margin of 22.1%
was 0.3 percentage points higher on a CER basis. The higher margin
was driven by higher than normal sales growth in Q1 2020 due to
COVID-19 and synergy delivery from the Pfizer integration. This was
partially offset by the impact of divestments and increased
targeted promotional investment.
Net finance costs
Total
net finance costs were £848 million compared with £814
million in 2019. Adjusted net finance costs were £844 million
compared with £810 million in 2019. The increase reflects
lower interest income on overseas cash post-closing of the
divestment of Horlicks and other Consumer Healthcare nutrition
products in India and a number of other countries, a premium paid
on early repayment and refinancing of bond debt in Q4 2020 and a
fair value gain on interest rate swaps in the 2019 comparator,
partly offset by reduced interest expense from lower debt levels
and refinancing at lower rates.
Share of after tax profits of associates and joint
ventures
The
share of after tax profits of associates was £33 million
(2019: £74 million). 2019 included a one-off adjustment of
£51 million to reflect GSK’s share of increased after
tax profits of Innoviva primarily as a result of a non-recurring
income tax benefit.
Taxation
The
charge of £580 million represented an effective tax rate on
Total results of 8.3% (2019: 15.3%) and reflected the different tax
effects of the various Adjusting items, including the disposal of
Horlicks and other Consumer
Healthcare brands to Unilever and subsequent disposal of shares
received in Hindustan Unilever. Tax on Adjusted profit amounted to
£1,295 million and represented an effective Adjusted tax rate
of 16.0% (2019: 16.0%).
Issues
related to taxation are described in Note 14,
‘Taxation’ in the Annual Report 2019. The Group
continues to believe it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the
outcome of agreements with relevant tax authorities.
Non-controlling interests
The
allocation of Total earnings to non-controlling interests amounted
to £639 million (2019: £623 million). The increase was
primarily due to an increased allocation of Consumer Healthcare
profits of £374 million (2019: £70 million) following the
completion of the new Consumer Healthcare Joint Venture with Pfizer
on 31 July 2019, and which included the unwind of the fair value
uplift on acquired inventory and major restructuring costs. This
was partly offset by a reduced allocation of ViiV Healthcare
profits of £223 million (2019: £482 million), including
increased charges for re-measurement of contingent consideration
liabilities.
The
allocation of Adjusted earnings to non-controlling interests
amounted to £1,031 million (2019: £787 million). The
increase in allocation primarily reflected an increased allocation
of Consumer Healthcare profits of £515 million (2019:
£204 million) following the completion of the new Consumer
Healthcare Joint Venture with Pfizer on 31 July 2019 partly offset
by a reduced allocation of ViiV Healthcare profits of £474
million (2019: £512 million), and lower net profits in some of
the Group’s other entities with non-controlling interests,
primarily Consumer Healthcare India following the Horlicks and other Consumer brands
disposal.
Earnings per share
Total
EPS was 115.5p, compared with 93.9p in 2019. The increase in EPS
primarily reflected the net profit on disposal of Horlicks and other Consumer Healthcare
brands as well as increased income from asset disposals, partly
offset by higher re-measurement charges on the contingent
consideration liabilities, higher major restructuring charges and a
one-off benefit in 2019 from increased share of after tax profits
of the associate Innoviva.
Adjusted
EPS was 115.9p compared with 123.9p in 2019, down 6% AER, 4% CER,
on a 2% CER increase in Adjusted operating profit. The reduction
primarily resulted from a higher non-controlling interest
allocation of Consumer Healthcare profits and reduced share of
after tax profits of associates resulting from a non-recurring
income tax benefit in Innoviva.
Currency impact on 2020 results
The
results for 2020 are based on average exchange rates, principally
£1/$1.29, £1/€1.13 and £1/Yen 137. Comparative
exchange rates are given on page 59. The period-end exchange rates
were £1/$1.36, £1/€1.11 and £1/Yen
141.
In
2020, turnover increased 1% AER, 3% CER. Total EPS was 115.5p
compared with 93.9p in 2019. Adjusted EPS was 115.9p compared with
123.9p in 2019, down 6% AER, 4% CER. The adverse currency impact
primarily reflected strengthening of Sterling against the US$ and
weakness in emerging market currencies relative to 2019. Exchange
gains or losses on the settlement of intercompany transactions had
a negligible impact on the adverse currency impact of two
percentage points on Adjusted EPS.
|
Adjusting items
The
reconciliations between Total results and Adjusted results for 2020
and 2019 are set out below.
|
Year ended 31 December 2020
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Trans-
action-
related
£m
|
Divest-
ments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
34,099
|
|
|
|
|
|
|
34,099
|
Cost of sales
|
(11,704)
|
699
|
31
|
667
|
116
|
|
|
(10,191)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
22,395
|
699
|
31
|
667
|
116
|
|
|
23,908
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(11,456)
|
1
|
18
|
659
|
(23)
|
16
|
68
|
(10,717)
|
Research and development
|
(5,098)
|
75
|
214
|
206
|
|
|
|
(4,603)
|
Royalty income
|
318
|
|
|
|
|
|
|
318
|
Other operating income/(expense)
|
1,624
|
|
|
|
1,215
|
(2,839)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
7,783
|
775
|
263
|
1,532
|
1,308
|
(2,823)
|
68
|
8,906
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(848)
|
|
|
2
|
|
2
|
|
(844)
|
Share of after tax profits of associates and joint
ventures
|
33
|
|
|
|
|
|
|
33
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
6,968
|
775
|
263
|
1,534
|
1,308
|
(2,821)
|
68
|
8,095
|
|
|
|
|
|
|
|
|
|
Taxation
|
(580)
|
(150)
|
(47)
|
(292)
|
(229)
|
17
|
(14)
|
(1,295)
|
Tax rate %
|
8.3%
|
|
|
|
|
|
|
16.0%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
6,388
|
625
|
216
|
1,242
|
1,079
|
(2,804)
|
54
|
6,800
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to non-controlling interests
|
639
|
|
|
|
392
|
|
|
1,031
|
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders
|
5,749
|
625
|
216
|
1,242
|
687
|
(2,804)
|
54
|
5,769
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
115.5p
|
12.6p
|
4.4p
|
25.0p
|
13.8p
|
(56.5)p
|
1.1p
|
115.9p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (millions)
|
4,976
|
|
|
|
|
|
|
4,976
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Year ended 31 December 2019
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
33,754
|
|
|
|
|
|
33,754
|
Cost of sales
|
(11,863)
|
713
|
30
|
658
|
383
|
|
(10,079)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
21,891
|
713
|
30
|
658
|
383
|
|
23,675
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(11,402)
|
|
4
|
332
|
104
|
247
|
(10,715)
|
Research and development
|
(4,568)
|
64
|
49
|
114
|
|
2
|
(4,339)
|
Royalty income
|
351
|
|
|
|
|
|
351
|
Other operating income/(expense)
|
689
|
|
|
1
|
(142)
|
(548)
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
6,961
|
777
|
83
|
1,105
|
345
|
(299)
|
8,972
|
|
|
|
|
|
|
|
|
Net finance costs
|
(814)
|
|
|
5
|
|
(1)
|
(810)
|
Share of after tax profits of associates and joint
ventures
|
74
|
|
|
|
|
|
74
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
6,221
|
777
|
83
|
1,110
|
345
|
(300)
|
8,236
|
|
|
|
|
|
|
|
|
Taxation
|
(953)
|
(156)
|
(17)
|
(208)
|
(124)
|
140
|
(1,318)
|
Tax rate %
|
15.3%
|
|
|
|
|
|
16.0%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
5,268
|
621
|
66
|
902
|
221
|
(160)
|
6,918
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to non-controlling interests
|
623
|
|
|
|
164
|
|
787
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders
|
4,645
|
621
|
66
|
902
|
57
|
(160)
|
6,131
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
Earnings per share
|
93.9p
|
12.6p
|
1.3p
|
18.2p
|
1.2p
|
(3.3)p
|
123.9p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (millions)
|
4,947
|
|
|
|
|
|
4,947
|
|
––––––––––––
|
|
|
|
|
|
––––––––––––
|
Major restructuring and integration
Within
the Pharmaceuticals sector, the highly regulated manufacturing
operations and supply chains and long lifecycle of the business
mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites
are likely to take several years to complete.
|
Total
Major restructuring charges incurred in 2020 were £1,532
million (2019: £1,105 million), analysed as
follows:
|
|
2020
|
|
2019
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
major restructuring programme (incl. Tesaro)
|
105
|
|
210
|
|
315
|
|
227
|
|
572
|
|
799
|
Consumer
Healthcare Joint Venture integration programme
|
298
|
|
28
|
|
326
|
|
248
|
|
4
|
|
252
|
Separation
Preparation restructuring programme
|
625
|
|
216
|
|
841
|
|
-
|
|
-
|
|
-
|
Combined
restructuring and integration programme
|
39
|
|
11
|
|
50
|
|
10
|
|
44
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,067
|
|
465
|
|
1,532
|
|
485
|
|
620
|
|
1,105
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
charges of £625 million under the Separation Preparation
programme primarily arose from restructuring of Vaccines
manufacturing and R&D functions as part of building the One
Development organisation for Pharma and Vaccines as well as
restructuring of commercial pharmaceuticals and some administrative
functions. Non-cash charges of £216 million were related to
write-down of assets in sites in the Pharmaceuticals Supply
Chain.
Cash
charges of £298 million under the Consumer Healthcare Joint
Venture programme primarily related to severance and integration
costs. The commercial integration of Consumer Healthcare is now
largely completed and the manufacturing integration is well
underway.
The
2018 major restructuring programme incurred cash charges of
£105 million in relation to severance costs for restructuring
of the manufacturing organisation, R&D and some administrative
functions as well as the integration of Tesaro and non-cash charges
of £210 million for write-downs on disposal of
sites.
Total
cash payments made in 2020 were £737 million (2019: £645
million), £115 million for the existing Combined restructuring
and integration programme (2019: £316 million), £179
million (2019: £164 million) under the 2018 major
restructuring programme including the settlement of certain charges
accrued in previous quarters, a further £291 million (2019:
£165 million) relating to the Consumer Healthcare Joint
Venture integration programme and £152 million relating to the
Separation Preparation restructuring programme.
The
analysis of Major restructuring charges by business was as
follows:
|
|
2020
£m
|
|
2019
£m
|
|
|
|
|
Pharmaceuticals
|
671
|
|
651
|
Vaccines
|
214
|
|
58
|
Consumer
Healthcare
|
374
|
|
321
|
|
|
|
|
|
1,259
|
|
1,030
|
Corporate
& central functions
|
273
|
|
75
|
|
|
|
|
Total
Major restructuring costs
|
1,532
|
|
1,105
|
|
|
|
|
The
analysis of Major restructuring charges by Income statement line
was as follows:
|
|
2020
£m
|
|
2019
£m
|
|
|
|
|
Cost of
sales
|
667
|
|
658
|
Selling,
general and administration
|
659
|
|
332
|
Research
and development
|
206
|
|
114
|
Other
operating income/(expense)
|
-
|
|
1
|
|
|
|
|
Total
Major restructuring costs
|
1,532
|
|
1,105
|
|
|
|
|
The
benefit in the year from the 2018 major restructuring programme was
£0.1 billion and the benefit from the Consumer Healthcare
Joint Venture integration was £0.2 billion and the benefit
from the Separation Preparation restructuring programme was
£0.1 billion.
The
2018 major restructuring programme, including Tesaro, is expected
to cost £1.75 billion over the period to 2021, with cash costs
of £0.85 billion and non-cash costs of £0.9 billion, and
is expected to deliver annual savings of around £450 million
by 2021 (at 2019 rates). These savings are intended to be fully
re-invested to help fund targeted increases in R&D and
commercial support of new products.
The
completion of the Consumer Healthcare Joint Venture with Pfizer is
expected to realise substantial cost synergies, generating total
annual cost savings of £0.5 billion by 2022 for expected cash
costs of £0.7 billion and non-cash charges now expected to be
£0.1 billion, plus additional capital expenditure of £0.2
billion. Up to 25% of the cost savings are intended to be
reinvested in the business to support innovation and other growth
opportunities.
The
Group initiated in Q1 2020 a two-year Separation Preparation
programme to prepare for the separation of GSK into two companies:
New GSK, a biopharma company with an R&D approach focused on
science related to the immune system, the use of genetics and new
technologies, and a new leader in Consumer Healthcare. The
programme aims to:
|
●
|
Drive a
common approach to R&D with improved capital
allocation
|
●
|
Align
and improve the capabilities and efficiency of global support
functions to support New GSK
|
●
|
Further
optimise the supply chain and product portfolio, including the
divestment of non-core assets. A strategic review of prescription
dermatology is underway
|
●
|
Prepare
Consumer Healthcare to operate as a standalone company
|
The
programme continues to target delivery of £0.7 billion of
annual savings by 2022 and £0.8 billion by 2023, with total
costs estimated at £2.4 billion, of which £1.6 billion is
expected to be cash costs. The proceeds of anticipated divestments
are largely expected to cover the cash costs of the
programme.
|
Transaction-related adjustments
Transaction-related
adjustments resulted in a net charge of £1,308 million (2019:
£345 million). This included a net £1,234 million
accounting charge for the re-measurement of the contingent
consideration liabilities related to the acquisitions of the former
Shionogi-ViiV Healthcare joint venture and the former Novartis
Vaccines business and the liabilities for the Pfizer put option and
Pfizer and Shionogi preferential dividends in ViiV
Healthcare.
|
Charge/(credit)
|
2020
£m
|
|
2019
£m
|
|
|
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare joint
venture
(including
Shionogi preferential dividends)
|
1,114
|
|
31
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
(52)
|
|
(234)
|
Contingent
consideration on former Novartis Vaccines business
|
172
|
|
76
|
Release
of fair value uplift on acquired Pfizer inventory
|
91
|
|
366
|
Other
adjustments
|
(17)
|
|
106
|
|
|
|
|
Total
transaction-related charges
|
1,308
|
|
345
|
|
|
|
|
The
£1,114 million charge relating to the contingent consideration
for the former Shionogi-ViiV Healthcare joint venture represented
an increase in the valuation of the contingent consideration due to
Shionogi, as a result of a £408 million unwind of the discount
and £706 million primarily from adjustments to sales forecasts
as well as updated exchange rate assumptions. The £52 million
credit relating to the ViiV Healthcare put options and Pfizer
preferential dividends represented a decrease in the valuation of
the put option as a result of adjustments to multiples and sales
forecasts and updated exchange rate assumptions.
The
ViiV Healthcare contingent consideration liability is fair valued
under IFRS. The potential impact of the COVID-19 pandemic remains
uncertain and, at 31 December 2020, it has been assumed that there
will be no significant impact on the long-term value of the
liability. This position remains under review and the amount of the
liability will be updated in future quarters as further information
on the impact of the pandemic becomes available. An explanation of
the accounting for the non-controlling interests in ViiV Healthcare
is set out on page 11.
Divestments, significant legal charges and other items
Divestments
and other items included a gain in the year of £2,339 million
arising from the net profit on disposal of the Horlicks and other Consumer Healthcare
brands of £2,815 million in Q2 2020, after reversal of
£240 million of embedded derivative gains on the value of the
shares taken in prior years. This was partly offset by the related
loss on sale of the shares in Hindustan Unilever in Q2 2020 of
£476 million. Divestments and other items also included
milestone income and gains from a number of asset disposals and
certain other Adjusting items. A charge of £7 million (2019:
£251 million) for significant legal matters included the
settlement of existing matters as well as provisions for ongoing
litigation. Significant legal cash payments were £9 million
(2019: £294 million).
Separation costs
From Q2
2020, the Group has started to report additional costs to prepare
Consumer Healthcare for separation. These are estimated at
£600-700 million, excluding transaction costs.
|
Financial performance – Q4 2020
|
Total results
|
The
Total results for the Group are set out below.
|
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
8,739
|
|
8,899
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(3,171)
|
|
(3,248)
|
|
(2)
|
|
(2)
|
|
|
|
|
|
|
|
|
Gross
profit
|
5,568
|
|
5,651
|
|
(1)
|
|
-
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(3,162)
|
|
(3,443)
|
|
(8)
|
|
(6)
|
Research
and development
|
(1,470)
|
|
(1,243)
|
|
18
|
|
19
|
Royalty income
|
91
|
|
82
|
|
11
|
|
12
|
Other
operating income/(expense)
|
34
|
|
855
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
1,061
|
|
1,902
|
|
(44)
|
|
(44)
|
|
|
|
|
|
|
|
|
Finance
income
|
5
|
|
11
|
|
|
|
|
Finance
expense
|
(239)
|
|
(206)
|
|
|
|
|
Share
of after tax (losses)/profits of associates and joint
ventures
|
(6)
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
821
|
|
1,711
|
|
(52)
|
|
(52)
|
|
|
|
|
|
|
|
|
Taxation
|
18
|
|
(194)
|
|
|
|
|
Tax rate %
|
(2.2)%
|
|
11.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
839
|
|
1,517
|
|
(45)
|
|
(45)
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling interests
|
162
|
|
218
|
|
|
|
|
Profit
attributable to shareholders
|
677
|
|
1,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
839
|
|
1,517
|
|
(45)
|
|
(45)
|
|
|
|
|
|
|
|
|
Earnings per share
|
13.6p
|
|
26.2p
|
|
(48)
|
|
(48)
|
|
|
|
|
|
|
|
|
Adjusted results
The
Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for Q4 2020 and Q4 2019
are set out on pages 39 and 40.
|
|
Q4 2020
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
8,739
|
|
100
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,792)
|
|
(31.9)
|
|
(2)
|
|
(2)
|
Selling,
general and administration
|
(2,924)
|
|
(33.5)
|
|
(6)
|
|
(4)
|
Research
and development
|
(1,297)
|
|
(14.8)
|
|
11
|
|
12
|
Royalty
income
|
91
|
|
1.0
|
|
11
|
|
12
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
1,817
|
|
20.8
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
|
|
Adjusted
profit before tax
|
1,578
|
|
|
|
(5)
|
|
(5)
|
Adjusted
profit after tax
|
1,358
|
|
|
|
(6)
|
|
(6)
|
Adjusted
profit attributable to shareholders
|
1,163
|
|
|
|
(5)
|
|
(5)
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share
|
23.3p
|
|
|
|
(6)
|
|
(5)
|
|
|
|
|
|
|
|
|
Operating profit by business
|
Q4 2020
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,874
|
|
42.9
|
|
(3)
|
|
(3)
|
Pharmaceuticals
R&D*
|
(1,023)
|
|
|
|
10
|
|
12
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
851
|
|
19.5
|
|
(16)
|
|
(16)
|
Vaccines
|
691
|
|
34.3
|
|
20
|
|
26
|
Consumer
Healthcare
|
385
|
|
16.3
|
|
(13)
|
|
(12)
|
|
|
|
|
|
|
|
|
|
1,927
|
|
22.1
|
|
(5)
|
|
(3)
|
Corporate
& other unallocated costs
|
(110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
1,817
|
|
20.8
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
|
|
*
|
Operating
profit of Pharmaceuticals R&D segment, which is the
responsibility of the Chief Scientific Officer and President,
R&D. It excludes ViiV Healthcare R&D expenditure, which is
reported within the Pharmaceuticals segment.
|
Turnover
|
Pharmaceuticals turnover
|
|
Q4 2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Respiratory
|
1,017
|
|
14
|
|
15
|
HIV
|
1,268
|
|
1
|
|
2
|
Immuno-inflammation
|
206
|
|
21
|
|
24
|
Oncology
|
115
|
|
74
|
|
74
|
|
2,606
|
|
9
|
|
10
|
Established
Pharmaceuticals
|
1,760
|
|
(19)
|
|
(18)
|
|
|
|
|
|
|
|
4,366
|
|
(4)
|
|
(3)
|
|
|
|
|
|
|
US
|
1,974
|
|
1
|
|
3
|
Europe
|
1,057
|
|
1
|
|
(3)
|
International
|
1,335
|
|
(14)
|
|
(12)
|
|
|
|
|
|
|
|
4,366
|
|
(4)
|
|
(3)
|
|
|
|
|
|
|
Pharmaceuticals
turnover in the quarter was £4,366 million, down 4% AER, 3%
CER. Respiratory sales were up 14% AER, 15% CER, to £1,017
million, on growth of Trelegy and Nucala. HIV sales were up 1% AER, 2%
CER, to £1,268 million, with growth in Juluca and Dovato partly offset by Tivicay and Triumeq. Sales of Established
Pharmaceuticals declined 19% AER, 18% CER, to £1,760
million.
In the
quarter, results continued to reflect the COVID-19 pandemic
environment, with lower levels of new patient prescriptions in US
and Europe, reduced market size for allergy and antibiotic products
in International and Europe, and pressure on net prices in
US.
In the
US, sales grew 1% AER and 3% CER. Continued growth of Nucala, Trelegy, Benlysta and the HIV two-drug regimens
was partially offset by the decline in Triumeq and Established
Pharmaceuticals, including the ongoing impact of generic
Advair/Seretide and
Flovent price
pressure.
In
Europe, sales grew 1% AER but declined 3% CER, with growth in
Ellipta Brands,
Nucala and HIV two-drug
regimens. This was offset
by the impacts of generic competition including ongoing
Seretide decline and a
one-off UK Relenza contract
last year in the Established Pharmaceuticals
portfolio.
International
declined 14% AER, 12% CER. Growth from the Respiratory portfolio
was offset by declines in HIV and Established Pharmaceuticals which
was impacted by COVID-19 suppressed antibiotics and dermatology
markets, and increased generic competition in Japan and
China.
Respiratory
Total
Respiratory sales were up 14% AER, 15% CER, with growth from
Trelegy and Nucala in all regions. International
Respiratory sales grew 21% AER, 22% CER including Nucala, up 50% AER, 53% CER, and
Trelegy continued to grow
with ongoing launches through the Region. In Europe, Respiratory
grew 18% AER, 14% CER including Trelegy growing 45% AER, 42% CER. In
the US, Respiratory grew 10% AER, 12% CER, driven by Trelegy and Nucala and the impact of a prior period
RAR adjustment.
Sales
of Nucala were £292
million in the quarter and grew 34% AER, 34% CER, with US sales up
39% AER, 42% CER to £184 million, Europe sales of £63
million grew 13% AER, 7% CER and International sales of £45
million grew 50% AER, 53% CER.
Trelegy sales were up 38% AER, 40% CER to £238 million
driven by growth in all regions. In the US, sales benefited from
the new asthma indication approved and launched in Q3 2020, with
sales up 28% AER, 30% CER. In Europe, sales grew 45% AER, 42% CER
and in International, where Trelegy asthma was approved in Japan in
the quarter, sales grew to £29 million.
HIV
HIV
sales were £1,268 million, up 1% AER, 2% CER in the quarter.
The dolutegravir franchise grew 1% AER, 2% CER, delivering sales of
£1,225 million. The remaining portfolio, with sales of
£43 million and 3% of total HIV sales, declined 12% AER, 6%
CER.
Sales
of dolutegravir products were £1,225 million in the quarter.
Tivicay delivered sales of
£365 million and declined 14% AER, 13% CER. Triumeq delivered sales of £580
million and declined 9% AER, 9% CER. The two-drug regimens,
Juluca and Dovato delivered sales of £280
million in the quarter, with combined growth more than offsetting
the decline of the three-drug regimen Triumeq.
In the
US, dolutegravir sales grew 2% AER, 4% CER and in Europe
dolutegravir sales grew 13% AER, 8% CER. Following recent launches
of Dovato, combined sales
of the two-drug regimens were £187 million in the US and
£84 million in Europe, with growth more than offsetting the
decline in Triumeq.
International dolutegravir sales declined 23% AER, 19% CER driven
by phasing of Tivicay
tender business.
Oncology
Sales
of Zejula, the PARP
inhibitor asset acquired from Tesaro in Q1 2019 were £89
million in the quarter, up 35% AER, 35% CER. Sales comprised
£54 million in the US and £32 million in
Europe.
Blenrep for the treatment of patients with relapsed or
refractory multiple myeloma was approved and launched in the US and
Europe in Q3 2020 and reported sales of £25 million in the
first full quarter of sales.
Immuno-inflammation
Sales
of Benlysta in the quarter
were up 21% AER, 23% CER to £205 million, including sales of
the sub-cutaneous formulation of £105 million up 33% AER, 35%
CER.
Established Pharmaceuticals
Sales
of Established Pharmaceuticals in the quarter were £1,760
million, down 19% AER, 18% CER.
Established
Respiratory products declined 22% AER, 21% CER to £756
million. This includes the impact of generics in Japan and price
pressure on Flovent in the
US. Advair/Seretide sales
declined 15% AER and CER with all regions impacted by generic
competition.
The
remainder of the Established Pharmaceuticals portfolio declined by
17% AER, 16% CER to £1,004 million on lower demand for
antibiotics during the COVID-19 pandemic period, the impact of
government mandated changes increasing use of generics in markets
including France, Japan and China, and a strong comparator,
including a European Relenza contract.
|
Vaccines turnover
|
|
Q4 2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Meningitis
|
274
|
|
35
|
|
36
|
Influenza
|
252
|
|
83
|
|
85
|
Shingles
|
645
|
|
21
|
|
23
|
Established
Vaccines
|
841
|
|
(3)
|
|
(3)
|
|
|
|
|
|
|
|
2,012
|
|
15
|
|
16
|
|
|
|
|
|
|
US
|
1,085
|
|
19
|
|
22
|
Europe
|
422
|
|
21
|
|
17
|
International
|
505
|
|
5
|
|
5
|
|
|
|
|
|
|
|
2,012
|
|
15
|
|
16
|
|
|
|
|
|
|
Vaccines turnover grew 15% AER, 16% CER to £2,012 million,
primarily driven by double-digit growth in Shingrix and a strong demand across all regions for
Influenza vaccine. Meningitis vaccines
also contributed to growth mainly due to favourable CDC demand in
the US.
Established Vaccines declined 3% AER, 3% CER to £841 million,
reflecting the adverse impact of the COVID-19 pandemic on Hepatitis
and Synflorix, together with the divestment of
Rabipur
and Encepur. This was partly offset by Cervarix strong performance in China.
Lower demand in the quarter was related to COVID-19 pandemic
conditions unless stated otherwise.
Meningitis
Meningitis sales grew 35% AER, 36% CER to £274 million
. Bexsero
sales grew 42% AER, 44% CER to
£159 million and Menveo 26% AER, 27% CER to £83
million, mostly driven by favourable
CDC demand related to an elongated back-to-school season in the US,
partly offset by Menveo competitive pressures in
International.
Influenza
Fluarix/FluLaval sales were
£252 million, up 83% AER, 85% CER, reflecting robust demand
across all regions resulting from strong government recommendations
that prioritised supporting flu vaccination during COVID-19
pandemic conditions.
Shingles
Shingrix recorded sales of
£645 million, up 21% AER, 23% CER, primarily driven by a
strong performance in Europe reflecting robust underlying
demand in Germany. US sales growth was supported by seasonal flu
vaccination, but wellness visits declined late in Q4 2020 as
pandemic conditions worsened. The launch of Shingrix in China also contributed to
growth.
Established Vaccines
Sales of DTPa-containing vaccines (Infanrix, Pediarix and Boostrix) were up 4% AER, 5% CER. Infanrix/Pediarix
sales grew 10% AER, 12% CER to
£172 million, primarily due to favourable CDC purchase
patterns in the US, partly offset by competitive pressures and
supply constraints in Europe together with lower demand in
International.
Boostrix sales were down 4%
AER, 3% CER to £125 million, reflecting lower demand in
International.
Hepatitis vaccines declined 29% AER, 28% CER to £139 million,
adversely impacted in the US and Europe by lower demand and travel
restrictions, together with competition returning to market in the
US.
Synflorix sales declined by 25%
AER, 27% CER to £93 million, primarily due supply constraints
in Emerging Markets and lower demand in
International.
Rotarix sales grew 5% AER, 6%
CER to £148 million, reflecting favourable CDC purchases in
the US.
MMRV
vaccines sales were up 11% AER, 10% CER to £78 million,
largely driven by improved supply and increased market shares in
Europe.
|
Consumer Healthcare turnover
|
|
|
|
Q4 2020
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Oral
health
|
|
|
679
|
|
4
|
|
6
|
Pain
relief
|
|
|
542
|
|
8
|
|
10
|
Vitamins,
minerals and supplements
|
|
|
386
|
|
16
|
|
17
|
Respiratory
health
|
|
|
262
|
|
(26)
|
|
(24)
|
Digestive
health and other
|
|
|
429
|
|
(9)
|
|
(7)
|
|
|
|
2,298
|
|
(1)
|
|
1
|
|
|
|
|
|
|
|
|
Brands
divested/under review
|
|
|
62
|
|
(76)
|
|
(75)
|
|
|
|
|
|
|
|
|
|
|
|
2,360
|
|
(8)
|
|
(7)
|
|
|
|
|
|
|
|
|
US
|
|
|
825
|
|
(7)
|
|
(5)
|
Europe
|
|
|
617
|
|
(1)
|
|
(4)
|
International
|
|
|
918
|
|
(13)
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
2,360
|
|
(8)
|
|
(7)
|
On a
reported basis, sales declined 8% AER
and declined 7% CER to £2,360 million in the quarter.
Brands divested/under review declined 76% AER, 75% CER to
£62 million given successful execution of the divestment
programme. Sales grew 1% CER, excluding brands divested/under
review, with underlying brand strength combined with the strength
of the portfolio and successful execution driving growth, and
offsetting a weak quarter in Respiratory health. Double digit
growth excluding brands divested/under review in Emerging markets
was driven by strong performance in China and also the retained
business in India.
Vitamins, minerals and supplements brands continue to
benefit from strong demand given increased consumer focus on health
and wellness as a result of the COVID-19 pandemic. Pain relief and
Oral health delivered good growth, however Respiratory heath was
adversely impacted by a lower cold and flu season as a result of
the pandemic and social distancing as highlighted in the previous
quarter. Digestive health and other declined, with growth in
Digestive health offset by weaker Smokers’ health and Skin
health.
Oral health
Oral
health sales increased 4% AER and grew
6% CER to £679 million. Sensodyne continued to perform strongly, delivering double
digit growth reflecting the underlying strength of the brand and
with broad based growth across most markets. Gum health continued
to deliver double digit growth, consistent with performance in the
previous quarter. Denture care declined in low-single digits due to
continued challenging market conditions. Overall growth was also
impacted by a low-single digit decline in non-strategic
brands.
Pain relief
Pain relief grew 8% AER, 10% CER to £542 million. Sales growth
was largely driven by strong Voltaren performance in the US following the successful Rx
to OTC launch in the US earlier this year. Panadol performance was adversely impacted by weaker
performance in South East Asia largely related to the COVID-19
pandemic.
Vitamins, minerals and supplements
Vitamins,
minerals and supplements grew 16% AER, 17% CER to £386
million. Centrum,
Caltrate and Emergen-C all saw double digit growth,
demonstrating the strength of the brands. The category continued to benefit
from consumer focus on health and wellness, a trend consistent with
prior quarters and as a result of the COVID-19
pandemic.
Respiratory health
Respiratory health sales declined 26% AER, 24% CER to £262
million. The category was particularly negatively impacted by
weaker than expected demand for cold and flu products in a key
quarter given seasonality. Theraflu, Robitussin
and Contac all declined in double digits as a result of a
significant decline in the global demand for seasonal cold and flu
remedies. Allergy and nasal products Flonase and Otrivin declined in low single digits.
Digestive health and other
Digestive
health and other brands declined 9% AER, 7% CER to £429
million. Digestive health brands grew in the quarter, with double
digit growth in Eno more
than offsetting declines in Tums and Nexium. Smokers’ health products
also declined in double digits given weaker performance in the US.
Skin health continued to be impacted by reduced impulse purchases
in retail stores as a result of lower footfall due to the COVID-19
pandemic.
|
Operating performance
|
Cost of sales
Total
cost of sales as a percentage of turnover was 36.3%, 0.2 percentage
points lower at AER and 0.5 percentage points lower in CER terms
compared with Q4 2019. This primarily reflected the unwind in Q4
2019 of the fair market value uplift on inventory arising on
completion of the Consumer Healthcare Joint Venture with Pfizer,
partly offset by increased write downs in a number of manufacturing
sites.
Excluding
these and other Adjusting items, Adjusted cost of sales as a
percentage of turnover was 31.9%, 0.1 percentage points lower at
AER and 0.3 percentage points lower at CER compared with Q4 2019.
This reflected a favourable comparison to a non-restructuring
related write down in a manufacturing site in Q4 2019 in
Pharmaceuticals, restructuring savings across all three businesses
and favourable product mix in Vaccines, partly offset by continued
adverse pricing pressure in Pharmaceuticals, primarily in
Established Respiratory.
Selling, general and administration
Total
SG&A costs as a percentage of turnover were 36.2%, 2.5
percentage points lower at AER and 2.1 percentage points lower at
CER compared with Q4 2019. This included lower significant legal
costs partly offset by increased major restructuring costs and
separation costs.
Excluding
these and other Adjusting items, Adjusted SG&A costs as a
percentage of turnover were 33.5%, 1.6 percentage points lower at
AER than in Q4 2019 and 1.1 percentage points lower on a CER basis.
Adjusted SG&A costs declined 6% AER, 4% CER which reflected the
continuing benefit of restructuring in Pharmaceuticals, Consumer
Healthcare and support functions, reduced variable spending across
all three businesses as a result of the COVID-19 lockdowns and the
tight control of ongoing costs. This was partly offset by increased
investment for new launches in Respiratory, HIV and Vaccines and
increased costs for a number of legal settlements in Q4
2020.
Research and development
Total
R&D expenditure was £1,470 million (16.8% of turnover), up
18% AER, 19% CER, including an increase in major restructuring
charges. Adjusted R&D expenditure was £1,297 million
(14.8% of turnover), 11% higher at AER, 12% higher at CER than in
Q4 2019.
Pharmaceuticals
R&D expenditure was £1,056 million, up 17% AER, 19% CER,
primarily driven by the significant increase in investment in
Oncology, reflecting the progression of a number of key programmes
including Blenrep,
feladilimab and bintrafusp alfa, as well as the progression of
COVID-19 treatment programmes (VIR-7831, otilimab) and a number of
other Phase II and III programs including HBV antisense
oligonucleotide (GSK3228836) and anti-IL5 for asthma (GSK3511294).
This has been partly offset by efficiency savings from the
implementation of the One Development programme for Pharma and
Vaccines as part of the Separation Preparation restructuring
programme and variable spending as a result of COVID-19
lockdowns.
R&D
expenditure in Vaccines was £178 million, down 4% AER, 6% CER,
reflecting efficiency savings from the implementation of the One
Development programme for Pharma and Vaccines and variable spending
as a result of COVID-19 lockdowns. R&D expenditure in Consumer
Healthcare was £63 million.
Royalty income
Royalty
income was £91 million (Q4 2019: £82 million), up 11%
AER, 12% CER.
|
Other operating income/(expense)
Net
other operating income of £34 million (Q4 2019: £855
million income) primarily reflected a number of asset disposals
together with accounting credits of £2 million (Q4 2019:
£535 million credits) arising from the re-measurement of the
contingent consideration liabilities related to the acquisitions of
the former Shionogi-ViiV Healthcare joint venture and the former
Novartis Vaccines business and the liabilities for the Pfizer put
option and Pfizer and Shionogi preferential dividends in ViiV
Healthcare. This included a re-measurement credit of £3
million (Q4 2019: £390 million credit) for the contingent
consideration liability due to Shionogi, primarily arising from
changes in exchange rate assumptions offset by changes in sales
forecasts as well as the unwind of discounting.
|
Operating profit
Total
operating profit was £1,061 million in Q4 2020 compared with
£1,902 million in Q4 2019. This primarily reflected lower
re-measurement credits on the contingent consideration liabilities,
lower profit on asset disposals and increased major restructuring
costs, partly offset by favourable comparisons to a decrease in
value of the shares in Hindustan Unilever and unwind of the fair
market value uplift on inventory arising on completion of the
Consumer Healthcare Joint Venture with Pfizer.
Excluding
these and other Adjusting items, Adjusted operating profit was
£1,817 million, 2% lower than Q4 2019 at AER, 1% lower at CER
on a turnover decline of 1% CER. The Adjusted operating margin of
20.8% was flat at AER, and 0.1 percentage points lower on a CER
basis than in Q4 2019.
The reduction in Adjusted operating profit primarily reflected
increased investment in R&D as well as targeted investments in
promotional product support and increased costs for a number of
legal settlements, partly offset by benefits from continued
restructuring across the business, tight control of ongoing costs
including reduced promotional and variable spending across all
three businesses as a result of the COVID-19
lockdowns.
Contingent
consideration cash payments which are made to Shionogi and other
companies reduce the balance sheet liability and hence are not
recorded in the income statement. Total contingent consideration
cash payments in Q4 2020 amounted to £221 million (Q4 2019:
£233 million). This included cash payments made to Shionogi of
£210 million (Q4 2019: £220 million).
Operating profit by business
Pharmaceuticals
operating profit was £851 million, down 16% AER, 16% CER on a
turnover decrease of 3% CER. The operating margin of 19.5% was 2.6
percentage points lower at AER than in Q4 2019 and 3.0 percentage
points lower on a CER basis. This primarily reflected increased
investment in Oncology R&D and several COVID-19 programmes,
investment in new product support and targeted priority markets,
the continued impact of lower prices, particularly in Respiratory
and increased costs for a number of legal settlements. This was
partly offset by the continuing benefit of restructuring, reduced
variable spending across all three businesses as a result of the
COVID-19 lockdowns and the tight control of ongoing costs and a
favourable comparison to a non-restructuring related write down in
a manufacturing site in Q4 2019.
Vaccines
operating profit was £691 million, up 20% AER, 26% CER on a
turnover increase of 16% CER. The operating margin of 34.3% was 1.2
percentage points higher at AER than in Q4 2019 and 3.0 percentage
points higher on a CER basis. This was primarily driven by enhanced
operating leverage from strong sales growth with positive mix due
to Shingrix and lower
R&D spend, partly offset by higher inventory
adjustments.
Consumer
Healthcare operating profit was £385 million, down 13% AER,
12% CER on a turnover decrease of 7% CER. The operating margin of
16.3% was 0.8 percentage points lower at AER and 1.0 percentage
points lower on a CER basis than in Q4 2019. This primarily
reflected the impact of divestments as well as increased
investments in power brands in the quarter, partially offset by
synergy benefits from the Pfizer integration.
Net finance costs
Total
net finance costs were £234 million compared with £195
million in Q4 2019. Adjusted net finance costs were £233
million compared with £197 million in Q4 2019. The increase
primarily reflects lower interest income on reduced overseas cash
post-closing of the divestment of Horlicks and other Consumer
Healthcare nutrition products in India and a number of other
countries and a premium paid on the early repayment and refinancing
of bond debt in the quarter.
Share of after tax (losses)/profits of associates and joint
ventures
The
share of after tax losses of associates and joint ventures was
£6 million (Q4 2019: £4 million profits).
Taxation
The
credit of £18 million represented an effective tax rate on
Total results of (2.2)% (Q4 2019: 11.3%) and reflected the
different tax effects of the various Adjusting items including a
reduction of £92 million in the estimated impact of the US tax
reform in 2017. Tax on Adjusted profit amounted to £220
million and represented an effective Adjusted tax rate of 13.9% (Q4
2019: 12.5%).
Issues
related to taxation are described in Note 14,
‘Taxation’ in the Annual Report 2019. The Group
continues to believe it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the
outcome of agreements with relevant tax authorities.
Non-controlling interests
The
allocation of Total earnings to non-controlling interests amounted
to £162 million (Q4 2019: £218 million). The reduction
was primarily due to reduced allocation of ViiV Healthcare profits
of £97 million (Q4 2019: £192 million), including reduced
credits for re-measurement of contingent consideration liabilities,
partly offset by increased allocation of Consumer Healthcare
profits of £64 million (Q4 2019: £23
million).
The
allocation of Adjusted earnings to non-controlling interests
amounted to £195 million (Q4 2019: £225 million). The
reduction in allocation primarily reflected a reduced allocation of
Consumer Healthcare profits of £91 million (Q4 2019: £101
million) and a reduced allocation of ViiV Healthcare profits of
£103 million (Q4 2019: £121 million).
Earnings per share
Total
EPS was 13.6p, compared with 26.2p in Q4 2019. The reduction in EPS
primarily reflected lower re-measurement credits on the contingent
consideration liabilities, lower profit on asset disposals and
increased major restructuring costs, partly offset by favourable
comparisons to a decrease in value of the shares in Hindustan
Unilever and unwind of the fair market value uplift on inventory
arising on completion of the Consumer Healthcare Joint Venture with
Pfizer.
Adjusted
EPS was 23.3p compared with 24.8p in Q4 2019, down 6% AER and 5%
CER, on a 1% CER decrease in Adjusted operating profit reflecting
higher interest costs and a higher effective tax rate partly offset
by a lower non-controlling interest allocation of Consumer
Healthcare and ViiV profits.
Currency impact on Q4 2020 results
The
results for Q4 2020 are based on average exchange rates,
principally £1/$1.33, £1/€1.11 and £1/Yen 138.
Comparative exchange rates are given on page 59. The period-end
exchange rates were £1/$1.36, £1/€1.11 and
£1/Yen 141.
In the
quarter, turnover decreased 2% AER, 1% CER. Total EPS was 13.6p
compared with 26.2p in Q4 2019. Adjusted EPS was 23.3p compared
with 24.8p in Q4 2019, down 6% AER and 5% CER. The adverse currency
impact primarily reflected the strengthening in Sterling,
particularly against the US$, partly offset by weakness against the
Euro. Exchange gains or losses on the settlement of intercompany
transactions had a one percentage point positive impact on the
negative currency impact of one percentage point on Adjusted
EPS.
|
Adjusting items
The
reconciliations between Total results and Adjusted results for Q4
2020 and Q4 2019 are set out below.
|
Three months ended 31 December 2020
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
8,739
|
|
|
|
|
|
|
8,739
|
Cost of sales
|
(3,171)
|
170
|
3
|
199
|
7
|
|
|
(2,792)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
5,568
|
170
|
3
|
199
|
7
|
|
|
5,947
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(3,162)
|
1
|
1
|
211
|
2
|
(2)
|
25
|
(2,924)
|
Research and development
|
(1,470)
|
25
|
38
|
110
|
|
|
|
(1,297)
|
Royalty income
|
91
|
|
|
|
|
|
|
91
|
Other operating income/(expense)
|
34
|
|
|
|
(8)
|
(26)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
1,061
|
196
|
42
|
520
|
1
|
(28)
|
25
|
1,817
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
(234)
|
|
|
|
|
1
|
|
(233)
|
Share
of after tax losses of associates and joint ventures
|
(6)
|
|
|
|
|
|
|
(6)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
821
|
196
|
42
|
520
|
1
|
(27)
|
25
|
1,578
|
|
|
|
|
|
|
|
|
|
Taxation
|
18
|
(40)
|
(8)
|
(51)
|
(43)
|
(90)
|
(6)
|
(220)
|
Tax rate %
|
(2.2)%
|
|
|
|
|
|
|
13.9%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
839
|
156
|
34
|
469
|
(42)
|
(117)
|
19
|
1,358
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to non-controlling interests
|
162
|
|
|
|
33
|
|
|
195
|
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders
|
677
|
156
|
34
|
469
|
(75)
|
(117)
|
19
|
1,163
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
13.6p
|
3.2p
|
0.7p
|
9.3p
|
(1.5)p
|
(2.4)p
|
0.4p
|
23.3p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares (millions)
|
4,981
|
|
|
|
|
|
|
4,981
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Three months ended 31 December 2019
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
8,899
|
|
|
|
|
|
8,899
|
Cost of sales
|
(3,248)
|
163
|
3
|
11
|
223
|
|
(2,848)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
5,651
|
163
|
3
|
11
|
223
|
|
6,051
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(3,443)
|
|
(1)
|
163
|
4
|
160
|
(3,117)
|
Research and development
|
(1,243)
|
16
|
19
|
43
|
|
1
|
(1,164)
|
Royalty income
|
82
|
|
|
|
|
|
82
|
Other operating income/(expense)
|
855
|
|
|
|
(557)
|
(298)
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
1,902
|
179
|
21
|
217
|
(330)
|
(137)
|
1,852
|
|
|
|
|
|
|
|
|
Net finance costs
|
(195)
|
|
|
1
|
|
(3)
|
(197)
|
Share of after tax profits of associates and joint
ventures
|
4
|
|
|
|
|
|
4
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
1,711
|
179
|
21
|
218
|
(330)
|
(140)
|
1,659
|
|
|
|
|
|
|
|
|
Taxation
|
(194)
|
(41)
|
(6)
|
(58)
|
15
|
77
|
(207)
|
Tax rate %
|
11.3%
|
|
|
|
|
|
12.5%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
1,517
|
138
|
15
|
160
|
(315)
|
(63)
|
1,452
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to non-controlling interests
|
218
|
|
|
|
7
|
|
225
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders
|
1,299
|
138
|
15
|
160
|
(322)
|
(63)
|
1,227
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
Earnings per share
|
26.2p
|
2.8p
|
0.3p
|
3.2p
|
(6.5)p
|
(1.2)p
|
24.8p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (millions)
|
4,953
|
|
|
|
|
|
4,953
|
|
––––––––––––
|
|
|
|
|
|
––––––––––––
|
Major restructuring and integration
Within
the Pharmaceuticals sector, the highly regulated manufacturing
operations and supply chains and long lifecycle of the business
mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites
are likely to take several years to complete.
|
Total
Major restructuring charges incurred in Q4 2020 were £520
million (Q4 2019: £217 million), analysed as
follows:
|
|
Q4 2020
|
|
Q4
2019
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
major restructuring programme (incl. Tesaro)
|
30
|
|
15
|
|
45
|
|
48
|
|
23
|
|
71
|
Consumer
Healthcare Joint Venture integration programme
|
53
|
|
4
|
|
57
|
|
113
|
-
|
4
|
|
117
|
Separation
Preparation restructuring programme
|
273
|
|
104
|
|
377
|
|
-
|
|
-
|
|
-
|
Combined
restructuring and integration programme
|
26
|
|
15
|
|
41
|
|
18
|
|
11
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
382
|
|
138
|
|
520
|
|
179
|
|
38
|
|
217
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
charges of £273 million under the Separation Preparation
programme primarily arose from restructuring of R&D functions
across Pharma and Vaccines and some administrative functions.
Non-cash charges of £104 million were related to write-down of
assets on disposal and closure of sites in the Pharmaceuticals
Supply Chain.
Cash
charges of £53 million on the Consumer Healthcare Joint
Venture programme primarily related to severance and integration
costs.
The
2018 major restructuring programme incurred cash charges of
£30 million in relation to severance costs for restructuring
within central functions and non-cash charges of £15 million
for write-downs of assets on sites.
Total
cash payments made in Q4 2020 were £194 million (Q4 2019:
£255 million), £22 million for the existing Combined
restructuring and integration programme (Q4 2019: £69
million), £34 million (Q4 2019: £79 million) under the
2018 major restructuring programme including the settlement of
certain charges accrued in previous quarters, a further £67
million (Q4 2019: £107 million) relating to the Consumer
Healthcare Joint Venture integration programme and £71 million
relating to the Separation Preparation restructuring
programme.
The
analysis of Major restructuring charges by business was as
follows:
|
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
|
|
|
Pharmaceuticals
|
309
|
|
36
|
Vaccines
|
11
|
|
10
|
Consumer
Healthcare
|
71
|
|
134
|
|
391
|
|
|
|
|
|
180
|
Corporate
& central functions
|
129
|
|
37
|
|
|
|
|
Total
Major restructuring costs
|
520
|
|
217
|
|
|
|
|
The
analysis of Major restructuring charges by Income statement line
was as follows:
|
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
|
|
|
Cost of
sales
|
199
|
|
11
|
Selling,
general and administration
|
211
|
|
163
|
Research
and development
|
110
|
|
43
|
|
|
|
|
Total
Major restructuring costs
|
520
|
|
217
|
|
|
|
|
The
benefit from the Consumer Healthcare Joint Venture integration was
£0.1 billion. Given its early stage the benefit from the
Separation Preparation restructuring programme was less than
£0.1 billion.
|
Transaction-related adjustments
Transaction-related
adjustments resulted in a net charge of £1 million (Q4 2019:
£330 million credit). This included a net £2 million
accounting credit for the re-measurement of the contingent
consideration liabilities related to the acquisitions of the former
Shionogi-ViiV Healthcare joint venture and the former Novartis
Vaccines business and the liabilities for the Pfizer put option and
Pfizer and Shionogi preferential dividends in ViiV
Healthcare.
|
Charge/(credit)
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
|
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare joint venture
(including Shionogi preferential dividends)
|
(3)
|
|
(390)
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
(10)
|
|
(153)
|
Contingent
consideration on former Novartis Vaccines business
|
11
|
|
8
|
Release
of fair value uplift on acquired Pfizer inventory
|
-
|
|
218
|
Other
adjustments
|
3
|
|
(13)
|
|
|
|
|
Total
transaction-related charges
|
1
|
|
(330)
|
|
|
|
|
The
£3 million credit relating to the contingent consideration for
the former Shionogi-ViiV Healthcare joint venture represented an
increase in the valuation of the contingent consideration due to
Shionogi, primarily as a result of a £110 million unwind of
the discount offset by a £113 million credit primarily from
updated exchange rate assumptions partly offset by adjustments to
sales forecasts.
The
ViiV Healthcare contingent consideration liability is fair valued
under IFRS. The potential impact of the COVID-19 pandemic remains
uncertain and at 31 December 2020, it has been assumed that there
will be no significant impact on the long-term value of the
liability. This position remains under review and the amount of the
liability will be updated in future quarters as further information
on the impact of the pandemic becomes available. An explanation of
the accounting for the non-controlling interests in ViiV Healthcare
is set out on page 11.
Divestments, significant legal charges and other items
Divestments
and other items also included gains from a number of asset
disposals and certain other Adjusting items. There was a £1
million charge (Q4 2019: £164 million) for significant legal
matters arising in the quarter. Significant legal cash payments
were £2 million (Q4 2019: £281 million).
Separation costs
From Q2
2020, the Group started to report additional costs to prepare for
Consumer Healthcare separation.
|
Cash generation
|
Cash flow
|
|
2020
|
|
2019
|
|
Q4
2020
|
|
|
|
|
|
|
Net
cash inflow from operating activities (£m)
|
8,441
|
|
8,020
|
|
3,855
|
Free
cash flow* (£m)
|
5,406
|
|
5,073
|
|
3,106
|
Free
cash flow growth (%)
|
7%
|
|
(11)%
|
|
20%
|
Free
cash flow conversion* (%)
|
94%
|
|
>100%
|
|
>100%
|
Net
debt** (£m)
|
20,780
|
|
25,215
|
|
20,780
|
*
|
Free
cash flow and free cash flow conversion are defined on page
63.
|
**
|
Net
debt is analysed on page 62.
|
2020
The net cash inflow from operating activities for the year was
£8,441 million (2019: £8,020 million). The increase
primarily reflected beneficial timing of payments for returns and
rebates, reduced legal payments and improved operating profits,
partly offset by an increase in trade receivables, increased tax
payments including tax on disposals and adverse exchange impacts.
There has not been any significant impact on trade collections or
payables as a result of the COVID-19 pandemic.
Total cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the year were £858
million (2019: £865 million), of which £751 million was
recognised in cash flows from operating activities and £107
million was recognised in contingent consideration paid within
investing cash flows. These payments are deductible for tax
purposes.
Free cash flow was £5,406 million for the year (2019:
£5,073 million). The increase primarily reflected increased
proceeds from disposal of intangible assets, beneficial timing of
payments for returns and rebates, reduced legal payments and
improved operating profits, partly offset by higher dividends to
non-controlling interests, increase in trade receivables, increased
tax payments including tax on disposals and adverse exchange
impacts.
|
Q4 2020
The net cash inflow from operating activities for the quarter was
£3,855 million (Q4 2019: £3,453 million). The increase
primarily reflected reduced legal and tax payments partly offset by
a lower seasonal reduction in inventory and trade
receivables.
Total cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the quarter were £210
million (Q4 2019: £220 million), of which £185 million
was recognised in cash flows from operating activities and £25
million was recognised in contingent consideration paid within
investing cash flows. These payments are deductible for tax
purposes.
Free
cash flow was £3,106 million for the quarter (Q4 2019:
£2,599 million). The increase primarily reflected increased proceeds from disposal of intangible
assets and reduced legal and tax payments, partly offset by a lower
seasonal reduction in inventory and trade receivables and
higher dividends to non-controlling interests.
|
Net debt
At 31 December 2020, net debt was £20.8 billion, compared with
£25.2 billion at 31 December 2019, comprising gross debt of
£27.2 billion and cash and liquid investments of £6.4
billion. Net debt decreased due to the £3.3 billion proceeds
from the Horlicks and other Consumer brands disposal including
shares in Hindustan Unilever of £2.7 billion and £0.6
billion of other assets, £0.6 billion of other business and
asset disposals together with £5.4 billion free cash flow,
partly offset by cash divested of £0.5 billion, dividends paid
to shareholders of £4.0 billion and £0.4 billion in
additional investments.
At 31 December 2020, GSK had short-term borrowings (including
overdrafts and lease liabilities) repayable within 12 months of
£3.7 billion with loans of £2.6 billion repayable in the
subsequent year.
|
Returns to shareholders
|
Quarterly dividends
The
Board has declared a fourth interim dividend for 2020 of 23 pence
per share (Q4 2019: 23 pence per share).
GSK
recognises the importance of dividends to shareholders and aims to
distribute regular dividend payments that will be determined
primarily with reference to the free cash flow generated by the
business after funding the investment necessary to support the
Group’s future growth.
The
Board currently intends to maintain the dividend for 2021 at the
current level of 80p per share, subject to any material change in
the external environment or performance expectations.
At our
Biopharma investor update in June we plan to set out in detail the
growth prospects and financial outlook for the new Biopharma
company over the medium term, including a detailed review of the
pipeline we have been building over recent years. Alongside these
we will provide details of a new distribution policy which reflects
the optimised capital structure and investment priorities focused
on delivering sustainable long-term shareholder value. We anticipate that this new policy will
deliver competitive and attractive returns informed by appropriate
earnings pay-out ratios through the investment cycle well covered
by Free Cash Flow and, importantly, expected growth potential. We
expect that aggregate distributions for GSK will be lower than at
present. This new policy will be implemented for dividends paid in
respect of 2022.
Payment of dividends
The
equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 6 April 2021. An annual
fee of $0.03 per ADS (or $0.0075 per ADS per quarter) is charged by
the Depositary.
The
ex-dividend date will be 18 February 2021, with a record date of 19
February 2021 and a payment date of 8 April 2021.
|
|
Paid/payable
|
|
Pence
per share
|
|
£m
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
First
interim
|
9 July
2020
|
|
19
|
|
946
|
Second
interim
|
8
October 2020
|
|
19
|
|
946
|
Third
interim
|
14
January 2021
|
|
19
|
|
946
|
Fourth
interim
|
8 April
2021
|
|
23
|
|
1,146
|
|
|
|
|
|
|
|
|
|
80
|
|
3,984
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
First
interim
|
11 July
2019
|
|
19
|
|
940
|
Second
interim
|
10 October
2019
|
|
19
|
|
941
|
Third
interim
|
9 January
2020
|
|
19
|
|
941
|
Fourth
interim
|
9 April
2020
|
|
23
|
|
1,144
|
|
|
|
|
|
|
|
|
|
80
|
|
3,966
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
2020
millions
|
|
2019
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
|
|
4,976
|
|
4,947
|
Dilutive
effect of share options and share awards
|
|
|
62
|
|
69
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
|
|
5,038
|
|
5,016
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
Q4 2020
millions
|
|
Q4
2019
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
|
|
4,981
|
|
4,953
|
Dilutive
effect of share options and share awards
|
|
|
61
|
|
69
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
|
|
5,042
|
|
5,022
|
|
|
|
|
|
|
At 31
December 2020, 4,981 million shares (2019: 4,953 million) were in
free issue (excluding Treasury shares and shares held by the ESOP
Trusts). GSK made no share repurchases during the period. The
company issued 2.1 million shares under employee share schemes in
the year for proceeds of £29 million (2019: £51
million).
|
At 31
December 2020, the ESOP Trust held 48.6 million GSK shares against
the future exercise of share options and share awards. The carrying
value of £195 million has been deducted from other reserves.
The market value of these shares was £657
million.
At 31
December 2020, the company held 355.2 million Treasury shares at a
cost of £4,969 million, which has been deducted from retained
earnings.
|
Financial information
|
Income statements
|
|
2020
£m
|
|
2019
£m
|
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
|
|
|
|
|
|
|
TURNOVER
|
34,099
|
|
33,754
|
|
8,739
|
|
8,899
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(11,704)
|
|
(11,863)
|
|
(3,171)
|
|
(3,248)
|
|
|
|
|
|
|
|
|
Gross
profit
|
22,395
|
|
21,891
|
|
5,568
|
|
5,651
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(11,456)
|
|
(11,402)
|
|
(3,162)
|
|
(3,443)
|
Research
and development
|
(5,098)
|
|
(4,568)
|
|
(1,470)
|
|
(1,243)
|
Royalty income
|
318
|
|
351
|
|
91
|
|
82
|
Other
operating income/(expense)
|
1,624
|
|
689
|
|
34
|
|
855
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
7,783
|
|
6,961
|
|
1,061
|
|
1,902
|
|
|
|
|
|
|
|
|
Finance
income
|
44
|
|
98
|
|
5
|
|
11
|
Finance
expense
|
(892)
|
|
(912)
|
|
(239)
|
|
(206)
|
Share
of after tax profits/(losses) of
associates
and joint ventures
|
33
|
|
74
|
|
(6)
|
|
4
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION
|
6,968
|
|
6,221
|
|
821
|
|
1,711
|
|
|
|
|
|
|
|
|
Taxation
|
(580)
|
|
(953)
|
|
18
|
|
(194)
|
Tax rate %
|
8.3%
|
|
15.3%
|
|
(2.2)%
|
|
11.3%
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAXATION
|
6,388
|
|
5,268
|
|
839
|
|
1,517
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
639
|
|
623
|
|
162
|
|
218
|
Profit
attributable to shareholders
|
5,749
|
|
4,645
|
|
677
|
|
1,299
|
|
|
|
|
|
|
|
|
|
6,388
|
|
5,268
|
|
839
|
|
1,517
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
|
115.5p
|
|
93.9p
|
|
13.6p
|
|
26.2p
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
114.1p
|
|
92.6p
|
|
13.4p
|
|
25.9p
|
|
|
|
|
|
|
|
|
Statement of comprehensive income
|
|
2020
£m
|
|
2019
£m
|
|
|
|
|
Profit
for the year
|
6,388
|
|
5,268
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
(59)
|
|
(832)
|
Reclassification
of exchange movements on liquidation or disposal of overseas
subsidiaries
|
36
|
|
(75)
|
Fair
value movements on cash flow hedges
|
(19)
|
|
(20)
|
Reclassification
of cash flow hedges to income statement
|
54
|
|
3
|
Tax on
fair value movements on cash flow hedges
|
(18)
|
|
16
|
|
|
|
|
|
(6)
|
|
(908)
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
(34)
|
|
(75)
|
Fair
value movements on equity investments
|
1,348
|
|
372
|
Tax on
fair value movements on equity investments
|
(220)
|
|
(95)
|
Re-measurement
losses on defined benefit plans
|
(187)
|
|
(1,050)
|
Tax on
re-measurement losses on defined benefit plans
|
69
|
|
189
|
|
|
|
|
|
976
|
|
(659)
|
|
|
|
|
Other
comprehensive income/(expense) for the year
|
970
|
|
(1,567)
|
|
|
|
|
Total
comprehensive income for the year
|
7,358
|
|
3,701
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the year attributable to:
|
|
|
|
Shareholders
|
6,753
|
|
3,153
|
Non-controlling
interests
|
605
|
|
548
|
|
|
|
|
|
7,358
|
|
3,701
|
|
|
|
|
Statement of comprehensive income
|
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
|
|
|
Profit
for the period
|
839
|
|
1,517
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
(248)
|
|
(637)
|
Reclassification
of exchange movements on liquidation or disposal of overseas
subsidiaries
|
-
|
|
(75)
|
Fair
value movements on cash flow hedges
|
4
|
|
86
|
Reclassification
of cash flow hedges to income statement
|
1
|
|
-
|
Tax on
fair value movements on cash flow hedges
|
(16)
|
|
16
|
|
|
|
|
|
(259)
|
|
(610)
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
(64)
|
|
(103)
|
Fair
value movements on equity investments
|
635
|
|
276
|
Tax on
fair value movements on equity investments
|
(104)
|
|
(68)
|
Re-measurement
gains on defined benefit plans
|
195
|
|
142
|
Tax on
re-measurement gains on defined benefit plans
|
(9)
|
|
(26)
|
|
|
|
|
|
653
|
|
221
|
|
|
|
|
Other
comprehensive income/(expense) for the period
|
394
|
|
(389)
|
|
|
|
|
Total
comprehensive income for the period
|
1,233
|
|
1,128
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
Shareholders
|
1,135
|
|
1,013
|
Non-controlling
interests
|
98
|
|
115
|
|
|
|
|
|
1,233
|
|
1,128
|
|
|
|
|
Pharmaceuticals turnover – year ended 31 December
2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
3,749
|
22
|
23
|
2,114
|
21
|
23
|
944
|
21
|
20
|
691
|
24
|
27
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Ellipta
products
|
2,755
|
19
|
20
|
1,516
|
18
|
19
|
706
|
22
|
22
|
533
|
19
|
22
|
Anoro Ellipta
|
547
|
6
|
8
|
327
|
1
|
2
|
142
|
18
|
17
|
78
|
11
|
17
|
Arnuity Ellipta
|
45
|
(6)
|
(6)
|
37
|
(10)
|
(7)
|
-
|
-
|
-
|
8
|
14
|
-
|
Incruse Ellipta
|
220
|
(16)
|
(15)
|
117
|
(27)
|
(27)
|
74
|
1
|
1
|
29
|
4
|
7
|
Relvar/Breo Ellipta
|
1,124
|
16
|
17
|
474
|
24
|
25
|
322
|
14
|
13
|
328
|
6
|
9
|
Trelegy Ellipta
|
819
|
58
|
59
|
561
|
47
|
48
|
168
|
65
|
65
|
90
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nucala
|
994
|
29
|
30
|
598
|
32
|
33
|
238
|
16
|
15
|
158
|
45
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
4,876
|
-
|
1
|
3,005
|
-
|
1
|
1,213
|
5
|
4
|
658
|
(5)
|
(1)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Dolutegravir
products
|
4,702
|
1
|
2
|
2,941
|
-
|
1
|
1,163
|
7
|
6
|
598
|
(2)
|
3
|
Tivicay
|
1,527
|
(8)
|
(7)
|
871
|
(11)
|
(10)
|
368
|
(7)
|
(8)
|
288
|
(1)
|
5
|
Triumeq
|
2,306
|
(10)
|
(9)
|
1,454
|
(10)
|
(9)
|
568
|
(9)
|
(10)
|
284
|
(9)
|
(6)
|
Juluca
|
495
|
35
|
36
|
387
|
28
|
29
|
97
|
73
|
71
|
11
|
57
|
71
|
Dovato
|
374
|
>100
|
>100
|
229
|
>100
|
>100
|
130
|
>100
|
>100
|
15
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Epzicom/Kivexa
|
31
|
(59)
|
(59)
|
1
|
(67)
|
(67)
|
9
|
(61)
|
(61)
|
21
|
(57)
|
(57)
|
Selzentry
|
91
|
(6)
|
(5)
|
47
|
(11)
|
(11)
|
27
|
(7)
|
(7)
|
17
|
13
|
20
|
Rukobia
|
11
|
-
|
-
|
11
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Other
|
41
|
(16)
|
(12)
|
5
|
(50)
|
(40)
|
14
|
(22)
|
(17)
|
22
|
5
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-Inflammation and other specialty
|
727
|
19
|
20
|
612
|
14
|
16
|
56
|
22
|
20
|
59
|
84
|
91
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Benlysta
|
719
|
17
|
19
|
612
|
14
|
16
|
56
|
22
|
20
|
51
|
59
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
372
|
62
|
62
|
231
|
72
|
74
|
136
|
42
|
40
|
5
|
-
|
-
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Zejula
|
339
|
48
|
48
|
206
|
54
|
55
|
128
|
35
|
33
|
5
|
-
|
-
|
Blenrep
|
33
|
-
|
-
|
25
|
-
|
-
|
8
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals excluding established products
|
9,724
|
11
|
12
|
5,962
|
10
|
11
|
2,349
|
13
|
12
|
1,413
|
10
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established Pharmaceuticals
|
7,332
|
(16)
|
(15)
|
1,489
|
(25)
|
(24)
|
1,755
|
(14)
|
(15)
|
4,088
|
(14)
|
(11)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Established Respiratory
|
3,251
|
(17)
|
(15)
|
1,048
|
(26)
|
(25)
|
738
|
(9)
|
(9)
|
1,465
|
(13)
|
(10)
|
Seretide/Advair
|
1,535
|
(11)
|
(10)
|
434
|
(14)
|
(13)
|
449
|
(11)
|
(11)
|
652
|
(10)
|
(7)
|
Flixotide/Flovent
|
419
|
(33)
|
(32)
|
183
|
(50)
|
(50)
|
80
|
(9)
|
(10)
|
156
|
(10)
|
(5)
|
Ventolin
|
785
|
(16)
|
(14)
|
430
|
(21)
|
(20)
|
116
|
(3)
|
(4)
|
239
|
(12)
|
(7)
|
Avamys/Veramyst
|
297
|
(8)
|
(6)
|
-
|
-
|
-
|
66
|
(4)
|
(4)
|
231
|
(10)
|
(7)
|
Other
Respiratory
|
215
|
(23)
|
(23)
|
1
|
>100
|
>100
|
27
|
(4)
|
-
|
187
|
(25)
|
(26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatology
|
425
|
(4)
|
(1)
|
1
|
(67)
|
(67)
|
140
|
(12)
|
(13)
|
284
|
-
|
6
|
Augmentin
|
490
|
(19)
|
(15)
|
-
|
-
|
-
|
145
|
(16)
|
(16)
|
345
|
(20)
|
(15)
|
Avodart
|
466
|
(19)
|
(17)
|
5
|
25
|
25
|
158
|
(24)
|
(25)
|
303
|
(16)
|
(13)
|
Imigran/Imitrex
|
118
|
(14)
|
(14)
|
42
|
(29)
|
(29)
|
51
|
(2)
|
(4)
|
25
|
(7)
|
(4)
|
Lamictal
|
537
|
(5)
|
(4)
|
269
|
(5)
|
(5)
|
120
|
7
|
6
|
148
|
(13)
|
(9)
|
Seroxat/Paxil
|
146
|
(9)
|
(6)
|
-
|
-
|
-
|
37
|
-
|
(3)
|
109
|
(11)
|
(7)
|
Valtrex
|
103
|
(4)
|
(2)
|
15
|
7
|
7
|
32
|
3
|
-
|
56
|
(10)
|
(5)
|
Other
|
1,796
|
(21)
|
(20)
|
109
|
(48)
|
(47)
|
334
|
(28)
|
(28)
|
1,353
|
(16)
|
(14)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Pharmaceuticals
|
17,056
|
(3)
|
(1)
|
7,451
|
1
|
2
|
4,104
|
(1)
|
(1)
|
5,501
|
(9)
|
(5)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals turnover – three months ended 31 December
2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
1,017
|
14
|
15
|
574
|
10
|
12
|
253
|
18
|
14
|
190
|
21
|
22
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Ellipta
products
|
725
|
8
|
8
|
390
|
-
|
2
|
190
|
20
|
17
|
145
|
14
|
15
|
Anoro Ellipta
|
151
|
7
|
8
|
90
|
(1)
|
1
|
39
|
18
|
15
|
22
|
29
|
29
|
Arnuity Ellipta
|
14
|
(7)
|
(13)
|
11
|
(15)
|
(8)
|
-
|
-
|
-
|
3
|
50
|
(50)
|
Incruse Ellipta
|
48
|
(38)
|
(38)
|
21
|
(60)
|
(58)
|
19
|
6
|
-
|
8
|
14
|
14
|
Relvar/Breo Ellipta
|
274
|
2
|
2
|
107
|
-
|
1
|
84
|
14
|
11
|
83
|
(6)
|
(3)
|
Trelegy Ellipta
|
238
|
38
|
40
|
161
|
28
|
30
|
48
|
45
|
42
|
29
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nucala
|
292
|
34
|
34
|
184
|
39
|
42
|
63
|
13
|
7
|
45
|
50
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
1,268
|
1
|
2
|
805
|
3
|
5
|
327
|
10
|
6
|
136
|
(24)
|
(21)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Dolutegravir
products
|
1,225
|
1
|
2
|
786
|
2
|
4
|
315
|
13
|
8
|
124
|
(23)
|
(19)
|
Tivicay
|
365
|
(14)
|
(13)
|
229
|
(6)
|
(4)
|
88
|
(12)
|
(17)
|
48
|
(41)
|
(35)
|
Triumeq
|
580
|
(9)
|
(9)
|
370
|
(9)
|
(7)
|
143
|
(7)
|
(10)
|
67
|
(13)
|
(13)
|
Juluca
|
139
|
25
|
25
|
108
|
21
|
22
|
28
|
47
|
37
|
3
|
-
|
33
|
Dovato
|
141
|
>100
|
>100
|
79
|
>100
|
>100
|
56
|
>100
|
>100
|
6
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Epzicom/Kivexa
|
6
|
(60)
|
(67)
|
(1)
|
>(100)
|
>(100)
|
2
|
(60)
|
(60)
|
5
|
(50)
|
(60)
|
Selzentry
|
21
|
(9)
|
(9)
|
12
|
(8)
|
(8)
|
7
|
-
|
-
|
2
|
(33)
|
(33)
|
Rukobia
|
8
|
-
|
-
|
8
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Other
|
8
|
(27)
|
18
|
-
|
-
|
-
|
3
|
(50)
|
(17)
|
5
|
25
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-Inflammation and other specialty
|
206
|
21
|
24
|
175
|
18
|
21
|
15
|
25
|
17
|
16
|
60
|
70
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Benlysta
|
205
|
21
|
23
|
175
|
18
|
21
|
15
|
25
|
17
|
15
|
50
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
115
|
74
|
74
|
75
|
>100
|
>100
|
37
|
28
|
21
|
3
|
-
|
-
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Zejula
|
89
|
35
|
35
|
54
|
46
|
51
|
32
|
10
|
3
|
3
|
-
|
-
|
Blenrep
|
25
|
-
|
-
|
20
|
-
|
-
|
5
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals excluding established products
|
2,606
|
9
|
10
|
1,629
|
9
|
12
|
632
|
15
|
10
|
345
|
-
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established Pharmaceuticals
|
1,760
|
(19)
|
(18)
|
345
|
(27)
|
(25)
|
425
|
(14)
|
(18)
|
990
|
(18)
|
(16)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Established Respiratory
|
756
|
(22)
|
(21)
|
234
|
(31)
|
(30)
|
175
|
(11)
|
(14)
|
347
|
(19)
|
(17)
|
Seretide/Advair
|
351
|
(15)
|
(15)
|
73
|
(30)
|
(28)
|
105
|
(12)
|
(16)
|
173
|
(9)
|
(7)
|
Flixotide/Flovent
|
87
|
(53)
|
(52)
|
34
|
(70)
|
(69)
|
20
|
(9)
|
(18)
|
33
|
(33)
|
(29)
|
Ventolin
|
211
|
(7)
|
(5)
|
125
|
1
|
3
|
29
|
(6)
|
(13)
|
57
|
(20)
|
(15)
|
Avamys/Veramyst
|
70
|
(3)
|
(1)
|
-
|
-
|
-
|
15
|
-
|
-
|
55
|
(7)
|
(5)
|
Other
Respiratory
|
37
|
(45)
|
(48)
|
2
|
>100
|
>100
|
6
|
(33)
|
(11)
|
29
|
(50)
|
(53)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatology
|
109
|
(3)
|
-
|
-
|
-
|
-
|
36
|
(10)
|
(12)
|
73
|
1
|
7
|
Augmentin
|
115
|
(27)
|
(24)
|
-
|
-
|
-
|
37
|
(21)
|
(26)
|
78
|
(30)
|
(23)
|
Avodart
|
96
|
(31)
|
(31)
|
1
|
>100
|
>100
|
34
|
(29)
|
(31)
|
61
|
(34)
|
(33)
|
Imigran/Imitrex
|
27
|
(23)
|
(26)
|
6
|
(60)
|
(60)
|
14
|
8
|
-
|
7
|
-
|
-
|
Lamictal
|
140
|
(3)
|
(3)
|
73
|
-
|
-
|
30
|
7
|
4
|
37
|
(16)
|
(11)
|
Seroxat/Paxil
|
36
|
(5)
|
(3)
|
-
|
-
|
-
|
10
|
11
|
-
|
26
|
(10)
|
(3)
|
Valtrex
|
26
|
(4)
|
(4)
|
4
|
-
|
-
|
8
|
-
|
(13)
|
14
|
(7)
|
-
|
Other
|
455
|
(18)
|
(17)
|
27
|
(27)
|
(16)
|
81
|
(25)
|
(25)
|
347
|
(15)
|
(14)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Pharmaceuticals
|
4,366
|
(4)
|
(3)
|
1,974
|
1
|
3
|
1,057
|
1
|
(3)
|
1,335
|
(14)
|
(12)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – year ended 31 December 2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
1,029
|
1
|
3
|
433
|
1
|
2
|
356
|
4
|
3
|
240
|
(2)
|
4
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Bexsero
|
650
|
(4)
|
(2)
|
260
|
-
|
1
|
324
|
2
|
1
|
66
|
(34)
|
(20)
|
Menveo
|
265
|
(1)
|
1
|
173
|
2
|
3
|
26
|
44
|
39
|
66
|
(16)
|
(13)
|
Other
|
114
|
58
|
57
|
-
|
-
|
-
|
6
|
-
|
-
|
108
|
64
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
733
|
35
|
37
|
535
|
30
|
31
|
98
|
75
|
73
|
100
|
37
|
42
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Fluarix, FluLaval
|
733
|
35
|
37
|
535
|
30
|
31
|
98
|
75
|
73
|
100
|
37
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
1,989
|
10
|
11
|
1,675
|
-
|
1
|
186
|
>100
|
>100
|
128
|
47
|
49
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Shingrix
|
1,989
|
10
|
11
|
1,675
|
-
|
1
|
186
|
>100
|
>100
|
128
|
47
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established Vaccines
|
3,231
|
(15)
|
(14)
|
1,054
|
(24)
|
(24)
|
801
|
(23)
|
(23)
|
1,376
|
1
|
3
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Infanrix, Pediarix
|
629
|
(14)
|
(13)
|
311
|
(14)
|
(13)
|
174
|
(18)
|
(19)
|
144
|
(10)
|
(6)
|
Boostrix
|
476
|
(18)
|
(18)
|
257
|
(14)
|
(13)
|
140
|
(10)
|
(11)
|
79
|
(39)
|
(36)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
576
|
(34)
|
(33)
|
333
|
(37)
|
(36)
|
140
|
(39)
|
(39)
|
103
|
(10)
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
559
|
-
|
1
|
123
|
(12)
|
(11)
|
119
|
6
|
6
|
317
|
4
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
402
|
(14)
|
(14)
|
-
|
-
|
-
|
53
|
(2)
|
(2)
|
349
|
(16)
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,Varilrix
|
261
|
13
|
14
|
-
|
-
|
-
|
126
|
26
|
25
|
135
|
2
|
5
|
Cervarix
|
139
|
>100
|
>100
|
-
|
-
|
-
|
30
|
43
|
43
|
109
|
>100
|
>100
|
Other
|
189
|
(35)
|
(35)
|
30
|
(55)
|
(56)
|
19
|
(87)
|
(87)
|
140
|
87
|
85
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines
|
6,982
|
(2)
|
(1)
|
3,697
|
(5)
|
(4)
|
1,441
|
(3)
|
(4)
|
1,844
|
5
|
7
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – three months ended 31 December
2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
274
|
35
|
36
|
110
|
>100
|
>100
|
91
|
10
|
5
|
73
|
(23)
|
(20)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Bexsero
|
159
|
42
|
44
|
60
|
>100
|
>100
|
82
|
8
|
4
|
17
|
(29)
|
(17)
|
Menveo
|
83
|
26
|
27
|
50
|
>100
|
>100
|
8
|
33
|
17
|
25
|
(47)
|
(45)
|
Other
|
32
|
28
|
24
|
-
|
-
|
-
|
1
|
-
|
-
|
31
|
29
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
252
|
83
|
85
|
154
|
67
|
71
|
65
|
>100
|
>100
|
33
|
38
|
42
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Fluarix, FluLaval
|
252
|
83
|
85
|
154
|
67
|
71
|
65
|
>100
|
>100
|
33
|
38
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
645
|
21
|
23
|
520
|
5
|
7
|
69
|
>100
|
>100
|
56
|
>100
|
>100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Shingrix
|
645
|
21
|
23
|
520
|
5
|
7
|
69
|
>100
|
>100
|
56
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established Vaccines
|
841
|
(3)
|
(3)
|
301
|
1
|
3
|
197
|
(13)
|
(15)
|
343
|
(1)
|
(1)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Infanrix, Pediarix
|
172
|
10
|
12
|
100
|
47
|
50
|
38
|
(14)
|
(18)
|
34
|
(23)
|
(18)
|
Boostrix
|
125
|
(4)
|
(3)
|
70
|
6
|
8
|
36
|
6
|
3
|
19
|
(37)
|
(33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
139
|
(29)
|
(28)
|
85
|
(23)
|
(23)
|
29
|
(45)
|
(47)
|
25
|
(19)
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
148
|
5
|
6
|
39
|
15
|
18
|
31
|
11
|
7
|
78
|
(1)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
93
|
(25)
|
(27)
|
-
|
-
|
-
|
11
|
10
|
-
|
82
|
(28)
|
(29)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,Varilrix
|
78
|
11
|
10
|
-
|
-
|
-
|
31
|
19
|
15
|
47
|
7
|
7
|
Cervarix
|
44
|
>100
|
>100
|
-
|
-
|
-
|
16
|
>100
|
>100
|
28
|
>100
|
>100
|
Other
|
42
|
(36)
|
(42)
|
7
|
(63)
|
(58)
|
5
|
(81)
|
(77)
|
30
|
43
|
14
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines
|
2,012
|
15
|
16
|
1,085
|
19
|
22
|
422
|
21
|
17
|
505
|
5
|
5
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
|
|
|
|
31 December 2020
£m
|
|
31
December 2019
£m
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
10,176
|
|
10,348
|
Right
of use assets
|
|
|
830
|
|
966
|
Goodwill
|
|
|
10,597
|
|
10,562
|
Other
intangible assets
|
|
|
29,824
|
|
30,955
|
Investments
in associates and joint ventures
|
|
|
364
|
|
314
|
Other
investments
|
|
|
3,060
|
|
1,837
|
Deferred
tax assets
|
|
|
4,287
|
|
4,096
|
Derivative
financial instruments
|
|
|
5
|
|
103
|
Other
non-current assets
|
|
|
1,041
|
|
1,020
|
|
|
|
|
|
|
Total non-current assets
|
|
|
60,184
|
|
60,201
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
|
5,996
|
|
5,947
|
Current
tax recoverable
|
|
|
671
|
|
262
|
Trade
and other receivables
|
|
|
6,952
|
|
7,202
|
Derivative
financial instruments
|
|
|
152
|
|
421
|
Liquid
investments
|
|
|
78
|
|
79
|
Cash
and cash equivalents
|
|
|
6,292
|
|
4,707
|
Assets
held for sale
|
|
|
106
|
|
873
|
|
|
|
|
|
|
Total current assets
|
|
|
20,247
|
|
19,491
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
80,431
|
|
79,692
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term
borrowings
|
|
|
(3,725)
|
|
(6,918)
|
Contingent
consideration liabilities
|
|
|
(765)
|
|
(755)
|
Trade
and other payables
|
|
|
(15,840)
|
|
(14,939)
|
Derivative
financial instruments
|
|
|
(221)
|
|
(188)
|
Current
tax payable
|
|
|
(545)
|
|
(629)
|
Short-term
provisions
|
|
|
(1,052)
|
|
(621)
|
|
|
|
|
|
|
Total current liabilities
|
|
|
(22,148)
|
|
(24,050)
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Long-term
borrowings
|
|
|
(23,425)
|
|
(23,590)
|
Corporation
tax payable
|
|
|
(176)
|
|
(189)
|
Deferred
tax liabilities
|
|
|
(3,600)
|
|
(3,810)
|
Pensions
and other post-employment benefits
|
|
|
(3,650)
|
|
(3,457)
|
Other
provisions
|
|
|
(707)
|
|
(670)
|
Derivative
financial instruments
|
|
|
(10)
|
|
(1)
|
Contingent
consideration liabilities
|
|
|
(5,104)
|
|
(4,724)
|
Other
non-current liabilities
|
|
|
(803)
|
|
(844)
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
(37,475)
|
|
(37,285)
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
(59,623)
|
|
(61,335)
|
|
|
|
|
|
|
NET ASSETS
|
|
|
20,808
|
|
18,357
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
1,346
|
|
1,346
|
Share
premium account
|
|
|
3,281
|
|
3,174
|
Retained
earnings
|
|
|
6,755
|
|
4,530
|
Other
reserves
|
|
|
3,205
|
|
2,355
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
14,587
|
|
11,405
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
6,221
|
|
6,952
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
|
20,808
|
|
18,357
|
|
|
|
|
|
|
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 2020
|
1,346
|
3,174
|
4,530
|
2,355
|
11,405
|
6,952
|
18,357
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
|
5,749
|
|
5,749
|
639
|
6,388
|
Other
comprehensive (expense)/income for the year
|
|
|
(133)
|
1,137
|
1,004
|
(34)
|
970
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income for the year
|
|
|
5,616
|
1,137
|
6,753
|
605
|
7,358
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(1,208)
|
(1,208)
|
Contributions
from non-controlling interests
|
|
|
|
|
|
3
|
3
|
Changes
to non-controlling interests
|
|
|
|
|
|
(131)
|
(131)
|
Dividends
to shareholders
|
|
|
(3,977)
|
|
(3,977)
|
|
(3,977)
|
Shares
issued
|
|
29
|
|
|
29
|
|
29
|
Realised
after tax profits on disposal of equity investments
|
|
|
163
|
(163)
|
|
|
-
|
Share
of associates and joint ventures realised profits on disposal of
equity investments
|
|
|
44
|
(44)
|
|
|
-
|
Shares
acquired by ESOP Trusts
|
|
78
|
531
|
(609)
|
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(529)
|
529
|
|
|
-
|
Share-based
incentive plans
|
|
|
381
|
|
381
|
|
381
|
Tax on
share-based incentive plans
|
|
|
(4)
|
|
(4)
|
|
(4)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 31 December 2020
|
1,346
|
3,281
|
6,755
|
3,205
|
14,587
|
6,221
|
20,808
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
As
previously reported
|
1,345
|
3,091
|
(2,137)
|
2,061
|
4,360
|
(688)
|
3,672
|
Adjustment
to non-controlling interest
|
|
|
(579)
|
|
(579)
|
579
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
As
revised
|
1,345
|
3,091
|
(2,716)
|
2,061
|
3,781
|
(109)
|
3,672
|
Implementation
of IFRS16
|
|
|
(93)
|
|
(93)
|
|
(93)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 1
January 2019, as adjusted
|
1,345
|
3,091
|
(2,809)
|
2,061
|
3,688
|
(109)
|
3,579
|
|
|
|
|
|
|
|
|
Profit
for the year
|
|
|
4,645
|
|
4,645
|
623
|
5,268
|
Other
comprehensive (expense)/income for the year
|
|
|
(1,766)
|
274
|
(1,492)
|
(75)
|
(1,567)
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income/(expense) for the year
|
|
|
2,879
|
274
|
3,153
|
548
|
3,701
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(364)
|
(364)
|
Changes
in non-controlling interests
|
|
|
|
|
|
(10)
|
(10)
|
Dividends
to shareholders
|
|
|
(3,953)
|
|
(3,953)
|
|
(3,953)
|
Recognition
of interest in Consumer Healthcare Joint Venture
|
|
|
8,082
|
|
8,082
|
6,887
|
14,969
|
Shares
issued
|
1
|
50
|
|
|
51
|
|
51
|
Realised
profits on disposal of equity investments
|
|
|
(4)
|
4
|
|
|
-
|
Shares
acquired by ESOP Trusts
|
|
33
|
295
|
(328)
|
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(344)
|
344
|
|
|
-
|
Share-based
incentive plans
|
|
|
365
|
|
365
|
|
365
|
Tax on
share-based incentive plans
|
|
|
19
|
|
19
|
|
19
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 31
December 2019
|
1,346
|
3,174
|
4,530
|
2,355
|
11,405
|
6,952
|
18,357
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Cash flow statement – year ended 31 December
2020
|
|
2020
£m
|
|
2019
£m
|
|
|
|
|
|
|
Profit after tax
|
6,388
|
|
5,268
|
|
Tax on
profits
|
580
|
|
953
|
|
Share
of after tax profits of associates and joint ventures
|
(33)
|
|
(74)
|
|
Net
finance expense
|
848
|
|
814
|
|
Depreciation,
amortisation and other adjusting items
|
624
|
|
2,996
|
|
Decrease
in working capital
|
120
|
|
531
|
|
Contingent
consideration paid
|
(765)
|
|
(780)
|
|
Increase/(decrease)
in other net liabilities (excluding contingent consideration
paid)
|
2,334
|
|
(176)
|
|
|
|
|
|
|
Cash generated from operations
|
10,096
|
|
9,532
|
|
Taxation
paid
|
(1,655)
|
|
(1,512)
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
8,441
|
|
8,020
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
Purchase
of property, plant and equipment
|
(1,226)
|
|
(1,265)
|
|
Proceeds
from sale of property, plant and equipment
|
68
|
|
95
|
|
Purchase
of intangible assets
|
(1,013)
|
|
(898)
|
|
Proceeds
from sale of intangible assets
|
1,255
|
|
404
|
|
Purchase
of equity investments
|
(411)
|
|
(258)
|
|
Proceeds
from sale of equity investments
|
3,269
|
|
69
|
|
Purchase
of businesses, net of cash acquired
|
15
|
|
(3,571)
|
|
Contingent
consideration paid
|
(120)
|
|
(113)
|
|
Disposal
of businesses
|
259
|
|
104
|
|
Investment
in associates and joint ventures
|
(4)
|
|
(11)
|
|
Interest
received
|
39
|
|
82
|
|
(Increase)/decrease
in liquid investments
|
(1)
|
|
1
|
|
Dividends
from associates and joint ventures
|
31
|
|
7
|
|
|
|
|
|
|
Net cash inflow/(outflow) from investing activities
|
2,161
|
|
(5,354)
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
Issue
of share capital
|
29
|
|
51
|
|
Increase
in short-term loans
|
-
|
|
3,095
|
|
Increase
in long-term loans
|
3,298
|
|
4,794
|
|
Repayment
of short-term loans
|
(7,305)
|
|
(4,160)
|
|
Repayment
of lease liabilities
|
(227)
|
|
(214)
|
|
Purchase
of non-controlling interests
|
-
|
|
(7)
|
|
Interest
paid
|
(864)
|
|
(895)
|
|
Dividends
paid to shareholders
|
(3,977)
|
|
(3,953)
|
|
Distributions
to non-controlling interests
|
(1,208)
|
|
(364)
|
|
Contributions
from non-controlling interests
|
3
|
|
-
|
|
Other
financing items
|
119
|
|
(187)
|
|
|
|
|
|
|
Net cash outflow from financing activities
|
(10,132)
|
|
(1,840)
|
|
|
|
|
|
|
Increase in cash and bank overdrafts in the year
|
470
|
|
826
|
|
|
|
|
|
|
Cash
and bank overdrafts at beginning of the year
|
4,831
|
|
4,087
|
|
Exchange
adjustments
|
(39)
|
|
(82)
|
|
Increase
in cash and bank overdrafts
|
470
|
|
826
|
|
|
|
|
|
|
Cash and bank overdrafts at end of the year
|
5,262
|
|
4,831
|
|
|
|
|
|
|
Cash
and bank overdrafts at end of the period comprise:
|
|
|
|
|
|
Cash
and cash equivalents
|
6,292
|
|
4,707
|
|
Cash
and cash equivalents reported in assets held for sale
|
-
|
|
507
|
|
|
|
|
|
|
|
6,292
|
|
5,214
|
|
Overdrafts
|
(1,030)
|
|
(383)
|
|
|
|
|
|
|
5,262
|
|
4,831
|
|
|
|
|
|
Segment information
|
|
Operating
segments are reported based on the financial information provided
to the Chief Executive Officer and the responsibilities of the
Corporate Executive Team (CET). GSK reports results under four
segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines and
Consumer Healthcare, and individual members of the CET are
responsible for each segment.
The
Pharmaceuticals R&D segment is the responsibility of the Chief
Scientific Officer and President, R&D and is reported as a
separate segment. The operating profit of this segment excludes the
ViiV Healthcare operating profit (including R&D expenditure)
that is reported within the Pharmaceuticals segment.
The
Group’s management reporting process allocates intra-Group
profit on a product sale to the market in which that sale is
recorded, and the profit analyses below have been presented on that
basis.
Corporate
and other unallocated turnover and costs include the results of
certain Consumer Healthcare products which are being held for sale
in a number of markets in order to meet anti-trust approval
requirements, together with the costs of corporate
functions.
|
Turnover by segment
|
|
2020
£m
|
|
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
17,056
|
|
17,554
|
|
(3)
|
|
(1)
|
Vaccines
|
6,982
|
|
7,157
|
|
(2)
|
|
(1)
|
Consumer
Healthcare
|
10,033
|
|
8,995
|
|
12
|
|
14
|
|
|
|
|
|
|
|
|
|
34,071
|
|
33,706
|
|
1
|
|
3
|
Corporate
and other unallocated turnover
|
28
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
34,099
|
|
33,754
|
|
1
|
|
3
|
|
|
|
|
|
|
|
|
Operating profit by segment
|
|
2020
£m
|
|
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
7,723
|
|
7,964
|
|
(3)
|
|
(2)
|
Pharmaceuticals
R&D
|
(3,538)
|
|
(3,369)
|
|
5
|
|
6
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
4,185
|
|
4,595
|
|
(9)
|
|
(7)
|
Vaccines
|
2,713
|
|
2,966
|
|
(9)
|
|
(6)
|
Consumer
Healthcare
|
2,213
|
|
1,874
|
|
18
|
|
22
|
|
|
|
|
|
|
|
|
Segment
profit
|
9,111
|
|
9,435
|
|
(3)
|
|
(1)
|
Corporate
and other unallocated costs
|
(205)
|
|
(463)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
8,906
|
|
8,972
|
|
(1)
|
|
2
|
Adjusting
items
|
(1,123)
|
|
(2,011)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
7,783
|
|
6,961
|
|
12
|
|
15
|
|
|
|
|
|
|
|
|
Finance
income
|
44
|
|
98
|
|
|
|
|
Finance
costs
|
(892)
|
|
(912)
|
|
|
|
|
Share
of after tax profits of associates and joint ventures
|
33
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
6,968
|
|
6,221
|
|
12
|
|
16
|
|
|
|
|
|
|
|
|
Turnover by segment
|
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,366
|
|
4,558
|
|
(4)
|
|
(3)
|
Vaccines
|
2,012
|
|
1,742
|
|
15
|
|
16
|
Consumer
Healthcare
|
2,360
|
|
2,571
|
|
(8)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
8,738
|
|
8,871
|
|
(1)
|
|
-
|
Corporate
and other unallocated turnover
|
1
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
8,739
|
|
8,899
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
|
|
Operating profit by segment
|
|
Q4 2020
£m
|
|
Q4
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,874
|
|
1,935
|
|
(3)
|
|
(3)
|
Pharmaceuticals
R&D
|
(1,023)
|
|
(927)
|
|
10
|
|
12
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
851
|
|
1,008
|
|
(16)
|
|
(16)
|
Vaccines
|
691
|
|
578
|
|
20
|
|
26
|
Consumer
Healthcare
|
385
|
|
440
|
|
(13)
|
|
(12)
|
|
|
|
|
|
|
|
|
Segment
profit
|
1,927
|
|
2,026
|
|
(5)
|
|
(3)
|
Corporate
and other unallocated costs
|
(110)
|
|
(174)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
1,817
|
|
1,852
|
|
(2)
|
|
(1)
|
Adjusting
items
|
(756)
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
1,061
|
|
1,902
|
|
(44)
|
|
(44)
|
|
|
|
|
|
|
|
|
Finance
income
|
5
|
|
11
|
|
|
|
|
Finance
costs
|
(239)
|
|
(206)
|
|
|
|
|
Share
of after tax (losses)/profits of associates and joint
ventures
|
(6)
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
821
|
|
1,711
|
|
(52)
|
|
(52)
|
|
|
|
|
|
|
|
|
Legal matters
The Group is involved in significant legal and
administrative proceedings, principally product liability,
intellectual property, tax, anti-trust, consumer fraud and
governmental investigations, which are more fully described in the
‘Legal Proceedings’ note in the Annual Report 2019, as
updated in subsequent quarterly results announcements for any
significant legal developments. At 31 December 2020, the
Group’s aggregate provision for legal and other disputes (not
including tax matters described on page 22) was £0.3 billion
(31 December 2019: £0.2 billion).
The
Group may become involved in significant legal proceedings in
respect of which it is not possible to make a reliable estimate of
the expected financial effect, if any, that could result from
ultimate resolution of the proceedings. In these cases, the Group
would provide appropriate disclosures about such cases, but no
provision would be made.
The
ultimate liability for legal claims may vary from the amounts
provided and is dependent upon the outcome of litigation
proceedings, investigations and possible settlement negotiations.
The Group’s position could change over time, and, therefore,
there can be no assurance that any losses that result from the
outcome of any legal proceedings will not exceed by a material
amount the amount of the provisions reported in the Group’s
financial accounts.
There
have been no significant legal developments this
quarter.
|
Additional information
|
Accounting policies and basis of preparation
|
This
unaudited Results Announcement contains condensed financial
information for the year-end and three months ended 31 December 2020, and should be read in
conjunction with the Annual Report 2019, which was prepared
in accordance with International Financial Reporting Standards as
adopted by the European Union. This Results Announcement has been
prepared applying consistent accounting policies to those applied
by the Group in the Annual Report 2019.
The
Group has not identified any changes to its key sources of
accounting judgements or estimations of uncertainty compared with
those disclosed in the Annual Report 2019.
|
This
Results Announcement does not constitute statutory accounts of the
Group within the meaning of sections 434(3) and 435(3) of the
Companies Act 2006. The full Group accounts for 2019 were published
in the Annual Report 2019, which has been delivered to the
Registrar of Companies and on which the report of the independent
auditor was unqualified and did not contain a statement under
section 498 of the Companies Act 2006.
COVID-19 pandemic
The
potential impact of the COVID-19 pandemic on GSK’s trading
performance and all our principal risks has been assessed with
mitigation plans put in place. Up to the date of this report, the
pandemic has, as anticipated, impacted the Group performance during
the year primarily in demand for Vaccines as a result of ongoing
containment measures impacting customers’ ability and
willingness to access vaccination services across all regions. We
anticipate that governments’ prioritisation of COVID-19
vaccination programmes will continue to impact our Vaccines
business. We continue to monitor the situation closely, as this
continues to be a very dynamic and uncertain situation, with the
ultimate severity, duration and impact unknown at this point
including potential impacts on trading results, clinical trials,
supply continuity and our employees. The situation could change at
any time and there can be no assurance that the COVID-19 pandemic
will not have a material adverse impact on the future results of
the Group.
|
Exchange rates
|
GSK
operates in many countries, and earns revenues and incurs costs in
many currencies. The results of the Group, as reported in Sterling,
are affected by movements in exchange rates between Sterling and
other currencies. Average exchange rates, as modified by specific
transaction rates for large transactions, prevailing during the
period, are used to translate the results and cash flows of
overseas subsidiaries, associates and joint ventures into Sterling.
Period-end rates are used to translate the net assets of those
entities. The currencies which most influenced these translations
and the relevant exchange rates were:
|
|
2020
|
|
2019
|
|
Q4 2020
|
|
Q4
2019
|
||
|
|
|
|
|
|
|
|
||
Average
rates:
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
1.29
|
|
1.28
|
|
1.33
|
|
1.30
|
|
|
Euro/£
|
1.13
|
|
1.14
|
|
1.11
|
|
1.17
|
|
|
Yen/£
|
137
|
|
139
|
|
138
|
|
141
|
|
|
|
|
|
|
|
|
||
Period-end
rates:
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
1.36
|
|
1.32
|
|
1.36
|
|
1.32
|
|
|
Euro/£
|
1.11
|
|
1.18
|
|
1.11
|
|
1.18
|
|
|
Yen/£
|
141
|
|
143
|
|
141
|
|
143
|
During Q4 2020 average Sterling exchange rates were stronger
against the US Dollar but weaker against the Euro and Yen compared
with the same period in 2019. Similarly, during the year ended 31
December 2020, average Sterling exchange rates were stronger
against the US Dollar but weaker against the Euro and Yen.
Period-end Sterling exchange rates were also stronger against the
US Dollar but weaker against the Euro and the Yen compared with the
2019 period-end rates.
|
Net assets
|
The
book value of net assets increased by £2,451 million from
£18,357 million at 31 December 2019 to £20,808 million at
31 December 2020. This primarily reflected the Total profit for the
year and the increase in the fair value of equity investments
exceeding the dividends paid during the year.
The
carrying value of investments in associates and joint ventures at
31 December 2020 was £364 million (31 December 2019: £314
million), with a market value of £364 million (31 December
2019: £396 million).
At 31
December 2020, the net deficit on the Group’s pension plans
was £2,104 million compared with £1,921 million at 31
December 2019. The increase in the net deficit primarily arose from
decreases in the rates used to discount UK pension liabilities from
2.0% to 1.4%, and US pension liabilities from 3.2% to 2.3%, partly
offset by higher UK assets and a decrease in the UK inflation rate
from 3.0% to 2.8%. The Group continues to monitor and review the
pension asset portfolios in response to the pandemic given the
elevated uncertainty inherent for valuations particularly for the
property asset class.
The
estimated present value of the potential redemption amount of the
Pfizer put option related to ViiV Healthcare, recorded in Other
payables in Current liabilities, was £960 million (31 December
2019: £1,011 million).
Contingent
consideration amounted to £5,869 million at 31 December 2020
(31 December 2019: £5,479 million), of which £5,359
million (31 December 2019: £5,103 million) represented the
estimated present value of amounts payable to Shionogi relating to
ViiV Healthcare and £477 million (31 December 2019: £339
million) represented the estimated present value of contingent
consideration payable to Novartis related to the Vaccines
acquisition.
Of the
contingent consideration payable (on a post-tax basis) to Shionogi
at 31 December 2020, £745 million (31 December 2019: £730
million) is expected to be paid within one year.
|
Movements in contingent consideration are as follows:
|
2020
|
ViiV Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the year
|
5,103
|
|
5,479
|
Re-measurement
through income statement
|
1,114
|
|
1,275
|
Cash
payments: operating cash flows
|
(751)
|
|
(765)
|
Cash
payments: investing activities
|
(107)
|
|
(120)
|
|
|
|
|
Contingent
consideration at end of the year
|
5,359
|
|
5,869
|
|
|
|
|
2019
|
ViiV
Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the year
|
5,937
|
|
6,286
|
Additions
|
-
|
|
4
|
Re-measurement
through income statement
|
31
|
|
82
|
Cash
payments: operating cash flows
|
(767)
|
|
(780)
|
Cash
payments: investing activities
|
(98)
|
|
(113)
|
|
|
|
|
Contingent
consideration at end of the year
|
5,103
|
|
5,479
|
|
|
|
|
The
liabilities for the Pfizer put option and the contingent
consideration at 31 December 2020 have been calculated based on the
period-end exchange rates, primarily US$1.36/£1 and
€1.11/£1. Sensitivity analyses for the Pfizer put option
and each of the largest contingent consideration liabilities are
set out below.
|
Increase/(decrease) in liability
|
ViiV
Healthcare
put
option
|
|
Shionogi-
ViiV
Healthcare
contingent
consideration
|
|
Novartis
Vaccines
contingent
consideration
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
10%
increase in sales forecasts
|
117
|
|
515
|
|
80
|
10%
decrease in sales forecasts
|
(116)
|
|
(516)
|
|
(78)
|
1% (100
basis points) increase in discount rate
|
(41)
|
|
(207)
|
|
(39)
|
1% (100
basis points) decrease in discount rate
|
45
|
|
223
|
|
45
|
5%
increase in probability of milestone success
|
|
|
|
|
7
|
5%
decrease in probability of milestone success
|
|
|
|
|
(7)
|
5 cent
appreciation of US Dollar
|
25
|
|
147
|
|
1
|
5 cent
depreciation of US Dollar
|
(23)
|
|
(137)
|
|
(1)
|
10 cent
appreciation of US Dollar
|
52
|
|
305
|
|
4
|
10 cent
depreciation of US Dollar
|
(45)
|
|
(262)
|
|
(2)
|
5 cent
appreciation of Euro
|
20
|
|
58
|
|
14
|
5 cent
depreciation of Euro
|
(18)
|
|
(56)
|
|
(13)
|
10 cent
appreciation of Euro
|
42
|
|
125
|
|
30
|
10 cent
depreciation of Euro
|
(34)
|
|
(105)
|
|
(24)
|
|
|
|
|
|
|
Contingent liabilities
|
There
were contingent liabilities at 31 December 2020 in respect of
guarantees and indemnities entered into as part of the ordinary
course of the Group’s business. No material losses are
expected to arise from such contingent liabilities. Provision is
made for the outcome of legal and tax disputes where it is both
probable that the Group will suffer an outflow of funds and it is
possible to make a reliable estimate of that outflow. Descriptions
of the significant legal disputes to which the Group is a party are
set out on page 58.
|
Reconciliation of cash flow to movements in net debt
|
|
2020
£m
|
|
2019
£m
|
|
|
|
|
Net
debt, as previously reported
|
(25,215)
|
|
(21,621)
|
Implementation
of IFRS 16
|
-
|
|
(1,303)
|
|
|
|
|
Net
debt at beginning of the year, as adjusted
|
(25,215)
|
|
(22,924)
|
|
|
|
|
Increase
in cash and bank overdrafts
|
470
|
|
826
|
Increase/(decrease)
in liquid investments
|
1
|
|
(1)
|
Net
decrease in short-term loans
|
7,305
|
|
1,065
|
Increase
in long-term loans
|
(3,298)
|
|
(4,794)
|
Repayment
of lease liabilities
|
227
|
|
214
|
Debt of
subsidiary undertakings acquired
|
-
|
|
(524)
|
Exchange
adjustments
|
(135)
|
|
1,015
|
Other
non-cash movements
|
(135)
|
|
(92)
|
|
|
|
|
Decrease/(increase)
in net debt
|
4,435
|
|
(2,291)
|
|
|
|
|
Net
debt at end of the year
|
(20,780)
|
|
(25,215)
|
|
|
|
|
Net debt analysis
|
|
2020
£m
|
|
2019
£m
|
|
|
|
|
Liquid
investments
|
78
|
|
79
|
Cash
and cash equivalents
|
6,292
|
|
4,707
|
Cash
and cash equivalents reported in assets held for sale
|
-
|
|
507
|
Short-term
borrowings
|
(3,725)
|
|
(6,918)
|
Long-term
borrowings
|
(23,425)
|
|
(23,590)
|
|
|
|
|
Net
debt at end of the period
|
(20,780)
|
|
(25,215)
|
|
|
|
|
Free cash flow reconciliation
|
|
2020
£m
|
|
2019
£m
|
|
Q4
2020
£m
|
|
|
|
|
|
|
Net
cash inflow from operating activities
|
8,441
|
|
8,020
|
|
3,855
|
Purchase
of property, plant and equipment
|
(1,226)
|
|
(1,265)
|
|
(514)
|
Proceeds
from sale of property, plant and equipment
|
68
|
|
95
|
|
33
|
Purchase
of intangible assets
|
(1,013)
|
|
(898)
|
|
(331)
|
Proceeds
from disposals of intangible assets
|
1,255
|
|
404
|
|
618
|
Net
finance costs
|
(825)
|
|
(813)
|
|
(341)
|
Dividends
from joint ventures and associates
|
31
|
|
7
|
|
17
|
Contingent
consideration paid (reported in investing
activities)
|
(120)
|
|
(113)
|
|
(29)
|
Distributions
to non-controlling interests
|
(1,208)
|
|
(364)
|
|
(202)
|
Contributions
from non-controlling interests
|
3
|
|
-
|
|
-
|
|
|
|
|
|
|
Free
cash flow
|
5,406
|
|
5,073
|
|
3,106
|
|
|
|
|
|
|
Reporting definitions
|
Total and Adjusted results
Total
reported results represent the Group’s overall
performance.
GSK
also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS
measures may be considered in addition to, but not as a substitute
for or superior to, information presented in accordance with IFRS.
Adjusted results are defined on page 10 and other non-IFRS measures
are defined below.
Free cash flow
Free
cash flow is defined as the net cash inflow from operating
activities less capital expenditure on property, plant and
equipment and intangible assets, contingent consideration payments,
net finance costs, and dividends paid to non-controlling interests
plus proceeds from the sale of property, plant and equipment and
intangible assets, and dividends received from joint ventures and
associates. 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. A reconciliation of net cash inflow from
operations to free cash flow is set out on page 62.
Free cash flow conversion
Free
cash flow conversion is free cash flow as a percentage of
earnings.
Working capital
Working
capital represents inventory and trade receivables less trade
payables.
CER and AER 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. CER% represents growth at constant exchange rates. £%
or AER% represents growth at actual exchange rates.
Pro-forma growth
The
acquisition of the Pfizer consumer healthcare business completed on
31 July 2019 and so GSK’s reported results for the year ended
31 December 2019 include five months of results of the former
Pfizer consumer healthcare business compared with twelve months in
2020.
The
Group has presented pro-forma growth rates at CER for turnover,
Adjusted operating profit and operating profit by business taking
account of this transaction. Pro-forma growth rates at CER for the
year ended 31 December 2020 are calculated comparing reported
results for the year ended 31 December 2020, calculated applying
the exchange rates used in the comparative period, with the results
for the year ended 31 December 2019 adjusted to include the
equivalent seven months of results to 31 July 2019 of the former
Pfizer consumer healthcare business, as consolidated (in US$) and
included in Pfizer’s US GAAP results.
|
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
|
2021 guidance
Our
guidance range for 2021 is a decline of mid to high-single digit
percent adjusted EPS at CER.
Assumptions related to 2021 guidance
In
outlining the guidance for 2021, 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.
The
Group has made planning assumptions for 2021 that healthcare
systems and consumer trends will approach normality in the second
half of the year, and we expect turnover to be flat to low single
digit growth for the Pharmaceuticals and Vaccines businesses and
low to mid-single digit growth for Consumer Healthcare excluding
brands divested/under review. These planning assumptions as well as
earnings guidance and dividend expectations assume no material
interruptions to supply of the Group’s products, no material
mergers, acquisitions or disposals, no material litigation or
investigation costs for the Company (save for those that are
already recognised or for which provisions have been made), no
share repurchases by the Company, and no change in the
Group’s shareholdings in ViiV Healthcare. The assumptions
also assume no material changes in the healthcare environment. The
2021 guidance factors in all divestments and product exits
announced to date, including product divestments planned in
connection with the formation of the Consumer Healthcare Joint
Venture with Pfizer, and the non-core divestments planned to fund
the cash costs of the Separation Preparation restructuring
programme.
The
Group’s guidance assumes successful delivery of the
Group’s integration and restructuring plans. It also assumes
that the integration and investment programmes following the
creation of the Consumer Healthcare Joint Venture with Pfizer are
delivered successfully. Material costs for investment in new
product launches and R&D have been factored into the
expectations given. Given the potential development options in the
Group’s pipeline, the outlook may be affected by additional
data-driven R&D investment decisions. The guidance is given on
a constant currency basis.
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 forward-looking nature of these assumptions 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,
macro-economic activity, the impact of outbreaks, epidemics or
pandemics, such as the COVID-19 pandemic and ongoing challenges and
uncertainties posed by the COVID-19 pandemic for businesses and
governments around the world, 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, dividend payments and
financial results. Other than in accordance with its legal or
regulatory obligations (including under the Market Abuse
Regulation, 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 2019 and any impacts of the COVID-19 pandemic. 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 pro-forma growth rates
The
pro-forma growth rates at CER in this Results Announcement have
been provided to illustrate the position in 2020 relative to the
position in 2019 as if, for the purposes of the 2020 results, the
acquisition of the Pfizer consumer healthcare business had taken
place as at 31 July 2018 and that, accordingly, seven months of
results of the former Pfizer consumer healthcare business were
included in the year ended 31 December 2019. The results of the
former Pfizer consumer healthcare business included for the year
ended 31 December 2019 are as consolidated (in US$) and included in
Pfizer’s US GAAP results. The results for the year ended 31
December 2020 used to calculate the pro-forma growth rates are as
reported at CER.
The
pro-forma growth rates have been provided for illustrative purposes
only and, by their nature, address a hypothetical situation and
therefore do not represent the Group’s actual growth rates.
The pro-forma growth rates do not purport to represent what the
Group’s results of operations actually would have been if the
Pfizer acquisition had been completed on the date indicated, nor do
they purport to represent the results of operations at any future
date. In addition, the pro-forma growth rates do not reflect the
effect of anticipated synergies and efficiencies or accounting and
reporting differences associated with the acquisition of the Pfizer
consumer healthcare business.
Inside information
This
announcement contains inside information. The person responsible
for arranging the release of this announcement on behalf of GSK is
Victoria Whyte, Company Secretary.
|
|
GlaxoSmithKline plc
|
|
(Registrant)
|
|
|
Date: February
03, 2021
|
|
|
|
|
By:/s/ VICTORIA
WHYTE
--------------------------
|
|
|
|
Victoria Whyte
|
|
Authorised
Signatory for and on
|
|
behalf
of GlaxoSmithKline plc
|