Business Context and Reporting Period
This Form 6-K filing by GSK plc, dated July 5, 2022, announces a material change in financial reporting presentation effective for the second quarter of 2022. Following the satisfaction of IFRS 5 criteria, GSK will classify its Consumer Healthcare business as a "Discontinued operation" effective June 30, 2022, in preparation for the demerger of this business to form Haleon plc on July 18, 2022. Consequently, Q2 2022 results (to be announced July 27, 2022) and comparative historical data will be restated to separate "Continuing operations" from "Discontinued operations."
Key Financial Metrics (Restated)
The filing provides restated financial data for Q1 2021 through Q1 2022 to reflect the new reporting structure. Key metrics for Q1 2022 (Continuing Operations) include:
- Turnover: £7,190 million
- Operating Profit: £2,288 million
- Profit After Tax (Continuing): £1,763 million
- Profit After Tax (Discontinued): £404 million
- Total Profit After Tax: £2,167 million
- Adjusted Operating Profit: £1,944 million
- Adjusted Earnings Per Share (Continuing): 25.8p
- Total Earnings Per Share: 35.9p
Cash Flow (Q1 2022):
- Cash Generated from Operations (Continuing): £2,353 million
- Cash Generated from Operations (Discontinued): £402 million
- Net Cash Inflow from Operating Activities (Continuing): £2,207 million
- Net Cash Inflow from Operating Activities (Discontinued): £335 million
Segment Performance (Q1 2022 Continuing Operations):
- Commercial Operations Turnover: £7,190 million (Specialty: £3,135m; Vaccines: £1,669m; Respiratory: £1,535m; General Medicines: £2,386m)
- Commercial Operations Profit: £3,120 million
- Research and Development Profit: (£1,095 million)
Material Changes Versus Prior Period
The primary material change is the reclassification of the Consumer Healthcare business from a reportable segment to "Discontinued operations." This results in:
- Segment Reporting: The Consumer Healthcare segment is removed. Remaining segments are Commercial Operations and Research & Development.
- Income Statement Presentation: Turnover, costs, and profits are now split between Continuing and Discontinued operations. Discontinued operations are presented as a single line item for post-tax results.
- Balance Sheet: Assets and liabilities of the Consumer Healthcare business are reclassified as "held for sale/distribution" and measured at the lower of carrying amount and fair value less costs to distribute. Depreciation and amortization on these assets cease.
- Comparative Data: Historical periods (2021 and Q1 2022) have been restated to align with the new presentation, ensuring consistency for trend analysis.
Guidance, Outlook, and Risks
Outlook and Demerger: GSK expects the demerger of the Consumer Healthcare business to complete on July 18, 2022. The Group will continue to consolidate the business until the demerger is finalized. Adjusted earnings per share will only be presented for Continuing operations moving forward.
Share Consolidation: Earnings per share figures for Q2 2022 and prior periods will be adjusted to reflect a share consolidation expected to occur after the demerger but before the Q2 results announcement. Current figures are based on the pre-consolidation capital structure.
Risks and Contingencies: The filing includes a standard cautionary statement regarding forward-looking statements. Risks include uncertainties that may cause actual results to differ materially from projections, including factors described in the 2021 Annual Report on Form 20-F, Q1 2022 results, and the ongoing impacts of the COVID-19 pandemic.
Investor Verification Checklist
- Verify the exact date of the Q2 2022 results announcement (July 27, 2022) for updated figures.
- Confirm the impact of the share consolidation on the final reported Earnings Per Share (EPS) for Q2 2022.
- Review the full Prospectus and Circular for the Haleon demerger to understand the specific assets and liabilities being transferred.
- Monitor the "Discontinued operations" line item in future filings to track the final financial performance of the Consumer Healthcare business prior to the spin-off.
- Check the reconciliation of Total Results to Adjusted Results to understand the specific non-IFRS adjustments (e.g., restructuring, transaction costs) applied to Continuing operations.