Business Context and Reporting Period
Company: GlaxoSmithKline plc (GSK)
Filing Type: Form 6-K (Report of Foreign Issuer)
Date Issued: March 21, 2014
Reporting Period: Historical quarterly restated financial information for 2013 and 2012, presented on a like-for-like basis to align with 2014 reporting standards.
This filing announces a revised presentation for 2014 financial results. Key changes include the creation of a new "Established Products Portfolio" segment (comprising over 50 tail brands), the renaming of the EMAP segment to "Emerging Markets," and the reclassification of certain OTC brands between Pharmaceuticals and Consumer Healthcare. The filing provides restated data for 2013 excluding results from divestments completed during that year to ensure comparability with 2014 core results.
Key Financial Metrics (FY 2013 Restated)
The following metrics reflect the "Revised" 2013 Core Results, excluding divestments completed in 2013:
| Metric | Value (£m) | Notes |
|---|---|---|
| Turnover | 25,602 | Excludes £903m from divestments |
| Operating Profit | 7,771 | Excludes £244m from divestments |
| Profit Before Taxation | 7,122 | Excludes £244m from divestments |
| Profit After Taxation | 5,487 | Excludes £184m from divestments |
| Profit Attributable to Shareholders | 5,237 | Excludes £184m from divestments |
| Earnings Per Share (EPS) | 108.4p | Revised from 112.2p |
| Tax Rate | 23.0% | Effective rate on revised profit |
Segment Turnover (FY 2013 Restated):
- Pharmaceuticals and Vaccines: £20,846m (1% growth vs prior year)
- Consumer Healthcare: £4,756m (2% growth vs prior year)
Cash Flow, Debt, and Liquidity: The filing text does not provide specific values for operating cash flow, total debt, or liquidity ratios. It focuses exclusively on turnover, profit, and EPS reconciliations.
Material Changes vs. Prior Comparable Period
The primary material change is the reclassification of financial data rather than a change in underlying operational performance. The filing restates 2013 results to exclude divestments completed in 2013, allowing for a direct comparison with 2014 core results.
- Turnover Adjustment: Reported FY 2013 turnover was £26,505m; revised to £25,602m (a reduction of £903m due to divestments).
- Profit Adjustment: Reported FY 2013 profit attributable to shareholders was £5,421m; revised to £5,237m (a reduction of £184m).
- EPS Adjustment: Reported EPS was 112.2p; revised to 108.4p.
- Segment Growth (Restated):
- Pharmaceuticals and Vaccines grew 1% (excluding divestments) compared to 2012.
- Consumer Healthcare grew 2% (excluding divestments) compared to 2012.
Guidance, Outlook, and Risks
Management Commentary & Reporting Strategy: GSK intends to report 2014 core results measured against 2013 core results excluding divestments. The new reporting structure reflects the responsibilities of the Corporate Executive Team (CET) and provides a clearer view of underlying performance. The "Established Products Portfolio" is now a distinct segment.
Risks and Contingencies: The filing includes a standard cautionary statement regarding forward-looking statements. It notes that actual results may differ materially from projections due to risks described in the company's Annual Report on Form 20-F for 2013 (Item 3.D 'Risk factors'). No specific new risks or contingencies are detailed in this text beyond the standard disclaimer.
Unusual Items: The filing details the exclusion of specific items from "Core Results," including amortization and impairment of intangible assets, major restructuring costs, legal charges, and acquisition accounting adjustments. For Q4 2013, a significant "Other operating income" of £1,233m (including £253m profit on disposal of associates) was excluded from core results, resulting in a reported total profit significantly higher than core profit for that quarter.
Investor Verification Checklist
- Restated Comparability: Verify that all 2013 historical data used for 2014 comparisons excludes the £903m turnover and £184m profit attributable to 2013 divestments.
- Segment Definitions: Confirm the composition of the new "Established Products Portfolio" segment and the reclassification of OTC dermatology and vitamin brands.
- Core vs. Total Results: Review the reconciliation tables to understand the magnitude of non-core items (legal charges, restructuring, impairments) impacting total reported earnings versus core earnings.
- Divestment Impact: Assess the long-term impact of the divestments excluded from the 2013 baseline on future revenue growth projections.
- Product Performance: Analyze the specific growth rates of key products (e.g., Seretide/Advair, Votrient, Benlysta) within the restated regional data to identify underlying trends independent of currency fluctuations.