As filed with the Securities and Exchange Commission on March 20, 2018
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F/A
Amendment No. 1
☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2017
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 1-15170
GlaxoSmithKline plc
(Exact name of Registrant as specified in its charter)
England
(Jurisdiction of incorporation or organization)
980 Great West Road, Brentford, Middlesex TW8 9GS England
(Address of principal executive offices)
Victoria Whyte
Company Secretary
GlaxoSmithKline plc
980 Great West Road
Brentford, TW8 9GS
England
+44 20 8047 5000
company.secretary@gsk.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Name of Each Exchange On Which Registered | |
American Depositary Shares, each representing 2 Ordinary Shares, Par value 25 pence |
New York Stock Exchange | |
5.650% Notes due 2018 | New York Stock Exchange | |
2.850% Notes due 2022 | New York Stock Exchange | |
2.800% Notes due 2023 | New York Stock Exchange | |
5.375% Notes due 2034 | London Stock Exchange | |
6.375% Notes due 2038 | New York Stock Exchange | |
4.200% Notes due 2043 | New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of class)
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.
Ordinary Shares of Par value 25 pence each | 5,372,553,820 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒ Yes ☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒ No
Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| The term new or revised financial accounting standard refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ |
Other ☐ |
If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
Explanatory Note
GlaxoSmithKline plc (GSK) is filing this Amendment No. 1 (the Form 20-F/A) to its Annual Report on Form 20-F for the year ended December 31, 2017 (the Form 20-F), which was filed with the Securities and Exchange Commission on March 16, 2018, to submit the Interactive Data File (as defined in Rule 11 of Regulation S-T) with respect to the audited consolidated financial statements of GSK and its consolidated subsidiaries for that fiscal year as an exhibit to the Form 20-F pursuant to paragraph 101 under Instructions as to Exhibits of Form 20-F in accordance with Rule 405 of Regulation S-T. Exhibit 101 was omitted from the Form 20-F in accordance with the 30-day grace period provided under Rule 405(a)(2)(ii) of Regulation S-T.
Except as set forth above, this Form 20-F/A does not modify or update any of the disclosures in the Form 20-F. This Form 20-F/A speaks as of the time of filing of the Form 20-F, does not reflect events that may have occurred subsequent to such filing, and does not modify or update in any way disclosures made in the Form 20-F.
Item 19 | Exhibits |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Linkbase Document | |
101. CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101. DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | In accordance with Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. |
Signature
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No.1 to the Annual Report on Form 20-F on its behalf.
GlaxoSmithKline plc | ||||||
March 20, 2018 | By: | /s/ Simon Dingemans | ||||
Simon Dingemans | ||||||
Chief Financial Officer |
Document and Entity Information |
12 Months Ended |
---|---|
Dec. 31, 2017
shares
| |
Document - Document and Entity Information [Abstract] | |
Document Type | 20-F/A |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2017 |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | FY |
Trading Symbol | GSK |
Entity Registrant Name | GLAXOSMITHKLINE PLC |
Entity Central Index Key | 0001131399 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 5,372,553,820 |
Consolidated balance sheet - GBP (£) |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Non-currentassets | ||
Property, plant and equipment | £ 10,860,000,000 | £ 10,808,000,000 |
Goodwill | 5,734,000,000 | 5,965,000,000 |
Other intangible assets | 17,562,000,000 | 18,776,000,000 |
Investments in associates and joint ventures | 183,000,000 | 263,000,000 |
Other investments | 918,000,000 | 985,000,000 |
Deferred tax assets | 3,796,000,000 | 4,374,000,000 |
Derivative financial instruments | 8,000,000 | |
Other non-current assets | 1,413,000,000 | 1,199,000,000 |
Total non-current assets | 40,474,000,000 | 42,370,000,000 |
Current assets | ||
Inventories | 5,557,000,000 | 5,102,000,000 |
Current tax recoverable | 258,000,000 | 226,000,000 |
Trade and other receivables | 6,000,000,000 | 6,026,000,000 |
Derivative financial instruments | 68,000,000 | 156,000,000 |
Liquid investments | 78,000,000 | 89,000,000 |
Cash and cash equivalents | 3,833,000,000 | 4,897,000,000 |
Assets held for sale | 113,000,000 | 215,000,000 |
Total current assets | 15,907,000,000 | 16,711,000,000 |
Total assets | 56,381,000,000 | 59,081,000,000 |
Current liabilities | ||
Short-term borrowings | (2,825,000,000) | (4,129,000,000) |
Contingent consideration liabilities | (1,076,000,000) | (561,000,000) |
Trade and other payables | (20,970,000,000) | (11,964,000,000) |
Derivative financial instruments | (74,000,000) | (194,000,000) |
Current tax payable | (995,000,000) | (1,305,000,000) |
Short-term provisions | (629,000,000) | (848,000,000) |
Total current liabilities | (26,569,000,000) | (19,001,000,000) |
Non-current liabilities | ||
Long-term borrowings | (14,264,000,000) | (14,661,000,000) |
Corporation tax payable | (411,000,000) | 0 |
Deferred tax liabilities | (1,396,000,000) | (1,934,000,000) |
Pensions and other post-employment benefits | (3,539,000,000) | (4,090,000,000) |
Other provisions | (636,000,000) | (652,000,000) |
Contingent consideration liabilities | (5,096,000,000) | (5,335,000,000) |
Other non-current liabilities | (981,000,000) | (8,445,000,000) |
Total non-current liabilities | (26,323,000,000) | (35,117,000,000) |
Total liabilities | (52,892,000,000) | (54,118,000,000) |
Net assets | 3,489,000,000 | 4,963,000,000 |
Equity | ||
Share capital | 1,343,000,000 | 1,342,000,000 |
Share premium account | 3,019,000,000 | 2,954,000,000 |
Retained earnings | (6,477,000,000) | (5,392,000,000) |
Other reserves | 2,047,000,000 | 2,220,000,000 |
Shareholders' equity | (68,000,000) | 1,124,000,000 |
Non-controlling interests | 3,557,000,000 | 3,839,000,000 |
Total equity | £ 3,489,000,000 | £ 4,963,000,000 |
Presentation of the financial statements |
12 Months Ended | ||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||
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Presentation of the financial statements | 1. Presentation of the financial statements
Description of business GSK is a major global healthcare group which is engaged in the creation and discovery, development, manufacture and marketing of pharmaceutical products, vaccines, over-the-counter (OTC) medicines and health-related consumer products. GSK’s principal pharmaceutical products include medicines in the following therapeutic areas: respiratory, HIV, immuno-inflammation, anti-virals, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterials, dermatology and rare diseases. Compliance with applicable law and IFRS The financial statements have been prepared in accordance with the Companies Act 2006, Article 4 of the IAS Regulation and International Financial Reporting Standards (IFRS) and related interpretations, as adopted by the European Union. The financial statements are also in compliance with IFRS as issued by the International Accounting Standards Board. Composition of financial statements The consolidated financial statements are drawn up in Sterling, the functional currency of GlaxoSmithKline plc, and in accordance with IFRS accounting presentation. The financial statements comprise:
Composition of the Group A list of the subsidiaries and associates which, in the opinion of the Directors, principally affected the amount of profit or net assets of the Group is given in Note 44, ‘Principal Group companies’. Accounting principles and policies The financial statements have been prepared using the historical cost convention modified by the revaluation of certain items, as stated in the accounting policies, and on a going concern basis.
The financial statements have been prepared in accordance with the Group’s accounting policies approved by the Board and described in Note 2, ‘Accounting principles and policies’. Information on the application of these accounting policies, including areas of estimation and judgement is given in Note 3, ‘Key accounting judgements and estimates’. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Implementation of new accounting standards and interpretations An agenda decision by the IFRS Interpretations Committee in September 2017 clarified that charges for interest on tax should be reported within finance expense and certain penalties on tax settlements should be reported within administrative expenses. Previously GSK had reported these charges within the overall tax charge in the income statement or other comprehensive income, as appropriate. GSK has adopted the revised basis of reporting in 2017 and, as a result of a number of settlements during the year, has recorded credits for interest on tax for 2017 of £24 million in finance expense. There were no material charges for penalties on settlements during 2017 that required adjustment. Accrued interest payable on tax at 31 December 2017 was £52 million, and this is included within trade and other payables on the Group balance sheet. The impact on prior years was not material and so prior year amounts have not been restated. Financial period These financial statements cover the financial year from 1 January to 31 December 2017, with comparative figures for the financial years from 1 January to 31 December 2016 and, where appropriate, from 1 January to 31 December 2015. Parent company financial statements The financial statements of the parent company, GlaxoSmithKline plc, have been prepared in accordance with UK GAAP and with UK accounting presentation. The company balance sheet is presented on page 239 and the accounting policies are given on page 240. |
Accounting principles and policies |
12 Months Ended | |||||||||||||||||||||||||||
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Accounting principles and policies | 2. Accounting principles and policies
Consolidation The consolidated financial statements include:
The financial statements of entities consolidated are made up to 31 December each year. Entities over which the Group has the power to direct the relevant activities so as to affect the returns to the Group, generally through control over the financial and operating policies, are accounted for as subsidiaries.
Where the Group has the ability to exercise joint control over, and rights to the net assets of, entities, the entities are accounted for as joint ventures. Where the Group has the ability to exercise joint control over an arrangement, but has rights to specified assets and obligations for specified liabilities of the arrangement, the arrangement is accounted for as a joint operation. Where the Group has the ability to exercise significant influence over entities, they are accounted for as associates. The results and assets and liabilities of associates and joint ventures are incorporated into the consolidated financial statements using the equity method of accounting. The Group’s rights to assets, liabilities, revenue and expenses of joint operations are included in the consolidated financial statements in accordance with those rights and obligations. Interests acquired in entities are consolidated from the date the Group acquires control and interests sold are de-consolidated from the date control ceases.
Transactions and balances between subsidiaries are eliminated and no profit before tax is taken on sales between subsidiaries until the products are sold to customers outside the Group. The relevant proportion of profits on transactions with joint ventures, joint operations and associates is also deferred until the products are sold to third parties. Transactions with non-controlling interests are recorded directly in equity. Deferred tax relief on unrealised intra-Group profit is accounted for only to the extent that it is considered recoverable. Business combinations Business combinations are accounted for using the acquisition accounting method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration transferred is measured at fair value and includes the fair value of any contingent consideration. Where the consideration transferred, together with the non-controlling interest, exceeds the fair value of the net assets, liabilities and contingent liabilities acquired, the excess is recorded as goodwill. The costs of acquisition are charged to the income statement in the period in which they are incurred. Goodwill is capitalised as a separate item in the case of subsidiaries and as part of the cost of investment in the case of joint ventures and associates. Goodwill is denominated in the currency of the operation acquired. Where the cost of acquisition is below the fair value of the net assets acquired, the difference is recognised directly in the income statement. Where not all of the equity of a subsidiary is acquired the non-controlling interest is recognised either at fair value or at the non-controlling interest’s share of the net assets of the subsidiary, on a case-by-case basis. Changes in the Group’s ownership percentage of subsidiaries are accounted for within equity. Foreign currency translation Foreign currency transactions are booked in the functional currency of the Group company at the exchange rate ruling on the date of transaction. Foreign currency monetary assets and liabilities are retranslated into the functional currency at rates of exchange ruling at the balance sheet date. Exchange differences are included in the income statement. On consolidation, assets and liabilities, including related goodwill, of overseas subsidiaries, associates and joint ventures, are translated into Sterling at rates of exchange ruling at the balance sheet date. The results and cash flows of overseas subsidiaries, associates and joint ventures are translated into Sterling using average rates of exchange. Exchange adjustments arising when the opening net assets and the profits for the year retained by overseas subsidiaries, associates and joint ventures are translated into Sterling, less exchange differences arising on related foreign currency borrowings which hedge the Group’s net investment in these operations, are taken to a separate component of equity. When translating into Sterling the assets, liabilities, results and cash flows of overseas subsidiaries, associates and joint ventures which are reported in currencies of hyper-inflationary economies, adjustments are made where material to reflect current price levels. Any loss on net monetary assets is charged to the consolidated income statement.
Revenue Revenue is recognised in the income statement when goods or services are supplied or made available to external customers against orders received, title and risk of loss is passed to the customer, reliable estimates can be made of relevant deductions and all relevant obligations have been fulfilled, such that the earnings process is regarded as being complete. Turnover represents net invoice value after the deduction of discounts and allowances given and accruals for estimated future rebates and returns. The methodology and assumptions used to estimate rebates and returns are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. Market conditions are evaluated using wholesaler and other third-party analyses, market research data and internally generated information. Value added tax and other sales taxes are excluded from revenue. Where the Group co-promotes a product and the counterparty records the sale, the Group records its share of revenue as co-promotion income within turnover. The nature of co-promotion activities is such that the Group records no costs of sales. Pharmaceutical turnover includes co-promotion revenue of £16 million (2016 – £9 million; 2015 – £14 million). In addition, initial or event-based milestone income (excluding royalty income) arising on development or marketing collaborations of the Group’s compounds or products with other parties is recognised in turnover. No such income is included in turnover for all the periods presented. Royalty income is recognised on an accruals basis in accordance with the terms of the relevant licensing agreements. Expenditure Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can be reliably estimated. Manufacturing start-up costs between validation and the achievement of normal production are expensed as incurred. Advertising and promotion expenditure is charged to the income statement as incurred. Shipment costs on inter-company transfers are charged to cost of sales; distribution costs on sales to customers are included in selling, general and administrative expenditure. Restructuring costs are recognised and provided for, where appropriate, in respect of the direct expenditure of a business reorganisation where the plans are sufficiently detailed and well advanced, and where appropriate communication to those affected has been undertaken.
Research and development Research and development expenditure is charged to the income statement in the period in which it is incurred. Development expenditure is capitalised when the criteria for recognising an asset are met, usually when a regulatory filing has been made in a major market and approval is considered highly probable. Property, plant and equipment used for research and development is capitalised and depreciated in accordance with the Group’s policy. Environmental expenditure Environmental expenditure related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible is charged to the income statement. The Group recognises its liability on a site-by-site basis when it can be reliably estimated. This liability includes the Group’s portion of the total costs and also a portion of other potentially responsible parties’ costs when it is probable that they will not be able to satisfy their respective shares of the clean-up obligation. Recoveries of reimbursements are recorded as assets when virtually certain. Legal and other disputes Provision is made for the anticipated settlement costs of legal or other disputes against the Group where an outflow of resources is considered probable and a reliable estimate can be made of the likely outcome. In addition, provision is made for legal or other expenses arising from claims received or other disputes. In respect of product liability claims related to certain products, there is sufficient history of claims made and settlements to enable management to make a reliable estimate of the provision required to cover unasserted claims. In certain cases, an incurred but not reported (IBNR) actuarial technique is used to determine this estimate. The Group may become involved in 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, appropriate disclosure about such cases would be included but no provision would be made. Costs associated with claims made by the Group against third parties are charged to the income statement as they are incurred. Pensions and other post-employment benefits The costs of providing pensions under defined benefit schemes are calculated using the projected unit credit method and spread over the period during which benefit is expected to be derived from the employees’ services, consistent with the advice of qualified actuaries. Pension obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the yields of high quality corporate bonds. Pension scheme assets are measured at fair value at the balance sheet date. The costs of other post-employment liabilities are calculated in a similar way to defined benefit pension schemes and spread over the period during which benefit is expected to be derived from the employees’ services, in accordance with the advice of qualified actuaries. Actuarial gains and losses and the effect of changes in actuarial assumptions, are recognised in the statement of comprehensive income in the year in which they arise. The Group’s contributions to defined contribution plans are charged to the income statement as incurred.
Employee share plans Incentives in the form of shares are provided to employees under share option and share award schemes. The fair values of these options and awards are calculated at their grant dates using a Black-Scholes option pricing model and charged to the income statement over the relevant vesting periods. The Group provides finance to ESOP Trusts to purchase company shares to meet the obligation to provide shares when employees exercise their options or awards. Costs of running the ESOP Trusts are charged to the income statement. Shares held by the ESOP Trusts are deducted from other reserves. A transfer is made between other reserves and retained earnings over the vesting periods of the related share options or awards to reflect the ultimate proceeds receivable from employees on exercise. Property, plant and equipment Property, plant and equipment (PP&E) is stated at the cost of purchase or construction, less provisions for depreciation and impairment. Financing costs are capitalised within the cost of qualifying assets in construction. Depreciation is calculated to write off the cost less residual value of PP&E, excluding freehold land, using the straight-line basis over the expected useful life. Residual values and lives are reviewed, and where appropriate adjusted annually. The normal expected useful lives of the major categories of PP&E are:
On disposal of PP&E, the cost and related accumulated depreciation and impairments are removed from the financial statements and the net amount, less any proceeds, is taken to the income statement. Leases Leasing agreements which transfer to the Group substantially all the benefits and risks of ownership of an asset are treated as finance leases, as if the asset had been purchased outright. The assets are included in PP&E or computer software and the capital elements of the leasing commitments are shown as obligations under finance leases. Assets held under finance leases are depreciated on a basis consistent with similar owned assets or the lease term, if shorter. The interest element of the lease rental is included in the income statement. All other leases are operating leases and the rental costs are charged to the income statement on a straight-line basis over the lease term. Goodwill Goodwill is stated at cost less impairments. Goodwill is deemed to have an indefinite useful life and is tested for impairment at least annually. Where the fair value of the interest acquired in an entity’s assets, liabilities and contingent liabilities exceeds the consideration paid, this excess is recognised immediately as a gain in the income statement.
Other intangible assets Intangible assets are stated at cost less provisions for amortisation and impairments. Licences, patents, know-how and marketing rights separately acquired or acquired as part of a business combination are amortised over their estimated useful lives, generally not exceeding 20 years, using the straight-line basis, from the time they are available for use. The estimated useful lives for determining the amortisation charge take into account patent lives, where applicable, as well as the value obtained from periods of non-exclusivity. Asset lives are reviewed, and where appropriate adjusted, annually. Contingent milestone payments are recognised at the point that the contingent event becomes probable. Any development costs incurred by the Group and associated with acquired licences, patents, know-how or marketing rights are written off to the income statement when incurred, unless the criteria for recognition of an internally generated intangible asset are met, usually when a regulatory filing has been made in a major market and approval is considered highly probable. Acquired brands are valued independently as part of the fair value of businesses acquired from third parties where the brand has a value which is substantial and long term and where the brands either are contractual or legal in nature or can be sold separately from the rest of the businesses acquired. Brands are amortised over their estimated useful lives of up to 20 years, except where it is considered that the useful economic life is indefinite. The costs of acquiring and developing computer software for internal use and internet sites for external use are capitalised as intangible fixed assets where the software or site supports a significant business system and the expenditure leads to the creation of a durable asset. ERP systems software is amortised over seven to ten years and other computer software over three to five years. Impairment of non-current assets The carrying values of all non-current assets are reviewed for impairment, either on a stand-alone basis or as part of a larger cash generating unit, when there is an indication that the assets might be impaired. Additionally, goodwill, intangible assets with indefinite useful lives and intangible assets which are not yet available for use are tested for impairment annually. Any provision for impairment is charged to the income statement in the year concerned. Impairments of goodwill are not reversed. Impairment losses on other non-current assets are only reversed if there has been a change in estimates used to determine recoverable amounts and only to the extent that the revised recoverable amounts do not exceed the carrying values that would have existed, net of depreciation or amortisation, had no impairments been recognised. Investments in associates, joint ventures and joint operations Investments in associates and joint ventures are carried in the consolidated balance sheet at the Group’s share of their net assets at date of acquisition and of their post-acquisition retained profits or losses together with any goodwill arising on the acquisition. The Group recognises its rights to assets, liabilities, revenue and expenses of joint operations.
Available-for-sale investments Liquid investments and other investments are classified as available-for-sale investments and are initially recorded at fair value plus transaction costs and then remeasured at subsequent reporting dates to fair value. Unrealised gains and losses on available-for-sale investments are recognised directly in other comprehensive income. Impairments arising from the significant or prolonged decline in fair value of an equity investment reduce the carrying amount of the asset directly and are charged to the income statement. On disposal or impairment of the investments, any gains and losses that have been deferred in other comprehensive income are reclassified to the income statement. Dividends on equity investments are recognised in the income statement when the Group’s right to receive payment is established. Equity investments are recorded in non-current assets unless they are expected to be sold within one year. Purchases and sales of equity investments are accounted for on the trade date and purchases and sales of other available-for-sale investments are accounted for on settlement date. Inventories Inventories are included in the financial statements at the lower of cost (including raw materials, direct labour, other direct costs and related production overheads) and net realisable value. Cost is generally determined on a first in, first out basis. Pre-launch inventory is held as an asset when there is a high probability of regulatory approval for the product. Before that point a provision is made against the carrying value to its recoverable amount; the provision is then reversed at the point when a high probability of regulatory approval is determined. Trade receivables Trade receivables are carried at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any provision available and then to the income statement. Subsequent recoveries of amounts previously provided for are credited to the income statement. Long-term receivables are discounted where the effect is material. Borrowings All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.
Taxation Current tax is provided at the amounts expected to be paid applying tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is provided using rates of tax that have been enacted or substantively enacted by the balance sheet date. Derivative financial instruments and hedging Derivative financial instruments are used to manage exposure to market risks. The principal derivative instruments used by GSK are foreign currency swaps, interest rate swaps, foreign exchange forward contracts and options. The Group does not hold or issue derivative financial instruments for trading or speculative purposes.
Derivative financial instruments are classified as held-for-trading and are carried in the balance sheet at fair value. Derivatives designated as hedging instruments are classified on inception as cash flow hedges, net investment hedges or fair value hedges. Changes in the fair value of derivatives designated as cash flow hedges are recognised in other comprehensive income to the extent that the hedges are effective. Ineffective portions are recognised in profit or loss immediately. Amounts deferred in other comprehensive income are reclassified to the income statement when the hedged item affects profit or loss. Net investment hedges are accounted for in a similar way to cash flow hedges. Changes in the fair value of derivatives designated as fair value hedges are recorded in the income statement, together with the changes in the fair value of the hedged asset or liability. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement. Discounting Where the time value of money is material, balances are discounted to current values using appropriate discount rates. The unwinding of the discounts is recorded in finance income and finance expense. |
Key accounting judgements and estimates |
12 Months Ended |
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Key accounting judgements and estimates | 3. Key accounting judgements and estimates In preparing the financial statements, management is required to make judgements about when or how items should be recognised in the financial statements and estimates and assumptions that affect the amounts of assets, liabilities, revenue and expenses reported in the financial statements. Actual amounts and results could differ from those estimates. The following are considered to be the key accounting judgements and estimates made. Turnover Reported Group turnover for 2017 was £30,186 million (2016 – £27,889 million). Gross turnover is reduced by rebates, discounts, allowances and product returns given or expected to be given, which vary by product arrangements and buying groups. These arrangements with purchasing organisations are dependent upon the submission of claims some time after the initial recognition of the sale. Accruals are made at the time of sale for the estimated rebates, discounts or allowances payable or returns to be made, based on available market information and historical experience. Because the amounts are estimated they may not fully reflect the final outcome, and the amounts are subject to change dependent upon, amongst other things, the types of buying group and product sales mix. The level of accrual for rebates and returns is reviewed and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. Market conditions are evaluated using wholesaler and other third-party analyses, market research data and internally generated information. Future events could cause the assumptions on which the accruals are based to change, which could affect the future results of the Group. Taxation The tax charge for the year was £1,356 million (2016 – £877 million). At December 2017, current tax payable was £995 million (2016 – £1,305 million), non-current corporation tax payable was £411 million (2016 – £nil), current tax recoverable was £258 million (2016 – £226 million), deferred tax liabilities were £1,396 million (2016 – £1,934 million) and deferred tax assets were £3,796 million (2016 – £4,374 million). Deferred tax assets are recognised when the judgement is made that it is probable that future taxable profits will be available against which the temporary differences can be utilised, based on management’s assumptions relating to the amounts and timing of future taxable profits. Factors affecting the tax charge in future years, in particular, US tax reform, are set out in Note 14, ‘Taxation’. A 1% change in the Group’s effective tax rate in 2017 would have changed the Total tax charge for the year by approximately £35 million. The Group has open tax issues with a number of revenue authorities. Where management makes a judgement that an outflow of funds is probable and a reliable estimate of the outcome of the dispute can be made, provision is made for the best estimate of the liability. In estimating any such liability GSK applies a risk-based approach which takes into account, as appropriate, the probability that the Group would be able to obtain compensatory adjustments under international tax treaties. These estimates take into account the specific circumstances of each dispute and relevant external advice, are inherently judgemental and could change substantially over time as each dispute progresses and new facts emerge.
GSK continues to believe that it has made adequate provision for the liabilities likely to arise from open assessments. At 31 December 2017, the Group had recognised provisions of £1,175 million in respect of uncertain tax positions (2016 – £1,892 million). Where open issues exist the ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of negotiations with the relevant tax authorities or, if necessary, litigation proceedings. Legal and other disputes Legal costs for the year were £166 million (2016 – £162 million). At 31 December 2017 provisions for legal and other disputes amounted to £186 million (2016 – £344 million). The Group provides for anticipated settlement costs where management makes a judgement that an outflow of resources is probable and a reliable estimate can be made of the likely outcome of the dispute and legal and other expenses arising from claims against the Group. The estimated provisions take into account the specific circumstances of each dispute and relevant external advice, are inherently judgemental and could change substantially over time as each dispute progresses and new facts emerge. Details of the status and various uncertainties involved in the significant unresolved disputes are set out in Note 45, ‘Legal proceedings’. The company’s Directors, having taken legal advice, have established provisions after taking into account the relevant facts and circumstances of each matter and in accordance with accounting requirements. In respect of product liability claims related to certain products there is sufficient history of claims made and settlements to enable management to make a reliable estimate of the provision required to cover unasserted claims. The Group may become involved in 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, appropriate disclosure about such cases would be provided, but no provision would be made and no contingent liability can be quantified. 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 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 the amount of the provisions reported in the Group’s financial statements by a material amount. Intangible asset impairments At 31 December 2017, intangible assets were £17,562 million (2016 – £18,776 million). Impairment tests on intangible assets are undertaken if events occur which call into question the carrying values of the assets. In addition, intangible assets with indefinite useful lives, or which are not yet available for use, are subject to annual impairment tests. Valuations for impairment tests are based on established market multiples or risk-adjusted future cash flows over the estimated useful life of the asset, where limited, discounted using appropriate discount rates as set out in Note 19, ‘Other intangible assets’. The assumptions relating to future cash flows, estimated useful lives and discount rates are based on business forecasts and are therefore inherently judgemental. Future events could cause the assumptions used in these impairment tests to change with a consequent adverse effect on the future results of the Group.
Contingent consideration and put option liabilities The 2017 income statement charge for contingent consideration and put option liabilities was £2,134 million (2016 – £3,991 million). At 31 December 2017, the liability for contingent consideration amounted to £6,172 million (2016 – £5,896 million). Of this amount, £5,542 million (2016 – £5,304 million) related to the acquisition of the former Shionogi-ViiV Healthcare joint venture in 2012 and £584 million (2016 – £545 million) related to the acquisition of the Vaccines business from Novartis in 2016. Any contingent consideration included in the consideration payable for a business combination is recorded at fair value at the date of acquisition. These fair values are generally based on risk-adjusted future cash flows discounted using appropriate post-tax discount rates. The fair values are reviewed on a regular basis, at least annually, and any changes are reflected in the income statement. See Note 39, ‘Contingent consideration liabilities’. During 2015, the Group granted a put option to Novartis in respect of Novartis’ shareholding in the Consumer Healthcare Joint Venture. In certain circumstances, Novartis has the right to require GSK to acquire its 36.5% shareholding in the Consumer Healthcare Joint Venture at a market-based valuation. This right is exercisable in certain windows from 2018 to 2035 and may be exercised either in respect of Novartis’ entire shareholding or in up to four instalments. GSK has recognised a financial liability of £8,606 million at 31 December 2017 (2016 – £7,420 million). This represents the present value of the redemption value estimated by GSK in the event of full exercise of the right by Novartis and is calculated by applying relevant public company multiples, with no premium or discount, to forecast future profits in accordance with the shareholder agreements. Sensitivity analysis is given in Note 27, ‘Trade and other payables’. Pfizer may request an IPO of ViiV Healthcare at any time and if either GSK does not consent to such IPO or an offering is not completed within nine months, Pfizer could require GSK to acquire its shareholding. A liability for the put option was recognised on the Group’s balance sheet during 2016 at an initial value of £1,070 million. GSK also recognised liabilities for the future preferential dividends anticipated to become payable to Pfizer and Shionogi on the Group’s balance sheet during 2016. The liability for the Pfizer put option, which is derived from an internal valuation of the ViiV Healthcare business, utilising both discounted forecast future cash flow and multiples-based methodologies amounted to £1,304 million at 31 December 2017 (2016 – £1,319 million). Sensitivity analysis is also given in Note 27, ‘Trade and other payables’.
Pensions and other post-employment benefits The costs of providing pensions and other post-employment benefits are assessed on the basis of assumptions selected by management. These assumptions include future earnings and pension increases, discount rates, expected long-term rates of return on assets and mortality rates, and are disclosed in Note 28, ‘Pensions and other post-employment benefits’. Where a surplus on a defined benefit scheme arises, or there is potential for a surplus to arise from committed future contributions, the rights of the Trustees to prevent the Group obtaining a refund of that surplus in the future are considered in determining whether it is necessary to restrict the amount of the surplus that is recognised.
Discount rates are derived from AA rated corporate bond yields except in countries where there is no deep market in corporate bonds where government bond yields are used. A sensitivity analysis is provided in Note 28, ‘Pensions and other post-employment benefits’, but a 0.25% reduction in the discount rate would lead to an increase in the net pension deficit of approximately £800 million and an increase in the annual pension cost of approximately £29 million. The selection of different assumptions could affect the future results of the Group. |
New accounting requirements |
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New accounting requirements | 4. New accounting requirements The following new and amended accounting standards have been issued by the IASB and are likely to affect future Annual Reports. IFRS 15 ‘Revenue from contracts with customers’ was issued in May 2014 and has been implemented by the Group from 1 January 2018. The Standard provides a single, principles-based approach to the recognition of revenue from all contracts with customers. It focuses on the identification of performance obligations in a contract and requires revenue to be recognised when or as those performance obligations are satisfied. The new Standard is not expected to have a material impact on the amount or timing of recognition of reported revenue. In its financial statements for 2018, GSK will adopt IFRS 15 applying the modified retrospective approach, with a cumulative adjustment to decrease equity at 1 January 2018 by approximately £4 million. In accordance with the requirements of the Standard where the modified retrospective approach is adopted, prior year results will not be restated. IFRS 9 ‘Financial instruments’ was issued in its final form in July 2014 and has been implemented by the Group from 1 January 2018. The Standard replaces the majority of IAS 39 and covers the classification, measurement and de-recognition of financial assets and financial liabilities, introduces a new impairment model for financial assets based on expected losses rather than incurred losses and provides a new hedge accounting model.
The new Standard is not expected to have a material impact on reported results. In its financial statements for 2018, GSK will adopt IFRS 9 retrospectively, but with certain permitted exceptions. As a result, prior year results will not be restated, but there will be a cumulative adjustment to decrease equity at 1 January 2018 by approximately £11 million. IFRS 16 ‘Leases’ was issued in January 2016 and will be implemented by the Group from 1 January 2019. The Standard will replace IAS 17 ‘Leases’ and will require lease liabilities and ‘right of use’ assets to be recognised on the balance sheet for almost all leases. This is expected to result in a significant increase in both assets and liabilities recognised. The costs of operating leases currently included within operating costs will be split and the financing element of the charge will be reported within finance expense. Finance lease obligations at 31 December 2017 are set out in Note 31, ‘Net debt’ and the undiscounted commitments under non-cancellable operating leases are set out in Note 41, ‘Commitments’. The Group is assessing the potential impact of IFRS 16. IFRIC 23 ‘Uncertainty over income tax treatments’ was issued in June 2017 and will be implemented by the Group from 1 January 2019. The Interpretation clarifies that if it is considered probable that a tax authority will accept an uncertain tax treatment, the tax charge should be calculated on that basis. If it is not considered probable, the effect of the uncertainty should be estimated and reflected in the tax charge. In assessing the uncertainty, it is assumed that the tax authority will have full knowledge of all information related to the matter. The Group is continuing to assess the potential impact of the new Interpretation. |
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Exchange rates | 5. Exchange rates The Group uses the average of exchange rates prevailing during the period to translate the results and cash flows of overseas subsidiaries, joint ventures and associates into Sterling and period end rates to translate the net assets of those entities. The currencies which most influence these translations and the relevant exchange rates were as follows:
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Segment information |
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Segment information | 6. 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 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. As explained on page 58, from 1 January 2017 only significant legal charges have been excluded from segment profit and reported within other reconciling items between segment profit and operating profit. Segment profits for 2016 and 2015 have been revised onto a comparable basis. Corporate and other unallocated turnover and costs included the results of several Vaccines and Consumer Healthcare products which were held for sale in a number of markets in order to meet anti-trust approval requirements in 2015, together with the costs of corporate functions.
During 2017, the US operations of the Pharmaceuticals and Vaccines businesses made sales to three wholesalers of approximately £2,449 million (2016 – £2,139 million; 2015 – £1,574 million), £3,043 million (2016 – £2,691 million; 2015 – £2,471 million) and £2,356 million (2016 – £2,129 million; 2015 – £1,602 million) respectively, after allocating final-customer discounts to the wholesalers.
Other reconciling items between segment profit and operating profit comprise items not specifically allocated to segment profit. These include impairment and amortisation of intangible assets, major restructuring charges, significant legal charges and expenses on the settlement of litigation and government investigations, disposals of businesses, products and associates, certain other items related to major acquisition and disposal activity and the pre-tax impact of the enactment of the US Tax Cuts and Jobs Act.
The other reconciling items between segment impairment and total impairment included £229 million related to the progressive withdrawal of Tanzeum.
The Pharmaceuticals segment includes the Shionogi-ViiV Healthcare contingent consideration liability of £5,542 million (2016 – £5,304 million) and the Pfizer put option of £1,304 million (2016 – £1,319 million). The Consumer Healthcare segment includes the put option liability of £8,606 million (2016 – £7,420 million).
Geographical information The UK is regarded as being the Group’s country of domicile.
Non-current assets by location excludes amounts relating to other investments, deferred tax assets, derivative financial instruments, pension assets, amounts receivable under insurance contracts and certain other non-current receivables. |
Other operating income/(expense) |
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Other operating income/(expense) | 7. Other operating income/(expense)
Disposal of businesses and assets in 2017 included a profit of £250 million on the disposal of the anaesthesia business to Aspen. Disposals in 2016 included milestone income of £152 million in relation to the divestment of ofatumumab and a number of other smaller divestments and in 2015 included the disposal of the Oncology business to Novartis for £9,228 million and an initial £200 million for the divestment of ofatumumab. Fair value remeasurements on contingent consideration recognised in business combinations included £909 million related to the acquisition of the former Shionogi-ViiV Healthcare joint venture and £53 million payable to Novartis related to the Vaccines acquisition. The fair value remeasurements on contingent consideration, the remeasurement of ViiV Healthcare put option liabilities and preferential dividends and the remeasurement of Consumer Healthcare put option liability include the additional charge arising from US tax reform of £666 million. |
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Operating profit | 8. Operating profit
The reversals of prior year write-downs of inventories principally arise from the reassessment of usage or demand expectations prior to inventory expiration. Net foreign exchange losses include a net loss of £109 million (2016 – £nil; 2015 – £nil) of exchange arising on the reclassification of exchange on liquidation or disposal of overseas subsidiaries. Included within operating profit are major restructuring charges of £1,056 million (2016 – £970 million; 2015 – £1,891 million), see Note 10, ‘Major restructuring costs’.
The other assurance services provided by the auditor relate to agreed upon procedures and other assurance services outside of statutory audit requirements. All other services provided by the auditor primarily related to advisory services for the year ended 31 December 2017. In addition to the above, fees paid in respect of the GSK pension schemes were:
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Employee costs |
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Employee costs | 9. Employee costs
The increase in wages and salaries included the impact of movements in exchange rates. The Group provides benefits to employees, commensurate with local practice in individual countries, including, in some markets, healthcare insurance, subsidised car schemes and personal life assurance. The cost of share-based incentive plans is analysed as follows:
The average monthly number of persons employed by the Group (including Directors) during the year was:
The average monthly number of Group employees excludes temporary and contract staff. The numbers of Group employees at the end of each financial year are given in the financial record on page 250. The monthly average number of persons employed by GlaxoSmithKline plc in 2017 was nil (2016 – nil). The compensation of the Directors and Senior Management (members of the CET) in aggregate, was as follows:
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Major restructuring costs | 10. Major restructuring costs Major restructuring costs charged in arriving at operating profit include restructuring costs arising under the Major Change programme initiated in 2013, under the Pharmaceuticals Restructuring Programme announced in October 2014, following the Novartis transaction completed in 2015 and the CEO Strategic Initiatives Programme announced in July 2017. The total restructuring costs of £1,056 million in 2017 were incurred in the following areas:
The costs charged to operating profit under these programmes were as follows:
Provision reversals of £43 million (2016 – £140 million; 2015 – £44 million) reflected the release of legacy support function and Novartis integration provisions. Asset impairments of £278 million (2016 – £158 million; 2015 – £419 million) and other non-cash charges totalling £247 million (2016 – £108 million; 2015 – £51 million) are non-cash items, principally fixed asset write downs across support functions, manufacturing and research facilities and accelerated depreciation where asset lives in R&D and manufacturing have been shortened as a result of the major restructuring programme. All other charges have been or will be settled in cash and include the termination of leases, site closure costs, consultancy and project management fees. |
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Finance income | 11. Finance income
All derivatives accounted for at fair value through profit or loss other than designated and effective hedging instruments (see Note 42, ‘Financial instruments and related disclosures’) are classified as held-for-trading financial instruments under IAS 39. |
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Finance expense | 12. Finance expense
All derivatives accounted for at fair value through profit or loss, other than designated and effective hedging instruments (see Note 42, ‘Financial instruments and related disclosures’), are classified as held-for-trading financial instruments under IAS 39. Interest expense arising on derivatives at fair value through profit or loss relates to swap interest expense. Other finance expense includes a £24 million credit for interest relating to income taxes (see Note 1, ‘Presentation of the financial statements’). The amounts for 2016 and 2015 were not material and so comparatives have not been restated. |
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Associates and joint ventures | 13. Associates and joint ventures The Group’s share of after tax profits and losses of associates and joint ventures is set out below:
At 31 December 2017, the Group held one significant associate, Innoviva, Inc. Summarised income statement information in respect of Innoviva is set out below for the periods in which the Group accounted for its investment in Innoviva as an associate. The Group’s 2017 share of after tax profits of associates and other comprehensive income includes a profit of £18 million and other comprehensive income of £nil in respect of Innoviva.
The results of Innoviva included in the summarised income statement information above represent the estimated earnings of Innoviva in the relevant periods. Innoviva’s turnover is from royalty income from GSK in relation to Relvar/Breo Ellipta, Anoro Ellipta and Trelegy Ellipta sales. Aggregated financial information in respect of GSK’s share of other associated undertakings and joint ventures is set out below:
The Group’s sales to associates and joint ventures were £41 million in 2017 (2016 – £43 million; 2015 – £41 million). |
Taxation |
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Taxation | 14. Taxation The Group’s tax charge is the sum of the total current and deferred tax expense.
In 2017, GSK made payments of £212 million in UK corporation tax to HMRC. These amounts are for UK corporation tax only, and do not include the various other business taxes borne in the UK by GSK each year. The deferred tax credit in 2017 reflected the revaluation of existing deferred tax liabilities to reflect a lower Swiss tax rate applicable following Swiss tax reform, and an increase in deferred tax assets related to intra-Group profit on inventory. The impact of these items was partly offset by the revaluation of existing deferred tax assets to reflect the lower headline US tax rate following enactment of US tax reform. In comparison to 2017, the 2016 and 2015 net deferred tax credits were impacted to a greater extent by remeasurements of the contingent consideration in relation to the former Shionogi-ViiV Healthcare joint venture. In 2015, the credit also included the unwind of deferred tax liabilities on the disposal of the Group’s Oncology business to Novartis. The following table reconciles the tax charge calculated at the UK statutory rate on the Group profit before tax with the actual tax charge for the year.
GSK has a substantial business presence in many countries around the globe. The impact of differences in overseas taxation rates arose from profits being earned in countries with tax rates higher than the UK statutory rate, the most significant of which in 2017 were the US, Belgium, and India. The adverse impact was partly offset by the increased benefit of intellectual property incentives such as the UK Patent Box and Belgian Patent Income Deduction regimes. Such regimes provide a reduced rate of corporate income tax on profits earned from qualifying patents. The Group’s 2017 tax rate of 38.5% has been influenced by the impact of US and Swiss tax reforms, together with transaction-related charges arising on the Group’s put option liabilities in relation to ViiV Healthcare and the Consumer Healthcare Joint Venture and the reassessment of estimates of uncertain tax positions following the settlement of a number of open issues with tax authorities in various jurisdictions. Included within Other permanent differences is a £34 million charge that arises following the enactment of Belgium tax reform during 2017. Future tax charges, and therefore the Group’s effective tax rate, may be affected by factors such as acquisitions, disposals, restructurings, the location of research and development activity, tax regime reforms and resolution of open matters as we continue to bring our tax affairs up to date around the world.
All of the above items have been charged to the statement of comprehensive income except for tax on share based payments. Following enactment of US and Belgian tax reform, the Group has recognised deferred tax charges of £27 million and £25 million respectively to equity and the statement of comprehensive income. Both amounts are included within the £222 million net deferred tax charge presented above. International tax reform The Group’s tax charge has been influenced by the impact of international tax reform enacted during the year. The US Tax Cuts and Jobs Act (‘the Act’) is expected to have a positive impact on the future after tax earnings of GSK’s US businesses. However, enactment of the new law in 2017 has resulted in a number of non-recurring charges. In addition, enactment of Swiss tax reform during 2017 resulted in a non-recurring tax credit arising from the revaluation of deferred tax liabilities relating to certain Consumer Healthcare brands, acquired from Novartis in 2015, to reflect a reduction in the headline Swiss tax rate. The charges associated with US tax reform are based on the information currently available. As further guidance from the US Treasury on implementation of the Act becomes available, particularly with regard to the repatriation tax provisions, the assumptions underlying these estimates could change. This could result in adjustments to the charges taken that could have a material impact on the results of the Group. The impact of tax reform on profits attributable to shareholders in 2017 is set out below.
The valuations of the HIV and Consumer Healthcare businesses have increased due to lower US tax rates. This has resulted in an increase in the related liabilities for contingent consideration and the put options and hence an additional operating cost of £666 million. The current tax charge in respect of US tax reform relates primarily to the introduction of a repatriation tax on the accumulated reserves of non-US subsidiaries of US entities in the Group, the cash impact of which will be spread over eight years from 2018 onwards. The deferred tax charge relates primarily to the revaluation of existing balance sheet tax assets held against future liabilities, such as pensions. The tax charge associated with US tax reform was partly offset by an allocation to non-controlling interests amounting to £114 million, as many of the adjustments related to ViiV Healthcare and the Consumer Healthcare Joint Venture. The tax credit associated with Swiss tax reform was similarly offset with a £176 million charge due to an allocation to non-controlling interests related to the Consumer Healthcare Joint Venture. The impact on the tax charge arising from US tax reform was as follows:
The Group also incurred a charge of £34 million following the enactment of Belgian tax reform during 2017, predominantly relating to the revaluation of existing deferred tax assets. Continued focus on tax reform is expected in 2018 and future years driven by the OECD’s Base Erosion and Profit Shifting (“BEPS”) project and European Commission initiatives including fiscal state aid investigations. Together with domestic initiatives around the world these may result in significant changes to established tax principles and an increase in tax authority disputes. In turn, this could adversely affect GSK’s effective tax rate or could result in higher cash tax liabilities.
Issues relating to taxation The integrated nature of the Group’s worldwide operations involves significant investment in research and strategic manufacture at a limited number of locations, with consequential cross-border supply routes into numerous end-markets. In line with current OECD guidelines the Group base our transfer pricing policy on the ‘arm’s length’ principle. However, different tax authorities may seek to attribute further profit to activities being undertaken in their jurisdiction, potentially resulting in double taxation. The Group also has open items in several jurisdictions concerning such matters as the deductibility of particular expenses and the tax treatment of certain business transactions. GSK applies a risk-based approach to determine the transactions most likely to be subject to challenge and the probability that the Group would be able to obtain compensatory adjustments under international tax treaties. The calculation of the Group’s total tax charge therefore necessarily involves a degree of estimation and judgment in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. At 31 December 2017 the Group had recognised provisions of £1,175 million in respect of such uncertain tax positions (2016 – £1,892 million). The decrease in recognised provisions during 2017 was driven by the reassessment of estimates and the utilisation of provisions for uncertain tax positions following the settlement of a number of open issues with tax authorities in various jurisdictions. The transfer of accrued interest payable on tax balances to ‘Other payables’ and the foreign exchange impact of revaluing overseas exposures also contributed to the reduction in recognised provisions. Whilst the ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of agreements with the relevant tax authorities, or litigation where appropriate, the Group continues to believe that it has made appropriate provision for periods which are open and not yet agreed by the tax authorities. We do not currently anticipate any material changes to the amounts provided for transfer pricing or tax contingencies during the next 12 months. A provision for deferred tax liabilities of £209 million (2016 – £205 million) has been made in respect of withholding taxation that would arise on the distribution of profits by certain overseas subsidiaries. Whilst the aggregate amount of unremitted profits at the balance sheet date was approximately £17 billion (2016 – £18 billion), the majority of these unremitted profits would not be subject to tax (including withholding tax) on repatriation, as UK legislation relating to company distributions provides for exemption from tax for most overseas profits, subject to certain exceptions. In prior years, a temporary difference arose on the accumulated reserves of non-US subsidiaries of US entities in the Group. As the timing of reversal of this temporary difference could be controlled and was not considered probable in the foreseeable future, deferred tax had not been provided. However, as a result of the US Tax Cuts and Jobs Act, the temporary difference reversed and the Group recorded a one-off repatriation tax charge of £348 million. Accordingly, the unremitted profits on which deferred tax has not been provided is now £nil (2016 – £1.7 billion). Movement in deferred tax assets and liabilities
The net deferred tax credit of £247 million to the income statement included a £483 million credit associated with Swiss tax reform and a £569 million credit in relation to the origination and reversal of temporary differences. These credits were partly offset by a £805 million charge in relation to US tax reform. The net credit to the income statement of £247 million included a £16 million charge related to R&D incentives recognised within Operating profit (and not the taxation charge) in the income statement. Deferred tax liabilities provided in relation to intangible assets predominately relate to temporary differences arising on assets and liabilities acquired as part of historic business combinations. The Group continues to recognise deferred tax assets on future obligations in respect of contingent consideration amounts payable to minority shareholders. These payments are tax deductible at the point in time at which payment is made. A deferred tax asset is recognised on intra-Group profits arising on inter-company inventory which are eliminated within the consolidated financial statements. As intra-Group profits are not eliminated from the individual entities’ tax returns a temporary difference arises that will reverse at the point in time inventory is sold externally. The deferred tax asset recognised on tax losses of £261 million related to trading losses. In 2016, £173 million related to trading losses and £54 million related to capital losses. Other net temporary differences included accrued expenses for which a tax deduction is only available on a paid basis, such as rebates. Deferred tax assets and liabilities are recognised on the balance sheet as follows:
Deferred tax assets are recognised on US foreign tax credits only where it is possible that future taxable profits will be available. The gross amount of foreign tax credits on which deferred tax has not been recognised was £721 million at 31 December 2017. Deferred tax assets are recognised where it is probable that future taxable profit will be available to utilise losses. Unrecognised tax losses are as follows:
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Earnings per share | 15. Earnings per share
Basic earnings per share has been calculated by dividing the profit attributable to shareholders by the weighted average number of shares in issue during the period after deducting shares held by the ESOP Trusts and Treasury shares. The trustees have waived their rights to dividends on the shares held by the ESOP Trusts. Diluted earnings per share has been calculated after adjusting the weighted average number of shares used in the basic calculation to assume the conversion of all potentially dilutive shares. A potentially dilutive share forms part of the employee share schemes where its exercise price is below the average market price of GSK shares during the period and any performance conditions attaching to the scheme have been met at the balance sheet date. The numbers of shares used in calculating basic and diluted earnings per share are reconciled below.
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Dividends |
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Dividends | 16. Dividends
Under IFRS interim dividends are only recognised in the financial statements when paid and not when declared. GSK normally pays a dividend two quarters after the quarter to which it relates and one quarter after it is declared. The 2017 financial statements recognise those dividends paid in 2017, namely the third and fourth interim dividends for 2016, and the first and second interim dividends for 2017. The amounts recognised in each year were as follows:
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Property, plant and equipment | 17. Property, plant and equipment
The weighted average interest rate for capitalised borrowing costs in the year was 4% (2016 – 3.8%). Disposals and write-offs in the year include a number of assets with nil net book value that are no longer in use in the business.
The net book value at 31 December 2017 of the Group’s land and buildings comprised freehold properties £3,896 million (2016 – £3,887 million), properties with leases of 50 years or more £338 million (2016 – £294 million) and properties with leases of less than 50 years £36 million (2016 – £42 million). Included in land and buildings at 31 December 2017 were leased assets with a cost of £630 million (2016 – £590 million), accumulated depreciation of £255 million (2016 – £253 million), impairment of £nil (2016 – £1 million) and a net book value of £375 million (2016 – £336 million). Included in plant, equipment and vehicles at 31 December 2017 were leased assets with a cost of £18 million (2016 – £44 million), accumulated depreciation of £4 million (2016 – £15 million), impairment of £1 million (2016 – £nil) and a net book value of £13 million (2016 – £29 million). Some lease agreements include renewal or purchase options or escalation clauses. The impairment losses principally arose from decisions to rationalise facilities and are calculated based on either fair value less costs of disposal or value in use. The fair value less costs of disposal valuation methodology uses significant inputs which are not based on observable market data, and therefore this valuation technique is classified as level 3 of the fair value hierarchy. These calculations determine the net present value of the projected risk-adjusted, post-tax cash flows of the relevant asset or cash generating unit, applying a discount rate of the Group post-tax weighted average cost of capital (WACC) of 7%, adjusted where appropriate for relevant specific risks. For value in use calculations, where an impairment is indicated and a pre-tax cash flow calculation is expected to give a materially different result, the test would be reperformed using pre-tax cash flows and a pre-tax discount rate. The Group WACC is equivalent to a pre-tax discount rate of approximately 9%. The net impairment losses have been charged to cost of sales £198 million (2016 – £45 million), R&D £93 million (2016 – £15 million) and SG&A £36 million (2016 – £120 million), and included £278 million (2016 – £151 million) arising from the major restructuring programmes. Reversals of impairment arose from subsequent reviews of the impaired assets where the conditions which gave rise to the original impairments were deemed no longer to apply. All of the reversals have been credited to cost of sales. The carrying value at 31 December 2017 of assets for which impairments have been charged or reversed in the year was £33 million (2016 – £171 million). During 2017, £38 million (2016 – £139 million) of computer software was reclassified from assets in construction to intangible assets on becoming ready for use. |
Goodwill |
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Goodwill | 18. Goodwill
The recoverable amounts of the cash generating units are assessed using a fair value less costs of disposal model. Fair value less costs of disposal is calculated using a discounted cash flow approach, with a post-tax discount rate applied to the projected risk-adjusted post-tax cash flows and terminal value. The discount rate used is based on the Group WACC of 7%, as most cash generating units have integrated operations across large parts of the Group. The discount rate is adjusted where appropriate for specific country or currency risks. The valuation methodology uses significant inputs which are not based on observable market data, therefore this valuation technique is classified as level 3 in the fair value hierarchy. Details relating to the discounted cash flow models used in the impairment tests of the Pharmaceuticals, Vaccines and Consumer Healthcare cash generating units are as follows:
The terminal growth rates do not exceed the long-term projected growth rates for the relevant markets, reflect the impact of future generic competition and take account of new product launches. In each case the valuations indicated sufficient headroom such that a reasonably possible change to key assumptions is unlikely to result in an impairment of the related goodwill. Goodwill is monitored at the segmental level. The Pharmaceuticals cash generating unit comprises a collection of smaller cash generating units including assets with indefinite lives with a carrying value of £228 million (2016 – £211 million). The Consumer Healthcare cash generating unit also comprises a collection of smaller cash generating units including brands with indefinite lives with a carrying value of £8.51 billion (2016 – £9.03 billion). Details of indefinite life brands are given in Note 19, ‘Other intangible assets’. |
Other intangible assets |
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Other intangible assets | 19. Other intangible assets
The weighted average interest rate for capitalised borrowing costs in the year was 4% (2016 – 3.8%). The net book value of computer software included £669 million (2016 – £620 million) of internally generated costs. The charge for impairments in the year included £229 million related to the progressive withdrawal of the pharmaceutical product, Tanzeum, which was fully impaired. The carrying value at 31 December 2017 of intangible assets, for which impairments have been charged or reversed in the year, following those impairments or reversals, was £300 million (2016 – £116 million). The patent expiry dates of the Group’s most significant assets, where relevant, are set out on pages 254 and 255.
Amortisation and impairment losses, net of reversals, have been charged in the income statement as follows:
Licences, patents, etc. includes a large number of acquired licences, patents, know-how agreements and marketing rights, which are either marketed or in use, or still in development. Note 38, ‘Acquisitions and disposals’ gives details of additions through business combinations in the year. The book values of the largest individual items are as follows:
The Meningitis portfolio includes Menveo, Bexsero and Men ABCWY. Indefinite life brands comprise a portfolio of Consumer Healthcare products primarily acquired with the acquisitions of Sterling Winthrop, Inc. in 1994, Block Drug Company, Inc. in 2001, CNS, Inc. in 2006 and the Novartis Consumer Healthcare business in 2015, together with a number of pharmaceutical brands from the acquisition of Stiefel Laboratories, Inc. in 2009. The book values of the major brands are as follows:
Each of these brands is considered to have an indefinite life, given the strength and durability of the brand and the level of marketing support. The brands are in relatively similar stable and profitable market sectors, with similar risk profiles, and their size, diversification and market shares mean that the risk of market-related factors causing a reduction in the lives of the brands is considered to be relatively low. The Group is not aware of any material legal, regulatory, contractual, competitive, economic or other factors which could limit their useful lives. Accordingly, they are not amortised. Each brand is tested annually for impairment and other amortised intangible assets are tested when indicators of impairment arise. This testing applies a fair value less costs of disposal methodology, generally using post-tax cash flow forecasts with a terminal value calculation and a discount rate equal to the Group post-tax WACC of 7%, adjusted where appropriate for specific country and currency risks. This valuation methodology uses significant inputs which are not based on observable market data, and therefore this valuation technique is classified as level 3 of the fair value hierarchy. The main assumptions include future sales price and volume growth, product contribution, the future expenditure required to maintain the product’s marketability and registration in the relevant jurisdictions and exchange rates. These assumptions are based on past experience and are reviewed as part of management’s budgeting and strategic planning cycle for changes in market conditions and sales erosion through competition. The terminal growth rates applied of between nil% and 5% are management’s estimates of future long-term average growth rates of the relevant markets. In each case the valuations indicate sufficient headroom such that a reasonably possible change to key assumptions is unlikely to result in an impairment of these intangible assets. |
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Investments in associates and joint ventures | 20. Investments in associates and joint ventures
The Group held one significant associate at 31 December 2017, Innoviva, Inc. At 31 December 2017, the Group owned 32 million shares or 31.4% of Innoviva, which is a biopharmaceutical company listed on NASDAQ. Innoviva partnered with GSK in the development of the long acting beta agonist vilanterol and currently receives royalty income from sales of products that contain this component, namely Relvar/Breo Ellipta, Anoro Ellipta and Trelegy Ellipta. The remaining 85% of the economic interest in these royalties will be due to Theravance Biopharma Inc., a company spun out of Innoviva in 2014, in which the Group holds 17.8% of the common stock. The investment in Innoviva had a market value of £336 million at 31 December 2017 (2016 – £278 million). In 2017, the Group divested its shareholdings in two associates, see Note 38, ‘Acquisitions and disposals’. Summarised balance sheet information, based on results information, in respect of Innoviva is set out below:
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Other investments | 21. Other investments
Other investments comprise non-current equity investments which are available-for-sale investments recorded at fair value at each balance sheet date. For investments traded in an active market, the fair value is determined by reference to the relevant stock exchange quoted bid price. For other investments, the fair value is estimated by management with reference to relevant available information, including the current market value of similar instruments and discounted cash flows of the underlying net assets. Other investments include listed investments of £535 million (2016 – £580 million). The most significant of the investments held at 31 December 2017 was in Theravance Biopharma, Inc. in which the Group holds 17.8% of the common stock. This investment had a fair value at 31 December 2017 of £199 million (2016 – £248 million). The other investments include equity stakes in companies with which GSK has research collaborations and in companies which provide access to biotechnology developments of potential interest. On disposal of investments, fair value movements are reclassified from equity to the income statement based on average cost for shares acquired at different times. The impairment losses recorded above have been recognised in the income statement for the year within Other operating income, together with amounts reclassified from the fair value reserve on recognition of the impairments. These impairments initially result from prolonged or significant declines in the fair value of the equity investments below acquisition cost, subsequent to which any further declines in fair value are immediately taken to the income statement. The carrying value at 31 December of Other investments which have been impaired is as follows:
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Other non-current assets | 22. Other non-current assets
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Inventories | 23. Inventories
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Trade and other receivables | 24. Trade and other receivables
Trade receivables included £11 million (2016 – £9 million) due from associates and joint ventures. Other receivables included £7 million (2016 – £7 million) due from associates and joint ventures.
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Cash and cash equivalents | 25. Cash and cash equivalents
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Assets held for sale |
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Assets held for sale | 26. Assets held for sale
Included within Assets held for sale is £31 million of intangible impairments, £10 million PP&E impairments, £21 million intangible impairment reversals and £15 million PP&E impairment reversals. Non-current assets and disposal groups are transferred to assets held for sale when it is expected that their carrying amounts will be recovered principally through disposal and a sale is considered highly probable. They are held at the lower of carrying amount and fair value less costs to sell. Included within Assets held for sale are assets which were written down to fair value less costs to sell of £63 million (2016 – £79 million). The valuation methodology uses significant inputs which are not based on observable market data, therefore, this valuation is classified as level 3 in the fair value hierarchy. |
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Trade and other payables | 27. Trade and other payables
Trade and other payables included £53 million (2016 – £36 million) due to associates and joint ventures. Customer return and rebate accruals are provided for by the Group at the point of sale in respect of the estimated rebates, discounts or allowances payable to customers, and included £2,837 million (2016 – £2,218 million) in respect of US Pharmaceuticals and Vaccines, as more fully described in the Group financial review on page 76. Accruals are made at the time of sale but the actual amounts paid are based on claims made some time after the initial recognition of the sale. As the amounts are estimated, they may not fully reflect the final outcome and are subject to change dependent upon, amongst other things, the types of buying group and product sales mix. The level of accrual is reviewed and adjusted quarterly in light of historical experience of actual rebates, discounts or allowances given and returns made and any changes in arrangements. Future events could cause the assumptions on which the accruals are based to change, which could affect the future results of the Group. The Consumer Healthcare put option liability relates to the ability of Novartis to put its shares in the Consumer Healthcare Joint Venture to GSK at certain points in the future. As this option became exercisable from 2 March 2018, with payment likely to be due several months after exercise, it has been classified within current liabilities. The liability is recorded at the present value of the estimated redemption value, applying a discount rate of 7%, calculated by applying an average of relevant public company multiples approach with no premium or discount, based on the forecast profits and earnings of the Consumer Healthcare Joint Venture, which forms part of GSK’s Consumer Healthcare segment. The remeasurement charge in the year was £1,186 million, including the impact of US tax reform (2016 – £1,133 million), see Note 7, ‘Other operating income/(expense)’. The table below shows on an indicative basis the income statement and balance sheet sensitivity to reasonably possible changes in key assumptions.
Pfizer’s put option over its shareholding in ViiV Healthcare was recognised during 2016 and is currently exercisable. The table below shows on an indicative basis the income statement and balance sheet sensitivity of the Pfizer put option to reasonably possible changes in key assumptions.
An explanation of the accounting for ViiV Healthcare is set out on page 59. |
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Pensions and other post-employment benefits | 28. Pensions and other post-employment benefits
The costs of the defined benefit pension and post-retirement healthcare schemes are charged in the income statement as follows:
GSK entities operate pension arrangements which cover the Group’s material obligations to provide pensions to retired employees. These arrangements have been developed in accordance with local practices in the countries concerned. Pension benefits can be provided by state schemes; by defined contribution schemes, whereby retirement benefits are determined by the value of funds arising from contributions paid in respect of each employee; or by defined benefit schemes, whereby retirement benefits are based on employee pensionable remuneration and length of service. Pension costs of defined benefit schemes for accounting purposes have been calculated using the projected unit method. In certain countries pension benefits are provided on an unfunded basis, some administered by trustee companies. Formal, independent, actuarial valuations of the Group’s main plans are undertaken regularly, normally at least every three years. Actuarial movements in the year are recognised through the statement of comprehensive income. Discount rates are derived from AA rated corporate bond yields except in countries where there is no deep market in corporate bonds where government bond yields are used. Discount rates are selected to reflect the term of the expected benefit payments. Projected inflation rate and pension increases are long-term predictions based on the yield gap between long-term index-linked and fixed interest Gilts. In the UK, mortality rates are determined by adjusting the SAPS S2 standard mortality tables to reflect recent scheme experience. These rates are then projected to reflect improvements in life expectancy in line with the CMI 2016 projections with a long-term rate of improvement of 1.25% per year for both males and females. In the US, mortality rates are calculated using the RP2014 white collar table adjusted to reflect recent experience. These rates are projected using MP-2017 to allow for future improvements in life expectancy.
The average life expectancy assumed now for an individual at the age of 60 and projected to apply in 2037 for an individual then at the age of 60 is as follows:
The assets of funded schemes are generally held in separately administered trusts, either as specific assets or as a proportion of a general fund, or are insurance contracts. Assets are invested in different classes in order to maintain a balance between risk and return. Investments are diversified to limit the financial effect of the failure of any individual investment. The Group reviewed the investment strategy of the UK plans in 2011 and the asset allocation for the UK plans has been adjusted to approximately 55% return seeking assets and 45% liability matching assets. In 2013, the target asset allocation of the US plans was also updated to 55% return seeking assets and 45% liability matching assets. The Pension Plans are exposed to risk that arises because the estimated market value of the Plans’ assets might decline, the investment returns might reduce, or the estimated value of the Plans’ liabilities might increase. In line with the agreed mix of return seeking assets to generate future returns and liability matching assets to better match future pension obligations, the Group has defined an overall long-term investment strategy for the Plans, with investments across a broad range of assets. The main market risks within the asset and hedging portfolio are against credit risk, interest rates, long-term inflation, equities, property, and bank counterparty risk. The Plan liabilities are a series of future cash flows with relatively long duration. On an IAS 19R basis, these cash flows are sensitive to changes in the expected long-term inflation rate and the discount rate (AA corporate bond yield curve) where an increase in long-term inflation corresponds with an increase in the liabilities, and an increase in the discount rate corresponds with a decrease in the liabilities. In the UK the defined benefit pension schemes operated for the benefit of former Glaxo Wellcome employees and former SmithKline Beecham employees remain separate. These schemes were closed to new entrants in 2001 and subsequent UK employees are entitled to join a defined contribution scheme. In the US the former Glaxo Wellcome and SmithKline Beecham defined benefit schemes were merged during 2001. In addition, the Group operates a number of post-retirement healthcare schemes, the principal one of which is in the US. The Group has applied the following financial assumptions in assessing the defined benefit liabilities:
The amounts recorded in the income statement and statement of comprehensive income for the three years ended 31 December 2017 in relation to the defined benefit pension and post-retirement healthcare schemes were as follows:
The amounts included within past service costs include £37 million (2016 – £52 million; 2015 – £25 million) of augmentation costs of which £18 million is arising from major restructuring programmes (see Note 29, ‘Other provisions’).
A summarised balance sheet presentation of the Group defined benefit pension schemes and other post-retirement benefits is set out in the table below:
The fair values of the assets and liabilities of the UK and US defined benefit pension schemes, together with aggregated data for other defined benefit pension schemes in the Group are as follows:
The multi-asset funds comprise investments in pooled investment vehicles that are invested across a range of asset classes, increasing diversification within the growth portfolio. The index-linked gilts held as part of the UK repo programme are included in government bonds. The related loan is included within ‘Other assets’ at a value of £(773) million (2016 – £(1,698) million; 2015 – £(2,215) million).
During 2017, the Group made special funding contributions to the UK pension schemes totalling £136 million (2016 – £191 million; 2015 – £85 million) and £78 million (2016 – £nil; 2015 – £111 million) to the US scheme. In 2016, GSK reached an agreement with the trustees of the UK pension schemes to make additional contributions to eliminate the pension deficit identified at the 31 December 2014 actuarial funding valuation. Based on the funding agreements following the 2014 valuation, the additional contributions to eliminate the pension deficit are expected to be £123 million in 2018. The contributions were based on a government bond yield curve approach to selecting the discount rate; the rate chosen included an allowance for expected investment returns which reflected the asset mix of the schemes. Employer contributions for 2018, including special funding contributions, are estimated to be approximately £360 million in respect of defined benefit pension schemes and £90 million in respect of post-retirement benefits.
The defined benefit pension obligation is analysed as follows:
The liability for the US post-retirement healthcare scheme has been assessed using the same assumptions as for the US pension scheme, together with the assumption for future medical inflation of 6.75% (2016 – 7%), grading down to 5.0% in 2025 and thereafter. At 31 December 2017, the US post-retirement healthcare scheme obligation was £1,254 million (2016 – £1,463 million; 2015 – £1,208 million). Post-retirement benefits are unfunded.
The movement in the net defined benefit liability is as follows:
The defined benefit pension obligation analysed by membership category is as follows:
Sensitivity analysis Effect of changes in assumptions used on the benefit obligations and on the 2018 annual defined benefit pension and post retirement costs.
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Other provisions | 29. Other provisions
Legal and other disputes The Group is involved in a substantial number of legal and other disputes, including notification of possible claims, as set out in Note 45 ‘Legal proceedings’. Provisions for legal and other disputes include amounts relating to product liability, anti-trust, government investigations, contract terminations, self insurance and environmental clean-up. The charge for the year of £166 million (net of reversals and estimated insurance recoveries) primarily related to provisions for product liability cases regarding Paxil and other products, commercial disputes and various other government investigations. The discount on the provisions increased by £2 million in 2017 (2016 – increased by £1 million). The discount was calculated using risk-adjusted projected cash flows and risk-free rates of return. In respect of product liability claims related to certain products, there is sufficient history of claims made and settlements to enable management to make a reliable estimate of the provision required to cover unasserted claims. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of litigation proceedings, investigations and possible settlement negotiations. It is in the nature of the Group’s business that a number of these matters may be the subject of negotiation and litigation over many years. Litigation proceedings, including the various appeal procedures, often take many years to reach resolution, and out-of-court settlement discussions can also often be protracted. The Group is in potential settlement discussions in a number of the disputes for which amounts have been provided and, based on its current assessment of the progress of these disputes, estimates that £138 million of the amount provided at 31 December 2017 will be settled within one year. At 31 December 2017, it was expected that £nil million (2016 – £nil) of the provision made for legal and other disputes will be reimbursed by third party insurers. For a discussion of legal issues, see Note 45, ‘Legal proceedings’. Major restructuring programmes In 2013, the Group initiated the Major Change restructuring programme focused on opportunities to simplify supply chain processes, build the Group’s capabilities in manufacturing and R&D and restructure the European Pharmaceuticals business.
The Pharmaceuticals restructuring programme, announced in October 2014, has been focused on rescaling commercial operations, global support functions and certain R&D/manufacturing operations across Pharmaceuticals. In addition, an integration restructuring programme was initiated in 2015, following the completion of the Novartis transaction, and the CEO Strategic Initiatives Programme was announced in July 2017. All of these restructuring and integration programmes are now reported together as one combined major restructuring programme. Provisions for staff severance payments are made when management has made a formal decision to eliminate certain positions and this has been communicated to the groups of employees affected and appropriate consultation procedures completed, where appropriate. No provision is made for staff severance payments that are made immediately. Pension augmentations arising from staff redundancies of £18 million (2016 – £23 million) have been charged during the year and then transferred to the pension obligations provision as shown in Note 28, ‘Pensions and other post-employment benefits’. Asset write-downs have been recognised as impairments of property, plant and equipment in Note 17, ‘Property, plant and equipment’. The majority of the amounts provided are expected to be utilised in the next two years. Employee related provisions Employee related provisions include obligations for certain medical benefits to disabled employees and their spouses in the US. At 31 December 2017, the provision for these benefits amounted to £108 million (2016 – £135 million). Other employee benefits reflect a variety of provisions for severance costs, jubilee awards and other long-service benefits. Other provisions Included in other provisions are insurance provisions of £6 million (2016 – £40 million), onerous property lease provisions of £38 million (2016 – £39 million) and a number of other provisions including vehicle insurance and regulatory matters. |
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Other non-current liabilities | 30. Other non-current liabilities
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Net debt | 31. Net debt
Current assets Liquid investments are classified as available-for-sale investments. At 31 December 2017, they included US Treasury Notes and other government bonds. The effective interest rate on liquid investments at 31 December 2017 was approximately 1.0% (2016 – approximately 0.7%). Liquid investment balances at 31 December 2017 earning interest at floating rates amount to £78 million (2016 – £89 million). Liquid investment balances at 31 December 2017 earning interest at fixed rates amount to £nil million (2016 – £nil). The effective interest rate on cash and cash equivalents at 31 December 2017 was approximately 1.3% (2016 – approximately 1.3%). Cash and cash equivalents at 31 December 2017 earning interest at floating and fixed rates amount to £3,832 million and £1 million respectively (2016 – £4,584 million and £3 million). GSK’s policy regarding the credit quality of cash and cash equivalents is referred to in Note 42, ‘Financial instruments and related disclosures’. Short-term borrowings GSK has a $10 billion (£7.4 billion) US commercial paper programme, of which $0.7 billion (£0.5 billion) was in issue at 31 December 2017 (2016 – $1.4 billion (£1.1 billion)). GSK also has £1.9 billion five year committed facilities and $2.5 billion (£1.9 billion) of 364 day committed facilities. The five-year committed facilities were agreed in September 2015 and were extended by one year to 2021 in September 2016. The 364 day committed facilities were agreed in August 2017. Liquid investments, cash and cash equivalents were as shown in the table on page 199. The weighted average interest rate on commercial paper borrowings at 31 December 2017 was 1.53% (2016 – 0.88%). The weighted average interest rate on current bank loans and overdrafts at 31 December 2017 was 4.65% (2016 – 3.47%). The average effective pre-swap interest rate of notes classified as short term at 31 December 2017 was 5.92% (2016 – 3.18%). Long-term borrowings At the year-end, GSK had long-term borrowings of £14.3 billion (2016 – £14.7 billion) of which £10.3 billion (2016 – £11.1 billion) falls due in more than five years. The average effective pre-swap interest rate of all notes in issue at 31 December 2017 was approximately 3.6% (2016 – approximately 4.1%). Long-term borrowings repayable after five years carry interest at effective rates between 1.07% and 6.66%, with repayment dates ranging from 2023 to 2045. Pledged assets The Group held pledged investments in US Treasury Notes with a par value of $105 million (£78 million), (2016 – $105 million (£85 million)) as security against irrevocable letters of credit issued on the Group’s behalf in respect of the Group’s self-insurance activity. Provisions in respect of self-insurance are included within the provisions for legal and other disputes discussed in Note 29, ‘Other provisions’. In addition, £20 million (2016 – £23 million) of assets included in Note 22, ‘Other non-current assets’, which do not form part of Net debt, were pledged as collateral against future rental payments under operating lease arrangements entered into by Human Genome Sciences, Inc. prior to its acquisition by the Group. Finance lease obligations
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Contingent liabilities | 32. Contingent liabilities At 31 December 2017, contingent liabilities, comprising guarantees, discounted bills and other items arising in the normal course of business, amounted to £434 million (2016 – £281 million). At 31 December 2017, £2 million (2016 – £1 million) of financial assets were pledged as collateral for contingent liabilities. Provision is made for the outcome of tax, legal and other 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. At 31 December 2017, other than for those disputes where provision has been made, it was not possible to make a reliable estimate of the potential outflow of funds that might be required to settle disputes where the possibility of there being an outflow was more than remote. Descriptions of the significant tax, legal and other disputes to which the Group is a party are set out in Note 14, ‘Taxation’ and Note 45, ‘Legal proceedings’. |
Share capital and share premium account |
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Share capital and share premium account | 33. Share capital and share premium account
At 31 December 2017, of the issued share capital, 66,696,677 shares were held in the ESOP Trusts, 414,605,950 shares were held as Treasury shares and 4,891,251,193 shares were in free issue. All issued shares are fully paid. The nominal, carrying and market values of the shares held in the ESOP Trusts are disclosed in Note 43, ‘Employee share schemes’. |
Movements in equity |
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Movements in equity | 34. Movements in equity Retained earnings and other reserves amounted to £(4,430) million at 31 December 2017 (2016 – £(3,172) million; 2015 – £943 million) of which £334 million (2016 – £329 million; 2015 – £283 million) relates to joint ventures and associated undertakings. The cumulative translation exchange in equity is as follows:
The analysis of other comprehensive income by equity category is as follows:
The analysis of other reserves is as follows:
Other reserves include various non-distributable merger and pre-merger reserves amounting to £1,849 million at 31 December 2017 (2016 – £1,849 million; 2015 – £1,849 million). Other reserves also include the capital redemption reserve created as a result of the share buy-back programme amounting to £280 million at 31 December 2017 (2016 – £280 million; 2015 – £280 million). |
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Related party transactions | 35. Related party transactions At 31 December 2017, GSK owned 32 million shares or 31.4% of Innoviva Inc. which is a biopharmaceutical company listed on NASDAQ. GSK began recognising Innoviva as an associate on 1 September 2015. The royalties due from GSK to Innoviva in the year were £173 million (2016 – £108 million). At 31 December 2017, the balance payable by GSK to Innoviva was £53 million (2016 – £36 million). At 31 December 2017, GSK held a 50% interest in Japan Vaccine Co. Ltd (JVC) through its subsidiary GlaxoSmithKline K.K. This joint venture with Daiichi Sankyo Co., Ltd is primarily responsible for the development and marketing of certain prophylactic vaccines in Japan. During 2017, GSK sold £41 million (2016 – £43 million) of its vaccine products into the joint venture. At 31 December 2017, the trading balance due to GSK from JVC was £11 million (2016 – £9 million) and the balance payable by GSK to JVC was £nil million (2016 – £nil). Loans of £7 million to JVC, £7 million to Medicxi Ventures I LP and £8 million to Index Ventures Life VI (Jersey) LP remained due to GSK at 31 December 2017. The aggregate compensation of the Directors and CET is given in Note 9, ‘Employee costs’. |
Adjustments reconciling profit after tax to operating cash flows |
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Adjustments reconciling profit after tax to operating cash flows | 36. Adjustments reconciling profit after tax to operating cash flows
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Reconciliation of net cash flow to movement in net debt |
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Reconciliation of net cash flow to movement in net debt | 37. Reconciliation of net cash flow to movement in net debt
For further information on significant changes in net debt see Note 31, ‘Net debt’. |
Acquisitions and disposals |
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Acquisitions and disposals | 38. Acquisitions and disposals Details of the acquisition and disposal of significant subsidiaries and associates, joint ventures and other businesses are given below: 2017 Business acquisitions There were no business acquisitions during 2017. Business disposals GSK made a number of small business disposals during the year for a net cash consideration of £342 million, including contingent consideration receivable of £86 million. The profit on disposal was determined as follows:
Investment in associates and joint ventures During the year, GSK made cash investments of £15 million into associates and joint ventures. In addition, GSK sold its holdings in two associates for £198 million in cash.
Cash flows
2016 Business acquisitions GSK completed two small business acquisitions during 2016. Cash consideration of £24 million was paid in the year to acquire the HIV R&D preclinical and discovery stage portfolio from Bristol Myers Squibb. Further consideration, contingent on commercial milestones and future sales performance, may be due, and an initial estimate of £40 million was recognised for this contingent consideration. Intangible assets acquired were valued at £57 million and goodwill of £7 million was recognised. GSK formed Galvani Bioelectronics Limited during the year and acquired intangible assets of £45 million and cash and cash equivalents of £41 million from Verily Life Sciences LLC in return for a 45% shareholding in Galvani Bioelectronics. The fair value of this shareholding was £47 million, and GSK also recognised a credit of £39 million in non-controlling interests representing Verily’s share of the net assets it contributed. Business disposals GSK also made a number of small business disposals in the year for net cash consideration of £72 million. In addition, deferred consideration receivable of £43 million was recognised.
Cash flows
In addition, GSK made cash investments of £11 million into associates and joint ventures. 2015 Business acquisitions Novartis Consumer Healthcare and Vaccines businesses The three-part inter-conditional transaction with Novartis AG involving the Consumer Healthcare, Vaccines and Oncology businesses completed on 2 March 2015. GSK and Novartis have contributed their respective Consumer Healthcare businesses into a Consumer Healthcare Joint Venture in a non-cash transaction. GSK has an equity interest of 63.5% and majority control of the Joint Venture. In addition, GSK has acquired Novartis’ global Vaccines business (excluding influenza vaccines) for an initial cash consideration of $5.25 billion (£3.417 billion) with contingent consideration representing subsequent potential milestone payments of up to $1.8 billion (£1.2 billion) arising on the achievement of specified development targets and ongoing royalties based on the future sales performance of certain products, and so the total amount payable is unlimited. The first milestone of $450 million (£300 million) was paid on 26 March 2015. Other business acquisitions In addition, GSK completed one smaller Vaccines business acquisition for cash consideration of £120 million, net of cash acquired, and the fair value of existing investments of £15 million. This represented goodwill of £22 million and intangible assets of £124 million less other net liabilities of £11 million. The fair values of the assets acquired in business combinations, including goodwill, are set out in the table below.
The non-controlling interest in the Consumer Healthcare Joint Venture, calculated applying the full goodwill method, represents Novartis’ share of the net assets it contributed to the Joint Venture together with attributable goodwill. The goodwill in the businesses acquired represents the potential for further synergies arising from combining the acquired businesses with GSK’s existing businesses together with the value of the workforce acquired. The majority of the goodwill recognised is not expected to be deductible for tax purposes. Total transaction costs recognised in 2014 and 2015 for the acquisitions from Novartis amounted to £102 million. Between 2 March 2015 and 31 December 2015, turnover of £1,941 million arising from the Novartis Consumer Healthcare and Vaccines businesses was included in Group turnover. If the businesses had been acquired at the beginning of the year, it is estimated that Group turnover in 2015 would have been approximately £320 million higher. These businesses have been integrated into the Group’s existing activities and it is not practical to identify the impact on the Group profit in the period. Business disposals Oncology GSK has divested its marketed Oncology business, related R&D activities and rights to its AKT inhibitor and also granted commercialisation partner rights for future oncology products to Novartis for consideration of $16 billion (£10,395 million) before purchase adjustments. Other business disposals GSK also made a number of small business disposals in the period for net cash consideration of £309 million. Profit on disposal of the businesses has been determined as follows:
Associates and joint ventures During the year, GSK made cash investments of £16 million into associates and joint ventures. In addition, in March 2015, GSK sold half of its shareholding in Aspen, representing 6.2% of the issued share capital of the company, for £571 million in cash. As a result of the sale, the Group was no longer considered to have the ability to exert significant influence over Aspen and the Group’s remaining investment was transferred from Investments in associates to Other investments.
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Contingent consideration liabilities | 39. Contingent consideration liabilities The consideration for certain acquisitions includes amounts contingent on future events such as development milestones or sales performance. The Group has provided for the fair value of this contingent consideration as follows:
Of the contingent consideration payable at 31 December 2017, £1,076 million (2016 – £561 million) is expected to be paid within one year. The contingent consideration payable in respect of the Novartis Vaccines business included a sales milestone of $450 million which was settled in January 2018. The consideration payable for the acquisition of the Shionogi-ViiV Healthcare joint venture and the Novartis Vaccines business is expected to be paid over a number of years. As a result, the total estimated liabilities are discounted to their present values, shown above. The Shionogi-ViiV Healthcare contingent consideration liability is discounted at 8.5% and the Novartis Vaccines contingent consideration liability is discounted partly at 8% and partly at 9%. The Shionogi-ViiV Healthcare contingent consideration liability is calculated based on the forecast sales performance of specified products, principally dolutegravir, over the life of those products. The table below shows on an indicative basis the income statement and balance sheet sensitivity to reasonably possible changes in key inputs to the valuations of the contingent consideration liabilities.
An explanation of the accounting for ViiV Healthcare is set out on page 59. |
Non-controlling interests |
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Non-controlling interests | 40. Non-controlling interests The Group has two subgroups that have material non-controlling interests, ViiV Healthcare Limited and its subsidiaries and GSK Consumer Healthcare Holdings Limited and its subsidiaries. Summarised financial information in respect of the ViiV Healthcare group and GSK Consumer Healthcare Joint Venture is set out below: ViiV Healthcare
The above financial information relates to the ViiV Healthcare group on a stand-alone basis, before the impact of Group-related adjustments, primarily related to the recognition of preferential dividends. The profit after taxation of £825 million (2016 – loss after taxation of £1,249 million; 2015 – loss after taxation of £1,426 million) is stated after charging preferential dividends payable to GSK, Shionogi and Pfizer and after a charge of £909 million (2016 – £2,186 million; 2015 – £1,874 million) for remeasurement of the contingent consideration payable for the acquisition of the former Shionogi-ViiV Healthcare joint venture. This consideration is expected to be paid over a number of years. The following amounts attributable to the ViiV Healthcare group are included in GSK’s Consolidated statement of comprehensive income, Consolidated statement of changes in equity and Consolidated balance sheet:
Consumer Healthcare Joint Venture
The above financial information relates to the Consumer Healthcare Joint Venture on a stand-alone basis, before the impact of Group-related adjustments but after major restructuring charges. The following amounts attributable to the Consumer Healthcare Joint Venture are included in GSK’s Consolidated statement of comprehensive income, Consolidated statement of changes in equity and Consolidated balance sheet:
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Commitments | 41. Commitments
The commitments related to intangible assets include milestone payments, which are dependent on successful clinical development or on meeting specified sales targets, and which represent the maximum that would be paid if all milestones, however unlikely, are achieved. The amounts are not risk-adjusted or discounted. The decrease in intangible commitments in 2017 is attributable to amendments made to the agreement with Adaptimmune Therapeutics plc and reduction in commitments to third parties such as Ionis Pharmaceuticals, Inc. In 2016, GSK reached an agreement with the trustees of the UK pension schemes to make additional contributions to eliminate the pension deficit identified at the 31 December 2014 actuarial funding valuation. A payment of £123 million is due in 2018 and each subsequent year up to, and including 2023. The table above includes this commitment, but excludes the normal ongoing annual funding requirement in the UK of approximately £130 million. The Group also has other commitments which principally relate to revenue payments to be made under licences and other alliances. Commitments in respect of future interest payable on loans are disclosed before taking into account the effect of interest rate swaps. Commitments under non-cancellable operating leases are disclosed below. £117 million (2016 – £186 million) is provided against these commitments on the Group’s balance sheet.
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Financial instruments and related disclosures | 42. Financial instruments and related disclosures
GSK uses a variety of financial instruments to finance its operations and derivative financial instruments to manage market risks from these operations. These derivatives, principally comprising interest rate swaps, foreign exchange forward contracts and swaps, are used to swap borrowings and liquid assets into currencies required for Group purposes and to manage exposure to financial risks from changes in foreign exchange rates and interest rates. GSK does not hold or issue derivatives for speculative purposes and GSK’s Treasury policies specifically prohibit such activity. All transactions in financial instruments are undertaken to manage the risks arising from underlying business activities. Capital management GSK’s financial strategy supports the Group’s strategic priorities and is regularly reviewed by the Board. GSK manages the capital structure of the Group through an appropriate mix of debt and equity. The capital structure of the Group consists of net debt of £13.2 billion (see Note 31, ‘Net debt’) and total equity, including that provided by non-controlling interests, of £3.5 billion (see ‘Consolidated statement of changes in equity’ on page 160). Total capital, including that provided by non-controlling interests, is £16.7 billion. Our long-term credit rating with Standard and Poor’s is A+ (stable outlook) and with Moody’s Investor Services (‘Moody’s’) it is A2 (stable outlook). The Group’s short-term credit ratings are A-1 and P-1 with Standard and Poor’s and Moody’s respectively. Liquidity risk management GSK’s policy is to borrow centrally in order to meet anticipated funding requirements. The strategy is to diversify liquidity sources using a range of facilities and to maintain broad access to financial markets. At 31 December 2017, GSK had £2.8 billion of borrowings repayable within one year and held £3.9 billion of cash and cash equivalents and liquid investments of which £2.5 billion was held centrally. GSK has access to short-term finance under a $10 billion (£7.4 billion) US commercial paper programme; $0.7 billion (£0.5 billion) was in issue at 31 December 2017 (2016 – $1.4 billion). GSK also has £1.9 billion five year committed facilities and $2.5 billion (£1.9 billion) of 364 day committed facilities. The five-year committed facilities were agreed in September 2015 and were extended by one year to 2021 in September 2016. The 364 day committed facilities were agreed in August 2017. These facilities were undrawn at 31 December 2017. GSK considers this level of committed facilities to be adequate, given current liquidity requirements. GSK has a £15 billion European Medium Term Note programme and at 31 December 2017, £9.0 billion of notes were in issue under this programme. The Group also had $9.7 billion (£7.2 billion) of notes in issue at 31 December 2017 under a US shelf registration. GSK’s borrowings mature at dates between 2018 and 2045. The put options owned by minority interest partners in ViiV Healthcare and the Consumer Healthcare JV business are both now exercisable. In reviewing liquidity requirements GSK considers that sufficient financing options are available should the put options be exercised.
Market risk Interest rate risk management GSK’s objective is to minimise the effective net interest cost and to balance the mix of debt at fixed and floating interest rates over time. The policy on interest rate risk management limits the amount of floating interest payments to a prescribed percentage of operating profit. Foreign exchange risk management Foreign currency transaction exposures arising on external trade flows are not normally hedged. Foreign currency transaction exposures arising on internal trade flows are selectively hedged. The Group’s objective is to minimise the exposure of overseas operating subsidiaries to transaction risk by matching local currency income with local currency costs where possible. GSK’s internal trading transactions are matched centrally and inter-company payment terms are managed to reduce foreign currency risk. Foreign currency cash flows can be hedged selectively including hedges of the foreign exchange risk arising from acquisitions and disposals of assets. Where possible, GSK manages the cash surpluses or borrowing requirements of subsidiary companies centrally using forward contracts to hedge future repayments back into the originating currency. In order to reduce foreign currency translation exposure, the Group seeks to denominate borrowings in the currencies of our principal assets and cash flows. These are primarily denominated in US Dollars, Euros and Sterling. Borrowings can be swapped into other currencies as required. Borrowings denominated in, or swapped into, foreign currencies that match investments in overseas Group assets may be treated as a hedge against the relevant assets. Forward contracts in major currencies are also used to reduce exposure to the Group’s investment in overseas assets (see ‘Net investment hedges’ section of this note for further details).
Credit risk The Group considers its maximum credit risk at 31 December 2017 to be £9,988 million (31 December 2016 – £11,002 million) which is the total of the Group’s financial assets with the exception of ’Other investments’ (comprising equity investments) which bear equity risk rather than credit risk. See page 216 for details on the Group’s total financial assets. At 31 December 2017, GSK’s greatest concentrations of credit risk were £0.5 billion with Citibank (A/A1) and £0.5 billion with one US wholesaler (BBB+/Baa2) (2016 – £0.9 billion with Citibank (A/A1)). Treasury-related credit risk GSK sets global counterparty limits for each of GSK’s banking and investment counterparties based on long-term credit ratings from Moody’s and Standard and Poor’s. Usage of these limits is monitored daily. GSK actively manages its exposure to credit risk, reducing surplus cash balances wherever possible. This is part of GSK’s strategy to regionalise cash management and to concentrate cash centrally as much as possible. The table below sets out the credit exposure to counterparties by rating for liquid investments, cash and cash equivalents and derivatives. The gross asset position on each derivative contract is considered for the purpose of this table, although, under ISDA agreements, the amount at risk is the net position with each counterparty. Table (e) on page 220 sets out the Group’s financial assets and liabilities on an offset basis.
At 31 December 2017, £45 million of cash is categorised as held with unrated or sub-investment grade rated counterparties (lower then BBB-/Baa3) of which £32 million is cash in transit. The remaining exposure is concentrated in overseas banks used for local cash management or investment purposes, including £7 million in Nigeria held with United Bank for Africa, Zenith Bank and Stanbic IBTC Bank and First Bank of Nigeria and £2 million with BTV in Austria. Of the £80 million of bank balances and deposits held with BBB/Baa rated counterparties, £27 million was held with BBB-/ Baa3 rated counterparties, including balances or deposits of £17 million with HDFC Bank in India and £10 million with State Bank of India. These banks are used for local investment purposes.
Credit ratings are assigned by Standard and Poor’s and Moody’s respectively. Where the opinions of the two rating agencies differ, GSK assigns the lower rating of the two to the counterparty. Where local rating agency or Fitch data is the only source available, the ratings are converted to global ratings equivalent to those of Standard and Poor’s or Moody’s using published conversion tables.
GSK’s centrally managed cash reserves amounted to £2.5 billion at 31 December 2017, all available within three months. This includes £1.7 billion centrally managed cash held by ViiV Healthcare, a 78.3% owned subsidiary. The Group has invested centrally managed liquid assets in bank deposits, Aaa/AAA rated US Treasury and Treasury repo only money market funds and Aaa/AAA rated liquidity funds. Wholesale and retail credit risk Outside the US, no customer accounts for more than 5% of the Group’s trade receivables balance. In the US, in line with other pharmaceutical companies, the Group sells its products through a small number of wholesalers in addition to hospitals, pharmacies, physicians and other groups. Sales to the three largest wholesalers amounted to approximately 83% of the sales of the US Pharmaceuticals and Vaccines businesses in 2017. At 31 December 2017, the Group had trade receivables due from these three wholesalers totalling £1,265 million (2016 – £1,323 million). The Group is exposed to a concentration of credit risk in respect of these wholesalers such that, if one or more of them encounters financial difficulty, it could materially and adversely affect the Group’s financial results. The Group’s credit risk monitoring activities relating to these wholesalers include a review of their quarterly financial information and Standard & Poor’s credit ratings, development of GSK internal risk ratings, and establishment and periodic review of credit limits. However, the Group believes there is no further credit risk provision required in excess of the normal provision for bad and doubtful debts (see Note 24, ‘Trade and other receivables’). Fair value of financial assets and liabilities The table on page 216 presents the carrying amounts and the fair values of the Group’s financial assets and liabilities at 31 December 2017 and 31 December 2016. The fair values of the financial assets and liabilities are included at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values:
Fair value of investments in GSK shares At 31 December 2017, the Employee Share Ownership Plan (ESOP) Trusts held GSK shares with a carrying value of £400 million (2016 – £286 million) and a fair value of £882 million (2016 – £667 million) based on quoted market price. The shares are held by the ESOP Trusts to satisfy future exercises of options and awards under employee incentive schemes. In 2017, the carrying value, which is the lower of cost or expected proceeds, of these shares has been recognised as a deduction from other reserves. At 31 December 2017, GSK held Treasury shares at a cost of £5,800 million (2016 – £6,451 million) which has been deducted from retained earnings.
The valuation methodology used to measure fair value in the above table is described and categorised on page 215. Trade and other receivables, Other non-current assets, Trade and other payables, Other provisions, Other non-current liabilities and Contingent consideration liabilities are reconciled to the relevant Notes on page 218.
(a) Financial instruments held at fair value The following tables categorise the Group’s financial assets and liabilities held at fair value by the valuation methodology applied in determining their fair value. Where possible, quoted prices in active markets are used (Level 1). Where such prices are not available, the asset or liability is classified as Level 2, provided all significant inputs to the valuation model used are based on observable market data. If one or more of the significant inputs to the valuation model is not based on observable market data, the instrument is classified as Level 3. Other investments classified as Level 3 in the tables below comprise equity investments in unlisted entities with which the Group has entered into research collaborations and also investments in emerging life science companies.
Movements in the year for financial instruments measured using Level 3 valuation methods are presented below:
The net losses of £970 million (2016 – £2,283 million) attributable to Level 3 financial instruments which were recognised in the income statement were all attributable to financial instruments which were held at the end of the year. Losses of £971 million (2016 – £2,283 million) were reported in Other operating income and income of £1 million (2016 – £nil) was recorded in Finance income. £909 million (2016 – £2,162 million) arose from remeasurement of the contingent consideration payable for the acquisition of the former Shionogi-ViiV Healthcare joint venture and £53 million (2016 – £152 million) arose from remeasurement of the contingent consideration payable on the acquisition in 2015 of the Novartis Vaccines business. Net gains of £22 million (2016 – £29 million) attributable to Level 3 financial instruments reported in Other comprehensive income as Fair value movements on available-for-sale investments included net losses of £6 million (2016 – net gains of £21 million) in respect of financial instruments held at the end of the year. Financial liabilities measured using Level 3 valuation methods at 31 December included £5,542 million (2016 – £5,304 million) in respect of contingent consideration payable for the acquisition in 2012 of the former Shionogi-ViiV Healthcare joint venture. This consideration is expected to be paid over a number of years and will vary in line with the future performance of specified products and movements in certain foreign currencies. They also included £584 million (2016 – £545 million) in respect of contingent consideration for the acquisition in 2015 of the Novartis Vaccines business. This consideration is expected to be paid over a number of years and will vary in line with the future performance of specified products, the achievement of certain milestone targets and movements in certain foreign currencies. Sensitivity analysis on these balances is provided in Note 39, ‘Contingent consideration liabilities’. (b) Trade and other receivables and Other non-current assets in scope of IAS 39 The following table reconciles financial instruments within Trade and other receivables and Other non-current assets which fall within the scope of IAS 39 to the relevant balance sheet amounts. The financial assets are predominantly non-interest earning. Financial instruments within the Other non-current assets balance include company-owned life insurance policies. Non-financial instruments include tax receivables, pension surplus balances and prepayments, which are outside the scope of IAS 39.
The following table shows the ageing of such financial assets which are past due and for which no provision for bad or doubtful debts has been made:
(c) Trade and other payables, Other provisions, Other non-current liabilities and Contingent consideration liabilities in scope of IAS 39 The following table reconciles financial instruments within Trade and other payables, Other provisions, Other non-current liabilities and Contingent consideration liabilities which fall within the scope of IAS 39 to the relevant balance sheet amounts. The financial liabilities are predominantly non-interest bearing. Accrued wages and salaries are included within financial liabilities. Non-financial instruments includes payments on account, tax and social security payables and provisions which do not arise from contractual obligations to deliver cash or another financial asset, which are outside the scope of IAS 39.
(d) Derivative financial instruments and hedging programmes The following table sets out the fair values of derivatives held by GSK. All the derivative liabilities and £68 million (2016 – £156 million) of the derivative assets have a maturity of less than one year.
Foreign exchange contracts classified as held for trading under IAS 39 The principal amount on foreign exchange contracts is the absolute total of outstanding positions at the balance sheet date. The Group’s foreign exchange contracts are for periods of 12 months or less. At 31 December 2017, the Group held outstanding foreign exchange contracts with a net asset fair value of £15 million (£62 million asset less £47 million liability). At 31 December 2016, the fair value was £34 million net asset (£133 million asset less £99 million liability). The overall decrease in the net asset fair value has been due to the weakening of Sterling against the Euro in 2017 and the strengthening of Sterling against the US Dollar which has impacted on the portion of the hedging portfolio that is not in a designated accounting hedge. Fair value movements are taken to the income statement in the period to offset the exchange gains and losses on the related underlying balances. Fair value hedges At 31 December 2017, the Group had no designated fair value hedges. Net investment hedges During the year, certain foreign exchange contracts were designated as net investment hedges in respect of the foreign currency translation risk arising on consolidation of the Group’s net investment in its European (Euro) foreign operations as shown in the table above. The carrying value of bonds on page 216 includes £4,315 million (2016 – £3,189 million) that are designated as hedging instruments in net investment hedges. Cash flow hedges During 2017, the Group entered into forward foreign exchange contracts which have been designated as cash flow hedges. These are hedging the foreign exchange exposure arising on Euro denominated coupon payments relating to notes issued under the Group’s European Medium Term Note programme and a number of highly probable forecast transactions denominated in US Dollars. In addition, the Group carries a balance in reserves that arose from pre-hedging fluctuations in long-term interest rates when pricing bonds issued in prior years. The balance is reclassified to finance costs over the life of these bonds.
(e) Offsetting of financial assets and liabilities Financial assets and liabilities are offset and the net amount reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. There are also arrangements that do not meet the criteria for offsetting but still allow for the related amounts to be offset in certain circumstances, such as bankruptcy or the termination of a contract. The following tables set out the financial assets and liabilities that are offset, or subject to enforceable master netting arrangements and other similar agreements but not offset, as at 31 December 2017 and 31 December 2016. The column ‘Net amount’ shows the impact on the Group’s balance sheet if all offset rights were exercised.
Amounts which do not meet the criteria for offsetting on the balance sheet but could be settled net in certain circumstances principally relate to derivative transactions under ISDA (International Swaps and Derivatives Association) agreements where each party has the option to settle amounts on a net basis in the event of default of the other party. As there is presently not a legally enforceable right of offset, these amounts have not been offset in the balance sheet, but have been presented separately in the table above.
(f) Debt interest rate repricing table The following table sets out the exposure of the Group to interest rates on debt, including commercial paper. The maturity analysis of fixed rate debt is stated by contractual maturity and of floating rate debt by interest rate repricing dates. For the purpose of this table, debt is defined as all classes of borrowings other than obligations under finance leases.
(g) Sensitivity analysis The tables below illustrate the estimated impact on the income statement and equity as a result of hypothetical market movements in foreign exchange and interest rates in relation to the Group’s financial instruments. The range of variables chosen for the sensitivity analysis reflects management’s view of changes which are reasonably possible over aone-year period. Foreign exchange sensitivity The Group operates internationally and is primarily exposed to foreign exchange risk in relation to Sterling against movements in US Dollar, Euro and Japanese Yen. Foreign exchange risk arises from the translation of financial assets and liabilities which are not in the functional currency of the entity that holds them. Based on the Group’s net financial assets and liabilities as at 31 December, a weakening and strengthening of Sterling against these currencies, with all other variables held constant, is illustrated in the tables below. The tables exclude financial instruments that expose the Group to foreign exchange risk where this risk is fully hedged with another financial instrument.
The equity impact, shown below, for foreign exchange sensitivity relates to derivative and non-derivative financial instruments hedging the Group’s net investments in its European (Euro) foreign operations and cash flow hedges of its foreign exchange exposure arising on Euro denominated coupon payments relating to notes issued under the Group’s European Medium Term Note programme and a number of highly probable forecast transactions denominated in US Dollar.
The tables below present the Group’s sensitivity to a weakening and strengthening of Sterling against the relevant currency based on the composition of net debt as shown in Note 31 adjusted for the effects of foreign exchange derivatives that are not part of net debt but affect future foreign currency cash flows.
Interest rate sensitivity The Group is exposed to interest rate risk on its outstanding borrowings and investments where any changes in interest rates will affect future cash flows or the fair values of financial instruments. The majority of debt is issued at fixed interest rates and changes in the floating rates of interest do not significantly affect the Group’s net interest charge, although the majority of cash and liquid investments earn floating rates of interest. The table below hypothetically shows the Group’s sensitivity to changes in interest rates in relation to Sterling, US Dollar and Euro floating rate financial assets and liabilities. If the interest rates applicable to floating rate financial assets and liabilities were to have increased by 1% (100 basis points), and assuming other variables had remained constant, it is estimated that the Group’s finance income for 2017 would have increased by approximately £5 million (2016 – £3 million increase). A 1% (100 basis points) movement in interest rates is not deemed to have a material effect on equity.
(h) Contractual cash flows for non-derivative financial liabilities and derivative instruments The following tables provides an analysis of the anticipated contractual cash flows including interest payable for the Group’s non-derivative financial liabilities on an undiscounted basis. The Group did not use interest rate swaps to manage its interest rate risk. For the purpose of this table, debt is defined as all classes of borrowings except for obligations under finance leases. Interest is calculated based on debt held at 31 December without taking account of future issuance. Floating rate interest is estimated using the prevailing interest rate at the balance sheet date. Cash flows in foreign currencies are translated using spot rates at 31 December. Contractual cash flows in respect of operating lease vacant space provisions are excluded from the table below as they are included in the Commitments under non-cancellable operating leases table in Note 41, ‘Commitments’.
The increase in contractual cash flows for non-derivative financial liabilities due in less than one year of £8.4 billion and the decrease in cash flows due between one and two years of £8.9 billion principally reflect the move of the Consumer Healthcare put option into amounts due in less than one year. This option relates to the ability of Novartis to put its shares in the Consumer Healthcare Joint Venture to GSK at certain points commencing on 2 March 2018 with payment likely to be due several months after exercise. See Note 27 ‘Trade and other payables’ for further information on the Consumer Healthcare put option. Anticipated contractual cash flows for the repayment of debt and debt interest have decreased by £2.6 billion over the year due to a reduction in the issuance of commercial paper and favourable exchange rate movements on US Dollar denominated debt. The table below provides an analysis of the anticipated contractual cash flows for the Group’s derivative instruments excluding embedded derivatives and equity options, which are not material, using undiscounted cash flows. Cash flows in foreign currencies are translated using spot rates at 31 December. The gross cash flows of foreign exchange contracts are presented for the purpose of this table although, in practice, the Group uses standard settlement arrangements to reduce its liquidity requirements on these instruments. The amounts receivable and payable in less than one year have decreased compared with 31 December 2016 as a result of reduced hedging of the US commercial paper programme.
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Employee share schemes | 43. Employee share schemes GSK operates several employee share schemes, including the Share Value Plan, whereby awards are granted to employees to acquire shares or ADS in GlaxoSmithKline plc at no cost after a three year vesting period and the Performance Share Plan, whereby awards are granted to employees to acquire shares or ADS in GlaxoSmithKline plc at no cost, subject to the achievement by the Group of specified performance targets. The granting of these restricted share awards has replaced the granting of options to employees as the cost of the schemes more readily equates to the potential gain to be made by the employee. The Group also operates savings related share option schemes, whereby options are granted to employees to acquire shares in GlaxoSmithKline plc at a discounted price. Grants of restricted share awards are normally exercisable at the end of the three year vesting or performance period. Awards are normally granted to employees to acquire shares or ADS in GlaxoSmithKline plc but in some circumstances may be settled in cash. Grants under savings-related share option schemes are normally exercisable after three years’ saving. In accordance with UK practice, the majority of options under the savings-related share option schemes are granted at a price 20% below the market price ruling at the date of grant. Options under historical share option schemes were granted at the market price ruling at the date of grant. The total charge for share-based incentive plans in 2017 was £347 million (2016 – £338 million; 2015 – £349 million). Of this amount, £276 million (2016 – £271 million; 2015 – £307 million) arose from the Share Value Plan. See Note 9, ‘Employee Costs’ for further details. GlaxoSmithKline share award schemes Share Value Plan Under the Share Value Plan, share awards are granted to certain employees at no cost. The awards vest after two and a half to three years and there are no performance criteria attached. The fair value of these awards is determined based on the closing share price on the day of grant, after deducting the expected future dividend yield of 4.8% (2016 – 4.5%; 2015 – 5.7%) over the duration of the award.
Performance Share Plan Under the Performance Share Plan, share awards are granted to Directors and senior executives at no cost. The percentage of each award that vests is based upon the performance of the Group over a defined measurement period with dividends reinvested during the same period. For awards granted from 2015, the performance conditions are based on three equally weighted measures over a three year performance period. These are adjusted free cash flow, TSR and R&D new product performance. The fair value of the awards is determined based on the closing share price on the day of grant. For TSR performance elements, this is adjusted by the likelihood of that condition being met, as assessed at the time of grant. During 2017, awards were made of 3.9 million shares at a weighted fair value of £11.09 and 1.0 million ADS at a weighted fair value of $32.85. At 31 December 2017, there were outstanding awards over 12.9 million shares and 3.2 million ADS.
Share options and savings-related options For the purposes of valuing savings-related options to arrive at the share based payment charge, a Black-Scholes option pricing model has been used. The assumptions used in the model are as follows:
Options over 2.0 million shares were granted during the year under the savings-related share option scheme at a weighted average fair value of £2.08. At 31 December 2017, 6.7 million of the savings-related share options were not exercisable. All of the other share options and ADS options are currently exercisable and all will expire if not exercised on or before 22 July 2020. There has been no change in the effective exercise price of any outstanding options during the year. Employee Share Ownership Plan Trusts The Group sponsors Employee Share Ownership Plan (ESOP) Trusts to acquire and hold shares in GlaxoSmithKline plc to satisfy awards made under employee incentive plans and options granted under employee share option schemes. The trustees of the ESOP Trusts purchase shares with finance provided by the Group by way of loans or contributions. In 2017, Treasury shares with a carrying value of £610 million were purchased by the US ESOP Trust to satisfy future awards. The costs of running the ESOP Trusts are charged to the income statement. Shares held by the ESOP Trusts are deducted from other reserves and amortised down to the value of proceeds, if any, receivable from employees on exercise by a transfer to retained earnings. The trustees have waived their rights to dividends on the shares held by the ESOP Trusts.
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Principal Group companies | 44. Principal Group companies The following represent the principal subsidiaries and their countries of incorporation of the Group at 31 December 2017. The equity share capital of these entities is wholly owned by the Group except where its percentage interest is shown otherwise. All companies are incorporated in their principal country of operation except where stated.
The subsidiaries and associates listed above principally affect the figures in the Group’s financial statements. Each of GlaxoSmithKline Capital Inc., GlaxoSmithKline Capital plc and GlaxoSmithKline LLC, is a wholly-owned finance subsidiary of the company, and the company has fully and unconditionally guaranteed the securities issued by each of GlaxoSmithKline Capital Inc., GlaxoSmithKline Capital plc and GlaxoSmithKline LLC. See pages 276 to 286 for a complete list of subsidiary undertakings, associates and joint ventures, which form part of these financial statements. |
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Legal proceedings | 45. Legal proceedings
The Group is involved in significant legal and administrative proceedings, principally product liability, intellectual property, tax, anti-trust and governmental investigations, as well as related private litigation. The most significant of these matters, other than tax matters, are described below. The Group makes provision for these proceedings on a regular basis as summarised in Note 2, ‘Accounting principles and policies’ and Note 29, ‘Other provisions’. 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, appropriate disclosures about such cases would be included in this note, but no provision would be made for the cases. With respect to each of the legal proceedings described below, other than those for which a provision has been made, the Group is unable to make a reliable estimate of the expected financial effect at this stage. The Group does not believe that information about the amount sought by the plaintiffs, if that is known, would be meaningful with respect to those legal proceedings. This is due to a number of factors, including, but not limited to, the stage of proceedings, the entitlement of parties to appeal a decision and clarity as to theories of liability, damages and governing law. Legal expenses incurred and provisions related to legal claims are charged to selling, general and administration costs. Provisions are made, after taking appropriate legal and other specialist advice, where an outflow of resources is considered probable and a reliable estimate can be made of the likely outcome of the dispute. For certain product liability claims, the Group will make a provision where there is sufficient history of claims made and settlements to enable management to make a reliable estimate of the provision required to cover unasserted claims. At 31 December 2017, the Group’s aggregate provision for legal and other disputes (not including tax matters described in Note 14, ‘Taxation’) was £186 million. 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 statements. If this were to happen, it could have a material adverse impact on the results of operations of the Group in the reporting period in which the judgements are incurred or the settlements entered into.
Intellectual property Intellectual property claims include challenges to the validity and enforceability of the Group’s patents on various products or processes as well as assertions of non-infringement of those patents. A loss in any of these cases could result in loss of patent protection for the product at issue. The consequences of any such loss could be a significant decrease in sales of that product and could materially affect future results of operations for the Group. Flovent HFA On 15 February 2017, the Group received a Paragraph IV certification from Teva for Flovent HFA. This was the first Paragraph IV certification the Group had received from a generic pharmaceutical company seeking to make an AB rated version of Flovent HFA. Three patents are at issue. Teva alleged that its generic version of Flovent did not infringe two patents directed to actuation indicators (metered dose) listed in the Orange Book. Teva also alleged that U.S. Patent No. 6,743, 413 (‘413 patent’) which claims a method of treatment with a formulation containing an active medication and a propellant known as 134a, substantially free of surfactant, and its use in the hydrofluoroalkane (HFA) metered dose inhalers for Flovent is not valid. After reviewing the Teva complaint, the Group did not sue Teva under the ‘413 patent and asked the FDA to remove the ‘413 patent from the Orange Book. Teva produced evidence showing that it did not infringe the dose counter patents. On 20 June 2017, the Group withdrew the case against Teva. Bexsero/Men B vaccines Following its acquisition of the Novartis Vaccines business, the Group took over patent litigation originally filed by Novartis against Pfizer, Inc. (Pfizer) in the UK, Italy and the United States related to meningococcal B (Men B) vaccines. In various cases, Novartis had alleged that European patents owned by Pfizer were not infringed by the Group’s vaccine, Bexsero and were invalid. Novartis had also filed suit against Pfizer for patent infringement, alleging that Pfizer’s sale of its vaccine, Trumenba, infringes Novartis’ patents related to Men B vaccines. Pfizer had filed suit against the Group in the UK seeking to invalidate six UK patents owned by the Group that have relevance to Trumenba and in Canada for infringement of a patent covering Trumenba. On 24 April 2017, the Group and Pfizer entered into a confidential global settlement resolving all matters that permits each company to manufacture and sell their respective Men B vaccines. Dolutegravir/Tivicay/Triumeq In September and October, 2017, ViiV Healthcare received patent challenge letters under the Hatch-Waxman Act from Lupin, Mylan, Cipla and Dr. Reddy’s Labs for Triumeq, and from Cipla, Dr. Reddy’s, Apotex and Sandoz for Tivicay and Triumeq. ViiV Healthcare lists two patents for dolutegravir, the active ingredient in Tivicay and one of the active ingredients in Triumeq, in the FDA Orange Book. One patent, covering the molecule dolutegravir, expires on 5 October 2027. A second patent, claiming a certain crystal form of dolutegravir, expires on 8 December 2029. All the letters challenged only the patent for the crystal form. Some generic companies alleged that the crystal form patent is not valid. Others challenged validity and asserted that their proposed product would not infringe the crystal form patent. On 7 February 2017, ViiV Healthcare filed patent infringement suits against all the generic companies in the US District Court for the District of Delaware. Additionally, ViiV Healthcare also filed suit against certain of the generic companies in the US District Court for the District of New Jersey, and the US District Court for the District of West Virginia. No trial date has yet been set. On 7 February 2018, ViiV Healthcare filed patent infringement litigation against Gilead Sciences Inc. (Gilead) over bictegravir in the US District Court for the District of Delaware (US Patent No. 8,129,385) and the Canadian Federal Court (Canadian Patent No. 2,606,282). ViiV Healthcare alleges that Gilead’s triple combination HIV drug containing the HIV integrase inhibitor bictegravir infringes ViiV Healthcare’s patent covering dolutegravir and other compounds that include dolutegravir’s unique chemical scaffold. In both the US and Canada, ViiV Healthcare seeks financial redress rather than injunctive relief. No trial date has yet been set. Kivexa Between Q1 2017 and Q1 2018, ViiV Healthcare reached confidential agreements with each of Vale Pharmaceuticals, Lupin, Sandoz, STADA and Zentiva to settle various challenges to the validity of the Supplementary Protection Certificate (‘SPC’) for the patent covering the combination of lamivudine and abacavir for Kivexa and certain counterclaims brought by ViiV Healthcare for infringement of that SPC. These settlements brought an end to litigation and arbitration proceedings between ViiV Healthcare and Lupin in Germany and Portugal, between ViiV Healthcare and STADA in Germany and Italy, between ViiV Healthcare and Sandoz in Austria, Germany, Portugal, Spain and Sweden, between ViiV Healthcare and Vale Pharmaceuticals in Portugal, and between ViiV Healthcare and Zentiva in Portugal.
DOC Generici filed an action in September 2016 in the Court of Rome seeking a declaration that the Italian SPC covering Kivexa was invalid because it is based upon the invalid lamivudine and abacavir combination patent. ViiV Healthcare has counterclaimed for infringement of the Italian SPC. The trial in this action is to be heard in Q3 2018. In June 2017, Biogaran commenced proceedings in France seeking revocation of the French SPC covering Kivexa. No trial date has been set for this action. In Portugal, ViiV Healthcare initiated arbitration proceedings against Farmoz under the SPC covering Kivexa. Farmoz had filed for marketing approval for a generic version of Kivexa. No arbitration date has yet been scheduled in this action. In February 2017, Kyowa Pharmaceuticals filed a nullity action relating to Kivexa in Japan. Oral hearing of the trial was held at the Japan Patent Office on 30 January 2018. The decision of the Japan Patent Office is expected in 2018. Lexiva The US patent covering Lexiva expired on 24 December 2017 and the product has paediatric exclusivity until 24 June 2018. Pursuant to a settlement of a litigation and confidential licence agreement, Mylan is presently selling a generic version of Lexiva in the US. Product liability Pre-clinical and clinical trials are conducted during the development of potential products to determine the safety and efficacy of products for use by humans following approval by regulatory bodies. Notwithstanding these efforts, when drugs and vaccines are introduced into the marketplace, unanticipated safety issues may become, or be claimed by some to be, evident. The Group is currently a defendant in a number of product liability lawsuits related to the Group’s Pharmaceutical, Vaccine and Consumer Healthcare products. The Group has been able to make a reliable estimate of the expected financial effect of the matters discussed in this category and has included a provision, as appropriate, for the matters below in the provision for legal and other disputes. Matters for which the Group has made a provision are also noted in Note 29, ‘Other provisions.
Avandia The Group has been named in product liability lawsuits on behalf of individuals asserting personal injury claims arising out of the use of Avandia. Economic loss actions have also been filed seeking restitution and penalties under consumer protection and other laws. The federal cases filed against the Group are part of a multi-district litigation proceeding pending in the US District Court for the Eastern District of Pennsylvania (the ‘MDL Court’). Cases have also been filed in a number of state courts. In addition, the County of Santa Clara, California, has brought an action on behalf of California residents which is pending in the MDL Court, alleging violations of California’s False Advertising Act and seeking restitution, damages, and civil penalties. As of February 2018, there are five remaining personal injury cases on appeal from summary judgement decisions in favour of the Group (one in federal court in Pennsylvania and four in California state court). There were four purported class actions in the US seeking economic damages on behalf of third party payers asserting claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) and consumer protection laws. Two plaintiffs voluntarily dismissed their actions. On 7 December 2017, the MDL Court granted the Group’s motion for summary judgement on the two remaining plaintiffs’ claims. Plaintiffs have filed an appeal of the decision in the US Court of Appeals for the Third Circuit, and a briefing schedule has been set. In the Santa Clara County action, the Group filed a motion for summary judgement on the basis of pre-emption and also is seeking partial summary judgement on the County’s restitution claim. On 7 December 2017, the MDL Court granted the Group’s motion. The County’s claims for civil penalties remain pending before the MDL Court. There are 13 purported class actions in Canada, two of which are active. In the two active cases, class certification hearings were held. In the Ontario action, the proceedings were adjourned. On 7 December 2017, the Nova Scotia court issued an Order certifying a nationwide class of all users of Avandia. The Group has filed an appeal of that class certification decision.
Seroxat/Paxil and Paxil CR The Group has received numerous lawsuits and claims alleging that use of Paxil (paroxetine) has caused a variety of injuries. Most of these lawsuits contain one or more of the following allegations: (i) that use of Paxil during pregnancy caused congenital malformations, persistent pulmonary hypertension or autism; (ii) that Paxil treatment caused patients to commit suicidal or violent acts; and (iii) that the Group failed to warn that patients could experience certain symptoms on discontinuing Paxil treatment. – Pregnancy The Group has reached agreements to settle the majority of the US claims relating to the use of Paxil during pregnancy as of February 2018, but a number of claims related to use during pregnancy are still pending in various courts in the US. Of these remaining lawsuits, there are three cases still pending in state court in California and one in federal court in California. There is one case in state court in Kentucky, one in state court in Oklahoma, and one lawsuit joining the claims of eight plaintiffs in state court in Illinois. Other matters have been dismissed without payment. The Singh action in Alberta, Canada, a proposed national class action, seeks to certify a class relating to birth defects generally. The Group is awaiting a hearing on the motion in Singh to certify the case as a class action. Another Canadian class action, Jensen, alleging claims of Paxil (and other SSRI) use and autism was filed in Saskatchewan in January 2017. On 27 March 2017, court approval was received for the settlement of Bartram, a third class action suit in British Columbia. – Acts of violence As of February 2018, there were six pending claims or cases concerning allegations that patients who took paroxetine or Paxil committed or attempted to commit suicide or acts of violence: five claims or cases are in the US and one case is in Canada. One of the US cases, Dolin, involving the suicide of a man who allegedly took generic paroxetine manufactured by Mylan, resulted in a $3 million verdict for the plaintiff. The Group has appealed the verdict to the US Court of Appeals for the Seventh Circuit.
– Discontinuation In the UK, a long-pending group action alleges that Seroxat caused severe discontinuation symptoms. In 2010, the Legal Services Commission (“LSC”) withdrew public funding from hundreds of claimants, causing termination of most claims. In 2015, the Legal Aid Agency (formerly the LSC) discharged the public funding certificate following a 2013 recommendation of its Special Cases Review Panel that these cases have poor prospects of success. However, more recently, Fortitude Law was engaged with the purpose of resurrecting the Seroxat group action, and obtained third-party funding for the experts and the 103 remaining claimants. The Group asked the court to require the third-party funder to provide security for the litigation costs in the event plaintiffs lose. On 8 December 2017, the High Court ruled in favour of the Group on its application for an order that the claimants’ litigation funder give security for costs for a sum in excess of the total funding it had committed to the case. The trial of the action is scheduled to commence in May 2019. Zofran Plaintiffs allege that their children suffered birth defects as a result of the mothers’ ingestion of Zofran and/or generic ondansetron for pregnancy-related nausea and vomiting. Plaintiffs assert that the Group sold Zofran knowing it was unsafe for pregnant women, failed to warn of the risks, and illegally marketed Zofran “off-label” for use by pregnant women. As of February 2018, the Group is a defendant in 420 personal injury lawsuits in the US. 406 of the cases are part of a multi-district litigation proceeding (MDL) in the District of Massachusetts. The MDL cases are in discovery. The MDL continues with monthly status conferences where issues such as the sufficiency of the pleadings and the scope of discovery will be addressed. The Group continues to seek the dismissal of individual cases as appropriate. The Brown case pending in Oregon is in discovery and is scheduled for trial in October 2018. The remaining nine state court cases in the US, eight of which are in California, are still in their early days. The Group is also a defendant in four proposed class actions in Canada. There has been no significant activity in 2017 in the Canadian class actions. Sales and marketing and regulation The Group’s marketing and promotion of its Pharmaceutical and Vaccine products are the subject of certain governmental investigations and private lawsuits brought by litigants under various theories of law. The Group has been able to make a reliable estimate of the expected financial effect of the matters discussed in this category, and has included a provision for such matters in the provision for legal and other disputes, except as noted below. Matters for which the Group has made a provision are also noted in Note 29, ‘Other provisions’.
SEC/DOJ and SFO Anti-corruption enquiries On 27 May 2014, the UK Serious Fraud Office (SFO) began a formal criminal investigation into the Group’s commercial operations in a number of countries, including China. The Group is co-operating with and responding to these requests. The SFO inquiry followed investigations initiated by China’s Ministry of Public Security in June 2013 (the “China Investigations”) which resulted in a ruling in 2014 that, according to Chinese law, GSK China Investment Co. Ltd. (“GSKCI”) had offered money or property to non-government personnel in order to obtain improper commercial gains and GSKCI being found guilty of bribing non-government personnel. On 30 September 2016, the Group reached a global resolution with the US Securities and Exchange Commission (SEC) regarding the SEC’s investigation under the US Foreign Corrupt Practices Act (FCPA) into the Group’s commercial practices in countries outside of the US, including China. As part of the resolution, the Group agreed to pay a civil penalty of $20 million to the US Government. The US Department of Justice (DOJ) confirmed that it had concluded its investigation into the Group’s commercial practices and would take no action against the Group. As part of the resolution with the SEC, the Group agreed to certain undertakings, including a period of self-monitoring and reporting. The Group’s obligations under that resolution continue through 30 September 2018. In the course of its current inquiry, the SFO has requested additional information from the Group regarding third party advisers engaged by the company in the course of the China Investigations. The SEC and DOJ are also investigating these matters following the Group’s reporting of the SFO’s inquiries. The Group is co-operating and responding to these requests. The Group is unable to make a reliable estimate of the expected financial effect of these investigations, and no provision has been made for them. US Vaccines subpoena On 25 February 2016, the Group received a subpoena from the US Attorney’s Office for the Southern District of New York requesting documents relating to the Group’s Vaccines business. The Group is responding to the subpoena. The Group is unable to make a reliable estimate of the expected financial effect of this matter, and no provision has been made for it. US subpoena relating to Imitrex and Amerge On 7 March 2016, the Group received a subpoena from the US Attorney’s Office for the Southern District of New York requesting documents relating to the Group’s US contracts for Imitrex and Amerge. The Group has completed its response to the subpoena. The Group is unable to make a reliable estimate of the expected financial effect of this matter, and no provision has been made for it.
Average wholesale price The Attorney General in Illinois filed suit against the Group and a number of other pharmaceutical companies claiming damages and restitution due to average wholesale price (AWP) and/or wholesale acquisition cost (WAC) price reporting for pharmaceutical products covered by the state’s Medicaid programmes. The case alleges that the Group reported or caused to be reported false AWP and WAC prices, which, in turn, allegedly caused the state Medicaid agency to reimburse providers more money for covered medicines than the agency intended. The state has sought recovery on behalf of itself as payer and on behalf of in-state patients as consumers. The case is ongoing, and no trial date has yet been set as to the Group. Cidra third-party payer litigation On 25 July 2013, a number of major US healthcare insurers filed suit against the Group in the Philadelphia, Pennsylvania County Court of Common Pleas seeking compensation for reimbursements they made for medicines manufactured at the Group’s former Cidra plant in Puerto Rico. These insurers claim that the Group knowingly and illegally marketed and sold adulterated drugs manufactured under conditions non-compliant with cGMP (current good manufacturing practices) and that they, as third-party insurers, were unlawfully induced to pay for them. The suit alleges both US federal and various state law causes of action. The Court denied the Group’s motion to dismiss and discovery is scheduled to be completed in 2018, with the case to be scheduled for trial sometime in late 2018. Anti-trust/competition Certain governmental actions and private lawsuits have been brought against the Group alleging violation of competition or anti-trust laws. The Group has been able to make a reliable estimate of the expected financial effect of the matters discussed in this category and has included a provision for such matters in the provision for legal and other disputes, except as noted below. Matters for which the Group has made a provision are also noted in Note 29, ‘Other provisions’. UK Competition and Markets Authority investigation On 12 February 2016, the UK Competition and Markets Authority (CMA) issued a decision fining the Group and two other pharmaceutical companies for infringement of the Competition Act. The CMA imposed a fine of £37.6 million on the Group, as well as fines totaling £7.4 million against the other companies. This relates to agreements to settle patent disputes between the Group and potential suppliers of generic paroxetine formulations, entered between 2001 and 2003. The Group terminated the agreements at issue in 2004. The Group believes it has strong grounds for its appeal of the CMA’s finding to the Competition Appeal Tribunal (CAT) in order to overturn the fine or substantially reduce it. The appeal concluded in April 2017. The CAT delivered its initial judgement on the appeal on 8 March 2018 referring all the principle points at issue to the Court of Justice of the EU for a preliminary ruling. The matter will then return to the CAT for final judgement. No provision has been made for this matter.
Lamictal Purported classes of direct and indirect purchasers filed suit in the US District Court for the District of New Jersey alleging that the Group and Teva Pharmaceuticals unlawfully conspired to delay generic competition for Lamictal, resulting in overcharges to the purchasers, by entering into an allegedly anti-competitive reverse payment settlement to resolve patent infringement litigation. A separate count accuses the Group of monopolising the market. On 26 June 2015, the Court of Appeals reversed the trial court’s decision to dismiss the case and remanded the action back to the trial court. On 18 May 2016, the trial court denied the indirect purchaser class plaintiffs’ motion for reconsideration. As a result, the indirect purchaser class representatives have agreed to a settlement to exit the case and resolve their remaining claims. Terms of the settlement are confidential. The case will continue to move forward with document production and witness depositions with regard to the claims of the direct purchasers. Wellbutrin XL Plaintiffs claimed anti-trust injury related to allegedly sham patent litigation filed by Biovail against generic companies pursuing ANDAs for generic Wellbutrin XL. Plaintiffs alleged that a conspiracy to delay generic approval existed between Biovail and the Group, but the US District Court granted summary judgement in favour of the Group on those claims. The sole remaining claims in the matter relate to plaintiffs’ allegations that the Group entered into an anti-competitive reverse payment settlement to resolve the patent infringement litigation. The District Court granted summary judgement in favour of the Group on all claims. On 9 August 2017, the US Court of Appeals for the Third Circuit Court affirmed the trial court’s dismissal of plaintiffs’ case on summary judgement. On 31 August 2017, plaintiffs filed a motion for a rehearing en banc before the Third Circuit which was denied on 20 September 2017. Plaintiffs did not file a petition for certiorari asking the United States Supreme Court to review the decision, so the dismissal of the action is now final. Commercial and corporate The Group is a defendant in certain cases which allege violation of US federal securities and ERISA laws. The Group has been able to make a reliable estimate of the expected financial effect of the matters discussed in this category and has included a provision for such matters in the provision for legal and other disputes. Matters for which the Group has made a provision are also noted in Note 29, ‘Other provisions’.
Securities/ERISA class actions – Stiefel On 12 December 2011, the US Securities and Exchange Commission (SEC) filed a formal complaint against Stiefel Laboratories, Inc. and Charles Stiefel in the US District Court for the District of Florida alleging that Stiefel and its principals violated federal securities laws by inducing Stiefel employees to sell their shares in the employee stock plan back to the company at a greatly undervalued price and without disclosing to employees that the company was about to be sold to the Group. The case was stayed while several private actions brought by former Stiefel employees proceeded through the courts, but was returned to active status in early summer 2015. It is unclear when the case ultimately will be scheduled for trial. In addition to the SEC case, one private matter (the “Martinolich” case) remains. It is also pending in federal district court in Florida, but has been stayed pending the trial of the SEC matter. The allegations in the Martinolich case largely track those in the SEC matter: plaintiff, a former Stiefel employee, alleges that Stiefel and its officers and directors violated the US Employee Retirement Income Security Act (ERISA) and federal and state securities laws by inducing Stiefel employees to sell their shares in the employee stock plan back to Stiefel at a greatly undervalued price and without disclosing to employees that Stiefel was about to be sold to the Group.
Environmental matters The Group has been notified of its potential responsibility relating to past operations and its past waste disposal practices at certain sites, primarily in the US. Some of these matters are the subject of litigation, including proceedings initiated by the US federal or state governments for waste disposal, site remediation costs and tort actions brought by private parties. The Group has been advised that it may be a responsible party at approximately 19 sites, of which 10 appear on the National Priority List created by the Comprehensive Environmental Response Compensation and Liability Act (Superfund). These proceedings seek to require the operators of hazardous waste facilities, transporters of waste to the sites and generators of hazardous waste disposed of at the sites to clean up the sites or to reimburse the US Government for cleanup costs. In most instances, the Group is involved as an alleged generator of hazardous waste. Although Superfund provides that the defendants are jointly and severally liable for cleanup costs, these proceedings are frequently resolved on the basis of the nature and quantity of waste disposed of by the generator at the site. The Group’s proportionate liability for cleanup costs has been substantially determined for 18 of the sites referred to above. The Group’s potential liability varies greatly from site to site. The the cost of investigation, study and remediation at such sites could, over time, be significant. The Group has made a provision for these matters, as noted in Note 29, ‘Other provisions’. |
Presentation of the financial statements (Policies) |
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Implementation of new accounting standards and interpretations | Implementation of new accounting standards and interpretations An agenda decision by the IFRS Interpretations Committee in September 2017 clarified that charges for interest on tax should be reported within finance expense and certain penalties on tax settlements should be reported within administrative expenses. Previously GSK had reported these charges within the overall tax charge in the income statement or other comprehensive income, as appropriate. GSK has adopted the revised basis of reporting in 2017 and, as a result of a number of settlements during the year, has recorded credits for interest on tax for 2017 of £24 million in finance expense. There were no material charges for penalties on settlements during 2017 that required adjustment. Accrued interest payable on tax at 31 December 2017 was £52 million, and this is included within trade and other payables on the Group balance sheet. The impact on prior years was not material and so prior year amounts have not been restated. |
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Consolidation | Consolidation The consolidated financial statements include:
The financial statements of entities consolidated are made up to 31 December each year. Entities over which the Group has the power to direct the relevant activities so as to affect the returns to the Group, generally through control over the financial and operating policies, are accounted for as subsidiaries.
Where the Group has the ability to exercise joint control over, and rights to the net assets of, entities, the entities are accounted for as joint ventures. Where the Group has the ability to exercise joint control over an arrangement, but has rights to specified assets and obligations for specified liabilities of the arrangement, the arrangement is accounted for as a joint operation. Where the Group has the ability to exercise significant influence over entities, they are accounted for as associates. The results and assets and liabilities of associates and joint ventures are incorporated into the consolidated financial statements using the equity method of accounting. The Group’s rights to assets, liabilities, revenue and expenses of joint operations are included in the consolidated financial statements in accordance with those rights and obligations. Interests acquired in entities are consolidated from the date the Group acquires control and interests sold are de-consolidated from the date control ceases.
Transactions and balances between subsidiaries are eliminated and no profit before tax is taken on sales between subsidiaries until the products are sold to customers outside the Group. The relevant proportion of profits on transactions with joint ventures, joint operations and associates is also deferred until the products are sold to third parties. Transactions with non-controlling interests are recorded directly in equity. Deferred tax relief on unrealised intra-Group profit is accounted for only to the extent that it is considered recoverable. |
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Business combinations | Business combinations Business combinations are accounted for using the acquisition accounting method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration transferred is measured at fair value and includes the fair value of any contingent consideration. Where the consideration transferred, together with the non-controlling interest, exceeds the fair value of the net assets, liabilities and contingent liabilities acquired, the excess is recorded as goodwill. The costs of acquisition are charged to the income statement in the period in which they are incurred. Goodwill is capitalised as a separate item in the case of subsidiaries and as part of the cost of investment in the case of joint ventures and associates. Goodwill is denominated in the currency of the operation acquired. Where the cost of acquisition is below the fair value of the net assets acquired, the difference is recognised directly in the income statement. Where not all of the equity of a subsidiary is acquired the non-controlling interest is recognised either at fair value or at the non-controlling interest’s share of the net assets of the subsidiary, on a case-by-case basis. Changes in the Group’s ownership percentage of subsidiaries are accounted for within equity. |
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Foreign currency translation | Foreign currency translation Foreign currency transactions are booked in the functional currency of the Group company at the exchange rate ruling on the date of transaction. Foreign currency monetary assets and liabilities are retranslated into the functional currency at rates of exchange ruling at the balance sheet date. Exchange differences are included in the income statement. On consolidation, assets and liabilities, including related goodwill, of overseas subsidiaries, associates and joint ventures, are translated into Sterling at rates of exchange ruling at the balance sheet date. The results and cash flows of overseas subsidiaries, associates and joint ventures are translated into Sterling using average rates of exchange. Exchange adjustments arising when the opening net assets and the profits for the year retained by overseas subsidiaries, associates and joint ventures are translated into Sterling, less exchange differences arising on related foreign currency borrowings which hedge the Group’s net investment in these operations, are taken to a separate component of equity. When translating into Sterling the assets, liabilities, results and cash flows of overseas subsidiaries, associates and joint ventures which are reported in currencies of hyper-inflationary economies, adjustments are made where material to reflect current price levels. Any loss on net monetary assets is charged to the consolidated income statement. |
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Revenue | Revenue Revenue is recognised in the income statement when goods or services are supplied or made available to external customers against orders received, title and risk of loss is passed to the customer, reliable estimates can be made of relevant deductions and all relevant obligations have been fulfilled, such that the earnings process is regarded as being complete. Turnover represents net invoice value after the deduction of discounts and allowances given and accruals for estimated future rebates and returns. The methodology and assumptions used to estimate rebates and returns are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience and projected market conditions. Market conditions are evaluated using wholesaler and other third-party analyses, market research data and internally generated information. Value added tax and other sales taxes are excluded from revenue. Where the Group co-promotes a product and the counterparty records the sale, the Group records its share of revenue as co-promotion income within turnover. The nature of co-promotion activities is such that the Group records no costs of sales. Pharmaceutical turnover includes co-promotion revenue of £16 million (2016 – £9 million; 2015 – £14 million). In addition, initial or event-based milestone income (excluding royalty income) arising on development or marketing collaborations of the Group’s compounds or products with other parties is recognised in turnover. No such income is included in turnover for all the periods presented. Royalty income is recognised on an accruals basis in accordance with the terms of the relevant licensing agreements. |
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Expenditure | Expenditure Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can be reliably estimated. Manufacturing start-up costs between validation and the achievement of normal production are expensed as incurred. Advertising and promotion expenditure is charged to the income statement as incurred. Shipment costs on inter-company transfers are charged to cost of sales; distribution costs on sales to customers are included in selling, general and administrative expenditure. Restructuring costs are recognised and provided for, where appropriate, in respect of the direct expenditure of a business reorganisation where the plans are sufficiently detailed and well advanced, and where appropriate communication to those affected has been undertaken. |
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Research and development | Research and development Research and development expenditure is charged to the income statement in the period in which it is incurred. Development expenditure is capitalised when the criteria for recognising an asset are met, usually when a regulatory filing has been made in a major market and approval is considered highly probable. Property, plant and equipment used for research and development is capitalised and depreciated in accordance with the Group’s policy. |
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Environmental expenditure | Environmental expenditure Environmental expenditure related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible is charged to the income statement. The Group recognises its liability on a site-by-site basis when it can be reliably estimated. This liability includes the Group’s portion of the total costs and also a portion of other potentially responsible parties’ costs when it is probable that they will not be able to satisfy their respective shares of the clean-up obligation. Recoveries of reimbursements are recorded as assets when virtually certain. |
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Legal and other disputes | Legal and other disputes Provision is made for the anticipated settlement costs of legal or other disputes against the Group where an outflow of resources is considered probable and a reliable estimate can be made of the likely outcome. In addition, provision is made for legal or other expenses arising from claims received or other disputes. In respect of product liability claims related to certain products, there is sufficient history of claims made and settlements to enable management to make a reliable estimate of the provision required to cover unasserted claims. In certain cases, an incurred but not reported (IBNR) actuarial technique is used to determine this estimate. The Group may become involved in 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, appropriate disclosure about such cases would be included but no provision would be made. Costs associated with claims made by the Group against third parties are charged to the income statement as they are incurred. |
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Pensions and other post-employment benefits | Pensions and other post-employment benefits The costs of providing pensions under defined benefit schemes are calculated using the projected unit credit method and spread over the period during which benefit is expected to be derived from the employees’ services, consistent with the advice of qualified actuaries. Pension obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the yields of high quality corporate bonds. Pension scheme assets are measured at fair value at the balance sheet date. The costs of other post-employment liabilities are calculated in a similar way to defined benefit pension schemes and spread over the period during which benefit is expected to be derived from the employees’ services, in accordance with the advice of qualified actuaries. Actuarial gains and losses and the effect of changes in actuarial assumptions, are recognised in the statement of comprehensive income in the year in which they arise. The Group’s contributions to defined contribution plans are charged to the income statement as incurred. |
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Employee share plans | Employee share plans Incentives in the form of shares are provided to employees under share option and share award schemes. The fair values of these options and awards are calculated at their grant dates using a Black-Scholes option pricing model and charged to the income statement over the relevant vesting periods. The Group provides finance to ESOP Trusts to purchase company shares to meet the obligation to provide shares when employees exercise their options or awards. Costs of running the ESOP Trusts are charged to the income statement. Shares held by the ESOP Trusts are deducted from other reserves. A transfer is made between other reserves and retained earnings over the vesting periods of the related share options or awards to reflect the ultimate proceeds receivable from employees on exercise. |
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Property, plant and equipment | Property, plant and equipment Property, plant and equipment (PP&E) is stated at the cost of purchase or construction, less provisions for depreciation and impairment. Financing costs are capitalised within the cost of qualifying assets in construction. Depreciation is calculated to write off the cost less residual value of PP&E, excluding freehold land, using the straight-line basis over the expected useful life. Residual values and lives are reviewed, and where appropriate adjusted annually. The normal expected useful lives of the major categories of PP&E are:
On disposal of PP&E, the cost and related accumulated depreciation and impairments are removed from the financial statements and the net amount, less any proceeds, is taken to the income statement. |
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Leases | Leases Leasing agreements which transfer to the Group substantially all the benefits and risks of ownership of an asset are treated as finance leases, as if the asset had been purchased outright. The assets are included in PP&E or computer software and the capital elements of the leasing commitments are shown as obligations under finance leases. Assets held under finance leases are depreciated on a basis consistent with similar owned assets or the lease term, if shorter. The interest element of the lease rental is included in the income statement. All other leases are operating leases and the rental costs are charged to the income statement on a straight-line basis over the lease term. |
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Goodwill | Goodwill Goodwill is stated at cost less impairments. Goodwill is deemed to have an indefinite useful life and is tested for impairment at least annually. Where the fair value of the interest acquired in an entity’s assets, liabilities and contingent liabilities exceeds the consideration paid, this excess is recognised immediately as a gain in the income statement. |
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Other intangible assets | Other intangible assets Intangible assets are stated at cost less provisions for amortisation and impairments. Licences, patents, know-how and marketing rights separately acquired or acquired as part of a business combination are amortised over their estimated useful lives, generally not exceeding 20 years, using the straight-line basis, from the time they are available for use. The estimated useful lives for determining the amortisation charge take into account patent lives, where applicable, as well as the value obtained from periods of non-exclusivity. Asset lives are reviewed, and where appropriate adjusted, annually. Contingent milestone payments are recognised at the point that the contingent event becomes probable. Any development costs incurred by the Group and associated with acquired licences, patents, know-how or marketing rights are written off to the income statement when incurred, unless the criteria for recognition of an internally generated intangible asset are met, usually when a regulatory filing has been made in a major market and approval is considered highly probable. Acquired brands are valued independently as part of the fair value of businesses acquired from third parties where the brand has a value which is substantial and long term and where the brands either are contractual or legal in nature or can be sold separately from the rest of the businesses acquired. Brands are amortised over their estimated useful lives of up to 20 years, except where it is considered that the useful economic life is indefinite. The costs of acquiring and developing computer software for internal use and internet sites for external use are capitalised as intangible fixed assets where the software or site supports a significant business system and the expenditure leads to the creation of a durable asset. ERP systems software is amortised over seven to ten years and other computer software over three to five years. |
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Impairment of non-current assets | Impairment of non-current assets The carrying values of all non-current assets are reviewed for impairment, either on a stand-alone basis or as part of a larger cash generating unit, when there is an indication that the assets might be impaired. Additionally, goodwill, intangible assets with indefinite useful lives and intangible assets which are not yet available for use are tested for impairment annually. Any provision for impairment is charged to the income statement in the year concerned. Impairments of goodwill are not reversed. Impairment losses on other non-current assets are only reversed if there has been a change in estimates used to determine recoverable amounts and only to the extent that the revised recoverable amounts do not exceed the carrying values that would have existed, net of depreciation or amortisation, had no impairments been recognised. |
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Investments in associates, joint ventures and joint operations | Investments in associates, joint ventures and joint operations Investments in associates and joint ventures are carried in the consolidated balance sheet at the Group’s share of their net assets at date of acquisition and of their post-acquisition retained profits or losses together with any goodwill arising on the acquisition. The Group recognises its rights to assets, liabilities, revenue and expenses of joint operations. |
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Available-for-sale investments | Available-for-sale investments Liquid investments and other investments are classified as available-for-sale investments and are initially recorded at fair value plus transaction costs and then remeasured at subsequent reporting dates to fair value. Unrealised gains and losses on available-for-sale investments are recognised directly in other comprehensive income. Impairments arising from the significant or prolonged decline in fair value of an equity investment reduce the carrying amount of the asset directly and are charged to the income statement. On disposal or impairment of the investments, any gains and losses that have been deferred in other comprehensive income are reclassified to the income statement. Dividends on equity investments are recognised in the income statement when the Group’s right to receive payment is established. Equity investments are recorded in non-current assets unless they are expected to be sold within one year. Purchases and sales of equity investments are accounted for on the trade date and purchases and sales of other available-for-sale investments are accounted for on settlement date. |
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Inventories | Inventories Inventories are included in the financial statements at the lower of cost (including raw materials, direct labour, other direct costs and related production overheads) and net realisable value. Cost is generally determined on a first in, first out basis. Pre-launch inventory is held as an asset when there is a high probability of regulatory approval for the product. Before that point a provision is made against the carrying value to its recoverable amount; the provision is then reversed at the point when a high probability of regulatory approval is determined. |
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Trade receivables | Trade receivables Trade receivables are carried at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any provision available and then to the income statement. Subsequent recoveries of amounts previously provided for are credited to the income statement. Long-term receivables are discounted where the effect is material. |
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Borrowings | Borrowings All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing. |
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Taxation | Taxation Current tax is provided at the amounts expected to be paid applying tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is provided using rates of tax that have been enacted or substantively enacted by the balance sheet date. |
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Derivative financial instruments and hedging | Derivative financial instruments and hedging Derivative financial instruments are used to manage exposure to market risks. The principal derivative instruments used by GSK are foreign currency swaps, interest rate swaps, foreign exchange forward contracts and options. The Group does not hold or issue derivative financial instruments for trading or speculative purposes.
Derivative financial instruments are classified as held-for-trading and are carried in the balance sheet at fair value. Derivatives designated as hedging instruments are classified on inception as cash flow hedges, net investment hedges or fair value hedges. Changes in the fair value of derivatives designated as cash flow hedges are recognised in other comprehensive income to the extent that the hedges are effective. Ineffective portions are recognised in profit or loss immediately. Amounts deferred in other comprehensive income are reclassified to the income statement when the hedged item affects profit or loss. Net investment hedges are accounted for in a similar way to cash flow hedges. Changes in the fair value of derivatives designated as fair value hedges are recorded in the income statement, together with the changes in the fair value of the hedged asset or liability. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement. |
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Discounting | Discounting Where the time value of money is material, balances are discounted to current values using appropriate discount rates. The unwinding of the discounts is recorded in finance income and finance expense. |
Accounting principles and policies (Tables) |
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Summary of Expected Useful Lives of Property Plant and Equipment | The normal expected useful lives of the major categories of PP&E are:
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Summary of Currencies Translations and Relevant Exchange Rates | The currencies which most influence these translations and the relevant exchange rates were as follows:
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Segment information (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Turnover by Segment |
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Segment Profit and Operating Profit |
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Summary of Geographical Information | Geographical information The UK is regarded as being the Group’s country of domicile.
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Pharmaceuticals [member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Turnover by Product & Service |
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Consumer Healthcare [member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Turnover by Product & Service |
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Vaccines [member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Turnover by Product & Service |
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Other operating income/(expense) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text block1 [abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Information about Other Operating Income Expense |
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Operating profit (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Information About Profit Loss |
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Summary of Auditors Remuneration |
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Pension schemes [member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Auditors Remuneration | In addition to the above, fees paid in respect of the GSK pension schemes were:
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Employee costs (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text block1 [abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Employee Costs |
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Disclosure of Average Monthly Number of Persons Employed by the Group (Including Directors) | The average monthly number of persons employed by the Group (including Directors) during the year was:
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Summary of Compensation of the Directors and Senior Management | The compensation of the Directors and Senior Management (members of the CET) in aggregate, was as follows:
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Pensions and other post-employment benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Analysis of Defined Benefit Pension Obligation |
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Summary of Average Life Expectancy Assumed | The average life expectancy assumed now for an individual at the age of 60 and projected to apply in 2037 for an individual then at the age of 60 is as follows:
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Summary of Financial Assumptions in Assessing Defined Benefit Liabilities | The Group has applied the following financial assumptions in assessing the defined benefit liabilities:
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Summary of Amounts Recorded in Income Statement and Statement of Comprehensive Income Related to Defined Benefit Pension and Post-retirement Healthcare Schemes | The amounts recorded in the income statement and statement of comprehensive income for the three years ended 31 December 2017 in relation to the defined benefit pension and post-retirement healthcare schemes were as follows:
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Summary of Balance Sheet Presentation of Group Defined Benefit Pension Schemes and Other Post-retirement Benefits | A summarised balance sheet presentation of the Group defined benefit pension schemes and other post-retirement benefits is set out in the table below:
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Summary of Fair Values of Assets and Liabilities of UK and US Defined Benefit Pension Schemes Together with Aggregated Data for Other Defined Benefit Pension Schemes in Group | The fair values of the assets and liabilities of the UK and US defined benefit pension schemes, together with aggregated data for other defined benefit pension schemes in the Group are as follows:
The multi-asset funds comprise investments in pooled investment vehicles that are invested across a range of asset classes, increasing diversification within the growth portfolio. The index-linked gilts held as part of the UK repo programme are included in government bonds. The related loan is included within ‘Other assets’ at a value of £(773) million (2016 – £(1,698) million; 2015 – £(2,215) million).
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Summary of Movements in Fair Values of Assets |
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Summary of Movements in Defined Benefit Obligations |
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Summary of Net Defined Benefit Liability | The movement in the net defined benefit liability is as follows:
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Summary of Defined Benefit Pension Obligation Analysed by Membership Category | The defined benefit pension obligation analysed by membership category is as follows:
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Summary of Post-Retirement Benefit Obligation Analysed By Membership Category |
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Summary of Weighted Average Duration of Defined Benefit Obligation |
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Summary of Changes In Assumptions Used on Benefit Obligations, Defined Benefit Pension and Post Retirement Costs | Effect of changes in assumptions used on the benefit obligations and on the 2018 annual defined benefit pension and post retirement costs.
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Share-based Incentive Plans [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Analysis of Defined Benefit Pension Obligation | The cost of share-based incentive plans is analysed as follows:
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Defined benefit pension and post-retirement healthcare scheme. [member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Analysis of Defined Benefit Pension Obligation | The costs of the defined benefit pension and post-retirement healthcare schemes are charged in the income statement as follows:
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Defined Benefit Pension Obligation [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Analysis of Defined Benefit Pension Obligation | The defined benefit pension obligation is analysed as follows:
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Post-retirement benefits [member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Defined Benefit Liability |
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Major restructuring costs (Tables) |
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Summary of Costs Charged to Operating Profit | The costs charged to operating profit under these programmes were as follows:
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Finance income (Tables) |
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Summary of Interest Income |
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Finance expense (Tables) |
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Summary of Finance Cost |
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Associates and joint ventures (Tables) |
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Summary of After Tax Profits and Losses of Associates and Joint Ventures | The Group’s share of after tax profits and losses of associates and joint ventures is set out below:
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Summary of Group Held for Significant Associate | Summarised income statement information in respect of Innoviva is set out below for the periods in which the Group accounted for its investment in Innoviva as an associate. The Group’s 2017 share of after tax profits of associates and other comprehensive income includes a profit of £18 million and other comprehensive income of £nil in respect of Innoviva.
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Summary of Aggregated Financial Information | Aggregated financial information in respect of GSK’s share of other associated undertakings and joint ventures is set out below:
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Taxation (Tables) |
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Summary of Taxation Charge Based on Profits |
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Summary of Reconciliation of Tax Charge Calculated at the UK Statutory Rate on the Group Profit Before Tax with the Actual Tax Charge | The following table reconciles the tax charge calculated at the UK statutory rate on the Group profit before tax with the actual tax charge for the year.
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Summary of Tax on Items Charged to Equity and Statement of Comprehensive Income | Future tax charges, and therefore the Group’s effective tax rate, may be affected by factors such as acquisitions, disposals, restructurings, the location of research and development activity, tax regime reforms and resolution of open matters as we continue to bring our tax affairs up to date around the world.
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Impact of Tax Reform on Profits Attributable to Shareholders | The impact of tax reform on profits attributable to shareholders in 2017 is set out below.
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Impact on Tax Charge Arising From US Tax Reform | The impact on the tax charge arising from US tax reform was as follows:
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Summary of Movement in Deferred Tax Assets and Liabilities | Movement in deferred tax assets and liabilities
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Summary of Net Temporary Differences Include Accrued Expenses | Deferred tax assets and liabilities are recognised on the balance sheet as follows:
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Summary of Temporary Difference Unused Tax Losses and Unused Tax Credits | Deferred tax assets are recognised where it is probable that future taxable profit will be available to utilise losses. Unrecognised tax losses are as follows:
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Earnings per share (Tables) |
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Summary of Basic and Diluted Earnings Per Share |
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Schedule of Numbers of Shares Earnings Per Share | The numbers of shares used in calculating basic and diluted earnings per share are reconciled below.
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Dividends (Tables) |
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Summary of Interim Financial Reporting |
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Summary of Dividends to Shareholders | The amounts recognised in each year were as follows:
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Property, plant and equipment (Tables) |
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Summary of Property, Plant and Equipment |
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Goodwill (Tables) |
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Summary of Changes in Goodwill |
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Summary of Goodwill Allocated to Segments |
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Schedule of Discounted Cash Flow Models Used in Impairment Tests | Details relating to the discounted cash flow models used in the impairment tests of the Pharmaceuticals, Vaccines and Consumer Healthcare cash generating units are as follows:
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Other intangible assets (Tables) |
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Summary of Other Intangible Assets |
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Schedule of Amortisation and Impairment Losses, Net of Reversals | Amortisation and impairment losses, net of reversals, have been charged in the income statement as follows:
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Summary of Book Values of Largest Individual Items | Licences, patents, etc. includes a large number of acquired licences, patents, know-how agreements and marketing rights, which are either marketed or in use, or still in development. Note 38, ‘Acquisitions and disposals’ gives details of additions through business combinations in the year. The book values of the largest individual items are as follows:
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Summary of Book Values of Major Brands | Indefinite life brands comprise a portfolio of Consumer Healthcare products primarily acquired with the acquisitions of Sterling Winthrop, Inc. in 1994, Block Drug Company, Inc. in 2001, CNS, Inc. in 2006 and the Novartis Consumer Healthcare business in 2015, together with a number of pharmaceutical brands from the acquisition of Stiefel Laboratories, Inc. in 2009. The book values of the major brands are as follows:
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Investments in associates and joint ventures (Tables) |
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Schedule of Investments in Associates and Joint Ventures |
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Summary of Balance Sheet Information | Summarised balance sheet information, based on results information, in respect of Innoviva is set out below:
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Other investments (Tables) |
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Schedule of Other Investments |
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Schedule of Carrying Value of Other Investments | The carrying value at 31 December of Other investments which have been impaired is as follows:
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Other non-current assets (Tables) |
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Summary of Other Non-Current Assets |
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Inventories (Tables) |
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Summary of Inventories |
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Trade and other receivables (Tables) |
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Summary of Trade Receivables and Bad and Doubtful Debts |
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Cash and cash equivalents (Tables) |
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Summary of Cash and Cash Equivalents |
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Assets held for sale (Tables) |
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Summary of Assets Held for Sale |
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Trade and other payables (Tables) |
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Summary of Trade and Other Payables |
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Summary of Increase/(Decrease) in Financial Liability and Loss/(Gain) in Income Statement | The table below shows on an indicative basis the income statement and balance sheet sensitivity to reasonably possible changes in key assumptions.
Pfizer’s put option over its shareholding in ViiV Healthcare was recognised during 2016 and is currently exercisable. The table below shows on an indicative basis the income statement and balance sheet sensitivity of the Pfizer put option to reasonably possible changes in key assumptions.
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Other provisions (Tables) |
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Summary of Other Provisions |
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Other non-current liabilities (Tables) |
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Summary of Other Noncurrent Liabilities |
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Net debt (Tables) |
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Schedule of Current Assets, Short and Long Term Borrowings |
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Schedule of Finance Lease Obligations | Finance lease obligations
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Share capital and share premium account (Tables) |
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Summary of Share Capital and Share Premium |
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Summary of Share Capital |
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Movements in equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text block1 [abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cumulative Translation Exchange in Equity |
The analysis of other comprehensive income by equity category is as follows:
|
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Summary of Analysis of Other Reserves | The analysis of other reserves is as follows:
|
Adjustments reconciling profit after tax to operating cash flows (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text block1 [abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash Generated from Operations |
|
Reconciliation of net cash flow to movement in net debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Summary of Net Debt |
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Summary of Analysis of Changes in Net Debt |
|
Acquisitions and disposals (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Summary of Profit on Disposal of Businesses | The profit on disposal was determined as follows:
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Summary of Investment in Associates and Joint Ventures |
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Summary of Cash Flows from Business Combinations | Cash flows
Cash flows
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Summary of Fair Values of the Assets Acquired in Business Combinations, Including Goodwill | The fair values of the assets acquired in business combinations, including goodwill, are set out in the table below.
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Contingent consideration liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Summary of Fair Value of Contingent Consideration | The consideration for certain acquisitions includes amounts contingent on future events such as development milestones or sales performance. The Group has provided for the fair value of this contingent consideration as follows:
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Summary of Possible Changes in key Inputs to Valuation of Contingent Consideration Liabilities | The table below shows on an indicative basis the income statement and balance sheet sensitivity to reasonably possible changes in key inputs to the valuations of the contingent consideration liabilities.
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Non-controlling interests (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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ViiV healthcare [member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarised Financial Information of ViiV Healthcare Group and GSK Consumer Healthcare Joint Venture | Summarised financial information in respect of the ViiV Healthcare group and GSK Consumer Healthcare Joint Venture is set out below: ViiV Healthcare
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Schedule of Amount Attributable to VIIV Healthcare Group Included in GSK's Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Balance Shee | The following amounts attributable to the ViiV Healthcare group are included in GSK’s Consolidated statement of comprehensive income, Consolidated statement of changes in equity and Consolidated balance sheet:
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Consumer health care joint venture [member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarised Financial Information of ViiV Healthcare Group and GSK Consumer Healthcare Joint Venture | Consumer Healthcare Joint Venture
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Schedule of Amount Attributable to VIIV Healthcare Group Included in GSK's Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Balance Shee | The following amounts attributable to the Consumer Healthcare Joint Venture are included in GSK’s Consolidated statement of comprehensive income, Consolidated statement of changes in equity and Consolidated balance sheet:
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Commitments (Tables) |
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Schedule of Contractual Obligations and Commitments |
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Summary of Commitments Under Non-Cancellable Operating Leases | Commitments under non-cancellable operating leases are disclosed below. £117 million (2016 – £186 million) is provided against these commitments on the Group’s balance sheet.
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Financial instruments and related disclosures (Tables) |
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Summary of External Credit Exposure | These banks are used for local investment purposes.
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Summary of Financial Assets and Liabilities |
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Summary of Fair Value of Financial Instruments |
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Summary of Financial and Non Financial Assets |
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Summary of Ageing of Financial Assets Which are Past Due and for Which No Provision for Bad or Doubtful Debts Has Been Made | The following table shows the ageing of such financial assets which are past due and for which no provision for bad or doubtful debts has been made:
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Reconciliation of Financial Instruments Within Trade and Other Payables, Other Provisions, Other Non-current Liabilities and Contingent Consideration Liabilities |
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Summary of Fair Values of Derivatives Held |
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Summary of Offsetting of Financial Assets and Liabilities | he following tables set out the financial assets and liabilities that are offset, or subject to enforceable master netting arrangements and other similar agreements but not offset, as at 31 December 2017 and 31 December 2016. The column ‘Net amount’ shows the impact on the Group’s balance sheet if all offset rights were exercised.
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Summary of Debt Interest Rate Repricing | The following table sets out the exposure of the Group to interest rates on debt, including commercial paper. The maturity analysis of fixed rate debt is stated by contractual maturity and of floating rate debt by interest rate repricing dates. For the purpose of this table, debt is defined as all classes of borrowings other than obligations under finance leases.
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Summary of Anticipated Contractual Cash Flows Including Interest Payable for the Non-Derivative Financial Liabilities on Undiscounted Basis |
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Summary of Anticipated Contractual Cash Flows for Derivative Instruments, Excluding Embedded Derivatives and Equity Options, Using Undiscounted Cash Flows | The amounts receivable and payable in less than one year have decreased compared with 31 December 2016 as a result of reduced hedging of the US commercial paper programme.
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Currency risk [member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sensitivity Analysis for Each Type of Market Risk |
The equity impact, shown below, for foreign exchange sensitivity relates to derivative and non-derivative financial instruments hedging the Group’s net investments in its European (Euro) foreign operations and cash flow hedges of its foreign exchange exposure arising on Euro denominated coupon payments relating to notes issued under the Group’s European Medium Term Note programme and a number of highly probable forecast transactions denominated in US Dollar.
The tables below present the Group’s sensitivity to a weakening and strengthening of Sterling against the relevant currency based on the composition of net debt as shown in Note 31 adjusted for the effects of foreign exchange derivatives that are not part of net debt but affect future foreign currency cash flows.
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Interest rate risk [member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sensitivity Analysis for Each Type of Market Risk | The table below hypothetically shows the Group’s sensitivity to changes in interest rates in relation to Sterling, US Dollar and Euro floating rate financial assets and liabilities. If the interest rates applicable to floating rate financial assets and liabilities were to have increased by 1% (100 basis points), and assuming other variables had remained constant, it is estimated that the Group’s finance income for 2017 would have increased by approximately £5 million (2016 – £3 million increase). A 1% (100 basis points) movement in interest rates is not deemed to have a material effect on equity.
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Level 3 [member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value of Financial Instruments | Movements in the year for financial instruments measured using Level 3 valuation methods are presented below:
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Employee share schemes (Tables) |
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Schedule of Number of Shares and ADS Issuable |
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Summary of Valuation Model Used to Valuing Saving - Related Option to Arrive at the Share Based Payment Charge | The assumptions used in the model are as follows:
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Summary of Option Outstanding |
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Summary of Shares Held for Share Award Schemes |
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Principal Group companies (Tables) |
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text block1 [abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Principal Subsidiaries and Their Countries of Incorporation | The following represent the principal subsidiaries and their countries of incorporation of the Group at 31 December 2017. The equity share capital of these entities is wholly owned by the Group except where its percentage interest is shown otherwise. All companies are incorporated in their principal country of operation except where stated.
|
Presentation of the Financial Statements - Additional Information (Detail) £ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2017
GBP (£)
| |
Presentation Of The Financial Statements [Abstract] | |
Date of end of reporting period | Dec. 31, 2017 |
Period covered by financial statements | These financial statements cover the financial year from 1 January to 31 December 2017, with comparative figures for the financial years from 1 January to 31 December 2016 and, where appropriate, from 1 January to 31 December 2015. |
Interest on tax | £ 24 |
Accrued interest payable on tax | £ 52 |
Accounting Principles and Policies - Summary of Expected Useful Lives of Property Plant and Equipment (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Freehold buildings [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Useful lives of property plant and equipment | 20 to 50 years |
Leasehold land and buildings [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Useful lives of property plant and equipment | Lease term or 20 to 50 years |
Plant and machinery [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Useful lives of property plant and equipment | 10 to 20 years |
Equipment and vehicles [member] | |
Disclosure of detailed information about property, plant and equipment [line items] | |
Useful lives of property plant and equipment | 3 to 10 years |
New Accounting Requirements - Additional Information (Detail) £ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2017
GBP (£)
| |
Description Of New Accounting Requirements [Line Items] | |
IFRS 15, description | IFRS 15 'Revenue from contracts with customers' was issued in May 2014 and has been implemented by the Group from 1 January 2018. The Standard provides a single, principles-based approach to the recognition of revenue from all contracts with customers. It focuses on the identification of performance obligations in a contract and requires revenue to be recognised when or as those performance obligations are satisfied. |
IFRS 9, description | IFRS 9 'Financial instruments' was issued in its final form in July 2014 and has been implemented by the Group from 1 January 2018. The Standard replaces the majority of IAS 39 and covers the classification, measurement and de-recognition of financial assets and financial liabilities, introduces a new impairment model for financial assets based on expected losses rather than incurred losses and provides a new hedge accounting model. |
IFRS 16, description | IFRS 16 'Leases' was issued in January 2016 and will be implemented by the Group from 1 January 2019. The Standard will replace IAS 17 'Leases' and will require lease liabilities and 'right of use' assets to be recognised on the balance sheet for almost all leases. |
Effect of overlay approach reclassification [member] | |
Description Of New Accounting Requirements [Line Items] | |
Cumulative adjustment increase decrease to equity | £ 11 |
Increase (decrease) due to application of IFRS 15 [member] | |
Description Of New Accounting Requirements [Line Items] | |
Cumulative adjustment increase decrease to equity | £ 4 |
Exchange Rates - Summary of Currencies Translations and Relevant Exchange Rates (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
USD [member] | |||
Disclosure of foreign exchange rates [line items] | |||
Average rates | 1.30 | 1.36 | 1.53 |
Period end rates | 1.35 | 1.24 | 1.47 |
Euro [member] | |||
Disclosure of foreign exchange rates [line items] | |||
Average rates | 1.15 | 1.23 | 1.37 |
Period end rates | 1.13 | 1.17 | 1.36 |
Yen [member] | |||
Disclosure of foreign exchange rates [line items] | |||
Average rates | 145 | 149 | 185 |
Period end rates | 152 | 144 | 177 |
Segment Information - Summary of Geographical Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of geographical areas [line items] | |||
Turnover | £ 30,186 | £ 27,889 | £ 23,923 |
Non-current assets | 34,566 | 36,096 | |
UK [member] | |||
Disclosure of geographical areas [line items] | |||
Non-current assets | 6,824 | 7,060 | |
US [member] | |||
Disclosure of geographical areas [line items] | |||
Non-current assets | 6,841 | 7,802 | |
International [member] | |||
Disclosure of geographical areas [line items] | |||
Non-current assets | 20,901 | 21,234 | |
Customer [member] | |||
Disclosure of geographical areas [line items] | |||
Turnover | 30,186 | 27,889 | 23,923 |
Customer [member] | UK [member] | |||
Disclosure of geographical areas [line items] | |||
Turnover | 940 | 1,056 | 1,102 |
Customer [member] | US [member] | |||
Disclosure of geographical areas [line items] | |||
Turnover | 11,263 | 10,197 | 8,222 |
Customer [member] | International [member] | |||
Disclosure of geographical areas [line items] | |||
Turnover | £ 17,983 | £ 16,636 | £ 14,599 |
Other Operating Income/(Expense) - Information about Other Operating Income Expense (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of other operating income expense [abstract] | |||
Impairment of equity investments | £ (30) | £ (47) | £ (263) |
Disposal of equity investments | 37 | 254 | 342 |
Disposal of businesses and assets | 195 | 283 | 9,661 |
Fair value remeasurements on contingent consideration recognised in business combinations | (1,012) | (2,205) | (1,965) |
Remeasurement of ViiV Healthcare put option liabilities and preferential dividends | 13 | (577) | |
Remeasurement of Consumer Healthcare put option liability | (1,186) | (1,133) | (83) |
Fair value adjustments on derivative financial instruments | 9 | (3) | 2 |
Other income/(expense) | 9 | 23 | 21 |
Other operating income expense | £ (1,965) | £ (3,405) | £ 7,715 |
Operating Profit - Summary of Information About Profit Loss (Detail) - GBP (£) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Profit or loss [abstract] | |||
Employee costs (Note 9) | £ 9,122,000,000 | £ 8,212,000,000 | £ 8,030,000,000 |
Advertising | 1,351,000,000 | 1,265,000,000 | 1,059,000,000 |
Distribution costs | 405,000,000 | 395,000,000 | 376,000,000 |
Depreciation of property, plant and equipment | 988,000,000 | 978,000,000 | 892,000,000 |
Impairment of property, plant and equipment, net of reversals | 327,000,000 | 180,000,000 | 346,000,000 |
Amortisation of intangible assets | 934,000,000 | 796,000,000 | 738,000,000 |
Impairment of intangible assets, net of reversals | 690,000,000 | 22,000,000 | 217,000,000 |
Net foreign exchange losses | 215,000,000 | 53,000,000 | 47,000,000 |
Inventories: | |||
Cost of inventories included in cost of sales | 8,526,000,000 | 8,093,000,000 | 7,602,000,000 |
Write-down of inventories | 701,000,000 | 533,000,000 | 488,000,000 |
Reversal of prior year write-down of inventories | (352,000,000) | (145,000,000) | (65,000,000) |
Operating lease rentals: | |||
Minimum lease payments | 110,000,000 | 91,000,000 | 101,000,000 |
Contingent rents | 4,000,000 | 4,000,000 | 8,000,000 |
Sub-lease payments | 5,000,000 | 4,000,000 | 7,000,000 |
Fees payable to the company's auditor and its associates in relation to the Group | £ 29,200,000 | £ 29,700,000 | £ 33,100,000 |
Operating Profit - Additional Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of Operating Profit [line items] | |||
Net foreign exchange losses | £ (215) | £ (53) | £ (47) |
Major restructuring costs | 1,056 | 970 | 1,891 |
Liquidation Or Disposal Of Overseas Subsidiary [member] | |||
Disclosure of Operating Profit [line items] | |||
Net foreign exchange losses | £ 109 | £ 0 | £ 0 |
Operating Profit - Summary of Auditors Remuneration (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Auditor's remuneration [abstract] | |||
Audit | £ 27.7 | £ 26.6 | £ 28.1 |
Taxation compliance | 0.2 | 0.2 | 0.3 |
Taxation advice | 0.1 | 1.8 | 3.2 |
Other assurance services | 1.0 | 0.3 | 1.1 |
All other services | 0.2 | 0.8 | 0.4 |
Auditors remuneration | 29.2 | 29.7 | 33.1 |
Pension schemes [member] | |||
Auditor's remuneration [abstract] | |||
Audit | 0.3 | 0.4 | 0.3 |
All other services | 0.1 | 0.0 | 0.0 |
GLAXOSMITHKLINE PLC [member] | |||
Auditor's remuneration [abstract] | |||
Audit | 7.0 | 5.8 | 7.5 |
Subsidiaries [member] | |||
Auditor's remuneration [abstract] | |||
Audit | 16.2 | 16.4 | 16.3 |
Attestation under s.404 of Sarbanes-Oxley Act 2002 [member] | |||
Auditor's remuneration [abstract] | |||
Audit | £ 4.5 | £ 4.4 | £ 4.3 |
Employee Costs - Summary of Employee Costs (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Short-term employee benefits expense [abstract] | |||
Wages and salaries | £ 7,116 | £ 6,391 | £ 6,132 |
Social security costs | 802 | 733 | 633 |
Pension and other post-employment costs, including augmentations (Note 28) | 616 | 541 | 467 |
Cost of share-based incentive plans | 347 | 338 | 349 |
Severance and other costs from integration and restructuring activities | 241 | 209 | 449 |
Employee benefits expense | £ 9,122 | £ 8,212 | £ 8,030 |
Employee Costs - Summary of Cost of Share-based Incentive Plans (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Expense from share based payment transactions with employees [line items] | |||
Cost of share-based incentive plans | £ 347 | £ 338 | £ 349 |
Share Value Plan [member] | |||
Expense from share based payment transactions with employees [line items] | |||
Cost of share-based incentive plans | 276 | 271 | 307 |
Performance Share Plan [member] | |||
Expense from share based payment transactions with employees [line items] | |||
Cost of share-based incentive plans | 47 | 39 | 26 |
Share option plans [member] | |||
Expense from share based payment transactions with employees [line items] | |||
Cost of share-based incentive plans | 4 | 4 | 4 |
Cash settled and other plans [member] | |||
Expense from share based payment transactions with employees [line items] | |||
Cost of share-based incentive plans | £ 20 | £ 24 | £ 12 |
Employee Costs - Disclosure of Average Monthly Number of Persons Employed by the Group (Including Directors) (Detail) - Employee |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of employee costs and numbers [line items] | |||
Average number of employees | 99,349 | 99,827 | 101,192 |
Manufacturing [member] | |||
Disclosure of employee costs and numbers [line items] | |||
Average number of employees | 38,632 | 38,611 | 37,025 |
Selling, general and administration [member] | |||
Disclosure of employee costs and numbers [line items] | |||
Average number of employees | 49,141 | 49,961 | 52,121 |
Research and development [member] | |||
Disclosure of employee costs and numbers [line items] | |||
Average number of employees | 11,576 | 11,255 | 12,046 |
Employee Costs - Summary of Compensation of the Directors and Senior Management (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Employees Benefit [abstract] | |||
Wages and salaries | £ 26 | £ 25 | £ 23 |
Social security costs | 4 | 4 | 2 |
Pension and other post-employment costs | 3 | 2 | 3 |
Cost of share-based incentive plans | 22 | 15 | 18 |
Key management personnel compensation | £ 55 | £ 46 | £ 46 |
Major Restructuring Costs - Additional Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Major Restructuring Costs [Abstract] | |||
Total restructuring costs | £ 1,056 | ||
Legacy support functions and Novartis integration provisions | 43 | £ 140 | £ 44 |
Asset impairments | 278 | 158 | 419 |
Other non-cash items | £ 247 | £ 108 | £ 51 |
Major Restructuring Costs - Summary of Costs Charged to Operating Profit (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Major Restructuring Costs [Abstract] | |||
Increase in provision for major restructuring programmes | £ 259 | £ 163 | £ 718 |
Amount of provision reversed unused | (43) | (140) | (44) |
Impairment losses recognised | 278 | 158 | 419 |
Other non-cash charges | 247 | 108 | 51 |
Other cash costs | 315 | 681 | 747 |
Cost charged to operating profit | £ 1,056 | £ 970 | £ 1,891 |
Finance Income - Summary of Interest Income (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Analysis of income and expense [abstract] | |||
cash and cash equivalents | £ 60 | £ 67 | £ 71 |
available-for-saleinvestments | 2 | 1 | 1 |
derivatives at fair value through profit or loss | 24 | ||
loans and receivables | 1 | 2 | 3 |
Fair value adjustments on derivatives at fair value through profit or loss | 2 | 2 | 5 |
Finance income | £ 65 | £ 72 | £ 104 |
Finance Expense - Summary of Finance Cost (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Interest expense arising on: | |||
financial liabilities at amortised cost | £ (698) | £ (671) | £ (655) |
derivatives at fair value through profit or loss | (22) | (30) | (64) |
Fair value movements on other derivatives at fair value through profit or loss | (4) | (3) | (6) |
Reclassification of cash flow hedge from other comprehensive income | (1) | (2) | |
Unwinding of discounts on provisions | (16) | (16) | (16) |
Other finance expense | 6 | (15) | (14) |
Finance Costs | £ (734) | £ (736) | £ (757) |
Finance Expense - Additional Information (Detail) £ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2017
GBP (£)
| |
Disclosure Of Finance Expense [abstract] | |
Description of financial instrument | All derivatives accounted for at fair value through profit or loss, other than designated and effective hedging instruments (see Note 42, 'Financial instruments and related disclosures'), are classified as held-for-trading financial instruments under IAS 39. Interest expense arising on derivatives at fair value through profit or loss relates to swap interest expense. |
Interest relating to income taxes | £ 24 |
Associates and Joint Ventures - Summary of After Tax Profits and Losses of Associates and Joint Ventures (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of financial information of associates and joint ventures [line items] | |||
Share of after tax profits and losses of associates and joint ventures | £ 13 | £ 5 | £ 14 |
Joint ventures [member] | |||
Disclosure of financial information of associates and joint ventures [line items] | |||
Share of after tax profits and losses of associates and joint ventures | (3) | (4) | (2) |
Associates [member] | |||
Disclosure of financial information of associates and joint ventures [line items] | |||
Share of after tax profits and losses of associates and joint ventures | £ 16 | £ 9 | £ 16 |
Associates and joint ventures - Additional Information (Detail) - GBP (£) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of joint ventures and associates [line items] | |||
Profit after taxation for the year | £ 13,000,000 | £ 5,000,000 | £ 14,000,000 |
Other comprehensive income | 713,000,000 | 962,000,000 | (487,000,000) |
Sales to associates and joint ventures | 41,000,000 | £ 43,000,000 | £ 41,000,000 |
Innoviva Inc [member] | |||
Disclosure of joint ventures and associates [line items] | |||
Profit after taxation for the year | 18,000,000 | ||
Other comprehensive income | £ 0 |
Associates and Joint Ventures - Summary of Group Held for Significant Associate (Detail) - GBP (£) £ in Millions |
4 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of financial information of associates and joint ventures [line items] | ||||
Turnover | £ 30,186 | £ 27,889 | £ 23,923 | |
Profit after taxation | 2,169 | 1,062 | 8,372 | |
Other comprehensive income | 713 | 962 | (487) | |
Total comprehensive income | 2,882 | 2,024 | £ 7,885 | |
Innoviva Inc [member] | ||||
Disclosure of financial information of associates and joint ventures [line items] | ||||
Turnover | £ 20 | 165 | 98 | |
Profit after taxation | 4 | 103 | 44 | |
Other comprehensive income | 0 | 0 | 0 | |
Total comprehensive income | £ 4 | £ 103 | £ 44 |
Associates and Joint Ventures - Summary of Aggregated Financial Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of financial information of associates and joint ventures [line items] | |||
Share of turnover | £ 30,186 | £ 27,889 | £ 23,923 |
Share of after tax (losses)/profits | 2,169 | 1,062 | 8,372 |
Share of other comprehensive income | 713 | 962 | (487) |
Share of total comprehensive (expense)/income | 2,882 | 2,024 | 7,885 |
Other associates [member] | |||
Disclosure of financial information of associates and joint ventures [line items] | |||
Share of turnover | 252 | 133 | 188 |
Share of after tax (losses)/profits | (5) | (1) | 12 |
Share of other comprehensive income | 25 | ||
Share of total comprehensive (expense)/income | £ (5) | £ (1) | £ 37 |
Taxation - Summary of Taxation Charge Based on Profits (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current tax expense (income) and adjustments for current tax of prior periods [abstract] | |||
Credit in respect of prior periods | £ (508) | £ (149) | £ (508) |
Total current taxation | 1,619 | 1,418 | 2,572 |
Total deferred taxation | (263) | (541) | (418) |
Total tax | 1,356 | 877 | 2,154 |
UK [member] | |||
Current tax expense (income) and adjustments for current tax of prior periods [abstract] | |||
Current tax expense (income) | 199 | 241 | 156 |
International [member] | |||
Current tax expense (income) and adjustments for current tax of prior periods [abstract] | |||
Current tax expense (income) | £ 1,928 | £ 1,326 | £ 2,924 |
Taxation - Summary of Tax on Items Charged to Equity and Statement of Comprehensive Income (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Deferred taxation | |||
Share-based payments | £ (4) | £ (12) | |
Defined benefit plans | (247) | £ 94 | (110) |
Exchange movements | 0 | 0 | 0 |
Fair value movements on cash flow hedges | 2 | ||
Fair value movements on available-for-saleinvestments | 29 | 51 | (55) |
Total equity and comprehensive income | (222) | 147 | (177) |
Total (charge)/credit to equity and statement of comprehensive income | (196) | 186 | (125) |
Share-based payments | 7 | 22 | |
Defined benefit plans | 26 | 32 | 30 |
Total equity and comprehensive income | £ 26 | £ 39 | £ 52 |
Taxation - Impact of Tax Reform on Profits Attributable to Shareholders (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income tax expense benefits [line items] | |||
Other operating expenses | £ (1,965) | £ (3,405) | £ 7,715 |
Current tax | (1,619) | (1,418) | (2,572) |
Deferred tax | 263 | 541 | 418 |
Profit after taxation for the year | 2,169 | 1,062 | 8,372 |
Profit attributable to non-controlling interests | 637 | 150 | (50) |
Profit attributable to shareholders | 1,532 | £ 912 | £ 8,422 |
Swiss tax reform [Member] | |||
Income tax expense benefits [line items] | |||
Deferred tax | 483 | ||
Profit after taxation for the year | 483 | ||
Profit attributable to non-controlling interests | 176 | ||
Profit attributable to shareholders | 307 | ||
US tax reform [member] | |||
Income tax expense benefits [line items] | |||
Other operating expenses | (666) | ||
Current tax | (273) | ||
Deferred tax | (805) | ||
Profit after taxation for the year | (1,744) | ||
Profit attributable to non-controlling interests | (114) | ||
Profit attributable to shareholders | £ (1,630) |
Taxation - Impact on Tax Charge Arising From US Tax Reform (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of tax reform [line items] | |||
Current tax | £ 1,619 | £ 1,418 | £ 2,572 |
Deferred tax | (263) | (541) | (418) |
Tax charge/tax rate | 1,356 | £ 877 | £ 2,154 |
US tax reform [member] | |||
Disclosure of tax reform [line items] | |||
Current tax | 273 | ||
Deferred tax | 805 | ||
US [member] | Revaluation of assets and liabilities [Member] | |||
Disclosure of tax reform [line items] | |||
Current tax | 75 | ||
Deferred tax | (805) | ||
Tax charge/tax rate | (730) | ||
US [member] | Repatriation Taxes [Member] | |||
Disclosure of tax reform [line items] | |||
Current tax | (348) | ||
Tax charge/tax rate | (348) | ||
US [member] | US tax reform [member] | |||
Disclosure of tax reform [line items] | |||
Current tax | (273) | ||
Deferred tax | (805) | ||
Tax charge/tax rate | £ (1,078) |
Taxation - Summary of Net Deferred Tax Asset (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Major components of tax expense (income) [abstract] | ||
Deferred tax assets | £ 3,796 | £ 4,374 |
Deferred tax liabilities | (1,396) | (1,934) |
Total | £ 2,400 | £ 2,440 |
Earnings per share - Summary of Basic and Diluted Earnings Per Share (Detail) - £ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Earnings per share [abstract] | |||
Basic earnings per share | £ 0.314 | £ 0.188 | £ 1.743 |
Diluted earnings per share | £ 0.310 | £ 0.186 | £ 1.723 |
Earnings per share - Schedule of Numbers of Shares Earnings Per Share (Detail) - shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Weighted average number of shares in issue | |||
Basic | 4,886 | 4,860 | 4,831 |
Dilution for share options and awards | 55 | 49 | 57 |
Diluted | 4,941 | 4,909 | 4,888 |
Dividends - Summary of Interim Financial Reporting (Detail) - GBP (£) £ / shares in Units, £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of dividends [line items] | |||
Dividend per share (pence) | £ 0.80 | £ 0.80 | £ 0.80 |
Total dividend | £ 3,911 | £ 3,897 | £ 3,872 |
First interim [member] | |||
Disclosure of dividends [line items] | |||
Paid | Jul. 13, 2017 | Jul. 14, 2016 | Jul. 09, 2015 |
Dividend per share (pence) | £ 0.19 | £ 0.19 | £ 0.19 |
Total dividend | £ 928 | £ 923 | £ 920 |
Second interim [member] | |||
Disclosure of dividends [line items] | |||
Paid | Oct. 12, 2017 | Oct. 13, 2016 | Oct. 01, 2015 |
Dividend per share (pence) | £ 0.19 | £ 0.19 | £ 0.19 |
Total dividend | £ 929 | £ 925 | £ 919 |
Third interim [member] | |||
Disclosure of dividends [line items] | |||
Paid | Jan. 11, 2018 | Jan. 12, 2017 | Jan. 14, 2016 |
Dividend per share (pence) | £ 0.19 | £ 0.19 | £ 0.19 |
Total dividend | £ 929 | £ 925 | £ 919 |
Fourth interim [member] | |||
Disclosure of dividends [line items] | |||
Paid | Apr. 12, 2018 | Apr. 13, 2017 | Apr. 14, 2016 |
Dividend per share (pence) | £ 0.23 | £ 0.23 | £ 0.23 |
Total dividend | £ 1,125 | £ 1,124 | £ 1,114 |
Special dividend [member] | |||
Disclosure of dividends [line items] | |||
Paid | Apr. 14, 2016 | ||
Dividend per share (pence) | £ 0.20 | ||
Total dividend | £ 969 |
Dividends - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Disclosure of Dividends [abstract] | |
Description of compliance with IFRSs applied For interim financial report | Under IFRS interim dividends are only recognised in the financial statements when paid and not when declared. GSK normally pays a dividend two quarters after the quarter to which it relates and one quarter after it is declared. The 2017 financial statements recognise those dividends paid in 2017, namely the third and fourth interim dividends for 2016, and the first and second interim dividends for 2017. |
Dividends - Summary of Dividends to Shareholders (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of Dividends [abstract] | |||
Dividends to shareholders | £ 3,906 | £ 4,850 | £ 3,874 |
Goodwill - Summary of Changes in Goodwill (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of reconciliation of changes in goodwill [line items] | ||
Goodwill Beginning balance | £ 5,965 | £ 5,162 |
Goodwill Ending Balance | 5,734 | 5,965 |
Cost [member] | ||
Disclosure of reconciliation of changes in goodwill [line items] | ||
Goodwill Beginning balance | 5,965 | 5,162 |
Exchange adjustments | (228) | 814 |
Additions through business combinations (Note 38) | 7 | |
Transfer to assets held for sale | (3) | (18) |
Goodwill Ending Balance | £ 5,734 | £ 5,965 |
Goodwill - Summary of Goodwill Allocated to Segments (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Disclosure of reconciliation of changes in goodwill [line items] | |||
Goodwill | £ 5,734 | £ 5,965 | £ 5,162 |
Pharmaceuticals [member] | |||
Disclosure of reconciliation of changes in goodwill [line items] | |||
Goodwill | 3,172 | 3,288 | |
Vaccines [member] | |||
Disclosure of reconciliation of changes in goodwill [line items] | |||
Goodwill | 1,302 | 1,353 | |
Consumer Healthcare [member] | |||
Disclosure of reconciliation of changes in goodwill [line items] | |||
Goodwill | £ 1,260 | £ 1,324 |
Goodwill - Schedule of Discounted Cash Flow Models Used in Impairment Tests (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of reconciliation of changes in goodwill [line items] | ||
Valuation basis | Fair value less costs of disposal | |
Key assumptions | Sales growth rates Profit margins Terminal growth rate Discount rate Taxation rate | |
Determination of assumptions | Growth rates are internal forecasts based on both internal and external market information. Margins reflect past experience, adjusted for expected changes. Terminal growth rates based on management's estimate of future long-term average growth rates. Discount rates based on Group WACC, adjusted where appropriate. Taxation rates based on appropriate rates for each region. | |
Period of specific projected cash flows | Five years | |
Discount rate | 7.00% | 7.00% |
Pharmaceuticals [member] | ||
Disclosure of reconciliation of changes in goodwill [line items] | ||
Terminal growth rate | 1.00% | |
Discount rate | 7.00% | |
Vaccines [member] | ||
Disclosure of reconciliation of changes in goodwill [line items] | ||
Terminal growth rate | 2.00% | |
Discount rate | 7.00% | |
Consumer Healthcare [member] | ||
Disclosure of reconciliation of changes in goodwill [line items] | ||
Terminal growth rate | 2.00% | |
Discount rate | 7.00% |
Other Intangible Assets - Additional information (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of detailed information about intangible assets [line items] | ||
Weighted average interest rate for capitalised borrowing costs | 4.00% | 3.80% |
Intangible assets, for which impairments have been charged or reversed | £ 300 | £ 116 |
Discount rate equal to post-tax WACC | 7.00% | 7.00% |
Bottom of range [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Terminal growth rate, estimates of future long-term average growth rate | 0.00% | |
Top of range [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Terminal growth rate, estimates of future long-term average growth rate | 5.00% | |
Internally generated [member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Net book value of computer software | £ 669 | £ 620 |
Investments in Associates and Joint Ventures - Additional Information (Detail) £ in Millions, shares in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017
GBP (£)
_Associate
shares
|
Dec. 31, 2016
GBP (£)
|
|
Disclosure of Investments in Associates and Joint Ventures [Line Items] | ||
Number of shares owned | shares | 32 | |
Percentage of shares owned | 0.00% | |
Percentage of interest in royalty | 85.00% | |
Innoviva Inc [member] | ||
Disclosure of Investments in Associates and Joint Ventures [Line Items] | ||
Significant associate | _Associate | 1 | |
Market value of investment | £ | £ 336 | £ 278 |
Theravance Biopharma Inc [member] | ||
Disclosure of Investments in Associates and Joint Ventures [Line Items] | ||
Percentage of common stock | 17.80% |
Investments in Associates and Joint Ventures - Summary of Balance Sheet Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of Investments in Associates and Joint Ventures [Line Items] | |||
Non-current assets | £ 40,474 | £ 42,370 | |
Current assets | 15,907 | 16,711 | |
Current liabilities | (26,569) | (19,001) | |
Non-current liabilities | (26,323) | (35,117) | |
Net liabilities | (3,489) | (4,963) | |
Goodwill | 5,734 | 5,965 | £ 5,162 |
Innoviva Inc [member] | |||
Disclosure of Investments in Associates and Joint Ventures [Line Items] | |||
Non-current assets | 124 | 146 | |
Current assets | 148 | 160 | |
Current liabilities | (26) | (16) | |
Non-current liabilities | (426) | (575) | |
Net liabilities | (180) | (285) | |
Interest in associated undertaking | (57) | (84) | |
Goodwill | 86 | 84 | |
Fair value and other adjustments | 118 | 138 | |
Carrying value at 31 December | £ 147 | £ 138 |
Other Investments - Schedule of Other Investments (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other investments 1 [abstract] | ||
Beginning of other investments | £ 985 | £ 1,255 |
Exchange adjustments | (64) | 211 |
Additions | 80 | 96 |
Net fair value movements | 11 | 130 |
Impairment losses | (30) | (24) |
Disposals | (64) | (683) |
Ending of other investments | £ 918 | £ 985 |
Other Investments - Additional Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other investments [line items] | ||
Listed investments | £ 535 | £ 580 |
Theravance Biopharma Inc [member] | ||
Other investments [line items] | ||
Percentage of common stock held | 17.80% | |
Investment fair value | £ 199 | £ 248 |
Other Investments - Schedule of Carrying Value of Other Investments (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other investments 1 [abstract] | ||
Carrying value at original cost | £ 475 | £ 515 |
Cumulative impairments recognised in the income statement | (283) | (314) |
Subsequent fair value increases | 210 | 282 |
Carrying value, ending balance | £ 402 | £ 475 |
Other Non-Current Assets - Summary of Other Non-Current Assets (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Miscellaneous non-current assets [abstract] | ||
Amounts receivable under insurance contracts | £ 648 | £ 602 |
Pension schemes in surplus | 538 | 313 |
Other receivables | 227 | 284 |
Total | £ 1,413 | £ 1,199 |
Inventories - Summary of Inventories (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Classes of current inventories [abstract] | ||
Raw materials and consumables | £ 1,193 | £ 1,068 |
Work in progress | 2,381 | 2,299 |
Finished goods | 1,983 | 1,735 |
Total | £ 5,557 | £ 5,102 |
Trade and Other Receivables - Summary of Trade and Other Receivables (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Trade and other receivables [abstract] | ||
Trade receivables, net of provision for bad and doubtful debts | £ 4,672 | £ 4,615 |
Accrued income | 21 | 64 |
Other prepayments | 308 | 335 |
Interest receivable | 10 | 11 |
Employee loans and advances | 19 | 17 |
Other receivables | 970 | 984 |
Total trade and other receivables | £ 6,000 | £ 6,026 |
Trade and other receivables - Additional Information (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure of trade and other receivables [line items] | ||
Trade receivables | £ 4,672 | £ 4,615 |
Other receivables | 970 | 984 |
Associates and joint ventures [member] | ||
Disclosure of trade and other receivables [line items] | ||
Trade receivables | 11 | 9 |
Other receivables | £ 7 | £ 7 |
Trade and Other Receivables - Summary of Bad and Doubtful Debt Provision (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Trade and other receivables [abstract] | ||
Beginning Balance | £ 207 | £ 167 |
Exchange adjustments | (4) | 23 |
Charge for the year | 31 | 77 |
Subsequent recoveries of amounts provided for | (79) | (59) |
Utilised | (15) | (1) |
Ending Balance | £ 140 | £ 207 |
Cash and cash equivalents - Summary of Cash and Cash Equivalents (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Cash and cash equivalents [abstract] | |||
Cash at bank and in hand | £ 826 | £ 1,462 | |
Short-term deposits | 3,007 | 3,435 | |
Total cash and cash equivalents | £ 3,833 | £ 4,897 | £ 5,830 |
Assets Held for Sale - Summary of Assets Held for Sale (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Assets Held For Sale [Line Items] | |||
Property, plant and equipment | £ 10,860 | £ 10,808 | £ 9,668 |
Goodwill | 5,734 | 5,965 | £ 5,162 |
Inventory | 5,557 | 5,102 | |
Total assets held for sale | 113 | 215 | |
Assets held for sale [member] | |||
Assets Held For Sale [Line Items] | |||
Property, plant and equipment | 57 | 184 | |
Goodwill | 13 | ||
Other intangibles | 49 | 12 | |
Inventory | 7 | 7 | |
Other | (1) | ||
Total assets held for sale | £ 113 | £ 215 |
Assets Held for Sale - Additional Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of detailed information about intangible assets [line items] | |||
Intangible impairments | £ 690 | £ 22 | £ 217 |
PP&E impairments | 327 | 180 | £ 346 |
PP&E impairment reversals | 33 | 171 | |
Financial assets written down to fair value | 10,906 | 11,987 | |
Other intangible assets [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Intangible impairments | 31 | ||
Intangible impairment reversals | 21 | ||
PPE [Member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
PP&E impairments | 10 | ||
PP&E impairment reversals | 15 | ||
Assets held for sale [member] | Level 3 [member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Financial assets written down to fair value | £ 63 | £ 79 |
Trade and Other Payables - Summary of Trade and Other Payables (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure of trade and other payables [Line Items] | ||
Trade payables | £ 3,528 | £ 3,596 |
Wages and salaries | 1,228 | 1,236 |
Social security | 166 | 120 |
Deferred income | 240 | 158 |
Customer return and rebate accruals | 3,463 | 2,778 |
Other accruals | 2,072 | 2,310 |
Total trade and other payables | 20,970 | 11,964 |
Consumer Healthcare [member] | ||
Disclosure of trade and other payables [Line Items] | ||
Consumer Healthcare put option | 8,606 | |
Shionogi-ViiV Healthcare [member] | ||
Disclosure of trade and other payables [Line Items] | ||
Consumer Healthcare put option | 1,304 | 1,319 |
Other payables | £ 363 | £ 447 |
Trade and Other Payables - Additional Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of trade and other payables [Line Items] | ||
Trade and other current payables | £ 20,970 | £ 11,964 |
Customer return and rebate accruals | £ 3,463 | 2,778 |
Discount rate payable stated percentage | 7.00% | |
Reimbursement charges | £ 1,186 | 1,133 |
Estimated rebates, discounts or allowances payable to customers [member] | US Pharmaceuticals and vaccines [member] | ||
Disclosure of trade and other payables [Line Items] | ||
Customer return and rebate accruals | 2,837 | 2,218 |
Associates and joint ventures [member] | ||
Disclosure of trade and other payables [Line Items] | ||
Trade and other current payables | £ 53 | £ 36 |
Pensions and Other Post-employment Benefits - Summary of Average Life Expectancy Assumed (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
UK [member] | Current. [member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Male Years | 27 years 6 months |
Female Years | 29 years 6 months |
UK [member] | Projected for 2037 [member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Male Years | 29 years 1 month 6 days |
Female Years | 31 years 1 month 6 days |
US [member] | Current. [member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Male Years | 26 years 10 months 25 days |
Female Years | 28 years 7 months 6 days |
US [member] | Projected for 2037 [member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Male Years | 28 years 7 months 6 days |
Female Years | 30 years 3 months 19 days |
Pensions and Other Post-employment Benefits - Summary of Analysis of Defined Benefit Pension Obligation (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Disclosure of defined benefit plans [line items] | |||
Defined benefit obligation | £ (19,785) | £ (19,654) | £ (16,119) |
Funded [member] | |||
Disclosure of defined benefit plans [line items] | |||
Defined benefit obligation | (19,052) | (18,974) | (15,552) |
Unfunded [member] | |||
Disclosure of defined benefit plans [line items] | |||
Defined benefit obligation | £ (733) | £ (680) | £ (567) |
Pensions and Other Post-employment Benefits - Summary of Movement in Net Defined Benefit Liability (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of defined benefit plans [abstract] | |||
Beginning of net defined benefit liability | £ (2,084) | £ (1,584) | £ (1,689) |
Exchange adjustments | 40 | (218) | (11) |
Additions through business combinations | (164) | ||
Service cost | (280) | (246) | (254) |
Past service cost | (37) | (54) | (17) |
Interest cost | (54) | (56) | (49) |
Settlements and curtailments | 28 | 8 | |
Remeasurements: | |||
Return on plan assets, excluding amounts included in interest | 899 | 2,195 | (526) |
Gain/(loss) from change in demographic assumptions | 209 | 85 | 120 |
(Loss)/gain from change in financial assumptions | (555) | (2,770) | 362 |
Experience (losses)/gains | (68) | 74 | 243 |
Employer contributions | 444 | 481 | 408 |
Expenses/other movements | (19) | (19) | (15) |
Ending of net defined benefit liability | £ (1,505) | £ (2,084) | £ (1,584) |
Pensions and Other Post-Employment Benefits - Summary of Remeasurements Within Post-Retirement Benefits (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of net defined benefit liability (asset) [line items] | |||
Gain from change in demographic assumptions | £ (209) | £ (85) | £ (120) |
(Loss)/gain from change in financial assumptions | 555 | 2,770 | (362) |
Experience gains/(losses) | 68 | (74) | (243) |
Post-retirement benefits [member] | |||
Disclosure of net defined benefit liability (asset) [line items] | |||
Gain from change in demographic assumptions | 47 | 15 | |
(Loss)/gain from change in financial assumptions | (1) | (81) | 59 |
Experience gains/(losses) | 18 | 22 | (12) |
Total | £ 64 | £ (59) | £ 62 |
Pensions and Other Post-Employment Benefits - Summary of Weighted Average Duration Defined Benefit Obligation (Detail) - yr |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Pensions. [member] | |||
Disclosure of Information About Maturity Profile of Defined Benefit Obligation [Line Items] | |||
Weighted average duration of the defined benefit obligation | 16 | 16 | 16 |
Post retirement benefit [Member] | |||
Disclosure of Information About Maturity Profile of Defined Benefit Obligation [Line Items] | |||
Weighted average duration of the defined benefit obligation | 11 | 12 | 12 |
Pensions and Other Post-Employment Benefits - Summary of Changes in Assumptions Used on Benefit Obligations, Defined Benefit Pension and Post Retirement Costs (Details) (Parenthetical) (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Decrease in discount rate | 7.00% |
Actuarial assumption of discount rates [Member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Decrease in discount rate | 0.25% |
Actuarial assumption of life expectancy rates [Member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Increase in life expectancy | 1 year |
Future assumptions rate for healthcare plans [Member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Increase in the rate of future healthcare inflation | 1.00% |
Actuarial assumption of expected rates of inflation [Member] | |
Disclosure of Sensitivity Analysis for Actuarial Assumptions [Line Items] | |
Increase in inflation | 0.25% |
Other provisions - Additional Information (Detail) - GBP (£) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of other provisions [line items] | ||
Charges on other provisions | £ 551,000,000 | |
Discount on the provisions | 2,000,000 | £ 1,000,000 |
Short term legal proceedings | 138,000,000 | |
Legal proceedings and other disputes provision estimated | 0 | 0 |
Pension augmentations arising from staff redundancies | £ 18,000,000 | 23,000,000 |
Period for amounts provided are expected to be utilised | 2 years | |
Provision for employee benefits | £ 6,000,000 | 40,000,000 |
Onerous property lease provisions | 38,000,000 | 39,000,000 |
Disabled employees [member] | ||
Disclosure of other provisions [line items] | ||
Provision for employee benefits | 108,000,000 | £ 135,000,000 |
Legal and other disputes [member] | ||
Disclosure of other provisions [line items] | ||
Charges on other provisions | £ 173,000,000 |
Other Non-current Liabilities - Summary of Other Noncurrent Liabilities (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Other non-current liabilities [abstract] | ||
Accruals and deferred income | £ 104 | £ 66 |
Consumer Healthcare put option liability | 7,420 | |
Other payables | 877 | 959 |
Other noncurrent liabilities | £ 981 | £ 8,445 |
Contingent Liabilities - Additional Information (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure of contingent liabilities [abstract] | ||
Contingent liabilities, comprising guarantees, discounted bills and other items | £ 434 | £ 281 |
Financial assets were pledged as collateral for contingent liabilities | £ 2 | £ 1 |
Share Capital and Share Premium Account - Summary of Share Capital and Share Premium (Parenthetical) (Detail) |
Dec. 31, 2017
£ / shares
|
---|---|
Disclosure Of Classes Of Share Capital And Share Premium [Abstract] | |
Ordinary price per share | £ 0.25 |
Share Capital and Share Premium Account - Summary of Share Capital (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017
shares
|
Dec. 31, 2016
shares
|
|
Disclosure Of Classes Of Share Capital And Share Premium [Abstract] | ||
Number of shares issuable under employee share schemes | 38,647 | 71,382 |
Number of unissued shares not under option | 4,588,799 | 4,560,302 |
Share Capital and Share Premium Account - Additional Information (Detail) |
Dec. 31, 2017
shares
|
---|---|
Employee share ownership plan [member] | |
Disclosure Of Classes Of Share Capital And Share Premium [Line Items] | |
Share capital issued | 66,696,677 |
Treasury shares [member] | |
Disclosure Of Classes Of Share Capital And Share Premium [Line Items] | |
Share capital issued | 414,605,950 |
Free issue [member] | |
Disclosure Of Classes Of Share Capital And Share Premium [Line Items] | |
Share capital issued | 4,891,251,193 |
Movements in Equity - Additional Information (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Retained earnings and other reserves | £ (4,430) | £ (3,172) | £ 943 | |
Other reserve | 2,047 | 2,220 | 2,340 | £ 2,239 |
Associates and joint ventures [member] | ||||
Retained earnings and other reserves | 334 | 329 | 283 | |
Merger and premerger reserves [member] | ||||
Other reserve | 1,849 | 1,849 | 1,849 | |
Capital redemption reserve [member] | ||||
Other reserve | £ 280 | £ 280 | £ 280 |
Movements in Equity - Summary of Cumulative Translation Exchange in Equity (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Beginning balance | £ 389 | £ (860) | £ (250) |
Exchange movements on overseas net assets | 313 | 1,249 | (610) |
Reclassification of exchange on liquidation or disposal of overseas subsidiaries | 109 | ||
Ending balance | 811 | 389 | (860) |
Retained earnings [member] | |||
Beginning balance | (128) | (761) | (137) |
Exchange movements on overseas net assets | 462 | 633 | (624) |
Reclassification of exchange on liquidation or disposal of overseas subsidiaries | 109 | ||
Ending balance | 443 | (128) | (761) |
Fair value reserve [member] | |||
Beginning balance | 23 | 10 | 4 |
Exchange movements on overseas net assets | 13 | 6 | |
Ending balance | 23 | 23 | 10 |
Non- controlling interests [member] | |||
Beginning balance | 494 | (109) | (117) |
Exchange movements on overseas net assets | (149) | 603 | 8 |
Ending balance | £ 345 | £ 494 | £ (109) |
Reconciliation of Net Cash Flow to Movement in Net Debt - Summary of Net Debt (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of net debt [Abstract] | |||
Net debt at beginning of year | £ (13,804) | £ (10,727) | £ (14,377) |
(Decrease)/increase in cash and bank overdrafts | (905) | (1,164) | 1,503 |
(Decrease)/increase in liquid investments | (4) | 2 | |
Net increase in long-term loans | (2,233) | ||
Net repayment of/(increase in) short-term loans | 3,200 | (148) | 2,412 |
Net repayment of obligations under finance leases | 23 | 18 | 25 |
Exchange adjustments | 585 | (1,781) | (268) |
Other non-cash movements | (40) | (2) | (24) |
Movement in net debt | 626 | (3,077) | 3,650 |
Net debt at end of year | £ (13,178) | £ (13,804) | £ (10,727) |
Acquisitions and Disposals - Summary of Disposal of Associates (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2015 |
|
2017 disposals [member] | ||
Disclosure of detailed information about business combination [line items] | ||
Cash consideration | £ 198 | |
Investment associates and joint ventures [member] | ||
Disclosure of detailed information about business combination [line items] | ||
Cash consideration | £ 571 | |
Net book value of shares | 143 | |
Reclassification of exchange from other comprehensive income | 30 | |
Transaction costs | 7 | |
Profit on disposal | £ 386 | |
Investment associates and joint ventures [member] | 2017 disposals [member] | ||
Disclosure of detailed information about business combination [line items] | ||
Cash consideration | 198 | |
Net book value of shares | (92) | |
Reclassification of exchange from other comprehensive income | (7) | |
Transaction costs | (5) | |
Profit on disposal | £ 94 |
Acquisitions and Disposals - Summary of Cash Flows from Business Combinations (Detail) £ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2016
GBP (£)
| |
Business acquisitions [member] | |
Disclosure of detailed information about business combination [line items] | |
Cash consideration (paid)/received after purchase adjustments | £ (24) |
Cash and cash equivalents acquired | 41 |
Cash inflow | 17 |
Business disposals [member] | |
Disclosure of detailed information about business combination [line items] | |
Cash consideration (paid)/received after purchase adjustments | 72 |
Cash inflow | £ 72 |
Contingent Consideration Liabilities - Additional Information (Detail) - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure of fair value of contingent consideration [Line Items] | ||
Contingent consideration payable | £ 1,076 | £ 561 |
Shionogi ViiV healthcare joint venture [member] | ||
Disclosure of fair value of contingent consideration [Line Items] | ||
Contingent consideration liability discount percentage | 8.50% | |
Novartis [member] | Bottom of range [member] | ||
Disclosure of fair value of contingent consideration [Line Items] | ||
Contingent consideration liability discount percentage | 8.00% | |
Novartis [member] | Top of range [member] | ||
Disclosure of fair value of contingent consideration [Line Items] | ||
Contingent consideration liability discount percentage | 9.00% |
Contingent consideration liabilities - Summary of Possible Changes in key Inputs to Valuation of Contingent Consideration Liabilities (Parenthetical) (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Shionogi ViiV healthcare joint venture [member] | |
Disclosure of valuation techniques and key model inputs used to measure contingent consideration [Line Items] | |
Increase in sales forecasts | 10.00% |
Decrease in sales forecasts | 10.00% |
increase in discount rate | 1.00% |
Decrease in discount rate | 1.00% |
Novartis vaccines [member] | |
Disclosure of valuation techniques and key model inputs used to measure contingent consideration [Line Items] | |
Increase in sales forecasts | 10.00% |
Decrease in sales forecasts | 10.00% |
increase in discount rate | 1.00% |
Decrease in discount rate | 1.00% |
Increase in probability of milestone success | 5.00% |
Decrease in probability of milestone success | 5.00% |
Non-controlling interests - Additional Information (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of noncontrolling interests [Line Items] | |||
Profit after taxation | £ 637 | £ 150 | £ (50) |
ViiV healthcare [member] | |||
Disclosure of noncontrolling interests [Line Items] | |||
Profit after taxation | 825 | (1,249) | (1,426) |
Shionogi ViiV healthcare joint venture [member] | |||
Disclosure of noncontrolling interests [Line Items] | |||
Remeasurement of contingent consideration payable for acquisition | £ 909 | £ 2,186 | £ 1,874 |
Non-controlling interests - Schedule of Amount Attributable to VIIV Healthcare Group Included in GSK's Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Balance Sheet (Detail) - GBP (£) £ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of noncontrolling interests [Line Items] | |||
Total comprehensive income for the year attributable to non-controllinginterests | £ 2,882 | £ 2,024 | £ 7,885 |
Non-controlling interests in the Consolidated balance sheet | 3,557 | 3,839 | |
Consumer health care joint venture [member] | |||
Disclosure of noncontrolling interests [Line Items] | |||
Total comprehensive income for the year attributable to non-controllinginterests | 296 | 730 | £ 14 |
Dividends paid to non-controlling interests | 420 | 346 | |
Non-controlling interests in the Consolidated balance sheet | £ 3,631 | £ 3,755 |
Commitments - Schedule of Contractual Obligations and Commitments (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure Of Contractual Obligations And Commitments [Abstract] | ||
Intangible assets | £ 5,254 | £ 7,199 |
Property, plant and equipment | 584 | 496 |
Investments | 107 | 166 |
Purchase commitments | 346 | 52 |
Pensions | 738 | 874 |
Other commitments | 38 | 143 |
Interest on loans | 8,510 | 9,410 |
Finance lease charges | 12 | 3 |
Total contractual obligations and commitments | £ 15,589 | £ 18,343 |
Commitments - Additional Information (Detail) - GBP (£) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of Commitments [Abstract] | ||
Payment due, 2018 | £ 123,000,000 | |
Payment due, 2019 | 123,000,000 | |
Payment due, 2020 | 123,000,000 | |
Payment due, 2021 | 123,000,000 | |
Payment due, 2022 | 123,000,000 | |
Payment due, 2023 | 123,000,000 | |
Ongoing annual funding requirement | 130,000,000 | |
Commitments under non-cancellable operating leases | £ 117,000,000 | £ 186,000,000 |
Financial Instruments and Related Disclosures - Summary of Movement in Financial Instruments Measured Using Level 3 Valuation Method (Detail) - Level 3 [member] - GBP (£) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of fair value measurement of assets and liabilities [Line Items] | ||
Beginning balance | £ (5,486) | £ (3,582) |
Net losses recognised in the income statement | (970) | (2,283) |
Net gains recognised in other comprehensive income | 22 | 29 |
Contingent consideration for businesses divested/acquired during the year | 80 | (194) |
Payment of contingent consideration liabilities | 685 | 431 |
Additions | 117 | 81 |
Disposals | (52) | (15) |
Transfers from Level 3 | (24) | (11) |
Exchange | (29) | 58 |
Ending balance | £ (5,657) | £ (5,486) |
Financial instruments and related disclosures - Fair Values of Derivatives Held (Parenthetical) (Detail) - Foreign Exchange Contracts [member] |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Financial Assets at Fair Value Through Profit or Loss, Mandatory Measured at Fair Value, Category [member] | Net Investment Hedges [member] | ||
Disclosure of detailed information about hedging instruments [line items] | ||
Principal amount | 6,333,000,000 | 5,362,000,000 |
Financial Assets at Fair Value Through Profit or Loss, Mandatory Measured at Fair Value, Category [member] | Cash Flow Hedges [member] | ||
Disclosure of detailed information about hedging instruments [line items] | ||
Principal amount | 38,000,000 | 170,000,000 |
Financial Assets at Fair Value Through Profit or Loss, Classified as Held for Trading, Category [member] | ||
Disclosure of detailed information about hedging instruments [line items] | ||
Principal amount | 14,449,000,000 | 14,943,000,000 |
Financial instruments and related disclosures - Impact of Interest Rate Currency Movements (Detail) - GBP (£) £ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
1% (100 basis points) increase in sterling interest rates [member] | ||
Disclosure of nature and extent of risks arising from financial instruments [line items] | ||
Increase/(decrease) in income | £ 24 | £ 3 |
1% (100 Basis Points) Increase in US Dollar Interest Rates [Member] | ||
Disclosure of nature and extent of risks arising from financial instruments [line items] | ||
Increase/(decrease) in income | (24) | (3) |
1% (100 Basis Points) Increase in Euro Interest Rates [Member] | ||
Disclosure of nature and extent of risks arising from financial instruments [line items] | ||
Increase/(decrease) in income | £ 5 | £ 3 |
Financial instruments and related disclosures - Summary Anticipated Contractual Cash Flows for Derivative Instruments, Excluding Embedded Derivatives and Equity Options, Using Undiscounted Cash Flows (Detail) - Derivative Instruments [Member] - GBP (£) £ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure of detailed information about financial instruments [line items] | ||
Receivables | £ 20,319 | £ 21,286 |
Payables | (20,326) | (21,323) |
Not later than one year [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Receivables | 20,319 | 21,266 |
Payables | £ (20,326) | (21,303) |
Between one and two years [member] | ||
Disclosure of detailed information about financial instruments [line items] | ||
Receivables | 20 | |
Payables | £ (20) |
Employee Share Schemes - Schedule of Number of Shares and ADS Issuable (Detail) - Share Value Plan [member] shares in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2017
shares
£ / shares
|
Dec. 31, 2017
shares
$ / shares
|
Dec. 31, 2016
shares
£ / shares
|
Dec. 31, 2016
shares
$ / shares
|
Dec. 31, 2015
shares
£ / shares
|
Dec. 31, 2015
shares
$ / shares
|
|
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||||
Number of shares, Beginning balance | 32,855 | 32,855 | 32,577 | 32,577 | 32,912 | 32,912 |
Number of shares, Awards granted | 13,018 | 13,018 | 12,983 | 12,983 | 13,019 | 13,019 |
Number of shares, Awards exercised | (10,596) | (10,596) | (11,198) | (11,198) | (11,476) | (11,476) |
Number of shares, Awards cancelled | (1,352) | (1,352) | (1,507) | (1,507) | (1,878) | (1,878) |
Number of shares, Ending balance | 33,925 | 33,925 | 32,855 | 32,855 | 32,577 | 32,577 |
Weighted fair value, Awards granted | £ / shares | £ 13.68 | £ 14.97 | £ 11.57 | |||
American Depositary Shares [member] | ||||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||||
Number of shares, Beginning balance | 17,083 | 17,083 | 17,520 | 17,520 | 21,227 | 21,227 |
Number of shares, Awards granted | 6,610 | 6,610 | 6,589 | 6,589 | 7,198 | 7,198 |
Number of shares, Awards exercised | (5,674) | (5,674) | (6,214) | (6,214) | (8,878) | (8,878) |
Number of shares, Awards cancelled | (627) | (627) | (812) | (812) | (2,027) | (2,027) |
Number of shares, Ending balance | 17,392 | 17,392 | 17,083 | 17,083 | 17,520 | 17,520 |
Weighted fair value, Awards granted | $ / shares | $ 35.63 | $ 39.18 | $ 35.66 |
Employee Share Schemes - Summary of Valuation Model Used to Valuing Saving - Related Option to Arrive at the Share Based Payment Charge (Detail) - Share Options and Savings-Related Options [member] - £ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Disclosure of share options and savings related options [Line Items] | |||
Risk-free interest rate | 0.54% | 0.32% | 0.88% |
Dividend yield | 5.90% | 4.90% | 6.50% |
Volatility | 23.00% | 23.00% | 21.00% |
Expected life | 3 years | 3 years | 3 years |
Savings-related options grant price (including 20% discount) | £ 10.86 | £ 12.95 | £ 10.14 |
Employee Share Schemes - Summary of Valuation Model Used to Valuing Saving - Related Option to Arrive at the Share Based Payment Charge (Parenthetical) (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share Options and Savings-Related Options [member] | |||
Disclosure of share options and savings related options [Line Items] | |||
Savings-related options grant price discount | 20.00% | 20.00% | 20.00% |
Employee Share Schemes - Summary of Shares Held for Share Award Schemes (Detail) - Employee share ownership plan [member] pure in Thousands, £ in Millions |
Dec. 31, 2017
GBP (£)
|
Dec. 31, 2016
GBP (£)
|
---|---|---|
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Shares held for share award schemes, Number of shares | 66,558 | 42,571 |
Shares held for share award schemes, Nominal value | £ 17 | £ 11 |
Shares held for share award schemes, Carrying value | 399 | 285 |
Shares held for share award schemes, Market value | £ 880 | £ 665 |
Shares held for share option schemes, Number of shares | 139 | 139 |
Shares held for share option schemes, Nominal value | £ 0 | £ 0 |
Shares held for share option schemes, Carrying value | 1 | 1 |
Shares held for share option schemes, Market value | £ 2 | £ 2 |
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