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GlaxoSmithKline PLC  -  GSK   

GSK applies IAS19R with effect from 1 January 2013

Released 12:16 06-Feb-2013

RNS Number : 2682X
GlaxoSmithKline PLC
06 February 2013
 

Issued:  Wednesday, 6 February 2013, London, U.K.

 

Amended Accounting Standard on Employee Benefits (IAS 19R) applicable as from 1 January, 2013

 

 

GlaxoSmithKline announces today that the amended IAS 19 issued by the IASB in June 2011 will be applied from 1 January 2013 to its consolidated financial statements.  The comparative periods presented in the 2013 financial statements will require retrospective application of the revised Standard.  It is estimated that the application of this change will reduce pre-tax profit by approximately £160 million in 2013 (2012: £92 million; 2011: £73 million) and earnings per share by approximately 2.5p in 2013 (2012: 1.3p; 2011: 1.0p).  The impact of this change on Shareholders' equity will be negligible.

 

For comparative purposes, set out below are the unaudited reconciliations between the reported figures under the existing Standard and the restated figures which will be reported on the new basis for the full year 2011 and each of the quarters from Q1 2012 to Q4 2012.  The funding costs of defined benefit plans are not allocated on a regional basis and therefore the impact of this change on the 2012 results has been allocated to corporate and other unallocated costs and disposal profits.

 

The two significant differences between the previous and amended Standards which will have an impact on GSK's reported results are as follows:

 

·

Expected returns on the fair value of plan assets will no longer be recognised in the income statement.  Expected returns are replaced by income calculated on the fair value of plan assets using the same discount rate as that used to measure the pension obligations.  This discount rate is based on market rates for high quality corporate bonds.  As a consequence, plan benefit costs will be higher under IAS 19R

 

 

·

Past service cost is recognised in the income statement in the period of a plan amendment instead of deferring the portion related to unvested benefits.  Past service cost arises when an entity introduces a pension plan or changes the benefit payable under an existing pension plan.

 

 


GlaxoSmithKline - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer.  For further information please visit www.gsk.com

 

 

UK Media enquiries:

 

 

David Mawdsley

Sarah Spencer

 

+44 (0) 20 8047 5502

+44 (0) 20 8047 5502

 

(London)

(London)





US Media enquiries:

Mary Rhyne

Stephen Rea

+1 919 483 0492

+1 215 751 4394

(North Carolina)

(Philadelphia)





Analyst/Investor enquiries:

Sally Ferguson

Tom Curry

Gary Davies

Lucy Budd

James Dodwell

Jeff McLaughlin

Ziba Shamsi

+44 (0) 20 8047 5543

+1 215 751 5419

+44 (0) 20 8047 5503

+44 (0) 20 8047 2248

+44 (0) 20 8047 2406

+1 215 751 7002

+44 (0) 20 8047 3289

(London)

 (Philadelphia)

(London)

(London)

(London)

(Philadelphia)

(London)



 

This Announcement does not constitute statutory accounts of the Group within the meaning of sections 434(3) and 435(3) of the Companies Act 2006.  The information for 2011 has been derived from the full Group accounts published in the Annual Report 2011.

 

Cautionary statement regarding forward-looking statements

Under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, GSK cautions investors that any forward-looking statements or projections made by GSK, including those made in this announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected.  Factors that may affect GSK' s operations are described under 'Risk factors' in the 'Financial review & risk' section in the company's Annual Report 2011 included as exhibit 15.2 to the company's Annual Report on Form 20-F for 2011.

 

 


Registered in England & Wales:

No. 3888792


Registered Office:

980 Great West Road

Brentford, Middlesex

TW8 9GS

 

 

Impact of IAS 19R in 2012 and 2011 on Core Results

 


FY 2012


FY 2011


Reported 
£m 

Revised 
£m 

Change 
£m 


Reported 
£m 

Revised 
£m 

Change 
£m 

 

------ 

------ 

------ 


------ 

------ 

------ 

Turnover

26,431 

26,431 


27,387 

27,387 

Cost of sales

(7,078) 

(7,109)

(31)


(7,259)

(7,284)

(25)


------ 

------ 

------ 


------ 

------ 

------ 

Gross profit

19,353 

19,322 

(31)


20,128 

20,103 

(25)









Selling, general and administration

(7,855)

(7,905)

(50)


(7,956)

(7,993)

(37)

Research and development

(3,474)

(3,485)

(11)


(3,678)

(3,689)

(11)

Royalty income

306 

306 


309 

309 

Other operating income



------ 

------ 

------ 


------ 

------ 

------ 

Operating profit

8,330 

8,238 

(92)


8,803 

8,730 

(73)

Net finance costs

(724)

(724)


(707)

(707)

Share of after tax profits of associates and joint ventures

29 

29 


15 

15 


------ 

------ 

------ 


------ 

------ 

------ 

Profit before taxation

7,635 

7,543 

(92)


8,111 

8,038 

(73)









Taxation

(1,864)

(1,838)

26 


(2,104)

(2,084)

20 

Tax rate%

24.4%

24.4%



25.9%

25.9%



------ 

------ 

------ 


------ 

------ 

------ 

Profit after taxation

5,771 

5,705 

(66)


6,007 

5,954 

(53)


------ 

------ 

------ 


------ 

------ 

------ 









Profit attributable to non-controlling interest

235 

235 


197 

197 

Profit attributable to shareholders

5,536 

5,470 

(66)


5,810 

5,757 

(53)


------ 

------ 

------ 


------ 

------ 

------ 









Earnings per share

112.7p

111.4p

(1.3)p


115.5p

114.5p

(1.0)p









Weighted average number of shares

4,912 

4,912 



5,028 

5,028 


 

 

Impact of IAS 19R on 2012 and 2011 Results

 


FY 2011
£m


Q1 2012
£m

Q2 2012
£m

H1 2012
£m

Q3 2012
£m

9M 2012
£m

Q4 2012
£m

FY 2012
£m

 

------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 











Cost of sales

(25)


(8)

(8)

(16)

(8)

(24)

(7)

(31)


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Gross profit

(25)


(8)

(8)

(16)

(8)

(24)

(7)

(31)











Selling, general and administration

(37)


(12)

(13)

(25)

(12)

(37)

(13)

(50)











Research and development

(11)


(3)

(2)

(5)

(3)

(8)

(3)

(11)


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Operating profit

(73)


(23)

(23)

(46)

(23)

(69)

(23)

(92)


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit before taxation

(73)


(23)

(23)

(46)

(23)

(69)

(23)

(92)











Taxation

20 


13 

19 

26 

Tax rate %











------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit after taxation

(53)


(17)

(16)

(33)

(17)

(50)

(16)

(66)


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit attributable to
  non-controlling interests












Profit attributable to shareholders

(53)


(17)

(16)

(33)

(17)

(50)

(16)

(66)


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 





















Earnings per share

(1.0)p








(1.3)p











Weighted average number of shares

5,028 








4,912 

 

 

Revised 2012 and 2011 Core Results

 


FY 2011
£m


Q1 2012
£m

Q2 2012
£m

H1 2012
£m

Q3 2012
£m

9M 2012
£m

Q4 2012
£m

FY 2012
£m

 

------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Turnover

27,387 


6,640 

6,462 

13,102 

6,527 

19,629 

6,802 

26,431 

Cost of sales

(7,284)


(1,719)

(1,698)

(3,417)

(1,855)

(5,272)

(1,837)

(7,109)


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Gross profit

20,103 


4,921 

4,764 

9,685 

4,672 

14,357 

4,965 

19,322 

Selling, general and administration

(7,993)


(2,050)

(1,969)

(4,019)

(1,946)

(5,965)

(1,940)

(7,905)

Research and development

(3,689)


(895)

(882)

(1,777)

(871)

(2,648)

(837)

(3,485)

Royalty income

309 


72 

66 

138 

92 

230 

76 

306 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Operating profit

8,730 


2,048 

1,979 

4,027 

1,947 

5,974 

2,264 

8,238 











Net finance costs

(707)


(168)

(184)

(352)

(178)

(530)

(194)

(724)

Share of after tax profits of
  associates and joint ventures

15 


10 

- 

10 

9 

19 

10 

29 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit before taxation

8,038 


1,890 

1,795 

3,685 

1,778 

5,463 

2,080 

7,543 











Taxation

(2,084)


(489)

(457)

(946)

(431)

(1,377)

(461)

(1,838)

Tax rate %

25.9%


25.9%

25.5%

25.7%

24.2%

25.2%

22.2%

24.4%


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit after taxation

5,954 


1,401 

1,338 

2,739 

1,347 

4,086 

1,619 

5,705 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit attributable to
  non-controlling interests

197 


65 

48 

113 

64 

177 

58 

235 











Profit attributable to shareholders

5,757 


1,336 

1,290 

2,626 

1,283 

3,909 

1,561 

5,470 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 





















Earnings per share

114.5p


26.9p

26.1p

53.0p

26.2p

79.2p

32.2p

111.4p











Weighted average number of shares

5,028 


4,963 

4,945 

4,954 

4,897 

4,935 

4,843 

4,912 

 

 

Impact of IAS 19R in 2012 and 2011 on Total Results

 


FY 2012


FY 2011


Reported 
£m 

Revised 
£m 

Change 
£m 


Reported 
£m 

Revised 
£m 

Change 
£m 

 

------ 

------ 

------ 


------ 

------ 

------ 

Turnover

26,431 

26,431 


27,387 

27,387 

Cost of sales

(7,894) 

(7,925)

(31)


(7,648)

(7,673)

(25)


------ 

------ 

------ 


------ 

------ 

------ 

Gross profit

18,537 

18,506 

(31)


19,739 

19,714 

(25)









Selling, general and administration

(8,739)

(8,789)

(50)


(8,510)

(8,547)

(37)

Research and development

(3,968)

(3,979)

(11)


(4,009)

(4,020)

(11)

Royalty income

306 

306 


309 

309 

Other operating income

1,256 

1,256 


278 

278 


------ 

------ 

------ 


------ 

------ 

------ 

Operating profit

7,392 

7,300 

(92)


7,807 

7,734 

(73)

Net finance costs

(729)

(729)


(709)

(709)

Profit on disposal of interest in associates





585 

585 

Share of after tax profits of associates and joint ventures

29 

29 


15 

15 


------ 

------ 

------ 


------ 

------ 

------ 

Profit before taxation

6,692 

6,600 

(92)


7,698 

7,625 

(73)









Taxation

(1,948)

(1,922)

26 


(2,240)

(2,220)

20 

Tax rate%

29.1%

29.1%



29.1%

29.1%



------ 

------ 

------ 


------ 

------ 

------ 

Profit after taxation

4,744 

4,678 

(66)


5,458 

5,405 

(53)


------ 

------ 

------ 


------ 

------ 

------ 









Profit attributable to non-controlling interest

179 

179 


197 

197 

Profit attributable to shareholders

4,565 

4,499 

(66)


5,261 

5,208 

(53)


------ 

------ 

------ 


------ 

------ 

------ 









Earnings per share

92.9p

91.6p

(1.3)p


104.6p

103.6p

(1.0)p









Weighted average number of shares

4,912 

4,912 



5,028 

5,028 


 

 

Revised 2012 and 2011 Total Results

 


FY 2011
£m


Q1 2012
£m

Q2 2012
£m

H1 2012
£m

Q3 2012
£m

9M 2012
£m

Q4 2012
£m

FY 2012
£m

 

------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Turnover

27,387 


6,640 

6,462 

13,102 

6,527 

19,629 

6,802 

26,431 

Cost of sales

(7,673)


(1,818)

(2,000)

(3,818)

(2,089)

(5,907)

(2,018)

(7,925)


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Gross profit

19,714 


4,822 

4,462 

9,284 

4,438 

13,722 

4,784 

18,506 

Selling, general and administration

(8,547)


(2,142)

(2,200)

(4,342)

(2,236)

(6,578)

(2,211)

(8,789)

Research and development

(4,020)


(974)

(924)

(1,898)

(937)

(2,835)

(1,144)

(3,979)

Royalty income

309 


72 

66 

138 

92 

230 

76 

306 

Other operating income

278 


236 

309 

545 

299 

844 

412 

1,256 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Operating profit

7,734 


2,014 

1,713 

3,727 

1,656 

5,383 

1,917 

7,300 











Net finance costs

(709)


(168)

(184)

(352)

(178)

(530)

(199)

(729)

Profit on disposal of interest in associates

585 


- 

- 

- 

- 

- 

- 

- 

Share of after tax profits of
  associates and joint ventures

15 


10 

- 

10 

9 

19 

10 

29 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit before taxation

7,625 


1,856 

1,529 

3,385 

1,487 

4,872 

1,728 

6,600 











Taxation

(2,220)


(483)

(226)

(709)

(308)

(1,017)

(905)

(1,922)

Tax rate %

29.1%


26.0%

14.8%

20.9%

20.7%

20.9%

52.4%

29.1%


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit after taxation

5,405 


1,373 

1,303 

2,676 

1,179 

3,855 

823 

4,678 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 

Profit attributable to
  non-controlling interests

197 


65 

65 

130 

74 

204 

(25)

179 











Profit attributable to shareholders

5,208 


1,308 

1,238 

2,546 

1,105 

3,651 

848 

4,499 


------ 


------ 

------ 

------ 

------ 

------ 

------ 

------ 





















Earnings per share

103.6p


26.4p

25.0p

51.4p

22.6p

74.0p

17.5p

91.6p











Weighted average number of shares

5,028 


4,963 

4,945 

4,954 

4,897 

4,935 

4,843 

4,912 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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GSK applies IAS19R with effect from 1 January 2013 - RNS