Slide 1: Full Year Results 2010 Presentation to Investors & Analysts
Full Year Results 2010 Presentation to Investors & Analysts 3rdd February F b 2011 Andrew Witty Chief Executive Officer 1
Slide 2: GSK is built around portfolios that drive highest returns
GSK is built around portfolios that drive highest returns in the current market environment Differentiated pharmaceutical Portfolio of right price products which meet products to drive payer and d patient ti t l volume iin emerging i criteria in developed markets markets Broad vaccines portfolio whi
Slide 3: Change executed in 2.5 years
Change executed in 2.5 years 2007 2010 £22.3bn Turnover (ex-pandemic) £27.1bn 40% Sales from white pill/western market 25% (excludes pandemic) 36% Proportion of SG&A in investment areas 51% (Emerging Markets, AP/Japan, Cx, Vx, Stiefel, ViiV) 103,500 Headcount 96,500 Local Support functions Central £
Slide 4: Accelerating growth in Consumer Healthcare
Accelerating growth in Consumer Healthcare Consumer Healthcare +5% “Scientifically driven, expert recommended ~15 Priority Brands and consumer preferred” • Increased focus to drive higher growth • Globalisation and innovation of priority + Emerging markets ~90% brands business • Portfolio of EM bran
Slide 5: Global underlying pharmaceutical sales growth
Global underlying pharmaceutical sales growth All sales and growth are underlying (ex pandemic, Avandia, Valtrex) £7.1bn (+3%) Promoted products (~80% of total) grew 8% in 2010 Strong early launches for Arzerra, Arzerra Jalyn and Votrient £5.9bn (flat); includes -2.5% price (50% EU austerity, 50% re
Slide 6: Pipeline potential increasing; committed to improving returns in R&D
Pipeline potential increasing 10 new NCE / vaccine Ph III starts 2010 / early 2011 ‘212 (MEK) ‘273 273 (Telethon) ‘436 (Braf) ‘786 (CCX282) ~ 30 in Phase III / ~ 15 assets with Phase III ‘968 (DMD) data by end 2012 registration Integrase / Integrase + Kivexa IPX066 LABA / LAMA migalastat HCl Zoster
Slide 7: Driving shareholder returns
Driving shareholder returns Sales growth • Underlying sales momentum to continue in 2011 and translate to reported growth in 2012 • £1.7bn cost savings delivered; £2.2bn by end 2012 Operating and • Strong cash generation (£8.8bn excluding legal) financial leverage • £1.3bn working capital reduction
Slide 8: 2010 Performance summary
Julian Heslop Chief Financial Officer 2010 Performance summary Before restructuring costs 2010 2009 % Change £m £m CER £ Turnover 28,392 28,368 (1) - EPS 53.9p 121.2p (59) (56) EPS excluding legal charges 120.7p 131.2p (11) (8) Free Cash Flow (FCF) 4,486 5,254 (15) FCF excl.forlegal * Expenditures s
Slide 9: Diversified global business; 2010 total turnover analysis
Diversified global business 2010 Turnover: £28.4bn (-1%) Consumer US £5.0bn (+5%) Pharma £7.6bn (-11%) ViiV £1.6bn (-3%) ROW £1.0bn (-1%) AP/Japan £3.1bn (+9%) Europe Pharma Emerging £6.5bn (-6%) Markets £3.6bn (+22%) CER growth rates 2010 Total turnover analysis 2010 2009 Change £m £m CER Total rep
Slide 10: 2010 Pharmaceuticals key growth drivers
2010 Pharmaceuticals key growth drivers Advair £5,139m +2% Vaccines (excl. pandemic) £3,134m +10% Dermatologicals £1,087m +6%* Flovent £804m +2% Avodart £629m +18% Lovaza £530m +17% Ventolin £522m +8% Arixtra £301m +19% Tykerb £227m +34% Veramyst £193m +33% Subtotal £12,566m +10% All others £8,531m
Slide 11: 2010 Consumer Healthcare: £5,010m (+5%)
2010 Consumer Healthcare: £5,010m (+5%) Regional turnover Category turnover USA £1,037m (+1%) Oral Care International £1,602m £2,015m OTC Medicines £2,456m (+6%) (+13%) (+3%) Europe £1,958m Nutritional (level) Healthcare £952m (+9%) CER growth rates 2010 Performance summary Before restructuring cost
Slide 12: 2010 SG&A analysis excl. legal
2010 SG&A analysis excl. legal Before restructuring costs -£578m +£180m +£176m £8,609m £8,387m 2009 Actual Core markets Investment Stiefel** 2010 Actual (including markets* Corporate) * Investment markets include Emerging markets, Asia Pacific/Japan and Consumer healthcare. ** Reflects full year imp
Slide 13: 2010 Performance summary
2010 Performance summary Before restructuring costs 2010 2009 % Change £m £ £m £ CER £ Operating profit 5,128 9,257 (48) (45) Operating margin excl. 30.4% 30.7% legal and OOI Interest (712) (710) - - Profit of disposal of 8 115 interest in associate 2010 Performance summary Before restructuring cost
Slide 14: Full year results after restructuring
Full year results after restructuring 2010 2009 Total results £m Results before Restructuring Total restructuring results £m £m £m Turnover 28,392 - 28,392 28,368 Operating 5,128 (1,345) 3,783 8,425 profit EPS 53.9p (21.8)p 32.1p 109.1p Restructuring Programme Restructuring Costs* 2007- 2010 cumulat
Slide 15: Free cash flow; working capital reduction update
Free cash flow 2010 2009 £m £m Total operating profit 3,783 8,425 Depreciation & other non-cash items 2,071 1,271 Decrease in working capital 1,297 (106) Increase / (decr.) in other net liabilities 1,480 (45) Cash generated from operations* operations 8 631 8,631 9 545 9,545 Taxation paid (1,834) (1
Slide 16: Free cash flow to net debt reconciliation; progressive dividend policy
Free cash flow to net debt reconciliation 2010 2009 £m £m F Free cash h flow fl 4 486 4,486 5 254 5,254 Dividends (3,205) (3,003) Purchase of businesses / equities (633) (2,946) Sale of intangibles / equities 126 356 Employee share option exercises / ESOT 63 (1) Exchange 61 1,041 Other Net debt at 3
Slide 17: Driving shareholder returns
Driving shareholder returns Sales growth + Operating and financial leverage Total Cash + generation shareholder return Dividend + Share buy back 17