GSK Form 20F 2006
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As filed with the Securities and Exchange Commission on March 2, 2007 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 20-F 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, 2006 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) 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 Securities registered or to be registered 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 issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 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 is a large accelerated filer, an accelerated filer, or 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 Acccelerated filer Non-accelerated filer 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 Back to Contents Financial summary Results 2006 2005 Sterling CER% growth* £m £m % growth 2006 2005 2004 2003 2002 Turnover 23,225 21,660 7 9 7 1 5 7 Research and development 3,457 3,136 Operating profit 7,808 6,874 14 17 16 – 8 13 Profit before taxation 7,799 6,732 Profit after taxation for the year 5,498 4,816 Profit attributable to shareholders 5,389 4,689 2006 2005 pence pence Earnings per share 95.5p 82.6p 16 19 18 2 10 13 Diluted earnings per share 94.5p 82.0p 2006 2005 2004 2003 2002 Dividends per share 48p 44p 48p 44p 42p 41p 40p Cash flow 2006 2005 £m £m Net cash inflow from operating activities 4,357 5,958 Capital expenditure 1,590 1,181 Free cash flow 2,623 4,664 Dividends to shareholders 2,598 2,390 Purchase of GSK shares 1,348 999 Net debt 2,450 1,237 Share price 2006 2005 Share price at 31st December £13.44 £14.69 *CER% growth is on an IFRS basis for 2006 and 2005 and a UK GAAP, business performance basis for 2004 and earlier. In order to illustrate underlying performance, it is the Group’s practice to discuss its results in terms of constant exchange rate (CER) growth. This represents growth calculated as if the exchange rates used to determine the results of overseas companies in Sterling had remained unchanged from those used in the previous year. CER% represents growth at constant exchange rates. Sterling% or £% represents growth at actual exchange rates. Website GlaxoSmithKline’s website www.gsk.com gives additional information on the Group. Information made available on the website does not constitute part of this Annual Report. Report of the Directors Pages 2 and 3 and pages 6 to 82 inclusive consist of a Report of the Directors that has been drawn up and presented in accordance with and in reliance upon English company law and the liabilities of the Directors in connection with that report shall be subject to the limitations and restrictions provided by such law. Notice regarding limitations on Director liability under English law Under the UK Companies Act 2006, a new safe harbour limits the liability of Directors in respect of statements in and omissions from the Report of the Directors contained on pages 2 and 3 and 6 to 82, under English law the Directors would be liable to the company (but not to any third party) if the Report of the Directors contains errors as a result of recklessness or knowing misstatement or dishonest concealment of a material fact, but would not otherwise be liable. Cautionary statement regarding forward-looking statements The Group's reports filed with or furnished to the US Securities and Exchange Commission (SEC), including this document and written information released, or oral statements made, to the public in the future by or on behalf of the Group, may contain forward-looking statements. Forward-looking statements give the Group's current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as ‘anticipate’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘project’, ‘plan’, ‘believe’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results. The Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements involve inherent risks and uncertainties. The Group cautions investors that a number of important factors, including those in this document, could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, those discussed under ‘Risk factors’ on pages 44 to 47 of this Annual Report. << Back to Contents Review of 2006 Chairman’s and CEO’s summary Every day we are involved in a race that unites more than 100,000 people at GSK: in finding new medicines and vaccines that meet unmet medical needs; in ensuring that patients have access to these new medicines regardless of their financial circumstances; and in meeting the expectations of our many stakeholders, including you – our shareholder. It is a race with many stages and we won’t win them all. But, as we take part, we never forget the real focus of our efforts: the human race. 2006 was a year of positive achievement for GSK as we continued to make progress on all fronts. Sales Our Consumer Healthcare portfolio will also be strengthened in 2007 with the launch of ten products, growth is coming from an ever-widening portfolio of fast-growing products that, combined with good cost including alli, the first FDA-approved OTC treatment for weight loss in the USA. control, has enabled us to deliver a strong financial performance. We also have very healthy momentum in our pipeline, with ten new products added to our late-stage development efforts in the last 12 months. For Best place to work all these reasons, we look to the future with confidence. We work hard to create a working environment where the best people can do their best work and the results of our biennial employee opinion survey demonstrated that we are enjoying real success. For Financial performance and outlook overall satisfaction, GSK scored higher than any of our peers in the benchmark group of major companies Your company delivered a strong financial performance in 2006. Turnover of £23.2 billion is an increase of and 90 per cent of managers are proud to work for GSK. 9 per cent at constant exchange rates (CER)*. Earnings per share (EPS) were 95.5 pence, with growth of 19 per cent. Playing our part In 2006, our global community investment contributions were valued at £302 million, equivalent to 3.9 per This performance was driven by sales of key pharmaceutical products including Seretide/Advair for cent of Group profit before tax. This is a significant sum, but such commitment is no less than should be asthma and chronic obstructive pulmonary disease (COPD), the Avandia group of products for diabetes, expected from a company in our industry. We have the capability and the desire to reach out to patients Coreg for heart disease, Lamictal for epilepsy and bipolar disorder, Valtrex for herpes, and our vaccines.