The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

GSK takes £394 million profit hit from IFRS

Pharmaceutical giant GlaxoSmithKline announced yesterday that switching reporting standards to IFRS cost its shareholders £394 million in 2004.

At the company's annual results, CEO JP Garnier described how the new standards had lowered GSK's profits attributable to shareholders from £4.302 billion to £3.908 billion, a fall of almost 10%, and turnover from £20.359 billion to £19.986 billion.

The biggest culprit for GSK was the reclassification of marketing and promotional expenditure. Under IFRS this customer spending is deducted directly from turnover, subtracting £373 million from GSK's revenue in 2004.

New charges for employee share options were also expensive, costing £309 million across sales, administration and R&D, while a change in methodology under IFRS for calculating deferred tax on intercompany items cost £110 million.

There were some positive changes from IFRS, but not enough to outweigh the negatives. Amortisation of goodwill and intangible assets (which was responsible for bouncing Vodafone into profit this month) added £43 million to R&D turnover, £11 million to profit on disposal of interest in associates and £14 million to shares of profits in joint ventures.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree