GlaxoSmithKline PLC (GSK) | Analysis of Investments

Investment Accounting Policy

Investments in associates and joint ventures

Investments in associates and joint ventures are carried in the consolidated balance sheet at GSK'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.

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 GSK'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.

Source: GlaxoSmithKline PLC, Annual Report

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

GlaxoSmithKline PLC, adjustment to Profit Attributable To Shareholders

	12 months ended	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Profit attributable to shareholders (as reported)
	Add: Fair value movements on available-for-sale investments
	Less: Reclassification of fair value movements on available-for-sale investments
	Profit attributable to shareholders (adjusted)

Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

GlaxoSmithKline PLC, adjusted ratios

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Net Profit Margin
	Reported net profit margin	%	%	%	%	%
	Adjusted net profit margin	%	%	%	%	%
	Return on Equity (ROE)
	Reported ROE	%	%	%	%	%
	Adjusted ROE	%	%	%	%	%
	Return on Assets (ROA)
	Reported ROA	%	%	%	%	%
	Adjusted ROA	%	%	%	%	%

Adjusted Net Profit Margin

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Profit attributable to shareholders (USD $ in millions, translated from GBP £)
	Turnover (USD $ in millions, translated from GBP £)
	Net profit margin1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted profit attributable to shareholders (USD $ in millions, translated from GBP £)
	Turnover (USD $ in millions, translated from GBP £)
	Adjusted net profit margin2	%	%	%	%	%

2011 Calculations

Adjusted Return On Equity (ROE)

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Profit attributable to shareholders (USD $ in millions, translated from GBP £)
	Shareholders’ equity (USD $ in millions, translated from GBP £)
	ROE1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted profit attributable to shareholders (USD $ in millions, translated from GBP £)
	Shareholders’ equity (USD $ in millions, translated from GBP £)
	Adjusted ROE2	%	%	%	%	%

2011 Calculations

Adjusted Return On Assets (ROA)

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Profit attributable to shareholders (USD $ in millions, translated from GBP £)
	Total assets (USD $ in millions, translated from GBP £)
	ROA1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted profit attributable to shareholders (USD $ in millions, translated from GBP £)
	Total assets (USD $ in millions, translated from GBP £)
	Adjusted ROA2	%	%	%	%	%

2011 Calculations