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My company GSK has discontinued its consumer healthcare segment in 2015. However the competitor i have chosen has not done so and so the results for the competitor also include the figures of its consumer healthcare segment along with other segments.
How should i deal with this. Kindly help me asap.
@aynskyfighter – we had a similar question previously and this was my response.
“With your scenario it depends which is its main source of income and what it is mostly known for. The main problem might be trying to make valid comparisons but if the food side is a subsidiary you may be able to get use the company rather than group financial statements”
I would add if the food side is not a significant contributor to income then this would hardly affect the figures except for its sale. If using the group you would then look for the impact on the cash flow, gearing and whether the money was reinvested in the company or used to buy back shares etc..
Well the Consumer Healthcare segment produces products like Panadol, Sensodyne, Horlicks,etc. The segment has been making 16% growth year on year.
The reason for the discontinuation is due to a major global three-part inter-conditional transaction with Novartis AG, Switzerland. GSK plc and Novartis plan on creating a new world leading consumer healthcare business.“Further, GSK
plc will also acquire Novartis’s global vaccines business
(excluding influenza vaccines) whereas GSK plc will
divest its marketed Oncology portfolio and Research and
Development activities related to it, as well as rights to GSK
plc’s AKT inhibitor to Novartis.
Pursuant to the global transaction the Company will have
its distribution rights terminated for the Oncology portfolio,
which portfolio contributed to less than 1% in the revenue
and gross profit of the Company.”They have decided to demerge it and it will hence forth be listed as a separate entity on the Stock Exchange.
Sorry but this looks like 2 issues – discontinuing consumer healthcare AND divesting its oncology division.
The consumer healthcare was discontinued in 2015 but is this divestment going to happen after year end 2016 as it says ‘will’?
In which case this is something you can discuss in the business analysis as part of its planned FUTURE strategy – possibly also mentioning it may be focusing on its strengths [vaccines] and opportunity and presumably it feels it is unable to compete in the oncology sector [which demands high investment in R & D]
(BTW Normally both group and company accounts are audited )
I am doing Topic 8 as well but i chose Airlines industry. I am doing Virgin Atlantic for competitor but can not find Financial reports for more than 2 years. I wanted to ask Do i have to use official financial reports or I can use some other sources for financial information? e.g Wikipedia or other press releases
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