GSK plc ANNUAL

Business / Consolidation

Consolidation The consolidated financial statements include: – the assets and liabilities, and the results and cash flows, of the company and its subsidiaries, including ESOP Trusts; – the Group’s share of the results and net assets of associates and joint ventures; and – the Group’s share of assets, liabilities, revenue and expenses of joint operations The financial statements of entities consolidated are made up to 31 December each year. Entities over which the Group has control are accounted for as subsidiaries and consolidated in the Group financial statements. Control is achieved when an entity in the Group: – has power over the investee; – is exposed, or has rights, to variable returns from its involvement with the investee; and – has the ability to use its power to affect its returns This is generally through control over the financial and operating policies of the subsidiary. Where the Group has the ability to exercise joint control over, and rights to, the net assets of entities, the entities are accounted for as joint ventures. Where the Group has the ability to exercise joint control over an arrangement, but has rights to specified assets and obligations for specified liabilities of the arrangement, the arrangement is accounted for as a joint operation. Where the Group has the ability to exercise significant influence over entities, they are accounted for as associates. The results, assets and liabilities of associates and joint ventures are incorporated into the consolidated financial statements using the equity method of accounting. The assets, liabilities, revenue and expenses of joint operations are included in the consolidated financial statements in accordance with the Group’s rights and obligations. Interests acquired in entities are consolidated from the date the Group acquires control and interests sold are deconsolidated from the date control ceases. Transactions and balances between subsidiaries are eliminated and no profit before tax is taken on sales between subsidiaries until the products are sold to customers outside the Group. The relevant proportion of profits on transactions with joint ventures, joint operations and associates is also deferred until the products are sold to third parties. Transactions with non- controlling interests are recorded directly in equity. Deferred tax relief on unrealised intra-Group profit is accounted