Glaxo cushions 3% fall

Glaxo cushions 3% fall

Glaxo Wellcome has capitalised its computer software costs, a move that has helped the leading British group cushion falling profits by #70m.

The pharmaceutical giant announced its 1998 preliminary results, showing pre-tax profits of #2.67bn, 1% less than the previous year.

But it admitted that the dip would have been greater had it not taken a decision to change its accounting policy for computer software expenditure.

Finance director John Coombe said that without the change, pre-tax profits would have been only #2.60bn, representing a 3% fall from 1997.

He explained: ‘The reason for the change is an increase in the focus on purchasing integrated software packages.’

Explaining that Glaxo had moved from in-house development to external purchase of computer software over the year, he said it had incurred significant costs in a limited period of time which would provide assets lasting several years.

These include a new human resources and payroll system, and the replacement of entire financial systems in a number of its operating companies.

Some #70m of computer software costs have been deferred as a result of the move. These will be depreciated over the next five years.

Coombe strongly defended the decision, emphasising it was in line with UK accounting standards.

Officials at the Accounting Standards Board said the decision fell within accepted practice under SSAP 13, which gives companies the option to capitalise development costs.

Pro-forma accounts showing the position without the change were included at the back of the group’s preliminary results announcement.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource