TIDMAG99
RNS Number : 6316G
GlaxoSmithKline Capital PLC
24 July 2019
Publication of GlaxoSmithKline Capital plc
Interim Management Report 2019
Today, 24 July 2019, GlaxoSmithKline Capital plc (the "Company")
published on the GlaxoSmithKline Group ("GSK") website, www.gsk.com
*, its Interim Management Report in respect of the period ended 30
June 2019.
In compliance with Listing Rule 9.6.1 of the UK Financial
Conduct Authority ('FCA'), copies of Company's Interim Management
Report, have been submitted to the UK Listing Authority's National
Storage Mechanism and will shortly be available for inspection at
http:/www.morningstar.co.uk/UK/NSM.
In accordance with the FCA's Disclosure and Transparency Rules
4.2 and 6.3.5, Appendix A to this announcement contains the
Company's Interim Management Report, which includes a description
of the principal risks and uncertainties affecting it together with
a responsibility statement.
V A Whyte
Company Secretary
24 July 2019
*
https://www.gsk.com/en-gb/about-us/policies-codes-and-standards/other-reports
Cautionary statement regarding forward-looking statements
GSK cautions investors that any forward-looking statements or
projections made by GSK, including those made in this announcement,
are subject to risks and uncertainties that may cause actual
results to differ materially from those projected. Such factors
include, but are not limited to, those described under Item 3.D
Principal risks and uncertainties in the company's Annual Report on
Form 20-F for 2018.
APPIX A
GlaxoSmithKline Capital plc
(Registered number: 2258699)
Interim Management Report
for the half year ended 30 June 2019
Registered office address:
980 Great West Road
Brentford
Middlesex
TW8 9GS
Contents Page
Interim report 1-2
Income statement 3
Statement of comprehensive income 4
Statement of financial position 5
Statement of changes in equity 6
Cash flow statement 7
Notes to the financial statements 8-12
Results announcement and interim management report for the half
year ended 30 June 2019
Performance
GlaxoSmithKline Capital plc (the "Company") is a member of the
GlaxoSmithKline Group (the "Group"). The principal activities
of the Company during the financial year were the issuance of
notes under the Group's European Medium Term Note programme and
the provision of financial services to other companies within
the Group.
The Directors do not envisage any change to the nature of the
business in the foreseeable future.
Review of business
The Company made a profit for the half year ended 30 June 2019
of GBP7,229,000 (2018: GBP16,814,000), which will be transferred
to reserves. The Directors are of the opinion that the current
level of activity and the period end financial position are satisfactory
and will remain so in the foreseeable future.
No dividend is proposed to the holders of ordinary shares in respect
of the period ended 30 June 2019 (2018: GBPnil).
At 30 June 2019, the Company had in issue GBP11,321,857,000 European
Medium Term Notes and GBP5,877,518,000 US Medium Term Notes (31
December 2018: GBP11,357,479,000 and GBP3,137,587,000, respectively),
which mature at dates between 2019 and 2045. All notes currently
in issue pay interest on a fixed rate basis, with the exception
of the EUR750 million (GBP672 million) 2020 European Medium Term
Note and $750 million (GBP591 million) 2021 US Medium Term Note
which are on a floating rate basis.
Principal risks and uncertainties
The Directors of GlaxoSmithKline plc manage the risks of the Group
at a group level, rather than at an individual statutory entity
level. For this reason, the Company's Directors believe that a
discussion of the Group's risks would not be appropriate for an
understanding of the development, performance or position of the
Company's business. The principal risks and uncertainties of the
Group, which include those of the Company, are discussed in the
Group's 2018 Annual Report which does not form part of this report.
Details of the Company's financial risk management is also disclosed
in the Company's Annual Report for the year ended 31 December
2018.
Directors' responsibility statement
The Board of Directors approved this document on 22 July 2019.
The Directors confirm that to the best of their knowledge this
unaudited condensed financial information for the six months ended
30 June 2019 has been prepared in accordance with Financial Reporting
Standard 104 "Interim Financial Reporting" and that the interim
management report herein includes a true and fair view of the
information required by Disclosure and Transparency Rules (DTR)
4.2.7.
Approach to Brexit
In preparing for the UK's exit from the EU (Brexit), the Directors
of the Group have taken a risk-based approach to maintain continuity
of supply of our medicines, vaccines and consumer healthcare products
to the people in the UK and EU at the Group level, rather than
at an individual statutory entity level. For this reason, the
Company's Directors believe that a discussion of the Group's approach
to Brexit would not be appropriate for an understanding of the
impact of Brexit to the position of the Company's business. The
Group's approach to Brexit, which include those of the Company,
are discussed in the Group's 2018 annual report which does not
form part of this report.
The Directors of the Company are:
Mr S Dingemans (resigned on 1 May 2019)
Mr I Mackay (appointed on 1 May 2019)
Edinburgh Pharmaceutical Industries Limited
Glaxo Group Limited
By order of the Board
Mr A Walker
For and on behalf of Glaxo Group Limited
Corporate Director
22 July 2019
Internet
This Announcement and other information about the GSK Group are
available on the website at: http://www.gsk.com.
Income statement
for the half year ended 30 June 2019
Period ended Period ended
30 June
30 June 2019 2018
Note GBP'000 GBP'000
-------------------------------------- ----- ------------- -------------
Other operating income/(expense) (465) 214
Finance income 3 226,897 172,296
Finance expense 4 (217,507) (151,712)
====================================== ===== ============= =============
Operating profit 2 8,925 20,798
====================================== ===== ============= =============
Profit before taxation 8,925 20,798
====================================== ===== ============= =============
Tax on profit 5 (1,696) (3,984)
====================================== ===== ============= =============
Profit for the financial period 7,229 16,814
-------------------------------------- ----- ------------- -------------
Statement of comprehensive income
for the half year ended 30 June 2019
Period Period
ended ended
30 June 30 June
2019 2018
GBP'000 GBP'000
Profit for the financial period 7,229 16,814
Items that may be subsequently reclassified to
the income statement:
Fair value movements on cash flow hedges (12,159) 1,288
Reclassification of cash flow hedges
to the income statement 1,368 731
Deferred tax on cash flow hedges 1,834 (124)
================================================= ========= ========
Other comprehensive income for the financial
period (8,957) 1,895
================================================= ========= ========
Total comprehensive income for the financial
period (1,728) 18,709
------------------------------------------------- --------- --------
Statement of financial position
As at 30 June 2019
31 December
30 June 2019 2018
Note GBP'000 GBP'000
--------------------------------------- ----- ------------- -------------
Non-current assets
Deferred tax assets 3,738 1,904
Loans and receivables 6 15,107,976 13,087,653
--------------------------------------- ----- ------------- -------------
Total non-current assets 15,111,714 13,089,557
--------------------------------------- ----- ------------- -------------
Current assets
Loans and receivables 6 2,139,171 1,471,451
Prepayments and accrued income 7 130,458 131,225
Cash and cash equivalents 4,155 -
--------------------------------------- ----- ------------- -------------
Total current assets 2,273,784 1,602,676
--------------------------------------- ----- ------------- -------------
Total assets 17,383,664 14,692,233
---------------------------------------
Current liabilities
Other payables 8 (7,448) (7,792)
Accruals and deferred income 10 (115,957) (124,929)
Short-term borrowings (2,016,271) (1,349,459)
--------------------------------------- ----- ------------- -------------
Total current liabilities (2,139,676) (1,482,180)
--------------------------------------- ----- ------------- -------------
Net current assets 134,108 120,496
--------------------------------------- ----- ------------- -------------
Total assets less current liabilities 15,243,988 13,210,053
--------------------------------------- ----- ------------- -------------
Non-current liabilities
Long-term borrowings 9 (15,183,104) (13,145,607)
--------------------------------------- ----- ------------- -------------
Total non-current liabilities (15,183,104) (13,145,607)
--------------------------------------- ----- ------------- -------------
Total liabilities (17,322,780) (14,627,787)
Net assets 62,718 64,446
--------------------------------------- ----- ------------- -------------
Equity
Called up share capital 13 100 100
Other reserves (18,254) (9,297)
Retained earnings 80,872 73,643
-----
Total equity 62,718 64,446
--------------------------------------- ----- ------------- -------------
Statement of changes in equity
for the half year ended 30 June 2019
Called
up
share Other Retained
capital reserves earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------
At 1 January 2018 100 (11,588) 49,123 37,635
Profit for the financial period - - 16,814 16,814
Other comprehensive income for
the
financial period - 1,895 - 1,895
--------------------------------- --------- ---------- ---------- -------------
At 30 June 2018 100 (9,693) 65,937 56,344
--------------------------------- --------- ---------- ---------- -------------
Called
up
share Other Retained
capital reserves earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------
At 1 January 2019 100 (9,297) 73,643 64,446
Profit for the financial period - - 7,229 7,229
Other comprehensive income for
the
financial period - (8,957) - (8,957)
--------------------------------- --------- ---------- ---------- -------------
At 30 June 2019 100 (18,254) 80,872 62,718
--------------------------------- --------- ---------- ---------- -------------
Cash flow statement
for the half year ended 30 June 2019
Period ended Period ended
30 June 2019 30 June 2018
Note GBP'000 GBP'000
------------------------------------------ ----- ------------- -------------
Cash flows from operating activities
Operating profit 8,925 20,798
Adjustments reconciling operating profit
to
operating cash flows 12 (13,983) (20,852)
------------------------------------------ ----- ------------- -------------
Net cash (outflow)/inflow from operating
activities (5,058) (54)
------------------------------------------ ----- ------------- -------------
Cash flows from financing activities
Proceeds from borrowings 2,630,777 3,650,522
Repayment of borrowings - -
Loans provided to Group undertakings (2,618,537) (3,648,326)
Loan repayments received from Group - -
undertakings
(Increase)/decrease in current accounts
with Group
undertakings (3,027) (2,142)
------------------------------------------ ----- ------------- -------------
Net cash inflow/(outflow) from financing
activities 9,213 54
------------------------------------------ ----- ------------- -------------
Net movement in cash in the period 4,155 -
------------------------------------------ ----- ------------- -------------
Cash at beginning of period - 1
Movement in cash 4,155 -
------------------------------------------ ----- ------------- -------------
Cash at end of period 4,155 1
------------------------------------------ ----- ------------- -------------
Notes to the financial statements for the half year ended 30 June 2019
1 Accounting presentation and policies
This unaudited Results Announcement containing condensed financial
information for the six months ended 30 June 2019 is prepared in accordance
with Financial Reporting Standard 104 "Interim Financial Reporting"
using the recognition and measurement requirements of Financial Reporting
Standard 101 "Reduced Disclosure Framework" and in accordance with
the Listing Rules of the UK Listing Authority.
2 Operating profit
Period ended Period ended
30 June
30 June 2019 2018
GBP'000 GBP'000
--------------------------------------------------------------------- ---- ----------------- --------------
The following items have been (charged) / credited
in operating profit:
Exchange gains/(losses) on foreign currency
transactions (465) 214
--------------------------------------------------------------------- ---- ---- ----------------- --------------
3 Finance income
Period ended Period ended
30 June
30 June 2019 2018
GBP'000 GBP'000
--------------- ------------------- ------------------------- ---- ---- ----------------- --------------
Interest income arising from loans with Group
undertakings 226,897 172,296
4 Finance expense
Period ended Period ended
30 June
30 June 2019 2018
GBP'000 GBP'000
--------------- ------------------- ------------------------- ---- ---- ----------------- --------------
Interest expense arising on financial liabilities
at amortised cost (216,139) (150,981)
Reclassification of cash flow hedge from other
comprehensive income (1,368) (731)
--------------------------------------------------------------------------------- ----------------- --------------
Total finance expense (217,507) (151,712)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
5 Taxation
Period ended Period ended
30 June
30 June 2019 2018
Income tax expense on ordinary activities GBP'000 GBP'000
--------------------------------------------------------------------------- ----------------- --------------
Current tax:
UK corporation tax at 19% (2018: 19%) (1,696) (3,984)
Total current tax (1,696) (3,984)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
Period ended Period ended
30 June
30 June 2019 2018
Total tax (expense) / credit included in other
comprehensive income GBP'000 GBP'000
=========================================================================== ================= ==============
Deferred tax:
Fair value movements on cash flow hedges 1,834 (124)
===================================================================== ==== ==== ================= ==============
Total tax (expense) / credit included in
other comprehensive income 1,834 (124)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
6 Loans and receivables
31 December
30 June 2019 2018
GBP'000 GBP'000
--------------------------------------------------------------------------- ----------------- --------------
Amounts due within one year
Amounts owed by Group undertakings 2,139,171 1,471,451
--------------------------------------------------------------------------- ---- ----------------- --------------
2,139,171 1,471,451
--------------------------------------------------------------------- ---- ---- ----------------- --------------
Amounts due after more than one year
Amounts owed by Group undertakings 15,107,976 13,087,653
15,107,976 13,087,653
--------------------------------------------------------------------- ---- ---- ----------------- --------------
17,247,147 14,559,104
Amounts due within one year are call accounts with Group undertakings
of GBP51,360,000 (2018: GBP51,647,000) which are unsecured, repayable
on demand and earn a market rate of interest (based on 1 week LIBOR
minus 0.125%) that is consistent with the Group's policy, and includes
deposits with Group undertakings of GBP81,749,000 (2018: GBP78,574,000)
which are unsecured, repayable on demand and earn a market rate of
interest (based on LIBOR minus 0.125%) that is consistent with the
Group's policy.
Amounts due within one year also include the net proceeds of bond
issuances that have been advanced as loans to Group undertakings of
GBP2,006,062,000 (2018: GBP1,341,230,000) which are unsecured with
a fixed interest rate of 1.05% and a floating interest rate of EURIBOR+
20bps per annum.
Amounts due after more than one year are the net proceeds of bond
issuances that have been advanced as loans to Group undertakings,
which are unsecured with fixed interest charged between 0.21% and
6.50% per annum and floating interest charged at LIBOR plus 56bps
and repayable at maturity dates between 2020 and 2045.
7 Prepayments and accrued income
31 December
30 June 2019 2018
GBP'000 GBP'000
--------------------------------------------------------------------------- ----------------- --------------
Amounts due within one year 130,458 131,225
--------------------------------------------------------------------- ---- ---- ----------------- --------------
Accrued income relates to interest on amounts owed by Group undertakings
(see Note 6).
8 Other payables
31 December
30 June 2019 2018
GBP'000 GBP'000
--------------------------------------------------------------------------- ----------------- --------------
Amounts falling due within one year
Amounts owed to Group undertakings - (2,040)
Corporation tax (7,448) (5,752)
--------------------------------------------------------------------------- ---- ----------------- --------------
(7,448) (7,792)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
The corporation tax creditor contains amounts which will be paid to
fellow Group companies under Group relief.
9 Borrowings
31 December
30 June 2019 2018
GBP'000 GBP'000
--------------------------------------------------------------------------- ----------------- --------------
Amounts falling due within one year
Loans payable:
EUR European Medium Term Notes (2,016,271) (1,349,459)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
(2,016,271) (1,349,459)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
Amounts falling due after more than one
year
Loans payable:
EUR European Medium Term Notes (5,260,810) (5,964,309)
GBP European Medium Term Notes (4,044,776) (4,043,711)
US$ Medium Term Notes (5,877,518) (3,137,587)
--------------------------------------------------------------------------- ---- ----------------- --------------
(15,183,104) (13,145,607)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
Total borrowings (17,199,375) (14,495,066)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
31 December
30 June 2019 2018
Maturity of borrowings GBP'000 GBP'000
--------------------------------------------------------------- ---- ---- ----------------- --------------
In more than one year, but not more than two
years
0.625% EUR European Medium Term Note 2019 - (1,349,459)
LIBOR + 20bps EUR European Medium Term Note
2020 - (677,246)
0.000% EUR European Medium Term Note 2020 (1,074,095) (1,079,415)
LIBOR + 35bps US$ US Medium Term Note 2021 (589,998) -
3.125% US$ Medium Term Note 2021 (981,576) -
--------------------------------------------------------------- ---- ---- ----------------- --------------
(2,645,669) (3,106,120)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
In more than two years, but not more than
five years
LIBOR + 35bps US$ US Medium Term Note 2021 - (589,385)
3.125% US$ Medium Term Note 2021 - (980,151)
2.85% US$ Medium Term Note 2022 (1,570,005) (1,568,052)
2.875% US$ Medium Term Note 2022 (1,178,283) -
3.000% US$ US Medium Term Note 2024 (781,340) -
--------------------------------------------------------------- ---- ---- ----------------- --------------
(3,529,628) (3,137,588)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
In more than five years
1.375% EUR European Medium Term Note 2024 (888,797) (892,962)
4.000% EUR European Medium Term Note 2025 (666,688) (669,903)
1.000% EUR European Medium Term Note 2026 (625,295) (628,546)
1.250% EUR European Medium Term Note 2026 (892,021) (896,568)
3.375% GBP European Medium Term Note 2027 (593,669) (593,351)
3.375% US$ US Medium Term Note 2029 (776,316) -
1.375% EUR European Medium Term Note 2029 (444,766) (447,022)
1.750% EUR European Medium Term Note 2030 (669,148) (672,647)
5.250% GBP European Medium Term Note 2033 (982,114) (981,711)
6.375% GBP European Medium Term Note 2039 (694,060) (693,984)
5.250% GBP European Medium Term Note 2042 (986,369) (986,216)
4.250% GBP European Medium Term Note 2045 (788,564) (788,448)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
(9,007,807) (8,251,358)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
Total borrowings due after one year (15,183,104) (14,495,066)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
10 Accruals and deferred income
31 December
30 June 2019 2018
GBP'000 GBP'000
--------------------------------------------------------------- ---- ---- ----------------- --------------
Amounts falling due within one year (115,957) (124,929)
--------------------------------------------------------------------- ---- ---- ----------------- --------------
Accruals relates to interest payable on borrowings
(see Note 9).
11 Fair value of financial assets and liabilities
The fair values of the financial assets and liabilities are included
at the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants
at the measurement date.
The following methods and assumptions were used to estimate the fair
values:
-- Cash and cash equivalents - approximates to the carrying amount;
-- Borrowings (European and US Medium Term Notes) - based on quoted
market prices (a level 1 fair value measurement);
-- Intercompany loans - approximates to the fair value of borrowings
(European and US Medium Term Notes); and
-- Receivables and payables - approximates to the carrying amount.
The carrying amounts and the fair values of the Company's financial
assets and liabilities at 30 June 2019 and 31 December 2018 are illustrated
below.
30 June 2019 31 December 2018
Carrying Carrying
value Fair value value Fair value
GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------------- ----- ------------- -------------------- ------------- -------------
Cash and cash equivalents 4,155 4,155 - -
Loans and receivables:
Other receivables 130,458 130,458 131,225 131,225
Amounts owed by Group undertakings 17,247,147 19,467,188 14,559,104 16,387,153
Total financial assets 17,381,760 19,601,801 14,690,329 16,518,378
------------------------------------------- ------------- -------------------- ------------- -------------
Financial liabilities measured at amortised
cost:
GBP European Medium Term
Notes (4,044,776) (5,697,927) (4,043,711) (4,088,154)
EUR European Medium Term
Notes (7,277,081) (7,724,089) (7,313,768) (8,627,556)
US$ US Medium Term Notes (5,877,518) (6,045,172) (3,137,587) (3,671,443)
------------------------------------ ----------- ------------- -------------------- ------------- -------------
(17,199,375) (19,467,188) (14,495,066) (16,387,153)
Other payables (115,957) (115,957) (126,969) (126,969)
Total financial liabilities (17,315,332) (19,583,145) (14,622,035) (16,514,122)
------------------------------------ ----------- ------------- -------------------- ------------- -------------
Net financial assets 66,428 18,656 68,294 4,256
------------------------------------------- ------------- -------------------- ------------- -------------
The Company has no financial assets or liabilities measured at fair
value through profit or loss.
Financial liabilities measured at amortised cost for which the fair
value of GBP19,467,188,000 (31 December 2018: GBP16,387,153,000) as
disclosed in the table above are categorised as Level 1, where quoted
prices in active markets are used. Similarly, amounts owed by Group
undertakings, which include the net proceeds of bond issuances advanced
as loans, also approximate to the fair value of these financial liabilities.
All other assets and liabilities are approximate to the carrying amount.
12 Adjustments reconciling operating profit to operating cash flows
Period
Period ended ended
30 June 30 June
2019 2018
GBP'000 GBP'000
------------------------------------------- ------------- -------------------- ------------- -------------
Operating profit 8,925 20,798
Adjustments:
Decrease/(increase) in other
receivables 767 3,317
(Decrease)/increase in other
payables (11,012) (13,836)
Exchange adjustments 307 (3,565)
Amortisation of bond costs 6,746 (8,787)
Fair value movements on cash flow hedges (12,159) 1,288
Reclassification of cash flow hedges
to the income statement 1,368 731
---------------------------------------------------------------- -------------------- ------------- -------------
-
(13,983) (20,852)
---------------------------------------------------------------- -------------------- ------------- -------------
Net cash (outflow)/inflow from operating activities (5,058) (54)
-------------------------------------------------------------------------------------- ------------- -------------
13 Called up share capital
31 December 30 June 31 December
30 June 2019 2018 2019 2018
Number
Number of of
shares shares GBP'000 GBP'000
--------------- ------------------- ----- ------------- -------------------- ------------- -------------
Authorised
Ordinary Shares of GBP1 each
(31 December 2018: GBP1 each) 100,000 100,000 100 100
------------------------------------------- ------------- -------------------- ------------- -------------
Issued and fully paid
Ordinary Shares of GBP1 each
(31 December 2018: GBP1 each) 100,000 100,000 100 100
------------------------------------------- ------------- -------------------- ------------- -------------
14 Related party transactions
As a wholly owned subsidiary of the ultimate parent company, GlaxoSmithKline
plc, advantage has been taken of the exemption afforded by FRS 101
"Reduced Disclosure Framework" not to disclose any related party transactions
within the Group. There are no other related party transactions.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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