TIDMAG99
RNS Number : 5228U
GlaxoSmithKline Capital PLC
29 July 2020
Publication of GlaxoSmithKline Capital plc
Interim Management Report 2020
Today, 29 July 2020, 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 2020
In compliance with Listing Rule 9.6.1 of the UK Financial
Conduct Authority ("FCA"), copies of the Company's Interim
Management Report, have been submitted to the UK Listing
Authority's NSM submission portal via the Electronic Submission
System (ESS). A copy can be viewed at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
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
29 July 2020
*
https://www.gsk.com/en-gb/about-us/policies-codes-and-standards/other-reports
Cautionary statement regarding forward-looking statements
Under the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995, GlaxoSmithKline plc (GSK) and the
company 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
"Risk Factors" in GSK's Annual Report on Form 20-F for 2019 and any
impacts of the COVID-19 pandemic.
APPIX A
GlaxoSmithKline Capital plc
(Registered number: 02258699)
Interim Management Report
for the half year ended 30 June 2020
Registered office address:
980 Great West Road
Brentford
Middlesex TW8 9G
Contents
Pages
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 8-10
Results announcement and interim management report for the half
year ended 30 June 2020
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 2020
of GBP10,366,000 (2019: GBP7,229,000), 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 2020 (2019: GBPnil).
At 30 June 2020, the Company had in issue GBP12,764,934,000
European Medium-Term Notes and GBP4,458,853,000 US Medium Term
Notes (31 December 2019: GBP11,807,444,000 and GBP5,650,654,000,
respectively), which mature at dates between 2020 and 2045. All
notes currently in issue pay interest on a fixed rate basis, except
for the EUR1.5 billion (GBP1.4 billion) 2021 European Medium Term
Note and $750 million (GBP611 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 2019 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 2019.
Approach to Brexit
In preparing for the UK's exit from the EU (BREXIT), our
overriding priority has been to maintain continuity of supply of
our products to people in the UK and EU. As a result, we have taken
a risk-based approach to planning and mitigation, in conjunction
and complete alignment with the Group, whilst the negotiations on
future relationships between the UK and the European Union is
negotiated.
We have significant experience of maintaining resilient supply
chains and have used existing processes to develop a new supply
model based on the UK leaving the EU. Uncertainty remains about the
new operating environment after the transition ends on 31 December
2020, but all preparations are being taken to minimise disruption
to the supply of our products to consumers.
Directors' responsibility statement
The Board of Directors approved this document on 27 July
2020.
The Directors confirm that to the best of their knowledge this
unaudited condensed financial information for the six months ended
30 June 2020 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.
Risks associated with the coronavirus outbreak
The potential impact of the coronavirus outbreak on the
Company's access to capital and ability to lend remains uncertain.
Up to the date of this Report, the outbreak has not had a material
impact on the trading results of the Company. However, we continue
to monitor the situation closely, including the potential impacts
on trading results. The situation could change at any time and
there can be no assurance that the coronavirus outbreak will not
have a material adverse impact on the future results of the
Company.
The Directors of the Company are:
Mr I Mackay
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
27 July 2020
Internet
This Announcement and other information about the GSK Group are
available on the website at:
http://www.gsk.com.
GlaxoSmithKline Capital plc
Income statement
for the half year ended 30 June 2020
Period ended
Period ended 30
30 June 2020 June 2019
Note GBP'000 GBP'000
----------------------------------- --------------------- ------------ ------------
Other operating income / (expense) 2 1,626 (465)
Finance income 3 251,724 226,897
Finance expense 4 (240,553) (217,507)
=================================== ===================== ============ ============
Operating profit 12,797 8,925
=================================== ===================== ============ ============
Profit before taxation 12,797 8,925
=================================== ===================== ============ ============
Tax on profit 5 (2,431) (1,696)
----------------------------------- --------------------- ------------ ------------
Profit for the financial period 10,366 7,229
----------------------------------- --------------------- ------------ ------------
Statement of comprehensive income
for the half year ended 30 June 2020
Period ended Period ended 30
30 June 2020 June 2019
GBP'000 GBP'000
Profit for the financial period 10,366 7,229
Items that may be subsequently reclassified
to the income statement:
Fair value movements on cash flow hedges (5,480) (12,159)
Reclassification of cash flow hedges
to the income statement 1,879 1,368
Deferred tax on fair value movements
on cash flow hedges 1,078 1,834
Other comprehensive income for the
financial period (2,523) (8,957)
Total comprehensive income for the
financial period 7,843 (1,728)
-------------------------------------------- ----------------------- ---------------
Balance sheet
as at 30 June 2020
30-Jun-20 31-Dec-19
Note GBP'000 GBP'000
Non-current assets
Deferred tax assets 4,421 3,343
Loans and receivables 6 17,139,924 15,725,293
Total non-current assets 17,144,345 15,728,636
--------------------------------------- ----- ------------ ------------
Current assets
Loans and receivables 6 2,882,068 1,804,015
Prepayments and accrued income 7 109,234 134,752
Cash and cash equivalents 5 4
Total current assets 2,991,307 1,938,771
--------------------------------------- ----- ------------ ------------
Total assets 20,135,652 17,667,407
--------------------------------------- ----- ------------ ------------
Current liabilities
Other payables 8 -5,811 -5,811
Corporate tax 8 -5,853 -3,421
Accruals and deferred income 10 -98,272 -128,073
Short-term borrowings 9 -2,722,083 -1,657,233
Total current liabilities -2,832,019 -1,794,538
Net current assets 159,288 144,233
Total assets less current liabilities 17,303,633 15,872,869
Non-current liabilities
Long-term borrowings 9 -17,223,787 -15,800,866
Total non-current liabilities -17,223,787 -15,800,866
Total liabilities -20,055,806 -17,595,404
Net assets 79,846 72,003
--------------------------------------- ----- ------------ ------------
Equity
Called up share capital 13 100 100
Other reserves -18,846 -16,323
Retained earnings 98,592 88,226
--------------------------------------- ----- ------------ ------------
Total equity 79,846 72,003
--------------------------------------- ----- ------------ ------------
Statement of changes in equity
for the half year ended 30 June 2020
Called up
share Retained
capital Other 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
-------------------------------- --------- -------------- -------- ------------
Called up
share Retained
capital Other reserves earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- -------------- -------- ------------
At 1 January 2020 100 (16,323) 88,226 72,003
Profit for the financial period - - 10,366 10,366
Other comprehensive income for
the financial period - (2,523) - (2,523)
-------------------------------- --------- -------------- -------- ------------
At 30 June 2020 100 (18,846) 98,592 79,846
-------------------------------- --------- -------------- -------- ------------
Cash flow statement
for the half year ended 30 June 2020
Period ended Period ended
30 June 2020 30 June 2019
Note GBP'000 GBP'000
Cash flows from operating activities
Operating profit 12,797 8,925
Adjustments reconciling operating profit
to operating cash flows 12 (166) (13,983)
Net cash (outflow) / inflow from operating
activities 12,631 (5,058)
Cash flows from financing activities
Proceeds from borrowings 2,140,275 2,630,777
Repayment of borrowings (674,483) -
Loans provided to Group undertakings (2,134,797) (2,618,537)
Loan repayments received from Group undertakings 674,483 -
(Increase) / decrease in current accounts
with Group undertakings (18,109) (3,027)
Net cash inflow / (outflow) from financing
activities (12,630) 9,213
Net movement in cash in the period 1 4,155
------------------------------------------------- ---- ------------ ------------
Cash at beginning of period 4 -
Movement in cash 1 4,155
------------------------------------------------- ---- ------------ ------------
Cash at end of period 5 4,155
------------------------------------------------- ---- ------------ ------------
Notes to the financial statements for the half year ended 30
June 2020
1 Accounting presentation and policies
This unaudited Results Announcement containing condensed
financial information for the six months ended 30 June 2020 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. The same accounting policies and methods
of computation are followed in the interim financial statements as
compared with the most recent annual financial statements.
2 Operating profit
Period ended Period ended
30-Jun-20 30-Jun-19
GBP'000 GBP'000
------------------------------------------------- ------------- -------------
The following items have been credited
/ (charged) in operating profit:
Exchange gains on foreign currency transactions 1,626 -465
------------------------------------------------- ------------- -------------
3 Finance Income
Period ended Period ended
30-Jun-20 30-Jun-19
GBP'000 GBP'000
----------------------------------------- ------------- -------------
Interest income arising from loans with
Group undertakings 251,724 226,897
----------------------------------------- ------------- -------------
4 Finance Expense
Period ended Period ended
30-Jun-20 30-Jun-19
GBP'000 GBP'000
------------------------------------------ ------------- -------------
Interest expense arising on financial
liabilities at amortised cost -238,674 -216,139
Reclassification of cash flow hedge from
other comprehensive income -1,879 -1,368
------------------------------------------ ------------- -------------
Total finance expense -240,553 -217,507
------------------------------------------ ------------- -------------
5 Taxation
Period ended Period ended
30-Jun-20 30-Jun-19
Income tax expense on ordinary activities GBP'000 GBP'000
Current tax:
UK corporation tax at 19% (2019: 19%) -2,431 -1,696
Total current tax -2,431 -1,696
------------------------------------------- ------------- -------------
Total tax (expense) / credit included in
other comprehensive income
Deferred tax:
Fair value movements on cash flow hedges 1,078 1,834
Total tax (expense) / credit included in
other comprehensive income 1,078 1,834
------------------------------------------- ------------- -------------
6 Loans and other receivables
Period ended Period ended
30-Jun-20 31-Dec-19
GBP'000 GBP'000
Amounts due within one year
Amounts owed by Group undertakings 2,882,068 1,804,015
2,882,068 1,804,015
Amounts due after more than one year
Long term deposits 360 360
Amounts owed by Group undertakings - loans 17,139,564 15,724,933
-------------------------------------------- --------------- ----------------
17,139,924 15,725,293
-------------------------------------------- --------------- ----------------
20,021,992 17,529,308
-------------------------------------------- --------------- ----------------
Amounts due within one year are call accounts with Group
undertakings of GBP74,483,000 (2019: GBP72,268,000) 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
GBP92,960,000 (2019: GBP77,063,000) 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 GBP2,714,625,000 (2019: GBP1,654,684,000) 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 2021 and
2045.
7 Prepayments and accrued income
Period ended Period ended
30-Jun-20 31-Dec-20
GBP'000 GBP'000
------------------------ ------------- -------------
Amounts due within one
year 109,234 134,752
------------------------ ------------- -------------
8 Other payables
Period ended Period ended
30-Jun-20 31-Dec-20
GBP'000 GBP'000
------------------------------------ ------------- -------------
Amounts falling due within
one year
Amounts owed to Group undertakings -5,811 -5,811
Corporation tax -5,853 -3,421
-11,664 -9,232
------------------------------------ ------------- -------------
The corporation tax creditor contains amounts which will be paid
to fellow Group companies under Group relief.
9 Borrowings
30-Jun-20 31-Dec-20
GBP'000 GBP'000
Amounts falling due within one year
Loans payable:
EUR European Medium-Term Notes -1,094,489 -1,657,233
US$ Medium Term Notes -1,627,594 -
-2,722,083 -1,657,233
---------------------------------------------- ------------ ------------
Amounts falling due after more than one year
Loans payable:
EUR European Medium-Term Notes -7,233,702 -6,104,340
GBP European Medium-Term Notes -5,531,232 -4,045,872
US$ Medium Term Notes -4,458,853 -5,650,654
-17,223,787 -15,800,866
---------------------------------------------- ------------ ------------
Total borrowings -19,945,870 -17,458,099
---------------------------------------------- ------------ ------------
30-Jun-20 31-Dec-20
GBP'000 GBP'000
---------------------------------------------- ------------ ------------
Maturity of borrowings GBP'000 GBP'000
In more than one year, but not more than
two years
LIBOR+0.30% EUR European Medium Term Note
2021 -1,372,786 -1,280,755
0% EUR European Medium Term Note 2021 -456,582 -425,592
3.125% US$ US Medium Term Note 2021 - -943,893
LIBOR+0.35% US$ US Medium Term Note 2021 - -567,101
2.85% US$ US Medium Term Note 2022 -1,625,778 -
2.875% US$ US Medium Term Note 2022 -1,219,820 -
-4,674,966 -3,217,341
---------------------------------------------- ------------ ------------
In more than two years, but not more than
five years
2.85% US$ US Medium Term Note 2022 - -1,509,382
2.875% US$ US Medium Term Note 2022 - -1,132,641
0% EUR European Medium Term Note 2023 -456,062 -424,926
0.125% EUR European Medium Term Note 2023 -682,410 -
1.375%EUR European Medium Term Note 2024 -906,169 -843,707
3.000%US$ US Medium Term Note 2024 -809,359 -751,294
4% EUR European Medium Term Note 2025 -679,555 -
---------------------------------------------- ------------ ------------
-3,533,555 -4,661,950
---------------------------------------------- ------------ ------------
In more than five years
4% EUR European Medium Term Note 2025 - -632,791
1% EUR European Medium Term Note 2026 -636,855 -593,265
1.25% EUR European Medium Term Note 2026 -908,701 -846,415
3.375% GBP European Medium Term Note 2027 -594,324 -593,994
1.25% GBP European Medium Term Note 2028 -741,128 -
1.375% EUR European Medium Term Note 2029 -453,103 -422,037
3.375% US$ US Medium Term Note 2029 -803,896 -746,343
1.75% EUR European Medium Term Note 2030 -681,478 -634,852
5.25% GBP European Medium Term Note 2033 -982,953 -982,530
1.625% GBP European Medium Term Note 2035 -743,118 -
6.375% GBP European Medium Term Note 2039 -694,218 -694,138
5.25% GBP European Medium Term Note 2042 -986,689 -986,528
4.25% GBP European Medium Term Note 2045 -788,803 -788,682
------------ ------------
-9,015,266 -7,921,575
---------------------------------------------- ------------ ------------
Total borrowings due after one year -17,223,787 -15,800,866
---------------------------------------------- ------------ ------------
10 Accruals and deferred income
30-Jun-20 31-Dec-20
GBP'000 GBP'000
------------------------------------- ---------- -----------
Amounts falling due within one year -98,272 -128,073
------------------------------------- ---------- -----------
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 - approximate 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 - approximate to the carrying amount.
The carrying amounts and the fair values of the Company's
financial assets and liabilities at 30 June 2020 and 31 December
2019 are illustrated below.
30-Jun-20 31-Dec-19
Carrying Fair value Carrying Fair value
value value
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ ------------ ------------ ------------
Cash and cash equivalents 5 5 4 4
Loans and receivables:
Other receivables 109,234 109,234 134,752 134,752
Amounts owed by Group
undertakings 20,021,992 23,067,185 17,528,948 19,952,387
----------------------------- ------------ ------------ ------------ ------------
Total financial assets 20,131,231 23,176,424 17,663,704 20,087,143
Financial liabilities
measured at amortised
cost:
GBP European Medium-Term
Notes -5,531,232 -7,831,320 -4,045,872 -5,903,688
EUR European Medium-Term
Notes -8,328,191 -8,779,892 -7,761,573 -8,214,511
US$ US Medium Term Notes -6,086,447 -6,455,973 -5,650,654 -5,834,188
----------------------------- ------------ ------------ ------------ ------------
-19,945,870 -23,067,185 -17,458,099 -19,952,387
Other payables -98,272 -98,272 -133,884 -133,884
Total financial liabilities -20,044,142 -23,165,457 -17,591,983 -20,086,271
----------------------------- ------------ ------------ ------------ ------------
Net financial assets 87,089 10,967 71,721 872
----------------------------- ------------ ------------ ------------ ------------
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 GBP23,067,185,000 (31 December 2019:
GBP19,952,387,000) 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 ended Period ended
30-Jun-20 31-Dec-20
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Operating profit 12,797 8,925
Adjustments:
Decrease/ (increase) in other receivables 25,518 767
(Decrease) / increase in other payables -29,800 -11,012
Exchange adjustments 2,608 307
Amortisation of bond costs 5,109 6,746
Fair value movements on cash flow hedges -5,480 -12,159
Reclassification of cash flow hedges to
the income statement 1,879 1,368
-166 -13,983
-------------------------------------------- ------------- -------------
Net cash (outflow) / inflow from operating
activities 12,631 -5,058
-------------------------------------------- ------------- -------------
13 Called up Share capital
30-Jun-20 31-Dec-19 30-Jun-20 31-Dec-19
Number Number GBP'000 GBP'000
of shares of shares
-------------------------------- ----------- ----------- ---------- ----------
Authorised
Ordinary shares of GBP1 each
(31 December 2019: GBP1 each) 100,000 100,000 100 100
-------------------------------- ----------- ----------- ---------- ----------
Issued and fully paid
Ordinary shares of GBP1 each
(31 December 2019: 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
IR EKLFLBDLXBBK
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