Last checked at 29 Jul 2021 10:23
Publication of GlaxoSmithKline Capital plc
Interim Management Report 2021
Today, 29 July 2021, 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 2021.
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 WhyteCompany Secretary29 July 2021
* https://www.gsk.com/en-gb/about-us/codes-and-standards/#tab-9343
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 2020 and any impacts of the COVID-19 pandemic.
APPENDIX A
GlaxoSmithKline Capital plc
(Registered number: 02258699)
Interim Management Report
for the half year ended 30 June 2021
Registered office address:
980 Great West Road
Brentford
Middlesex
TW8 9GS
GlaxoSmithKline Capital plc
(Registered number: 02258699)
Interim Management Report
for the half year ended 30 June 2021
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 |
GlaxoSmithKline Capital plc
(Registered number: 02258699)
Results announcement and interim management report for the half year ended 30 June 2021
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 2021 of £6,685,000 (2020: £10,366,000), 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 2021 (2020:£nil).
At 30 June 2021, the Company had in issue £12,336,576,000 European Medium Term Notes and £4,851,788,000 US Medium Term Notes (31 December 2020: £12,664,804,000 and £5,474,398,622 respectively), which mature at dates between 2022 and 2045. All notes currently in issue pay interest on a fixed rate basis, with the exception of the €1.5 billion (£1.4 billion) 2021 European Medium Term Note, which is 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 2020 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 2020.
Impact of Brexit
The UK left the EU on 31 January 2020 and the Brexit transition period ended on 31 December 2020 with a Trade and Cooperation Agreement ('a deal') in place between the UK and EU. The Group's overriding priority in preparing for the UK's exit from the EU has been to maintain continuity of supply of our products to people in the UK and EU.
The Group's post-Brexit operating model has been implemented, and we continue to work closely with Governments in both the UK and EU, as well as our third parties, on the effective implementation of the deal and to ensure that our sector continues to thrive and deliver innovation for consumers in both the UK and EU.
Over the longer term, we continue to believe that Brexit will not have a material impact on our business.
Directors' responsibility statement
The Board of Directors approved this document on 23 July 2021.
The Directors confirm that to the best of their knowledge this unaudited condensed financial information for the six months ended 30 June 2021 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 COVID-19
The potential impact of the coronavirus outbreak on the Company's and its subsidiaries' access to capital and ability to lend and all its principal risks have been assessed with mitigation plans put in place. The Company has accessed capital markets in 2020, and continues to monitor the situation closely, as this continues to be a dynamic and an uncertain situation, with the ultimate severity, duration and impact unknown at this point.
The Directors of the Company are:
Mr I MackayEdinburgh Pharmaceutical Industries LimitedGlaxo Group Limited
By order of the Board
Mr A Walker
For and on behalf of Glaxo Group Limited
Corporate Director
23 July 2021
Internet
This Announcement and other information about the GSK Group are available on the website at: http://www.gsk.com.
GlaxoSmithKline Capital plc
Income statementfor the half year ended 30 June 2021
|
| Period ended 30 June 2021 | Period ended 30 June 2020 |
| Note | £'000 | £'000 |
Other operating income / (expense) | 2 | (1,197) | 1,626 |
Finance income | 3 | 224,460 | 251,724 |
Finance expense | 4 | (215,009) | (240,553) |
Operating profit |
| 8,254 | 12,797 |
Profit before taxation |
| 8,254 | 12,797 |
Taxation on profit | 5 | (1,569) | (2,431) |
Profit for the financial period |
| 6,685 | 10,366 |
GlaxoSmithKline Capital plc
Statement of comprehensive incomefor the half year ended 30 June 2021
|
| Period ended 30 June 2021 | Period ended 30 June 2020 |
|
| £'000 | £'000 |
Profit for the financial period |
| 6,685 | 10,366 |
Items that may be subsequently reclassified to the income statement: |
|
|
|
Fair value movements on cash flow hedges |
| 0 | (5,480) |
Reclassification of cash flow hedges to the income statement |
| 1,851 | 1,879 |
Deferred tax on fair value movements on cash flow hedges |
| 46 | 1,078 |
Other comprehensive income for the financial period |
| 1,897 | (2,523) |
Total comprehensive income for the financial period |
| 8,582 | 7,843 |
GlaxoSmithKline Capital plc
Balance sheetas at 30 June 2021
Note | 30 June 2021 £'000 | 31 December 2020 £'000 | |
Non-current assets |
| ||
Deferred tax assets |
| 3,780 | 4,021 |
Loans and receivables | 6 | 12,955,837 | 15,776,159 |
Total non-current assets |
| 12,959,617 | 15,780,180 |
Current assets |
|
|
|
Loans and receivables | 6 | 4,321,861 | 2,447,426 |
Prepayments and accrued income | 7 | 108,086 | 145,580 |
Cash and cash equivalents |
| 4 | 4 |
Total current assets |
| 4,429,951 | 2,593,010 |
Total assets |
| 17,389,568 | 18,373,190 |
Current liabilities |
|
|
|
Other payables | 8 | - | -4,024 |
Corporate tax |
| -5,417 | -4,134 |
Accruals and deferred income | 10 | -98,396 | -137,021 |
Short-term borrowings | 9 | -4,238,047 | -2,350,809 |
Total current liabilities |
| -4,341,860 | -2,495,988 |
Net current assets |
| 88,091 | 97,022 |
Total assets less current liabilities |
| 13,047,708 | 15,877,202 |
Non-current liabilities |
|
|
|
Long-term borrowings | 9 | -12,950,318 | -15,788,394 |
Total non-current liabilities |
| -12,950,318 | -15,788,394 |
Total liabilities |
| -17,292,178 | -18,284,382 |
Net assets |
| 97,390 | 88,808 |
Equity |
|
|
|
Called up share capital | 13 | 100 | 100 |
Other reserves |
| -15,244 | -17,141 |
Retained earnings |
| 112,534 | 105,849 |
Total equity |
| 97,390 | 88,808 |
GlaxoSmithKline Capital plc
Statement of changes in equityfor the half year ended 30 June 2021
| Called up share capital | Other reserves | Retained earnings | Total equity |
£'000 | £'000 | £'000 | £'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 |
| Called up share capital | Other reserves | Retained earnings | Total equity |
£'000 | £'000 | £'000 | £'000 | |
At 1 January 2021 | 100 | (17,141) | 105,849 | 88,808 |
Profit for the financial period | - | - | 6,685 | 6,685 |
Other comprehensive income for the financial period | - | 1,897 | - | 1,897 |
At 30 June 2021 | 100 | (15,244) | 112,534 | 97,390 |
GlaxoSmithKline Capital plc
Cash flow statementfor the half year ended 30 June 2021
|
| Period ended 30 June 2021 | Period ended 30 June 2020 |
| Note | £'000 | £'000 |
Cash flows from operating activities |
|
|
|
Operating profit |
| 6,685 | 12,797 |
Adjustments reconciling operating profit to operating cash flows | 12 | 4,863 | (166) |
Net cash (outflow) / inflow from operating activities |
| 11,548 | 12,631 |
Cash flows from financing activities |
|
|
|
Proceeds from borrowings |
| - | 2,140,275 |
Repayment of borrowings |
| (533,048) | (674,483) |
Loans provided to Group undertakings |
| - | (2,134,797) |
Loan repayments received from Group undertakings |
| 531,715 | 674,483 |
(Increase) / decrease in current accounts with Group undertakings |
| (10,215) | (18,109) |
Net cash inflow / (outflow) from financing activities |
| (11,548) | (12,630) |
Net movement in cash in the period |
| - | 1 |
Cash at beginning of period |
| 4 | 4 |
Movement in cash |
| - | 1 |
Cash at end of period |
| 4 | 5 |
GlaxoSmithKline Capital plc
Notes to the financial statements for the half year ended 30 June 2021
1. Accounting presentation and policies
This unaudited Results Announcement containing condensed financial information for the six months ended 30 June 2021 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 30 June 2021 | Period ended 30 June 2020 |
| £'000 | £'000 |
The following items have been credited / (charged) in operating profit: |
|
|
Exchange gains on foreign currency transactions | (1,197) | 1,626 |
3. Finance income
| Period ended 30 June 2021 | Period ended 30 June 2020 |
| £'000 | £'000 |
Interest income arising from loans with Group undertakings | 224,460 | 251,724 |
4. Finance expense
| Period ended 30 June 2021 | Period ended 30 June 2020 |
| £'000 | £'000 |
Interest expense arising on financial liabilities at amortised cost | (213,158) | (238,674) |
Reclassification of cash flow hedge from other comprehensive income | (1,851) | (1,879) |
Total finance expense | (215,009) | (240,553) |
5. Taxation
| Period ended 30 June 2021 | Period ended 30 June 2020 |
Income tax expense on ordinary activities | £'000 | £'000 |
Current tax: |
|
|
UK corporation tax at 19% (2020: 19%) | (1,569) | (2,431) |
Total current tax | (1,569) | (2,431) |
| Period ended 30 June 2021 | Period ended 30 June 2020 |
Total tax (expense) / credit included in other comprehensive income | £'000 | £'000 |
Deferred tax: |
|
|
Fair value movements on cash flow hedges | 46 | 1,078 |
Total tax (expense) / credit included in other comprehensive income | 46 | 1,078 |
6. Trade and other receivables
| 30 June 2021 | 31 December 2020 |
| £'000 | £'000 |
Amounts due within one year |
|
|
Amounts owed by Group undertakings | 4,321,861 | 2,447,426 |
| 4,321,861 | 2,447,426 |
Amounts due after more than one year |
|
|
Long term deposits | 244 | 320 |
Amounts owed by Group undertakings - loans | 12,955,593 | 15,775,839 |
| 12,955,837 | 15,776,159 |
| 17,277,698 | 18,223,585 |
Amounts due within one year are deposits with Group undertakings of £97,699,618 (2019: £92,960,000) 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 £4,224,161,513 (2020: £2,714,625,000) which are unsecured with an interest rate between 0.045% and 3.2% per annum.
Amounts due after more than one year include the net proceeds of bond issuances that have been advanced as loans to Group undertakings, which are unsecured with fixed interest charged between 0.103% and 6.50% per annum and repayable at maturity dates between 2023 and 2045.
Amounts due after more than one year also include call accounts with Group undertakings of £81,724,873 (2020: £74,483,000) 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.
7. Prepayments and accrued income
| 30 June 2021 | 31 December 2020 |
| £'000 | £'000 |
Amounts due within one year | 108,086 | 145,580 |
8. Trade and other payables
| 30 June 2021 | 31 December 2020 |
| £'000 | £'000 |
Amounts falling due within one year | - | (4,024) |
Amounts owed to Group undertakings | - | (4,024) |
9. Borrowings
| 30 June 2021 | 31 December 2020 |
| £'000 | £'000 |
Amounts falling due within one year |
|
|
Loans payable: |
|
|
€ European Medium Term Notes | (1,716,270) | (1,801,490) |
US$ Medium Term Notes | (2,521,777) | (549,319) |
| (4,238,047) | (2,350,809) |
Amounts falling due after more than one year |
|
|
Loans payable: |
|
|
€ European Medium Term Notes | (5,085,212) | (5,330,086) |
£ European Medium Term Notes | (5,535,094) | (5,533,228) |
US$ Medium Term Notes | (2,330,012) | (4,925,080) |
| (12,950,318) | (15,788,394) |
Total borrowings | (17,188,365) | (18,139,203) |
| 30 June 2021 | 31 December 2020 |
Maturity of borrowings | £'000 | £'000 |
|
|
|
In one year or less, or on demand |
|
|
LIBOR+0.35% US$ US Medium Term Note 2021 | - | (549,319) |
LIBOR+0.30% € European Medium Term Note 2021 | (1,287,335) | (1,351,541) |
0% € European Medium Term Note 2021 | (428,935) | (449,949) |
2.850% US$ US Medium Term Note 2022 | (1,440,942) | - |
2.875% US$ US Medium Term Note 2022 | (1,080,835) | - |
|
|
|
| (4,238,047) | (2,350,809) |
|
|
|
In more than one year, but not more than two years |
|
|
2.850% US$ US Medium Term Note 2022 | - | (1,462,747) |
2.875% US$ US Medium Term Note 2022 | - | (1,097,314) |
0.125% € European Medium Term Note 2023 | (642,169) | - |
|
|
|
| (642,169) | (2,560,061) |
|
|
|
In more than two years, but not more than five years |
|
|
0% € European Medium Term Note 2023 | (428,815) | (449,632) |
0.125% € European Medium Term Note 2023 | - | (673,048) |
0.534% US$ US Medium Term Note 2023 | (899,955) | (913,467) |
1.375% € European Medium Term Note 2024 | (853,253) | (894,036) |
3.000% US$ US Medium Term Note 2024 | (717,565) | (728,293) |
4.000% € European Medium Term Note 2025 | (639,721) | (670,363) |
1.250% € European Medium Term Note 2026 | (854,931) | - |
| (4,394,240) | (4,328,839) |
|
|
|
In more than five years |
|
|
1.000% € European Medium Term Note 2026 | (599,036) | (627,997) |
1.250% € European Medium Term Note 2026 | - | (896,167) |
3.375% £ European Medium Term Note 2027 | (595,045) | (594,710) |
1.25% £ European Medium Term Note 2028 | (742,111) | (741,602) |
1.375% € European Medium Term Note 2029 | (426,306) | (446,859) |
3.375% US$ US Medium Term Note 2029 | (712,493) | (723,260) |
1.750% € European Medium Term Note 2030 | (640,979) | (671,985) |
5.250% £ European Medium Term Note 2033 | (983,840) | (983,392) |
1.625% £ European Medium Term Note 2035 | (743,490) | (743,284) |
6.375% £ European Medium Term Note 2039 | (694,621) | (694,542) |
5.250% £ European Medium Term Note 2042 | (986,961) | (986,794) |
4.250% £ European Medium Term Note 2045 | (789,027) | (788,902) |
|
|
|
| (7,913,909) | (8,899,494) |
|
|
|
Total borrowings | (17,188,365) | (18,139,203) |
|
|
|
10. Accruals and deferred income
| 30 June 2021 | 31 December 2020 |
| £'000 | £'000 |
Amounts falling due within one year | (98,396) | (137,021) |
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 2021 and 31 December 2020 are illustrated below
| 30 June 2021 | 31 December 2020 | ||
| Carrying value | Fair value | Carrying value | Fair value |
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
Cash and cash equivalents | 4 | 4 | 4 | 4 |
Loans and receivables: |
|
|
|
|
Other receivables | 108,086 | 108,086 | 145,580 | 145,580 |
Amounts owed by Group undertakings | 17,277,454 | 19,682,835 | 18,223,265 | 21,184,077 |
Total financial assets | 17,385,544 | 19,790,925 | 18,368,849 | 21,329,661 |
|
|
|
|
|
Financial liabilities measured at amortised cost: |
|
|
|
|
£ European Medium Term Notes | (5,535,094) | (7,425,663) | (5,533,228) | (8,044,821) |
€ European Medium Term Notes | (6,801,482) | (7,201,869) | (7,131,576) | (7,621,068) |
US$ US Medium Term Notes | (4,851,789) | (5,055,303) | (5,474,399) | (5,765,875) |
| (17,188,365) | (19,682,835) | (18,139,203) | (21,431,764) |
|
|
|
|
|
Other payables | (98,396) | (98,396) | (141,045) | (141,045) |
|
|
|
|
|
Total financial liabilities | (17,286,761) | (19,781,231) | (18,280,248) | (21,572,809) |
|
|
|
|
|
Net financial assets | 98,783 | 9,694 | 88,601 | (243,148) |
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 £19,781,231,000 (31 December 2020: £21,572,809,000) 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 30 June 2021 | Period ended 30 June 2020 |
| £'000 | £'000 |
|
|
|
Operating profit | 6,685 | 12,797 |
Adjustments: |
|
|
Decrease/ (increase) in other receivables | 37,570 | 25,518 |
(Decrease) / increase in other payables | (41,079) | (29,800) |
Exchange adjustments | 1,114 | 2,608 |
Amortisation of bond costs | 5,407 | 5,109 |
Fair value movements on cash flow hedges | - | (5,480) |
Reclassification of cash flow hedges to the income statement | 1,851 | 1,879 |
| 4,863 | (166) |
Net cash (outflow) / inflow from operating activities | 11,548 | 12,631 |
13. Called up share capital
| 30 June 2021 | 31 December 2020 | 30 June 2021 | 31 December 2020 |
| Number of shares | Number of shares | £'000 | £'000 |
Authorised |
|
|
|
|
Ordinary shares of £1 each (31 December 2020: £1 each) | 100,000 | 100,000 | 100 | 100 |
Issued and fully paid |
|
|
|
|
Ordinary shares of £1 each (31 December 2020: £1 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.