Last checked at 28 Jul 2017 16:45
Publication of GlaxoSmithKline Capital plc Interim Management Report 2017
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Today, 28 July 2017, 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 2017.
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.
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V A Whyte Company Secretary 28 July 2017
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Cautionary statement regarding forward-looking statements GSK and the Company cautions investors that any forward-looking statements or projections made by GSK and the Company, 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 as 'Principal risks and uncertainties' in Appendix A of this announcement and under 'Principal Risks and Uncertainties' in the 'Investor information" section in the GSK Annual Report 2016 included as exhibit 15.2 to the GSK Annual Report on Form 20-F for 2016. |
Appendix A
GlaxoSmithKline Capital plc
(Registered number: 2258699)
Interim Management Report
for the half year ended 30 June 2017
Registered office address: 980 Great West Road Brentford
Middlesex TW8 9GS
GlaxoSmithKline Capital plc
(Registered number: 2258699)
Interim Management Report
for the half year ended 30 June 2017
Contents | Page |
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Interim report | 1-2 |
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Income statement | 3 |
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Statement of comprehensive income | 4 |
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Statement of financial position | 5 |
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Statement of changes in equity | 6 |
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Cash flow statement | 7 |
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Notes to the financial statements | 8-11 |
GlaxoSmithKline Capital plc
(Registered number: 2258699)
Results announcement and interim management report for the half year ended 30 June 2017
Performance
GlaxoSmithKline Capital plc (the "Company") is a member of the GlaxoSmithKline Group (the "Group"). The Company's principal activity is the issuance of notes under the Group's European and US 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 2017 of £4,055,000 (2016: £5,691,000), 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 2017 (2016: £nil).
At 30 June 2017, the Company had in issue £7,979,192,000 Euro Medium Term Notes and £1,529,764,000 US Medium Term Notes (31 December 2016: £7,874,858,000 and £3,214,961,000, respectively), which mature at dates between 2017 and 2045. All notes currently in issue pay interest on a fixed 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 2016 Annual Report and Second Quarter 2017 Results Announcement which do not form part of this report.
Details of the Company's financial risk management is also disclosed in the Company's Directors' Report and Annual Report for the year ended 31 December 2016.
Directors' responsibility statement
The Board of Directors approved this document on 24 July 2017.
The Directors confirm that to the best of their knowledge this unaudited condensed financial information for the six months ended 30 June 2017 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.
The Directors of the Company are:
Mr S Dingemans
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
24 July 2017
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 2017
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Note | 30 June 2017 £'000 | 30 June 2016 £'000 |
Other operating (expense) / income |
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(511) |
1,527 |
Finance income | 3 | 196,552 | 196,314 |
Finance expense | 4 | (191,019) | (190,729) |
Operating profit | 2 | 5,022 | 7,112 |
Profit before taxation |
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5,022 |
7,112 |
Tax on profit |
5 |
(967) |
(1,421) |
Profit for the financial period |
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4,055 |
5,691 |
Statement of comprehensive income
for the half year ended 30 June 2017
| Period ended 30 June 2017 £'000 | Period ended30 June 2016 £'000 |
Profit for the financial period | 4,055 | 5,691 |
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Items that may be subsequently reclassified to the income statement:
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Reclassification of cash flow hedges to the income statement | 477 | 477 |
Deferred tax on cash flow hedges | (81) | (86) |
Other comprehensive income for the financial period | 396 | 391 |
Total comprehensive income for the financial period | 4,451 | 6,082 |
Statement of financial position
as at 30 June 2017
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Note | 30 June 2017 £'000 | 31 December 2016 £'000 |
Non-current assets Deferred tax assets |
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1,812 |
1,893 |
Loans and receivables | 6 | 8,351,495 | 8,353,138 |
Total non-current assets |
| 8,353,307 | 8,355,031 |
Current assets Loans and receivables |
6 |
1,187,321 |
2,767,682 |
Prepayments and accrued income | 7 | 116,664 | 110,223 |
Cash and cash equivalents |
| 2 | 2 |
Total current assets |
| 1,303,987 | 2,877,907 |
Total assets |
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9,657,294 |
11,232,938 |
Current liabilities Other payables |
8 |
(3,791) |
(5,026) |
Short-term borrowings | 9 | (1,096,128) | (2,679,716) |
Accruals and deferred income | 10 | (108,434) | (106,431) |
Total current liabilities |
| (1,208,353) | (2,791,173) |
Net current assets |
| 95,634 | 86,734 |
Total assets less current liabilities |
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8,448,941 |
8,441,765 |
Non-current liabilities Long-term borrowings |
9 |
(8,412,828) |
(8,410,103) |
Total non-current liabilities |
| (8,412,828) | (8,410,103) |
Total liabilities |
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(9,621,181) |
(11,201,276) |
Net assets |
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36,113 |
31,662 |
Equity Called up share capital |
13 |
100 |
100 |
Other reserves |
| (8,847) | (9,243) |
Retained earnings |
| 44,860 | 40,805 |
Total equity |
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36,113 |
31,662 |
Statement of changes in equity
for the half year ended 30 June 2017
| Called up share capital |
Other reserves | Retained earnings |
Total equity |
£'000 | £'000 | £'000 | £'000 | |
At 1 January 2016 |
100 |
(9,914) |
29,508 |
19,694 |
Profit for the financial period | - |
| 5,691 | 5,691 |
Other comprehensive income for the financial period | - | 477 | - | 477 |
At 30 June 2016 |
100 |
(9,437) |
35,199 |
25,862 |
| Called up share capital |
Other reserves | Retained earnings |
Total equity |
£'000 | £'000 | £'000 | £'000 | |
At 1 January 2017 |
100 |
(9,243) |
40,805 |
31,662 |
Profit for the financial period | - | - | 4,055 | 4,055 |
Other comprehensive income for the financial period | - | 396 | - | 396 |
At 30 June 2017 |
100 |
(8,847) |
44,860 |
36,113 |
Cash flow statement
for the half year ended 30 June 2017
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| Period ended | Period ended |
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| 30 June 2017 | 30 June 2016 |
| Note | £'000 | £'000 |
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| Cash flows from operating activities |
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Operating profit |
| 5,022 | 7,112 |
Adjustments reconciling operating profit to operating cash flows | 12 | (312) | (759) |
Net cash inflow from operating activities |
| 4,710 | 6,353 |
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Cash flows from financing activities |
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Repayment of short-term borrowings |
| (1,543,721) | - |
Loan repayments received from Group undertakings |
| 1,532,776 | - |
Decrease / (increase) in current accounts with Group undertakings |
| 6,235 | (6,354) |
Net cash outflow from financing activities |
| (4,740) | (6,354) |
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Net movement in cash in the period |
| - | (1) |
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Cash at beginning of period |
| 2 | 3 |
Movement in cash |
| - | (1) |
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Cash at end of period |
| 2 | 2 |
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Notes to the financial statements for the half year ended 30 June 2017
1 Accounting presentation and policies
This unaudited Results Announcement containing condensed financial information for the six months ended 30 June 2017 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 |
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| 30 June 2017 | 30 June 2016 |
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| £'000 | £'000 |
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The following items have been (charged) / credited in operating profit: Exchange gains on foreign currency transactions |
(511) |
1,527 |
3 |
Finance income |
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| Period ended | Period ended |
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| 30 June 2017 | 30 June 2016 |
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| £'000 | £'000 |
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Interest income arising from loans with Group undertakings |
196,552 |
196,314 |
4 |
Finance expense |
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| Period ended | Period ended |
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| 30 June 2017 | 30 June 2016 |
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| £'000 | £'000 |
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Interest expense arising on financial liabilities at amortised cost |
(190,542) |
(190,252) |
| Reclassification of cash flow hedge from other comprehensive income | (477) | (477) |
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Total finance expense |
(191,019) |
(190,729) |
5 |
Tax on profit |
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| Period ended | Period ended |
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| 30 June 2017 | 30 June 2016 |
| Income tax expense on ordinary activities | £'000 | £'000 |
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Current tax: |
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| UK corporation tax at 19.25% (2016: 20%) | (967) | (1,421) |
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Total current tax |
(967) |
(1,421) |
6 |
Loans and receivables |
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| 30 June 2017 | 31 December 2016 |
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| £'000 | £'000 |
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Amounts due within one year |
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| Amounts owed by Group undertakings - loans | 1,087,763 | 2,661,340 |
| Amounts owed by Group undertakings - current accounts | 99,558 | 106,342 |
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| 1,187,321 | 2,767,682 |
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Amounts due after more than one year |
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| Amounts owed by Group undertakings - loans | 8,351,495 | 8,353,138 |
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| 8,351,495 | 8,353,138 |
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| 9,538,816 | 11,120,820 |
Amounts due within one year are the net proceeds of bond issuances that have been advanced as loans to Group undertakings totalling £1,087,763,000
(31 December 2016: £2,661,340,000), which are unsecured with interest charged at 5.76% per annum and repayable at maturity in December 2017.
In addition, there are balances with Group undertakings totalling £99,558,000 (31 December 2016: £106,342,000) that are unsecured and repayable on demand and earn a market rate of interest (based on one week LIBOR minus 0.125%) that is consistent with the Group's policy.
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 interest charged between 1.05% and 6.50% per annum and repayable at maturity dates between 2017 and 2045.
7 | Prepayments and accrued income |
30 June 2017 |
31 December 2016 |
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| £'000 | £'000 |
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Amounts due within one year |
116,664 |
110,223 |
| Accrued income relates to interest on amounts owed by Group undertakings (see Note 6). |
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8 | Other payables |
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| 30 June 2017 | 31 December 2016 |
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| £'000 | £'000 |
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Amounts falling due within one year Amounts owed to Group undertakings |
- |
(2,202) |
| Corporation tax | (3,791) | (2,824) |
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(3,791) |
(5,026) |
| Amounts owed to Group undertakings are unsecured and repayable on demand. |
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| The corporation tax creditor contains amounts which will be paid to fellow Group companies.
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9 | Borrowings |
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| 30 June 2017 | 31 December 2016 |
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| £'000 | £'000 |
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Amounts falling due within one year Loans payable: € European Medium Term Notes |
(1,096,128) |
(1,067,597) |
| US$ Medium Term Notes | - | (1,612,119) |
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| (1,096,128) | (2,679,716) |
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| Amounts falling due after more than one year |
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| Loans payable: |
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| € European Medium Term Notes | (2,831,355) | (2,756,848) |
| £ European Medium Term Notes | (4,051,709) | (4,050,413) |
| US$ Medium Term Notes | (1,529,764) | (1,602,842) |
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| (8,412,828) | (8,410,103) |
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| Total borrowings | (9,508,956) | (11,089,819) |
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30 June 2017 |
31 December 2016 |
Maturity of borrowings | £'000 | £'000 |
In one year or less, or on demand 1.50% US$ Medium Term Note 2017 |
- |
(1,612,119) |
5.625% € European Medium Term Note 2017 | (1,096,128) | (1,067,597) |
| (1,096,128) | (2,679,716) |
In more than two years, but not more than five years 0.6250% € European Medium Term Note 2019 |
(1,311,026) |
(1,276,450) |
2.85% US$ US Medium Term Note 2022 | (1,529,764) | - |
| (2,840,790) | (1,276,450) |
In more than five years 2.85% US$ US Medium Term Note 2022 |
- |
(1,602,842) |
1.375% € European Medium Term Note 2024 | (867,799) | (844,930) |
4.00% € European Medium Term Note 2025 | (652,530) | (635,468) |
3.375% £ European Medium Term Note 2027 | (593,067) | (592,734) |
5.25% £ European Medium Term Note 2033 | (986,051) | (985,626) |
6.375% £ European Medium Term Note 2039 | (695,220) | (695,110) |
5.25% £ European Medium Term Note 2042 | (988,367) | (988,133) |
4.25% £ European Medium Term Note 2045 | (789,004) | (788,810) |
| (5,572,038) | (7,133,653) |
Total borrowings |
(9,508,956) |
(11,089,819) |
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10 Accruals and deferred income
|
30 June 2017 |
31 December 2016 |
| £'000 | £'000 |
Amounts falling due within one year | (108,434) | (106,431) |
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);
• Intercompany current accounts - approximates to the carrying amount; 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 2017 and 31 December 2016 are illustrated below.
| 30 June 2017 Carrying value |
Fair value | 31 December 2016 Carrying value Fair value |
£'000 | £'000 | £'000 £'000 | |
Cash and cash equivalents |
2 |
2 |
2 2 |
Loans and receivables: Other receivables |
116,664 |
116,664 |
110,223 110,223 |
Amounts owed by Group undertakings - current accounts | 99,558 | 99,558 | 106,342 106,342 |
Amounts owed by Group undertakings | 9,439,258 | 11,388,004 | 11,014,478 13,045,298 |
Total financial assets | 9,655,482 | 11,604,228 | 11,231,045 13,261,865 |
Financial liabilities measured at amortised cost: £ European Medium Term Notes |
(4,051,709) |
(5,640,387) |
(4,050,413) (5,762,307) |
€ European Medium Term Notes | (3,927,483) | (4,174,371) | (3,824,445) (4,147,107) |
US$ US Medium Term Notes | (1,529,764) | (1,573,246) | (3,214,961) (3,242,226) |
| (9,508,956) | (11,388,004) | (11,089,819) (13,151,640) |
Other payables | (108,434) | (108,434) | (108,633) (108,633) |
Total financial liabilities | (9,617,390) | (11,496,438) | (11,198,452) (13,260,273) |
Net financial assets and liabilities |
38,092 |
107,790 |
32,593 1,592 |
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 £11,388,004,000 (31 December 2016: £13,151,640,000) is 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 approximate to the carrying amount.
12 | Adjustments reconciling operating profit to operating cash flows |
Period ended |
Period ended |
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| 30 June 2017 £'000 | 30 June 2016 £'000 |
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Operating profit |
5,022 |
7,112 |
| Increase in other receivables | (6,441) | (12,590) |
| (Decrease) / increase in other payables | (199) | 7,335 |
| Exchange adjustments | 511 | (1,527) |
| Amortisation of bond costs | 5,340 | 5,546 |
| Reclassification of cash flow hedges to the income statement | 477 | 477 |
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| (312) | (759) |
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Net cash inflow from operating activities |
4,710 |
6,353 |
13 Called up share capital
| 30 June 2017 Number of | 31 December 2016 Number of | 30 June 2017 | 31 December 2016 |
shares | shares | £'000 | £'000 | |
Authorised |
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Ordinary Shares of £1 each (31 December 2016: £1 each) | 100,000 | 100,000 | 100 | 100 |
Issued and fully paid |
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Ordinary Shares of £1 each (31 December 2016: £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.