27th Aug 2008 17:22
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Issued: 27th August 2008, London, U.K. |
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GlaxoSmithKline Capital plc |
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Results announcement and interim management report for the half year ended 30th June 2008 |
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Performance GlaxoSmithKline Capital plc, (the company) a wholly owned subsidiary of GlaxoSmithKline plc, provides financial services to its fellow subsidiaries ("the Group"). During the period the company made a profit on ordinary activities after taxation of £1,043,000 (H1 2007 - £372,000). The company had one cross currency swap outstanding with commercial banks at 30th June 2008. This was to manage the fixed/floating interest rate profile of debt. Under its European Medium Term Note (EMTN) programme the company issued a new fixed rate bond on 6th March 2008; a 31 year note for £700 million with interest fixed at 6.375%. Net proceeds after fees were £693,161,000. The costs will be amortised over the life of the bond. The issue was not swapped. The funds are to be used for Group financing purposes. The company's policy on interest rate risk management requires that the amount of net borrowings at fixed rates increases with the ratio of forecast net interest payable to trading profit. At 30th June 2008, £499 million (31st December 2007 - £1,234 million) of the company's net borrowings were exposed to changes in interest rates after allowing for the effects of hedging. The company seeks to denominate borrowings in the currencies of its principal assets and cash flows. These are primarily denominated in US dollars, Euros and Sterling. Certain borrowings are swapped into other currencies as required for Group purposes. After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing this document. |
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Outlook 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. |
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GlaxoSmithKline Capital plc, 980 Great West Road, Brentford, Middlesex TW8 9GS, United Kingdom Registered in England and Wales Registered number: 2258699 |
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GlaxoSmithKline Capital plc |
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Profit and loss account |
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Six months ended 30th June 2008 |
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Period ended30th June 2008£'000 |
Period ended 30th June 2007£'000 |
Year ended 31st December 2007£'000 |
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------ |
------ |
------ |
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Net administrative (expense)/income (including foreign exchange gains and losses) |
(76) |
55 |
(75) |
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------ |
------ |
------ |
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Operating (loss)/profit: |
(76) |
55 |
(75) |
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Net interest receivable |
1,771 |
650 |
3,026 |
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------ |
------ |
------ |
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Profit on ordinary activities before taxation |
1,695 |
705 |
2,951 |
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Taxation |
(652) |
(333) |
408 |
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------ |
------ |
------ |
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Profit on ordinary activities after taxation |
1,043 |
372 |
3,359 |
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------ |
------ |
------ |
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Statement of total recognised gains and losses |
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Six months ended 30th June 2008 |
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Period ended30th June 2008£'000 |
Period ended 30th June 2007£'000 |
Year ended 31st December 2007£'000 |
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------ |
------ |
------ |
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Profit for the period |
1,043 |
372 |
3,359 |
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Fair value movement of cash flow hedge reserve |
- |
(3,260) |
(3,142) |
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Amount recycled to profit and loss account |
481 |
218 |
387 |
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Tax on fair value movement of cash flow hedgereserve |
- |
978 |
942 |
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Tax on amount recycled to profit and loss account |
(144) |
- |
(116) |
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Deferred Tax - effect of tax rate change |
- |
- |
(174) |
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------ |
------ |
------ |
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Total recognised gains and losses |
1,380 |
(1,692) |
1,256 |
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------ |
------ |
------ |
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GlaxoSmithKline Capital plc |
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Balance sheet |
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30th June 2008£'000 |
31st December 2007£'000 |
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--------- |
--------- |
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Debtors: amounts due after one year |
7,096,859 |
6,812,508 |
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Derivative financial assets |
126,470 |
118,731 |
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Cash at bank |
20 |
4 |
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--------- |
--------- |
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Current assets |
7,223,349 |
6,931,243 |
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--------- |
--------- |
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Loans due within one year |
(499,861) |
(1,233,574) |
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Other creditors |
(130,476) |
(91,698) |
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Derivative financial liabilities |
- |
(83) |
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--------- |
--------- |
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Creditors: amounts due within one year |
(630,337) |
(1,325,355) |
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--------- |
--------- |
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Net current assets |
6,593,012 |
5,605,888 |
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--------- |
--------- |
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Total assets less current liabilities |
6,593,012 |
5,605,888 |
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--------- |
--------- |
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Loans due after one year |
(6,594,523) |
(5,608,779) |
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--------- |
--------- |
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Creditors: amounts due after one year |
(6,594,523) |
(5,608,779) |
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--------- |
--------- |
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Net liabilities |
(1,511) |
(2,891) |
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------ |
------ |
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Called up share capital |
100 |
100 |
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Profit and loss account |
4,325 |
3,282 |
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Other reserves |
(5,936) |
(6,273) |
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------ |
------ |
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Equity shareholders' deficit |
(1,511) |
(2,891) |
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------ |
------ |
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Reconciliation of movements in equity |
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Period ended30th June 2008£'000 |
Period ended 30th June 2007£'000 |
Year ended 31st December 2007£'000 |
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------ |
------ |
------ |
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Equity shareholders' deficit at beginning of period |
(2,891) |
(4,147) |
(4,147) |
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Profit for the period |
1,043 |
372 |
3,359 |
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Movement in cash flow hedge reserve (net of taxation) |
337 |
(2,064) |
(2,103) |
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------ |
------ |
------ |
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Equity shareholders' deficit at end of period |
(1,511) |
(5,839) |
(2,891) |
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------ |
------ |
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GlaxoSmithKline Capital plc |
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Taxation |
Period ended30th June 2008£'000 |
Period ended 30th June 2007£'000 |
Year ended 31st December 2007£'000 |
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---- |
---- |
---- |
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Tax charge/(credit) |
652 |
333 |
(408) |
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Tax rate |
28% |
30% |
30% |
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The tax credit in the years to 31st December 2007 arises from the release of an over provision from prior years. |
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The effective tax rate is based on the anticipated charge for taxation for the year to 31st December 2008. |
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Net interest receivable/(payable) |
Period ended30th June 2008£'000 |
Period ended 30th June 2007£'000 |
Year ended 31st December 2007£'000 |
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Interest payable |
------ |
------ |
------ |
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Net swap interest income/(expense) |
7,327 |
(1,767) |
(2,346) |
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Interest on Medium-Term Notes and Eurobonds |
(183,788) |
(80,777) |
(184,874) |
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Amortisation of bond expenses |
(4,018) |
(1,968) |
(4,368) |
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Ineffectiveness on fair value hedges |
2,381 |
(185) |
667 |
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-------- |
-------- |
-------- |
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(178,098) |
(84,697) |
(190,921) |
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Interest receivable |
|||
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Interest receivable on loans with group undertakings |
179,869 |
85,347 |
193,947 |
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-------- |
-------- |
-------- |
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1,771 |
650 |
3,026 |
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------ |
------ |
------ |
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Debtors |
30th June 2008£'000 |
31st December 2007£'000 |
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Amounts due within one year |
-------- |
-------- |
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Amounts owed by group undertakings - loans |
388,070 |
1,116,879 |
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Amounts owed by group undertakings - current account |
113,451 |
82,351 |
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Deferred tax asset |
3,751 |
3,407 |
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-------- |
-------- |
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505,272 |
1,202,637 |
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-------- |
-------- |
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Amount due after one year |
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Amounts owed by group undertakings - loans |
6,591,587 |
5,609,871 |
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-------- |
-------- |
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7,096,859 |
6,812,508 |
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-------- |
-------- |
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GlaxoSmithKline Capital plc |
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Other creditors |
30th June 2008£'000 |
31st December 2007£'0000 |
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Amounts due within one year |
-------- |
-------- |
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Taxation |
2,904 |
771 |
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Other creditors |
127,572 |
90,927 |
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-------- |
-------- |
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130,476 |
91,698 |
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-------- |
-------- |
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Net debt |
Period ended30th June 2008£'000 |
Year ended 31st December 2007£'000 |
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--------- |
--------- |
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Cash at bank |
20 |
4 |
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Amounts owed by group undertakings - loans |
6,979,657 |
6,726,750 |
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Interest rate swaps |
- |
7,333 |
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Currency swaps |
126,470 |
111,315 |
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--------- |
--------- |
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7,106,147 |
6,845,402 |
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Loans due within one year |
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Eurobonds and Medium-Term Notes |
(499,861) |
(1,233,574) |
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Loans due after one year |
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Eurobonds and Medium-Term Notes |
(6,594,523) |
(5,608,779) |
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--------- |
--------- |
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Net debt |
11,763 |
3,049 |
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Eurobonds and Medium-Term Notes have increased by £4,018,000 due to the amortisation of capitalised bond costs. The cumulative effect at 30th June 2008 is £20,429,000 (31st December 2007 - £16,411,000). |
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A £500million loan repayable in less than one year is swapped to floating interest rates. The repayment date is 2nd October 2008. A EUR 1 billion loan outstanding as at 31st December 2007, also swapped to floating rates, matured on 15th April 2008. |
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Related party transactions The company's significant related parties are other members of the GlaxoSmithKline group. Advantage has been taken of the exemption afforded by FRS 8 'Related Party Disclosures' not to disclose any related party transactions within the Group. There are no other related party transactions. |
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Cash flow As a wholly owned subsidiary of GlaxoSmithKline plc, advantage has been taken of the exemption afforded by FRS 1 'Cash Flow Statements' not to prepare a cash flow statement. |
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GlaxoSmithKline Capital plc |
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Accounting presentation and policies This unaudited Results Announcement containing condensed financial information for the six months ended 30th June 2008 is prepared under UK GAAP in accordance with the Listing Rules of the UK Listing Authority, pronouncements on interim reporting issued by the Accounting Standards Board (ASB) and the accounting policies set out in the company's audited Financial Statements 2007. This Results Announcement does not constitute statutory accounts of the company within the meaning of section 240 of the Companies Act 1985. The balance sheet at 31st December 2007 has been derived from the full accounts published in the Financial Statements 2007, which have been delivered to the Registrar of Companies and on which the report of the independent auditors was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. |
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Principal risks and uncertainties The directors of GlaxoSmithKline plc manage the risks at a Group level, rather than at an individual business unit level. The principal risks and uncertainties affecting the company are the same as those which affect the Group, and are described under the headings below in the 'Risk Factors' section of the 'Business Review' of the GlaxoSmithKline plc Annual Report 2007. |
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Risk of unplanned loss of patents Risk that R&D will not deliver commercially successful new products Risk of substantial adverse outcome of litigation and government investigations Risks of competition, price controls and limitations on sales Regulatory controls Risk of interruption of product supply Risk from concentration of sales to wholesalers Reliance on information technology Taxation Disruption from pandemic influenza Environmental liabilities Global political and economic conditions Accounting standards Human resources |
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In particular, policies regarding the management of Group risk pertaining to financial risk, interest rate risk and market risk as well as liquidity are discussed in the Group's Annual Report under the Treasury operations section of the 'Business Review'. |
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Directors' responsibility statement The Board of Directors approved this document on 27th August 2008. The Directors confirm that to the best of their knowledge this unaudited condensed financial information has been prepared in accordance with pronouncements by the ASB and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8. The Directors of GlaxoSmithKline Capital plc are Edinburgh Pharmaceutical Industries Limited and Glaxo Group Limited. |
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By order of the Board Paul Blackburn, For and on behalf of Glaxo Group Limited, Corporate Director |
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27th August 2008 |
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Internet This Announcement and other information about the GSK Group are available on GSK's website at: http://www.gsk.com. |
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Related Shares:
Glaxosmithkline