Half Yearly Report

Issued: 28th August 2009, London, U.K.

GlaxoSmithKline Capital plc

Results announcement and interim management report for the half year ended 30th June 2009

Performance

GlaxoSmithKline Capital plc, ("the Company") a wholly owned subsidiary of GlaxoSmithKline plc, provides financial services to GlaxoSmithKline plc and its subsidiaries ("the Group").  During the period the Company made a profit on ordinary activities after taxation of £1,211,000 (H1 2008: £1,043,000).

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.

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 2009, £nil (31st December 2008: £nil) of the Company's net borrowings were exposed to changes in interest rates after taking account the effects of hedging.

After making certain 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, due to ongoing support from the intermediate parent undertaking, GlaxoSmithKline Finance plc.

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.

GlaxoSmithKline Capital plc, 980 Great West Road, Brentford, Middlesex TW8 9GS, United Kingdom.

Registered in England and Wales. Registered number: 2258699

GlaxoSmithKline Capital plc

Profit and loss account

Six months ended 30th June 2009

Period ended30th June 2009£'000

Period ended30th June 2008£'000

Year ended31st December 2008£'000

------

------

------

Net administrative income/(expense) (including foreign exchange gains and losses)

982 

(76)

(892)

------

------

------

Operating profit/(loss)

982 

(76)

(892)

Net interest receivable

700 

1,771 

4,424 

------

------

------

Profit on ordinary activities before taxation

1,682 

1,695 

3,532 

Taxation

(471)

(652)

(10,486)

------

------

------

Profit/(loss) on ordinary activities after taxation

1,211 

1,043 

(6,954)

------

------

------

Statement of total recognised gains and losses

Six months ended 30th June 2009

Period ended30th June 2009£'000

Period ended30th June 2008£'000

Year ended31st December 2008£'000

------

------

------

Profit for the period

1,211 

1,043  

(6,954)

Amount recycled to profit and loss account

206 

481 

929 

Tax on amount recycled to profit and loss account

(58) 

(144)

(260)

Prior year deferred tax movement in cashflow hedge reserve

- 

- 

(2,441)

------

------

------

Total recognised gains and losses

1,359 

1,380 

8,726 

------

------

------

GlaxoSmithKline Capital plc

Balance sheet

30th June 2009£'000

31st December 2008£'000

---------

---------

Debtors: amounts due after one year

6,902,537 

7,427,980 

Debtors: amounts due within one year

107,186 

104,695 

Cash at bank

5 

6 

---------

---------

Current assets

7,009,728 

7,532,681 

Creditors: amounts due within one year

(116,474)

(113,285)

---------

---------

Net current assets

6,893,254 

7,419.396 

---------

---------

Total assets less current liabilities

6,893,254 

7,419,396 

---------

---------

Loans due after one year

(6,903,512)

(7,431,013)

---------

---------

Creditors: amounts due after one year

(6,903,512)

(7,431,013)

---------

---------

Net liabilities

(10,258)

(11,617)

---------

---------

Called up share capital

100 

100 

Profit and loss account

(2,461)

(3,672)

Other reserves

(7,897)

(8,045)

---------

---------

Equity shareholders' deficit

(10,258)

(11,617)

---------

---------

Reconciliation of movements in equity

Period ended30th June 2009£'000

Period ended30th June 2008£'000

Year ended31st December 2008£'000

-------

-------

-------

Equity shareholders' deficit at beginning of period

(11,617)

(2,891)

(2,891)

Profit/(loss) for the period

1,211 

1,043 

(6,954)

Movement in cash flow hedge reserve (net of taxation)

148 

337 

(1,772)

-------

-------

-------

Equity shareholders' deficit at end of period

(10,258)

(1,511)

(11,617)

-------

-------

-------

GlaxoSmithKline Capital plc

Taxation

Period ended30th June 2009£'000

Period ended30th June 2008£'000

Year ended31st December 2008£'000

--------

--------

--------

Tax charge

471 

652 

10,486 

Tax rate

28%

28%

28%

The effective tax rate is based on the anticipated charge for taxation for the year to 31st December 2009.

Net interest receivable

Period ended30th June 2009£'000

Period ended30th June 2008£'000

Year ended31st December 2008£'000

Interest payable

--------

--------

--------

Net swap interest (expense)/income

(206)

7,327 

7,559 

Interest on Medium-Term Notes and Eurobonds

(171,083)

(183,788)

(383,596)

Amortisation of bond expenses

(2,996)

(4,018)

(7,868)

Ineffectiveness on fair value hedges

- 

2,381 

3,411 

--------

--------

--------

(174,285)

(178,098)

(380,494)

Interest receivable

Interest receivable on loans with Group undertakings

174,985 

179,869 

384,918 

--------

--------

--------

700 

1,771 

4,424 

--------

--------

--------

Debtors

30th June 2009£'000

31st December 2008£'000

Amounts due within one year

---------

---------

Amounts owed by Group undertakings - current account

106,400 

103,850 

Deferred tax asset

786 

845 

---------

---------

107,186 

104,695 

---------

---------

Amounts due after one year

Amounts owed by Group undertakings - loans

6,902,537 

7,427,980 

---------

---------

7,009,723 

7,532,675 

---------

---------

Other Creditors: amounts due within one year

30th June 2009£'000

31st December 2008£'0000

--------

--------

Taxation

1,288 

886 

Other creditors

115,186 

112,399 

--------

--------

116,474 

113,285 

--------

--------

GlaxoSmithKline Capital plc

Net debt

30th June 2009£'000

31st December 2008£'0000

---------

---------

Cash at bank

5 

6 

Amounts owed by Group undertakings - loans 

6,902,537 

7,427,980 

---------

---------

6,902,542 

7,427,986 

Loans due after one year

Eurobonds and Medium-Term Notes

(6,903,512)

(7,431,013)

---------

---------

Net debt

(970)

3,027 

---------

---------

The Sterling equivalent values of Eurobonds and Medium-Term Notes has decreased due to the weakening of the Euro against Sterling. The overall exchange gain of £530,497,000 has been partially off-set by the addition of amortised bond costs, which totalled £2,996,000 in the period to 30th June 2009 (year ended 31st December 2008: £7,868,000).

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.

Subsequent Events

Under its Euro Medium Term Note (EMTN) programme the Company issued a new fixed rate bond on 6th July 2009; a 6 year note for €1.6 billion with interest fixed at 3.875%.  Net proceeds after fees were €1,585,472,000. 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.

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.

Accounting presentation and policies

This unaudited Results Announcement containing condensed financial information for the six months ended 30th June 2009 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 2008.

This Results Announcement does not constitute statutory accounts of the company within the meaning of sections 434(3) and 435(3) of the Companies Act 2006.  The balance sheet at 31st December 2008 has been derived from the full accounts published in the Financial Statements 2008, 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.

GlaxoSmithKline Capital plc

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 those described under the headings below in the 'Risk Factors' section of the 'Business Review' of the GlaxoSmithKline plc Annual Report 2008.

Risk that R&D will not deliver commercially successful new products

Risk of unplanned loss of patents

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

Global political and economic conditions

Taxation

Disruption from pandemic influenza

Environmental liabilities

Global political and economic conditions

Accounting standards

Human resources

Failure of third party priorities

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'.

Directors' responsibility statement

The Board of Directors approved this document on 27th August 2009.

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.

The Directors of GlaxoSmithKline Capital plc are Edinburgh Pharmaceutical Industries Limited and Glaxo Group Limited.

By order of the Board

Ashley Grist,

For and on behalf of Edinburgh Pharmaceutical Industries Limited,

Corporate Director

27th August 2009

Internet

This Announcement and other information about the GSK Group are available on the website at: http://www.gsk.com.