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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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1 |
Presentation of the financial statements |
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General information |
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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 Medium Term Note programme and the provision of financial services to other companies within the Group. |
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The Company is a public company limited by shares and is incorporated and domiciled in the UK (England and Wales). The address of the registered office is 980 Great West Road, Brentford, Middlesex TW8 9GS. |
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2 |
Summary of significant accounting policies |
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The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied, unless otherwise stated. |
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(a) |
Basis of preparation |
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The financial statements have been prepared in accordance with Financial Reporting Standard 100 "Application of Financial Reporting Requirements" ("FRS 100") and Financial Reporting Standard 101 "Reduced Disclosure Framework" ("FRS 101"). |
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These financial statements have been prepared on the going concern basis under the historical cost convention and in accordance with the Companies Act 2006 as applicable to companies using FRS101. |
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Disclosure exemptions adopted |
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In preparing these financial statements, the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore these financial statements do not include: |
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l |
Paragraph 38 of IAS 1 "Presentation of financial statements" comparative information requirements in respect of: |
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paragraph 79(a) (iv) of IAS 1; |
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l |
The following paragraphs of IAS 1 "Presentation of financial statements": |
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16 (statement of compliance with all IFRS); and |
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38B-D (additional comparative information) |
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l |
Paragraph 30 and 31 of IAS 8 "Accounting policies, changes in accounting estimates and errors" (requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet effective); |
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l |
Paragraph 17 of IAS 24 "Related party disclosures" (key management compensation); and |
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l |
The requirements in IAS 24 "Related party disclosures" to disclose related party transactions entered into between two or more wholly owned members of a group. |
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The financial statements of GlaxoSmithKline plc can be obtained as described in Note 2(b). |
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The preparation of financial statements in conformity with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. |
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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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2 |
Summary of significant accounting policies (continued) |
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(b) |
Ultimate and immediate parent undertaking |
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The Company is a wholly owned subsidiary of the ultimate parent company. GlaxoSmithKline plc, a company registered in England and Wales, is the Company's ultimate parent undertaking and controlling party. The largest and smallest group of undertakings for which group financial statements are prepared and which include the results of the Company are the consolidated financial statements of GlaxoSmithKline plc. Copies of the consolidated financial statements can be obtained from the Company Secretary, GlaxoSmithKline plc, 980 Great West Road, Brentford, Middlesex TW8 9GS. The immediate parent undertaking is SmithKline Beecham Limited. These financial statements are separate financial statements. |
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(c) |
Foreign currency transactions |
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Foreign currency transactions are booked in the functional currency of the Company at the exchange rate ruling on the date of the transaction. Foreign currency monetary assets and liabilities are translated into the functional currency at rates of exchange ruling at the balance sheet date. Exchange differences are included in the income statement. The functional and presentation currency of the Company is Pounds Sterling. |
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(d) |
Other operating income |
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Management service fees are recognised in other operating income on an accruals basis. |
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(e) |
Finance income and expense |
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Finance income and expenses are recognised on an accruals basis using the effective interest method. |
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(f) |
Financial assets |
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Loans and receivables |
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Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Company's loans and receivables represent intercompany balances with other Group undertakings, which are carried at amortised cost using the effective interest method. |
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(g) |
Impairment of financial assets |
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The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event") and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. |
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Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. |
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For loans and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement. |
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If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the income statement. |
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(h) |
Cash and cash equivalents |
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Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions. They are readily convertible into known amounts of cash and have an insignificant risk of changes in value. |
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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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2 |
Summary of significant accounting policies (continued) |
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(i) |
Other payables |
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Other payables are initially recognised at fair value and then held at amortised cost using the effective interest method. Long-term payables are discounted where the effect is material. |
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(j) |
Borrowings |
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All borrowings, which comprise notes issued under the Group's European Medium Term Note programme, are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing. |
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(k) |
Taxation |
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Current tax is provided at the amounts expected to be paid or refunded applying the rates that have been enacted or substantively enacted by the balance sheet date. |
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Deferred tax is provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is provided using rates of tax that have been enacted or substantively enacted by the balance sheet date. |
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(l) |
Derivative financial instruments and hedging |
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Derivative financial instruments can be used by the Company to manage exposure to market risks. The Company does not hold or issue derivative financial instruments for trading or speculative purposes and does not currently hold any derivative financial instruments. Derivative financial instruments are classified as held-for-trading and are carried in the balance sheet at fair value. |
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Changes in the fair value of derivatives designated as cash flow hedges are recognised in other comprehensive income to the extent that the hedges are effective. Ineffective portions are recognised in profit or loss immediately. Amounts deferred in other comprehensive income are reclassified to the income statement when the hedged item affects profit or loss. |
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Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement. |
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The Company carries a balance in other comprehensive income that arose from using treasury gilt locks and forward starting interest rate swaps for pre-hedging fluctuations in long-term interest rates when pricing bonds issued in prior and current years. |
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3 |
Key accounting judgements and estimates |
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In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue and expenses reported in the financial statements. Actual amounts and results could differ from those estimates. The following are considered to be the key accounting judgements and estimates made. |
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(a) |
Taxation |
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Current tax is provided at the amounts expected to be paid or refunded, and deferred tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at the rates that have been enacted or substantively enacted by the balance sheet date. |
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Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised, based on management's assumptions relating to the amounts and timing of future taxable profits. |
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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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4 |
Financial risk management |
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Risk management is carried out by the Group's Corporate Treasury under policies and procedures approved annually by the Group's Board of Directors, most recently on 20 July 2017. The role of Corporate Treasury is to monitor and manage the Group's external and internal funding requirements and financial risks, covering foreign exchange, interest rate, liquidity, and credit risks in support of the Group's strategic objectives. A Treasury Management Group meeting, chaired by the Group's Chief Financial Officer, also takes place on a monthly basis to review treasury activities. |
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(a) |
Market risk |
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(i) |
Foreign exchange risk |
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The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US dollar and Euro, in respect of bonds issued under the Group's European Medium Term Note programme. |
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The net proceeds of bond issuances received are subsequently advanced as loans to other Group undertakings in the same currency which minimises the foreign translation exposure within the Company. On this basis, foreign exchange risk is not considered material and the Company has not prepared a sensitivity analysis. |
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(ii) |
Interest rate risk |
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The Group's objective is to minimise the effective net interest cost and to balance the mix of debt at fixed and floating interest rates over time. The policy on interest rate risk management limits the amount of floating interest payments to a prescribed percentage of operating profit. |
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The Company's interest rate risk arises mainly from deposits with Group undertakings and cash held at floating rates which expose the Company to interest rate risk. The Company has borrowings, comprised of notes issued under the Group's European Medium Term Note programme, which are at fixed rates and expose the Company to fair value interest rate risk. |
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The table below hypothetically shows the Company's sensitivity to changes in interest rates in relation to Euro, Sterling and US dollar floating rate financial assets. If interest rates applicable to floating rate financial assets were to have increased by 1% (100 basis points), and assuming all other variables had remained constant, it is estimated that the Company's finance income for 2017 would have increased by approximately £1,018,000 (2016: £1,064,000 increase in finance income). |
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2017 |
2016 |
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Increase in income |
Increase in income |
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£'000 |
£'000 |
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1% (100 basis points) increase in Euro interest rates (2016: 1%) |
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398 |
375 |
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1% (100 basis points) increase in Sterling interest rates (2016: 1%) |
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450 |
350 |
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1% (100 basis points) increase in US dollar interest rates (2016: 1%) |
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170 |
339 |
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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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4 |
Financial risk management (continued) |
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(a) |
Market risk (continued) |
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The tables below illustrate the currency and interest rate profiles arising from the Company's borrowings, loans and receivable balances. |
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Currency and interest rate risk profile of borrowings |
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Fixed rate |
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At 31 December 2017 |
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Weighted average interest rate |
Average years for which rate
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Total |
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Currency |
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% |
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£'000 |
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US dollar |
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3.0 |
2 |
(1,473,973) |
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Sterling |
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5.0 |
20 |
(4,053,006) |
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Euro |
1.5 |
7 |
(4,973,782) |
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Total borrowings |
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3.2 |
10 |
(10,500,761) |
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Fixed rate |
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At 31 December 2016 |
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Weighted average interest rate |
Average years for which rate
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Total |
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Currency |
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% |
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£'000 |
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US dollars |
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2.2 |
3 |
(3,214,961) |
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Sterling |
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5.0 |
21 |
(4,050,413) |
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Euro |
3.0 |
5 |
(3,824,445) |
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Total borrowings |
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3.4 |
10 |
(11,089,819) |
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Currency and interest rate risk profile of loans and receivables |
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At 31 December 2017 |
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Fixed rate |
Floating rate |
Total |
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Currency |
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£'000 |
£'000 |
£'000 |
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US dollars |
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1,464,741 |
17,003 |
1,481,744 |
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Sterling |
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4,024,022 |
45,025 |
4,069,047 |
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Euro |
4,946,115 |
39,827 |
4,985,942 |
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Total loans and receivables |
10,434,878 |
101,855 |
10,536,733 |
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At 31 December 2016 |
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Fixed rate |
Floating rate |
Total |
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Currency |
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£'000 |
£'000 |
£'000 |
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US dollars |
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3,196,145 |
33,887 |
3,230,032 |
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Sterling |
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4,024,023 |
34,996 |
4,059,019 |
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Euro |
3,794,309 |
37,460 |
3,831,769 |
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Total loans and receivables |
11,014,477 |
106,343 |
11,120,820 |
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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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4 |
Financial risk management (continued) |
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Net currency exposure |
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2017 |
2016 |
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£'000 |
£'000 |
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US dollars |
7,771 |
15,071 |
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Euro |
12,160 |
7,324 |
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19,931 |
22,395 |
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(b) |
Credit risk |
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Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group and arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. The Group sets global counterparty limits for each of its banking and investment counterparties based on long-term credit ratings from Standard and Poor's and Moody's Investor Services ("Moody's"). Usage of these limits is monitored daily and Corporate Treasury actively manages its exposure to credit risk, reducing surplus cash balances wherever possible. |
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There are no financial assets that are past due or impaired as at 31 December 2017 (2016: £nil). |
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The Company did not hold any collateral as security or obtained other credit enhancements as at 31 December 2017 (2016: £nil). |
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The Company considers its maximum exposure to credit risk at 31 December 2017, without taking into account any collateral held or other credit enhancements, to be £10,644,567,000 (2016: £11,231,045,000) being the total of the Company's financial assets of which the balances are all held within the GlaxoSmithKline Group, see Note 16. |
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(c) |
Liquidity risk |
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Liquidity is managed centrally by the Group by borrowing in order to meet anticipated funding requirements. The Group's cash flow forecast and funding requirements are monitored on a monthly basis by the Treasury Management Group and the strategy is to have diversified liquidity sources using a range of facilities and to maintain broad access to funding markets. |
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5 |
Capital management |
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The Group's financial strategy supports its strategic priorities and is regularly reviewed by the Board. The capital structure of the Group is managed through an appropriate mix of debt and equity in order to optimise returns to shareholders whilst maintaining the Group's credit ratings that provide the Company with flexibility to access debt capital markets on attractive terms under the Group's European Medium Term Note programme. |
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The capital structure of the Company consists of net debt of £10,500,760,000 (2016: £11,089,817,000) and shareholders' funds of £37,635,000 (2017: £31,662,000) (see Statement of changes in equity). |
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6 |
Operating profit |
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2017 |
2016 |
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£'000 |
£'000 |
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The following items have been (charged)/credited in operating profit: |
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Exchange (losses)/gains on foreign currency transactions |
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(768) |
2,758 |
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Management fee |
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(56) |
(47) |
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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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6 |
Operating profit (continued) |
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GlaxoSmithKline Services Unlimited provides various services and facilities to the Company including finance and administrative services for which a management fee was charged of £56,254 in 2017 compared with £47,085 in 2016. Included in the management fee is a charge for auditors' remuneration of £35,575 (2016: £35,945). |
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The disclosure of fees payable to the auditor and its associates for other (non-audit) services has not been made and has been disclosed in the Group's 2017 Annual Report which does not form part of this report. |
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7 |
Employees |
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All of the Group's UK employees are remunerated by GlaxoSmithKline Services Unlimited and receive no remuneration from the Company. A management fee is charged by GlaxoSmithKline Services Unlimited for services provided to the Company (see Note 6). The Company has no employees. |
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8 |
Finance income |
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2017 |
2016 |
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£'000 |
£'000 |
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Interest income arising from loans and receivables |
387,262 |
399,340 |
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9 |
Finance expense |
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2016 |
2015 |
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£'000 |
£'000 |
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Interest expense arising on financial liabilities at amortised cost |
(375,019) |
(386,976) |
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Reclassification of cash flow hedge from other comprehensive income |
(1,118) |
(954) |
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Total finance expense |
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(376,137) |
(387,930) |
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10 |
Taxation |
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2017 |
2016 |
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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: 20.00%) |
(1,983) |
(2,824) |
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Total current tax |
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(1,983) |
(2,824) |
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The tax assessed for the year is no different (2016: no different) than the standard rate of corporation tax in the UK for the year ended 31 December 2017 of 19.25% (2016: 20.00%). The offsetting differences are explained below: |
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2017 |
2016 |
|
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Reconciliation of total tax charge |
£'000 |
£'000 |
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Profit on ordinary activities before taxation |
10,301 |
14,121 |
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Profit on ordinary activities at the UK statutory rate of 19.25% (2016: 20.00%) |
(1,983) |
(2,824) |
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Effects of: |
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Permanent disallowables - interest treated as paid by ultimate parent |
72,134 |
77,369 |
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Permanent deductions - Group relief received for no payment |
(72,134) |
(77,369) |
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Total tax charge for the year |
(1,983) |
(2,824) |
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GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
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10 |
Taxation (continued) |
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Factors that may affect future tax charges: |
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The tax rate for the current year is lower than the prior year, due to changes in the UK corporation tax rate, which decreased from 20% to 19% from 1 April 2017. Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2016 (on 6 September 2016). These include reductions to the main rate, to reduce the rate to 17% from 1 April 2020. This will impact the Company's future current tax charge accordingly. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements. |
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2017 |
2016 |
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Tax (credit)/expense included in other comprehensive income |
£'000 |
£'000 |
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|
|
|
|
Deferred tax: |
|
|
|
|
Fair value movements on cash flow hedges |
(480) |
162 |
|
|
Change in tax rates |
- |
121 |
|
|
|
|
|
|
|
Total tax (credit)/expense included in other comprehensive income |
(480) |
283 |
|
|
|
|
|
|
|
Movement in deferred tax assets and liabilities |
|
|
|
|
|
Other net temporary differences |
Total |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
At 1 January 2017 |
1,893 |
1,893 |
|
|
Credit to comprehensive income |
480 |
480 |
|
|
|
|
|
|
|
At 31 December 2017 |
2,373 |
2,373 |
|
|
|
|
|
|
|
After offsetting deferred tax assets and liabilities where appropriate, the net deferred tax assets comprises: |
|
|
|
|
|
|
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
Deferred tax assets |
2,373 |
1,893 |
|
|
Deferred tax liabilities |
- |
- |
|
|
|
|
|
|
|
|
2,373 |
1,893 |
|
|
|
|
|
|
11 |
Loans and receivables |
|
|
|
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
Amounts due within one year |
|
|
|
|
Amounts owed by Group undertakings |
101,855 |
2,767,682 |
|
|
|
|
|
|
|
Amounts due after more than one year |
|
|
|
|
Amounts owed by Group undertakings |
10,434,878 |
8,353,138 |
|
|
|
|
|
|
|
|
10,536,733 |
11,120,820 |
|
|
|
|
|
|
|
Amounts due within one year are call accounts with Group undertakings of £45,025,000 (2016: £34,996,000) 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 £56,830,000 (2016: £71,347,000) 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. |
|
GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
|
|
|
|
|
|
|
11 |
Loans and receivables (continued) |
|
|
|
|
|
|
|
|
|
Amounts due within one year also include the net proceeds of bond issuances that have been advanced as loans to Group undertakings of £nil (2016: £2,661,339,000, which were unsecured with interest charged between 1.77% and 5.76% per annum and repaid in 2017). |
|
|
|
|
|
|
|
Amounts due after more than one year include the net proceeds of bond issuances that have been advanced as loans to Group undertakings totalling £10,434,878,000 (2016: £8,353,138,000), which are unsecured with interest charged at between 0.21% and 6.50% per annum and repayable at maturity dates between 2019 and 2045. |
|
|
|
|
|
|
12 |
Prepayments and accrued income |
|
|
|
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
Amounts due within one year |
107,833 |
110,223 |
|
|
|
|
|
|
|
Accrued income relates to interest on amounts owed by Group undertakings (see Note 11). |
|
|
|
|
|
|
13 |
Other payables |
|
|
|
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
Amounts falling due within one year |
|
|
|
|
Amounts owed to Group undertakings |
(2,881) |
(2,202) |
|
|
Corporation tax |
(1,983) |
(2,824) |
|
|
|
|
|
|
|
|
(4,864) |
(5,026) |
|
|
|
|
|
|
|
Amounts owed to Group undertakings are unsecured and repayable on demand. |
|
|
|
|
|
|
|
The corporation tax creditor contains amounts which will be paid to fellow Group companies. |
|
|
|
|
|
|
14 |
Borrowings |
|
|
|
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
Amounts falling due within one year |
|
|
|
|
Loans payable: |
|
|
|
|
€ European Medium Term Notes |
- |
(1,067,597) |
|
|
US$ US Medium Term Notes |
- |
(1,612,119) |
|
|
|
|
|
|
|
|
- |
(2,679,716) |
|
|
|
|
|
|
|
Amounts falling due after more than one year |
|
|
|
|
Loans payable: |
|
|
|
|
€ European Medium Term Notes |
(4,973,782) |
(2,756,848) |
|
|
£ European Medium Term Notes |
(4,053,006) |
(4,050,413) |
|
|
US$ US Medium Term Notes |
(1,473,973) |
(1,602,842) |
|
|
|
(10,500,761) |
(8,410,103) |
|
|
|
|
|
|
|
Total borrowings |
(10,500,761) |
(11,089,819) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
|
|
|
|
|
|
14 |
Borrowings (continued) |
|
|
|
|
|
|
|
|
|
2017 |
2016 |
|
|
Maturity of borrowings |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
In one year or less, or on demand |
|
|
1.500% US$ US Medium Term Note 2017 |
|
- |
(1,612,119) |
|
|
5.625% € European Medium Term Note 2017 |
|
- |
(1,067,597) |
|
|
|
|
- |
(2,679,716) |
|
|
|
|
|
|
|
|
In more than one year, but not more than two years |
|
|
0.625% € European Medium Term Note 2019 |
|
(1,323,623) |
- |
|
|
|
|
|
|
|
(1,323,623) |
- |
|
|
|
|
|
|
|
|
In more than two years, but not more than five years |
|
|
|
|
|
0.625% € European Medium Term Note 2019 |
|
- |
(1,276,450) |
|
|
0.000% € European Medium Term Note 2020 |
|
(1,059,379) |
- |
|
|
2.850% US$ US Medium Term Note 2022 |
|
(1,473,973) |
- |
|
|
|
|
(2,533,352) |
(1,276,450) |
|
|
|
|
|
|
|
|
In more than five years |
|
|
|
|
|
2.850% US$ US Medium Term Note 2022 |
- |
(1,602,842) |
|
|
1.375% € European Medium Term Note 2024 |
(876,117) |
(844,930) |
|
|
4.000% € European Medium Term Note 2025 |
(658,647) |
(635,468) |
|
|
1.000% € European Medium Term Note 2026 |
(617,178) |
- |
|
|
3.375% £ European Medium Term Note 2027 |
(593,400) |
(592,734) |
|
|
1.375% € European Medium Term Note 2029 |
(438,838) |
- |
|
|
5.250% £ European Medium Term Note 2033 |
(986,476) |
(985,626) |
|
|
6.375% £ European Medium Term Note 2039 |
(695,330) |
(695,110) |
|
|
5.250% £ European Medium Term Note 2042 |
(988,603) |
(988,133) |
|
|
4.250% £ European Medium Term Note 2045 |
(789,197) |
(788,810) |
|
|
|
(6,643,786) |
(7,133,653) |
|
|
|
|
|
|
|
Total borrowings |
(10,500,761) |
(11,089,819) |
|
|
|
|
|
|
15 |
Accruals and deferred income |
|
|
|
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
Amounts falling due within one year |
(103,680) |
(106,431) |
|
|
|
|
|
|
|
Accruals relates to interest payable on borrowings (see Note 14). |
|
|
|
|
|
|
|
|
16 |
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. |
|
GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
|
|
|
|
16 |
Fair value of financial assets and liabilities (continued) |
|
|
|
|
|
The carrying amounts and the fair values of the Company's financial assets and liabilities at 31 December 2017 and 31 December 2016 are illustrated below. |
|
|
|
|
|
2017 |
2016 |
|
|
|
|
|
Carrying value |
Fair value |
Carrying value |
Fair value |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
1 |
1 |
2 |
2 |
|
|
|
|
|
|
|
|
|
Loans and receivables: |
|
|
|
|
|
|
Other receivables |
107,833 |
107,833 |
110,223 |
110,223 |
|
|
Amounts owed by Group undertakings |
10,536,733 |
12,413,202 |
11,120,820 |
13,151,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial assets |
10,644,567 |
12,521,036 |
11,231,045 |
13,261,865 |
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortised cost: |
|
|
|
|
|
£ European Medium Term Notes |
|
(4,053,006) |
(5,688,556) |
(4,050,413) |
(5,762,307) |
|
|
€ European Medium Term Notes |
|
(4,973,782) |
(5,221,979) |
(3,824,445) |
(4,147,107) |
|
|
US$ US Medium Term Notes |
|
(1,473,973) |
(1,502,667) |
(3,214,961) |
(3,242,226) |
|
|
|
|
(10,500,761) |
(12,413,202) |
(11,089,819) |
(13,151,640) |
|
|
|
|
|
|
|
|
|
|
Other payables |
|
(106,561) |
(106,561) |
(108,633) |
(108,633) |
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities |
|
(10,607,322) |
(12,519,763) |
(11,198,452) |
(13,260,273) |
|
|
|
|
|
|
|
|
|
|
|
Net financial assets and liabilities |
37,245 |
1,273 |
32,593 |
1,592 |
|
|
|
|
|
|
|
|
|
|
The Company has no financial assets or liabilities measured at fair value through profit and loss. |
|
|
|
|
|
Financial liabilities measured at amortised cost for which the fair value of £(12,413,202,000) (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. |
|
|
|
|
17 |
Contractual cash flows for non-derivative financial liabilities |
|
|
|
|
|
The following table provides an analysis of the anticipated contractual cash flows including interest payable for the Company's non-derivative financial liabilities on an undiscounted basis. Interest is calculated based on debt held at 31 December without taking account of future issuance. |
|
|
|
|
|
|
|
|
2017 |
2016 |
|
|
|
|
|
Debt |
Interest on debt |
Debt |
Interest on debt |
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
Due in less than one year |
- |
(305,389) |
(2,681,279) |
(367,440) |
|
|
Between one and two years |
(1,327,434) |
(305,389) |
- |
(295,249) |
|
|
Between two and three years |
(1,061,947) |
(297,094) |
(1,282,051) |
(295,249) |
|
|
Between three and four years |
- |
(297,091) |
- |
(287,238) |
|
|
Between four and five years |
(1,481,481) |
(275,982) |
- |
(287,234) |
|
|
Between five and ten years |
(2,768,142) |
(1,178,556) |
(3,108,630) |
(1,180,179) |
|
|
Greater than 10 years |
(3,942,478) |
(2,262,168) |
(4,100,000) |
(2,453,875) |
|
|
|
|
|
|
|
|
|
Gross contractual cash flows |
(10,581,482) |
(4,921,669) |
(11,171,960) |
(5,166,464) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GlaxoSmithKline Capital plc Notes to the financial statements for the year ended 31 December 2017 |
|
|
|
|
18 |
Adjustments reconciling operating profit to operating cash flows |
|
|
|
|
|
|
|
|
2017 |
2016 |
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Operating profit for the year |
|
10,301 |
14,121 |
|
|
Decrease/(increase) in other receivables |
|
2,390 |
(4,831) |
|
|
(Decrease)/increase in other payables |
|
(4,896) |
4,416 |
|
|
Exchange adjustments |
|
768 |
(2,758) |
|
|
Amortisation of bond costs |
|
10,338 |
11,496 |
|
|
Fair value movements on cash flow hedges |
|
(3,943) |
- |
|
|
Reclassification of cash flow hedges to the income statement |
|
1,118 |
954 |
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities |
|
|
16,076 |
23,398 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|