Issued: 30 April 2024, London
UK
Publication of GlaxoSmithKline Capital plc 2023 Annual
Report
Today, 30 April 2024,
GlaxoSmithKline Capital plc (the "Company") published on
the GSK Group website, www.gsk.com*, its Annual Report in
respect of the year ended 31 December 2023.
In compliance with Listing Rule
9.6.1 of the UK Financial Conduct Authority ("FCA"), copies
of the Company's 2023 Annual Report, have
been submitted to the UK Listing
Authority's NSM submission portal via Electronic
Submission System (ESS). A copy can be viewed at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
In accordance with the FCA's
Disclosure and Transparency Rules 4.1 and 6.3.5, Appendix A to this announcement
contains the Company's 2023 Annual Report, which includes a
description of the principal risks and
uncertainties affecting it together with a responsibility
statement.
V
A Whyte
Company Secretary
30 April 2024
*
https://www.gsk.com/en-gb/company/codes-standards-and-reports/#gsk-capital-plc-annual-reports
Cautionary statement regarding forward-looking
statements
GSK cautions
investors that any forward-looking statements or projections made
by GSK, including those made in this announcement, are subject to
risks and uncertainties that may cause actual results to differ
materially from those projected. Such factors include, but are not
limited to, those described under Item 3.D "Risk factors" in GSK
plc's Annual Report on Form 20-F for 2023.
Registered in England & Wales:
No. 2258699
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
Appendix A
GlaxoSmithKline Capital
plc
(Registered number: 2258699)
Annual Report and financial statements
for
the year ended 31 December 2023
Registered office address:
980 Great West Road
Brentford
Middlesex
TW8 9GS
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Contents
Strategic report
Directors' report
Independent auditors' report to
the members of GlaxoSmithKline Capital plc
Income statement
Statement of comprehensive
income
Balace
Sheet
Statement of changes in
equity
Cash flow
statement
Notes to the financial
statements
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Pages
1-2
3-6
7-14
15
16
17
18
19
20-31
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GlaxoSmithKline Capital plc
(Registered number: 2258699)
Strategic report for the year ended 31 December
2023
The Board presents their Strategic
report on GlaxoSmithKline Capital plc (the "Company") for the year
ended 31 December 2023.
Principal activities and future
developments
The Company is a member of the GSK
Group (the "Group"). The Company is a public company limited by
shares and is incorporated and domiciled in the UK (England). The
address of the registered office is 980 Great West Road, Brentford,
Middlesex TW8 9GS.
The principal activities of the
Company during the financial year were the issuance of notes under
the Group's European Medium Term Note programme and the provision
of financial services to other companies within the
Group.
The Board does not envisage any
change to the nature of the business in the foreseeable
future.
Review of business
At 31 December 2023, the Company
had in issue £8,137,595,000 European Medium Term Notes and
£1,561,718,000 US Medium Term Notes (2022: £9,230,890,000 and
£2,688,409,000 respectively) which mature at dates between 2024 and
2045. All notes currently in issue pay interest on a fixed rate
basis.
In 2023, the Company repaid the
following notes:
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EUR 750 million 0.125% European
Medium Term Note (repaid on 12th May 2023)
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EUR 500 million zero coupon
European Medium Term Note (repaid on 23rd September
2023)
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USD 1.25 billion 0.534% US Medium
Term Note (repaid on 1st October 2023)
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The profit for the year of
£13,412,000 (2022: profit for the year of £9,474,000) will be
transferred to retained earnings. The Board is of the opinion that
the current level of activity and the year end financial position
are satisfactory and will remain so in the foreseeable
future.
In February 2023, the Company
repurchased the following bond holdings, as part of a wider plan to
rebalance the group's portfolio of debt:
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£75,783,000 of the GBP 1 billion
5.250% European Medium Term Note 2033
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£68,700,000 of the GBP 700 million
6.375% European Medium Term Note 2039
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On the 21st September 2023, the
Company issued a new JPY 42.5 billion European Medium Term Note.
The proceeds from the borrowing were on-lent to Glaxo Group
Limited.
Net assets of the Company as at 31
December 2023 were £134,865,000 (2022: £119,648,000).
Principal risks and uncertainties
The Board has considered the
accessibility of additional capital and the potential risk to
liquidity for the Company. However, the Board of GSK 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 Board
believes 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 2023 annual report which does not form
part of this report.
Key performance indicators (KPIs)
The Board of the Group manages the
Group's operations on an operating segment basis. The KPIs
including but not limited to finance income and finance expense are
reviewed at Group level. For this reason, the Company's Board
believes that analysis using key performance indicators for the
Company is not necessary or appropriate for an understanding of the
development, performance or position of the Company's business. The
development, performance and position of the Group are discussed in
the Group's 2023 annual report which does not form part of this
report.
As per IFRS 8, an entity whose
debt or equity instruments are traded in a public market, shall
provide segmental reporting information in the Financial
statements. GSK Plc reports under two segments; Commercial
Operations and Total R&D. The information for segmental
reporting is included in the Group's 2023 annual report under Note
6. GlaxoSmithKline Capital plc engages in only one business
activity which is the provision of financial services to other
companies within the Group hence the entity has a single reportable
segment, the results of which are disclosed in the Financial
statements.
UK Climate-related Financial Disclosure
(UK-CFD)
The Company does not meet the
criteria for applying UK-CFD for the year ended 31 December
2023.
Section 172 Companies Act 2006 statement
The Company's governance
architecture and processes are operated to ensure that all relevant
matters are considered by the Board in its principal
decision-making, as a means of contributing to the delivery of the
Company's long-term priorities of Innovation, Performance and
Trust.
The Board prioritises human
capital as a key element in enhancing the positive influence within
communities, with the Code of Conduct defining our purpose,
culture, and performance commitments to ensure the realisation of
the Company's aspirations while also ensuring fair treatment of
shareholders.
In the performance of its duty to
promote the success of the company and the long-term priorities,
the Board has agreed to a number of matters, including listening to
and considering the views of shareholders and the company's other
stakeholders to build trust and ensure it fully understands the
potential impacts of the decisions it makes for our stakeholders,
the environment and the communities in which we operate.
Further disclosures detailing how,
during the year, the Board addressed the matters set out in Section
172(1) (a) to (f) of the Companies Act, can be found in the Group's
2023 annual report, of which the Company is a member and no
additional considerations are deemed necessary for the Company as
the relevant matters are all considered in the Group's 2023 annual
report. Copies of the Group's 2023 annual report can be obtained
from the Company Secretary, GSK plc, 980 Great West Road,
Brentford, Middlesex, TW8 9GS.
For more information, please read
Group's Section 172 statement on GSK's website
www.gsk.com.
By order of the Board
Mr A Walker
For and on behalf of Glaxo Group
Limited
Corporate Director
22 April 2024
GlaxoSmithKline Capital plc
(Registered number: 2258699)
Directors' report for the year ended 31 December
2023
The Directors present their report
on the Company and the audited financial statements of
GlaxoSmithKline Capital plc (the "Company") for the year ended 31
December 2023.
Results and dividends
The Company's result for the
financial year is shown in the income statement on page
15.
No dividend was proposed to the
holders of ordinary shares in respect of the year ended 31 December
2023 (2022: £nil).
Internal control framework
The GSK plc Board is accountable
for evaluating and approving the effectiveness of the internal
controls, including financial, operational and compliance controls,
and risk management processes operated by the Group. The Internal
Control Framework is the means by which the Group ensures the
reliability of financial reporting and compliance with laws and
regulations.
To ensure effective governance and
promote an ethical culture, the Group has in place the Risk
Oversight and Compliance Council. This team of senior leaders is
mandated by the Board to assist the Audit and Risk Committee in
overseeing risk management and internal control activities. It also
provides the business units with a framework for risk management
and upward escalation of significant risks, which the Company
operates within. Further information on the Group's Internal
Control Framework is discussed in the Group's 2023 Annual Report
which does not form part of this report.
Financial risk
The Company issues notes under the
Group's European Medium Term Note programme and US shelf
registration in order to meet anticipated funding requirements for
the Group. The strategy is to diversify liquidity sources using a
range of facilities and to maintain broad access to funding
markets. Details of derivative financial instruments and hedging,
and further information on risk management policies, exposures to
market, credit and liquidity risk are disclosed in Note 2 (m) and
Note 4 respectively.
The Company manages its cash flow
interest rate risk on its forecasted Euro and US Dollar denominated
notes issued under the Group's European Medium Term Note programme
and US shelf registration using treasury gilt locks and interest
rate swaps. In addition, the Company carries a balance in reserves
that arose from pre-hedging fluctuations in long-term interest
rates when pricing bonds issued in prior years. The balance is
reclassified to finance costs over the life of these
bonds.
Directors and their interests
The Directors of the Company who
were in office during the year and up to the date of signing the
financial statements were as follows:
Iain Mackay (resigned on 1st May
2023)
Julie Brown (appointed on 1st May
2023)
Edinburgh Pharmaceutical
Industries Limited
Glaxo Group Limited
No Director had, during the year
or at the end of the year, any material interest in any contract of
significance to the Company's business with the exception of the
Corporate Directors, where such an interest may arise in the
ordinary course of business. A corporate director is a legal entity
of the Group as opposed to a natural person (an individual)
Director.
Directors' indemnity
Each of the Directors benefits
from an indemnity given by the Company under its articles of
association. This indemnity is in respect of liabilities incurred
by the Director in the execution and discharge of their
duties.
In addition, each of the Directors
who is an individual benefits from an indemnity given by another
Group company, GlaxoSmithKline Services Unlimited. This indemnity
is in respect of liabilities arising out of third party proceedings
to which the Director is a party by virtue of their engagement in
the business of the Company.
Directors' interests
The following interests of the
Director in office in the shares of the ultimate parent
undertaking, GSK plc, at the year end have been notified to the
Company.
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Unvested share plan
interests
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At 31
Dec 2022
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Granted
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Exercised/Lapsed
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At 31 Dec 2023 or
date
of
retirement1
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Performance Share Plans
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Iain Mackay
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783,978
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12,503
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-241,214
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783,978
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Julie Brown
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269,262
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269,262
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At 31
Dec 2021
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Granted
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Exercised/Lapsed
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At 31 Dec
2022
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Performance Share Plans - 2 Year Deferral
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Mr I Mackay
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157,965
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129,523
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287,488
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Deferred Annual Bonus Plan
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Mr I Mackay
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127,002
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80,460
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-40,985
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166,477
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Beneficial interests
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Iain Mackay
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23,105
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-
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23,105
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Julie Brown
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21,892
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-
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21,892
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1 Iain Mackay retired from
the Board on 1 May 2023
All share awards are over ordinary
shares of GSK plc.
Further details of the
above-mentioned Plans are disclosed in the 2023 Annual Report of
GSK plc, which does not form part of this report.
Statement of Directors' responsibilities
The Board is responsible for
preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Board to
prepare financial statements for each financial year. Under that
law the Board has prepared the financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 ''Reduced
Disclosure Framework'', and applicable law). Under company law the
Board of Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Company and of the profit or loss of the Company
for that period.
In preparing these financial
statements, the Directors are required to:
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select suitable accounting
policies and then apply them consistently;
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make judgements and accounting
estimates that are reasonable and prudent;
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state whether applicable UK
accounting standards, comprising FRS 101, have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
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prepare the financial statements
on the going concern basis unless it is inappropriate to presume
that the company will continue in business.
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The Board is responsible for
keeping adequate accounting records that are sufficient to show and
explain the Company's transactions and disclose with reasonable
accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the
Companies Act 2006. The Board is also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other
irregularities.
The Board is responsible for the
maintenance and integrity of the corporate and financial
information included on the company's website. Legislation in the
United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
The following items have been
included in the Strategic report on pages 1 and 2:
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principal activities and future
developments;
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review of business;
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principal risks and
uncertainties;
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key performance indicators
(KPIs);
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UK Climate-related financial
disclosure (UK-CFD); and
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section 172 Companies Act 2006
Statement.
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Corporate Governance
As a subsidiary company of the
Group which is listed on the New York and London Stock Exchanges,
the Company has chosen to follow the developed governance practices
and processes of the Group that are fit for purpose rather than a
Corporate Governance code.
The Board has applied an
undocumented system of governance by:
(a) promoting the purpose of the
Group to deliver manufacturing and distribution of medicines
through its subsidiaries' operations.
(b) regularly reviewing its
composition to ensure that it has an appropriately diverse balance
of skills, backgrounds, experience and knowledge and that
individual directors have sufficient capacity to make a valuable
contribution.
(c) to support effective
decision-making Directors take into account the System of Internal
Control and the Code of Conduct when acting in their capacity as a
Director of the Company.
(d) in accordance with the
governance practices and processes that it adopts, the Board is
supported by Systems of Internal Control to identify opportunities
to create and preserve value.
(e) having regard to and fostering
good stakeholder relationships.
(f) the remuneration policies are
governed to align executive remuneration with performance
outcome.
Stakeholder engagement
The Company aims to build enduring
relationships with all its stakeholders in the countries where it
operates. The Company works with its business partners in an
honest, respectful and responsible way and seeks to work with
others who share the Company's commitments to safety, ethics and
compliance.
On behalf of the Company, the
Group participates in industry associations that offer
opportunities to share good practices and collaborate on issues of
importance. Additionally, the Group works with stakeholders on a
range of issues that are relevant to its business and relating to
regulatory compliance matters.
Disclosure of information to auditors
As far as each of the Directors
are aware, there is no relevant audit information of which the
Company's auditor is unaware, and the Directors have taken all the
steps that ought to have been taken as a director to make
themselves aware of any relevant audit information and to establish
that the Company's auditor is aware of that information.
This confirmation is given and
should be interpreted in accordance with the provisions of s418 of
the Companies Act 2006.
Going concern basis
Having assessed the principal
risks of the Company and other matters the Board is of the opinion
that the current level of activity remains sustainable. The Board
in its considerations have included the accessibility of additional
capital and the potential risk to liquidity. The Board has
considered the Company's ability to continue as a going concern for
a minimum of twelve months from the date of signing of these
financial statements.
The Board have taken into account
that as part of the Group, the Company has the support from the
Group through the access to the Group cash pooling mechanism and
can take actions to ensure business continuity through operational
channels, as well as the ability to manage variable costs. On the
basis of those considerations, the Board believe that it remains
appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
Independent auditors
Deloitte LLP have been reappointed
to act as the Company's auditors by a resolution of the Board in
accordance with s489(3) Companies Act 2006. A resolution of the
members to appoint Deloitte LLP as auditors was passed at a General
Meeting of the Company in accordance with s489(4) Companies Act
2006.
By order of the Board
Mr A Walker
For and on behalf of Glaxo Group
Limited
Corporate Director
22 April 2024
Independent auditors' report to the members of
GlaxoSmithKline Capital plc
Report on the audit of the financial
statements
1. Opinion
In our opinion the financial
statements of GlaxoSmithKline Capital plc (the
'company'):
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give a true and fair view of the
state of the company's affairs as at 31 December 2023 and of its
profit for the year then ended;
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have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 101 "Reduced
Disclosure Framework"; and
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have been prepared in accordance
with the requirements of the Companies Act 2006.
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We have audited the financial
statements which comprise:
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the income statement;
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the statement of comprehensive
income;
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the balance sheet;
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the statement of changes in
equity;
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the cash flow statement;
and
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the related notes 1 to
24.
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The financial reporting framework
that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards, including Financial Reporting
Standard 101 "Reduced Disclosure Framework" (United Kingdom
Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in
accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those
standards are further described in the auditor's responsibilities
for the audit of the financial statements section of our
report.
We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
Financial Reporting Council's (the 'FRC's') Ethical Standard as
applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We confirm that we have not provided any non-audit
services prohibited by the FRC's Ethical Standard to the
company.
We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis
for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we
identified in the current year were:
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Valuation of borrowings;
and
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Valuation of intercompany loan
receivables.
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Materiality
The materiality that we used in
the current year was £96 million which was determined on the basis
of 1% of external debt.
Scoping
Our audit of the company was
scoped by obtaining an understanding of the entity and its
environment, including relevant controls, and assessing the risk of
material misstatement at the entity level.
Significant Changes in our approach
There have been no significant
changes in approach since the prior year.
4. Conclusions relating to going concern
In auditing the financial
statements, we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the financial
statements is appropriate.
Our evaluation of the directors'
assessment of the company's ability to continue to adopt the going
concern basis of accounting included:
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Evaluating the assumptions on
which management's assessment is based including the company's role
within the wider GSK group, its access to sources of internal and
external financing, and the current macroeconomic
conditions;
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Evaluating the GSK group's
performance, position and access to sources of financing, including
undrawn committed bank facilities, including the impact of changes
in interest rates on profitability;
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Reading analyst reports for GSK
group, industry data and other external information to determine if
it provided corroborative or contradictory evidence in relation to
management's assumptions; and
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Evaluating the appropriateness of
the going concern disclosures in line with the requirements of IAS
1.
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Based on the work we have
performed, we have not identified any material uncertainties
relating to events or conditions that, individually or
collectively, may cast significant doubt on the company's ability
to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for
issue.
Our responsibilities and the
responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those
matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the
current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest
effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement
team.
These matters were addressed in
the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Valuation of borrowings
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Key audit matter
description
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The company issues external
borrowings under its European Medium Term Note (EMTN) and US Shelf
Programme on behalf of other GSK Group entities. This has resulted
in the recognition of material borrowing amounts
including:
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Short-term borrowings: £1.7
billion (2022: £2.1 billion); and
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Long-term borrowings: £8.0 billion
(2022: £9.8 billion).
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These external borrowings are
recognised as financial liabilities measured at amortised cost at
the original effective interest rate, computed based on the bond
proceeds, costs of issuance, coupon payments and redemption value.
In the current year, the external borrowings decreased by £2.2
billion due to the repayment of bonds during 2023 offset by new
issuance of a bond.
Due to the magnitude of the
external debt held by the company, we have identified a key audit
matter with respect to the calculation of the effective interest
rate and carrying value of the borrowings under IFRS 9.
Borrowings are disclosed in Note
14 of the financial statements with fair value disclosure in Note
16 of the financial statements. The accounting policy for
borrowings is disclosed in Note 2 of the financial
statements.
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How the scope of our audit
responded to the key audit matter
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We performed the following audit
procedures:
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Agreed bond proceeds, bond costs,
coupon rate and redemption values to underlying agreements and term
sheets;
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Recalculated the effective
interest rate and the carrying value of each bond using the key
inputs outlined above per the underlying agreements
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Assessed the appropriateness of
the accounting treatment applied for borrowings including the
recognition at amortised cost in line with IFRS 9
requirements;
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Agreed the inputs used for the
fair value disclosures in the notes to the financial statements to
an independent source; and
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Evaluated the appropriateness of
disclosures in respect to these
liabilities included in the notes
to the financial statements.
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Key observations
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We are satisfied that the
calculation of the effective interest rate and carrying value of
the external borrowings balance has been correctly calculated and
appropriately recorded in accordance with IFRS 9.
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Valuation of intercompany loan receivables
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Key audit matter
description
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The bonds issued by the company
are subsequently loaned to GlaxoSmithKline Group companies. This is
divided as follows:
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Short-term intercompany
loan receivables: £1.7 billion (2022: £2.2
billion);
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Long-term intercompany loan
receivables: £8.1 billion (2022: £9.8
billion).
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These are recognised as financial
assets measured at amortised cost at the original effective
interest rate, computed based on the loan issued, coupon payments
and redemption value. As such, we identified a key audit matter
relating to the calculation of the effective interest rate and
carrying value of the intercompany loan receivables balance under
IFRS 9.
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Key audit matter description
(continued)
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Intercompany loan receivables are
disclosed in Note 11 of the financial statements with fair value
disclosure in Note 16 of the financial statements. The accounting
policy for receivables is disclosed in Note 2 of the financial
statements.
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How the scope of our audit
responded to the key audit matter
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We performed the following audit
procedures:
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Agreed loan amounts, coupon rate
and redemption values to underlying agreements;
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Recalculated the effective
interest rate and the carrying value of each intercompany loan
using the key inputs outlined above per the underlying
agreements;
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Inspected board minutes for the
completeness of all loans entered into in the period;
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Assessed the appropriateness of
the accounting treatment applied for intercompany loans including
the recognition at amortised cost and provisioning of expected
credit losses in line with IFRS 9 requirements;
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Assessed the recoverability of
intercompany loans against net assets of counter
parties;
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Evaluated the appropriateness of
disclosures in respect to these assets included in the notes to the
financial statements; and
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Reconciled the intercompany loans
and receivables balance per the intercompany schedule to the trial
balance and intercompany mismatch report.
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Key observations
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We are satisfied that the
calculation of the effective interest rate and carrying value of
the intercompany loan receivables has been correctly calculated and
appropriately recorded in accordance with IFRS
9.
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6. Our application of materiality
Materiality
We define materiality as the
magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable
person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results
of our work.
Based on our professional
judgement, we determined materiality for the financial statements
as a whole as follows:
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Materiality
|
£96 million (2022: £119
million)
|
|
Basis for determining
materiality
|
The materiality that we used in
the current year was £96 million which was determined on the basis
of 1% of external debt.*
The decrease in materiality from
the previous year is due to the decrease in external borrowings of
£2.2 billion and associated decrease in intercompany receivables
from the lending of the proceeds to other entities within the
group.
*External debt is defined as
short-term and long-term borrowings.
|
|
Rationale for the benchmark
applied
|
The company is the main UK debt
issuer of the GlaxoSmithKline Group. As such, total assets and
external debt were determined to be the most appropriate benchmarks
to apply as they relate to the primary focus of management,
shareholders and lenders in assessing the performance on the
entity.
|
Performance materiality
We set performance materiality at
a level lower than materiality to reduce the probability that, in
aggregate, uncorrected and undetected misstatements exceed the
materiality for the financial statements as a whole. Performance
materiality was set at 70% of materiality for the 2023 audit (2022:
70%). In determining performance materiality, we considered the
following factors:
|
•
|
our risk assessment, including our
assessment of the company's overall control environment;
|
|
•
|
our past experience of the audit,
which has indicated a low number of corrected and uncorrected
misstatements identified in prior periods; and
|
|
•
|
prior period adjustments or errors
found in the current year of which there were none.
|
Error reporting threshold
We agreed with the Board of
Directors that we would report to them all audit differences in
excess of £4.8 million (2022: £6.0 million), as well as differences
below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Board of Directors on
disclosure matters that we identified when assessing the overall
presentation of the financial statements.
7. An overview of the scope of our
audit
Scoping
Our audit was scoped by obtaining
an understanding of the entity and its environment, including
internal control, and assessing the risk of material misstatement.
Audit work to respond to the risks of material misstatement was
performed directly by the audit engagement team.
Our consideration of the control
environment
We obtained an understanding of
the company's control environment through audit procedures over the
in-scope processes for the purpose of the GSK plc group audit.
Subsequently, as part of our statutory audit process, we have
performed additional audit procedures in order to obtain an
understanding of all other key company processes. We structured our
audit approach to reflect how the company is organised so that our
audit was both effective and risk focused. Based on our scope and
determination of audit approach, the audit engagement team have
obtained an understanding of the relevant controls over the
financial reporting process and have adopted a fully substantive
approach for the audit of the financial statements.
8. Other information
The other information comprises
the information included in the annual report, other than the
financial statements and our auditor's report thereon. The
directors are responsible for the other information contained
within the annual report.
Our opinion on the financial
statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
Our responsibility is to read the
other information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated.
If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of
this other information, we are required to report that
fact.
We have nothing to report in this
regard.
9. Responsibilities of
directors
As explained more fully in the
directors' responsibilities statement, the directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial
statements, the directors are responsible for assessing the
company's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
10. Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain
reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our
responsibilities for the audit of the financial statements is
located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor's report.
11. Extent to which the audit was considered capable of
detecting irregularities, including fraud
Irregularities, including fraud,
are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is
detailed below.
Identifying and assessing potential risks related to
irregularities
In identifying and assessing risks
of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, we considered
the following:
|
•
|
the nature of the industry and
sector, control environment and business performance including the
design of the company's remuneration policies, key drivers for
directors' remuneration, bonus levels and performance
targets;
|
|
•
|
results of our enquiries of
management and the Board of Directors about their own
identification and assessment of the risks of
irregularities;
|
|
•
|
any matters we identified having
obtained and reviewed the company's documentation of their policies
and procedures relating to:
|
|
|
○
|
identifying, evaluating and
complying with laws and regulations and whether they were aware of
any instances of non-compliance;
|
|
|
○
|
detecting and responding to the
risks of fraud and whether they have knowledge of any
actual, suspected or alleged fraud;
and
|
|
|
○
|
the internal controls established
to mitigate risks of fraud or non-compliance with laws and
regulations;
|
|
•
|
the matters discussed among the
audit engagement team and relevant internal specialists, including
tax specialists regarding how and where fraud might occur in the
financial statements and any potential indicators of
fraud.
|
As a result of these procedures,
we considered the opportunities and incentives that may exist
within the organisation for fraud. In common with all audits under
ISAs (UK), we are required to perform specific procedures to
respond to the risk of management override.
We also obtained an understanding
of the legal and regulatory framework that the company operates in,
focusing on provisions of those laws and regulations that had a
direct effect on the determination of material amounts and
disclosures in the financial statements. The key laws and
regulations we considered in this context included the UK Companies
Act, Listing Rules and tax legislation.
In addition, we considered
provisions of other laws and regulations that do not have a direct
effect on the financial statements but compliance with which may be
fundamental to the company's ability to operate or to avoid a
material penalty.
Audit response to risks identified
As a result of performing the
above, we did not identify any key audit matters related to the
potential risk of fraud or non-compliance with laws and
regulations.
Our procedures to respond to risks
identified included the following:
|
•
|
reviewing the financial statement
disclosures and testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations
described as having a direct effect on the financial
statements;
|
|
•
|
enquiring of management, the Board
of Directors and in-house and external legal counsel concerning
actual and potential litigation and claims;
|
|
•
|
performing analytical procedures
to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
|
|
•
|
reading minutes of meetings of
those charged with governance, reviewing internal audit reports;
and
|
|
•
|
in addressing the risk of fraud
through management override of controls, testing the
appropriateness of journal entries and other adjustments; assessing
whether the judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or
outside the normal course of business.
|
We also communicated relevant
identified laws and regulations and potential fraud risks to all
engagement team members including internal specialists and remained
alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Report on other legal and regulatory
requirements
12. Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work
undertaken in the course of the
audit:
|
•
|
the information given in the
strategic report and the directors' report for the financial year
for which the financial statements are prepared is consistent with
the financial statements; and
|
|
•
|
the strategic report and the
directors' report have been prepared in accordance with applicable
legal requirements.
|
In the light of the knowledge and
understanding of the company and its environment obtained in the
course of the audit, we have not identified any material
misstatements in the strategic report or the directors'
report.
13. Matters on which we are required to report by
exception
Adequacy of explanations received and accounting
records
Under the Companies Act 2006 we
are required to report to you if, in our opinion:
|
•
|
we have not received all the
information and explanations we require for our audit;
or
|
|
•
|
adequate accounting records have
not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
|
|
•
|
the financial statements are not
in agreement with the accounting records and returns.
|
We have nothing to report in
respect of these matters.
Directors' remuneration
Under the Companies Act 2006 we
are also required to report if in our opinion certain disclosures
of directors' remuneration have not been made.
We have nothing to report in
respect of this
matter.
14. Other matters which we are required to
address
Auditor tenure
We were appointed by the Board of
Directors on 30 May 2018 to audit the financial statements for the
year ending 31 December 2018 and subsequent financial periods. The
period of total uninterrupted engagement including previous
renewals and reappointments of the firm is six years, covering the
years ending 31 December 2018 to 31 December 2023.
Consistency of the audit report with the additional report to
the Board of Directors
Our audit opinion is consistent
with the additional report to the Board of Directors we are
required to provide in accordance with ISAs (UK).
15. Use of our report
This report is made solely to the
company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so
that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other
purpose.
To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the company and the company's members as a body, for our audit
work, for this report, or for the opinions we have
formed.
The company has passed a
resolution in accordance with section 506 of the Companies Act 2006
that the senior statutory auditor's name should not be
stated.
Deloitte LLP
Statutory Auditors
London, United Kingdom
22 April 2024
GlaxoSmithKline Capital
plc
Income
statement
for
the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
Note
|
£'000
|
£'000
|
|
Other operating loss
|
6
|
(605)
|
2,797
|
|
Finance income
|
8
|
325,627
|
480,543
|
|
Finance expense
|
9
|
(307,490)
|
(471,643)
|
|
Operating profit
|
|
17,532
|
11,697
|
|
Profit before taxation
|
|
17,532
|
11,697
|
|
Tax on profit
|
10
|
(4,120)
|
(2,223)
|
|
Profit for the financial year
|
|
13,412
|
9,474
|
The results disclosed above for
both the current year and prior year relate entirely to continuing
operations.
The notes on pages 20 to 31 are an
integral part of these financial statements.
GlaxoSmithKline Capital
plc
Statement of comprehensive
income
for
the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
Note
|
£'000
|
£'000
|
|
Profit for the financial year
|
|
13,412
|
9,474
|
|
Items that may be subsequently reclassified to the income
statement:
|
|
|
|
|
Reclassification of cash flow
hedges to the income statement
|
|
2,406
|
5,584
|
|
Deferred tax on fair value
movements and reclassification on cash flow hedges
|
10
|
(601)
|
(1,396)
|
|
Other comprehensive income for the financial
year
|
|
1,805
|
4,188
|
|
Total comprehensive income for the financial
year
|
|
15,217
|
13,662
|
The notes on pages 20 to 31 are an
integral part of these financial
statements.
GlaxoSmithKline Capital
plc
Balance
sheet
as
at 31 December 2022
|
|
|
2023
|
2022
|
|
|
Note
|
£'000
|
£'000
|
|
Non-current assets
|
|
|
|
|
Deferred tax assets
|
10
|
2,367
|
2,968
|
|
Trade and other
receivables
|
11
|
8,133,931
|
9,794,173
|
|
Total non-current assets
|
|
8,136,298
|
9,797,141
|
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
11
|
1,696,382
|
2,236,637
|
|
Prepayments and accrued
income
|
12
|
105,811
|
113,755
|
|
Cash and cash
equivalents
|
|
1
|
1
|
|
Total current assets
|
|
1,802,194
|
2,350,393
|
|
Total assets
|
|
9,938,492
|
12,147,534
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
13
|
(69)
|
-
|
|
Short-term borrowings
|
14
|
(1,651,681)
|
(2,145,952)
|
|
Accruals and deferred
income
|
15
|
(100,125)
|
(106,364)
|
|
Corporation tax
|
|
(4,120)
|
(2,223)
|
|
Total current
liabilities
|
|
(1,755,995)
|
(2,254,539)
|
|
|
|
|
|
|
Net current assets
|
|
46,199
|
95,854
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
8,182,497
|
9,982,995
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Long-term borrowings
|
14
|
(8,047,632)
|
(9,773,347)
|
|
Total non-current
liabilities
|
|
(8,047,632)
|
(9,773,347)
|
|
|
|
|
|
|
Total liabilities
|
|
(9,803,627)
|
(12,027,886)
|
|
|
|
|
|
|
Net assets
|
|
134,865
|
119,648
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Called up share capital
|
20
|
100
|
100
|
|
Other reserves
|
21
|
(7,097)
|
(8,902)
|
|
Retained earnings
|
|
141,862
|
128,450
|
|
|
|
|
|
|
Total equity
|
|
134,865
|
119,648
|
The notes on pages 20 to 31
are an integral part of these financial statements.
The financial statements on pages
15 to 31 were approved by the Board of Directors on 22 April 2024
and signed on its behalf by:
Mr A Walker
For and on behalf of Glaxo Group
Limited
Corporate Director
GlaxoSmithKline Capital plc
Statement of changes in equity
for
the year ended 31 December 2023
|
|
Called up share
capital
|
Other
reserves
|
Retained
earnings
|
Total
equity
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
At 1 January 2022
|
100
|
(13,090)
|
118,976
|
105,986
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
9,474
|
9,474
|
|
Other comprehensive income for the
financial year
|
-
|
4,188
|
-
|
4,188
|
|
Profit and comprehensive income for
the financial year
|
-
|
4,188
|
9,474
|
13,662
|
|
|
|
|
|
|
|
At 31 December 2022
|
100
|
(8,902)
|
128,450
|
119,648
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
13,412
|
13,412
|
|
Other comprehensive income for the
financial year
|
-
|
1,805
|
-
|
1,805
|
|
Profit and comprehensive income for
the financial year
|
-
|
1,805
|
13,412
|
15,217
|
|
|
|
|
|
|
|
At
31 December 2023
|
100
|
(7,097)
|
141,862
|
134,865
|
The notes on pages 20 to 31 are an
integral part of these financial statements.
GlaxoSmithKline Capital plc
Cash flow statement
for
the year ended 31 December 2023
|
|
|
|
2023
|
|
2022
|
|
|
Note
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Operating profit
|
|
|
17,532
|
|
11,697
|
|
Adjustments reconciling operating
profit to operating cash flows
|
|
|
16,465
|
|
31,127
|
|
Taxation paid
|
|
|
(2,223)
|
|
(3,079)
|
|
Net cash inflow from operating activities
|
18
|
|
31,774
|
|
39,745
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Proceeds from
borrowings
|
|
|
231,973
|
|
(4,414,769)
|
|
Repayment of borrowings
|
|
|
(2,259,906)
|
|
-
|
|
Loans provided to Group
undertakings
|
|
|
(231,973)
|
|
-
|
|
Loan repayments received from
Group undertakings
|
|
|
2,252,829
|
|
4,357,442
|
|
(Increase) / decrease in other
receivables with Group undertakings
|
|
|
(24,697)
|
|
17,579
|
|
Net cash outflow from financing activities
|
|
|
(31,774)
|
|
(39,748)
|
|
|
|
|
|
|
|
|
Net movement in cash in the year
|
|
|
-
|
|
(3)
|
|
|
|
|
|
|
|
|
Cash at beginning of
year
|
|
|
1
|
|
4
|
|
Movement in cash
|
|
|
-
|
|
(3)
|
|
|
|
|
|
|
|
|
Cash at end of year
|
|
|
1
|
|
1
|
The notes on pages 20 to 31 are an
integral part of these financial statements.
GlaxoSmithKline Capital plc
Notes to the financial statements for the year ended 31
December 2023
1. Presentation of the financial
statements
General information
GlaxoSmithKline Capital plc (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.
The Company is a member of the GSK
Group (the "Group"). The Company's principal activity is the
issuance of notes under the Group's European Medium Term Note
programme and US shelf registration and the provision of financial
services to other companies within the Group.
2. Summary of material accounting
policies
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.
(a) Basis of
preparation
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").
These financial statements have
been prepared on the going concern basis under the historical cost
convention as modified by the revaluation of financial assets at
fair value through other comprehensive income, and in accordance
with the Companies Act 2006.
The financial statements are
presented in Pounds Sterling which is the currency of the primary
economic environment in which the Company operates.
Going concern
Having assessed the principal
risks of the Company and other matters the Board is of the opinion
that the current level of activity remains sustainable. The Board
in its considerations have included the accessibility of additional
capital and the potential risk to liquidity. The Board has
considered the Company's ability to continue as a going concern for
a minimum of twelve months from the date of signing of these
financial statements.
The Board have taken into account
that as part of the Group, the Company has the support from the
Group through the access to the Group cash pooling mechanism and
can take actions to ensure business continuity through operational
channels, as well as the ability to manage variable costs. On the
basis of those considerations, the Board believe that it remains
appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
Disclosure exemptions adopted
In preparing these financial
statements the Company has taken advantage of all disclosure
exemptions conferred by FRS 101 to requirements set by the
International Financial Reporting Standards (IFRS). Therefore these
financial statements do not include:
|
•
|
Paragraph 38 of IAS 1
"Presentation of financial statements" comparative information
requirements in respect of:
|
|
|
○
|
paragraph 79(a) (iv) of IAS
1;
|
|
|
○
|
16 (statement of compliance with
all IFRS); and
|
|
|
○
|
38B-D (additional comparative
information);
|
|
•
|
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);
|
|
•
|
Paragraph 17 of IAS 24 "Related
party disclosures" (key management compensation); and
|
|
•
|
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.
|
The financial statements of
GlaxoSmithKline plc can be obtained as described in Note
2(b).
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.
(b) Ultimate and immediate parent
undertaking
The Company is a wholly owned
subsidiary of the ultimate parent company. GSK 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 GSK plc. Copies of the consolidated
financial statements can be obtained from the Company Secretary,
GSK plc, 980 Great West Road, Brentford, Middlesex TW8 9GS. The
immediate parent undertaking is SmithKline Beecham Limited. These
financial statements are separate financial statements.
(c) Foreign currency transactions
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.
(d) Other operating
income
Management service fees are
recognised in other operating income on an accruals
basis.
(e) Finance income and
expense
Finance income and expenses are
recognised on an accruals basis using the effective interest
method.
(f) Financial assets
Financial assets are measured at
amortised cost, fair value through other comprehensive income
('FVTOCI') or fair value through profit or loss ('FVTPL'). The
measurement basis is determined by reference to both the business
model for managing the financial asset and the contractual cash
flow characteristics of the financial asset.
(g) Impairment of financial assets
Expected credit losses are
recognised in the income statement on financial assets measured at
amortised cost and at fair value through other comprehensive income
apart from equity investments.
For financial assets a 12-month
expected credit loss ("ECL") allowance is recorded on initial
recognition. If there is evidence of a significant increase in the
credit risk of an asset, the allowance is increased to reflect the
full lifetime ECL. If there is no realistic prospect of recovery,
the asset is written off.
(h) Trade and other receivables
For Trade and other receivables,
the general approach is used where the entity recognises the losses
that are expected to result from all possible default events over
the expected life of the receivable, when there has been a
significant increase in credit risk since initial recognition.
However, if the credit risk on the receivable has not increased
significantly since initial recognition, the entity measures the
expected loss allowance based on losses that are expected to result
from default events that are possible within 12 months after the
reporting date. When a trade and other receivable is determined to
be uncollectable it is written off, firstly against any expected
credit loss allowance available and then to the income
statement/statement of comprehensive income.
Subsequent recoveries of amounts
previously provided for are credited to the income statement.
Long-term receivables are discounted where the effect is
material.
(i) Cash and cash equivalents
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.
(j) Other
payables
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.
(k) Borrowings
All borrowings, which comprise
notes issued under the Group's European Medium Term Note programme
and US shelf registration, 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.
(l) Taxation
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. The tax charge for the period is recognised in the income
statement or statement of comprehensive income or directly in
equity, according to the accounting treatment of the related
transaction.
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.
Deferred tax assets and
liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when
they relate to income taxes levied by the same tax authority and
the Company and its subsidiaries intend to settle their current tax
assets and liabilities on a net basis.
Deferred tax assets and
liabilities are not recognised if the temporary differences arise
from the initial recognition of goodwill or from the initial
recognition of other assets and liabilities in a transaction (other
than a business combination) that affects neither the accounting
nor the taxable profit or loss. Unrecognised deferred tax assets
are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered.
(m) Derivative financial instruments and
hedging
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 assets and
liabilities are classified as held-for trading and are measured at
fair value. Changes in the fair value of any derivative instruments
that do not qualify for hedge accounting are recognised immediately
in the income statement.
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.
(n) International Tax Reform - Pillar Two Model
Rules
The Company has adopted the
amendments to IAS 12 which have been introduced in response to the
OECD's BEPS Pillar Two rules and include:
|
•
|
A mandatory temporary exception to
the recognition and disclosure of deferred taxes arising from the
jurisdictional implementation of the Pillar Two model
rules;
|
|
•
|
Disclosure requirements for
affected entities to help users of the financial statements better
understand an entity's exposure to Pillar Two income taxes arising
from that legislation.
|
The Company has applied the
mandatory exception and is not recognising any deferred tax impact.
Further information is set out in note 10.
3. Critical accounting judgements and key sources
of estimation uncertainty
In preparing the financial
statements, the Board 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. There are no required
estimates or assumptions made in the valuation of intercompany
loans and borrowings.
The Board does not consider that
there are any critical accounting judgements that have been made in
the process of applying the Company's accounting policies and that
have had a significant effect on the amounts recognised in the
financial statements. There have been no significant estimates or
assumptions which are likely to cause a material adjustment to the
carrying amount of assets and liabilities within the next financial
year.
4. Financial risk management
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 11 October 2023. 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 quarterly
basis to review treasury activities.
(a) Market risk
(i) Foreign exchange risk
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 and US shelf
registration.
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.
(ii) Interest rate risk
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 net amount of floating
rate debt to a specific cap, reviewed and agreed no less than
annually by the GlaxoSmithKline Board.
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 unsecured borrowings, comprised of notes issued
under the Group's European Medium Term Note programme and US shelf
registration, all of which are at fixed rates, and expose the
Company to fair value interest rate risk.
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 2023 would have increased by
approximately £2,187,000 (2022: £1,964,000 increase in finance
income). If the applicable interest rate were to have increased by
1.5%, the financial income for 2023 would have increased by
approximately £3,279,000 (2022: £2,946,000 increase in finance
income).
|
|
|
|
2023
|
2022
|
|
|
|
|
Increase
in income
|
Increase
in income
|
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
1% (100 basis points) increase in
Euro interest rates (2022: 1%)
|
|
432
|
702
|
|
1% (100 basis points) increase in
Sterling interest rates (2022: 1%)
|
1,521
|
1,022
|
|
|
1% (100 basis points) increase in
US dollar interest rates (2022: 1%)
|
234
|
240
|
|
|
1.5% (150 basis points) increase
in Euro interest rates (2022: 1.5%)
|
647
|
1,054
|
|
|
1.5% (150 basis points) increase
in Sterling interest rates (2022: 1.5%)
|
2,281
|
1,533
|
|
|
1.5% (150 basis points) increase
in US dollar interest rates (2022: 1.5%)
|
351
|
359
|
|
|
|
|
|
|
|
|
The tables below illustrate the
currency and interest rate profiles arising from the Company's
borrowings, loans and receivable balances.
Currency and interest rate risk profile of
borrowings
|
|
Fixed rate
|
|
|
|
|
At
31 December 2023
|
Weighted
average interest rate
|
Average years for which rate
is fixed
|
Fixed rate
|
Floating
rate
|
Total
|
|
Currency
|
%
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
US dollars
|
3.5
|
3
|
(1,561,718)
|
-
|
(1,561,718)
|
|
Sterling
|
4.4
|
12
|
(3,826,646)
|
-
|
(3,826,646)
|
|
Euro
|
1.8
|
3
|
(4,075,833)
|
-
|
(4,075,833)
|
|
Yen
|
0.9
|
5
|
(235,116)
|
-
|
(235,116)
|
|
|
|
|
|
|
|
|
Total borrowings
|
3.2
|
6
|
(9,699,313)
|
-
|
(9,699,313)
|
|
|
|
|
|
|
|
|
|
Fixed
rate
|
|
|
|
|
At 31 December 2022
|
Weighted
average interest rate
|
Average
years for which rate is fixed
|
Fixed
rate
|
Floating
rate
|
Total
|
|
Currency
|
%
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
US dollars
|
2.3
|
3
|
(2,688,409)
|
-
|
(2,688,409)
|
|
Sterling
|
5.6
|
13
|
(3,966,581)
|
-
|
(3,966,581)
|
|
Euro
|
1.5
|
3
|
(5,264,309)
|
-
|
(5,264,309)
|
|
Yen
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total borrowings
|
3.3
|
6
|
(11,919,299)
|
-
|
(11,919,299)
|
Currency and interest rate risk profile of loans and
receivables
|
At
31 December 2023
|
|
|
Fixed rate
|
Floating
rate
|
Total
|
|
Currency
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
US dollars
|
|
|
1,541,475
|
23,415
|
1,564,890
|
|
Sterling
|
|
|
3,798,820
|
152,068
|
3,950,888
|
|
Euro
|
|
|
4,036,231
|
43,157
|
4,079,388
|
|
Yen
|
|
|
235,090
|
-
|
235,090
|
|
|
|
|
|
|
|
|
Total loans and
receivables
|
|
|
9,611,616
|
218,640
|
9,830,256
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
|
|
Fixed
rate
|
Floating
rate
|
Total
|
|
Currency
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
US dollars
|
|
|
2,667,694
|
23,963
|
2,691,657
|
|
Sterling
|
|
|
3,940,570
|
102,209
|
4,042,779
|
|
Euro
|
|
|
5,226,016
|
70,238
|
5,296,254
|
|
Yen
|
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Total loans and
receivables
|
|
|
11,834,280
|
196,410
|
12,030,690
|
|
|
|
2023
|
2022
|
|
Net currency exposure
|
|
£'000
|
£'000
|
|
|
|
|
|
|
US dollars
|
|
3,172
|
3,249
|
|
Euro
|
|
3,555
|
31,945
|
|
Yen
|
|
(26)
|
-
|
|
|
|
|
|
|
|
|
6,701
|
35,194
|
(b) Credit risk
Credit risk is the risk that a
counterparty will default on its contractual obligations resulting
in financial loss to the Company and arises from cash and cash
equivalents, favourable derivative financial instruments and
deposits held with banks and financial institutions, and
outstanding loans and receivables. 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.
There are no financial assets that
are past due or impaired as at 31 December 2023 (2022:
£nil).
The Company did not hold any
collateral as security or obtained other credit enhancements as at
31 December 2023 (2022: £nil).
The Company considers its maximum
exposure to credit risk as at 31 December 2023, without taking into
account any collateral held or other credit enhancements, to be
£9,936,125,000 (2022: £12,144,565,000) being the total of the
Company's financial assets (excluding cash) of which the balances
are all held within the GSK Group.
(c) Liquidity risk
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 quarterly 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.
5. Capital management
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 and US shelf registration.
The capital structure of the
Company consists of net debt of £9,699,312,000 (2022:
£11,919,298,000) and shareholders' funds of £134,865,000 (2022:
£119,648,000) (see Statement of changes in equity).
6. Operating profit
|
|
|
|
2023
|
2022
|
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
The following items have been credited / (charged) in
operating profit:
|
|
|
|
Exchange gains / (losses) on
foreign currency transactions
|
|
(535)
|
2,862
|
|
Management fee
|
|
|
(69)
|
(63)
|
|
Other (expense)/income
|
|
|
(1)
|
(1)
|
|
Total other operating
(expense)/income
|
|
|
(605)
|
2,797
|
GlaxoSmithKline Services Unlimited
provides various services and facilities to the Company including
finance and administrative services for which a management fee was
charged. Included in the management fee is a charge for auditors'
remuneration of £42,331 (2022: £39,600).
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 2023 Annual
Report which does not form part of this report.
7. Employees
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.
8. Finance income
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Interest income arising from
financial assets at amortised cost
|
325,627
|
480,543
|
9. Finance expense
|
|
|
|
2023
|
2022
|
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Interest expense arising on
financial liabilities at amortised cost
|
|
(305,084)
|
(466,059)
|
|
Reclassification of cash flow hedge
from other comprehensive income
|
(2,406)
|
(5,584)
|
|
|
|
|
|
|
|
Total finance expense
|
|
|
(307,490)
|
(471,643)
|
10. Taxation
|
|
|
2023
|
2022
|
|
Income tax charge on profit
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Current tax:
|
|
|
|
|
UK corporation tax at
23.50% (2022: 19.00%)
|
(4,120)
|
(2,223)
|
|
Total current tax
|
|
(4,120)
|
(2,223)
|
The tax assessed for the year is
the same as (2022: the same as) the average standard rate of
corporation tax in the UK for the year ended 31 December 2023 of
23.50% (2022: 19.00%). The differences are explained
below:
|
|
|
|
|
2023
|
2022
|
|
Reconciliation of total tax charge
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
before taxation
|
|
|
|
17,532
|
11,697
|
|
Tax on ordinary activities at the
UK standard rate 23.50% (2022: 19.00%)
|
(2,223)
|
(3,079)
|
|
Effects of:
|
|
|
|
|
|
|
Permanent disallowables - interest
treated as paid by ultimate parent
|
|
71,266
|
88,728
|
|
Permanent deductions - Group
relief received for no payment
|
|
|
(71,266)
|
(88,728)
|
|
|
|
|
|
|
|
|
Total tax charge for the
year
|
|
|
|
(4,120)
|
(2,223)
|
Factors that may affect future tax
charges:
An increase in the UK corporation
rate from 19% to 25% (effective 1 April 2023) was substantively
enacted on 24 May 2021. This will increase the company's future
current tax charge accordingly. There is no impact of this change
as there are no instances of deferred taxation recognised in the
income statement or directly in equity in the current
year.
In 2023, the UK Government
substantively enacted legislation introducing a global minimum
corporate income tax rate, to have effect from 2024 in line with
the Organisation for Economic Co-operation and Development's (OECD)
Pillar Two model framework. The Company is exempt from the impact
of Pillar Two model framework as the disclosure is included in the
Group's 2023 annual report.
|
|
|
|
|
2023
|
2022
|
|
Total tax (expense) / credit included in other comprehensive
income
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Deferred tax:
|
|
|
|
|
|
|
Fair value movements and
reclassification on cash flow hedges
|
(601)
|
(1,396)
|
|
|
|
|
|
|
|
|
Total tax (expense) / credit
included in other comprehensive income
|
|
(601)
|
(1,396)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
net temporary differences
|
Total
|
|
Movement in deferred tax assets and
liabilities
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
|
|
|
2,968
|
2,968
|
|
Credit to comprehensive
income
|
|
|
|
(601)
|
(601)
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
|
|
|
2,367
|
2,367
|
11. Trade and other receivables
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Amounts due within one year
|
|
|
|
|
Amounts owed by Group
undertakings
|
|
1,696,382
|
2,236,637
|
|
|
|
|
|
|
Amounts due after more than one year
|
|
|
|
|
Long term deposits
|
|
57
|
120
|
|
Amounts owed by Group
undertakings
|
|
8,133,874
|
9,794,053
|
|
|
|
|
|
|
|
|
9,830,313
|
12,030,810
|
Amounts due within one year
include deposits with Group undertakings of £66,572,000 (2022:
£94,201,000) which are unsecured, repayable within one year and
earn a market rate of interest (based on the benchmark risk-free
rate applicable to each currency minus 0.025%) that is consistent
with the Group's policy.
Amounts due within one year also
include the net proceeds of bond issuances that have been advanced
as loans to Group undertakings of £1,629,810,000 (2022:
£2,142,436,000) which are unsecured with interest charged between
1.79% and 3.40% per annum (2022: between 0.10% and 0.78% per
annum).
Amounts due after more than one
year include the net proceeds of bond issuances that have been
advanced as loans to Group undertakings totalling £7,981,806,000
(2022: £9,691,844,000), which are unsecured with interest charged
at between 1.05% and 6.50% per annum and repayable at maturity
dates between 2025 and 2045 and also include a call account with
GlaxoSmithKline Finance plc of £152,068,000 (2022: £102,209,000)
which is unsecured, repayable on demand and earns a market rate of
interest (based on the benchmark risk-free rate applicable minus
0.05%) which is consistent with the Group's policy. The call
account balance is classified as a non-current asset as the amounts
are not expected to be settled within the year.
12. Prepayments and accrued income
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Amounts due within one
year
|
|
105,811
|
113,755
|
Accrued income relates to interest
on amounts owed by Group undertakings (see Note
11).
13. Trade and other payables
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Amounts falling due within one year
|
|
|
|
|
Amounts owed to Group
undertakings
|
|
(69)
|
-
|
|
|
|
|
|
|
|
|
(69)
|
-
|
Amounts owed to Group undertakings
are unsecured, interest free and repayable on demand. The variance
represents management service charges for the year 2023 (management
service charges for the year 2022 were settled in December
2022).
14. Borrowings
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Amounts falling due within one year
|
|
|
|
|
Loans payable:
|
|
|
|
|
€ European Medium Term
Notes
|
|
(867,728)
|
(1,108,313)
|
|
US$ US Medium Term
Notes
|
|
(783,953)
|
(1,037,639)
|
|
|
|
(1,651,681)
|
(2,145,952)
|
|
|
|
|
|
|
Amounts falling due after more than one year
|
|
|
|
Loans payable:
|
|
|
|
|
€ European Medium Term
Notes
|
|
(3,208,106)
|
(4,155,995)
|
|
£ European Medium Term
Notes
|
|
(3,826,646)
|
(3,966,581)
|
|
US$ US Medium Term
Notes
|
|
(777,764)
|
(1,650,771)
|
|
|
|
(235,116)
|
-
|
|
|
|
(8,047,632)
|
(9,773,347)
|
|
|
|
|
|
|
Total borrowings
|
|
(9,699,313)
|
(11,919,299)
|
|
|
|
2023
|
2022
|
|
Maturity of borrowings
|
|
£'000
|
£'000
|
|
|
|
|
|
|
In
one year or less, or on demand
|
|
|
|
|
|
|
|
|
|
1.375% € European Medium Term Note
2024
|
|
(867,728)
|
-
|
|
3.000% US$ US Medium Term Note
2024
|
|
(783,953)
|
-
|
|
0% € European Medium Term Note
2023
|
-
|
(443,407)
|
|
0.125% € European Medium Term Note
2023
|
-
|
(664,906)
|
|
0.534% US$ US Medium Term Note
2023
|
|
-
|
(1,037,639)
|
|
|
|
|
|
|
|
|
(1,651,681)
|
(2,145,952)
|
|
|
|
|
|
|
In
more than one year, but not more than two years
|
|
|
|
|
|
|
|
|
0% € European Medium Term Note
2023
|
|
-
|
(884,229)
|
|
0.125% € European Medium Term Note
2023
|
|
-
|
(828,516)
|
|
0.534% US$ US Medium Term Note
2023
|
|
(650,326)
|
-
|
|
|
|
|
|
|
|
|
(650,326)
|
(1,712,745)
|
|
In
more than two years, but not more than five years
|
|
|
|
|
|
|
|
|
4.000% € European Medium Term Note
2025
|
|
-
|
(662,778)
|
|
1.000% € European Medium Term Note
2026
|
|
(607,549)
|
(619,781)
|
|
1.250% € European Medium Term Note
2026
|
|
(867,566)
|
(884,833)
|
|
3.375% £ European Medium Term Note
2027
|
|
(306,132)
|
(305,753)
|
|
1.25% £ European Medium Term Note
2028
|
|
(744,733)
|
-
|
|
0.883% ¥ European Medium Term Note
2028
|
|
(235,116)
|
-
|
|
|
|
|
|
|
|
|
(2,761,096)
|
(2,473,145)
|
|
In
more than five years
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
1.25% £ European Medium Term Note
2028
|
|
-
|
(743,675)
|
|
1.375% € European Medium Term Note
2029
|
|
(432,656)
|
(441,246)
|
|
3.375% US$ US Medium Term Note
2029
|
|
(777,764)
|
(822,254)
|
|
1.750% € European Medium Term Note
2030
|
|
(650,009)
|
(663,127)
|
|
5.250% £ European Medium Term Note
2033
|
|
(566,291)
|
(640,375)
|
|
1.625% £ European Medium Term Note
2035
|
|
(744,556)
|
(744,125)
|
|
6.375% £ European Medium Term Note
2039
|
|
(626,847)
|
(694,879)
|
|
5.250% £ European Medium Term Note
2042
|
|
(472,062)
|
(471,877)
|
|
4.250% £ European Medium Term Note
2045
|
|
(366,025)
|
(365,899)
|
|
1.25% £ European Medium Term Note
2028
|
|
-
|
(743,675)
|
|
|
|
|
|
|
|
|
(4,636,210)
|
(5,587,457)
|
|
|
|
|
|
|
Total borrowings
|
|
(9,699,313)
|
(11,919,299)
|
15. Accruals and deferred income
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Amounts falling due within one
year
|
|
(100,125)
|
(106,364)
|
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.
|
The carrying amounts and the fair
values of the Company's financial assets and liabilities at 31
December 2023 and 31 December 2022 are illustrated
below.
|
|
|
2023
|
2022
|
|
|
|
Carrying
value
|
Fair value
|
Carrying
value
|
Fair
value
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
1
|
1
|
1
|
1
|
|
|
|
|
|
|
|
|
Trade and other
receivables:
|
|
|
|
|
|
|
Other receivables
|
|
105,811
|
105,811
|
113,755
|
113,755
|
|
Amounts owed by Group
undertakings
|
|
9,830,256
|
9,590,090
|
12,030,690
|
11,306,796
|
|
Total financial assets
|
|
9,936,068
|
9,695,902
|
12,144,446
|
11,420,552
|
|
|
|
|
|
|
|
|
Financial liabilities measured at
amortised cost:
|
|
|
|
|
|
£ European Medium Term
Notes
|
|
(3,826,646)
|
(3,798,008)
|
(3,966,581)
|
(3,759,798)
|
|
€ European Medium Term
Notes
|
|
(4,075,833)
|
(3,943,347)
|
(5,264,308)
|
(5,010,694)
|
|
US$ US Medium Term
Notes
|
|
(1,561,718)
|
(1,532,591)
|
(2,688,410)
|
(2,584,635)
|
|
¥ European Medium Term
Notes
|
|
(235,116)
|
(234,549)
|
-
|
-
|
|
|
|
(9,699,313)
|
(9,508,495)
|
(11,919,299)
|
(11,355,127)
|
|
|
|
|
|
|
|
|
Other payables
|
|
(100,194)
|
(100,194)
|
(106,364)
|
(106,364)
|
|
Total financial
liabilities
|
|
(9,799,507)
|
(9,608,689)
|
(12,025,663)
|
(11,461,491)
|
|
|
|
|
|
|
|
|
Net financial assets and
liabilities
|
|
136,561
|
87,213
|
118,783
|
(40,939)
|
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 £9,508,495,000 (2022:
£11,355,127,000) 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.
|
|
|
2023
|
2022
|
|
|
|
Debt
|
Interest on
debt
|
Debt
|
Interest
on debt
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Due in less than one
year
|
|
(1,653,521)
|
(255,851)
|
(2,146,841)
|
(284,699)
|
|
Between one and two
years
|
|
(651,721)
|
(232,134)
|
(1,717,473)
|
(265,864)
|
|
Between two and three
years
|
|
(1,477,233)
|
(206,065)
|
(665,129)
|
(241,210)
|
|
Between three and four
years
|
|
(307,770)
|
(189,121)
|
(1,507,627)
|
(214,605)
|
|
Between four and five
years
|
|
(985,561)
|
(178,733)
|
(307,770)
|
(197,311)
|
|
Between five and ten
years
|
|
(2,444,927)
|
(659,125)
|
(3,339,132)
|
(889,211)
|
|
Greater than 10 years
|
|
(2,229,902)
|
(680,716)
|
(2,298,602)
|
(706,994)
|
|
|
|
|
|
|
|
|
Gross contractual cash
flows
|
|
(9,750,635)
|
(2,401,745)
|
(11,982,574)
|
(2,799,894)
|
18. Adjustments reconciling operating profit to
operating cash flows
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Operating profit for the
year
|
|
17,532
|
11,697
|
|
(Increase) / decrease in other
receivables
|
|
8,007
|
28,881
|
|
Increase / (decrease) in other
payables
|
|
(6,170)
|
(32,344)
|
|
Taxation paid
|
|
(2,223)
|
(3,079)
|
|
Exchange adjustments
|
|
535
|
(2,885)
|
|
Amortisation of bond
costs
|
|
11,687
|
31,891
|
|
Reclassification of cash flow
hedges to the income statement
|
2,406
|
5,584
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
|
31,774
|
39,745
|
19. Reconciliation of net cash flow to movement in net
(debt) / surplus
|
|
Other
assets
|
Liabilities from financing
activities
|
|
|
|
Cash and cash
equivalents
|
Amounts owed by Group
undertakings
|
Borrowings - due within one
year
|
Borrowings - due after 1
year
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Net surplus as at 1 January
2022
|
4
|
15,614,287
|
(2,595,811)
|
(12,917,825)
|
100,655
|
|
Cash flows
|
(3)
|
(4,375,021)
|
2,821,090
|
1,593,679
|
39,746
|
|
Foreign exchange
adjustments
|
-
|
791,424
|
(181,231)
|
(607,309)
|
2,884
|
|
Other non-cash
adjustments:
|
|
|
|
|
|
|
Re-classification (long-term to
short-term)
|
-
|
-
|
(2,188,909)
|
2,188,909
|
-
|
|
Amortisation
|
-
|
-
|
(1,091)
|
(30,801)
|
(31,892)
|
|
|
|
|
|
|
|
|
Net surplus as at 31 December
2022
|
1
|
12,030,690
|
(2,145,952)
|
(9,773,347)
|
111,393
|
|
|
|
|
|
|
|
|
Net surplus as at 1 January 2023
|
1
|
12,030,690
|
(2,145,952)
|
(9,773,347)
|
111,393
|
|
Cash flows
|
-
|
(1,996,159)
|
2,115,423
|
(87,490)
|
31,774
|
|
Foreign exchange
adjustments
|
-
|
(204,275)
|
50,053
|
153,687
|
(535)
|
|
Other non-cash
adjustments:
|
|
|
|
|
|
|
Re-classification (long-term to
short-term)
|
-
|
-
|
(1,669,354)
|
1,669,354
|
-
|
|
Amortisation
|
-
|
-
|
(1,851)
|
(9,836)
|
(11,687)
|
|
|
|
|
|
|
|
|
Net surplus as at 31 December 2023
|
1
|
9,830,256
|
(1,651,681)
|
(8,047,632)
|
130,945
|
20. Called up share capital
|
|
2023
|
2022
|
2023
|
2022
|
|
|
Number of
shares
|
Number
of
shares
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Authorised
|
|
|
|
|
|
Ordinary shares of £1 each (2022:
£1 each)
|
100,000
|
100,000
|
100
|
100
|
|
|
|
|
|
|
|
Issued and fully paid
|
|
|
|
|
|
Ordinary shares of £1 each (2022:
£1 each)
|
100,000
|
100,000
|
100
|
100
|
21. Other reserves
|
|
|
Other
reserves
|
Retained
earnings
|
Total
reserves
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
At 1 January 2023
|
|
(8,902)
|
128,450
|
119,548
|
|
Transferred from income and expense
in the year
|
-
|
-
|
13,412
|
|
Reclassification of cash flow
hedges to the income statement
|
3,708
|
2,406
|
-
|
|
Deferred tax effect of cash flow
hedges
|
|
(601)
|
-
|
(601)
|
|
|
|
|
|
|
|
At 31 December 2023
|
|
(8,902)
|
128,450
|
119,548
|
The cash flow hedge reserve
relates to the cumulative fair value changes of derivatives that
arose from pre-hedging fluctuations in long-term interest rates
when pricing bonds issued in prior and current years. The balance
is reclassified to finance costs over the life of the subsequently
issued bonds.
|
|
|
Amount reclassified to profit or loss
|
|
|
Hedging gains / (losses)
recognised in reserves
|
Hedged future cash flows no
longer expected to occur
|
As hedged item affects profit
or loss
|
Line item in which
reclassification adjustment is included
|
|
2023
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Pre-hedging of long-term interest
rates
|
(7,097)
|
-
|
2,406
|
Finance
income / (expense)
|
|
|
|
|
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Pre-hedging of long-term interest
rates
|
(8,902)
|
-
|
5,584
|
Finance
income / (expense)
|
22. Contingent liabilities/assets
Group banking arrangement
The Company, together with fellow
Group undertakings, has entered into a Group banking arrangement
with the Company's principal bank. The bank holds the right
to pay and apply funds from any account of the Company to settle
any indebtedness to the bank of any other party to this
agreement. The Company's maximum potential liability as at 31
December 2023 is limited to the amount held on its accounts with
the bank. No loss is expected to accrue to the Company from the
agreement.
23. Directors' remuneration
During the year, the Directors of
the Company, with the exception of the Corporate Directors, were
remunerated as executives of the Group and received no remuneration
in respect of their services to the Company (2022: £nil). Corporate
Directors received no remuneration during the year, either as
executives of the Group or in respect of their services to the
Company (2022: £nil).
24. Related party transactions
As a wholly owned subsidiary of
the ultimate parent company, GSK plc, advantage has been taken of
the exemption afforded by FRS 101 "Reduced disclosure framework"
not to disclose any related party transactions with other wholly
owned members of the Group, or information around remuneration of
key management personnel compensation.