Financial statements In this section Directors’ statement of responsibilities 128 Independent Auditor’s report 129 Financial statements 132 Notes to the financial statements 136 Financial statements of GlaxoSmithKline plc prepared under UK GAAP 211 GSK Annual Report 2013 127 Financial statements Directors’ statement of responsibilities Directors’ statement of responsibilities in relation to the Group financial statements The Directors are responsible for preparing the Annual Report, the Disclosure of information to auditors Remuneration Report and the Group financial statements in The Directors in office at the date of this Report have each confirmed accordance with applicable law and regulations. that: UK Company law requires the Directors to prepare financial so far as he or she is aware, there is no relevant audit information statements for each financial year. Under that law the Directors are of which the company’s auditors are unaware; and required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted he or she has taken all the steps that he or she ought to have taken by the European Union. In preparing the Group financial statements, as a Director to make himself or herself aware of any relevant audit the Directors have also elected to comply with IFRS, as issued by the information and to establish that the company’s auditors are aware International Accounting Standards Board (IASB). Under company of that information. law the Directors must not approve the Group financial statements This confirmation is given and should be interpreted in accordance unless they are satisfied that they give a true and fair view of the state with the provisions of section 418 of the Companies Act 2006. of affairs of the Group and of the profit or loss of the Group for that period. Going concern basis In preparing those financial statements, the Directors are required to: Pages 58 to 74 contain information on the performance of the Group, its financial position, cash flows, net debt position and borrowing select suitable accounting policies and then apply them facilities. Further information, including Treasury risk management consistently; policies, exposures to market and credit risk and hedging activities, is make judgements and accounting estimates that are reasonable given in Note 41 to the financial statements, ‘Financial instruments and prudent; and related disclosures’. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to state that the Group financial statements comply with IFRS as continue in operational existence for the foreseeable future. For this adopted by the European Union and IFRS as issued by the IASB, reason, they continue to adopt the going concern basis in preparing subject to any material departures disclosed and explained in the financial statements. the Group financial statements. The Directors are responsible for keeping adequate accounting Internal control records that are sufficient to show and explain the company’s The Board, through the Audit & Risk Committee, has reviewed the transactions and disclose with reasonable accuracy at any time the assessment of risks and the internal control framework that operates financial position of the Group and to enable them to ensure that the in GSK and has considered the effectiveness of the system of internal Group financial statements and the Remuneration Report comply control in operation in the Group for the year covered by this report with the Companies Act 2006 and Article 4 of the IAS Regulation. and up to the date of its approval by the Board of Directors. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and The UK Corporate Governance Code detection of fraud and other irregularities. The Board considers that GlaxoSmithKline plc applies the principles The Group financial statements for the year ended 31 December and provisions of the UK Corporate Governance Code maintained 2013, comprising principal statements and supporting notes, are set by the Financial Reporting Council, as described in the Corporate out in ‘Financial statements’ on pages 132 to 210 of this report. The Governance section on pages 82 to 95, and has complied with its responsibilities of the auditors in relation to the Group financial provisions. The Board further considers that the Annual Report, taken statements are set out in the Independent Auditors’ report on pages as a whole, is fair, balanced and understandable, and provides the 129 to 131. information necessary for shareholders to assess the Group’s performance, business model and strategy. The Group financial statements for the year ended 31 December 2013 are included in the Annual Report, which is published in printed As required by the Financial Conduct Authority’s Listing Rules, the form and made available on our website. The Directors are auditors have considered the Directors’ statement of compliance in responsible for the maintenance and integrity of the Annual Report on relation to those points of the UK Corporate Governance Code which our website in accordance with UK legislation governing the are specified for their review. preparation and dissemination of financial statements. Access to the Annual Report website is available from outside the UK, where comparable legislation may be different. The Annual Report for the year ended 31 December 2013, comprising the Report of the Directors, the Remuneration Report, the Each of the current Directors, whose names and functions are listed Financial statements and additional information for investors, has in the Corporate Governance section of the Annual Report 2013 been approved by the Board of Directors and signed on its behalf by confirms that, to the best of his or her knowledge: the Group financial statements, which have been prepared in accordance with IFRS as adopted by the EU and IFRS as issued by the IASB, give a true and fair view of the assets, liabilities, Sir Christopher Gent financial position and profit of the Group; and Chairman 26 February 2014 the Strategic Report and risk sections of the Annual Report include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces. 128 GSK Annual Report 2013 Independent Auditors’ report to the members of GlaxoSmithKline plc Our opinion Overview of our audit approach In our opinion, the Group financial statements defined below: Materiality HJWFBUSVFBOEGBJSWJFXPGUIFTUBUFPGUIF(SPVQµTBGGBJSTBU We set certain thresholds for materiality. These helped us to December 2013 and of the Group’s profit and cash flows for the determine the nature, timing and extent of our audit procedures and year then ended; to evaluate the effect of misstatements, both individually and on the financial statements as a whole. IBWFCFFOQSPQFSMZQSFQBSFEJOBDDPSEBODFXJUI*OUFSOBUJPOBM Financial Reporting Standards (IFRSs) as adopted by the Based on our professional judgement, we determined materiality for European Union; and the Group financial statements as a whole to be £332 million which represents 5% of profit before taxation. IBWFCFFOQSFQBSFEJOBDDPSEBODFXJUIUIFSFRVJSFNFOUTPGUIF Companies Act 2006 and Article 4 of the IAS Regulation. We agreed with the Audit & Risk Committee that we would report to This opinion is to be read in the context of what we say in the them misstatements identified during our audit above £10 million as remainder of this report. well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Separate opinion in relation to IFRSs as issued by the IASB Overview of the scope of our audit As explained in Note 1 to the financial statements, the Group, in The Group financial statements are a consolidation of reporting units, addition to applying IFRSs as adopted by the European Union, has comprising the Group’s operating businesses and centralised also applied IFRSs as issued by the International Accounting functions. Standards Board (IASB). In establishing the overall approach to the Group audit, we In our opinion, the Group financial statements comply with IFRSs as determined the type of work that needed to be performed at the issued by the IASB. reporting units by us, as the Group audit team, or by component What we have audited auditors within PwC UK and from other PwC network firms operating under our instruction. Where the work was performed by component The Group financial statements, which are prepared by auditors, we determined the level of involvement we needed to have GlaxoSmithKline plc, comprise: in the audit work at those reporting units to be able to conclude UIF(SPVQCBMBODFTIFFUBU%FDFNCFS whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole. UIF(SPVQJODPNFTUBUFNFOUBOETUBUFNFOUPGDPNQSFIFOTJWF income for the year then ended; We identified 28 reporting units which, in our view, required an audit of their complete financial information, either due to their size or their UIF(SPVQTUBUFNFOUPGDIBOHFTJOFRVJUZBOETUBUFNFOUPGDBTI risk characteristics. Specific audit procedures on certain specified flows for the year then ended; and balances and transactions were performed at a further 26 reporting UIFOPUFTUPUIF(SPVQ¾OBODJBMTUBUFNFOUT XIJDIJODMVEFB units. Together with additional procedures performed at the Group summary of significant accounting