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Reckitt Benckiser Group PLC — Annual Report 2019
May 13, 2020
4872_prs_2020-05-13_c92e8d0d-15c7-462a-920a-c5be044bf6a7.pdf
Annual Report
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Report and Financial Statements
Year Ended
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$\bar{\bar{1}}$
31 December 2019
Company Number 05960843
Company Information
| Directors | Adrian Nevil Hennah John Dixon Simon Andrew Neville Jonathan Timmis |
|
|---|---|---|
| Company Secretary | Christine Anne-Marie Logan | |
| Registered Number | 05960843 | |
| Registered Office | 103-105 Bath Road Slough Berkshire SL 1 3UH |
|
| Independent Auditor | KPMG LLP 15 Canada Square London E14 5GL |
|
| Contents | |
|---|---|
| ---------- | -- |
| Page | |
|---|---|
| Strategic Report | $1 - 4$ |
| Directors' Report | $5 - 7$ |
| Independent Auditor's Report to the Members of Reckitt Benckiser Treasury Services pic |
$8 - 12$ |
| Statement of Comprehensive Income | 13 |
| Balance Sheet | 14 |
| Statement of Changes in Equity | 15 |
| Notes to the Financial Statements | $16 - 42$ |
Strategic Report For the Year Ended 31 December 2019
The Directors of Reckitt Benckiser Treasury Services plc (the "Company") present their Strategic Report for the year ended 31 December 2019.
Principal activities
The principal activity of the Company is to provide financing to the Reckitt Benckiser group of companies (the "Group"), including to act as a finance company for other Group companies. It also holds investments in other Group entities. The Company carries out the strategy intended by the Company Directors.
Business review
Review of the business
Given the straightforward nature of the business, the Company's Directors are of the opinion that analysis using KPIs is not necessary for an understanding of the development, performance or position of the business.
Principal risks and uncertainties
The principal risks and uncertainties of the Company are integrated with the principal risks of the Group and are not managed separately. Accordingly, the principal risks and uncertainties of Reckitt Benckiser Group plc, which include those of the Company, are discussed on pages 64 - 76 of the Group's 2019 Annual Report and Financial Statements which do not form part of this report. In addition, those principal risks and uncertainties of the Group, that also represent those of the Company, are discussed in the financial instruments note 13 to these Financial Statements.
Financial risk management
The Company is a subsidiary undertaking within the Group. Cash funds of the Group are managed at Group level. Interest is received/paid by the Company on certain loans with other Group companies, on bonds, on commercial paper and term loans.
Liquidity and interest rate risk
The Company's arrangements with the Group, as described above, ensure it can access the funds needed to meet its liquidity requirements as cash can be obtained through Group funding and external borrowings. Interest receivable/payable on loans with other Group companies, bonds, commercial paper and term loans are calculated at both fixed and floating rates of interest. The Group's liquidity requirements and interest rate risks are managed at a Group level.
Currency risk
The Company's functional currency is Sterling and its Financial Statements are also presented in Sterling. Some transactions undertaken by the Company are denominated in currencies other than Sterling. The Company's policy is to actively manage its exposure to currency risk and to minimise this risk. The Company purchases derivatives, including the use of forward contracts to manage its exposure to foreign currency debt, as part of its treasury management activities. As at 31 December 2019, the net derivative value was a liability of £209,085k (2018 - liability of £110,292k)
Credit risk
The Company has no significant concentrations of credit risk. Financial Institution counterparties are subject to approval under the Group's counterparty risk policy and such approval is limited to financial institutions with a BBB rating or above. The amount of exposure to any individual counterparty is subject to a limit defined within the counterparty risk policy, which is reassessed annually by the Board of Reckitt Benckiser Group plc. Amounts owing from companies in the Group are usually remitted within the Company's standard credit terms.
Strategic Report (continued) For the Year Ended 31 December 2019
COVID-19
The spread of Coronavirus disease 2019 (COVID-19) represents one of the most serious global health emergencies in the last 100 years, with the pandemic having now reached over 120 countries.
As a leader in both hygiene and health, the Group is uniquely positioned to provide tangible assistance to consumers, governments and healthcare authorities. Demand for certain Group products has increased substantially in Q1 2020, and the Group is currently working to increase the level of available supply. At present, the Group's supply chains and distribution channels are proving both resilient and flexible, though there has been some unavoidable disruption in many parts of the world. At the same time, as the situation develops, it is likely that the Group will experience increased levels of disruption, particularly in those countries and regions that are hardest hit. Longer term, the economic consequences associated with COVID-19 are difficult to predict, however they may lead to weakened demand for some RB products.
As set out on page 77 of its 2019 Annual Report and Financial Statements, the Group assessed the impact of COVID-19 on its going concern and viability statement. This assessment concluded that, even with COVID-19 and the occurrence of other unexpected scenarios, the Group would still have sufficient funds to trade, settle its liabilities as they fall due, and remain compliant with financial covenants.
Based on this assessment updated to 7 April 2020, and given the nature of the Company's operations, the Directors remain satisfied that both the Company's investments (refer Note 7) and amounts owed by Group undertakings (refer Note 8) are unlikely to be materially impacted by COVID-19, and that the Company will not need to take responsive steps to continue functioning as a going concern.
Statement under section 172 of the Companies Act 2006
This statement, which forms part of the Strategic Report, is intended to show how the Directors have approached and met their responsibilities under s172 Companies Act 2006 during 2019. The statement has been prepared in response to the obligations as set out in the Companies (Miscellaneous Reporting) Requlations 2018.
As required by s172 of the UK Companies Act 2006, a Director of a Company must act in a way s/he considers, in good faith, would most likely promote the success of the company for the benefit of its shareholders. In doing this, the Director must have regard, amongst other matters, to the:
- likely consequences of any decisions in the long term;
- interests of the Company's employees:
- need to foster the Company's business relationships with suppliers, customers and others;
- impact of the Company's operations on the community and environment;
- Company's reputation for high standards of business conduct; and
- need to act fairly as between members of the Company.
Strategic Report (continued) For the Year Ended 31 December 2019
Statement under section 172 of the Companies Act 2006 (continued)
In discharging our section 172 duties we have regard to the factors set out above. In addition, we also have regard to other factors which we consider relevant to the decision being made. As a Board our aim is always to uphold the highest standards of governance and conduct, taking decisions in the interests of the long-term sustainable success of the Company, generating value for our shareholders and contributing to wider society. Understanding our stakeholders is key to ensuring the Board can have informed discussions and factor stakeholder interests into decision-making. Those factors, for example, include the interests and views of other members of our Group and our relationship with our lenders. By considering the Company's purpose and values, together with its strategic priorities and having a process in place for decision-making, we aim to make sure that our decisions are consistent and appropriate in all the circumstances. In particular:
- The strategy of the Group applies to the Company, as a member of the Group, and shapes the Company's business operations and activities. Details of the Group's long-term strategy can be found on pages 6 to 15 of the Group's 2019 Annual Report, which is available at www.rb.com.
- We understand the importance of engaging with, and understanding the perspectives of, our workforce. We also recognise the benefits of personal interaction and informal discussions in learning more about the dayto-day operations; the development and execution of strategy and gathering direct insight into our culture and workforce engagement. For further details on how the Company has engaged with employees, please see page 6 of the Directors' Report.
- The Company is committed to responsible and ethical corporate behaviour. This includes high standards of business conduct in our relationships. The Company operates under documented treasury controls and policies approved by the Group, together with other Group policies, including the Group's Code of Business Conduct, Global Anti-Bribery Policy and Global Anti-Money Laundering Policy and processes are in place to ensure compliance therewith.
We delegate authority for day-to-day management of the Company to executives and then engage management in setting, approving and overseeing execution of the business strategy and related policies. Board meetings are held periodically where the Directors consider the Company's activities and make decisions. As a part of those meetings the Directors receive information on section 172 matters when making relevant decisions. During the year the decisions taken by the Company included the approval of the audited financial statements for the year ended 31 December 2018 and entry into and management of loan arrangements with financial institutions and with other members of the Group. In making our decisions we considered a range of factors. These included the long-term viability of the Company; its expected cash flow and financing requirements; the ongoing need for strategic investment in our business and the expectations of the Group.
As the principal activity of the Company is to provide loan facilities to fellow subsidiary undertakings, the breadth of stakeholder and other considerations that would often apply in operating or commercial trading companies have generally not applied to the decisions made by the Directors.
Results for the year and movement on reserves
The Financial Statements for the year ended 31 December 2019 show a profit of £134,190k (2018 - profit of £114.655k). The profit for the year has been added to reserves (2018 - added to reserves). As at 31 December 2019 the Company has net assets of £5,103,517k (2018: £4,970,723k).
Strategic Report (continued)
For the Year Ended 31 December 2019
Future developments
No significant change in the business of the Company has taken place during the year or is expected in the immediately foreseeable future.
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This report was approved by the Board on 7 April 2020 and signed on its behalf by: Simon Angrew Neville ກົ້irector
Directors' Report to the members of Reckitt Benckiser Treasury Services plc For the Year Ended 31 December 2019
The Directors present their report and the audited Financial Statements for the year ended 31 December 2019.
Directors
The Directors of the Company who held office during the year and up to the date of signing of the Financial Statements, unless otherwise stated, were:
Adrian Nevil Hennah John Dixon Simon Andrew Neville Jonathan Timmis
Directors' indemnity
On 28 July 2009, Reckitt Benckiser Group plc executed a deed poll of indemnity for the benefit of each individual who is, at any time on, or after 28 July 2009, an officer of Reckitt Benckiser Group plc and/or any company within the Group in respect of costs of defending claims against them and liabilities suffered or incurred by them.
Statement of Directors' responsibilities in respect of the Strategic Report, the Directors' Report and the Financial Statements
The Directors are responsible for preparing the Strategic Report, the Directors' Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law they have elected to prepare the Financial Statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework.
Under company law the 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:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;
- assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern: and
- use the going concern basis of accounting unless they either intend to liguidate the Company or to cease operations, or have no realistic alternative but to do so.
The Directors are 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. They are responsible for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, and Corporate Governance Statement that complies with that law and those regulations.
Directors' Report to the members of Reckitt Benckiser Treasury Services plc (continued) For the Year Ended 31 December 2019
Responsibility Statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
- the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
- the Directors' Report/Strategic Report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.
Employees
The Company is committed to the principle of equal opportunity in employment. No applicant or employee receives less favourable treatment on the grounds of nationality, age, gender, religion, race, ethnicity or disability. The Company recognises its responsibilities to disabled persons and endeavours to assist them to make their full contribution at work. Where employees become disabled, every practical effort is made to allow them to continue in their jobs and to arrange appropriate training. It is essential to the continued improvement in efficiency and productivity throughout the Group that each employee understands the Group's strategies, policies and procedures. Open and regular communication with employees at all levels is an essential part of the management process. A continuing programme of training and development reinforces the Group's commitment to employee development.
Results for the year and movement on reserves
The Company's results for the year and movements on reserves are included in the Strategic Report on page 3.
Other information
Disclosures in respect of financial instruments are made in note 13.
Disclosures made in respect to post balance sheet events are made in note 20.
Corporate Governance Considerations
Disclosures required under the Disclosure and Transparency Rules ("DTR")
Statutory Reporting
The monitoring of the financial reporting and statutory audit of the Group, which includes the Company, is discussed on pages 103 to 110 of the Reckitt Benckiser Group plc Annual Report 2019.
Other required disclosures
For the 12 months ended 31 December 2019, the Company did not have any securities carrying voting rights admitted to trading on a regulated market and therefore disclosures required by paragraph 13 for Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) are not applicable.
Financial risk management
The Company's approach to managing financial risk is included in the Strategic Report on page 1.
Directors' Report to the members of Reckitt Benckiser Treasury Services plc (continued) For the Year Ended 31 December 2019
Future developments
No significant change in the business of the Company has taken place during the year or is expected in the immediately foreseeable future.
Going concern
The Company participates in the Group's centralised treasury arrangements and so shares the banking arrangements with its parent and fellow subsidiaries.
On the basis of their assessment of the Company's financial position and of the enquiries made of the Directors of Reckitt Benckiser Group plc, the Company's Directors have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual Financial Statements.
Independent auditors
The Company has adopted Articles which are compliant with provisions of the Companies Act 2006 and is therefore not required to hold annual general meetings to lay Financial Statements before the shareholders nor to reappoint the auditors annually.
Political contributions
Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during the year.
Disclosure of information to auditor
Each of the persons who are Directors at the time when this Directors' Report to the members of Reckitt Benckiser Treasury Services plc is approved has confirmed that:
- so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
- the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audinfinformation and to establish that the Company's auditor is aware of that information.
approved by the Board on 7 April 2020 and signed on its behalf by: This report wa
Simon And Neville Director
Independent Auditor's Report to the Members of Reckitt Benckiser Treasury Services plc
1 Our opinion is unmodified
We have audited the Financial Statements of Reckitt Benckiser Treasury Services plc ("the Company") for the year ended 31 December 2019 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and the related notes, including the accounting policies in note 1.
In our opinion the Financial Statements:
- give a true and fair view of the state of the Company's affairs as at 31 December 2019 and of the profit for the year then ended:
- have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
We were first appointed as auditor by the Directors on 17 May 2019. The period of total uninterrupted engagement is for the two financial years ended 31 December 2019. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with. UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided.
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the Financial Statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including 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. We summarise below the key audit matter (unchanged from 2018), in arriving at our audit opinion above, together with our key audit procedures to address that matter and, as required for public interest entities, our results from those procedures. This matter was addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the Financial Statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter.
Independent Auditor's Report to the Members of Reckitt Benckiser Treasury Services plc (continued)
| : The risk | : Our response | |
|---|---|---|
| Recoverability | of : Reliance on support | Our procedures included: |
| amounts owed by: | Funding assessment: Challenging the : |
|
| Group undertakings : The carrying amount of the : financial capacity of the ultimate parent and the Group : | ||
| amounts | owed by Group: it heads, including inspection of the Group's latest: | |
| E44,954,829,000 £ | : undertakings is significant and at : available audited accounts; considering the possible : | |
| : (2018: | : risk of irrecoverability due to the : impacts of COVID-19 and the ability of the ultimate: | |
| E42,113,589,000) | : net current liabilities of certain : parent to provide financial support. | |
| : Refer to: note |
1: entities that the Company lends :- Evaluating intent: Challenging the Directors': | |
| : (accounting | policy): to. The Company is reliant on assessment of the intention of the ultimate parent to: | |
| and note 8 (financial: support - provided - by - their: provide such financial support by considering the: | ||
| disclosures) | Eultimate parent to the relevant Group's history of providing support and the $\colon$ |
|
| Group undertaking in assessing commercial advantages and disadvantages to the | ||
| recoverability of the balance. | : ultimate parent of providing such support. | |
| Assessing transparency: Assessing the: | ||
| adequacy of the Company's disclosures in respect of: | ||
| amounts owed by Group undertakings. | ||
| : Our results: We found the Company's assessment of : | ||
| the recoverability of the amounts owed by Group: | ||
| : undertakings to be acceptable. | ||
3 Our application of materiality and an overview of the scope of our audit
Materiality for the Financial Statements as a whole was set at £486m (2018: £460m), determined with reference to a benchmark of total assets of which it represents 1.0% (2018:1.0%). We consider total assets to be the most appropriate benchmark given the Company's primary activity is the financing of other Group companies.
We agreed to report to the Board of Directors any corrected or uncorrected identified misstatements exceeding £23.7m (2018: £23m), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Independent Auditor's Report to the Members of Reckitt Benckiser Treasury Services plc (continued)
4 We have nothing to report on going concern
The Directors have prepared the Financial Statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the Financial Statements ("the going concern period").
Our responsibility is to conclude on the appropriateness of the Directors' conclusions and, had there been a material uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a quarantee that the Company will continue in operation.
In our evaluation of the Directors' conclusions, we considered the inherent risks to the Company's business model and analysed how those risks might affect the Company's financial resources or ability to continue operations over the going concern period.
The risks that we considered most likely to adversely affect the Company's available financial resources over this period were as a consequence on the rest of the Group being:
In relation to the COVID-19 pandemic, disruption at one or more of the Group's key production facilities, the viability of key suppliers and customers, and the impact on consumer demand for the Group's brands;
A product safety issue leading to reputational damage with customers, consumers or regulators; and
The impact of a significant business continuity issue affecting the Group's manufacturing facilities or those of its suppliers.
As these were risks that could potentially cast significant doubt on the wider Group's ability to continue as a going concern, we considered sensitivities over the level of available financial resources available to the Company indicated by the Group's financial forecasts taking account of reasonably possible (but not unrealistic) adverse effects that could arise from these risks individually and collectively and evaluated the achievability of the actions the Directors consider they would take to improve the position should the risks materialise. We also considered less predictable but realistic second order impacts on the Group, such as erosion of customer or supplier confidence or a cyber-security attack, which could result in a rapid reduction of available financial resources.
Based on this work, we are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the Financial Statements.
We have nothing to report in these respects, and we did not identify going concern as a key audit matter. .
5 We have nothing to report on the other information in the Report and Financial Statements
The Directors are responsible for the other information presented in the Report and Financial Statements. Our opinion on the Financial Statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our Financial Statements audit work, the information therein is materially misstated or inconsistent with the Financial Statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.
Independent Auditor's Report to the Members of Reckitt Benckiser Treasury Services plc (continued)
Strategic Report and Directors' Report
Based solely on our work on the other information:
- we have not identified material misstatements in the Strategic Report and the Directors' Report;
- in our opinion the information given in those reports for the financial year is consistent with the Financial Statements: and
- in our opinion those reports have been prepared in accordance with the Companies Act 2006.
6 We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
- adequate accounting records have not been kept by the Company, 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; or
- certain disclosures of Directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
7 Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 5, the Directors are responsible for: the preparation of the Financial Statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error; 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 they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
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 other irregularities (see below), or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Statements.
| A fuller description of our responsibilities is provided on the FRC's website at | ||||||
|---|---|---|---|---|---|---|
| www.frc.org.uk/auditorsresponsibilities. |
Irregularities - ability to detect
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the Financial Statements from our general commercial and sector experience (as required by auditing standards) and discussed with the Directors and other management the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the Financial Statements varies considerably.
The Company is subject to laws and requlations that directly affect the Financial Statements including financial reporting legislation (including related companies legislation), distributable profits legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related Financial Statement items.
Independent Auditor's Report to the Members of Reckitt Benckiser Treasury Services plc (continued)
Whilst the Company is subject to many other laws and requiations, we did not identify any others where the. consequences of non-compliance alone could have a material effect on amounts or disclosures in the Financial Statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the Financial Statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the Financial Statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
8 The purpose of our audit work and to whom we owe our responsibilities
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.
! Ricoltett
Richard Broadbelt (Senior Statutory Auditor) For and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants
15 Canada Square London F14 5GL
07 April 2020
2019 2018 Note £000 £000 Administrative expenses $(1,402)$ $(1, 458)$ Operating loss $(1,402)$ $(1, 458)$ Interest receivable and similar income 724,820 626,931 $\overline{\mathbf{4}}$ $\overline{\mathbf{5}}$ Interest payable and similar charges $(560, 913)$ $(476, 955)$ $3-5$ Profit before tax 162,505 148,518 Tax on profit $\boldsymbol{6}$ $(28, 315)$ $(33, 863)$ Profit for the financial year 134,190 114,655 Other comprehensive (loss)/income: (Losses)/gains on cash flow hedges (net of tax) $(1, 396)$ 1,506 132,794 116,161 Total comprehensive income
Statement of Comprehensive Income For the Year Ended 31 December 2019
The notes on pages 16 to 42 form part of these Financial Statements.
All amounts in the current and prior year relate to continuing operations.
All amounts included in other comprehensive income may be reclassified to profit or loss in subsequent years.
Reckitt Benckiser Treasury Services plc
Registered number: 05960843
| As at 31 December 2019 | |||||
|---|---|---|---|---|---|
| Note | 2019 £000 |
2018 £000 |
|||
| Fixed Assets | |||||
| Investments | $\overline{7}$ | 3,610,237 | 3,610,237 | ||
| Current Assets | |||||
| Debtors due after more than one year | 8,13 | 520,604 | 1,161,563 | ||
| Debtors due within one year | 8,13 | 44,485,556 | 40,995,414 | ||
| Current asset investments | 9,13 | 23,700 | 128,974 | ||
| Cash at bank and in hand | 10,13 | 16,262 | 14,569 | ||
| 45,046,122 | 42,300,520 | ||||
| Creditors due within one year | 11, 13 | (36, 525, 861) | (32, 633, 181) | ||
| Net Current Assets | 8,520,261 | 9,667,339 | |||
| Total Assets less Current Liabilities | 12,130,498 | 13,277,576 | |||
| Creditors due after more than one year | 12,13 | (7,026,981) | (8,306,853) | ||
| Net Assets | 5,103,517 | 4,970,723 | |||
| Equity | |||||
| Share capital | 15 | 2,000 | 2,000 | ||
| Share premium | 3,975,335 | 3,975,335 | |||
| Other reserves | (499) | 897 | |||
| Retained earnings | 1,126,681 | 992,491 | |||
| Total Equity | 5 103 517 | 4,970,723 |
Balance Sheet
The notes on pages 16 to 42 form part of these Financial Statements.
The Financial Statements on pages 13 to 42 were approved and authorised for issue by the Board and were signed on its behalf on 7 April 2020 by:
Simon Andrew Neville Director
| Share capital |
Share premium |
Other reserves |
Retained earnings |
Total equity |
|---|---|---|---|---|
| £000 | ||||
| 2.000 | 3.975.335 | 897 | 992.491 | 4,970,723 |
| 134.190 | 134.190 | |||
| (1, 396) | (1, 396) | |||
| $ \cdot$ | (1, 396) | 134.190 | 132,794 | |
| 2,000 | 3,975,335 | (499) | 1,126,681 | 5.103.517 |
| £000 | £000 | £000 | £000 |
Statement of Changes in Equity
For the Year Ended 31 December 2019
Included in other reserves are movements on cash flow hedges, net of tax.
Statement of Changes in Equity For the Year Ended 31 December 2018
| Share capital |
Share premium |
Other reserves |
Retained earnings |
Total equity | |
|---|---|---|---|---|---|
| £000 | £000 | £000 | £000 | £000 | |
| At 1 January 2018 | 2,000 | 3.975.335 | (609) | 877,836 | 4.854.562 |
| Comprehensive income | |||||
| Profit for the financial year | 114,655 | 114,655 | |||
| Movements in hedging reserve (net of tax) |
1,506 | 1,506 | |||
| Total comprehensive income | 1,506 | 114.655 | 116.161 | ||
| Total transactions with owners | |||||
| Balance at 31 December 2018 | 2.000 | 3.975.335 | 897 | 992.491 | 4,970,723 |
Included in other reserves are movements on cash flow hedges, net of tax.
The notes on pages 16 to 42 form part of these Financial Statements.
Notes to the Financial Statements For the Year Ended 31 December 2019
$\ddot{\mathbf{1}}$ . Accounting Policies
The principal accounting policies are summarised below. They have been applied consistently throughout the year and the preceding year.
$\lambda$
1.1 General Information
Reckitt Benckiser Treasury Services plc is a public limited company, limited by shares and is incorporated in England and Wales. The address of the registered office is given on the Company Information page at the beginning of these statutory Financial Statements. The nature of the Company's operations and its principal activities are set out in the Strategic Report on pages 1 to 4.
1.2 Statement of Compliance
The Financial Statements have been prepared on a going concern basis, under the historical costs convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and in compliance with United Kingdom Accounting Standards, comprising Financial Reporting Standard 101, Reduced Disclosure Framework and the Companies Act 2006.
1.3 Basis of Preparation
The preparation of Financial Statements in compliance with Financial Reporting Standard 101 Reduced Disclosure Framework requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 2).
1.4 Going concern
The Company participates in the Group's centralised treasury arrangements and so shares the banking arrangements with its parent and fellow subsidiaries.
On the basis of their assessment of the Company's financial position and of the enquiries made of the Directors of Reckitt Benckiser Group plc, the Company's Directors have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual Financial Statements.
1.5 Changes in accounting policy and disclosure
There are no new standards, amendments or interpretations from 1 January 2019, which have been adopted for the first time and have a significant impact on the accounting policies applied in preparing the Company's Financial Statements.
A number of new standards are effective for annual periods beginning on or after 1 January 2020 and earlier application is permitted; however, the Company has not early adopted the new or amended standards in preparing these Financial Statements.
The following amended standards and interpretations are not expected to have a significant impact on the Company's Financial Statements:
- Amendments to References to Conceptual Framework in IFRS Standards.
- Definition of a Business (Amendments to IFRS 3).
- Definition of Material (Amendments to IAS 1 and IAS 8).
- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).
Notes to the Financial Statements For the Year Ended 31 December 2019
$\overline{\mathbf{1}}$ . Accounting Policies (continued)
1.6 Financial Reporting Standard 101 - Reduced Disclosure Exemptions
The Company has taken advantage of the following disclosure exemptions in preparing these Financial Statements, as permitted by FRS 101 for qualifying entities:
- The requirements of IAS 7 Statement of Cash Flows;
- The requirements in IAS 24 Related Party Disclosures not to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member;
- The requirements of paragraphs 17 and 18A of IAS 24 Related Party Disclosures;
- The following paragraphs of IAS 1, 'Presentation of Financial Statements':
- 10(d), (Statement of Cash Flows),
- 16 (statement of compliance with all IFRS),
- -38A (requirement for minimum of two primary statements, including cash flow statements),
- 38B-D (additional comparative information),
- -40A-D (requirements for a third statement of financial position),
- 111 (cash flow statement information), and
- 134-136 (capital management disclosures).
- The requirements of paragraphs $130(f)(ii)$ , $130(f)(iii)$ , $134(d)$ to $134(f)$ and $135(c)$ to $135(e)$ of IAS 36 Impairment of Assets, provided that equivalent disclosures are included in the consolidated Financial Statements of the Group in which the entity is consolidated.
The Company's results are included in the publicly available consolidated Financial Statements of Reckitt Benckiser Group plc and these Financial Statements may be obtained from 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom, or at https://www.rb.com.
1.7 Consolidation
The Financial Statements contain information about Reckitt Benckiser Treasury Services plc as an individual company and do not contain consolidated financial information as the parent of a group. The Company is exempt under section 400 of the Companies Act 2006 from the requirement to prepare consolidated Financial Statements as it and its subsidiary undertakings are included in the consolidated Financial Statements of its ultimate parent company. Reckitt Benckiser Group plc, a company registered in England and Wales.
Notes to the Financial Statements For the Year Ended 31 December 2019
Accounting Policies (continued) $\overline{1}$ .
1.8 Foreign Currency Balances
The Company's functional and presentational currency is Sterling, therefore foreign currency is determined to be any other currency than Sterling.
Transactions denominated in foreign currencies are translated into Sterling at the rate of exchange on the day the transaction occurs. Monetary assets and liabilities denominated in a foreign currency are translated into Sterling at the exchange rate ruling on the Balance Sheet date. Resultant foreign exchange gains and losses are recorded in the Statement of Comprehensive Income for the financial vear.
1.9 Pension Commitments
The Company contributes to a defined contribution scheme on behalf of its employees. Payments to the scheme are recognised as an employee benefit expense in the year they are incurred.
1.10 Interest
Interest receivable is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably using the effective interest method. Interest receivable is credited to the Statement of Comprehensive Income on recognition. Interest payable is recognised when it is probable that the economic benefits will flow from the Company and the amount of expense can be measured reliably using the effective interest method. Interest payable is debited to the Statement of Comprehensive Income on recognition.
1.11 Provisions for liabilities
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Income Statement in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
1.12 Fixed Asset Investments
Investments in subsidiaries are held at cost less accumulated impairment losses.
A review for the potential impairment of an investment is carried out by the Directors if events or changes in circumstances indicate that the carrying value of the investment may not be recoverable.
1.13 Current Asset Investments
Current asset investments are included at amortised cost and include deposits and money market funds with a maturity of less than three months,
Notes to the Financial Statements For the Year Ended 31 December 2019
$\mathbf{1}$ Accounting Policies (continued)
1.14 Financial Instruments
Reckitt Benckiser Treasury Services plc may use derivatives to manage its exposure to fluctuating foreign exchange rates. The derivatives are initially recognised at fair value on the date the contract is entered into and are subsequently remeasured at fair value. Except for certain derivatives designated as cash flow hedges, all changes in fair value of derivative instruments are recognised immediately in profit or loss. The Company designates certain derivative financial instruments as cash flow hedges. The effective portion of changes in the fair value is initially recorded in OCI. Amounts recorded in other comprehensive income are recycled to profit or loss in the period in which the hedged item will affect profit or loss. Any gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
The Company recognises financial instruments when it becomes a party to the contractual arrangements of the instrument. Financial instruments are de-recognised when they are discharged or when the contractual terms expire. The Company's accounting policies in respect of financial instruments are explained below.
(a) Financial Assets
The Company recognises amounts owed by Group undertakings at amortised cost. The Company also recognises its derivative assets either as cash flow hedges or at fair value through profit or loss.
Amounts owed by Group undertakings are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of intra-Group funding. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
The Company applies the 'expected credit loss' (ECL) model under IFRS 9. The model applies to financial assets measured at amortised cost, contract assets and debt investments at fair value through OCI, but not to investments in equity instruments. Measurement of ECLs are a probabilityweighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.
(b) Financial Liabilities
The Company classifies its financial liabilities in the following categories: as financial liabilities at amortised cost or derivatives at fair value either as cash flow hedges or through profit or loss.
Financial liabilities at amortised cost include: bank borrowings, intercompany loans, bonds and commercial paper. These are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method.
(c) Cash and cash equivalents
Cash and cash equivalents comprise cash balances.
Notes to the Financial Statements For the Year Ended 31 December 2019
Accounting Policies (continued) $\mathbf{1}$ .
1.15 Cash at bank and in hand
Cash at bank and in hand comprise cash balances.
Bank overdrafts are included within creditors due within one year in the Balance Sheet.
1.16 Income tax
Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in profit for the financial year, except to the extent that it relates to items recognised in OCI or directly in equity. In this case the tax is also recognised in OCI or directly in equity, respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted in the UK or substantively enacted, at the Balance Sheet date and any adjustment to tax payable in respect of previous years.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements. The deferred tax is not accounted for if it arises from the total recognition of an asset or liability in a transaction (other than a business combination) that affects neither accounting nor taxable profit or loss at that time. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the investor is able to control the timing of temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities and where there is an intention to settle balances on a net basis.
1.17 Operating segments
The Company has one operating segment which is the provision of treasury services to the Group.
Notes to the Financial Statements For the Year Ended 31 December 2019
Accounting Estimates and Judgements $2.$
In the application of the Company's accounting policies the Directors are required to make a number of estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
In preparing these Financial Statements, the Directors have had to make the following judgements:
- Determine whether loans are at a market rate of interest at inception in order to consider whether a day one fair value adjustment is required.
- Determine whether there are indicators of impairment of the Company's fixed asset investments. Factors considered are net assets for financing companies.
- Expected credit losses relating to intercompany assets have been assessed as not material to the Financial Statements.
The Company's Directors are of the opinion that there are no further judgements and no other key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying value of assets and liabilities for the Company within the next financial year.
Staff costs $3.$
Staff costs were as follows:
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Wages and salaries | 780 | 736 |
| Social security costs | 81 | 97 |
| Defined contribution pension costs | 57 | 64 |
| 918 | 897 | |
The average monthly number of employees during the year was as follows:
| 2019 No. |
2018 No. |
|
|---|---|---|
| Administration and support | Q $\sim$ |
9 |
Notes to the Financial Statements For the Year Ended 31 December 2019
| 4. | Interest receivable and similar income | ||
|---|---|---|---|
| 2019 £000 |
2018 £000 |
||
| Interest receivable from Group undertakings | 658,042 | 602,183 | |
| Bank interest receivable | 56,091 | 24,748 | |
| Other interest receivable | 10,687 | ||
| 724,820 | 626,931 | ||
| 5. | Interest payable and similar charges | ||
| 2019 £000 |
2018 £000 |
||
| Interest payable on third party borrowings | 258,906 | 266,690 | |
| Interest payable to Group undertakings | 275,324 | 194,568 | |
| Net exchange losses | 26,683 | 15,697 | |
| 560,913 | 476,955 | ||
| 6. | Taxation | ||
| 2019 £000 |
2018 £000 |
||
| Corporation tax | |||
| Current tax on profit for the financial year | 25,895 | 23,731 | |
| Adjustments in respect of previous periods Foreign tax |
98 | 8,007 | |
| Foreign tax relief/other relief | (894) | (574) | |
| Foreign withholding tax charge | 3,216 | 2,699 | |
| Total current tax | 28,315 | 33,863 | |
| Deferred tax | |||
| Adjustment in respect of previous periods | |||
| Total deferred tax | |||
| Tax on profit | 28,315 | 33,863 | |
$\ddot{\phantom{a}}$
Notes to the Financial Statements For the Year Ended 31 December 2019
6. Taxation (continued)
Reconciliation of tax charge
The tax assessed for the year is lower than (2018 - higher than) the standard rate of corporation tax in the UK of 19% (2018 - 19%), as explained below:
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Profit before tax | 162,505 | 148,518 |
| Profit multiplied by standard rate of corporation tax in the UK of 19% (2018 - 19%) Effects of: |
30,876 | 28,218 |
| Adjustments in respect of previous periods | 98 | 8,007 |
| Transfer pricing adjustments | (4,981) | (4, 488) |
| Higher rate taxes on overseas earnings | 2.322 | 2,126 |
| Total tax charge for the year | 28,315 | 33,863 |
Factors that may affect future tax charges
A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantively enacted on 6 September 2016, and the UK deferred tax asset as at 31 December 2019 has been calculated based on this rate. In the 11 March 2020 Budget it was announced that the UK tax rate would remain at 19% and not reduce to 17% from 1 April 2020. The effect of this change on the Company's deferred tax balance is not material.
Notes to the Financial Statements For the Year Ended 31 December 2019
$\overline{7}$ . Fixed Asset Investments
| Investments in subsidiary undertakings £000 |
|
|---|---|
| Cost | |
| At 1 January 2019 | 3,610,237 |
| At 31 December 2019 | 3,610,237 |
| Impairment At 1 January 2019 and 31 December 2019 |
|
| Net book value | |
| At 31 December 2019 | 3,610,237 |
| At 31 December 2018 | 3,610,237 |
Subsidiaries
The following are direct subsidiaries of the Company:
| Class of | ||
|---|---|---|
| Name | shares | Holding Registered office |
| Reckitt Benckiser Jersey (No.1) Limited | Ordinary | 100 % IFC 5, St Helier, Jersey, JE1 1ST |
| Reckitt Benckiser Jersey (No.2) Limited | Ordinary | 100 % IFC 5, St Helier, Jersey, JE1 1ST |
The Directors believe that the carrying value of the investments is supported by their net assets.
8. Debtors
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Due after more than one year | ||
| Amounts owed by Group undertakings | 520.604 | 1.160.420 |
| Derivative financial instruments - External | $\blacksquare$ | 1.143 |
| 520.604 | 1.161.563 |
Notes to the Financial Statements For the Year Ended 31 December 2019
$\overline{\mathbf{R}}$ . Debtors (continued)
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Due within one year | ||
| Amounts owed by Group undertakings | 44.434.225 | 40.953.169 |
| Prepayments and accrued income | 1.671 | 772 |
| Derivative financial instruments - Intragroup | 25,818 | 8,399 |
| Derivative financial instruments - External | 23.740 | 33,074 |
| Deferred tax asset | 102 | ۰ |
| 44.485.556 | 40.995.414 | |
The amounts owed by Group undertakings are repayable on demand, unsecured and are either interest free, interest-bearing at a fixed rate, interest-bearing at LIBOR minus or plus a margin of various rates or interest-bearing at other floating based rates (2018 - same). Further detail on the rates of interest receivable on amounts owed by Group undertakings is provided in note 13 to these Financial Statements.
The intragroup derivative financial instruments represent intragroup forward contracts which are fair valued through profit and loss.
The external derivative financial instruments represent the forward contracts with third parties outside of the Group which are fair valued, either through profit or loss or designated as cash flow hedges.
The fair value of derivatives has been estimated by using forward exchange rates derived from market sourced data at the Balance Sheet date, with the resulting value discounted back to present value.
Further disclosures about the deferred tax asset/(liability) is included in note 14.
9. Current Asset Investments
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Short term deposits | 23,700 | 128,974 |
Short term deposits relate to deposits and money market funds with a maturity of less than three months. Short term deposits are at a floating rate.
Cash at bank and in hand 10.
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Cash at bank | 16,262 | 14,569 |
Notes to the Financial Statements For the Year Ended 31 December 2019
$11.$ Creditors due within one year
| 2019 £000 |
2018 £000 |
|---|---|
| 649 | 1.166 |
| 125.843 | 17,468 |
| 2.992.748 | 1,608,373 |
| 33.251,021 | 30.973,725 |
| 132.800 | 16.912 |
| 22,800 | 15.269 |
| 268 | |
| 36 525 861 | 32.633.181 |
The amounts owed to Group undertakings are repayable on demand, unsecured and are either interest free, interest bearing at a fixed rate, interest bearing at LIBOR minus or plus a margin of various rates or interest bearing at other floating based rates (2018 - same). Further detail on the rates of interest payable on amounts owed to Group undertakings is provided in note 13 to these Financial Statements.
Included in the amounts owed to Group undertakings are Eurobonds, quoted on the Channel Islands Stock Exchange, of £41,488k (2018 - £43,124k) issued to subsidiary undertakings that have an early redemption option attached to them. The carrying value of each bond is a reasonable approximation of fair value. They are interest bearing at a rate of 3M LIBOR plus 0.3% (2018 - same).
The Commercial Paper issued by the Company represents unsecured short-term debt instruments, taken out against short term funding. As at 31 December 2019 the Company had Commercial Paper in issue amounting to US\$2,028,250k (nominal values) at rates between 1.8% and 2.78% with maturities ranging from 2 January 2020 to 31 July 2020, and €1,750,000k (nominal values) at rates between negative 0.15% and negative 0.35% with maturities ranging from 23 January 2020 to 12 August 2020. As at 31 December 2018 the Company had Commercial Paper in issue amounting to US\$782,750k (nominal values) at rates between 2.54% and 2.98% with maturities ranging from 3 January 2019 to 7 March 2019, and €1,110,000k (nominal values) at rates between negative 0.21% and negative 0.25% with maturities ranging from 23 January 2019 to 13 June 2019.
The intragroup derivative financial instruments represent intragroup forward contracts which are fair valued through profit and loss.
The external derivative financial instruments represent the forward contracts with third parties outside of the Group which are fair valued, either through profit and loss or designated as cash flow hedges.
The fair value of derivatives has been estimated by using forward exchange rates derived from market sourced data at the Balance Sheet date, with the resulting value discounted back to present value.
Further disclosures about the deferred tax asset/(liability) is included in note 14.
Notes to the Financial Statements For the Year Ended 31 December 2019
12. Creditors due after more than one year
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Bonds | 6,201,007 | 6,440,220 |
| Term loans | 825,974 | 1,326,236 |
| Amounts owed to Group undertakings | $\hbox{ }$ | 421,869 |
| Derivative financial instruments - Intragroup | $\hbox{\small -}$ | 118,528 |
| 7,026,981 | 8,306,853 |
The amounts owed to Group undertakings in the prior year were unsecured and interest bearing at LIBOR minus or plus a margin of various rates (2018 - same). Further details on the rates of interest payable on amounts owed
$13.$ Financial Instruments
Financial instruments by category:
At 31 December 2019
Ÿ.
| Amortised cost £000 |
Fair value through OCI £000 |
Derivatives used for hedging £000 |
Carrying value total £000 |
Fair value total £000 |
|
|---|---|---|---|---|---|
| Assets as per the balance sheet |
|||||
| Cash at bank and in hand | 16,262 | 16,262 | 16,262 | ||
| Current asset investments | 23.700 | 23,700 | 23.700 | ||
| External derivative financial instruments - short term |
4.075 | 19.665 | 23,740 | 23 740 | |
| Internal derivative financial instruments - short term |
25,818 | 25,818 | 25,818 | ||
| Intercompany financing loans $-$ short term $(3)(4)$ |
44.434.127 | 44.434.127 | 44.434.127 | ||
| Intercompany financing loans $-$ long term $(3)(4)$ |
520,604 | 520,604 | 520.604 | ||
| Intercompany trade receivable |
98 | 98 | 98 |
Notes to the Financial Statements For the Year Ended 31 December 2019
At 31 December 2019
| Amortised cost £000 |
Fair value through OCI £000 |
Derivatives used for hedging £000 |
Carrying value total £000 |
Fair value total £000 |
|
|---|---|---|---|---|---|
| Liabilities as per the balance sheet |
|||||
| Borrowings (excluding bonds) (1) |
2,993,397 | 2.993.397 | 2,993,397 | ||
| Bonds (2) | 6,201,007 | 6.201.007 | 6,325,172 | ||
| Term Ioans (2) | 825,974 | 825.974 | 825.974 | ||
| External derivative financial instruments - short term |
105,804 | 26,996 | 132,800 | 132,800 | |
| Internal derivative financial instruments - short term |
125,843 | 125,843 | 125,843 | ||
| Intercompany financing loans $-$ short term $(3)(4)$ |
33,202,739 | 33,202,739 | 33,202,739 | ||
| Intercompany trade payables | 48,282 | 48.282 | 48.282 | ||
| Accruals | 22,800 | 22,800 | 22.800 |
$\ddot{\phantom{a}}$
Notes to the Financial Statements
For the Year Ended 31 December 2019
At 31 December 2018
÷.
| Amortised cost |
Fair value through OCI |
Derivatives used for hedging |
Carrying value total |
Fair value total £000 |
|---|---|---|---|---|
| 14,569 | 14,569 | 14,569 | ||
| 128,974 | 128,974 | 128,974 | ||
| 31,729 | 1,345 | 33,074 | 33.074 | |
| 1,143 | 1.143 | 1,143 | ||
| 8,399 | 8.399 | 8,399 | ||
| 40,953,169 | 40,953,169 | 40,953,169 | ||
| 1,160,420 | 1,160,420 | 1,195,149 | ||
| 772 | 772 | 772 | ||
| £000 | £000 | £000 | £000 |
Notes to the Financial Statements
For the Year Ended 31 December 2019
At 31 December 2018
| Amortised cost £000 |
Fair value through OCI £000 |
Derivatives used for hedging £000 |
Carrying value total £000 |
Fair value total £000 |
|
|---|---|---|---|---|---|
| Liabilities as per the balance sheet |
|||||
| Borrowings (excluding bonds) (1) |
1,609,539 | 1,609,539 | 1,609,539 | ||
| Bonds (2) | 6,440,220 | 6.440.220 | 6,174,508 | ||
| Term Ioans (2) | 1,326,236 | 1,326,236 | 1,326,236 | ||
| External derivative financial instruments - short term |
16,909 | 3 | 16,912 | 16,912 | |
| Internal derivative financial instruments - short term |
17,468 | 17,468 | 17,468 | ||
| Internal derivative financial instruments - long term |
118,528 | 118,528 | 118,528 | ||
| Intercompany financing loans $-$ short term $(3)(4)$ |
30,940,479 | 30,940,479 | 30,940,479 | ||
| Intercompany financing loans $-$ long term $(3)(4)$ |
421,869 | 421,869 | 421,869 | ||
| Intercompany trade payables | 33,246 | 33,246 | 33,246 | ||
| Accruals | 15,269 | 15,269 | 15,269 |
Notes to the Financial Statements For the Year Ended 31 December 2019
Financial Instruments (continued)
(1) The categories in this disclosure are determined by IFRS 9. As at 31 December 2019 the Company had Commercial Paper in issue amounting to US\$2,028,250k (nominal values) at rates between 1.8% and 2.78% with maturities ranging from 2 January 2020 to 31 July 2020, and €1.750,000k (nominal values) at rates between negative 0.15% and negative 0.35% with maturities ranging from 23 January 2020 to 12 August 2020. As at 31 December 2018 the Company had Commercial Paper in issue amounting to US\$782,750k (nominal values) at rates between 2.54% and 2.98% with maturities ranging from 3 January 2019 to 7 March 2019, and €1,110,000k (nominal values) at rates between negative 0.21% and negative 0.25% with maturities ranging from 23 January 2019 to 13 June 2019. The fair value of borrowings (excluding bonds) is deemed to be in line with the carrying amount due to their short-term nature.
(2) Bonds as at 31 December 2019 are comprised of the following tranches: US\$2,500,000k at 2.375% (matures in 2022), US\$750,000k at 3M LIBOR plus a margin of 0.56% (matures in 2022), US\$500,000k at 3.625% (matures in 2023), US\$2,000,000k at 2.75% (matures in 2024), US\$2,500,000k at 3% (matures in 2027). Bonds in 2018 were comprised of the same tranches. The fair value of bonds at 31 December 2019 is a liability of £6,325,172k (2018: £6,174,508k). This value is derived using a quoted market rate in an active market (level 1 classification). The term loan is interest bearing at a floating rate of interest plus a margin and is repayable in 2022. The term loan carrying value at 31 December 2019 is a liability of £825,974k (2018: £1,326,236k). The fair value approximates to carrying value and is calculated using discounted future cashflows at floating market rates (level 2 classification).
(3) Intercompany loans payable and receivable are unsecured and are either interest free, interest bearing at a fixed rate, interest bearing at LIBOR plus or minus a margin of various rates or interest bearing at other floating based rates (2018: same).
(4) The fair value of short term loans is deemed to be in line with the carrying amount due to their short term nature. The fair value of floating long term loans are deemed to be comparable with carrying value. The fair value of long term fixed rate debt is determined by discounting future flows at the prevailing rate and converting to sterling at the year end rate.
All financial instruments, with the exception of the bonds, are in level 2 of the fair value hierarchy. Fair value for financial instruments held at amortised cost has been estimated by discounting cash flows at prevailing interest rates and by applying year end exchange rates. The fair value measurement hierarchy levels have been defined as follows:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3. Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
The fair value of internal and external forward foreign exchange contracts at 31 December 2019 is a liability of £258,643k (2018: £152,908k) and an asset of £49,558k (2018: £42,616k). This value is determined using forward exchange rates derived from market sourced data at the Balance Sheet date, with the resulting value discounted back to present value (level 2 classification).
As the value of level 3 instruments at 31 December 2019 is £nil (2018: £nil), no further level 3 disclosures have been made. There have been no movements of financial instruments between levels (2018: £nil).
Notes to the Financial Statements For the Year Ended 31 December 2019
Offsetting Financial Assets and Financial Liabilities
The Company has forward foreign exchange contracts that are subject to enforceable master netting arrangements. The following tables set out the carrying amounts of the recognised financial
instruments that are subject to these agreements.
(a) Financial assets
| Gross amounts of recognised financial assets £000 |
Gross amounts of recognised financial liabilities set off in the balance sheet £000 |
Net amounts of financial assets presented in the balance sheet £000 |
Financial instruments not set off in the balance sheet £000 |
Net amount £000 |
|
|---|---|---|---|---|---|
| As at 31 December 2019 | |||||
| Forward foreign exchange contracts - External |
23,740 | 23,740 | (21,660) | 2.080 | |
| Forward foreign exchange contracts - Internal |
25,818 | 25,818 | 25,818 | ||
| 49,558 | 49,558 | (21,660) | 27,898 |
| Gross amounts of recognised financial assets £000 |
Gross amounts of recognised financial liabilities set off in the balance sheet £000 |
Net amounts of financial assets presented in the balance sheet £000 |
Financial instruments not set off in the balance sheet £000 |
Net amount £000 |
|---|---|---|---|---|
| (13.638) | 20,579 | |||
| 8.399 | ||||
| (13,638) | 28,978 | |||
| 34.217 8,399 42,616 |
34.217 8,399 42.616 |
$\bar{z}$
$\ddot{\phantom{a}}$
Notes to the Financial Statements For the Year Ended 31 December 2019
(b) Financial Liabilities
$\ddot{\phantom{a}}$
$\ddot{\phantom{1}}$
| Gross amounts of recognised financial liabilities £000 |
Gross amounts of recognised financial assets set off in the balance sheet £000 |
Net amounts of financial liabilities presented in the balance sheet £000 |
Financial instruments not set off in the balance sheet £000 |
Net amount £000 |
|
|---|---|---|---|---|---|
| As at 31 December 2019 | |||||
| Forward foreign exchange contracts - External |
(132, 800) | (132, 800) | 21,660 | (111, 140) | |
| Forward foreign exchange contracts - Internal |
(125, 843) | (125, 843) | (125, 843) | ||
| (258.643) | (258, 643) | 21,660 | (236.983) |
| Gross amounts of recognised financial liabilities £000 |
Gross amounts of recognised financial assets set off in the balance sheet £000 |
Net amounts of financial liabilities presented in the balance sheet £000 |
Financial instruments not set off in the balance sheet £000 |
Net amount £000 |
|
|---|---|---|---|---|---|
| As at 31 December 2018 | |||||
| Forward foreign exchange contracts - External |
(16, 912) | (16, 912) | 13,638 | (3,274) | |
| Forward foreign exchange contracts - Internal |
(135,996) | (135,996) | (135, 996) | ||
| (152,908) | (152,908) | 13.638 | (139, 270) |
External FX forward trades are subject to an enforceable right of offset in the event of a default by either party. Internal trades are not subject to such an agreement.
Notes to the Financial Statements For the Year Ended 31 December 2019
Financial Risk Management
The Company's operations expose it to a variety of financial risks that include the effects of changes in foreign currency exchange rates (foreign exchange risk), interest rates, credit risks and liquidity. The Company has in place a risk management programme that uses foreign currency financial instruments, including debt, and other instruments, to limit the impact of these risks on the financial performance of the Company.
The Company's financing and financial risk management activities are centralised into Group Treasury ('GT') to achieve benefits of scale and control. The Company manages financial exposures of the wider Group centrally in a manner consistent with underlying business risks. The Company manages only those risks and flows generated by the underlying commercial operations and speculative transactions are not undertaken.
The Board of Directors review and agree policies, guidelines and authority levels for all areas of Treasury activity and individually approve significant activities. GT operates under the close control of the CFO and is subject to periodic independent reviews and internal audits.
1. Market Risk
(a) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from recognised assets and liabilities.
The Company's policy is to align interest costs and operating profit of its major currencies in order to provide some protection against the translation exposure on foreign currency profits after tax.
The Company aligns internal foreign currency exposures and where necessary uses external debt and forward FX instruments to mitigate the risk to its income statement. The Company seeks to minimise its foreign currency exposures.
The notional principal amount of the outstanding external forward foreign exchange contracts at 31 December 2019 was £5,837,903k payable (2018: £1,426,791k payable).
The notional principal amount of the outstanding internal forward foreign exchange contracts at 31 December 2019 was £1,784,349k payable (2018: £1,344,291k payable).
The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the Balance Sheet.
The remaining major monetary financial instruments (liquid assets, receivables, interest and non-interest bearing liabilities) are directly denominated in the functional currency of the Company or are transferred to the functional currency of the local entity through the use of derivatives.
The gains and losses from fair value movements on derivatives held at fair value through the profit or loss, recognised in the Income Statement was a £158,183k loss (2018: £22,102k gain). This includes the forward exchange contracts economically hedging intercompany and external debt, which is included in the net exchange losses in the year in note 5 to these Financial Statements (2018: net exchange losses in note 5).
Notes to the Financial Statements For the Year Ended 31 December 2019
Market Risk (continued)
(b) Cash flow and fair value interest rate risk
The Company has both interest-bearing and non interest-bearing assets and liabilities. The Company monitors its interest income and expense rate exposure on a regular basis. The Company manages its interest income rate exposure on its gross financial assets by using a combination of fixed rate term deposits.
Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on the Income Statement of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies, calculated on a full year and pre-tax basis.
The scenarios are only run for liabilities and assets that represent the major interest-bearing positions. Based on the simulations performed, the impact on the Income Statement of a 50 basis-point shift in interest rates would be a maximum increase of £21,939k (2018: £9,287k) or decrease of £21,939k (2018: £9,287k), respectively for the liabilities and assets covered.
The Company has a number of loans, both receivable and payable, with other Group companies. These loans are unsecured and are either interest free, interest bearing at a fixed rate, or interest bearing at a floating based rate. The tables below categorise the intragroup loans by the rates of interest that are applied to these loans.
Amounts owed by Group undertakings
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Basis of interest receivable: | ||
| Interest free | 81,871 | 76,113 |
| Fixed based interest (4.5%) (2018 - 4.5%) | 680,938 | 707.794 |
| Floating based interest | 44,186,624 | 41,325,060 |
| Total | 44,949,433 | 42,108,967 |
| Amounts owed to Group undertakings | ||
| 2019 £000 |
2018 £000 |
|
| Basis of interest payable: | ||
| interest free | 940,377 | 1,389,590 |
| Fixed based interest (between 0.75% and 4.5%) (2018 - between 2.63% and $5.5%$ |
78 4 25 | 43,595 |
| Floating based interest | 32.183.781 | 29,928,956 |
| Total | 33, 202, 583 | 31,362,141 |
Notes to the Financial Statements For the Year Ended 31 December 2019
2. Credit Risk
The Company has no significant concentrations of third party credit risk. Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits with banks and financial institutions, as well as credit exposures to customers. Financial institution counterparties are subject to approval under the Group's counterparty risk policy and such approval is limited to financial institutions with a BBB rating or above. The Company uses BBB and higher rated counterparties to manage risk, and operationally only uses sub BBB rated counterparties by exception. The amount of exposure to any individual counterparty is subject to a limit defined within the counterparty risk policy, which is reassessed annually by the Board of Directors. Derivative financial instruments are only traded with counterparties in accordance with the approved policy. Derivative risk is measured using a risk weighting method.
The Company has counterparty risk from asset positions held with financial institutions. This is comprised of short-term investments, cash and cash equivalents and derivatives positions as stated on the face of the Balance Sheet. For risk management purposes the Company assesses the exposure to major financial institutions by looking at the deposits, cash and cash equivalents and 5% of derivative notional position. The table below summarises the Company's assessment of its exposure. The financial institutions listed in the table are not comparable on a year on year basis.
| Credit rating |
2019 Exposure £000 |
|
|---|---|---|
| Counterparty | ||
| Financial Institution A | AAA | 20,000 |
| Financial Institution B | $A+$ | 16,262 |
| Financial Institution C | AA- | 3,700 |
| Credit rating £000 |
2018 Exposure £000 |
|
| Counterparty | ||
| Financial Institution A | $A+$ | 98,974 |
| Financial Institution B | $A+$ | 30,690 |
| Financial Institution C | AA- | 25,000 |
| Financial Institution D | A | 5,000 |
The above table does not include exposures to intercompany balances. The Company is in a net asset position and there is no history of intercompany default on balances owing to the Company. The maximum asset exposure to intercompany credit risk is £44,980,647k (2018: £42,121,988k).
Notes to the Financial Statements For the Year Ended 31 December 2019
3. Liquidity Risk
Cash flow forecasting is performed by other business units in the Group and on an aggregated basis by Group Treasury. GT monitors rolling forecasts of the Company's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Funds over and above those required for short-term working capital purposes by the local businesses are generally remitted to GT. The Company uses the remittances to settle obligations, repay borrowings, or, in the event of a surplus, invest in short-term instruments issued by institutions with a BBB rating or better.
The Company has various borrowing facilities available to it. The Company has bilateral credit facilities with high-quality international banks. All of these facilities have similar or equivalent terms and conditions and have a financial covenant, which is not expected to restrict the Company's future operations.
At the end of 2019, the Company had, in addition to its long-term debt of £7,026,981k (2018: £7,766,456k), undrawn committed borrowing facilities totalling £5,500,000k (2018: £4,500,000k), of which £5,500,000k exceeded 12 months' maturity (2018: £4,500,000k). The committed borrowing facilities, together with available uncommitted facilities and central cash and investments, are considered sufficient to meet the Company's projected cash requirements.
The undrawn committed facilities available, in respect of which all conditions precedent have been met at the Balance Sheet date, were as follows:
| 2019 £000 |
2018 £000 |
|---|---|
| 5.500.000 | 4.500.000 |
| 5.500.000 | 4.500.000 |
All committed facilities are at floating rates of interest.
The facilities have been arranged to cover general corporate purposes, including support for commercial paper issuance. All facilities incur commitment fees at market rates.
The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows which have been calculated using spot rates at the relevant balance sheet date, including interest to be paid.
| At 31 December 2019 | Total £000 |
Less than 1 year £000 |
Between 1 and 2 years £000 |
Between 2 and 5 years £000 |
Over 5 years £000 |
|---|---|---|---|---|---|
| Overdrafts | (649) | (649) | |||
| Commercial paper | (3,013,000) | (3,013,000) | |||
| Bonds | (7,049,331) | (175, 983) | (175, 930) | (4,670,187) | (2.027.231) |
| Term Ioans | (881, 199) | (21, 444) | (21, 444) | (838, 311) | |
| Intercompany trade payables | (48, 282) | (48, 282) | ٠. | ||
| Accruals | (22, 800) | (22, 800) | $\hbox{\small -}$ | ۰ | |
| Intercompany financing loans | (33, 202, 739) | (33.202.739) | - |
Notes to the Financial Statements For the Year Ended 31 December 2019
| Total £000 |
Less than 1 vear £000 |
Between 1 and 2 years £000 |
Between 2 and 5 years £000 |
Over 5 years £000 |
|
|---|---|---|---|---|---|
| At 31 December 2018 | |||||
| Overdrafts | (1, 166) | (1.166) | |||
| Commercial paper | (1,608,373) | (1,608,373) | |||
| Bonds | (7,510,216) | (182, 869) | (182, 924) | (3,388,739) | (3.755.684) |
| Term loans | (1,475,036) | (41, 710) | (41, 710) | (1,391,616) | |
| Intercompany trade payables | (33.246) | (33, 246) | ۰ | ||
| Accruals | (15, 269) | (15.269) | - | ||
| Intercompany financing loans | (31, 405, 072) | (30,889,677) | (4, 463) | (58.519) | (452, 413) |
The table below analyses the Company's derivative financial instruments into relevant maturity groupings based on the remaining period between the balance sheet date and the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows which have been calculated using spot rates at the relevant balance sheet date.
Notes to the Financial Statements For the Year Ended 31 December 2019
At 31 December 2019
| Less than 1 vear £000 |
Between 1 and 2 years £000 |
Between 2 and 5 vears £000 |
∙Over 5 years £000 |
|
|---|---|---|---|---|
| Forward exchange contracts - External | ||||
| Outflow | (5,837,903) | ٠ | ||
| Inflow | 5.731.560 | ۰ | $\overline{\phantom{a}}$ | |
| Forward exchange contracts - Internal | ||||
| Outflow | (1,784,349) | $\overline{\phantom{0}}$ | $\overline{\phantom{0}}$ | |
| Inflow | 1,791,583 | $\blacksquare$ |
At 31 December 2018
| Less than 1 vear £000 |
Between 1 and 2 years £000 |
Between 2 and 5 years £000 |
Over 5 years £000 |
|---|---|---|---|
| (1,422,196) | (4, 595) | ۰ | |
| 1.430.385 | 6.215 | $\overline{\phantom{0}}$ | |
| (1,338,076) | (6.215) | ||
| 1.329.598 | 4.595 | $\overline{\phantom{0}}$ | $\overline{\phantom{0}}$ |
4. Capital Management
The Company considers capital to be net debt plus total equity. Net debt is calculated as total external borrowings (excluding intercompany liabilities) less cash at bank and in hand, current asset investments and derivative financial instruments. Total equity includes share capital, reserves and retained earnings as shown in the Company Balance Sheet.
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| Net debt | 10,110,503 | 9,229,912 |
| Total equity | 5.103.517 | 4,970,723 |
| . . | 15,214,020 | 14,200,635 |
The objectives for managing capital are to safeguard the Company's ability to continue as a going concern, in order to provide returns for Shareholders and benefits for other stakeholders and to maintain an efficient capital structure to optimise the cost of capital.
The Company monitors net debt and at year end the Company had net debt of £10,110,503k (2018: £9,229,912k). The Company seeks to pay down net debt using cash generated by the Group companies to maintain an appropriate level of financial flexibility.
Notes to the Financial Statements For the Year Ended 31 December 2019
l.
$\hat{\mathcal{A}}$
14. Deferred taxation
$15.$
$\bar{z}$
| 2019 £000 |
2018 £000 |
|
|---|---|---|
| At beginning of year | (268) | 125 |
| Deferred tax charge in OCI for the period | 300 | (21) |
| Adjustments in respect of prior periods through OCI | 70 | (372) |
| At end of year | 102 | (268) |
| The deferred tax asset/(liability) is made up as follows: | ||
| 2019 £000 |
2018 £000 |
|
| Deferred tax on cash flow hedges | 102 | (268) |
| Share Capital | ||
| 2019 £000 |
2018 £000 |
|
| Allotted and fully paid | ||
| 2,000,102 (2018 - 2,000,102) Ordinary shares of £1 each | 2,000 | 2,000 |
$\ddot{\phantom{0}}$
Notes to the Financial Statements For the Year Ended 31 December 2019
16. Related Party Transactions
During the year, Reckitt Benckiser Treasury Services plc earned £60k (2018 - £41k) of interest receivable and incurred £nil (2018 - £7k) of interest payable to RB & Manon Business Co. Limited, another group company. RB & Manon Business Co. Limited is 75.05% owned by SSL Healthcare (Shanghai) Limited and 24.95% by three individual third-party shareholders. At the year-end, borrowings of £6,416k (2018 -£192k) were outstanding and included within creditors (2018 - included within creditors). The creditor is repayable on demand, unsecured and interest bearing at a rate of 3M LIBOR less 0.125% (2018 - same).
During the year, Reckitt Benckiser Treasury Services plc incurred £24k (2018 - £nil) of interest payable to RB & Manon (Hygiene Home) HK Ltd, another group company. RB & Manon (Hygiene Home) HK Ltd is 75.05% owned by Reckitt Benckiser (Hygiene Home) Holdings Ltd and 24.95% by three individual thirdparty shareholders. At the year-end, borrowings of £3,270k (2018 - £nil) were outstanding and included within creditors. The creditor is repayable on demand, unsecured and interest bearing at a rate of 3M HIBOR less 0.125%.
During the year, Reckitt Benckiser Treasury Services plc earned £1k of interest receivable (2018 - £nil) and incurred £1,969k (2018 - £2,905k) of interest payable to RB (China Trading) Limited, another group company. RB (China Trading) Limited is 80% owned by Reckitt Benckiser plc and 20% by an individual third-party shareholder. At the year-end, receivables of Enil (2018 - £768k) and borrowings of £13,361k (2018 - £102,144k) were outstanding. Borrowings are included within creditors (2018 - receivables included within debtors and borrowing included within creditors). The debtor is repayable on demand, unsecured and interest bearing at a rate of 3M HIBOR plus 0.2%. The creditor is repayable on demand, unsecured and interest bearing at a rate of 3M HIBOR less 0.125% (2018 - same).
$17.$ Directors
During the year the Company had 4 Directors resident in the UK (2018 - 4 Directors). The remuneration of the Directors is paid by a fellow subsidiary, Reckitt Benckiser Corporate Services Limited. The Directors are also Directors of a number of fellow subsidiaries, and it is not possible to make an accurate apportionment of their remuneration in respect of each of the subsidiaries. Accordingly, the above details include no remuneration in respect of the Directors. The Directors have no material interest in any contract of significance to the Company's business.
18. Ultimate Parent Undertaking and Controlling Party
The immediate parent company is Reckitt Benckiser plc, a company which is registered in England and Wales.
The ultimate parent company and controlling party is Reckitt Benckiser Group plc, a company incorporated in England and Wales, which is the parent undertaking of the smallest and largest Group to consolidate these Financial Statements. Copies of the Group Financial Statements of Reckitt Benckiser Group plc can be obtained from 103-105 Bath Road, Slough, Berkshire, SL1 3UH or at https://www.rb.com.
19. Auditor's remuneration
The auditor's remuneration is met by the ultimate parent company, Reckitt Benckiser Group plc and is disclosed in total in the Group Financial Statements. Amounts receivable by the Company's auditor in respect of the audit of these financial statements is £225k. It was not practical to make an allocation of the audit fee to the Company in 2018.
Notes to the Financial Statements For the Year Ended 31 December 2019
$20.$ Post Balance Sheet Event
The impact of COVID-19 is considered to represent a non-adjusting post balance sheet event as at 31 December 2019.
Following the year end, the Company has drawn around £750,000k from its committed facilities due to illiquidity in the short-term market for Commercial Paper. In the short to medium-term, the Company expects to draw down further as and when required. Committed facilities total £5,500,000k (2018: £4,500,000k), of which £4,750,000k remains currently undrawn, and available to draw. The Company remains compliant with its banking covenants. The committed facilities are not subject to renewal until from 2022 onwards.