8. Operating profit
| 2017 | 2016 | 2015 | ||||||||||
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The following items have been included in operating profit: |
£m | £m | £m | |||||||||
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Employee costs (Note 9) |
9,122 | 8,212 | 8,030 | |||||||||
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Advertising |
1,351 | 1,265 | 1,059 | |||||||||
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Distribution costs |
405 | 395 | 376 | |||||||||
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Depreciation of property, plant and equipment |
988 | 978 | 892 | |||||||||
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Impairment of property, plant and equipment, net of reversals |
327 | 180 | 346 | |||||||||
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Amortisation of intangible assets |
934 | 796 | 738 | |||||||||
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Impairment of intangible assets, net of reversals |
690 | 22 | 217 | |||||||||
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Net foreign exchange losses |
215 | 53 | 47 | |||||||||
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Inventories: |
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Cost of inventories included in cost of sales |
8,526 | 8,093 | 7,602 | |||||||||
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Write-down of inventories |
701 | 533 | 488 | |||||||||
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Reversal of prior year write-down of inventories |
(352 | ) | (145 | ) | (65 | ) | ||||||
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Operating lease rentals: |
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Minimum lease payments |
110 | 91 | 101 | |||||||||
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Contingent rents |
4 | 4 | 8 | |||||||||
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Sub-lease payments |
5 | 4 | 7 | |||||||||
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Fees payable to the company’s auditor and its associates in relation to the Group (see below) |
29.2 | 29.7 | 33.1 | |||||||||
The reversals of prior year write-downs of inventories principally arise from the reassessment of usage or demand expectations prior to inventory expiration.
Net foreign exchange losses include a net loss of £109 million (2016 – £nil; 2015 – £nil) of exchange arising on the reclassification of exchange on liquidation or disposal of overseas subsidiaries.
Included within operating profit are major restructuring charges of £1,056 million (2016 – £970 million; 2015 – £1,891 million), see Note 10, ‘Major restructuring costs’.
|
Fees payable to the company’s auditor and its associates: |
2017 £m |
2016 £m |
2015 £m |
|||||||||
|
Audit of parent company and consolidated financial statements |
7.0 | 5.8 | 7.5 | |||||||||
|
Audit of the company’s subsidiaries |
16.2 | 16.4 | 16.3 | |||||||||
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Attestation under s.404 of Sarbanes-Oxley Act 2002 |
4.5 | 4.4 | 4.3 | |||||||||
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Audit and audit-related services |
27.7 | 26.6 | 28.1 | |||||||||
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Taxation compliance |
0.2 | 0.2 | 0.3 | |||||||||
|
Taxation advice |
0.1 | 1.8 | 3.2 | |||||||||
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Other assurance services |
1.0 | 0.3 | 1.1 | |||||||||
|
All other services |
0.2 | 0.8 | 0.4 | |||||||||
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| 29.2 | 29.7 | 33.1 | ||||||||||
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The other assurance services provided by the auditor relate to agreed upon procedures and other assurance services outside of statutory audit requirements. All other services provided by the auditor primarily related to advisory services for the year ended 31 December 2017.
In addition to the above, fees paid in respect of the GSK pension schemes were:
| 2017 £m |
2016 £m |
2015 £m |
||||||||||
|
Audit |
0.3 | 0.4 | 0.3 | |||||||||
|
Other services |
0.1 | |
— |
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— | ||||||