REG - Imperial Brands Fin - Half-year Report
24/05/2024 18:15
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RNS Number : 9204P Imperial Brands Finance PLC 24 May 2024
Company Number: 03214426
IMPERIAL BRANDS FINANCE PLC
Interim Financial Statements 2024
INTERIM MANAGEMENT REPORT
For the six months ended 31 March 2024
The Directors present their Interim Management Report together with the
condensed unaudited Interim Financial Statements of Imperial Brands Finance
PLC ("the Company") for the six months ended 31 March 2024.
Business review and performance
The principal activity of the Company is to provide treasury services to
Imperial Brands PLC and its subsidiaries ("the Group"). There have been no
changes in the composition of the Company in the interim period.
The performance of the Company is dependent on external borrowings and
intragroup loans payable and receivable and interest thereon, together with
fair value gains and losses on derivative financial instruments.
The profit for the six months ended 31 March 2024 was £75 million (2023:
£277 million) and is stated after a release of £1 million (six months ended
2023: £73 million) arising on a decrease in the expected credit loss
provision against the carrying value of certain loans made to entities within
the Imperial Brands Group. The expected loss provision arises due to the
assessment of credit risk associated with the future repayment of the loans.
The release of the provision is not tax allowable and therefore there is no
associated tax charge. Total shareholders' funds as at 31 March 2024 were
£2,752 million (31 March 2023: £2,561 million).
The directors do not recommend a dividend for the current period. There were
no aggregate dividends on the ordinary shares recognised as a charge to
shareholders' funds during the six months ended 31 March 2024 (2023: £nil).
Principal risks and uncertainties
The Company is a wholly owned indirect subsidiary of Imperial Brands PLC,
which is the ultimate parent company within the Group, and the Directors of
the Group manage operations at a Group level. The Company, as the main
financing and financial risk management company for the Group, undertakes
transactions to manage the Group's financial risks, together with its
financing and liquidity requirements.
The principal risks and uncertainties of the Company are discussed in note 20
of the Company's Annual Report and Accounts for the year ended 30 September
2023, which does not form part of this report, but is available at
www.imperialbrandsplc.com. These risks and uncertainties remain materially
unchanged as at 31 March 2024.
Outlook
The business activity is expected to continue at levels similar to the current
level. The Company will continue to manage the overall liquidity and financial
risk management requirements of the Group as they change over time. The
Company will manage the Group's financing requirement in combination with
other Group entities where it is beneficial to the Group as a whole.
Going concern
The Directors are satisfied that the Company has adequate resources to meet
its operational needs for the foreseeable future and accordingly they continue
to adopt the going concern basis in preparing these Interim Financial
Statements.
Directors' responsibility statement
The Board of Directors comprising L J Paravicini, M E Slade and D M
Tillekeratne, confirms that:
● the condensed Interim Financial Statements have been prepared in
accordance with applicable accounting standards and give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company as required by Rule 4.2.4 of the Disclosure Transparency Rules of the
United Kingdom's Financial Conduct Authority ("the DTRs"); and
● the Interim Management Report includes a fair review of the information
required by Rule 4.2.7 of the DTRs, namely an indication of important events
that have occurred during the six months ended 31 March 2024 and their impact
on the condensed set of Interim Financial Statements, and a description of the
principal risks and uncertainties for the remaining six months of the year.
By order of the Board
M E Slade
D M Tillekeratne
Director
Director
24 May 2024
24
May 2024
INTERIM FINANCIAL STATEMENTS
For the six months ended 31 March 2024
Income Statement
Unaudited Unaudited Audited
(In £ million) Notes 6 months ended 31 March 2024 6 months ended 31 March 2023 Year ended 30
September 2023
Other operating income - - 1
Administrative expenses (2) (1) (4)
Impairment gain 1 73 25
Operating (loss)/profit (1) 72 22
Investment income 2 1,365 1,516 2,671
Finance costs 3 (1,264) (1,254) (2,194)
Profit before taxation 100 334 499
Tax on profit 4 (25) (57) (106)
Profit for the period 75 277 393
All activities derive from continuing operations.
The Company has no other comprehensive income other than that included above
and, therefore, no separate Statement of Comprehensive Income has been
presented.
Balance Sheet
Unaudited Unaudited Audited
(£ million) Notes 31 March 2024 31 March 2023 30 September 2023
Non-current assets
Derivative financial instruments 6 505 694 824
505 694 824
Current assets
Other receivables 7 29,667 29,988 28,624
Cash and cash equivalents 44 28 681
Derivative financial instruments 6 158 72 126
29,869 30,088 29,431
Total assets 30,374 30,782 30,255
Current liabilities
Borrowings (3,370) (1,851) (1,450)
Derivative financial instruments 6 (410) (579) (174)
Trade and other payables (15,859) (16,584) (17,245)
(19,639) (19,014) (18,869)
Non-current liabilities
Borrowings (5,621) (6,977) (6,178)
Derivative financial instruments 6 (709) (832) (829)
Other payables (1,653) (1,398) (1,702)
(7,983) (9,207) (8,709)
Total liabilities (27,622) (28,221) (27,578)
Net assets 2,752 2,561 2,677
Equity
Share capital 2,100 2,100 2,100
Retained earnings 652 461 577
Total equity 2,752 2,561 2,677
Statement of Changes in Equity (unaudited)
Share Retained Total
capital earnings equity
£ million
At 1 October 2023 2,100 577 2,677
Profit for the period - 75 75
Total comprehensive income - 75 75
At 31 March 2024 2,100 652 2,752
Share Retained Total
capital earnings equity
At 1 October 2022 2,100 184 2,284
Profit for the period - 277 277
Total comprehensive income - 277 277
At 31 March 2023 2,100 461 2,561
NOTES TO THE INTERIM FINANCIAL STATEMENTS
For the six months ended 31 March 2024
1. Accounting Policies
These condensed Interim Financial Statements have been prepared on the going
concern basis and in accordance with the United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law)
including the Companies Act 2006 and FRS 101.
Basis of Preparation
The condensed Interim Financial Statements comprise the unaudited results for
the six months ended 31 March 2024 and 31 March 2023, together with the
audited results for the year ended 30 September 2023.
The information shown for the year ended 30 September 2023 does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006, and is an abridged version of the Company's Financial Statements for
that year. The Auditors' Report on those Financial Statements was
unqualified and did not contain any statements under section 498 of the
Companies Act 2006. The Financial Statements for the year ended 30 September
2023 were approved by the Board of Directors on 13 December 2023 and filed
with the Registrar of Companies.
This condensed set of Interim Financial Statements for the six months ended 31
March 2024 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and FRS 104 'Interim
Financial Reporting' ("FRS 104") as adopted by the Financial Reporting Council
("FRC") using the recognition and measurement requirements of FRS 100
'Application of Financial Reporting Requirements' ("FRS 100") and FRS 101
'Reduced Disclosure Framework' ("FRS 101"). The condensed set of Interim
Financial Statements for the six months ended 31 March 2024 should be read in
conjunction with the Annual Report and Financial Statements for the year ended
30 September 2023.
The Company has taken advantage of the following disclosure exemptions under
FRS 101 on the basis that the disclosures are available within the
consolidated financial statements of the ultimate parent company, which is
Imperial Brands PLC:
a) the requirement in paragraph 38 of IAS 1 Presentation of Financial
Statements to present comparative information in respect of paragraph
79(a)(iv) of IAS 1 Presentation of Financial Statements.
b) the requirements of paragraphs 10(d) and 10(f) of IAS 1 Presentation
of Financial Statements.
c) the requirements of IAS 7 Statement of Cash Flows
d) the requirements of paragraph 17 of IAS 24 Related Party Disclosures.
e) the requirements in IAS 24 Related Party Disclosures 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 Imperial Brands PLC consolidated financial statements may be found in via
the investor relations section of the Imperial Brands PLC website at
www.imperialbrandsplc.com/investors
(http://www.imperialbrandsplc.com/investors) .
The Interim Financial Statements have been prepared on an amortised cost or
fair value basis as described in the accounting policies on derivative
financial instruments below.
The Company is a wholly owned indirect subsidiary of Imperial Brands PLC and
is included in the consolidated Financial Statements of Imperial Brands PLC.
Consequently, the Company has taken advantage of the exemption conferred by
FRS 101 paragraph 8(h) and not presented a cash flow statement.
2. Investment income
Unaudited Unaudited Audited
(In £ million) 6 months ended 31 March 2024 6 months ended 31 March 2023 Year ended 30 September 2023
Interest receivable from Group undertakings 822 656 1,328
Interest on bank deposits and other loan receivables 2 4 6
Exchange gains on monetary assets and liabilities 272 491 630
Fair value gains on external derivative financial instruments 269 365 707
1,365 1,516 2,671
3. Finance costs
Unaudited Unaudited Audited
(In £ million) 6 months ended 31 March 2024 6 months ended 31 March 2023 Year ended 30 September 2023
Interest payable to Group undertakings 450 282 607
Interest on bank loans and other loan payables 147 181 349
Fair value losses on external derivative financial instruments 395 273 568
Fair value losses on intragroup derivative financial instruments 272 518 670
1,264 1,254 2,194
4. Tax on profit
Analysis of charge in the period:
Unaudited Unaudited Audited
(In £ million) 6 months ended 31 March 2024 6 months ended 31 March 2023 Year ended 30 September 2023
UK Corporation tax on profits for the period 25 57 106
Withholding tax - - 1
Double taxation relief - - (2)
Adjustments in respect of prior years - - 1
Current tax 25 57 106
Total taxation 25 57 106
5. Fair value of financial assets and liabilities
There are no material differences between the carrying value of the Company's
financial assets and liabilities and their estimated fair value, with the
exception of bonds. The fair value of bonds is estimated to be £6,626
million (2023: £7,869 million) and has been determined by reference to market
prices at the balance sheet date. The carrying value of bonds is £6,837
million (2023: £8,234 million). The fair value of all other borrowings is
considered to be equal to their carrying amount.
6. Derivative financial instruments
Unaudited Unaudited Audited
(In £ million) 6 months ended 31 March 2024 6 months Year ended
ended 31 30 September 2023
March 2023
Assets
Interest rate swaps 488 604 775
Foreign exchange contracts 1 10 12
Cross currency swaps 174 152 163
Total carrying value of derivative financial assets 663 766 950
Liabilities
Interest rate swaps (548) (621) (718)
Foreign exchange contracts (6) (29) (5)
Intragroup forward foreign currency contracts (272) (414) -
Cross currency swaps (293) (347) (280)
Total carrying value of derivative financial liabilities (1,119) (1,411) (1,003)
Total carrying value of derivative financial instruments (456) (645) (53)
Analysed as:
Interest rate swaps (60) (17) 57
Foreign exchange contracts (5) (19) 7
Intragroup forward foreign currency contracts (272) (414) -
Cross currency swaps (119) (195) (117)
Total carrying value of derivative financial instruments (456) (645) (53)
The Company's derivative financial instruments are held at fair value. Fair
values are determined based on observable market data such as yield curves and
foreign exchange rates to calculate the present value of future cash flows
associated with each derivative at the balance sheet date, and are consistent
with those applied for the year ended 30 September 2023.
All financial assets and liabilities are carried on the balance sheet at
amortised cost, other than derivative financial instruments which are carried
at fair value. Derivative fair values are determined based on observable
market data such as yield curves, foreign exchange rates and credit default
swap prices to calculate the present value of future cash flows associated
with each derivative at the balance sheet date (Level 2 classification
hierarchy per IFRS 7). Market data is sourced through Bloomberg and valuations
are validated by reference to counterparty valuations where appropriate. Some
of the Company's derivative financial instruments contain early termination
options and these have been considered when assessing the element of the fair
value related to credit risk. On this basis the reduction in reported net
derivative liabilities due to credit risk is £7 million (2023: £10 million)
and would have been a £9 million (2023: £20 million) reduction without
considering the early termination options. There were no changes to the
valuation methods or transfers between hierarchies during the year. With the
exception of capital market issuance, the fair value of all financial assets
and financial liabilities is considered approximate to their carrying amount.
7. Other receivables
Unaudited Unaudited Audited
(In £ million) 6 months ended 31 March 2024 6 months Year ended
ended 31 30 September 2023
March 2023
Amounts owed by Group undertakings 29,649 29,980 28,610
Other receivables and prepayments 18 8 14
29,667 29,988 28,624
Amounts owed by Group undertakings are unsecured, both interest bearing and
non-interest bearing and can be either repayable on a future date to be
mutually agreed between the Company and the counterparty borrower or have
fixed repayment dates. At 31 March 2024 £26,531 million (2023: £26,738
million) of the amounts owed by Group undertakings is repayable on a mutually
agreed future date and £3,118 million (2023: £3,242 million) were term
loans. There were £29,623 million (2023: £29,954 million) of interest
bearing loans and £26 million (2023: £26 million) of non-interest bearing
loans. Where loans were subject to interest the rates charged varied from
0.131% to 12.000% (2023: 0.131% to 13.750%).
The Directors have assessed the extent to which amounts owed by the Group
companies are impaired. For those balances that are neither overdue nor
impaired the Directors have concluded that the expected credit losses (ECL)
that are possible from default events over the next twelve months are
immaterial and consequently no allowance for impairment has been recognised.
For those balances assessed to be impaired, an expected credit loss adjustment
of £582 million (31 March 2023: £535 million) has been recognised to reflect
the credit risk inherent within a number of the current intragroup loans
receivable, as disclosed in the following table.
31 March 2024
Gross amount ECL allowance Net balance
Group undertaking loan receivable balances that are not impaired 29,438 - 29,438
Group undertaking loan receivable balances that are impaired 793 (582) 211
30,231 (582) 29,649
31 March 2023
Gross amount ECL allowance Net balance
Group undertaking loan receivable balances that are not impaired 29,740 - 29,740
Group undertaking loan receivable balances that are impaired 775 (535) 240
30,515 (535) 29,980
30 September 2023
Gross amount ECL allowance Net balance
Group undertaking loan receivable balances that are not impaired 28,401 - 28,401
Group undertaking loan receivable balances that are impaired 792 (583) 209
29,193 (583) 28,610
The provision released during the period was £1 million (2023: £73 million).
8. Related party transactions
The Company has taken advantage of the Group dispensation permitted under FRS
101 for 100% owned Group subsidiaries, not to disclose intragroup transactions
undertaken during the period.
During the period the Company charged interest and other expenses to
Compañía de Distribución Integral Logista S.A.U. to the value of €9
million (2023: €5 million). At 31 March 2024, the Company had an
outstanding balance receivable due from Compañía de Distribucion Integral
Logista SAU totalling €689 million (2023: €515 million).
During the period the Company was charged interest to the value of €34
million by Logista France SAS (2023: €19 million). At 31 March 2024, the
Company had an outstanding balance payable to Logista France SAS totalling
€1,201 million (2023: €1,349 million).
During the period the Company was charged interest to the value of €27
million by Logista Italia SpA (2023: €15 million). At 31 March 2024, the
Company had an outstanding balance payable to Logista Italia SpA totalling
€974 million (2023: €1,057 million).
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