REG - Imperial Brands PLC - Final Results <Origin Href="QuoteRef">IMB.L</Origin> - Part 3

Imperial BrandsAnnouncement

08/11/2016 07:05

- Part 3: For the preceding part double click  ID:nRSH5802Ob 

year is £99 million (2015: £77 million) less than the
current tax charge.  This arises as a result of timing differences between the
accrual of income taxes and the actual payment of cash and the movement in the
provision for uncertain tax positions. 
 
Uncertain tax positions 
 
As an international business the Group is exposed to uncertain tax positions
and changes in legislation in the jurisdictions in which it operates.  The
Group's uncertain tax positions principally include cross border transfer
pricing, interpretation of new or complex tax legislation and tax arising on
the valuation of assets.  The Group is also monitoring developments in
relation to EU State Aid investigations but does not currently consider any
provision is required.  The assessment of uncertain tax positions is
subjective and significant management judgement is required.  This judgement
is based on interpretation of legislation, management experience and
professional advice. 
 
Provisions arising from uncertain tax positions taken in the calculation of
tax assets and liabilities are included within current tax liabilities.  At 30
September 2016 the total value of these provisions, including foreign exchange
movements, was £165 million (2015: £114 million).  It is possible that amounts
paid will be different from the amounts provided. 
 
Management have assessed the Group's provision for uncertain tax positions and
are comfortable that apart from the French matter referred to below, the
provisions in place are not material individually or in aggregate, and that a
reasonably possible change in the next financial year would not have a
material impact to the results of the Group. 
 
In November 2015 the Group received a challenge from the French tax
authorities that could lead to additional tax liabilities of up to £253
million. The challenge concerns the valuation placed on the shares of Altadis
Distribution France (now known as Logista France) following an intra group
transfer of the shares in October 2012 and the tax consequences flowing from a
potentially higher value that is argued for by the tax authorities. Based on
professional advice, an amount of £41 million (2015: £23 million) is included
in the provision for uncertain tax positions. 
 
7. Dividends 
 
 Distributions to ordinary equity holders                                              
 £ million                                                                             2016   2015   2014   
 Paid interim of 47.0 pence per share (2015: 91.9p, 2014: 38.8p)                                            
 - Paid August 2014                                                                    -      -      370    
 - Paid June 2015                                                                      -      204    -      
 - Paid September 2015                                                                 -      204    -      
 - Paid December 2015                                                                  -      468    -      
 - Paid June 2016                                                                      225    -      -      
 - Paid September 2016                                                                 225    -      -      
 Interim dividend paid                                                                 450    876    370    
 Proposed interim of 54.1 pence per share (2015: nil, 2014: nil)                                            
 - To be paid December 2016                                                            516    -      -      
 Interim dividend proposed                                                             516    -      -      
 Proposed final of 54.1 pence per share (2015: 49.1p, 2014: 89.3p)                                          
 - Paid February 2015                                                                  -      -      851    
 - Paid March 2016                                                                     -      468    -      
 - To be paid March 2017                                                               516    -      -      
 Final dividend                                                                        516    468    851    
 Total ordinary share dividends of 155.2 pence per share (2015: 141.0p, 2014: 128.1p)  1,482  1,344  1,221  
 
 
The third interim dividend for the year ended 30 September 2016 of 54.1 pence
per share amounts to a proposed dividend of £516 million, which will be paid
in December 2016. 
 
The proposed final dividend for the year ended 30 September 2016 of 54.1 pence
per share amounts to a proposed dividend payment of £516 million in March 2017
based on the number of shares ranking for dividend at 30 September 2016, and
is subject to shareholder approval.  If approved, the total dividend paid in
respect of 2016 will be £1,482 million (2015: £1,344 million).  The dividend
paid during 2016 is £1,386 million (2014: £1,259 million). 
 
8. Earnings per Share 
 
Basic earnings per share is based on the profit for the year attributable to
the owners of the parent and the weighted average number of ordinary shares in
issue during the year excluding shares held to satisfy the Group's employee
share schemes and shares purchased by the Company and held as treasury shares.
Diluted earnings per share have been calculated by taking into account the
weighted average number of shares that would be issued if rights held under
the employee share schemes were exercised. No instruments have been excluded
from the calculation for any period on the grounds that they are
anti-dilutive. 
 
 £ million                                                                   2016   2015   
 Earnings: basic and diluted - attributable to owners of the Parent Company  631    1,691  
                                                                                           
 Millions of shares                                                                        
 Weighted average number of shares:                                                        
 Shares for basic earnings per share                                         954.0  953.4  
 Potentially dilutive share options                                          2.7    2.5    
 Shares for diluted earnings per share                                       956.7  955.9  
                                                                                           
 Pence                                                                                     
 Basic earnings per share                                                    66.1   177.4  
 Diluted earnings per share                                                  66.0   176.9  
 
 
 Reconciliation from reported to adjusted earnings and earnings per share  
                                                                           2016                        2015      
 £ million unless otherwise indicated                                      Earnings per share (pence)  Earnings  Earnings per share (pence)  Earnings  
 Reported basic                                                            66.1                        631       177.4                       1,691     
 Acquisition costs                                                         -                           -         4.2                         40        
 Amortisation of acquired intangibles                                      78.0                        744       57.5                        548       
 Net fair value and exchange movements on financial instruments            76.2                        727       (22.7)                      (215)     
 Post-employment benefits net financing cost                               1.3                         12        1.5                         14        
 Restructuring costs                                                       23.9                        228       24.9                        237       
 Tax on unrecognised losses                                                5.9                         56        (28.6)                      (273)     
 Adjustments attributable to non-controlling interests                     (1.8)                       (17)      (1.7)                       (16)      
 Adjusted                                                                  249.6                       2,381     212.5                       2,026     
 Adjusted diluted                                                          248.9                       2,381     211.9                       2,026     
 
 
9. Net Debt 
 
The movements in cash and cash equivalents, borrowings, and derivative
financial instruments in the year were as follows: 
 
 £ million                                                       Cash and cashequivalents  Currentborrowings  Non-currentborrowings  Derivativefinancialinstruments  Total     
 At 1 October 2015                                               2,042                     (1,957)            (12,250)               215                             (11,950)  
 Reallocation of current borrowings from non-current borrowings  -                         (471)              471                    -                               -         
 Cash flow                                                       (956)                     1,017              723                    209                             993       
 Accretion of interest                                           -                         94                 (13)                   (23)                            58        
 Change in fair values                                           -                         -                  -                      (1,056)                         (1,056)   
 Exchange movements                                              188                       (227)              (1,325)                -                               (1,364)   
 As at 30 September 2016                                         1,274                     (1,544)            (12,394)               (655)                           (13,319)  
 
 
Adjusted net debt 
 
Management monitors the Group's borrowing levels using adjusted net debt which
excludes interest accruals and the fair value of derivative financial
instruments providing commercial cash flow hedges. 
 
 £ million                                              2016      2015      
 Reported net debt                                      (13,319)  (11,950)  
 Accrued interest                                       221       279       
 Fair value of derivatives providing commercial hedges  216       25        
 Adjusted net debt                                      (12,882)  (11,646)  
 
 
10. Derivative Financial Instruments 
 
                                                           2016    2015         
 £ million                                                 Assets  Liabilities  Net Fair Value  Assets  Liabilities  Net Fair Value  
 Current derivative financial instruments                                                                                            
 Interest rate swaps                                       32      (60)         (28)            55      (20)         35              
 Foreign exchange contracts                                9       (11)         (2)             13      (5)          8               
 Cross-currency swaps                                      5       (121)        (116)           6       -            6               
 Total current derivatives                                 46      (192)        (146)           74      (25)         49              
 Collateral                                                -       74           74              -       -            -               
                                                           46      (118)        (72)            74      (25)         49              
 Non-current derivative financial instruments                                                                                        
 Interest rate swaps                                       1,063   (1,279)      (216)           666     (753)        (87)            
 Cross-currency swaps                                      -       (427)        (427)           235     (23)         212             
 Total non-current derivatives                             1,063   (1,706)      (643)           901     (776)        125             
 Collateral                                                -       60           60              -       41           41              
                                                           1,063   (1,646)      (583)           901     (735)        166             
 Total carrying value of derivative financial instruments  1,109   (1,764)      (655)           975     (760)        215             
 Analysed as                                                                                                                         
 Interest rate swaps                                       1,096   (1,339)      (244)           721     (773)        (52)            
 Foreign exchange contracts                                9       (11)         (2)             13      (5)          8               
 Cross-currency swaps                                      5       (548)        (543)           241     (23)         218             
 Collateral                                                -       134          134             -       41           41              
 Total carrying value of derivative financial instruments  1,109   (1,764)      (655)           975     (760)        215             
 
 
The Groups' derivative financial instruments are held at fair value.  Fair
values are determined based on observable market data (Level 2 classification
hierarchy) and are consistent with those applied during the year ended 30
September 2015. 
 
This information is provided by RNS
The company news service from the London Stock Exchange