REG - Imperial Tobacco Gp - Final Results <Origin Href="QuoteRef">IMT.L</Origin> - Part 2
04/11/2014 08:05
- Part 2: For the preceding part double click ID:nRSD0746Wa
the context of the maturity profile
of the Group's facilities. The Group plans its financing in a structured and
proactive manner and remains confident that sources of financing will be
available when required.
In relation to the proposed acquisition of certain brands and assets as a
result of the acquisition of Lorillard by Reynolds American, we have entered
into committed bank facilities of £7.7 billion, comprising term loan and
revolving credit facilities.
Based on its review, the Board is of the opinion that the Group as a whole and
Imperial Tobacco Group PLC have adequate resources to meet their operational
needs for a period of twelve months from the date of this report and conclude
that it is appropriate to prepare the financial statements on a going concern
basis.
Financial Reporting
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
Financial Statements
The figures and financial information for the year ended 30 September 2014 do
not constitute the statutory financial statements for that year. Those
financial statements have not yet been delivered to the Registrar, nor have
the Auditors yet reported on them. The financial statements have been prepared
in accordance with our accounting policies published in our financial
statements available on our website www.imperial-tobacco.com.
Consolidated Income Statement
for the year ended 30 September
£ million unless otherwise indicated Notes 2014 2013
Revenue 1 26,625 28,269
Duty and similar items (12,928) (13,681)
Other cost of sales (8,422) (9,059)
Cost of sales (21,350) (22,740)
Gross profit 5,275 5,529
Distribution, advertising and selling costs (1,946) (2,053)
Acquisition costs (13) -
Amortisation of acquired intangibles (644) (372)
Impairment of acquired intangibles - (580)
Restructuring costs 2 (305) (270)
Other expenses (303) (296)
Administrative and other expenses (1,265) (1,518)
Operating profit 2,064 1,958
Investment income 3 517 724
Finance costs 3 (1,061) (1,463)
Net finance costs 3 (544) (739)
Profit before taxation 1,520 1,219
Taxation 4 (69) (290)
Profit for the year 1,451 929
Attributable to:
Owners of the parent 1,422 905
Non-controlling interests 29 24
Earnings per ordinary share (pence)
- Basic 6 148.5 92.9
- Diluted 6 148.1 92.7
Consolidated Statement of Comprehensive Income
for the year ended 30 September
£ million 2014 2013
Profit for the year 1,451 929
Other comprehensive income
Exchange movements (581) 164
Current tax on exchange movements - 40
Items that may be reclassified to profit and loss (581) 204
Net actuarial gains on retirement benefits 45 43
Deferred tax relating to net actuarial gains on
retirement benefits (1) (42)
Items that will not be reclassified to profit and loss 44 1
Other comprehensive income for the year, net of tax (537) 205
Total comprehensive income for the year 914 1,134
Attributable to:
Owners of the parent 900 1,108
Non-controlling interests 14 26
Total comprehensive income for the year 914 1,134
Reconciliation from operating profit to adjusted operating profit
£ million 2014 2013
Operating profit 2,064 1,958
Acquisition costs 13 -
Amortisation of acquired intangibles 644 372
Impairment of acquired intangibles - 580
Restructuring costs 305 270
Adjusted operating profit 3,026 3,180
Reconciliation from net finance costs to adjusted net finance costs
£ million 2014 2013
Net finance costs (544) (739)
Net fair value and exchange (gains)/losses on financial
instruments (12) 156
Post-employment benefits net financing cost 40 51
Adjusted net finance costs (516) (532)
Consolidated Balance Sheet
at 30 September
£ million 2014 2013
Non-current assets
Intangible assets 15,859 17,382
Property, plant and equipment 1,862 2,080
Investments in associates 17 17
Retirement benefit assets 44 5
Trade and other receivables 75 85
Derivative financial instruments 605 312
Deferred tax assets 241 153
18,703 20,034
Current assets
Inventories 2,935 3,296
Trade and other receivables 2,806 2,966
Current tax assets 96 72
Cash and cash equivalents 1,431 1,809
Derivative financial instruments 38 245
7,306 8,388
Total assets 26,009 28,422
Current liabilities
Borrowings (468) (3,276)
Derivative financial instruments (46) (219)
Trade and other payables (6,990) (7,354)
Current tax liabilities (133) (141)
Provisions (176) (92)
(7,813) (11,082)
Non-current liabilities
Borrowings (9,464) (7,858)
Derivative financial instruments (645) (531)
Trade and other payables (21) (17)
Deferred tax liabilities (1,453) (1,820)
Retirement benefit liabilities (824) (1,055)
Provisions (312) (407)
(12,719) (11,688)
Total liabilities (20,532) (22,770)
Net assets 5,477 5,652
Equity
Share capital 104 107
Share premium and capital redemption 5,836 5,833
Retained earnings (756) (791)
Exchange translation reserve (119) 447
Equity attributable to owners of the parent 5,065 5,596
Non-controlling interests 412 56
Total equity 5,477 5,652
Consolidated Statement of Changes in Equity
for the year ended 30 September
£ million Sharecapital Sharepremium &capitalredemption Retainedearnings Exchangetranslationreserve Equityattrib-utabletoownersof theparent Non-control-linginterests Totalequity
At 1 October 2013 107 5,833 (791) 447 5,596 56 5,652
Profit for the year - - 1,422 - 1,422 29 1,451
Exchange movements - - - (566) (566) (15) (581)
Net actuarial gains on
retirement benefits - - 45 - 45 - 45
Deferred tax relating to net
actuarial gains on
retirement benefits - - (1) - (1) - (1)
Other comprehensive income - - 44 (566) (522) (15) (537)
Total comprehensive income - - 1,466 (566) 900 14 914
Transactions with owners
Cash from employees on
maturity/ exercise of
share schemes - - 6 - 6 - 6
Purchase of shares by Employee
Share Ownership Trusts - - (2) - (2) - (2)
Costs of employees' services
compensated by share
schemes - - 20 - 20 - 20
Current tax on share-based
payments - - 3 - 3 - 3
Increase in own shares held as
treasury shares - - (341) - (341) - (341)
Cancellation of own shares held
as treasury shares (3) 3 - - - - -
Changes in non-controlling
interests - - (363) - (363) 363 -
Proceeds, net of fees, from
the disposal of Logista IPO - - 395 - 395 - 395
Dividends paid - - (1,149) - (1,149) (21) (1,170)
At 30 September 2014 104 5,836 (756) (119) 5,065 412 5,477
At 1 October 2012 107 5,833 (150) 245 6,035 49 6,084
Profit for the year - - 905 - 905 24 929
Exchange movements - - - 162 162 2 164
Current tax on exchange
movements - - - 40 40 - 40
Net actuarial gains on
retirement benefits - - 43 - 43 - 43
Deferred tax relating to net
actuarial gains on
retirement benefits - - (42) - (42) - (42)
Other comprehensive income - - 1 202 203 2 205
Total comprehensive income - - 906 202 1,108 26 1,134
Transactions with owners
Cash from employees on
maturity/exercise of
share schemes - - 6 - 6 - 6
Purchases of shares by
Employee Share
Ownership Trusts - - (4) - (4) - (4)
Costs of employees' services
compensated by share
schemes - - 14 - 14 - 14
Current tax on share-based
payments - - 2 - 2 - 2
Increase in own shares held as
treasury shares - - (500) - (500) - (500)
Dividends paid - - (1,065) - (1,065) (19) (1,084)
At 30 September 2013 107 5,833 (791) 447 5,596 56 5,652
Consolidated Cash Flow Statement
for the year ended 30 September
£ million 2014 2013
Cash flows from operating activities
Operating profit 2,064 1,958
Share of post-tax (profit)/loss of associates (3) 1
Depreciation, amortisation and impairment 920 1,215
Loss/(profit) on disposal of property, plant and equipment 6 (5)
Loss on disposal of software 3 1
Loss on disposal of businesses - 13
Post-employment benefits (156) (34)
Costs of employees' services compensated by share schemes 22 18
Movement in provisions 19 (47)
Operating cash flows before movement in working capital 2,875 3,120
Decrease/(increase) in inventories 119 (93)
(Increase)/decrease in trade and other receivables (33) 151
Increase/(decrease) in trade and other payables 44 (140)
Movement in working capital 130 (82)
Taxation paid (457) (686)
Net cash flows generated by operating activities 2,548 2,352
Cash flows from investing activities
Interest received 10 9
Purchase of property, plant and equipment (256) (269)
Proceeds from sale of property, plant and equipment 59 14
Purchase of intangible assets - software (37) (27)
Internally generated intellectual property rights (4) (9)
Purchase of intangible assets - intellectual property rights (46) -
Purchases of businesses - net of cash acquired - (35)
Proceeds from sale of businesses - net of cash disposed - 1
Net cash used in investing activities (274) (316)
Cash flows from financing activities
Interest paid (550) (522)
Cash from employees on maturity/exercise of share schemes 6 6
Purchase of shares by Employee Share Ownership Trusts (2) (6)
Increase in borrowings 2,324 4,884
Repayment of borrowings (3,200) (3,443)
Cash flows relating to derivative financial instruments (121) (28)
Finance lease payments - (20)
Purchase of treasury shares (341) (500)
Proceeds from sale of shares in a subsidiary to non-controlling
interests (net of fees) 395 -
Dividends paid to non-controlling interests (21) (19)
Dividends paid to owners of the parent (1,149) (1,065)
Net cash used in financing activities (2,659) (713)
Net (decrease)/increase in cash and cash equivalents (385) 1,323
Cash and cash equivalents at start of year 1,809 631
Effect of foreign exchange rates on cash and cash equivalents 7 (145)
Cash and cash equivalents at end of year 1,431 1,809
Notes to the Financial Statements
1. Segment Information
Imperial Tobacco comprises two distinct businesses - Tobacco and Logistics.
The Tobacco business comprises the manufacture, marketing and sale of tobacco
and tobacco-related products, including sales to (but not by) the Logistics
business. The Logistics business comprises the distribution of tobacco
products for tobacco product manufacturers, including Imperial Tobacco, as
well as a wide range of non-tobacco products and services. The Logistics
business is run on an operationally neutral basis ensuring all customers are
treated equally, and consequently transactions between the Tobacco and
Logistics businesses are undertaken on an arm's length basis reflecting market
prices for comparable goods and services.
The Tobacco business is managed based on the strategic role of groups of
markets rather than their geographic proximity, with divisions focused on
prioritising growth or returns. Returns Markets are typically mature markets
where we have relatively large market shares and our objective is to maximise
returns over the long term by growing profits while actively managing market
share. Growth Markets are mainly large profit or volume pools where we
typically have market shares below 15 per cent and where our total tobacco
approach provides many opportunities for share and profit growth both now and
in the future.
The function of Chief Operating Decision Maker (defined in IFRS 8), which is
to review performance and allocate resources, is performed by the Board and
the Chief Executive, who are regularly provided with information on our
segments. This information is used as the basis of the segment revenue and
profit disclosures provided below. The main profit measure used by the Board
and the Chief Executive is adjusted operating profit. Segment balance sheet
information is not provided to the Board or the Chief Executive. Our
reportable segments are Returns Markets North, Returns Markets South, Growth
Markets (which includes our Cuban joint ventures and Fontem Ventures) and
Logistics. Prevailing market characteristics such as maturity, excise
structure and the breadth of the distribution networks determine the
allocation of Returns Markets between Returns Markets North and Returns
Markets South.
The main tobacco business markets in each of the reportable segments are:
Returns Markets North - Australia, Belgium, Germany, Netherlands, Poland,
United Kingdom;
Returns Markets South - France, Spain and our African markets including
Algeria, Ivory Coast, Morocco;
Growth Markets - Iraq, Norway, Russia, Saudi Arabia, Taiwan, United States of
America.
Tobacco
£ million unless otherwise indicated 2014 2013
Revenue 19,656 20,881
Net revenue 6,576 7,007
Operating profit 1,970 1,888
Adjusted operating profit 2,850 3,003
Adjusted operating margin % 43.3 42.9
Logistics
£ million unless otherwise indicated 2014 2013
Revenue 7,784 8,288
Distribution fees 848 850
Operating profit 84 69
Adjusted operating profit 166 176
Adjusted distribution margin % 19.6 20.7
Revenue
2014 2013
£ million Totalrevenue Externalrevenue Totalrevenue Externalrevenue
Tobacco
Returns Markets North 12,939 12,915 13,527 13,506
Returns Markets South 2,824 2,080 3,051 2,222
Growth Markets 3,893 3,846 4,303 4,253
Total Tobacco 19,656 18,841 20,881 19,981
Logistics 7,784 7,784 8,288 8,288
Eliminations (815) - (900) -
Total Group 26,625 26,625 28,269 28,269
Tobacco net revenue
£ million 2014 2013
Returns Markets North 2,801 2,929
Returns Markets South 1,662 1,824
Growth Markets 2,113 2,254
Total Tobacco 6,576 7,007
Adjusted operating profit and reconciliation to profit before tax
£ million 2014 2013
Tobacco
Returns Markets North 1,511 1,543
Returns Markets South 742 792
Growth Markets 597 668
Total Tobacco 2,850 3,003
Logistics 166 176
Eliminations 10 1
Adjusted operating profit 3,026 3,180
Acquisition costs - Tobacco (13) -
Amortisation of acquired intangibles - Tobacco (562) (288)
Amortisation of acquired intangibles - Logistics (82) (84)
Impairment of acquired intangibles - Tobacco - (580)
Restructuring costs - Tobacco (305) (247)
Restructuring costs - Logistics - (23)
Operating profit 2,064 1,958
Net finance costs (544) (739)
Profit before tax 1,520 1,219
2. Restructuring Costs
£ million 2014 2013
Employment related 149 107
Asset impairments 71 83
Other charges 85 80
305 270
The net charge for the year of £305 million (2013: £270 million) included £9
million (2013: £24 million) of unused provisions reversed during the year,
£193 million (2013: £163 million) of additional restructuring provisions and
£71 million (2013: £83 million) impairment of tangible assets. The remaining
charge of £50 million (2013: £48 million) was charged directly to the
consolidated income statement as incurred. Restructuring cash flow in the
year was approximately £120 million (2013: £200 million), mainly due to the
cost optimisation programme.
In January 2013 we announced our cost optimisation programme, aligned to our
strategy, with a target of generating annual savings of £300 million by 2018,
and with an anticipated cash implementation cost in the region of £600
million. The programme includes major restructuring of a number of sales
forces to align with our strategy, rationalisation of our manufacturing
footprint, and aligning organisational structures, processes and resource
levels with future requirements. A number of initiatives delivered savings of
over £60 million in our 2014 results (2013: £30 million).
Asset impairments in 2014 relate mainly to the proposed closure of our
manufacturing facilities in Nottingham and Nantes while in 2013 they were
mainly due to the closure of our facility in Cadiz.
Restructuring costs are included within administrative and other expenses in
the consolidated income statement.
3. Net Finance Costs and Reconciliation to Adjusted Net Finance Costs
Reconciliation from reported net finance costs to adjusted net finance costs
£ million 2014 2013
Reported net finance costs 544 739
Fair value gains on derivative financial instruments 271 479
Fair value losses on derivative financial instruments (358) (589)
Exchange gains/(losses) on financing activities 99 (46)
Net fair value and exchange gains/(losses) on financial instruments 12 (156)
Interest income on net defined benefit assets 138 126
Interest cost on net defined benefit liabilities (174) (168)
Unwind of discount on redundancy and other long-term provisions (4) (9)
Post-employment benefits net financing cost (40) (51)
Adjusted net finance costs 516 532
Compromising:
Interest credit on bank deposits (9) (8)
Interest charge on bank and other loans 525 540
Adjusted net finance costs 516 532
Amounts in 2013 have been reclassified from fair value gains/losses on
derivative financial instruments to exchange gains/losses on financing
activities, to better reflect the nature of the transactions and the way the
group manages its financial risks and to ensure comparable data from year to
year.
4. Taxation
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