REG - Imperial Tobacco Gp - Final Results <Origin Href="QuoteRef">IMT.L</Origin> - Part 2
03/11/2015 07:01
- Part 2: For the preceding part double click ID:nRSC3269Ea
Concern
The Group's policy is to ensure that we always have sufficient capital markets
funding and committed bank facilities in place to meet foreseeable peak
borrowing requirements.
In reviewing the Group's committed funding and liquidity positions, the Board
considered various sensitivity analyses when assessing the forecast funding
and headroom requirements of the Group in 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.
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 at least 12 months from the date of this report and
conclude that it is appropriate to prepare the financial statements on a going
concern basis.
Oliver Tant
Chief Financial Officer
FINANCIAL STATEMENTS
The figures and financial information for the year ended 30 September 2015 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 2015 2014 (Restated)
Revenue 3 25,289 26,460
Duty and similar items (12,585) (12,928)
Other cost of sales (7,533) (8,351)
Cost of sales (20,118) (21,279)
Gross profit 5,171 5,181
Distribution, advertising and selling costs (1,857) (1,929)
Acquisition costs (40) (13)
Amortisation of acquired intangibles (697) (644)
Restructuring costs 4 (328) (305)
Other expenses (261) (271)
Administrative and other expenses (1,326) (1,233)
Operating profit 3 1,988 2,019
Investment income 948 516
Finance costs (1,209) (1,059)
Net finance costs 5 (261) (543)
Share of profit of investments accounted for using the equity method 29 49
Profit before taxation 1,756 1,525
Taxation 6 (33) (80)
Profit for the year 1,723 1,445
Attributable to:
Owners of the parent 1,691 1,422
Non-controlling interests 32 23
Earnings per ordinary share (pence)
- Basic 8 177.4 148.5
- Diluted 8 176.9 148.1
Results and financial positions for 30 September 2014 have been restated on
adoption of IFRS 11 - see note 1.
Consolidated Statement of Comprehensive Income
For the Year Ended 30 September £ million 2015 2014 (Restated)
Profit for the year 1,723 1,445
Other comprehensive income
Exchange movements (198) (581)
Items that may be reclassified to profit and loss (198) (581)
Net actuarial (losses)/gains on retirement benefits (28) 45
Deferred tax relating to net actuarial losses/(gains) on retirement benefits 5 (1)
Items that will not be reclassified to profit and loss (23) 44
Other comprehensive income for the year, net of tax (221) (537)
Total comprehensive income for the year 1,502 908
Attributable to:
Owners of the parent 1,489 900
Non-controlling interests 13 8
Total comprehensive income for the year 1,502 908
Reconciliation from operating profit to adjusted operating profit
£ million Notes 2015 2014 (Restated)
Operating profit 1,988 2,019
Acquisition costs 40 13
Amortisation of acquired intangibles 697 644
Restructuring costs 4 328 305
Adjusted operating profit 3,053 2,981
Reconciliation from net finance costs to adjusted net finance costs
£ million Notes 2015 2014 (Restated)
Net finance costs (261) (543)
Net fair value and exchange gains on financial instruments 5 (226) (12)
Post-employment benefits net financing cost 5 20 40
Adjusted net finance costs (467) (515)
Results and financial positions for 30 September 2014 have been restated on
adoption of IFRS 11 - see note 1.
Consolidated Balance Sheet
At 30 September £ million Notes 2015 2014 (Restated) 2013 (Restated)
Non-current assets
Intangible assets 11 18,690 15,334 16,855
Property, plant and equipment 1,768 1,854 2,069
Investments accounted for using the equity method 598 561 546
Retirement benefit assets 92 44 5
Trade and other receivables 84 69 80
Derivative financial instruments 10 901 605 312
Deferred tax assets 533 241 153
22,666 18,708 20,020
Current assets
Inventories 2,842 2,875 3,239
Trade and other receivables 2,454 2,761 2,899
Current tax assets 56 96 72
Cash and cash equivalents 9 2,042 1,413 1,793
Derivative financial instruments 10 74 38 245
7,468 7,183 8,248
Total assets 30,134 25,891 28,268
Current liabilities
Borrowings 9 (1,957) (429) (3,236)
Derivative financial instruments 10 (25) (46) (219)
Trade and other payables (6,795) (6,957) (7,303)
Current tax liabilities (167) (128) (137)
Provisions 4 (197) (175) (89)
(9,141) (7,735) (10,984)
Non-current liabilities
Borrowings 9 (12,250) (9,462) (7,857)
Derivative financial instruments 10 (735) (645) (531)
Trade and other payables (13) (21) (17)
Deferred tax liabilities (1,170) (1,430) (1,779)
Retirement benefit liabilities (909) (824) (1,055)
Provisions 4 (220) (311) (406)
(15,297) (12,693) (11,645)
Total liabilities (24,438) (20,428) (22,629)
Net assets 5,696 5,463 5,639
Equity
Share capital 104 104 107
Share premium and capital redemption 5,836 5,836 5,833
Retained earnings (315) (756) (791)
Exchange translation reserve (298) (119) 447
Equity attributable to owners of the parent 5,327 5,065 5,596
Non-controlling interests 369 398 43
Total equity 5,696 5,463 5,639
Results and financial positions for 30 September 2014 have been restated on
adoption of IFRS 11 - see note 1.
Consolidated Statement of Changes in Equity
For the Year Ended 30 September
£ million Sharecapital Sharepremiumand capitalredemption Retainedearnings Exchangetranslationreserve Equityattributableto ownersof theparent Non-controllinginterests Totalequity
At 1 October 2014 (Restated) 104 5,836 (756) (119) 5,065 398 5,463
Profit for the year - - 1,691 - 1,691 32 1,723
Other comprehensive income - - (23) (179) (202) (19) (221)
Total comprehensive income - - 1,668 (179) 1,489 13 1,502
Transactions with owners
Cash from employees on maturity/exercise of share schemes - - 7 - 7 - 7
Costs of employees' services compensated by share schemes - - 22 - 22 - 22
Current tax on share-based payments - - 3 - 3 - 3
Dividends paid - - (1,259) - (1,259) (42) (1,301)
At 30 September 2015 104 5,836 (315) (298) 5,327 369 5,696
Results and financial positions for 30 September 2014 have been restated on adoption of IFRS 11 - see note 1.
At 1 October 2013 (Restated) 107 5,833 (791) 447 5,596 43 5,639
Profit for the year - - 1,422 - 1,422 23 1,445
Other comprehensive income - - 44 (566) (522) (15) (537)
Total comprehensive income - - 1,466 (566) 900 8 908
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) (16) (1,165)
At 30 September 2014 (Restated) 104 5,836 (756) (119) 5,065 398 5,463
Results and financial positions for 30 September 2014 have been restated on adoption of IFRS 11 - see note 1.
Consolidated Cash Flow Statement
For Year Ended 30 September £ million 2015 2014 (Restated)
Cash flows from operating activities
Operating profit 1,988 2,019
Dividends received from investments accounted for under the equity method 24 2
Depreciation, amortisation and impairment 940 919
(Profit)/loss on disposal of property, plant and equipment (2) 6
Profit on disposal of intellectual property (31) -
Loss on disposal of software - 3
Post-employment benefits (50) (156)
Costs of employees' services compensated by share schemes 25 22
Movement in provisions (67) 17
Operating cash flows before movement in working capital 2,827 2,832
Decrease in inventories 21 121
Decrease/(increase) in trade and other receivables 218 (29)
Increase in trade and other payables 89 29
Movement in working capital 328 121
Taxation paid (408) (451)
Net cash flows generated by operating activities 2,747 2,502
Cash flows from investing activities
Interest received 10 10
Purchase of property, plant and equipment (194) (255)
Proceeds from sale of property, plant and equipment 39 59
Proceeds from the sale of intellectual property 31 -
Purchase of intangible assets - software (44) (37)
Internally generated intellectual property rights (16) (4)
Purchase of brands and operations (4,613) -
Purchase of intangible assets - intellectual property rights - (46)
Net cash used in investing activities (4,787) (273)
Cash flows from financing activities
Interest paid (459) (543)
Cash from employees on maturity/exercise of share schemes 7 6
Purchase of shares by Employee Share Ownership Trusts - (2)
Increase in borrowings 4,720 2,303
Repayment of borrowings (380) (3,200)
Repayment of loan to joint ventures - 52
Cash flows relating to derivative financial instruments 139 (121)
Purchase of treasury shares - (341)
Proceeds from sale of shares in a subsidiary to non-controlling interests (net of fees) - 395
Dividends paid to non-controlling interests (42) (16)
Dividends paid to owners of the parent (1,259) (1,149)
Net cash used in financing activities 2,726 (2,616)
Net increase/(decrease) in cash and cash equivalents 686 (387)
Cash and cash equivalents at start of year 1,413 1,793
Effect of foreign exchange rates on cash and cash equivalents (57) 7
Cash and cash equivalents at end of year 2,042 1,413
Results and financial positions for 30 September 2014 have been restated on adoption of IFRS 11 - see note 1.
Notes to the Financial Statements
1. Accounting Policies
New Accounting Standards and Interpretations
The following standards became effective for the current reporting period:
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
Only the application of IFRS 11 had a material effect on the net assets or
results of the Group. The impact on the Group's results and net assets is as
follows:
Income Statement Year ended 30 September 2014
£ million Previously reported Adjustment Restated
Revenue 26,625 (165) 26,460
Duty and similar items (12,928) - (12,928)
Other cost of sales (8,422) 71 (8,351)
Cost of sales (21,350) 71 (21,279)
Gross profit 5,275 (94) 5,181
Distribution, advertising and selling costs (1,946) 17 (1,929)
Amortisation of acquired intangibles (644) - (644)
Other expenses (621) 32 (589)
Administrative and other expenses (1,265) 32 (1,233)
Operating profit 2,064 (45) 2,019
Investment income 517 (1) 516
Finance costs (1,061) 2 (1,059)
Net finance costs (544) 1 (543)
Share of profit of investments accounted for using the equity method - 49 49
Profit before taxation 1,520 5 1,525
Taxation (69) (11) (80)
Profit for the year 1,451 (6) 1,445
Attributable to:
Owners of the parent 1,422 - 1,422
Non-controlling interests 29 (6) 23
Balance Sheet Year ended Year ended
30 September 2014 30 September 2013
£ million Previously reported Adjustment Restated Previously reported Adjustment Restated
Non-current assets
Intangible assets 15,859 (525) 15,334 17,382 (527) 16,855
Investments accounted for using the equity method - 561 561 - 546 546
Other non-current assets 2,844 (31) 2,813 2,652 (33) 2,619
Current assets 7,306 (123) 7,183 8,388 (140) 8,248
Total assets 26,009 (118) 25,891 28,422 (154) 28,268
Current liabilities (7,813) 78 (7,735) (11,082) 98 (10,984)
Non-current liabilities (12,719) 26 (12,693) (11,688) 43 (11,645)
Total liabilities (20,532) 104 (20,428) (22,770) 141 (22,629)
Net assets 5,477 (14) 5,463 5,652 (13) 5,639
Equity
Share capital 104 - 104 107 - 107
Share premium and capital redemption 5,836 - 5,836 5,833 - 5,833
Retained earnings (756) - (756) (791) - (791)
Exchange translation reserve (119) - (119) 447 - 447
Non-controlling interests 412 (14) 398 56 (13) 43
Total equity 5,477 (14) 5,463 5,652 (13) 5,639
2. Critical Accounting Estimates and Judgements
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience, and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances.
In the future, actual experience may deviate from these estimates and
assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the current financial year are discussed in the financial
statements for the year ended 30 September 2015, which will be available on
our website www.imperial-tobacco.com in due course.
3. 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. Following the 2015 acquisition, the United States of America
has become a significant market and it is considered appropriate to disclose
this separately.
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), United
States of America 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 2015 2014 (Restated)
Revenue 19,011 19,501
Net revenue 6,251 6,421
Operating profit 1,910 1,925
Adjusted operating profit 2,895 2,805
Adjusted operating margin % 46.3 43.7
Logistics
£ million unless otherwise indicated 2015 2014 (Restated)
Revenue 7,025 7,774
Distribution fees 749 838
Operating profit 74 84
Adjusted operating profit 154 166
Adjusted distribution margin % 20.6 19.8
Revenue
2015 2014(Restated)
Total External Total External
£ million revenue revenue revenue revenue
Tobacco
Returns Markets North 12,332 12,303 12,939 12,915
Returns Markets South 2,245 1,576 2,497 1,753
Growth Markets 3,019 2,970 3,192 3,145
USA 1,415 1,415 873 873
Total Tobacco 19,011 18,264 19,501 18,686
Logistics 7,025 7,025 7,774 7,774
Eliminations (747) - (815) -
Total Group 25,289 25,289 26,460 26,460
Tobacco net revenue
£ million 2015 2014 (Restated)
Returns Markets North 2,649 2,801
Returns Markets South 1,446 1,600
Growth Markets 1,449 1,513
USA 707 507
Total Tobacco 6,251 6,421
Tobacco net revenue excludes revenue from the sale of peripheral and
non-tobacco related products of £175 million (2014: £152 million).
Adjusted operating profit and reconciliation to profit before tax
£ million 2015 2014 (Restated)
Tobacco
Returns Markets North 1,475 1,511
Returns Markets South 636 724
Growth Markets 409 334
USA 375 236
Total Tobacco 2,895 2,805
Logistics 154 166
Eliminations 4 10
Adjusted operating profit 3,053 2,981
Acquisition costs - Tobacco (40) (13)
Amortisation of acquired intangibles - Tobacco (617) (562)
Amortisation of acquired intangibles - Logistics (80) (82)
Restructuring costs - Tobacco (328) (305)
Operating profit 1,988 2,019
Net finance costs (261) (543)
Share of profit of investments accounted for using the equity method 29 49
Profit before tax 1,756 1,525
4. Restructuring Costs and Provisions
Restructuring costs
£ million 2015 2014
Employment related 100 149
Asset impairments 113 71
Other charges 115 85
328 305
The charge for the year of £328 million (2014: £305 million) relates mainly to
our Cost Optimisation Programme announced in 2013 (£159 million) and
integration costs relating to the businesses acquired in the year (£139
million). The balance of £30 million relates primarily to the closure of our
UK vending operation and the restructuring of our Chinese operations.
The Cost Optimisation Programme is expected to have a cash implementation cost
of in the region of £600 million and generate savings of £300 million by 2018.
In 2015 the cash cost of the Programme was £169 million (2014: £81 million)
bringing the cumulative net cash cost of the Programme to £340 million.
The total restructuring cash flow in the year ended 30 September 2015 was £256
million (2014: £120 million).
Restructuring costs are included within administrative and other expenses in
the consolidated income statement.
Provisions
£ million Restructuring Other Total
At 1 October 2014 (Restated) 320 166 486
Additional provisions charged to the consolidated income statement 95 22 117
Acquisitions (see note 12) - 16 16
Unwind of discount on redundancy and other long-term provisions 1 - 1
Amounts used (103) (34) (137)
Unused amounts reversed (25) (21) (46)
Exchange movements (10) (10) (20)
At 30 September 2015 278 139 417
Analysed as:
£ million 2015 2014(Restated)
Current 197 175
Non-current 220 311
417 486
5. Net Finance Costs and reconciliation to Adjusted Net Finance Costs
Reconciliation from reported net finance costs to adjusted net finance costs
£ million 2015 2014 (Restated)
Reported net finance costs 261 543
Fair value gains on derivative financial instruments 691 271
Fair value losses on derivative financial instruments (578) (358)
Exchange gains on financing activities 113 99
Net fair value and exchange gains on financial instruments 226 12
Interest income on net defined benefit assets 138 138
Interest cost on net defined benefit liabilities (157) (174)
Unwind of discount on redundancy and other long-term provisions (1) (4)
Post-employment benefits net financing cost (20) (40)
Adjusted net finance costs 467 515
Comprising
Interest on bank deposits (6) (9)
Interest on bank loans and other loans 473 524
Adjusted net finance costs 467 515
6. Taxation and reconciliation to adjusted tax charge
Analysis of charge in the year
£ million 2015 2014 (Restated)
Current tax
UK Corporation tax 36 7
Overseas taxation 449 405
Total current tax 485 412
Deferred tax
Origination and reversal of temporary differences (452) (332)
Total tax charged to the consolidation income statement 33 80
Reconciliation from reported taxation to adjusted taxation
The table below shows the tax impact of the adjustments made to reported
profit before tax in order to arrive at the adjusted measure of earnings
disclosed in note 8.
£ million 2015 2014 (Restated)
Reported taxation 33 80
Deferred tax on amortisation of acquired intangibles 149 281
Tax on net fair value and exchange losses on financial instruments (11) 13
Tax on post-employment benefits net financing cost 6 12
Tax on restructuring costs 91 84
Tax on unrecognised losses 273 51
Adjusted tax charge 541 521
Factors affecting the tax charge for the year
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the average of the enacted UK corporation tax rates for
the year of 20.5 per cent (2014: 22.0 per cent) as follows:
£ million 2015 2014 (Restated)
Profit before tax 1,756 1,525
Tax at the UK corporation tax rate 360 335
Tax effects of:
Differences in effective tax rates on overseas earnings (66) (103)
Remeasurement of deferred tax balances (310) (260)
Remeasurement of deferred tax balances arising from changes in tax rates (13) 64
Permanent differences 68 61
Adjustments in respect of prior years (6) (17)
Total tax charged to the consolidated income statement 33 80
Movement on current tax account
£ million 2015 2014(Restated)
At 1 October (32) (65)
Charged to the consolidated income statement (485) (412)
Charged to equity (3) (3)
Cash paid 408 451
Other movements 1 (3)
At 30 September (111) (32)
7. Dividends
Distributions to ordinary equity holders
£ million 2015 2014 2013
Paid interim of 42.8p per share (2014: 38.8p, 2013: 35.2p)
- Paid August 2013 - - 341
- Paid August 2014 - 370 -
- Paid June 2015 204 - -
- Paid September 2015 204 - -
Interim dividend paid 408 370 341
Proposed interim of 49.1p per share (2014: nil, 2013: nil)
- To be paid December 2015 468 - -
Interim dividend proposed 468 - -
Proposed Final of 49.1p per share (2014: 89.3p, 2013: 81.2p)
- Paid February 2014 - - 779
- Paid February 2015 - 851 -
- To be paid March 2016 468 - -
Final dividend 468 851 779
Total ordinary share dividends of 141.0p per share (2014: 128.1p, 2013: 116.4p) 1,344 1,221 1,120
The third interim dividend for the year ended 30 September 2015 of 49.1p per
share amounts to a proposed dividend of £468 million, which will be paid in
December 2015.
The proposed final dividend for the year ended 30 September 2015 of 49.1p per
share amounts to a proposed dividend payment of £468 million in March 2016
based on the number of shares ranking for dividend at 30 September 2015, and
is subject to shareholder approval. If approved, the total dividend paid in
respect of 2015 will be £1,344 million (2014: £1,221 million). The dividend
paid during 2015 is £1,259 million (2014: £1,149 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 2015 2014
Earnings: basic and diluted - attributable to owners of the Parent Company 1,691 1,422
Millions of shares
Weighted average number of shares:
Shares for basic earnings per share 953.4 957.4
Potentially dilutive share options 2.5 2.5
Shares for diluted earnings per share 955.9 959.9
Pence
Basic earnings per share 177.4 148.5
Diluted earnings per share 176.9 148.1
Reconciliation from reported to adjusted earnings and earnings per share
2015 2014
£ million unless otherwise indicated Earnings per share(pence) Earnings Earnings per share (pence) Earnings
Reported basic 177.4 1,691 148.5 1,422
Acquisition costs 4.2 40 1.4 13
Amortisation of acquired intangibles 57.5 548 35.8 343
Net fair value and exchange gainson financial instruments (22.7) (215) (2.5) (25)
Post-employment benefits net financing cost 1.5 14 2.8 28
Restructuring costs 24.9 237 23.1 221
Tax on unrecognised losses (28.6) (273) (5.3) (51)
Adjustments attributable to non-controlling interests (1.7) (16) (0.4) (4)
Adjusted 212.5 2,026 203.4 1,947
Adjusted diluted 211.9 2,026 202.8 1,947
9. Analysis of 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 2014 (Restated) 1,413 (429) (9,462) (48) (8,526)
Reallocation of current borrowingsfrom non-current borrowings - (1,620) 1,620 - -
Cash flow 686 33 (4,373) (139) (3,793)
Accretion of interest - - (13) 14 1
Change in fair values - - - 388 388
Exchange movements (57) 59 (22) - (20)
At 30 September 2015 2,042 (1,957) (12,250) 215 (11,950)
Adjusted net debt
Management monitors the Group's borrowing levels using adjusted net debt which
excludes interest accruals, the fair value of derivative financial instruments
providing commercial cash flow hedges.
£ million 2015 2014 (Restated)
Reported net debt (11,950) (8,526)
Accrued interest 279 280
Fair value of derivatives providing commercial hedges 25 134
Adjusted net debt (11,646) (8,112)
10. Derivative Financial Instruments
2015 2014
£ million Assets Liabilities Net Fair Value Assets Liabilities Net Fair Value
Current derivative financial instruments
Interest rate swaps 55 (20) 35 27 (41) (14)
Forward foreign currency contracts 13 (5) 8 7 (7) -
Cross currency swaps 6 - 6 4 - 4
Total current derivatives 74 (25) 49 38 (48) (10)
Collateral1 - - - - 2 2
74 (25) 49 38 (46) (8)
Non-current derivative financialinstruments
Interest rate swaps 666 (753) (87) 521 (692) (171)
Cross currency swaps 235 (23) 212 84 (53) 31
Total non-current derivatives 901 (776) 125 605 (745) (140)
Collateral1 - 41 41 - 100 100
901 (735) 166 605 (645) (40)
Total carrying value of derivative financial instruments 975 (760) 215 643 (691) (48)
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