REG - Imperial Tobacco Gp - Half Yearly Report <Origin Href="QuoteRef">IMT.L</Origin> - Part 2
15/07/2015 16:11
- Part 2: For the preceding part double click ID:nRSF3020Ma
Owners of the parent 705 161 900
Non-controlling interests (9) 7 8
Total comprehensive income for the period 696 168 908
Reconciliation from operating profit to adjusted operating profit
£ million Notes 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Operating profit 959 978 2,019
Acquisition costs 20 - 13
Amortisation of acquired intangibles 9 312 326 644
Restructuring costs 4 76 42 305
Adjusted operating profit 1,367 1,346 2,981
Reconciliation from net finance income/(costs) to adjusted net finance
income/(costs)
£ million Notes 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Net finance income/(costs) 72 (350) (543)
Net fair value and exchange (gains)/losses on
financial instruments providing
commercial hedges 5 (314) 75 (12)
Post-employment benefits net financing cost 5 11 21 40
Adjusted net finance income/(costs) (231) (254) (515)
Consolidated Balance Sheet
£ million Notes 31 March2015 31 March2014Restated 30 September2014Restated
Non-current assets
Intangible assets 9 14,515 16,365 15,334
Property, plant and equipment 1,718 2,002 1,854
Investments accounted for using the equity
method 607 528 577
Retirement benefit assets 134 5 44
Trade and other receivables 72 76 69
Derivative financial instruments 11 1,059 287 605
Deferred tax assets 233 191 241
18,338 19,454 18,724
Current assets
Inventories 3,442 3,945 2,875
Trade and other receivables 2,838 3,023 2,761
Current tax assets 34 61 96
Cash and cash equivalents 10 633 617 1,413
Derivative financial instruments 11 91 298 38
7,038 7,944 7,183
Total assets 25,376 27,398 25,907
Current liabilities
Borrowings 10 (2,469) (2,260) (431)
Derivative financial instruments 11 (52) (191) (46)
Trade and other payables (6,366) (6,698) (6,957)
Current tax liabilities (105) (155) (128)
Provisions 4 (188) (90) (175)
(9,180) (9,394) (7,737)
Non-current liabilities
Borrowings 10 (7,751) (9,544) (9,460)
Derivative financial instruments 11 (774) (589) (645)
Trade and other payables (15) (22) (21)
Deferred tax liabilities (1,267) (1,823) (1,446)
Retirement benefit liabilities (868) (946) (824)
Provisions 4 (232) (293) (311)
(10,907) (13,217) (12,707)
Total liabilities (20,087) (22,611) (20,444)
Net assets 5,289 4,787 5,463
Equity
Share capital 104 104 104
Share premium and capital redemption 5,836 5,836 5,836
Retained earnings (772) (1,377) (756)
Exchange translation reserve (256) 186 (119)
Equity attributable to owners of the parent 4,912 4,749 5,065
Non-controlling interests 377 38 398
Total equity 5,289 4,787 5,463
Consolidated Statement of Changes in Equity
£ million Sharecapital Sharepremium&capitalredemp-tion Retainedearnings Exchangetrans-lationreserve Equityattrib-utabletoownersof theparent Non-control-linginterest Totalequity
At 1 October 2014 (Restated) 104 5,836 (756) (119) 5,065 398 5,463
Profit for the period - - 853 - 853 15 868
Other comprehensive income - - (11) (137) (148) (24) (172)
Total comprehensive income - - 842 (137) 705 (9) 696
Transactions with owners
Cash from employees on maturity/
exercise of share schemes - - 1 - 1 - 1
Costs of employees' services
compensated by share schemes - - 12 - 12 - 12
Dividends paid - - (871) - (871) (12) (883)
At 31 March 2015 104 5,836 (772) (256) 4,912 377 5,829
At 1 October 2013 (Restated) 107 5,833 (791) 447 5,596 43 5,639
Profit for the period - - 366 - 366 8 374
Other comprehensive income - - 56 (261) (205) (1) (206)
Total comprehensive income - - 422 (261) 161 7 168
Transactions with owners
Cash from employees on maturity/
exercise of share schemes - - 1 - 1 - 1
Costs of employees' services
compensated by share schemes - - 9 - 9 - 9
Purchase of shares by Employee
Share Ownership Trusts - - (2) - (2) - (2)
Increase in own shares held as
treasury shares - - (237) - (237) - (237)
Cancellation of own shares held as
treasury shares (3) 3 - - - - -
Dividends paid - - (779) - (779) (12) (791)
At 31 March 2014 (Restated) 104 5,836 (1,377) 186 4,749 38 4,787
Consolidated Cash Flow Statement
£ million 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Cash flows from operating activities
Operating profit 959 978 2,019
Dividends received from investments accounted for
under equity method - - 2
Depreciation, amortisation and impairment 407 430 919
Loss on disposal of property, plant and equipment - 4 6
Loss on disposal of software - 2 3
Post-employment benefits (54) (51) (156)
Costs of employees' services compensated by share
schemes 11 11 22
Movement in provisions (43) (108) 17
Operating cash flows before movement in working
capital 1,280 1,266 2,832
(Increase)/decrease in inventories (754) (805) 121
(Increase)/decrease in trade and other receivables (162) (178) (29)
(Decrease)/increase in trade and other payables (287) (538) 29
Movement in working capital (1,203) (1,521) 121
Taxation paid (235) (226) (451)
Net cash flows (used in)/generated by operating
activities (158) (481) 2,502
Cash flows from investing activities
Interest received 5 4 10
Purchase of property, plant and equipment (77) (113) (255)
Proceeds from sale of property, plant and equipment 11 26 59
Purchase of intangible assets - software (17) (16) (37)
Internally generated intellectual property rights (4) - (4)
Purchase of intangible assets - intellectual property
rights - (37) (46)
Net cash used in investing activities (82) (136) (273)
Cash flows from financing activities
Interest paid (343) (396) (543)
Cash from employees on maturity/exercise of share
schemes 1 1 6
Purchase of shares by Employee Share Ownership
Trusts - (2) (2)
Increase in borrowings 914 3,055 2,303
Repayment of borrowings (321) (2,165) (3,200)
Repayment of loan to joint ventures - - 52
Cash flows relating to derivative financial
instruments 98 - (121)
Finance lease payments (1) - -
Purchase of treasury shares - (237) (341)
Proceeds from sales of shares in a subsidiary to
non-controlling interests (net of fees) - - 395
Dividends paid to non-controlling interests (12) (11) (16)
Dividends paid to owners of the parent (871) (779) (1,149)
Net cash used in financing activities (535) (534) (2,616)
Net decrease in cash and cash equivalents (775) (1,151) (387)
Cash and cash equivalents at start of period 1,413 1,792 1,793
Effect of foreign exchange rates on cash and cash
equivalents (5) (24) 7
Cash and cash equivalents at end of period 633 617 1,413
Notes to the Financial Statements
1 Accounting Policies
Basis of Preparation
The financial information comprises the unaudited results for the six months
ended 31 March 2015 and 31 March 2014, together with the audited results for
the year ended 30 September 2014.
The information shown for the year ended 30 September 2014 does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006, and is an abridged version of the Group's published financial statements
for that year. The Auditors' Report on those 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 2014 were approved by
the Board of Directors on 4 November 2014 and filed with the Registrar of
Companies.
This condensed set of financial statements for the six months ended 31 March
2015 has been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34 Interim Financial
Reporting as adopted by the European Union. The condensed set of financial
statements for the six months ended 31 March 2015 should be read in
conjunction with the annual financial statements for the year ended 30
September 2014 which have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
Except as described below, the Group's principal accounting policies used in
preparing this information are as stated in the financial statements for the
year ended 30 September 2014, which are available on our website
www.imperial-tobacco.com .
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 6 months ended31 March 2014 Year ended30 September 2014
£ million unless otherwise indicated Previouslyreported Adjustment Restated Previouslyreported Adjustment Restated
Revenue 12,717 (83) 12,634 26,625 (165) 26,460
Duty and similar items (6,094) - (6,094) (12,928) - (12,928)
Other cost of sales (4,127) 35 (4,092) (8,422) 71 (8,351)
Cost of sales (10,221) 35 (10,186) (21,350) 71 (21,279)
Gross profit 2,496 (48) 2,448 5,275 (94) 5,181
Distribution, advertising and selling
costs (974) 7 (967) (1,946) 17 (1,929)
Amortisation of acquired intangibles (326) - (326) (638) - (638)
Other expenses (197) 20 (177) (627) 32 (595)
Administration and other expenses (523) 20 (503) (1,265) 32 (1,233)
Operating profit 999 (21) 978 2,064 (45) 2,019
Investment income 266 - 266 517 (1) 516
Finance costs (617) 1 (616) (1,061) 2 (1,059)
Net finance income/(costs) (351) 1 (350) (544) 1 (543)
Share of profit of investments
accounted for using the equity
method - 11 11 - 49 49
Profit before taxation 648 (9) 639 1,520 5 1,525
Taxation (271) 6 (265) (69) (11) (80)
Profit for the period 377 (3) 374 1,451 (6) 1,445
Attributable to:
Owners of the parent 366 - 366 1,422 - 1,422
Non-controlling interests 11 (3) 8 29 (6) 23
Balance Sheet 6 months ended31 March 2014 Year ended30 September 2014
£ million unless otherwise indicated Previouslyreported Adjustment Restated Previouslyreported Adjustment Restated
Non-current assets:
Intangible assets 16,877 (512) 16,365 15,859 (525) 15,334
Investments accounted for using
the equity method - 528 528 - 577 577
Other non-current assets 2,591 (30) 2,561 2,844 (31) 2,813
Current assets 8,070 (126) 7,944 7,306 (123) 7,183
Total assets 27,538 (140) 27,398 26,009 (102) 25,907
Current liabilities (9,473) 79 (9,394) (7,813) 76 (7,737)
Non-current assets (13,262) 45 (13,217) (12,719) 12 (12,707)
Total liabilities (22,735) 124 (22,611) (20,532) 88 (20,444)
Net assets 4,803 (16) 4,787 5,477 (14) 5,463
Equity
Share capital 104 - 104 104 - 104
Share premium and capital
redemption 5,836 - 5,836 5,836 - 5,836
Retained earnings (1,377) - (1,377) (756) - (756)
Exchange translation reserve 186 - 186 (119) - (119)
Non-controlling interests 54 (16) 38 412 (14) 398
Total equity 4,803 (16) 4,787 5,477 (14) 5,463
The effect in the six months ended 31 March 2015 has been to reduce revenue
and operating profit by £82 million and £26 million respectively, but increase
share of profit of investments accounted for using the equity method by £17
million. Profit attributable to owners of the parent and earnings per share
are unaffected by this change.
Other new standards
Other standards and interpretations issued, but not yet effective, are not
expected to have a material effect on the Group's net assets or results.
2 Critical Accounting Estimates and Judgements
The Group makes estimates and judgements 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
judgements. The estimates and judgements 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 2014.
3 Segment Information
Tobacco
£ million unless otherwise indicated 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Revenue 9,095 9,237 19,501
Net revenue 2,945 3,054 6,421
Operating profit 925 948 1,925
Adjusted operating profit 1,295 1,275 2,805
Adjusted operating margin % 44.0 41.7 43.7
Logistics
£ million unless otherwise indicated 6 monthsended31 March2014 6 monthsended31 March2014Restated Yearended 30September2014Restated
Revenue 3,430 3,819 7,774
Distribution fees 378 427 838
Operating profit 35 32 84
Adjusted operating profit 73 73 166
Adjusted distribution margin % 19.3 17.1 19.8
Revenue
6 months ended31 March 2015 6 months ended31 March 2014Restated Year ended30 September 2014Restated
£ million Totalrevenue Externalrevenue Totalrevenue Externalrevenue Totalrevenue Externalrevenue
Tobacco
Growth Markets 1,804 1,783 1,765 1,741 4,065 4,018
Returns Markets North 6,162 6,162 6,202 6,202 12,939 12,915
Returns Markets South 1,129 754 1,270 872 2,497 1,753
Total Tobacco 9,095 8,699 9,237 8,815 19,501 18,686
Logistics 3,430 3,430 3,819 3,819 7,774 7,774
Eliminations (396) - (422) - (815) -
Total Group 12,129 12,129 12,634 12,634 26,460 26,460
Tobacco net revenue
£ million 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Growth Markets 895 865 2,020
Returns Markets North 1,320 1,368 2,801
Returns Markets South 730 821 1,600
Total Tobacco 2,945 3,054 6,421
Tobacco net revenue excludes revenue from the sale of peripheral and
non-tobacco related products of £59 million (2014 6 months: £89 million).
In addition to the amendments as a result of the implementation of IFRS 11
(detailed in note 1), 2014 comparatives have also been restated to reflect the
transfer of four markets in the Southern Balkans from Returns Markets South to
Growth Markets.
Adjusted operating profit and reconciliation to profit before tax
£ million 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Tobacco
Growth Markets 266 195 570
Returns Markets North 719 728 1,511
Returns Markets South 310 352 724
Total Tobacco 1,295 1,275 2,805
Logistics 73 73 166
Eliminations (1) (2) 10
Adjusted operating profit 1,367 1,346 2,981
Acquisition costs - Tobacco (20) - (13)
Amortisation of acquired intangibles - Tobacco (274) (285) (562)
Amortisation of acquired intangibles - Logistics (38) (41) (82)
Restructuring costs - Tobacco (76) (42) (305)
Operating profit 959 978 2,019
Net finance income/(costs) 72 (350) (543)
Share of profit of investments accounted for using the
equity method 17 11 49
Profit before tax 1,048 639 1,525
4 Restructuring Costs and Provisions
Restructuring costs
£ million 6 monthsended31 March2015 6 monthsended31 March2014 Yearended 30September2014
Employment related 32 16 149
Asset impairment 20 - 71
Other charges 24 26 85
76 42 305
The restructuring charge in the six months ended 31 March 2015 was £76
million, of which £67 million was in respect of the cost optimisation
programme and £9 million related to other projects. The charge comprised £7
million of net additional provisions and £69 million charged directly to the
consolidated income statement as incurred.
Provisions
£ million Restructuring Other Total
At 1 October 2014 (Restated) 321 165 486
Additional provisions charged to the consolidated
income statement 9 13 22
Unwind of discount on redundancy and other long-term provisions 1 - 1
Amounts used (32) (16) (48)
Unused amounts reversed (2) (14) (16)
Exchange movements (16) (9) (25)
At 31 March 2015 281 139 420
Analysed as:£ million 2015 2014Restated
Current 188 175
Non-current 232 311
420 486
5 Net finance income/(costs) and reconciliation to adjusted net finance
income/(costs)
£ million 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Reported net finance (income)/costs per consolidated
income statement (72) 350 543
Fair value gains on derivative financial instruments 699 193 271
Fair value losses on derivative financial instruments (561) (169) (358)
Exchange gains/(losses) on financing activities 176 (99) 99
Net fair value and exchange gains/(losses) on financial
instruments 314 (75) 12
Interest income on net defined benefit assets 67 69 138
Interest cost on net defined benefit liabilities (77) (88) (174)
Unwind of discount on redundancy and other long-term
provisions (1) (2) (4)
Post-employment benefit net financing cost (11) (21) (40)
Adjusted net finance costs 231 254 515
Comprising
Interest on bank deposits (3) (4) (9)
Interest on bank loans and other loans 234 258 524
Adjusted net finance costs 231 254 515
6 Taxation and reconciliation to adjusted tax charge
Reported tax for the six months ended 31 March 2015 has been calculated on the
basis of an estimated effective tax rate for the year ended 30 September
2015.
£ million 6 monthsended31 March2015 6 monthsended31 March2014Restated Yearended 30September2014Restated
Reported taxation per consolidated income statement 180 265 80
Tax on acquisition costs 4 - -
Deferred tax on amortisation of acquired intangibles 69 (67) 281
Tax on net fair value and exchange gains and losses on
financial instruments (21) 17 13
Tax on post-employment benefits net financing cost 3 6 12
Tax on restructuring costs 19 13 84
Tax on unrecognised losses (13) - 51
Adjusted tax charge 241 234 521
On 28 November 2014 a staged reduction from 30% to 25% in the effective rate
applicable to Spanish profits was announced. This rate change resulted in a
deferred tax credit of £33 million in respect of acquired intangibles being
recognised in the consolidated income statement for the six months ended 31
March 2015. This has been excluded from our adjusted tax charge in line with
our existing policy regarding the treatment of deferred tax on acquired
intangibles.
7 Dividends
Dividend per share in respect of financial year
Pence 2015 2014 2013
Interim 42.8 38.8 35.2
Final - 89.3 81.2
Total 42.8 128.1 116.4
Amounts recognised as distributions to ordinary equity holders in the period
£ million 6 monthsended31 March2015 6 monthsended31 March2014 Yearended 30September2014
Final dividend paid in the period in respect of previous
financial year 871 779 779
Interim dividend - - 370
871 779 1,149
The declared interim dividend for 2015 amounts to a total dividend of £408
million based on the number of shares ranking for dividend at 31 March 2015.
8 Earnings Per Share
£ million 6 monthsended31 March2015 6 monthsended31 March2014 Yearended 30September2014
Earnings: basic and diluted 853 366 1,422
Millions of shares
Weighted average number of shares:
Shares for basic earnings per share 953.1 961.4 957.4
Potentially dilutive share options 2.0 2.0 2.5
Shares for diluted earnings per share 955.1 963.4 959.9
Pence
Basic earnings per share 89.5 38.1 148.5
Diluted earnings per share 89.3 38.0 148.1
Reconciliation from reported to adjusted earnings and earnings per share
6 months ended31 March 2015 6 months ended31 March 2014 Year ended30 September 2014
£ million unless otherwise indicated Earningspershare(pence) Earnings Earningspershare(pence) Earnings Earningspershare(pence) Earnings
Reported basic 89.5 853 38.1 366 148.5 1,422
Aquisition costs 1.7 16 - - 1.4 13
Amortisation of acquired intangibles 25.5 243 40.9 393 35.8 343
Net fair value and exchange
(gains)/losses on financial instruments (30.7) (293) 6.0 58 (2.5) (25)
Post-employment benefits net
financing cost 0.8 8 1.6 15 2.8 28
Restructuring costs 6.0 57 3.0 29 23.1 221
Tax on unrecognised losses 1.3 13 - - - -
Exchange gains/(losses) on financing
activities - - - - (5.3) (51)
Adjustments attributable to non-controlling
interests (0.8) (8) - - (0.4) (4)
Adjusted 93.3 889 89.6 861 203.4 1,947
Adjusted diluted 93.1 889 89.4 861 202.8 1,947
9 Intangible Assets
Following the application of IFRS 11, £512 million of Group intangibles have
been reclassified as share of investments accounted for using the equity
method as at 31 March 2014. £525 million of Group intangibles have been
reclassified as share of investments accounted for using the equity method as
at 30 September 2014.
At the 2014 year end the impairment test for the Drive Growth CGU grouping
that includes our markets in Russia, Italy and Japan indicated headroom of
£240 million and that an impairment would result in the event of relatively
small changes in exchange rate, or in an individual assumption or assumptions.
In view of this sensitivity and recent volatility in the Rouble exchange rates
and increased discount rates, we have tested the appropriateness of the
carrying value of the Drive Growth CGU grouping's intangible assets at 31
March 2015. In doing so, we have revisited our cash flow forecasts and other
factors such as, growth rates, discount rates and other appropriate
assumptions. In spite of the difficult macroeconomic climate, the CGU grouping
is performing in line with latest business plan assumptions. Taking account of
all of these factors, we have concluded that the carrying value for the Drive
Growth CGU grouping included in our 31 March 2015 balance sheet is
appropriate. Our test indicated headroom of £40 million and remains sensitive
to adverse movements in exchange rates, or in any individual assumption or
assumptions. We will conduct a further review in the second half of the year
in line with our normal impairment review cycle.
10 Net Debt
The movements in cash and cash equivalents, borrowings, and derivative
financial instruments in the period were as follows:
£ million Cashand cashequivalents Currentborrowings Non-currentborrowings Derivativefinancialinstruments Total
At 1 October 2014 (Restated) 1,413 (431) (9,460) (48) (8,526)
Reallocation of current borrowings from
non-current borrowings - (1,620) 1,620 - -
Cash flow (775) (588) (4) (98) (1,465)
Accretion of interest - 57 61 - 118
Change in fair values - - - 470 470
Exchange movements (5) 113 32 - 140
At 31 March 2015 633 (2,469) (7,751) 324 (9,263)
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 and finance lease liabilities.
£ million 31 March2015 31 March2014Restated 30 September2014Restated
Reported net debt (9,263) (11,378) (8,526)
Accrued interest 162 175 280
Fair value of interest rate derivatives 45 176 134
Adjusted net debt (9,056) (11,027) (8,112)
The fair value of bonds is estimated to be £10,521 million (2014 6 months:
£11,210 million) and has been determined using quoted market prices or
discounted cash flow analysis. The carrying value of bonds is £9,216 million
(2014 6 months: £10,189 million). The values of other assets and liabilities
held at amortised cost are not materially different to their fair values.
11 Derivative Financial Instruments
£ million 31 March2015 31 March2014 30 September2014
Interest rate swaps and options 794 505 548
Forward foreign currency contracts 18 11
- More to follow, for following part double click ID:nRSF3020McRecent news on Imperial Brands
See all newsREG - Imperial Brands PLC - Transaction in Own Shares
AnnouncementREG - Imperial Brands PLC - Transaction in Own Shares
AnnouncementREG - Imperial Brands PLC - Transaction in Own Shares
AnnouncementREG - Imperial Brands PLC - Transaction in Own Shares
AnnouncementREG - Imperial Brands PLC - Directorate change
Announcement