TIDMIMB
RNS Number : 6963L
Imperial Brands PLC
17 May 2022
IMPERIAL BRANDS PLC
Legal Entity Identifier (LEI) No. 549300DFVPOB67JL3A42
HALF YEAR RESULTS STATEMENT
17 May 2022
GAINING MOMENTUM BEHIND OUR STRATEGIC PRIORITIES
Report for the six months ended 31 March 2022
Business Highlights
-- Good progress in delivering on our strategic objectives
-- Strategic investment driving growth in aggregate market share in top-five priority markets
-- Successful NGP trials underpin further market roll-outs in heated tobacco and vapour
-- Implementing our new purpose, vision and behaviours to align our culture to our strategy
-- Strong operating cash generation delivering further deleverage, as anticipated
-- On track to deliver full year results in line with guidance
Financial Summary
Six months ended Reported Adjusted(3)
Constant
31 March 2022 2022 2021 Change 2022 2021(2) Actual currency(4)
Revenue/Net revenue(1) GBPm 15,362 15,568 -1.3% 3,495 3,571 -2.1% +0.3%
Operating profit GBPm 1,201 1,637 -26.6% 1,600 1,586 +0.9% +2.9%
Basic earnings
per share pence 105.2 191.2 -45.0% 113.0 107.0 +5.6% +7.7%
Net debt GBPm (9,757) (11,003) (9,157) (10,328)
Dividend per share pence 42.54 42.12 +1.0% 42.54 42.12 +1.0% +1.0%
(1) Reported revenue includes duty, similar items, distribution
and sale of peripheral products which are excluded from net
revenue; net revenue comprises reported revenue less duty and
similar items, excluding sale of peripheral products and
distribution revenue.
(2) The 2021 net revenue and adjusted operating profit metrics
exclude the contribution of the Premium Cigar Division from that
financial reporting period following its divestment in October
2020. The Premium Cigar Division contributed GBP21 million to net
revenue and GBP3 million to adjusted operating profit in 2021.
(3) See page 3 for basis of presentation, page 17 and notes 3,
5, 9 and 12 of the financial statements for the reconciliation
between reported and adjusted measures.
(4) Constant currency removes effect of exchange rate movements
on the translation of the results of our overseas operations.
Stefan Bomhard Chief Executive
"We are now 18 months into our five-year strategy to build a
more sustainable Imperial capable of consistent growth - and I am
pleased with the progress we are making.
"These results provide further evidence that we have achieved
the stabilisation of our core combustible business. During the
first half of the year, we increased aggregate market share in the
five priority markets which account for around 70 per cent of our
operating profit, while maintaining pricing discipline. This strong
performance is an outcome of our tighter performance management and
disciplined investment in sales execution and brand building.
Meanwhile, our more focused approach to our broader portfolio of
markets is delivering a stronger performance from regions, such as
Africa. In April, we delivered on our earlier commitment to exit
Russia, with the orderly transfer of our business to local
investors.
"In next generation products, consumers have given positive
feedback on our recent trials, validating our new insights-driven
approach. We will now roll out our Pulze and iD heated tobacco
proposition to further European markets and, in US vape, we are
extending our refreshed blu marketing proposition. We have also
started a pilot in France for an all-new vapour device, the first
new NGP product from our redesigned innovation pipeline.
"Our strategy is being supported by a comprehensive culture
change programme, designed to embed more consumer-centric,
collaborative and future-focused ways of working, across every
level of the organisation.
"Our focus for the remainder of 2022 will be to invest further
in our five priority markets and begin the roll-out of our NGP
strategy. While these are uncertain times, as we move into 2023, we
will have in place the capabilities and culture necessary to
support the next phase of our strategy and deliver sustainable
growth in shareholder value."
Delivering Against our Strategic Priorities
Focus on priority combustible markets
-- Investment in operational levers drives 25 bps growth in
aggregate market share in priority combustible markets
-- Share gains in USA, UK and Australia more than offset declines in Germany and Spain
-- Investing in sales execution activities:
o Enhancing sales force capabilities, e.g. in the USA and
Germany
o Strengthening our key account management, e.g. in the USA
-- Investing in multiple brand equity building initiatives:
o Building brand equity in premium segment, e.g. Winston pack
change and new campaign in USA
o Optimising our approach to the value segment, e.g. launch of
Lambert & Butler in Australia
o Maximising fine cut opportunities, e.g. development of West in
Germany; Riverstone in UK and Australia
Build a targeted NGP business
-- Successful consumer trials validate our approach and
strengthen our confidence in our NGP strategy
-- Heated tobacco trial results from the Czech Republic and
Greece support further launches into new markets
-- Positive trial results of new marketing proposition for blu
in the USA supports further roll-out
-- Trials underway of all-new blu vapour device into selected French cities
Drive value from our broader market portfolio
-- Market prioritisation driving improved operational and financial performance
-- Clear portfolio strategy in Africa delivering share gains and
growth in net revenue and profit
-- Concluded our exit from Russia, with a transfer of our business to local investors
Transforming our ways of working through our critical
enablers
-- Strategy supported by structured culture change programme to
embed more consumer-centric, collaborative and future focused ways
of working
-- Programme will be rolled out across our whole Group by the end of the year
-- Simplified and efficient operations: on track to deliver cost
savings in line with our strategic plan
-- Our environmental, social and governance strategy has been
refreshed, underpinning our new ambitions
Results Overview*
Net revenue
-- Net revenue up +0.3%, tobacco +0.1%, NGP +8.7%; reported
revenue reduced -1.3%, due to lower excise duty in Europe
-- Tobacco price mix of +0.8% reflects pricing of +1.2% and
adverse mix of -0.4% (product mix in the Americas and market mix in
AAA)
-- Recent price increases in Q2 (+3.8%) support improved price mix in second half of the year
-- Overall volumes down -0.7%: reflecting strong volume
performance in the USA, Middle East and Australia, offsetting
declines in Europe as COVID-19 restrictions ease
-- NGP net revenue growth +8.7%, to GBP101m, driven by strong
progress across all categories in Europe
Progress in improving profitability
-- Group adjusted operating profit growth of 2.9%, driven by
reduced losses in NGP reflecting prior year market exits
-- Reported operating profit of GBP1,201m is lower by GBP436m,
driven by charges related to our exit from Russia and associated
markets (GBP201m) and non-recurrence of gains on disposal of
Premium Cigar Division (GBP281m)
-- Tobacco adjusted operating profit at a similar level to last
year reflecting increased investment in strategy
-- NGP adjusted operating losses reduced by +49.9% vs HY21,
against comparator period that included exit from AAA
-- Adjusted EPS up +7.7% driven by growth in adjusted operating
profit and a reduction in tax rate to 21.9% following favourable
developments in several tax authority audits and a lower adjusted
finance charge
-- Reported EPS down -45.0%, with lower reported operating
profit and lower finance income as we reduced our exposure to
unhedged currency exposures on financial instruments, partly offset
by higher reported tax rate
Strong cash conversion supports year-on-year deleverage
-- Strong 12-month cash conversion at +102%
-- Adjusted and reported net debt both reduced by GBP1.2bn
(12-month basis) driven by free cash flow
-- Adjusted net debt to EBITDA improved to 2.4x in line with
expectations (HY21: 2.6x), reflecting usual seasonality
-- Maintaining our deleverage momentum to deliver further net reduction at the full year
-- Interim dividend per share up 1%, consistent with our progressive dividend policy
* All measures at constant currency unless otherwise stated
Basis of Presentation
-- To aid understanding of our results, we use 'adjusted'
(non-GAAP) measures as we believe they provide a better comparison
of performance from one period to the next. Reconciliations between
adjusted and reported (GAAP) measures are also included in the
relevant notes. Further definitions of adjusted measures are
provided in Note 1 of these accounts. Change at constant currency
removes the effect of exchange rate movements on the translation of
the results of our overseas operations. References in this document
to percentage growth and increases or decreases in our adjusted
results are on a constant currency basis unless stated otherwise.
These are calculated by translating current year results at prior
year exchange rates.
-- Stick Equivalent (SE) volumes reflect our combined cigarette,
fine cut tobacco, cigar and snus volumes.
-- Market share is presented as a 6-month average to the end of
March (MHT - moving half-year trend), unless otherwise stated.
Aggregate market share is a weighted average across markets within
our footprint.
Other Information
Investor Contacts Media Contacts
Peter Durman +44 (0)7970 328 093 Jonathan Oliver +44 (0)7740 096 018
James King +44 (0)7581 052 880 Simon Evans +44 (0)7967 467 684
Jennifer Ramsey +44 (0)7974 615 739
Analyst Presentation Webcast
Imperial Brands PLC will be hosting a live webcast at 09:00
(BST) for investors and investment analysts following the
publication of our results on 17 May 2022. The webcast will be
hosted by Stefan Bomhard, Chief Executive, and Lukas Paravicini,
Chief Financial Officer. The presentation will be followed by a
question and answer session. The presentation slides will be
available on www.imperialbrandsplc.com from 07.00 (BST). An archive
of the webcast and the presentation script and slides will also be
available.
Please either listen to the Q&A session via the webcast
link: https://edge.media-server.com/mmc/p/i7adfq8m or to ask a
question, please use the dial-in details below. Please dial-in at
least 10 minutes prior to the start time to provide sufficient time
to access the event. You will be asked to provide the conference ID
number below.
Conference ID No: 7855858
United Kingdom: 44 (0) 20 7192 8338 or toll free: 0800 279
6619
USA: +1 646 741 3167 or toll free: +1 877 870 9135
Germany local call: 069 2222 2625
Switzerland local call: 044 580 71 45
Cautionary Statement
Certain statements in this announcement constitute or may
constitute forward-looking statements. Any statement in this
announcement that is not a statement of historical fact including,
without limitation, those regarding the Company's future
expectations, operations, financial performance, financial
condition and business is or may be a forward-looking statement.
Such forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially
from those projected or implied in any forward-looking statement.
These risks and uncertainties include, among other factors,
changing economic, financial, business or other market conditions.
These and other factors could adversely affect the outcome and
financial effects of the plans and events described in this
announcement. As a result, you are cautioned not to place any
reliance on such forward-looking statements. The forward-looking
statements reflect knowledge and information available at the date
of this announcement and the Company undertakes no obligation to
update its view of such risks and uncertainties or to update the
forward-looking statements contained herein. Nothing in this
announcement should be construed as a profit forecast or profit
estimate and no statement in this announcement should be
interpreted to mean that the future earnings per share of the
Company for current or future financial years will necessarily
match or exceed the historical or published earnings per share of
the Company. This announcement has been prepared for, and only for
the members of the Company, as a body, and no other persons. The
Company, its Directors, employees, agents or advisers do not accept
or assume responsibility to any other person to whom this
announcement is shown or into whose hands it may come, and any such
responsibility or liability is expressly disclaimed.
CHIEF EXECUTIVE'S STATEMENT
Overview
These results cover an important six months in the strengthening
phase of our five-year strategy to transform Imperial into a more
sustainable business capable of consistent growth - year in, year
out.
The essential foundations of this new strategy - a consumer
mindset, a rigorous high-performance culture and a desire to
challenge the status quo - are fast taking shape. And already we
are seeing the fruits of these new ways of working and our focused
investments in new capabilities. In particular, these results
provide further evidence of the stabilisation of our core
combustible business. In the first half, while maintaining pricing
discipline, we delivered aggregate market share gain across the
five priority markets, which account for around 70 per cent of our
operating profit.
In next generation products (NGP), consumers have given positive
feedback to the pilots we launched in the second half of last year.
We now intend to roll out our Pulze and iD heated tobacco
proposition in further European markets and, in the US vapour
segment, we are extending our new blu consumer marketing
proposition.
All this progress has been achieved by our people during a
challenging period characterised by growing macroeconomic
pressures, amplified by Russia's invasion of Ukraine. I would like
to pay special tribute to the dedication of our teams working to
keep safe our 600 Ukrainian colleagues and their families. Since
the war began in February, we have been providing transport and
accommodation to enable them to escape the areas most heavily
affected by war, and resettlement assistance for those who have
left Ukraine. Meanwhile, in April, we delivered on our commitment
to fully exit Russia, with the orderly transfer of our business to
local investors.
Our results
These results reflect a further step up in investment to build
these new foundations during the two-year strengthening phase of
our five-year strategy. Price mix was relatively weak in the first
quarter but improved markedly in our second quarter as we achieved
price increases in several of our key markets, which will support a
stronger price mix performance in our second half. Our NGP business
delivered top-line growth and reduced losses as we focused
investment behind our new trials.
Adjusted Group operating profit grew 2.9 per cent at constant
currency driven by reduced losses in NGP. Reported operating profit
was 26.6 per cent lower, driven primarily by exit charges related
to the divestment of our Russian business and the non-recurrence of
gains on last year's divestment of the Premium Cigar Division . Our
cash generation has remained strong supporting further debt
reduction on a 12-month basis.
Developing the right culture
Building the right culture is essential to the successful
delivery of our strategy. In 2021, we developed a new statement of
purpose: "Forging a path to a healthier future for moments of
relaxation and pleasure". Alongside this our vision statement "To
build a strong challenger business powered by responsibility, focus
and choice" underpins our strategy. We are embedding this purpose,
and vision, together with our new behaviours through all levels of
the business. So far over 400 of our senior leadership team have
participated in extensive training sessions and a further 900 will
take part in the next three months. These sessions are focused on
helping our people work in ways which are more consumer-centric,
collaborative, accountable, inclusive, and future focused. By the
end of this year, all of our people will have had training in these
behaviours.
Building our consumer capabilities
Having last year set up a new Group Consumer Office led by Andy
Dasgupta, we are now embedding consumer packaged goods best
practice in our insights, marketing and sales. Our investor webinar
in March showcased how our largest market, the US, was successfully
combining deep consumer research, creative marketing executions and
new digital sales systems to drive stronger business performance.
This more rigorous, integrated approach is being replicated across
our key markets. Andy has now completed his senior team with new
hires who are adopting a different approach based more on
partnerships with third parties and informed by consumer insight to
develop the pipeline for new products in both tobacco and NGP.
Becoming a strong challenger
As the smallest of the global tobacco businesses, we need to
work more nimbly than our competitors. This means identifying value
pools others overlook and innovating swiftly to satisfy unmet
consumer needs. Recently, I have seen diverse examples of this
challenger approach in action. In Australia, we achieved something
rare in a dark market: the successful launch of a new brand,
Lambert & Butler, which meets a consumer need for affordable
quality. In Spain, we are taking a different approach to our
competitors by building on the success of our investment behind our
local jewel brand, Nobel. We are now extending this approach to our
other Spanish local brands, Fortuna and Ducados. Even in some
smaller markets in Africa and Eastern Europe, we have built share
by addressing underserved niches, including different-sized
products, pricing segments or brand positioning.
Focusing on priority combustible markets
In combustibles, we remain focused on driving performance in our
five largest markets: the US, Germany, UK, Australia and Spain.
Historically, we posted annual double-digit declines in aggregate
share - making us the sector's largest share donor. In FY21, thanks
to our renewed focus on the priority markets, that decline was
stabilised. And during the first half of 2022, we recorded a 25
basis point increase in share while maintaining pricing discipline.
This outperformance has been driven by a tighter operational
management and the focused investment initiatives in these five
priority markets.
We grew share in the US, UK and Australia, which more than
offset declines in Germany and Spain. We manage these markets as a
portfolio where we recognise the mix of market performance will
vary from period to period. For example, we recognise that Germany
is likely to take longer to address after more than a decade of
share declines. However, at the same time, we will have
opportunities to outperform, such as we have done in the US market,
where we quickly mobilised our team to capture some of the share
made available by KT&G's exit from the US. This opportunity
will not be repeated and therefore we expect our share performance
momentum to moderate in the second half.
Driving value from our broader portfolio
We are applying the same disciplined focus to how we manage the
rest of our combustible markets. Here we are prioritising
investment behind the best growth opportunities in regions, while
applying the same strict standards of responsible marketing to
existing adult smokers.
The new divisional structure with Paola Pocci leading the
Africa, Asia and Australasia region now provides a greater
management focus and the specific skill-set needed to unlock value
from these markets. For example, the Africa region, where we have
strong positions in five markets, has performed well again in the
first half with market share gains and profitable growth.
Building a targeted NGP business
In NGP, we continue to execute on our strategic objective to
rebuild our business as a focused, sustainable, consumer-centric
enterprise. We have received positive consumer feedback from trials
of our Pulze heated tobacco system in Greece and the Czech
Republic. While we will continue to innovate on our marketing
proposition, device technology and the range and quality of our iD
heat sticks, consumer data has validated our approach and
strengthened our confidence in our NGP strategy. Heated tobacco
remains a nascent market, where consumers have yet to form strong
brand loyalties and they are willing to experiment with different
propositions as they search for potentially less-risky alternatives
to smoking, which best suit their personal preferences. In line
with our strategy, we are now developing plans to roll out Pulze to
additional European markets.
In vape in the US, we have been following a similar
test-and-learn approach. A local pilot of an improved consumer
marketing proposition has received positive consumer feedback and
we now plan to extend to further territories in the US. The new
proposition includes improved packaging and a new marketing
approach targeting "next steppers" looking to migrate from
combustibles. We were disappointed with the FDA's decision to issue
Marketing Denial Orders for some of our myblu products in early
April and we are currently seeking to overturn the decision through
the administrative appeals process. Our products will remain in the
market during the appeals process.
In April, we began piloting an all-new vape device, blu 2.0, in
selected cities in France. We will evaluate consumer feedback from
this pilot before moving to a wider roll-out in Europe.
In modern oral nicotine, we continue to focus on the Nordic
markets, where we have achieved strong growth in Sweden and Norway,
as well as Austria, where there is a heritage of oral tobacco.
Managing our Environmental, Social & Governance
responsibilities
An important element of the foundation-building phase of our
strategy has been a refresh of our approach to environmental,
social & governance (ESG) responsibilities
Imperial has a long tradition of responsible business with a
good track record of preventing under-age access, combating illicit
trade and continually reducing its carbon footprint.
Our recent ESG review has focused on prioritising our activities
to ensure they fully align with our new strategy, purpose and
vision and meet the evolving expectation of stakeholders.
A full materiality study, which combined both quantitative
data-led analysis and qualitative stakeholder interviews,
highlighted eight key areas of focus.
We have grouped these into three broad categories:
-- Healthier futures - comprising consumer health, climate change and packaging & waste;
-- Positive contribution to society - comprising farmer
livelihoods & welfare, sustainable & responsible sourcing
and human rights; and
-- A safe and inclusive workplace - comprising employee health,
safety & wellbeing and diversity, equity & inclusion.
In some areas, we have already defined targets and begun the
work required to meet these goals. In climate change, for example,
we have pledged to become a net zero company by 2040 and have set
intermediate objectives in order help us to track our progress. We
are developing initiatives across the value chain to decarbonise
our business at pace. More than 90 per cent of our electricity is
now supplied by traceable renewable sources. Our first carbon
neutral factory, the Skruf plant in Savsjo, Sweden, is now acting
as an example for our other facilities as they work to further
improve their energy efficiency and sustainable sourcing.
Meanwhile, we will be launching a pilot salary-sacrifice scheme to
encourage uptake of electric cars among our UK-based staff, which
we will extend to other markets where enabled by local tax
rules.
We are developing detailed metrics and targets for all ESG focus
areas, including consumer health, and these will be integrated into
our executive remuneration policy during this financial year. We
will provide an update to investors and analysts at an ESG webinar
in September.
Allocating capital with discipline
We have a clear capital allocation framework to support
investment in our strategy and to maximise returns for
shareholders, with four clear capital priorities:
-- Invest behind the new strategy to deliver the growth initiatives.
-- Deleverage to support a strong and efficient balance sheet
with a target leverage towards the lower end of our net debt to
EBITDA range of 2-2.5 times.
-- A progressive dividend policy with dividend growing annually
taking into account underlying business performance.
-- Surplus capital returns to shareholders to be considered once
target leverage has been achieved.
We delivered another strong cash performance supporting a
further reduction in our leverage with our adjusted net debt/EBITDA
improving by 0.2 times to 2.4 times, in line with expectations and
reflecting usual seasonal variations. We are on track to deliver a
year-on-year improvement in our full year leverage.
We have announced a 1 per cent increase in the dividend for this
year, consistent with our progressive dividend policy taking into
account underlying performance and our broader capital allocation
priorities.
Outlook
We are making good progress in implementing our five-year plan
and we remain on track to deliver against expectations.
We expect to deliver full-year net revenue growth of around 0-1
per cent and adjusted operating profit growth of around 1 per cent,
at constant currency.
Our net revenue will benefit from a stronger price mix in the
second half although we expect volume declines to revert to
historic norms as pandemic-related restrictions are now largely
lifted in the majority of our markets.
We are mindful of the inflationary pressures and growth
headwinds all businesses are facing across the economy. While we
are not immune as a tobacco company, Imperial is well placed to
manage these through the balance of this year through cost
initiatives, high gross margins and pricing.
Our full year adjusted earnings per share will now benefit from
a lower adjusted tax rate of c. 22 per cent and a reduced finance
charge of around GBP330 million. At current exchange rates, foreign
exchange translation is expected to be a c. 1.5 per cent benefit to
earnings per share.
Our five-year plan to transform Imperial is divided into two
distinct periods. We are now into the final year of the two-year
strengthening phase. During the remainder of 2022 we will make
further investment in our five priority markets and begin full
roll-out of our new focused NGP strategy and the embedding of new
ways of working and cost-saving initiatives. I am confident that,
as we move into 2023, we will have in place the capabilities and
culture necessary to support the subsequent acceleration phase,
delivering sustainable growth in shareholder value.
OPERATING REVIEW
EUROPE REGION
Half Year Result Change
2022 2021 Actual Constant Currency
bn
Tobacco volume SE 57.8 60.0 -3.6%
Total net revenue GBPm 1,569 1,670 -6.1% -2.2%
Tobacco net revenue GBPm 1,492 1,615 -7.6% -3.8%
NGP net revenue GBPm 77 55 +39.5% +44.7%
Adjusted operating
profit GBPm 671 750 -10.6% -7.3%
Headlines
-- Share growth in the UK driven by local jewel brands strategy;
share declines in Germany and Spain
-- Increased travel begins to repatriate volumes to historical
channels and markets
-- Price/mix relatively weak reflecting price phasing and adverse
geographic/product mix
-- Price increases secured in key markets support a stronger second
half
-- Pulze heated tobacco trials support plans for further market
roll-outs
-- Pilot of new vape device underway in France
Our first half European results faced a strong comparator as we
began to see an unwind of the COVID-19 impacts on consumer buying
patterns with the lifting of restrictions and increased travel.
Investment behind our strategic initiatives in the UK,
particularly the continued growth of local jewel brand, Embassy,
supported strong market share growth in the UK. In Germany, our
share remains under pressure with the investment initiatives to
rejuvenate JPS and West, as well as sales execution, expected to
take time. We have repositioned heritage brands in our portfolio to
further enhance our consumer offering across the price segments as
a result of increased consumer preferences for value for money
offerings. In Spain, we achieved price increases early in the
period although this adversely impacted our market share
performance in the first quarter. Encouragingly, this is the first
notable price increase taken in Spain in several years.
Volumes for the region declined 3.6 per cent, as sales are
beginning to be repatriated to historical markets and channels as
restrictions ease. Tobacco net revenue was down 3.8 per cent at
constant currency with negative price mix of 0.2 per cent
reflecting price phasing and adverse geographic mix as the COVID-19
related shifts in market and channel buying patterns began to
unwind. Recently implemented price increases in key markets such as
Germany and the UK will support a stronger price mix in the second
half. Our global duty free business and our travel retail sales in
the holiday destinations in Southern Europe have begun to recover
as cross-border travel resumes, helping to offset volume declines
in Northern European markets such as Germany and the UK.
Our focus in Ukraine, which has been affected by the conflict
with Russia, has been on the safety and wellbeing of our 600
Ukrainian colleagues and their families. It is a fast-moving
situation, which we are monitoring closely.
Our NGP portfolio has performed well with NGP net revenue up
44.7 per cent at constant currency reflecting a strong performance
across all three categories: heated tobacco, modern oral and
vapour. We have received positive consumer feedback from trials of
our Pulze heated tobacco system in Greece and the Czech Republic
and we are now developing plans to roll out Pulze to additional
European markets later this year. Our blu share in several markets
such as the UK, France and Italy remains relatively stable despite
lower levels of investment. In modern oral nicotine, we have
continued to achieve strong growth in Sweden, Norway and Austria,
while also launching ZoneX in the global duty free channel.
In April, we began piloting a new blu vape device in selected
cities in France. We will evaluate consumer feedback from this
pilot before determining further market roll-outs.
Adjusted operating profit declined 7.3 per cent at constant
currency reflecting the lower tobacco net revenue driven by price
phasing and adverse geographic mix, as well as increased investment
behind our new strategy. This was partially offset by reduced
losses in our NGP business.
Priority Market Performance
Tobacco Share
Germany Market size declined 4.6% on a six-month basis a gainst
19.1% (-80 a strong prior-year comparator which benefited from
bps) COVID-19 travel restrictions. Our market share declined
despite increased investment behind our strategy. Our
brand portfolio is well positioned across price segments
having taken action to tier Gauloises variants within
premium and repositioned portfolio heritage brands within
13% of Group the lower-tier value segment to offer consumers choice
net revenue in both cigarettes and fine-cut. We continue to invest
behind JPS and West to rejuvenate brand equity, with
targeted point-of-sale marketing campaigns coupled with
retailer advocacy programmes driving increased consumer
awareness.
UK Tobacco industry volumes are beginning to revert to
41.8% (+105 historic declines, as COVID-19 related travel restrictions
bps) begin to unwind and there is growth in illicit trade.
Our strong market share gains benefited from investment
in our portfolio, particularly behind the local jewel
8% of Group brand, Embassy, and as we invested in new sales effectiveness
net revenue initiatives to enhance on-shelf availability with retailers.
We increased prices towards the end of the period, the
first increases in two years.
Spain Tobacco market volumes have started to recover following
28.2% (-45 two years of decline as tourism recovers. Spain has
bps) a stable excise regime and for the first time in five
years we achieved price increases across key product
lines. This led to some share loss at the beginning
4% of Group of the period although our share has since begun to
net revenue recover. We continue to invest behind our local jewel
brands and to capture downtrading through our super-king
variant of our West brand.
AMERICAS REGION
Half Year Result Change
2022 2021 Actual Constant Currency
bn
Tobacco volume SE 9.7 9.4 +3.9%
Total net revenue GBPm 1,160 1,131 +2.6% +2.2%
Tobacco net revenue GBPm 1,136 1,098 +3.5% +3.2%
NGP net revenue GBPm 24 33 -28.0% -28.1%
Adjusted operating
profit GBPm 453 426 +6.4% +6.0%
Headlines
-- Cigarette share growth up 70 basis points to 9.8 per cent
-- Investment in initiatives driving operational improvements
-- Revenue growth reflects strong cigarette pricing offset by adverse
product mix
-- NGP net revenue declined as we did not participate in the category
price discounting
-- Successful trial of new consumer marketing proposition for blu
supports further roll-out
-- Adjusted operating profit growth reflects lower litigation costs
and higher investment
We delivered a strong combustible tobacco performance in the US,
which is our largest single market, contributing around 34 per cent
of Group net revenue.
Tobacco volumes grew by 3.9 per cent against an industry volume
decline of 6.8 per cent. This outperformance primarily reflects the
improvement in our US cigarette market share of 70 basis points, to
9.8 per cent with the benefit of our increased investment in sales
execution and our brands, as well as our agile response to capture
share following KT&G's exit from the US market. We estimate our
underlying share growth, excluding the KT&G-related share
gains, was around 50 basis points. Our volumes also reflect an
increase in wholesaler customer inventories of around 250 million
sticks at the period end as wholesalers pulled forward orders ahead
of anticipated price increases. In addition, wholesaler inventories
at the beginning of this financial period were c. 150 million
sticks lower than the equivalent point in the prior year. Excluding
these inventory movements, our volumes were broadly flat on last
year.
Industry volume declines of 6.9 per cent are against a strong
comparator that benefited from COVID-19 related changes to consumer
buying patterns as a result of lockdowns and fiscal stimulus
payments. Volume decline rates have deteriorated further recently,
reflecting some increased inflationary pressure on consumer
spending, although our brand portfolio is well-placed across key
price segments, particularly if downtrading accelerates.
We achieved two price increases in the period. On a constant
currency basis, tobacco net revenue increased by 3.2 per cent,
benefiting from cigarette pricing offset by adverse product mix
with strong growth in the deep discount cigarette segment.
We continue to step up investment in our strategic priorities to
strengthen performance. In the premium segment, trials of a new
pack design and a new marketing campaign for Winston in Texas have
gone well and have now been rolled out nationally and a series of
initiatives behind the Kool brand are underway. We have increased
our sales force by around a quarter and are investing to improve
our sales execution through adopting best practices such as route
optimisation and better information systems. We are also achieving
improved traction with key accounts following the expansion of our
key account team.
Our mass market cigar portfolio achieved further market share
gains driven by strong performances by Backwoods and Dutch Leaf. We
have strengthened our position as the second largest manufacturer
in the US market, having been number four a year ago. Our volumes
were broadly flat on last year compared with an industry that
experienced volume declines against an exceptionally strong
comparator period, which benefited from changes in consumer buying
patterns caused by pandemic-related lockdowns. We remain well
positioned to capture consumer demand in this category with our
portfolio of iconic heritage brands.
Our NGP revenues were down 28.1 per cent on a constant currency
basis, reflecting the continued competitive environment with
greater discounting in the category. Our trial of the refreshed
consumer marketing proposition for blu in Charlotte has performed
well and we now plan to roll-out to other territories in the US. We
were disappointed with the FDA's decision to issue Marketing Denial
Orders for some of our myblu products in early April and we are
currently seeking to overturn the decision through the
administrative appeals process. Our products will remain in the
market during the appeals process.
Adjusted operating profit was 6.0 per cent higher at constant
currency driven by market share gains, the benefit of trade
inventory phasing and lower NGP costs. The non-repeat of the
litigation settlement cost in Minnesota and Texas in the prior
period more than offset the increased investment to support our
strategic priorities, the inflation-indexed increase in Master
Settlement Agreement costs and higher leaf costs in mass market
cigars.
AFRICA, ASIA AND AUSTRALASIA REGION
Half Year Result Change
2022 *2021 Actual Constant currency
bn
Tobacco volume SE 42.4 41.3 +2.6%
Total net revenue GBPm 766 770 -0.6% +3.1%
Tobacco net revenue GBPm 766 763 +0.4% +4.1%
NGP net revenue GBPm 0 7 -101.1% -101.1%
Adjusted operating
profit GBPm 357 286 +25.0% +25.8%
* The 2021 net revenue and adjusted operating profit metrics
exclude the contribution of the Premium Cigar Division from that
financial reporting period following its divestment in October
2020. The Premium Cigar Division contributed GBP21 million to net
revenue and GBP3 million to adjusted operating profit in 2021.
Headlines
-- Strong financial delivery driven by Africa and Middle East
regions
-- Clear portfolio focus in Africa delivered gains in market share
and financial performance
-- Investment in Australian portfolio driving market share gains
-- NGP revenue declines reflect last year's market exits from
Japan and Russia
-- Successful transfer of Russian operation as a going concern
to investors based in Russia
Our Africa, Asia and Australasia region performed strongly with
growth in tobacco volumes and constant currency growth in total net
revenue and adjusted operating profit. This reflects the benefit of
a more focused approach under the new regional structure and
leadership team.
We turned around our share performance in Australia, the
region's priority combustible market, as we focused our investment
behind sales execution and marketing in line with our strategy. We
invested behind our brand portfolio with the launch of Lambert
& Butler in the fifth price tier, which enabled us to ensure we
had a clear brand offering at each of the key price points. We also
invested in our sales execution, particularly in key accounts, and
reinforced our supply chain to enhance customer delivery.
Our African portfolio of markets performed strongly with further
market share gains in the region and continued growth in revenue
and profit. This has been driven by a clear portfolio focus, which
is leveraging key international brands, such as Gauloises in
targeted markets, as well as harnessing the power of our local
jewel brands with adult smokers.
Our Middle East business performed well as pandemic-related
travel restrictions lifted in the region and customer buying
patterns normalised. In Asia, we delivered a strong financial
performance driven primarily by Taiwan, where we grew share through
Davidoff Absolute and West 25s.
Our performance in Russia was affected by our decision to
initially suspend operations and then exit the market. We have now
completed the transfer of our Russian business as a going concern
to investors based in Russia, which concludes Imperial's operations
in Russia. In FY21, Russia represented around 1.5 per cent of net
revenues and 0.2 per cent of adjusted operating profit.
Tobacco volumes were 2.6 per cent higher, driven by a strong
volume performance in the Middle East as the region recovered from
some COVID-19 related disruption in the prior period. As expected,
volumes also benefited from a normalisation in Australia shipment
patterns, following the Australian Government's decision last year
to step away from the 12.5 per cent annual excise duty
accelerator.
Tobacco net revenue grew 4.1 per cent at constant currency,
driven by the improved volumes and price mix of 1.5 per cent. Our
net revenue was partially impacted by last year's changes to the
Australian excise regime, which benefited the prior period net
revenue and adjusted operating profit by about GBP41 million.
NGP net revenue declined to zero, following our decision to exit
the vapour market in Japan and Russia and the heated tobacco market
in Japan. This is consistent with our more targeted approach to NGP
as we have increased investment in other regions, particularly
behind the heated tobacco trials in Europe.
Adjusted operating profit was up 25.8 per cent at constant
currency, driven by a strong financial performance in Africa and
the Middle East, as well as lower NGP investment in the region,
compared to the same period last year.
Priority Market Performance
Tobacco Share
Australia We grew share through investment in our total portfolio
31.6% (+70 strategy to meet consumer needs. We launched Lambert
bps) & Butler in the fifth price tier in November, enabling
a clear differentiation with Parker & Simpson at the
4% of Group higher price tier. We also invested in improving sales
net revenue force effectiveness and strengthened our supply chain
to ensure on-shelf availability. While the market remains
highly competitive, the market dynamics have stabilised
following changes to the excise regime and as COVID-19
restrictions ease.
Distribution
Half Year Result Change
2022 2021 Actual Constant Currency
Net revenue GBPm 502 533 -5.8% -0.6%
Adjusted operating profit GBPm 121 121 +0.3% +5.5%
Adjusted operating margin % 24.1 22.7 +140bps +145bps
Eliminations GBPm (2) 3 -174.9% -179.0%
Adjusted operating profit
(inc. eliminations) GBPm 119 124 -4.0% +1.0%
COVID-19 related travel restrictions have now largely been
lifted for the markets in which Logista operates. While inflation
has been exacerbated by the Russian invasion of Ukraine and
transport union strikes have impacted economic growth in Spain, the
business has been able to mitigate these pressures.
Net revenues at GBP502 million were 0.6 per cent lower on a
constant currency basis as strong performance in Iberia was offset
by weaker performance in France and Italy.
In Iberia net revenue growth was driven by tobacco and related
products which benefited from an increase in pricing without an
increase in excise tax, transport with growth in Logista Parcel and
higher B2B activity at parcel delivery business (Nacex), and
pharmaceutical distribution as the business expanded both its
customer base and product offering. In Italy, net revenues were
weaker as the distribution of tobacco and related products cycled
against a tough comparator period with higher stock profit last
year than in the current period. A reduction in tobacco volumes
with no significant change in prices led to weaker net revenue in
France.
The adjusted operating profit contribution to the Group, after
eliminations, increased 1.0 per cent on a constant currency basis,
as a focus on cost control and contracts that allow increased costs
to be passed through, mitigated inflationary pressures and enabled
margin expansion.
During the period, Logista announced the acquisition of 70 per
cent of Speedlink Worldwide Express B.V, a Dutch express courier
company and disposed of Supergroup S.A.S, a subsidiary in France,
that had already been classified as held for sale at the end of the
last financial year.
In line with other Imperial owned entities, we continue to
benefit from an intercompany cash pooling arrangement with Logista,
which further enhances the Group's liquidity. On a 12-month basis,
the daily average cash balance loaned to the Group by Logista was
GBP1.9 billion, with movements in the cash position during the
12-month period varying from a high of GBP2.2 billion to a low of
GBP1.3 billion, primarily due to the timing of excise duty
payments. At 31 March 2022, the loan position was GBP1.8 billion
compared to GBP1.8 billion at 30 September 2021.
FINANCIAL REVIEW
These financial results demonstrate our continued progress
against our strategic priorities as we enter the latter part of the
two year strengthening phase of our five-year strategy. In the
period, Group net revenues grew 0.3 per cent and Group adjusted
operating profit rose 2.9 per cent, both on a constant currency
basis.
Reported operating profit reduced 26.6 per cent, mainly due to
exit charges related to the Russian asset disposal (GBP201 million)
and the non-recurrence of gains on disposal of the Premium Cigar
Division (GBP281 million) in the comparator period.
We have had favourable developments in several tax authority
audits, which have reduced uncertainty for the current financial
year. As a result our adjusted effective tax rate for the period
was 21.9 per cent and is expected to remain at a similar level for
the rest of the current financial year. Our reported effective tax
rate was 17.6 per cent.
Our focus on cash generation supported the delivery of GBP336
million of free cash flow in the seasonally weaker first half of
the year, with 102 per cent operating cash conversion on a 12-month
basis. This enabled us to reduce reported net debt by GBP1.2
billion to GBP9.8 billion.
Capital allocation remains a key value lever and we achieved a
further reduction in net debt, with adjusted net debt / EBITDA
reducing by 0.2-2.4 times on a 12-month basis. We are making good
progress towards meeting our target leverage at the lower end of
2.0-2.5 times adjusted net debt to EBITDA range.
We are also reshaping the finance function to become a more
effective business partner to support the Group as we build the
foundations for future growth.
SUMMARY INCOME STATEMENT
Half Year Results
Reported Adjusted
GBP million (unless otherwise indicated) 2022 2021 2022 *2021
Net Revenue
Tobacco & NGP Net Revenue 3,495 3,592 3,495 3,571
Distribution Net Revenue 502 533 502 533
Operating Profit
Total Tobacco & NGP 1,124 1,560 1,481 1,462
Distribution 79 74 121 121
Eliminations (2) 3 (2) 3
Group operating profit 1,201 1,637 1,600 1,586
Net finance income/(costs) 75 414 (165) (206)
Share of (loss)/profit of investments
accounted for using equity method (20) 8 4 4
Profit before tax 1,256 2,059 1,439 1,384
Tax (221) (215) (316) (318)
Profit for the period 1,035 1,844 1,123 1,066
Earnings per ordinary share (pence) 105.2 191.2 113.0 107.0
Dividend per share (pence) 42.54 42.12 42.54 42.12
* The 2021 net revenue and adjusted operating profit metrics
exclude the contribution of the Premium Cigar Division from that
financial reporting period following its divestment in October
2020. The Premium Cigar Division contributed GBP21 million to net
revenue and GBP3 million to adjusted operating profit in 2021.
Adjusted performance measures
When managing the performance of our business we focus on
non-GAAP measures, which we refer to as adjusted measures. We
believe they provide a useful comparison of underlying performance
from one period to the next as GAAP measures can include one-off,
non-recurring items and recurring items that relate to earlier
acquisitions. These adjusted measures are supplementary to, and
should not be regarded as a substitute for, GAAP measures, which we
refer to as reported measures. The basis of our adjusted measures
is explained in our accounting policies accompanying our financial
statements.
Reconciliations between reported and adjusted measures are
included in the appropriate notes to our financial statements.
Percentage growth figures for adjusted results are given on a
constant currency basis, where the effects of exchange rate
movements on the translation of the results of our overseas
operations are removed.
While we believe that adjusted performance measures can provide
helpful information which supplements reported measures we are also
aware of the need to ensure that an appropriate balance is
maintained between the two sets of reporting metrics with adjusted
disclosures not being given greater prominence than GAAP measures.
In line with this we have made a number of changes to our adjusted
performance measures this year, reducing the total number used.
SUMMARY CASH FLOW STATEMENT - STATUTORY RECONCILIATION
Half Year Result
Reported Adjusted
GBP million (unless otherwise indicated) 2022 2021 2022 2021
Group Operating Profit 1,201 1,637 1,600 1,589
Depreciation, amortisation and impairments 356 372 125 161
EBITDA 1,557 2,009 1,725 1,750
Loss/(profit) on disposal of subsidiaries 16 (281) - 0
Other non-cash movements 52 (125) (45) (101)
Operating Cash Flows before movement in
Working Capital 1,625 1,603 1,680 1,649
Working capital (652) (1,331) (665) (1,331)
Tax cash flow (273) (431) (273) (431)
Cash Flows from Operating Activities 700 (159) 742 (113)
Net capex (64) (61) (64) (61)
Restructuring - - (42) (46)
Cash interest (242) (255) (242) (255)
Minority interest dividends (58) (63) (58) (63)
Free Cash Flow 336 (538) 336 (538)
Acquisitions / disposals 44 626 44 626
Shareholder dividends (917) (906) (917) (906)
Purchase of ESOT shares (1) - (1) -
Net Cash Flow (538) (818) (538) (818)
GROUP RESULTS - ADJUSTED CONSTANT CURRENCY ANALYSIS
Half Half
year ended Movement year ended Constant
GBP million 31 March Foreign at constant 31 March currency
(unless otherwise indicated) 2021* exchange currency 2022 Change change
Tobacco & NGP Net Revenue
Europe 1,670 (63) (38) 1,569 -6.1% -2.2%
Americas 1,131 3 26 1,160 2.6% 2.2%
Africa, Asia and Australasia 770 (28) 24 766 -0.6% 3.1%
Total Group 3,571 (88) 12 3,495 -2.1% 0.3%
Tobacco & NGP Adjusted Operating
Profit
Europe 750 (24) (55) 671 -10.6% -7.3%
Americas 426 1 26 453 6.4% 6.0%
Africa, Asia and Australasia 286 (3) 74 357 25.0% 25.8%
Total Group 1,462 (26) 45 1,481 1.3% 3.1%
Distribution
Net revenue 533 (28) (3) 502 -5.8% -0.6%
Adjusted operating profit
including eliminations 124 (6) 1 119 -4.0% +1.0%
Group Adjusted Results
Adjusted operating profit 1,586 (32) 46 1,600 0.9% 2.9%
Adjusted net finance costs (206) 1 40 (165) 19.8% 19.3%
Adjusted EPS (pence) 107.0 (2.2) 8.2 113.0 5.6% 7.7%
* The 2021 net revenue and adjusted operating profit metrics
exclude the contribution of the Premium Cigar Division from that
financial reporting period following its divestment in October
2020. The Premium Cigar Division contributed GBP21 million to net
revenue and GBP3 million to adjusted operating profit in 2021.
SALES PERFORMANCE
Reported revenue adjusted net revenue
-1.3% +0.3%
-- Reported revenue declined -1.3% due to a reduction in duty and similar items.
-- Adjusted net revenue grew 0.3% at constant currency
comprising +0.1% from tobacco and +8.7% from NGP.
-- Tobacco volume was down -0.7%, reflecting volumes declines in
Europe as COVID-19 restrictions begin to unwind, partly offset by a
strong volume performance in the Americas and Africa, Asia and
Australasia region
-- Aggregate market share growth in our top-five priority market of +25bps (HY21: +6bps).
-- Tobacco price mix of 0.8% was below historical levels, due to
price phasing, product mix in the Americas and market mix in AAA.
Price increases in the latter part of the first half support a
stronger price mix in the second half of the year.
-- NGP adjusted net revenue increased 8.7% at constant currency
with growth across all three categories in Europe (heated, modern
oral & vapour), partly offset by strategic market exits in
AAA.
-- Translation FX was adverse due to sterling strengthening against the euro.
NET REVENUE BRIDGE: +0.3% (CC); -2.1% (Actual Exchange
Rate)
HY21 net revenue GBP3,571m
Tobacco volume -0.7%
Tobacco price/mix +0.8%
NGP net revenue +0.2%
HY22 constant currency net revenue GBP3,583m +0.3%
Translation FX -2.5%
HY22 net revenue GBP3,495m -2.1%
The net revenue of GBP3,571m for 2021 excludes a GBP21m
contribution from the Premium Cigar Division following its
divestment in September 2020.
OPERATING PROFIT
Reported operating profit adjusted operating profit
-26.6% +2.9%
-- Reported Group operating profit of GBP1,201m declined 26.6%,
primarily driven by exit charges related to the Russian asset
disposal (GBP201m) and the non-recurrence of gains on disposal of
Premium Cigar Division (GBP281m).
-- Adjusted Group operating profit increased 2.9% at constant
currency due to reduced losses in NGP as we reprioritised
investment.
-- Tobacco adjusted operating profit was broadly flat at
constant currency. Profit growth in the AAA and Americas was offset
by Europe where price phasing was weighted towards the end of the
period. Tobacco adjusted profit benefited from lower US state
litigation costs which was offset by higher investment in strategic
initiatives.
-- The reduction in NGP losses drove the majority of improvement
in Group profit growth as we benefited from exiting loss making
markets and rationalised investments
-- Translation FX was adverse due to sterling strengthening against the euro.
ADJUSTED OPERATING PROFIT BRIDGE: +2.9% (CC); +0.9% (Actual
Exchange Rate)
HY21 AOP GBP1,586m
HY21 US State Litigation +GBP36m
Strategic Investments -GBP35m
NGP AOP +GBP44m
Distribution AOP (including eliminations) +GBP1m
HY22 AOP constant currency GBP1,632m +2.9%
Translation FX -GBP32m
HY22 AOP GBP1,600m +0.9%
The adjusted operating profit figure of GBP1,586m for 2021
excludes a GBP3m contribution from the Premium Cigar Division
following its divestment in September 2020.
EARNINGS PER SHARE
Reported EPS adjusted EPS
-45.0% +7.7%
-- Reported EPS declined 45.0% to 105.2 pence driven by the
lower reported operating profit and lower net finance income as we
reduced our exposure to the marked to market foreign exchange
accounting gains on unhedged financial instruments, partly offset
by a higher reported tax rate.
-- Adjusted EPS was 113.0 pence, up 7.7% at constant currency
due to increased adjusted operating profit, lower adjusted interest
costs due to a reduction in net debt driven by last year's US bond
repayment and a lower adjusted tax rate, following favourable
developments in several tax authority audits.
EPS BRIDGE: +7.7% (CC); +5.6% (Actual Exchange Rate)
HY20 adjusted EPS 107.0p
Operating profit +4.8p
Interest +4.2p
Minorities & JV -0.2p
Tax -0.4p
Number of shares -0.2p
HY21 organic adjusted constant currency
EPS 115.2p +7.7%
Translation FX -2.2p
HY21 organic adjusted EPS 113.0p +5.6%
The adjusted earnings per share figure of 107.0p for 2021
excludes a 0.6p contribution from the Premium Cigar Division
following its divestment in September 2020.
CASH FLOW
Cash flows from operating activities were GBP700 million (2021:
GBP(159) million).
The year-on-year improvement in free cash flow to GBP336 million
(2021: GBP(538) million) was driven by a lower working capital
outflow as duty payment dates at Logista return to normal following
changes to duty payment dates in preceding years, and a lower cash
tax payment after a one off payment in 2021 of GBP101m for
Controlled Foreign Company (CFC) state aid in the UK.
While the net cash outflow of GBP538 million (2021: GBP(818)
million) improved year-on-year, the improvement was impacted by
lower disposal proceeds than in the same period in 2021 which
benefitted from the sale of the Premium Cigar Division. Disposal
proceeds in the first half of 2022 were mainly related to the
divestment of Supergroup, a French subsidiary of Logista. The La
Romana factory sale is now expected to be delayed into the second
half of the current financial year. Shareholder dividend payments
of GBP917 million, are weighted towards the first half of the year
in line with past practice.
Capital expenditure of GBP64 million was similar to the prior
year (2021: GBP61 million) but is anticipated to increase in the
second half of the year in line with our full year guidance of c.
GBP300 million, with investments in projects to support our
strategic plan.
Cash conversion was 102 per cent on a 12-month basis (2021: 122
per cent) driven by neutral working capital over the period and
lower capital expenditure. Cash conversion in the comparator period
was temporarily inflated by duty deferrals in Logista, which led to
a significant working capital inflow in the second half of
2020.
Half Year Result
GBP million (unless otherwise indicated) 2022 2021
Cash flow from operating activities 700 (159)
Free cash flow 336 (538)
Net cash flow (538) (818)
Cash Conversion (all numbers below on a 12 month basis)
Adjusted operating profit 3,584 3,647
Adjusted operating cash flow 3,643 4,437
Adjusted operating cash conversion 102% 122%
ADJUSTED NET DEBT/EBITDA
Active capital discipline remains a key value lever for our
strategic plan. The strong cash generation of the business on a
12-month basis delivered a 0.2 times reduction on adjusted net
debt/EBITDA to 2.4x from 2.6x. Adjusted net debt has reduced by
GBP1.2 billion on a 12-month basis, driven by strong cash
generation.
We remain on track to reduce our gearing to the lower end of
2.0x to 2.5x.
Reported net debt reduced by GBP1,246 million to GBP9,757
million (2021: GBP11,003 million). Excluding accrued interest,
lease liabilities and the fair value of derivative financial
instruments providing commercial hedges of interest risk, Group
adjusted net debt was GBP9,157 million (2021: GBP10,328
million).
Half Year Result
GBP million 2022 2021
Reported net debt (9,757) (11,003)
Accrued interest 68 81
Lease liabilities 241 269
Fair value of interest rate derivatives 291 325
Adjusted net debt (9,157) (10,328)
RECONCILIATION BETWEEN REPORTED AND ADJUSTED PERFORMANCE
MEASURES
Half Year Results
GBP million unless otherwise Operating profit Net finance Earnings
indicated income/(costs) per share
(pence)
2022 2021 2022 2021 2022 2021
Reported 1,201 1,637 75 414 105.2 191.2
Russian and associated markets
exit 201 - - - 21.3 -
Acquisition and disposal costs 5 - - - 0.5 -
Amortisation & impairment
of acquired intangibles 182 211 - - 18.4 21.1
Excise tax provision (10) (1) - - (1.1) (0.1)
Fair value adjustment of loan
receivable (2) (17) - - (0.2) (1.8)
Loss/(profit) on disposal
of subsidiaries 16 (281) - - 1.0 (30.4)
Restructuring costs 7 40 - - 0.4 3.3
Fair value & FX movements
on financial instruments - - (236) (619) (25.2) (74.9)
Post-employment benefits net
financing costs - - (4) (1) (0.4) (0.1)
Brand impairment in equity - - - - 2.5 -
accounted JV
Uncertain tax positions - - - - (6.0) -
Deferred tax on unremitted - - - - (2.7) -
earnings
Tax on unrecognised losses - - - - 0.8 1.1
Adj. above attributable to
non-controlling interests - - - - (1.5) (1.8)
Adjusted 1,600 1,589 (165) (206) 113.0 107.6
Adjusting items
The adjusting items are set out in the table above. Please refer
to notes 5, 9 and 12 of the financial statements for a full
reconciliation of adjusted performance measures including cash and
debt.
The Group announced in April its exit and sale of its Russian
business and associated markets. In the period, the exit charges at
the operating profit level total GBP201 million, with an additional
GBP24 million recognised in profit before tax. These are outlined
below:
-- The Russian businesses met the criteria to be shown as an
asset held for sale in the Group balance sheet at 31 March 2022.
The Russian assets have been revalued on a 'fair value less cost of
disposal' basis to GBP16 million. An impairment charge of GBP166
million arises on revaluation.
-- The planned exit from a limited number of associated markets
has resulted in the recognition of asset impairments provisions and
exit costs currently estimated at GBP35 million.
-- Joint venture Jadé impairment: the Global Horizons joint
venture with China Tobacco holds an intangible asset for the Jadé
brand, which is sold in Russia. This is now impaired with a charge
to the Group of GBP24 million.
The sale of the Russia business has been disclosed as a post
balance sheet event in these results. The transaction has triggered
a recycling of foreign exchange losses estimated to be in the range
of GBP150 million to GBP190 million, which will be recognised in
the second half of the current financial year.
Last year we announced the outcome of our strategic review,
including an associated and specific time-bound restructuring
programme to deliver new ways of working and efficiencies, which we
refer to as the 2021 Strategic Review Programme. This is resulting
in one-off costs being incurred in order to reshape the business to
support delivery of the new strategy. It excludes any costs
associated with factory footprint rationalisation. Only the
restructuring costs for the 2021 Strategic Review Programme are
being treated as an adjusting item in 2022. An overview of the this
programme's cumulative charges, cash spend and annualised savings,
together with those from the two previous programmes, Cost
Optimisation Programme I and Cost Optimisation Programme II, is
shown in the section below.
Restructuring programmes
Half Year 2022
Income
GBPm Statement Cash
Cost Optimisation Programme I - 6
Cost Optimisation Programme II - 12
2021 Strategic Review Programme 7 24
Total 7 42
Income Statement
Charges Cash Costs Savings
Cumulative Anticipated Cumulative Anticipated Annualised
GBPm to date Total to date Total Savings
Cost Optimisation Programme
I (2013) 945 945 577 634 305
Cost Optimisation Programme
II (2018) 848 848 560 650 320
2021 Strategic Review Programme 233 375-425 72 275 100-150
During the course of 2021, the Group announced a restructuring
programme as part of delivering its new five-year strategy. This
restructuring programme aims to reorganise and simplify the
business, unlocking efficiency savings to enable increased
investment in our core capabilities such as sales and marketing to
support the five-year plan.
The GBP7 million restructuring charge in this period brings the
cumulative costs of this restructuring programme to GBP233 million.
The remainder of this programme is expected to be recognised in the
second half of this financial year and will be treated as an
adjusting item.
There are ongoing cash costs for all three restructuring
programmes as detailed in the table above.
Finance costs
Adjusted net finance costs were lower at GBP165 million (HY21:
GBP206 million), reflecting the early repayment of a US bond last
year. Reported net finance income was GBP75 million (HY21: GBP414
million), incorporating the impact of fair value and foreign
exchange gains on financial instruments of GBP236 million (HY21:
GBP619 million) and post-employment benefits net financing income
of GBP4 million (HY21: GBP1 million). The gains on financial
instruments are due to foreign exchange accounting gains of GBP164
million mainly resulting from sterling having strengthened against
the euro by 1.7 per cent in the period, together with fair value
gains on derivative financial instruments of GBP72 million caused
by increasing market interest rates.
Our all-in cost of debt decreased to 3.5 per cent (HY21: 3.7 per
cent) in line with continued efficiently controlled debt
management.
Our interest cover increased to 10.8 times (HY21: 8.5 times)
reflecting the lower adjusted finance costs.
Taxation
Our adjusted effective tax rate is 21.9 per cent (2021: 23.1 per
cent) and the reported effective tax rate is 17.6 per cent (2021:
10.4 per cent). The decrease in the adjusted effective tax rate was
due to favourable developments in tax authority audits in several
jurisdictions. The adjusted tax rate is higher than the reported
rate due to one off releases of provisions for uncertain tax
positions partially offset by no tax relief arising on the
impairment of Russian assets. The increase in the reported
effective tax rate was due to no tax relief arising on the
impairment of Russian assets in 2022 and limited tax arising on the
gain on the divestment of the Premium Cigar Division in 2021. We
expect our adjusted effective tax rate for the year ended 30
September 2022 to be around 22 per cent. Over the medium term, we
expect upward pressure on the effective tax rate.
The effective tax rate is sensitive to the geographic mix of
profits, reflecting a combination of higher rates in certain
markets such as the USA and lower rates in other markets such as
the UK. The rate is also sensitive to future legislative changes
affecting international businesses such as changes arising from the
OECD's (Organisation for Economic Co-operation and Development)
Base Erosion and Profits Shifting (BEPS) work. Whilst we seek to
mitigate the impact of these changes, we anticipate there will be
further upward pressure on the adjusted and reported tax rate in
the medium term.
Our Group Tax Strategy is publicly available and can be found in
the governance section of our corporate website.
Exchange rates
Foreign exchange had an adverse impact on Group adjusted
operating profit and earnings per share at average exchange rates
(1.9 per cent) as sterling strengthened against the Euro (5.5 per
cent). Other major currencies remained broadly flat compared to the
prior year.
Dividend payments
The Group paid two dividends of 48.48 pence per share in
December 2021 and March 2022.
The Board has approved an interim dividend of 42.54 pence per
share which will be paid in two payments of 21.27 pence per share.
The first interim dividend payment will be paid on 30 June 2022 to
shareholders registered on 27 May 2022. The second interim dividend
payment will be paid on 30 September 2022 to shareholders
registered on 19 August 2022. This interim dividend is an increase
of 1 per cent, or GBP4 million, in line with the Group's
progressive dividend policy.
Funding and liquidity
During the period, we repaid one bond of GBP1.0 billion, from a
combination of utilising excess cash together with some short term
debt drawings. The denomination of our closing adjusted net debt
was split approximately 74 per cent euro and 26 per cent US dollar.
As at 31 March 2022, the Group had committed financing in place of
around GBP11.7 billion, which comprised 25 per cent bank facilities
and 75 per cent raised from capital markets. During the period the
maturity date of our existing revolving credit facility of EUR3.5
billion was extended to March 2025.
The Group remains fully compliant with all our banking covenants
and remains committed to retaining our investment grade
ratings.
Principal Risks and Uncertainties
Risk Management is the responsibility of everyone across the
Group. Whilst the Board remain ultimately accountable for Risk
Management, our approach is designed to enable our people to
proactively identify and assess risks on an ongoing basis and to
ensure the effectiveness and appropriateness of related mitigating
actions. The business is supported by subject matter experts in our
second line of defence to ensure the Group's control frameworks
align to achieving our strategic objectives whilst operating within
the Board's defined risk appetite.
Over the past six months the Group, in common with other
organisations, has had to manage the continuing impacts of
COVID-19, as well as those arising from Russia's invasion of
Ukraine. The Group's priority remains the safety and welfare of its
people and our crisis committee and cross-functional Executive
Leadership Team working groups continue to manage our responses to
the dynamic environment. They continue to inform the Board of
potential and current impacts arising, along with assurance over
the continuity and sustainability of the wider business.
The wider socio-economic effects of COVID-19 and the conflict in
Ukraine have started to impact businesses and consumers across all
goods and services and could impact the commercial environment into
the longer-term. Inflationary pressures increase input costs and
commodity prices, with further pressure placed upon consumer
disposable income from increases in fuel and food prices
potentially creating affordability concerns. This, in turn, could
result in reduced consumption, consumer downtrading or increased
consumption of illicit products. These pressures could adversely
impact the size of the legitimate nicotine market with additional
impacts from regulatory change, excise tax or increases in other
product taxes. Compared to other consumer goods companies, however,
the Group has a high gross margin with the low cost of goods sold.
The long purchasing terms for tobacco leaf gives the Group
visibility of upcoming inflationary pressures and this, combined
with the Group's resilient business model, enables the Group to
pass on cost inflation through product pricing, which mitigates the
Group's inflationary risk.
Additionally, the impacts on global supply chains, financial
markets, and businesses in commercial distress are being actively
considered and mitigating actions taken across the business. The
significant pressures on all consumer markets increases the
potential variability of outcomes in commercial decisions as the
ability to accurately predict and quantify these risks may be
reduced in comparison to previous periods.
Given the recent increase in cyber criminality combined with
current geopolitical tensions, the Group increased investments in
IT security in the period. The Group continuously evaluates the
risk posed by cyber criminals and will continue to monitor the
effectiveness of our IT security infrastructure.
The Board continues to monitor the principal risks and
uncertainties to which the Group is exposed. The risks and the
approach to managing the risks remains consistent with that
identified on pages 80-93 of our 2021 Annual Report and Accounts,
and covers the following areas:
-- Failure to manage the impacts of regulatory change
-- Failure to develop commercially sustainable NGP categories
-- Inability to develop, execute, and communicate an effective
ESG strategy in line with expectations of stakeholders
-- Pricing, excise, or other product taxes not in line with
business plan assumptions or expectations
-- Product portfolio and/or interaction approach not aligned to consumer preferences
-- Failure to ensure expected benefits of strategic transformation programmes
-- Major incident resulting from cyber or similar technology risk
-- Failure to appropriately manage litigation and investigations
results in adverse judgements and/or related costs
-- Management of liquidity and financing requirements
-- Product supply fails to meet market demands (stock issues in market)
-- People and organisation
Climate risks are specifically considered across the business in
relation to their impact on existing risks, rather than as a risk
in itself. This ensures that all risk owners consider the impacts
of climate change, notably within our supply chain, on both a
current and forward looking basis. Expert second line assistance is
provided by our sustainability team along with independent external
advice to best understand impacts on our global footprint.
We assess geo-political risks on the same basis as climate
above. As a multi-national we are exposed to a wide variety of
operating environments and cultures, and so local assessment of
risks and impacts form a key input to our ongoing management of
geo-political risks, with support available from second line
centres of expertise. This approach ensures responsibility for
identification, assessment, and mitigation of risks is consistently
understood and applied across the business.
The Group continues to successfully progress with its
organisational change initiatives. Failure to manage both the
potential short and long-term adverse impacts of organisational
change could result in material adverse effects on the Group, from
both the crystallisation of risks and the failure to seize
opportunities in an increasingly dynamic marketplace. Appropriate
frameworks and governance continue to be applied to our change
programmes to best ensure achievement of intended positive
commercial and strategic outcomes.
Liquidity and Going 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.
The Group recognises that the current political situation in
Ukraine and Russia brings uncertainty. During the period of the
COVID-19 pandemic, the Group effectively managed operations across
the world, and has proved it has an established mechanism to
operate efficiently despite uncertainty. The Directors consider
that a one-off discrete event with immediate cash outflow is of
greatest concern to short term liquidity of the Group.
The Directors have assessed the principal risks of the business,
including stress testing a range of different scenarios that may
affect the business. These included scenarios which examined the
implications of:
-- A one-off discrete event resulting in immediate cash outflow
such as unexpected duty or tax payments of c. GBP900 million.
-- A rapid and lasting deterioration to the Group's
profitability because markets become closed to tobacco products or
there are sustained failures to our tobacco manufacturing and
supply chains. These assumed a permanent reduction in profitability
of 15 per cent from 1 June 2022.
-- The additional impact of potential bad debt risks arising
from a recession, of c. GBP200 million.
-- The withdrawal of facilities that provide receivables factoring of c. GBP660 million.
The scenario planning also considered mitigation actions
including reductions to capital expenditure and dividend payments.
There are additional actions that were not modelled but could be
taken including other cost mitigations such as staff redundancies,
retrenchment of leases, and discussions with lenders about capital
structure.
Under the worst-case scenario, where the largest envisaged
downside scenarios all take place at the same time, the Group would
have sufficient headroom until February 2023. The Group believes
this worst-case scenario to be highly unlikely given the relatively
small impact on our trading performance and bad debt levels during
the COVID-19 pandemic. In addition, the Group has a number of
mitigating actions available that could be implemented should such
a scenario arise.
Based on its review of future cashflows covering the period
through to September 2023, and having assessed the principal risks
facing the Group, the Board is of the opinion that the Group as a
whole and Imperial Brands PLC have adequate resources to meet their
operational needs from the date of this Report through to September
2023 and concludes that it is appropriate to prepare the financial
statements on a going concern basis.
Statement of Directors' Responsibilities
The Directors confirm that this condensed consolidated interim
financial information has been prepared in accordance with
UK-adopted IAS 34 and that the interim management report includes a
fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely: an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and material related party transactions in the
first six months of the current financial year and any material
changes in the related-party transactions described in the last
annual report.
A list of current directors is maintained on the Imperial Brands
PLC website: www.imperialbrandsplc.com.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
LUKAS PARAVICINI
Chief Financial Officer
INDEPENT REVIEW REPORT TO IMPERIAL BRANDS PLC
Conclusion
We have been engaged by the Company to review the condensed
consolidated set of financial statements in the Half Year Results
of Imperial Brands PLC for the six months ended 31 March 2022 which
comprises the consolidated income statement, consolidated statement
of comprehensive income, consolidated balance sheet, consolidated
statement of changes in equity, consolidated cash flow statement
and the notes to the financial statements. We have read the other
information contained in the Half Year Results and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
March 2022 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group will be prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion is based on procedures that are less extensive than
audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
17 May 2022
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
GBP million unless otherwise Year ended 30
indicated Notes 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Revenue 3 15,362 15,568 32,791
Duty and similar items (7,539) (7,640) (16,229)
Other cost of sales (5,087) (5,068) (10,535)
Cost of sales (12,626) (12,708) (26,764)
Gross profit 2,736 2,860 6,027
Distribution, advertising and
selling costs (968) (1,097) (2,118)
Russian and associated markets
exit 10 (201) - -
Amortisation and impairment of
acquired intangibles 11 (182) (211) (450)
Restructuring costs 4 (7) (40) (257)
Fair value adjustment of loan
receivable 2 17 15
(Loss)/profit on disposal of
subsidiaries 10 (16) 281 281
Acquisition and disposal costs (5) - (17)
Excise tax provision 10 1 1
Other expenses (168) (174) (336)
Administrative and other expenses (567) (126) (763)
Operating profit 3/5 1,201 1,637 3,146
Investment income 908 1,071 1,060
Finance costs (833) (657) (979)
Net finance income 5 75 414 81
Share of (loss)/profit of
investments accounted for using
the equity method (20) 8 11
Profit before tax 1,256 2,059 3,238
Tax 7 (221) (215) (331)
Profit for the period 1,035 1,844 2,907
Attributable to:
Owners of the parent 995 1,806 2,834
Non-controlling interests 40 38 73
Earnings per ordinary share
(pence)
- Basic 9 105.2 191.2 299.9
- Diluted 9 104.8 190.9 299.1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Profit for the period 1,035 1,844 2,907
Other comprehensive income
Exchange movements (96) (917) (680)
Exchange movements recycled to profit
and loss upon disposal of subsidiaries - (337) (337)
Current tax on hedge of net investments
and quasi-equity loans (9) (130) (105)
Deferred tax on hedge of net
investments and quasi-equity loans - 2 (12)
Items that may be reclassified to
profit and loss (105) (1,382) (1,134)
Net actuarial (losses)/gains on
retirement benefits (12) 6 41
Current tax relating to net actuarial
(losses)/gains on retirement benefits 10 14 2
Deferred tax relating to net actuarial
(losses)/gains on retirement benefits (14) (12) (21)
Items that will not be reclassified to
profit and loss (16) 8 22
Other comprehensive loss for the
period, net of tax (121) (1,374) (1,112)
Total comprehensive income for the
period 914 470 1,795
Attributable to:
Owners of the parent 885 476 1,761
Non-controlling interests 29 (6) 34
Total comprehensive income for the
period 914 470 1,795
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
GBP million Notes 31 March 2022 31 March 2021 30 September 2021
Non-current assets
Intangible assets 11 16,431 16,753 16,674
Property, plant and equipment 1,609 1,714 1,715
Right of use assets 232 263 242
Investments accounted for using the equity method 67 88 88
Retirement benefit assets 6 1,048 942 1,046
Trade and other receivables 74 63 62
Derivative financial instruments 12/13 179 480 391
Deferred tax assets 503 303 564
State aid tax recoverable 101 101 101
20,244 20,707 20,883
Current assets
Inventories 4,445 4,575 3,834
Trade and other receivables 2,284 2,780 2,749
Current tax assets 261 219 234
Cash and cash equivalents 12 588 765 1,287
Derivative financial instruments 12/13 58 86 68
Current assets held for disposal 10 231 - 35
7,867 8,425 8,207
Total assets 28,111 29,132 29,090
Current liabilities
Borrowings 12 (1,721) (1,498) (1,107)
Derivative financial instruments 12/13 (49) (42) (62)
Lease liabilities 12 (55) (60) (57)
Trade and other payables (8,746) (9,012) (9,106)
Current tax liabilities (213) (323) (253)
Provisions 4 (159) (153) (188)
Current liabilities held for disposal 10 (215) - (35)
(11,158) (11,088) (10,808)
Non-current liabilities
Borrowings 12 (7,979) (9,488) (8,715)
Derivative financial instruments 12/13 (592) (1,037) (984)
Lease liabilities 12 (186) (209) (194)
Trade and other payables (8) (5) (7)
Deferred tax liabilities (961) (911) (1,037)
Retirement benefit liabilities 6 (1,139) (1,179) (1,199)
Provisions 4 (195) (187) (206)
(11,060) (13,016) (12,342)
Total liabilities (22,218) (24,104) (23,150)
Net assets 5,893 5,028 5,940
Equity
Share capital 103 103 103
Share premium and capital redemption 5,837 5,837 5,837
Retained earnings (712) (1,447) (788)
Exchange translation reserve 106 (43) 200
Equity attributable to owners of the parent 5,334 4,450 5,352
Non-controlling interests 559 578 588
Total equity 5,893 5,028 5,940
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited
Share Equity
premium Exchange attributable Non-
Share and capital Retained translation to owners controlling Total
GBP million capital redemption earnings reserve of the parent interests equity
At 1 October 2021 103 5,837 (788) 200 5,352 588 5,940
Profit for the period - - 995 - 995 40 1,035
Exchange movements on
assets - - - (77) (77) (11) (88)
Exchange movements on net
investment hedges - - - 28 28 - 28
Exchange movements on
quasi equity loans - - - (36) (36) - (36)
Current tax on hedge of
net investments and
quasi-equity loans - - - (9) (9) - (9)
Net actuarial losses on
retirement benefits - - (12) - (12) - (12)
Current tax relating to
net actuarial gains on
retirement benefits - - 10 - 10 - 10
Deferred tax relating to
net actuarial gains on
retirement benefits - - (14) - (14) - (14)
Other comprehensive
expense - - (16) (94) (110) (11) (121)
Total comprehensive
income/(expense) - - 979 (94) 885 29 914
Transactions with owners
Costs of employees'
services compensated by
share schemes - - 14 - 14 - 14
Dividends paid - - (917) - (917) (58) (975)
At 31 March 2022 103 5,837 (712) 106 5,334 559 5,893
At 1 October 2020 103 5,837 (2,364) 1,295 4,871 647 5,518
Profit for the period - - 1,806 - 1,806 38 1,844
Exchange movements on
assets - - - (1,316) (1,316) (44) (1,360)
Exchange movements on net
investment hedges - - - 600 600 - 600
Exchange movements on
quasi equity loans - - - (157) (157) - (157)
Exchange movements
recycled to profit and
loss upon disposal of
subsidiaries - - - (337) (337) - (337)
Current tax on hedge of
net investments and
quasi-equity loans - - - (130) (130) - (130)
Deferred tax on hedge of
net investments and
quasi-equity loans - - - 2 2 - 2
Net actuarial gains on
retirement benefits - - 6 - 6 - 6
Current tax relating to
net actuarial gains on
retirement benefits - - 14 - 14 - 14
Deferred tax relating to
net actuarial gains on
retirement benefits - - (12) - (12) - (12)
Other comprehensive
income/(expense) - - 8 (1,338) (1,330) (44) (1,374)
Total comprehensive
income/(expense) - - 1,814 (1,338) 476 (6) 470
Transactions with owners
Costs of employees'
services compensated by
share schemes - - 9 - 9 - 9
Dividends paid - - (906) - (906) (63) (969)
At 31 March 2021 103 5,837 (1,447) (43) 4,450 578 5,028
CONSOLIDATED CASHFLOW STATEMENT
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Cash flows from operating activities
Operating profit 1,201 1,637 3,146
Dividends received from investments
accounted for under the equity method - 4 4
Depreciation, amortisation and impairment 356 372 815
Loss on disposal of non-current assets 2 2 2
Loss/(profit) on disposal of subsidiary 16 (281) (281)
Post-employment benefits (24) (73) (63)
Costs of employees' services compensated
by share schemes 14 11 25
Fair value adjustment of loan receivable (2) (17) (15)
Movement in provisions 62 (52) 18
Operating cash flows before movement in
working capital 1,625 1,603 3,651
(Increase)/decrease in inventories (689) (720) 70
Decrease/(increase) in trade and other
receivables 240 (28) (201)
Decrease in trade and other payables (203) (583) (533)
Movement in working capital (652) (1,331) (664)
Tax paid (273) (431) (820)
Net cash flows generated from/(used in)
operating activities 700 (159) 2,167
Cash flows from investing activities
Interest received 2 - 15
Proceeds from the sale of non-current
assets 23 30 50
Proceeds from sale of subsidiaries, net
of cash disposed of 57 626 845
Purchase of non-current assets (87) (91) (200)
Purchase of subsidiaries, net of cash
acquired (13) - -
Net cash (used in)/generated from
investing activities (18) 565 710
Cash flows from financing activities
Interest paid (244) (255) (415)
Purchase of shares by Employee Share
Ownership Trusts (1) - -
Lease liabilities paid (34) (38) (69)
Increase in borrowings 891 856 858
Repayment of borrowings (1,004) (899) (2,224)
Cash flows relating to derivative
financial instruments 40 14 41
Dividends paid to non-controlling
interests (58) (63) (93)
Dividends paid to owners of the parent (917) (906) (1,305)
Net cash used in financing activities (1,327) (1,291) (3,207)
Net decrease in cash and cash equivalents (645) (885) (330)
Cash and cash equivalents at the start of
period 1,287 1,626 1,626
Effect of foreign exchange rates on cash
and cash equivalents (12) 24 (9)
Transferred to held for disposal (42) - -
Cash and cash equivalents at the end of
period 588 765 1,287
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 2022 and 31 March 2021, together with
the audited results for the year ended 30 September 2021.
The comparative information shown for the year ended 30
September 2021 does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006, and does not
reflect all of the information contained in the Group's published
financial statements for that year. The Auditors' Report on those
statements was unqualified with no reference to matters to which
the auditor drew attention by way of emphasis and did not contain
any statements under section 498 of the Companies Act 2006. The
financial statements for the year ended 30 September 2021 were
approved by the Board of Directors on 15 November 2021 and have
been filed with the Registrar of Companies.
As previously reported, the nancial statements of the Group for
the year ending 30 September 2022 will be prepared under UK-adopted
International Accounting Standards ("UK-adopted IAS"). Accordingly,
this condensed set of financial statements for the six months ended
31 March 2022 has been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority
and with UK-adopted IAS 34 Interim Financial Reporting. The
condensed set of financial statements for the six months ended 31
March 2022 should be read in conjunction with the annual financial
statements for the year ended 30 September 2021 which have been
prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and
International Financial Reporting Standards adopted pursuant to
Regulation (EC) No.1606/2002 as it applies in the European
Union.
Except for the adoption of the new standards and interpretations
effective as of 1 October 2021, the Group's principal accounting
policies and methods of computation used in preparing this
information are the same as those applied in the financial
statements for the year ended 30 September 2021, which are
available on our website www.imperialbrandsplc.com.
BASIS FOR GOING CONCERN
The financial statements have been prepared under the historical
cost convention except where fair value measurement is required
under IFRS as described below in the accounting policies on
financial instruments, and on a going concern basis. 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.
The Group recognises that the current political situation in
Ukraine and Russia brings uncertainty. During the period of the
COVID-19 pandemic, the Group effectively managed operations across
the world, and has proved it has an established mechanism to
operate efficiently despite uncertainty. The Directors consider
that a one-off discrete event with immediate cash outflow is of
greatest concern to short term liquidity of the Group.
The Directors have assessed the principal risks of the business,
including stress testing a range of different scenarios that may
affect the business. These included scenarios which examined the
implications of:
-- A one-off discrete event resulting in immediate cash outflow
such as unexpected duty or tax payments of c. GBP900 million.
-- A rapid and lasting deterioration to the Group's
profitability because markets become closed to tobacco products or
there are sustained failures to our tobacco manufacturing and
supply chains. These assumed a permanent reduction in profitability
of 15 per cent from 1 June 2022.
-- The additional impact of potential bad debt risks arising
from a recession, of c. GBP200 million.
-- The withdrawal of facilities that provide receivables
factoring of c. GBP660 million.
The scenario planning also considered mitigation actions
including reductions to capital expenditure and dividend payments.
There are additional actions that were not modelled but could be
taken including other cost mitigations such as staff redundancies,
retrenchment of leases, and discussions with lenders about capital
structure.
Under the worst-case scenario, where the largest envisaged
downside scenarios all take place at the same time the Group would
have sufficient headroom until February 2023. The Group believes
this worst-case scenario to be highly unlikely given the relatively
small impact on our trading performance and bad debt levels during
the COVID-19 pandemic. In addition, the Group has a number of
mitigating actions available that could be implemented should such
a scenario arise.
Based on its review of future cash flows covering the period
through to September 2023, and having assessed the principal risks
facing the Group, the Board is of the opinion that the Group as a
whole and Imperial Brands PLC have adequate resources to meet their
operational needs from the date of this Report through to September
2023 and concludes that it is appropriate to prepare the financial
statements on a going concern basis.
The preparation of the consolidated financial statements
requires management to make estimates and assumptions that affect
the reported amounts of revenues and expenses during the period and
of assets, liabilities and contingent liabilities at the balance
sheet date. The key estimates and assumptions are set out in note 2
Critical Accounting Estimates and Judgements. Such estimates and
assumptions are based on historical experience and various other
factors that are believed to be reasonable in the circumstances and
constitute management's best judgement at the date of the financial
statements. In the future, actual experience may deviate from these
estimates and judgements. This could affect future financial
statements as the original estimates and judgements are modified,
as appropriate, in the year in which the circumstances change.
NEW ACCOUNTING STANDARDS ADOPTED IN THE PERIOD
The following amendments to the accounting standards, issued by
the IASB or International Financial Reporting Interpretations
Committee (IFRIC) and endorsed for use in the UK, have been adopted
by the Group from 1 October 2021 with no impact on the group's
consolidated results, financial position or disclosures:
-- Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate
benchmark reform (phase 2) (effective in the year ending 30
September 2022)
Following the announcement of the discontinuation of GBP LIBOR
at the end of 2021 and USD LIBOR discontinuation in 2023, the Group
has amended its bank facility agreement to stop referencing GBP and
USD LIBOR and instead reference the daily risk free rates of SONIA
and SOFR respectively. In the first half of the fiscal year all GBP
LIBOR derivatives have been changed to reference SONIA instead of
GBP LIBOR. All USD LIBOR derivatives will be changed to reference
SOFR instead of USD LIBOR during the remainder of calendar year
2022. There are no changes pending for EUR derivatives. No
temporary reliefs or practical expedients were required to be taken
by the Group.
USE OF ADJUSTED MEASURES
Management believes that non-GAAP or adjusted measures provide
an important comparison of business performance and reflect the way
in which the business is controlled. The adjusted measures seek to
remove the distorting effects of a number of significant gains or
losses arising from transactions which are not directly related to
the ongoing underlying performance of the business and may be
non-recurring events or not directly within the control of
management.
Accordingly, adjusted performance measures of operating profit,
net finance costs, profit before tax, tax, attributable earnings
and earnings per share exclude, where applicable, acquisition and
disposal costs, amortisation and impairment of acquired
intangibles, restructuring costs, post-employment benefits net
financing cost, fair value and exchange gains and losses on
financial instruments, and related tax effects and tax matters.
Reconciliations between adjusted and reported operating profit are
included within note 5 to the financial statements, adjusted and
reported net finance costs in note 5, adjusted and reported tax in
note 7, and adjusted and reported earnings per share in note 9.
There are also other adjusted reported measures which are defined
below.
The adjusted measures in this report are not defined terms under
IFRS and may not be comparable with similarly titled measures
reported by other companies.
The items excluded from adjusted performance results are those
which are one-off in nature or items which arose due to
acquisitions and are not influenced by the day to day operations of
the Group, and the movements in the fair value of financial
instruments which are marked to market and not naturally offset.
Adjusted net finance costs also excludes all post-employment
benefit net finance cost since pension assets and liabilities and
redundancy and social plan provisions do not form part of adjusted
net debt. This allows comparison of the Group's cost of debt with
adjusted net debt. The adjusted measures are used by management to
assess the Group's financial performance and aid comparability of
results year on year.
The adjusted performance measures used by the group are as
follows:
ADJUSTED OPERATING PROFIT
Adjusted operating profit is calculated as operating profit
amended for a number of adjustments, the principal changes are
detailed below. This measure is separately calculated and disclosed
for Tobacco, NGP and Distribution where appropriate. A
reconciliation can be found in note 5.
Acquisition and disposal costs / Profit on disposal of
subsidiaries
Adjusted performance measures exclude costs and profits or
losses associated with major acquisitions and disposals as they do
not relate to the day to day operational performance of the Group.
Acquisition costs and profits or losses on disposal can be
significant in size and are one-off in nature. Exclusion of these
items allows a clearer presentation of the day to day underlying
income and costs of the business. Where applicable and not reported
separately, this includes changes in contingent or deferred
consideration.
The impairment losses arising due to the revaluation of the
assets of the Group's Russian operations on classification as an
asset held for sale have been treated as an adjusting item as they
relate to a disposal. Impairments and exit costs arising in
associated markets that have been caused by the transfer of the
Russian business have also been classified as adjusting items as
they are linked to the disposal.
Amortisation and impairment of acquired intangibles
Acquired intangibles are amortised over their estimated useful
economic lives where these are considered to be finite. Acquired
intangibles considered to have an indefinite life are not
amortised. Any negative goodwill arising is recognised immediately
in the income statement. We exclude from our adjusted performance
measures the amortisation and impairment of acquired intangibles,
other than software and internally generated intangibles, and the
deferred tax associated with amortisation of acquired intangibles.
Gains and losses on the sale of intellectual property are removed
from adjusted operating profit.
It is recognised that there may be some correlation between the
amortisation charges derived from the acquisition value of acquired
intangibles, and the subsequent future profit streams arising from
sales of associated branded products. However, the amortisation of
intangibles is not directly related to the operating performance of
the business. Conversely, the level of profitability of branded
products is directly influenced by day to day commercial actions,
with variations in the level of profit derived from branded product
sales acting as a clear indicator of performance. Given this, the
Group's view is that amortisation and impairment charges do not
clearly correlate to the ongoing variations in the commercial
results of the business and are therefore excluded to allow a
clearer view of the underlying performance of the organisation. The
deferred tax is excluded on the basis that it will only crystallise
upon disposal of the intangibles and goodwill. The related current
cash tax benefit is retained in the adjusted measure to reflect the
ongoing tax benefit to the Group.
Presentation of Auxly Cannabis Group Inc.
As the movement in the fair value of loan receivables associated
with the Auxly Cannabis Group Inc. investment has the potential to
be significant the Group has disclosed a fair value movement
separately on the face of the income statement.
Restructuring costs
Significant one-off costs incurred in integrating acquired
businesses and in major rationalisation and optimisation
initiatives together with their related tax effects are excluded
from our adjusted earnings measures. These include restructuring
costs incurred as part of fundamental multi-year transformational
change projects but do not include costs related to ongoing cost
reduction activity. These costs are all Board approved, and include
impairment of property, plant and equipment which are surplus to
requirements due to restructuring activity. These costs are
required in order to address structural issues associated with
operating within the Tobacco sector that have required action to
both modernise and right-size the organisation, ultimately
delivering an operating model suitable for the future of the
business. The Group's view is that as these costs are both
significant and one-off in nature, excluding them allows a clearer
presentation of the underlying costs of the business.
ADJUSTED NET FINANCE COSTS
Adjusted net finance costs excludes the movements in the fair
value of financial instruments which are marked to market and not
naturally offset. This measure also excludes all post-employment
benefit net finance costs since pension assets and liabilities and
redundancy and social plan provisions do not form part of adjusted
net debt. This allows comparison of the Group's cost of debt with
adjusted net debt. A reconciliation can be found in note 5. The
detail of these adjustments is given below.
Fair value gains and losses on derivative financial instruments
and exchange gains and losses on borrowings
IFRS 9 requires that all derivative financial instruments are
recognised in the consolidated balance sheet at fair value, with
changes in the fair value being recognised in the consolidated
income statement unless the instrument satisfies the hedge
accounting rules under IFRS and the Group chooses to designate the
derivative financial instrument as a hedge.
The Group hedges underlying exposures in an efficient,
commercial and structured manner. However, the strict hedging
requirements of IFRS 9 may lead to some commercially effective
hedge positions not qualifying for hedge accounting. As a result,
and as permitted under IFRS 9, the Group has decided not to apply
cash flow or fair value hedge accounting for its derivative
financial instruments. However, the Group does apply net investment
hedging, designating certain borrowings and derivatives as hedges
of the net investment in the Group's foreign operations, as
permitted by IFRS 9, in order to reduce income statement
volatility.
We exclude fair value gains and losses on derivative financial
instruments and exchange gains and losses on borrowings from
adjusted net finance costs. Fair value gains and losses on the
interest element of derivative financial instruments are excluded
as there is no direct natural offset between the movements on
derivatives and the interest charge on debt in any one period, as
the derivatives and debt instruments may be contracted over
different periods, although they will reverse over time or are
matched in future periods by interest charges. The fair value gains
on derivatives are excluded as they can introduce volatility in the
finance charge for any given period.
Fair value gains and losses on the currency element of
derivative financial instruments and exchange gains and losses on
borrowings are excluded as the relevant foreign exchange gains and
losses on the instruments in a net investment hedging relationship
are accumulated as a separate component of other comprehensive
income in accordance with the Group's policy on foreign
currency.
Fair value movements arising from the revaluation of contingent
consideration liabilities are adjusted out where they represent
one-off acquisition costs that are not linked to the current period
underlying performance of the business. Fair value adjustments on
loans receivable measured at fair value are excluded as they arise
due to counterparty credit risk changes that are not directly
related to the underlying commercial performance of the
business.
Post-employment benefits net financing cost
The net interest on defined benefit assets or liabilities,
together with the unwind of discount on redundancy, social plans
and other long-term provisions are reported within net finance
costs. These items together with their related tax effects are
excluded from our adjusted earnings measures, as they primarily
represent charges associated with historic employee benefit
commitments, rather than the ongoing current period costs of
operating the business.
ADJUSTED TAX CHARGE
The adjusted tax charge is calculated by amending the reported
tax charge for significant one-off tax charges or credits arising
from:
-- prior period tax items (including re-measurement of deferred
tax balances on a change in tax rates); or
-- a provision for uncertain tax items not arising in the normal
course of business; or
-- newly enacted taxes in the year; or
-- tax items that are closely related to previously recognised
tax matters, and are excluded from our adjusted tax charge to aid
comparability and understanding of the Group's performance.
The recognition and utilisation of deferred tax assets relating
to losses not historically generated in the normal course of
business are excluded on the same basis. A reconciliation can be
found in note 7.
The adjusted tax rate is calculated as the adjusted tax charge
divided by the adjusted profit before tax.
ADJUSTED EARNINGS
Adjusted earnings is calculated by amending the reported basic
earnings for all of the adjustments recognised in the calculation
of the adjusted operating profit, adjusted finance costs and
adjusted tax charge metrics as detailed above. In addition,
adjustments have been made to present this measure on an organic
basis to allow year on year comparability (see organic
adjustments). Adjusted earnings per share and organic earnings per
share are calculated by providing adjusted earnings and organic
earnings by the weighted average number of shares. A reconciliation
can be found in note 9.
OTHER NON-GAAP MEASURES USED BY MANAGEMENT
TOBACCO AND NGP NET REVENUE
Tobacco & Next Generation Products (NGP) net revenue
comprises associated revenue less duty and similar items, excluding
peripheral products. Management considers this an important measure
in assessing the performance of Tobacco & NGP operations.
The Group recognises revenue on sales to Logista, a Group
company, within its reported Tobacco & NGP revenue figure. As
the revenue calculation includes sales made to Logista from other
Group companies but excludes Logista's external sales, this metric
differs from revenue calculated under IFRS accounting standards.
For the purposes of Adjusted Performance Measures on Net Revenue we
treat Logista as an arm's length distributor on the basis that
contractual rights are in line with other Third Party suppliers to
Logista. Variations in the amount of inventory held by Logista
results in a different level of revenue compared to that which is
included within the income statement. For tobacco product sales,
inventory level variations are normally not significant. A
reconciliation can be found in note 3.
DISTRIBUTION NET REVENUE
Distribution net revenue comprises the Distribution segment
revenue less the cost of distributed products. Management considers
this an important measure in assessing the performance of
Distribution operations. The eliminations in note 3 all relate to
sales to Distribution. A reconciliation can be found in note 3.
ADJUSTED OPERATING CASH FLOW
Adjusted operating cash flow is calculated as cash flow from
operations pre-restructuring and before interest and tax payments
less net capital expenditure relating to property, plant and
equipment, software and intellectual property rights. A
reconciliation can be found in note 5.
ADJUSTED NET DEBT
Management monitors the Group's borrowing levels using adjusted
net debt which excludes interest accruals, lease commitments and
the fair value of derivative financial instruments providing
commercial hedges of interest rate risk. The adjusted net debt
metric is used in monitoring performance against various debt
management obligations including covenant compliance. A
reconciliation can be found in note 12.
CASH CONVERSION
The Group uses cash conversion as a key metric for assessing
underlying cash performance. Cash Conversion is calculated as
adjusted operating cash flow as a percentage of adjusted operating
profit. A reconciliation can be found in note 5.
ADJUSTED OPERATING PROFIT MARGIN
Adjusted operating profit margin is adjusted operating profit
divided by net revenue expressed as a percentage. This measure is
separately calculated and disclosed for Tobacco, NGP and
Distribution where appropriate. A reconciliation of adjusted
operating profit can be found in note 5 and a reconciliation of net
revenue can be found in note 3.
FREE CASH FLOW
Free cash flow is adjusted operating profit (as defined above)
adjusted for certain cash and non-cash items. The principal
adjustments are depreciation, working capital movements, net capex,
restructuring cash flows, tax cash flows, cash interest and
minority interest dividends. A reconciliation can be found in note
5.
NET DEBT TO EBITDA (MULTIPLE)
This is defined as adjusted net debt divided by adjusted EBITDA.
Adjusted net debt is measured at balance sheet foreign exchange
rates, with a full reconciliation shown in note 12. Adjusted EBITDA
is calculated as adjusted operating profit plus amortisation,
depreciation and impairments. A reconciliation of EBITDA can be
found in the RNS on page 13.
ALL IN COST OF DEBT
This is defined as adjusted net finance costs (defined above)
divided by the average net debt in the year (note 12). A
reconciliation of adjusted net finance costs can be found in note
5.
CONSTANT CURRENCY
Constant currency removes the effect of exchange rate movements
on the translation of the results of our overseas operations. We
translate current year results at prior year foreign exchange
rates.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and judgements associated with
accounting entries which will be affected by future events.
Estimates and judgements are continually evaluated based on
historical experience, and other factors, including current
information that helps form a forward-looking view of expected
future outcomes.
Estimates involve the determination of the quantum of accounting
balances to be recognised. Judgements typically involve decisions
such as whether to recognise an asset or liability. The actual
amounts recognised in the future 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 note
2 of the financial statements for the year ended 30 September
2021.
Those risks particularly relevant to the current period and the
remaining 6 months of the year include:
-- Determination of the useful life of intangible assets
-- Amortisation and impairment of intangible assets
-- Income taxes
-- Legal proceedings and disputes
-- Provisions
-- Categorisation of Russian business assets as assets and
liabilities held for sale (see note 10)
CONTROL OF LOGISTA
The Group continues to determine that it has effective control
of Logista, principally by virtue of its holding 50.01% of the
voting shares and the powers set out in the Relationship Framework
Agreement; and that it is appropriate to consolidate this entity in
line with the requirements of IFRS 10 Consolidated Financial
Statements.
3. SEGMENT INFORMATION
Imperial Brands comprises two distinct businesses - Tobacco
& NGP and Distribution. The Tobacco & NGP business
comprises the manufacture, marketing and sale of Tobacco & NGP
and Tobacco & NGP-related products, including sales to (but not
by) the Distribution business. The Distribution business comprises
the distribution of Tobacco & NGP products for Tobacco &
NGP product manufacturers, including Imperial Brands, as well as a
wide range of non-Tobacco & NGP products and services. The
Distribution business is run on an operationally neutral basis
ensuring all customers are treated equally, and consequently
transactions between the Tobacco & NGP and Distribution
businesses are undertaken on an arm's length basis reflecting
market prices for comparable goods and services.
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 Europe, Americas, Africa, Asia &
Australasia (AAA) and Distribution. Operating segments are
comprised of geographical groupings of business markets. The main
Tobacco & NGP business markets within the Europe, Americas and
AAA reportable segments are:
Europe - United Kingdom, Germany, Spain, France, Italy, Greece,
Sweden, Norway, Belgium, Netherlands, Ukraine and Poland.
Americas - United States.
AAA - Australia, Japan, Russia, Saudi Arabia, Taiwan and our
African markets including Algeria and Morocco.
TOBACCO & NGP
Unaudited Unaudited Audited
Year ended 30
GBP million unless otherwise indicated 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Revenue 11,044 11,244 23,863
Net revenue 3,495 3,592 7,610
Operating profit 1,124 1,560 2,991
Adjusted operating profit 1,481 1,465 3,308
Adjusted operating margin % 42.4 40.8 43.5
RECONCILIATION FROM OPERATING PROFIT TO ADJUSTED OPERATING
PROFIT
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Adjusted operating profit 1,481 1,465 3,308
Russian and associated markets exit (201) - -
Amortisation and impairment of acquired
intangibles (156) (168) (365)
Restructuring costs (7) (36) (249)
Fair value adjustment of loan receivable 2 17 15
Profit on disposal of subsidiaries - 281 281
Acquisition and disposal costs (5) - -
Excise tax provision 10 1 1
Operating profit 1,124 1,560 2,991
DISTRIBUTION
Unaudited Unaudited Audited
Year ended 30
GBP million unless otherwise indicated 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Revenue 4,639 4,654 9,589
Distribution net revenue 502 533 1,069
Operating profit 79 74 148
Adjusted operating profit 121 121 258
Adjusted distribution margin % 24.1 22.7 24.1
RECONCILIATION FROM OPERATING PROFIT TO ADJUSTED OPERATING
PROFIT
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Adjusted operating profit 121 121 258
Amortisation of acquired intangibles (26) (43) (85)
Loss on disposal of subsidiaries (16) - -
Acquisition and disposal costs - - (17)
Restructuring costs - (4) (8)
Operating profit 79 74 148
REVENUE
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
Total External Total External Total External
GBP million revenue revenue revenue revenue Revenue revenue
Tobacco & NGP
Europe 6,596 6,275 6,873 6,543 14,720 14,059
Americas 1,550 1,550 1,512 1,512 3,393 3,393
Africa, Asia &
Australasia 2,898 2,898 2,859 2,859 5,750 5,750
Total Tobacco & NGP 11,044 10,723 11,244 10,914 23,863 23,202
Distribution 4,639 4,639 4,654 4,654 9,589 9,589
Eliminations (321) - (330) - (661) -
Total Group 15,362 15,362 15,568 15,568 32,791 32,791
RECONCILIATION FROM TOBACCO & NGP REVENUE TO TOBACCO &
NGP NET REVENUE
Unaudited Unaudited
6 months ended 6 months ended
31 March 2022 31 March 2021
GBP million Tobacco NGP Total Tobacco NGP Total
Revenue 10,937 107 11,044 11,143 101 11,244
Duty and similar items (7,533) (6) (7,539) (7,634) (6) (7,640)
Sale of peripheral products (10) - (10) (12) - (12)
Net Revenue 3,394 101 3,495 3,497 95 3,592
Audited
Year ended
30 September 2021
GBP million Tobacco NGP Total
Revenue 23,664 199 23,863
Duty and similar items (16,218) (11) (16,229)
Sale of peripheral products (24) - (24)
Net Revenue 7,422 188 7,610
RECONCILIATION FROM DISTRIBUTION REVENUE TO DISTRIBUTION NET
REVENUE
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Revenue 4,639 4,654 9,589
Distribution cost of sales (4,137) (4,121) (8,520)
Distribution Net Revenue 502 533 1,069
TOBACCO & NGP NET REVENUE
Unaudited Unaudited
6 months ended 6 months ended
31 March 2022 31 March 2021
GBP million Tobacco NGP Total Tobacco NGP Total
Europe 1,492 77 1,569 1,615 55 1,670
Americas 1,136 24 1,160 1,098 33 1,131
Africa, Asia & Australasia 766 - 766 784 7 791
Total Tobacco & NGP 3,394 101 3,495 3,497 95 3,592
Audited
Year ended
30 September 2021
GBP million Tobacco NGP Total
Europe 3,425 126 3,551
Americas 2,478 56 2,534
Africa, Asia & Australasia 1,519 6 1,525
Total Tobacco & NGP 7,422 188 7,610
ADJUSTED OPERATING PROFIT AND RECONCILIATION TO PROFIT BEFORE TAX
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Tobacco & NGP
Europe 671 750 1,670
Americas 453 426 1,037
Africa, Asia & Australasia 357 289 601
Total Tobacco & NGP 1,481 1,465 3,308
Distribution 121 121 258
Eliminations (2) 3 7
Adjusted operating profit 1,600 1,589 3,573
Russian and associated markets exit -
Tobacco & NGP (201) - -
Amortisation and impairment of acquired
intangibles - Tobacco & NGP (156) (168) (365)
Amortisation of acquired intangibles -
Distribution (26) (43) (85)
Restructuring costs - Tobacco & NGP (7) (36) (249)
Restructuring costs - Distribution - (4) (8)
Fair value adjustment of loan receivable
- Tobacco & NGP 2 17 15
Profit on disposal of subsidiaries -
Tobacco & NGP - 281 281
Loss on disposal of subsidiaries -
Distribution (16) - -
Acquisition and disposal costs - Tobacco
& NGP (5) - -
Acquisition and disposal costs -
Distribution - - (17)
Excise tax provision - Tobacco & NGP 10 1 1
Operating profit 1,201 1,637 3,146
Net finance income 75 414 81
Share of profit of investments accounted
for using the equity method (20) 8 11
Profit before tax 1,256 2,059 3,238
4. RESTRUCTURING COSTS AND PROVISIONS
RESTRUCTURING COSTS
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Employment related 3 5 145
Asset impairments - 24 92
Other charges 4 11 20
7 40 257
Restructuring costs analysed by workstream:
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
2021 strategic review programme 7 27 226
Cost optimisation programme - 8 23
Other restructuring activities - 5 8
7 40 257
The charge for the period of GBP7 million (6 months to 2021:
GBP40 million) relates to our 2021 Strategic review programme.
Restructuring costs are included within administrative and other
expenses in the consolidated income statement. All restructuring
costs are treated as adjusting items.
These projects differ from everyday initiatives that are
undertaken to improve the efficiency and effectiveness of the
ongoing operations business. These costs are required in order to
address structural issues involved in operating within the Tobacco
sector that require action to both modernise and right-size the
organisation, ultimately delivering an operating model suitable for
the future of the business.
2021 STRATEGIC REVIEW PROGRAMME
In January 2021, the Group announced the results of a Strategic
Review Programme including an associated and specific time-bound
restructuring programme. The Group expects the majority of the
associated restructuring costs to have been incurred by September
2022. Total restructuring costs in respect of the programme are
expected to be in the range of GBP375 million - GBP425 million.
Restructuring costs of GBP7 million (6 months to 2021: GBP27
million) related to the 2021 Strategic Review Programme have been
incurred in the period, GBP7 million (6 months to 2021: GBP7
million) of charges in respect of the change programme itself and
nil (6 months to 2021: GBP20 million) impairments associated with
NGP assets.
2021 Strategic Review Programme cash spend for the period was
GBP24 million (6 months to 2021: GBP7 million).
COST OPTIMISATION PROGRAMME
The cost optimisation programmes (Phase I announced in 2013 and
Phase II announced in November 2016) were part of the Group
strategy to optimise costs and drive operational efficiencies. The
programmes were time bound projects which, given their scale, were
delivered over a number of years. Phase I was concluded at the end
of 2018 and Phase II was concluded at the end of 2021. Whilst both
programmes are concluded there remain some ongoing cash costs.
Restructuring costs of nil (6 months to 2021: GBP8 million)
related to the Cost optimisation programmes includes nil (6 months
to 2021: GBP4 million) of impairments associated with tangible
assets.
Phase II of the programme focused on reducing product costs and
overheads. Phase II cash spend for the period was GBP11 million (6
months to 2021: GBP27 million), bringing the cumulative cash cost
of the programme to GBP559 million as at 31 March 2022. Phase II
was delivering savings of c. GBP320 million per annum from
September 2021.
Phase I cash spend for the period was GBP6 million (6 months to
2021: GBP4 million), bringing the cumulative cash cost of the
programme to GBP577 million as at 31 March 2022. Phase I has
delivered savings of c. GBP305 million per annum from September
2018.
OTHER RESTRUCTURING
In the period, restructuring costs related to Logista were nil
(6 months to 2021: GBP5 million). In the period other restructuring
cash spend was GBP1 million (6 months to 2021: GBP8 million).
PROVISIONS
Unaudited
31 March 2022
GBP million Restructuring Other Total
At 1 October 2021 251 143 394
Additional provisions charged to the consolidated income statement 12 152 164
Amounts used (28) (10) (38)
Unused amounts reversed (22) (15) (37)
Transferred to held for disposal (note 10) - (121) (121)
Exchange movements (5) (3) (8)
At 31 March 2022 208 146 354
Current 96 63 159
Non-current 112 83 195
208 146 354
Analysed as:
Unaudited Unaudited Audited
30
GBP million 31 March 2022 31 March 2021 September 2021
Current 159 153 188
Non-current 195 187 206
354 340 394
Restructuring provisions relate mainly to our 2021 Strategic
Review Programme and Cost optimisation programmes.
The restructuring provision is split between 2021 Strategic
review programme of GBP69 million, Cost Optimisation Programmes of
GBP130 million and other programmes of GBP9 million.
Within the Cost optimisation programme provisions of GBP68
million related to costs of consolidating the manufacturing
capacity within the Group. It is expected that the Cost
optimisation programme restructuring provisions will be
predominantly utilised over the next 2 years.
Other provisions include GBP44 million relating to local
employment requirements including holiday pay, GBP44 million to
various local tax or duty requirements, GBP23 million of
distribution requirements relating to employment and duty, and
GBP17m relating to the impact of Russian exit on other operations.
The provisions are spread throughout the Group and payment will be
dependent on local statutory requirements.
5. ALTERNATIVE PERFORMANCE MEASURES
RECONCILIATION FROM OPERATING PROFIT TO ADJUSTED OPERATING PROFIT
Unaudited Unaudited Audited
Year ended 30
GBP million Notes 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Operating profit 1,201 1,637 3,146
Russian and associated markets
exit 10 201 - -
Amortisation and impairment of
acquired intangibles 182 211 450
Restructuring costs 4 7 40 257
Fair value adjustment of loan
receivable (2) (17) (15)
Loss/(profit) on disposal of
subsidiaries 16 (281) (281)
Acquisition and disposal costs 5 - 17
Excise tax provision (10) (1) (1)
Adjusted operating profit 1,600 1,589 3,573
Amortisation and impairment of acquired intangibles, profit on
disposal of subsidiaries, acquisition and disposal costs and
restructuring costs are discussed in further detail in note 1.
RECONCILIATION FROM REPORTED NET FINANCE INCOME TO ADJUSTED NET FINANCE COSTS
Unaudited Unaudited Audited
Year ended 30
GBP million Notes 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Reported net finance income 75 414 81
Fair value gains on derivative financial
instruments (688) (487) (508)
Fair value losses on derivative financial
instruments 616 402 457
Exchange gains on financing activities (164) (534) (445)
Net fair value and exchange gains on
financial instruments (236) (619) (496)
Interest income on net defined benefit
assets (53) (45) (89)
Interest cost on net defined benefit
liabilities 49 44 87
Post-employment benefits net financing
income (4) (1) (2)
Adjusted net finance costs (165) (206) (417)
Comprising
Interest income on bank deposits 3 5 18
Interest cost on lease liabilities (4) (4) (7)
Interest cost on bank and other loans (164) (207) (428)
Adjusted net finance costs (165) (206) (417)
CASH CONVERSION CALCULATION
Unaudited Unaudited Audited
Year ended 30
GBP million unless otherwise stated 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Net cash generated from/(used in)
operating activities 700 (159) 2,167
Tax 273 431 820
Proceeds from sale of non-current
assets 23 30 50
Purchase of non-current assets (87) (91) (200)
Restructuring cash spend 42 46 112
Adjusted operating cash flow 951 257 2,949
Adjusted operating profit 1,600 1,589 3,573
Cash Conversion % 59 % 16 % 83 %
RECONCILIATION FROM NET CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Net cash generated from/(used in)
operating activities 700 (159) 2,167
Purchase of non-current assets (87) (91) (200)
Net proceeds from sale of non-current
assets 23 30 50
Dividends paid to non-controlling
interests (58) (63) (93)
Net interest paid (242) (255) (400)
Free cash flow 336 (538) 1,524
6. RETIREMENT BENEFIT SCHEMES
The Group operates a number of retirement benefit schemes for
its employees, including both defined benefit and defined
contribution schemes. The Group's three principal schemes are
defined benefit schemes and are operated by Imperial Tobacco
Limited (ITL) in the UK, Reemtsma Cigarettenfabriken GmbH in
Germany and ITG Brands in the USA.
In December 2021 the Imperial Tobacco Pension Fund (ITPF)
entered into an agreement to purchase a bulk annuity of c. GBP1.8
billion. The bulk annuity will cover around 60% of the pensioner
member obligation and is funded by existing assets held in the
ITPF.
DEFINED BENEFIT PLAN ASSETS AND LIABILITIES RECOGNISED IN THE
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30
31 March 2022 31 March 2021 September 2021
Retirement benefit assets 1,048 942 1,046
Retirement benefit liabilities (1,139) (1,179) (1,199)
Net retirement benefit liabilities (91) (237) (153)
The movement in the net retirement benefit is mainly from
actuarial gains and losses on the Group's pension assets and
liabilities. The actuarial gains and losses were from the changes
in principal actuarial assumptions on the Group schemes.
KEY FIGURES AND ASSUMPTIONS USED FOR MAJOR PLANS
Unaudited Unaudited
6 months ended 6 months ended
31 March 2022 31 March 2021
GBP million unless otherwise stated ITPF RCPP ITGBH ITPF RCPP ITGBH
Defined benefit obligation (DBO) 3,122 723 364 3,303 743 387
Fair value of scheme assets (4,080) - (391) (4,188) - (370)
Net defined benefit (asset)/liability (958) 723 (27) (885) 743 17
Principal actuarial assumptions used (% per annum)
Discount rate 2.8 1.8 3.7 2.1 1.0 3.0
Future salary increases 3.6 3.8 n/a 3.1 2.8 n/a
Future pension increases 3.6 2.7 n/a 3.1 1.7 n/a
Inflation 3.6 2.7 2.3 3.1 1.7 2.5
Audited
30
September 2021
GBP million unless otherwise stated ITPF RCPP ITGBH
Defined benefit obligation (DBO) 3,404 765 403
Fair value of scheme assets (4,386) - (396)
Net defined benefit (asset)/liability (982) 765 7
Principal actuarial assumptions used (% per annum)
Discount rate 2.1 1.1 2.7
Future salary increases 3.4 3.1 n/a
Future pension increases 3.4 2.0 n/a
Inflation 3.4 2.0 2.3
7. TAX
RECONCILIATION FROM REPORTED TAX TO ADJUSTED TAX
Reported tax for the six months ended 31 March 2022 has been
calculated on the basis of a forecast effective rate for the year
ended 30 September 2022.
Unaudited Unaudited Audited
6 months ended 31 Year ended 30
GBP million March 2021 6 months ended 31 March 2021 September 2021
Reported tax 221 215 331
Deferred tax on amortisation and impairment of
acquired intangibles 8 12 31
Tax on net foreign exchange and fair value gains and
losses on financial instruments 2 88 78
Tax on post-employment benefits net financing cost - - 1
Tax on restructuring costs 3 9 72
Tax on disposal of subsidiaries 7 6 11
Recognition of tax credits - - 239
Uncertain tax positions 57 - -
Deferred tax on unremitted earnings 26 - -
Tax on unrecognised losses (8) (10) (47)
Adjusted tax charge 316 320 716
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 assessment of uncertain tax positions is subjective and
significant management judgement is required. This judgement is
based on current interpretation of legislation, management
experience and professional advice. Until matters are finally
concluded it is possible that amounts ultimately paid will be
different from the amounts provided. Management have assessed the
Group's provision for uncertain tax positions and have concluded
that apart from the matters 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.
FRENCH TAX LITIGATION
In November 2015 the Group received a challenge from the French
tax authorities that could lead to additional tax liabilities of up
to GBP230 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 shares in October 2012
and the tax Consequences flowing from a potentially higher value
that is argued for by the tax authorities. In October 2018 the
Commission Nationale, an independent adjudication body, whose
decision is advisory only, issued a report supportive of the
Group's arguments for no adjustment. In December 2018 the French
tax authorities issued their final assessments seeking the full
amount of additional tax assessed of GBP230 million (2021: GBP234
million). In January 2019 the Group appealed against the
assessment. In August 2020, the French tax authorities rejected the
Group's appeal and the matter will now proceed to litigation. All
submissions have been made to the court and we await a hearing
date. The Group believes it is appropriate to maintain a GBP40
million (2021: GBP41 million) provision for uncertain tax positions
in respect of this matter.
STATE AID UK CFC
The Group continues to monitor developments in relation to EU
State Aid investigations. On 25 April 2019, the EU Commission's
final decision regarding its investigation into the UK's Controlled
Foreign Company regime was published. It concludes that the
legislation up until December 2018 does partially represent State
Aid. The UK Government has appealed to the European Court seeking
annulment of the EU Commission's decision. The Group, along with a
number of UK corporates, has made a similar application to the
European Court. The UK Government is obliged to collect any State
Aid granted pending the outcome of the European Court process.
Based on advice, the Group's position remains that no State Aid
has been received, but following HMRC guidance an assessment of
potential state aid was submitted to HMRC in July 2020. In February
2021 a charging notice for GBP101 million, in line with the Group's
assessment, was issued to the Group by HMRC and has since been
paid. Advice to date is that our appeal and that of the UK
government against the Commission's decision should ultimately be
successful so a current tax receivable of GBP101 million has been
recognised as a non-current asset.
Based upon current advice the Group does not consider any
provision is required in relation to any other EU State Aid
investigation.
TRANSFER PRICING
The Group has tax audits in progress, relating to transfer
pricing matters in a number of jurisdictions, principally UK,
France and Germany. The Group estimates the potential gross level
of exposure relating to transfer pricing issues is approximately
GBP700 million (2021: GBP900 million). The Group holds a provision
of GBP163 million (2021: GBP260 million) in respect of these
items.
In August 2020 the Group notified HMRC of a potential Diverted
Profits Tax (DPT) issue relating to brand rewards. In September
2020, HMRC issued a preliminary notice under the DPT regime in
respect of the year ended 30 September 2016 indicating a potential
liability of c. GBP6 million. Collaborative discussions on the
issue continue and it is the Group's belief the issue is a transfer
pricing one, and will be resolved as such. In November 2020, HMRC
issued a final DPT notice, which has now been paid. In September
2021, further preliminary DPT notices were received in respect of
the year ended 30 September 2017 indicating a potential liability
of c. GBP4 million, which has since been paid. Based on advice, the
Group continues to believe this is a transfer pricing matter. On
conclusion of the transfer pricing discussions, an appropriate
refund is anticipate for all DPT payments.
The Group believe the transfer pricing provision held above
appropriately provides for this and other transfer pricing
issues.
FRENCH BRANCH TAX
In December 2021 the Group received assessments from the French
tax authorities which could lead to additional liabilities of
GBP169 million. The challenge concerns the intragroup financing of
the French branch of Imperial Tobacco Limited. In February 2022 the
Group appealed against the assessment. Advice to date is that our
appeal should ultimately be successful.
8. DIVIDS
DISTRIBUTIONS TO ORDINARY EQUITY HOLDERS
Unaudited Audited Audited
GBP million 2022 2021 2020
Paid interim of nil pence per share (2021: 90.60 pence, 2020: 89.70 pence)
- Paid June 2020 - - 197
- Paid September 2020 - - 197
- Paid December 2020 - - 453
- Paid June 2021 - 199 -
- Paid September 2021 - 199 -
- Paid December 2021 - 458 -
Interim dividend paid - 856 847
Proposed interim of 42.54 pence per share (2021: nil, 2020: nil)
- To be paid June 2022 201 - -
- To be paid September 2022 201 - -
Interim dividend proposed 402 - -
Paid final of nil pence per share (2021: 48.48 pence, 2020: 48.01 pence)
- Paid March 2021 - - 454
- Paid March 2022 - 459 -
Final dividend - 459 454
Total ordinary share dividends of 42.54 pence per share (2021: 139.08 pence, 2020: 137.71
pence) 402 1,315 1,301
The declared interim dividend for 2022 amounts to a total
dividend of GBP402 million based on the number of shares ranking
for dividend at 31 March 2022. This will be paid in two stages, one
in June 2022 and one in September 2022.
The dividend paid during the half year to 31 March 2022 is
GBP917 million (2021: GBP906 million).
9. EARNINGS PER SHARE
Unaudited Unaudited Audited
Year ended 30
GBP million 6 months ended 31 March 2022 6 months ended 31 March 2021 September 2021
Earnings: basic and diluted -
attributable to owners of the
Parent Company 995 1,806 2,834
Millions of shares
Weighted average number of shares:
Shares for basic earnings per share 945.7 944.6 945.0
Potentially dilutive share options 4.1 1.4 2.5
Shares for diluted earnings per share 949.8 946.0 947.5
Pence
Basic earnings per share 105.2 191.2 299.9
Diluted earnings per share 104.8 190.9 299.1
RECONCILIATION FROM REPORTED TO ADJUSTED EARNINGS AND EARNINGS PER SHARE
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
31 March 2022 31 March 2021 30 September 2021
GBP million
unless otherwise Earnings per Earnings Earnings per Earnings Earnings per Earnings net of
indicated share (pence) net of tax share (pence) net of tax share (pence) tax
Reported basic 105.2 995 191.2 1,806 299.9 2,834
Russian and
associated
markets exit 21.3 201 - - - -
Amortisation and
impairment of
acquired
intangibles 18.4 174 21.1 199 44.3 419
Restructuring
costs 0.4 4 3.3 31 19.6 185
Fair value
adjustment loan
receivable (0.2) (2) (1.8) (17) (1.6) (15)
Loss/(profit) on
disposal of
subsidiaries 1.0 9 (30.4) (287) (29.7) (281)
Acquisition and
disposal costs 0.5 5 - - 1.8 17
Excise tax
provision (1.1) (10) (0.1) (1) (0.1) (1)
Net fair value
and exchange
movements on
financial
instruments (25.2) (238) (74.9) (707) (60.7) (574)
Post-employment
benefits net
financing cost (0.4) (4) (0.1) (1) (0.3) (3)
Brand impairment
in equity
accounted joint
venture 2.5 24 - - - -
Tax on disposal
of premium cigar
division - - - - (1.2) (11)
Recognition of
tax credits - - - - (25.3) (239)
Uncertain tax
positions (6.0) (57) - - - -
Deferred tax on
unremitted
earnings (2.7) (26) - - - -
Tax on
unrecognised
losses 0.8 8 1.1 10 5.0 47
Adjustments above
attributable to
non-controlling
interests (1.5) (14) (1.8) (17) (4.6) (43)
Adjusted 113.0 1,069 107.6 1,016 247.1 2,335
Adjusted diluted 112.6 1,069 107.5 1,016 246.4 2,335
Organic adjusted 113.0 1,069 107.0 1,011 246.5 2,330
Premium Cigar divestment adjusted - - 0.6 5 0.6 5
Adjusted 113.0 1,069 107.6 1,016 247.1 2,335
Organic adjusted diluted 112.6 1,069 106.9 1,011 245.8 2,330
Premium Cigar divestment adjusted diluted - - 0.6 5 0.6 5
Adjusted diluted 112.6 1,069 107.5 1,016 246.4 2,335
10. DISPOSAL OF SUBSIDIARIES
PREMIUM CIGAR DIVISION
On 27 April 2020 the Group announced that it had agreed the sale
of the Premium Cigar Division ("the Division"). The share sale
element of the sale of the Division completed on 29 October 2020.
Further deferred consideration of EUR88 million (GBP74 million)
relating to the share sale was received on 26 October 2021.
The sale of the La Romana factory in the Dominican Republic is
due to complete during the Group's 2022 financial year when it is
expected that EUR69 million (GBP58 million) of sales consideration
will be received subject to a true up in respect of inventory
values. The carrying value of the net assets of the La Romana
factory total $64 million (GBP49 million). This sale of the La
Romana factory does not meet the recognition criteria for an asset
held for sale as there is ongoing work to separate the factory for
disposal.
LOGISTA
On 2 February 2022 the Group's subsidiary Logista sold its
interest in Supergroup S.A.S. for a consideration of nil. A loss on
disposal of GBP16 million before tax and GBP9 million after tax has
been recognised. In addition Logista sold two properties in the
period that had previously been recognised as assets held for sale
for consideration of EUR15 million (GBP13 million).
RUSSIAN OPERATIONS
On 15 March 2022 the Group announced it had entered into
negotiations to transfer its Russian assets and operations (the
Disposal Group) to a third party. On 27 April 2022, following
registration with the Russian tax authority, the Group completed
the transfer of assets for a total consideration of GBP20 million.
Disposal costs of c. GBP4 million are expected to be incurred. The
transaction met the IFRS 5 criteria for presentation as an asset
held for sale as at the 31 March 2022 balance sheet date.
IMPAIRMENT AND PRESENTATION AS AN ASSET HELD FOR SALE
There is a requirement to reassess the carrying value of the
Disposal Group immediately prior to classification as held for
sale. At 31 March 2022 an impairment test was undertaken. The test
involved an assessment of the level of proceeds expected to be
achieved on completion of the disposal, less transaction tax and
costs with a comparison of this figure to the carrying value of the
net assets of the Disposal Group (as it is required to be valued at
the lower of cost and its fair value less costs to sell). Since bid
offers are an observable input not based on a quoted price the fair
value is based on a level 2 valuation under IFRS 13.
The fair value less costs to sell was GBP16 million based on the
sales consideration less associated disposal costs. As a result of
this test an impairment of GBP166 million was recognised at 31
March 2022 against the carrying value of the Disposal Group. The
non-current assets have been written down to zero and the current
assets of the Disposal Group have been presented at their original
carrying values within current assets held for sale as the balance
of the impairment has been recognised as a provision within
liabilities held for sale. Total net assets held for sale (after
impairment) is GBP16 million. The actual transfer consideration has
been used as the basis of the fair value and therefore no further
disclosure of sensitivities has been given.
IMPACT OF RUSSIAN EXIT ON OTHER OPERATIONS
The decision to transfer the assets of the Russian operations
has implications for a limited number of Group markets that have
historically been supplied by the Volgograd factory. Following a
review of the impacts resulting from the decision to transfer the
Russian factory it was determined that it was unviable to continue
trading in these areas for a number of reasons including duty and
supply chain challenges. The decision to exit operations results in
a number of assets held by these markets having to be impaired. In
addition certain exit costs are expected to have to be incurred
ending operations. Total impairment and exit costs of GBP35 million
are now required to be recognised. As the original decision to
cease Group operations in Russia was the triggering event resulting
in the impairments these provisions have been recognised as at the
31 March 2022 balance sheet date.
The Group has an investment in the Global Horizon Ventures joint
venture company which is accounted for as an investment using the
equity method. This entity held an intangible asset relating to
royalties arising on the sales of a specific brand within Russia.
Following the transfer of the Russian assets these royalties will
cease and therefore the Group's share of this asset has now been
fully impaired with a charge of GBP24 million.
The total value of all direct and indirect impairments and exit
costs associated with the transfer of operations in Russia that
were recognised at 31 March 2022 was GBP225 million. Within this
charge, GBP201 million has been treated as an adjusting item and
removed from Adjusted Operating Profit. The impairment charge of
GBP24 million relating to the joint venture operations is
recognised in the consolidated income statement within the share of
profit of investments accounted for under the equity method line.
This impairment has also been treated as an adjusting item and is
excluded from Adjusted Earnings.
ASSET HELD FOR DISPOSAL
The assets and liabilities classified as held for disposal are
as follows:
Unaudited Unaudited Audited
GBP million 31 March 2022 31 March 2021 September 2021
Non-current assets
Property, plant and equipment - - 8
Deferred tax assets 6 - -
6 - 8
Current assets
Inventories 56 - 9
Trade and other receivables 127 - 18
Cash and cash equivalents 42 - -
225 - 27
Total Assets 231 - 35
Current liabilities
Trade and other payables (85) - (13)
Lease liabilities (2) - -
Tax liabilities (7) - (4)
Provisions (121) - (18)
(215) - (35)
Total liabilities (215) - (35)
Net assets 16 - -
11. INTANGIBLE ASSETS
The Group tests goodwill and intangible assets with indefinite
lives for impairment annually, or more frequently if there are any
indicators that impairment may have arisen. Goodwill is allocated
to groups of cash-generating units (CGUs) and is monitored at a
Cash Generating Unit Grouping (CGUG) level. The last goodwill
impairment test was conducted as at 30 September 2021. At present
there is a significant level of headroom for the recoverability of
goodwill within each CGUG. The next goodwill impairment review will
take place on or before the 30 September 2022. We have reviewed
goodwill and indefinite life intangible assets for indicators of
impairment as required by IAS 36. Following a review of the
recoverable values of other intangible assets not currently subject
to amortisation, no intangible assets (2021: GBP20 million) were
identified as not being recoverable. Nil impairment charge (2021:
GBP20 million) was therefore recognised. We have not identified any
other indicators and therefore there is no requirement to undertake
a full impairment test at this stage.
On 16 February 2022, the Group's subsidiary Logista acquired 70
per cent of the share capital of Speedlink Worldwide Express B.V.
for a purchase consideration of EUR17 million (GBP14 million)
comprised of EUR15 million (GBP13 million) which has been paid in
cash and EUR2 million (GBP2 million) of contingent consideration
which is payable upon achievement of certain business objectives,
the maximum contingent consideration payable is EUR3 million (GBP3
million). There is an intention to purchase the remaining 30% of
share capital over the next 3 years. As effective control has been
achieved through this acquisition, Speedlink Worldwide Express B.V.
has been consolidated as a subsidiary within the Group with a 65
per cent minority interest. Provisional goodwill of EUR16 million
(GBP14 million) was recognised on acquisition. If new information
is obtained within one year of the date of acquisition about the
facts and circumstances that existed at the date of acquisition
that identifies adjustments, the value of the goodwill will be
revised.
12. NET DEBT
The movements in cash and cash equivalents, borrowings, and
derivative financial instruments in the period were as follows:
Unaudited
Derivative Liabilities Cash
Current Lease Non-current financial from financing and cash
GBP million borrowings creditors borrowings instruments activities equivalents Total
At 1 October 2021 (1,107) (251) (8,715) (587) (10,660) 1,287 (9,373)
Reallocation of current
borrowings from non-current
borrowings (746) - 746 - - - -
Cash flow 113 34 - (40) 107 (645) (538)
Change in accrued interest 55 (3) 21 (4) 69 - 69
Change in fair values - - - 72 72 - 72
New leases and modifications - (26) - - (26) - (26)
Exchange movements (36) 3 (31) 155 91 (12) 79
Transferred to asset held for
disposal (note 10) - 2 - - 2 (42) (40)
At 31 March 2022 (1,721) (241) (7,979) (404) (10,345) 588 (9,757)
Unaudited
Derivative Liabilities Cash
Current Lease Non-current financial from financing and cash
GBP million borrowings creditors borrowings instruments activities equivalents Total
At 1 October 2020 (1,442) (299) (10,210) (816) (12,767) 1,626 (11,141)
Reallocation of
current borrowings
from non-current
borrowings (1,055) - 1,055 - - - -
Cash flow 899 38 (856) (14) 67 (885) (818)
Change in accrued
interest 56 (4) 17 2 71 - 71
Change in fair
values - - - 85 85 - 85
New leases and
modifications - (20) - - (20) - (20)
Exchange movements 44 16 506 230 796 24 820
At 31 March 2021 (1,498) (269) (9,488) (513) (11,768) 765 (11,003)
Average reported net debt during the period was GBP10,027
million (2021: GBP11,887 million).
ADJUSTED NET DEBT
Management monitors the Group's borrowing levels using adjusted
net debt which excludes lease liabilities, interest accruals and
the fair value of derivative financial instruments. Adjusted net
debt is used for the purpose of debt monitoring as it excludes
non-cash accounting adjustments and therefore better tracks
operational debt management performance.
Unaudited Unaudited Audited
30
GBP million 31 March 2022 31 March 2021 September 2021
Reported net debt (9,757) (11,003) (9,373)
Accrued interest 68 81 140
Lease liabilities 241 269 251
Fair value of interest rate derivatives 291 325 367
Adjusted net debt (9,157) (10,328) (8,615)
The fair value of bonds is estimated to be GBP8,690 million
(2021: GBP11,668 million) and has been determined by reference to
market prices at the balance sheet date. The carrying value of
bonds is GBP8,743 million (2021: GBP10,926 million). The fair value
of all other borrowings is considered to be equal to their carrying
amount.
Average adjusted net debt during the period was GBP9,278 million
(2021: GBP11,062 million).
13. FINANCIAL INSTRUMENTS
The table below sets out the Group's accounting classification
of each class of financial assets and liabilities:
Unaudited
31 March 2022
Fair value Fair value Assets and
through through liabilities at
income comprehensive amortised
GBP million statement income cost Total Current Non-current
Trade and other receivables 43 - 2,151 2,194 2,138 56
Cash and cash equivalents - - 588 588 588 -
Derivatives 237 - - 237 58 179
Total financial assets 280 - 2,739 3,019 2,784 235
Borrowings - - (9,700) (9,700) (1,721) (7,979)
Trade and other payables - - (8,133) (8,133) (8,133) -
Derivatives (471) (170) - (641) (49) (592)
Lease liabilities - - (241) (241) (55) (186)
Total financial liabilities (471) (170) (18,074) (18,715) (9,958) (8,757)
Total net financial liabilities (191) (170) (15,335) (15,696) (7,174) (8,522)
Unaudited
31 March 2021
Fair value Fair value Assets and
through through liabilities at
income comprehensive amortised
GBP million statement income cost Total Current Non-current
Trade and other receivables 38 - 2,648 2,686 2,628 58
Cash and cash equivalents - - 765 765 765 -
Derivatives 566 - - 566 86 480
Total financial assets 604 - 3,413 4,017 3,479 538
Borrowings - - (10,986) (10,986) (1,498) (9,488)
Trade and other payables - - (8,319) (8,319) (8,319) -
Derivatives (886) (193) - (1,079) (42) (1,037)
Lease liabilities - - (269) (269) (60) (209)
Total financial liabilities (886) (193) (19,574) (20,653) (9,919) (10,734)
Total net financial liabilities (282) (193) (16,161) (16,636) (6,440) (10,196)
Audited
30
September 2021
Fair value Fair value Assets and
through through liabilities at
income comprehensive amortised
GBP million statement income cost Total Current Non-current
Trade and other receivables 37 - 2,611 2,648 2,590 58
Cash and cash equivalents - - 1,287 1,287 1,287 -
Derivatives 459 - - 459 68 391
Total financial assets 496 - 3,898 4,394 3,945 449
Borrowings - - (9,822) (9,822) (1,107) (8,715)
Trade and other payables - - (8,373) (8,373) (8,373) -
Derivatives (832) (214) - (1,046) (62) (984)
Lease liabilities - - (251) (251) (57) (194)
Total financial liabilities (832) (214) (18,446) (19,492) (9,599) (9,893)
Total net financial (liabilities) (336) (214) (14,548) (15,098) (5,654) (9,444)
Trade and other receivables excludes prepayments and Trade and
other payables excludes accruals.
The Group's derivative financial instruments which are held at
fair value, are as follows.
Unaudited Unaudited Audited
30
GBP million 31 March 2022 31 March 2021 September 2021
Assets
Interest rate swaps 190 541 451
Forward foreign currency contracts 21 21 4
Cross-currency swaps 26 4 4
Total carrying value of derivative financial assets 237 566 459
Liabilities
Interest rate swaps (480) (862) (813)
Forward foreign currency contracts (16) (3) (4)
Cross-currency swaps (179) (261) (266)
Carrying value of derivative financial liabilities before collateral (675) (1,126) (1,083)
Collateral (1) 34 47 37
Total carrying value of derivative financial liabilities (641) (1,079) (1,046)
Total carrying value of derivative financial instruments (404) (513) (587)
Analysed as:
Interest rate swaps (290) (321) (362)
Forward foreign currency contracts 5 18 -
Cross-currency swaps (153) (257) (262)
Collateral (1) 34 47 37
Total carrying value of derivative financial instruments (404) (513) (587)
(1) Collateral deposited against derivative financial
liabilities under the terms and conditions of an ISDA Credit
Support Annex
All financial assets and liabilities are carried on the balance
sheet at amortised cost, other than derivative financial
instruments and the investment in Auxly Cannabis Group 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
Group'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 GBP17 million (2021: GBP21 million) and would have been a GBP33
million (2021: GBP46 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 and the Auxly investment, the
fair value of all financial assets and financial liabilities is
considered approximate to their carrying amount.
14. CONTINGENT LIABILITIES
The following summary includes updates to matters that have
developed since publication of the 2021 Annual Report and
Accounts.
USA STATE SETTLEMENT AGREEMENTS
In November 1998, the major US cigarette manufacturers,
including Reynolds and Philip Morris, entered into the Master
Settlement Agreement ("MSA") with 52 US states and territories and
possessions. These cigarette manufacturers previously settled four
other cases, brought by Mississippi, Florida, Texas and Minnesota,
by separate agreements with each state (collectively with the MSA,
the "State Settlement Agreements", with Mississippi, Florida, Texas
and Minnesota known collectively as the "Previously Settled
States"). ITG is a party to the MSA and to the Mississippi, and
Minnesota State Settlement Agreements.
In connection with its 12 June 2015 acquisition of four
cigarette brands (Winston, Salem, Kool and Maverick, referred to as
the "Acquired Brands") from Reynolds and Lorillard, ITG has been
involved in litigation and other disputes with the Previously
Settled States, Philip Morris, and Reynolds in their state courts.
ITG has also been involved in litigation with Reynolds in the
Delaware court that has jurisdiction over disputes under the
acquisition agreement for the Acquired Brands. All cases have now
been resolved with the exception of Florida which continues to be
heard before the Delaware court.
The Court will hear argument on potentially dispositive motions
in May 2022 with a trial, if necessary, in September 2022. Amounts
at issue range from $105 million to $184 million through 2021 and
$17 million to $27 million annually going forward.
MSA PREVIOUSLY SETTLED STATES REDUCTION
The MSA contains a downward adjustment, called the Previously
Settled States Reduction, which reduces aggregate payments made by
Philip Morris, Reynolds, and ITGB by a specified percentage each
year. The State of California, later joined by the remainder of the
MSA states and by Philip Morris, challenged the application of that
Reduction to ITGB for every year from 2016 forward, claiming that
it cannot apply to ITGB since it is not making settlement payments
to Florida, Minnesota, or Texas under their settlements. The
Independent Auditor to the MSA, which initially addresses disputes
related to payments, has rejected that challenge every year. It is
possible that one of the parties making the challenge may seek to
arbitrate the claim under the MSA. The PSS Reduction provides
annual MSA payment reductions of about $65 million.
The parties have resolved Philip Morris' related claim under the
MSA, challenging ITG's right to receive a "Previously Settled
States Reduction" worth about $65 million a year, as such claim
relates to Minnesota and Texas.
OVERALL SUMMARY OF LIABILITY POSITION ASSOCIATED WITH USA STATE
SETTLEMENT AGREEMENTS
The Group's legal advice is that it has a strong position on
pending claims related to the Acquired Brands and the Group
therefore considers that no provision is required for these
matters.
PRODUCT LIABILITY INVESTIGATIONS
The Group is currently involved in a number of legal cases in
which claimants are seeking damages for alleged smoking and health
related effects. In the opinion of the Group's lawyers, the Group
has meritorious defences to these actions, all of which are being
vigorously contested. Although it is not possible to predict the
outcome of the pending litigation, the Directors believe that the
pending actions will not have a material adverse effect upon the
results of the operations, cash flow or financial condition of the
Group. This assessment of the probability of economic outflows at
the year-end is a judgement which has been taken by management.
Consequently, the Group has not provided for any amounts in respect
of these cases in the financial statements. There have been no
material updates in any product liability investigations in the
first half of FY22.
COMPETITION AUTHORITY INVESTIGATIONS
BELGIUM
On 29 May 2017, the National Competition Authority in Belgium
(the BCA) conducted raids at the premises of several manufacturers
and wholesalers of tobacco products. On 1 October 2021 the BCA
announced that it had issued a Proposal for Decision which alleges
the existence of anticompetitive practices in the tobacco industry
that lasted for several years and consisted in repeated indirect
exchanges of information on manufacturers' prices through
wholesalers. The BCA stated that such conduct may be contrary to
Article IV.1 CEL and Article 101 TFEU.
Following the parties' defence and a hearing, an infringement
Decision was issued in April 2022 by the BCA Competition College
imposing a fine of EUR7.14 million on the Company's Belgian
subsidiary, payable within 30 Days of the notification of the
Decision. This amount had been fully provided for in the accounts.
The Company's Belgian subsidiary will pursue an appeal to the
Market Court in Brussels, by submitting its detailed grounds of
appeal in May 2022.
OTHER LITIGATION
US HELMS-BURTON LITIGATION
Imperial has been named as a defendant in a civil action in
federal court in Miami, Florida under Title III of the Cuban
Liberty and Democratic Solidarity Act of 1996 ("Helms-Burton")
filed on 6 August 2020. Title III provides US nationals with a
cause of action and a claim for treble damages against persons who
have "trafficked" in property expropriated by the Cuban government.
Title III is largely untested because it did not come into effect
until May 2019. Treble damages are automatically available under
Helms Burton. Although the filed claim is for unquantified damages,
we understand the claim could potentially reach approximately $365
million, based on the claimants' claim to own 90% of the property,
which they value at $135 million (and then treble). The claim is
based on allegations that Imperial, through Corporación Habanos
S.A. (a joint venture between one of Imperial's now former
subsidiaries and the Cuban government), has "trafficked" in a
factory in Havana, Cuba that the Cuban government confiscated from
the claimants' ancestor in the early 1960s, by using the factory to
manufacture, market, sell, and distribute Habanos cigars.
At the time the claim was filed against Imperial and up until
the conclusion of the Brexit "transition period" on 31 December
2020, Imperial was subject to an EU law known as the EU Blocking
Statute (Regulation (EC) No. 2271/96), which conflicts with
Helms-Burton, protected Imperial against the impact of Title III,
and impacted how Imperial might respond to the threatened
litigation. The EU Blocking Statute has been transposed into
domestic law with only minimal changes. Accordingly, on 10 January
2021, Imperial submitted an application to the UK Department for
International Trade for authorisation from the Secretary of State
for International Trade to defend the action or, at a minimum, to
file and litigate a motion to dismiss the action. On 8 February
2021, the UK Secretary of State for International Trade authorised
Imperial to file and litigate a motion to dismiss the action.
Imperial is pursuing a motion to dismiss the filed claim and,
the Claimants having been granted leave to amend their claim a
second time, Imperial filed a motion to dismiss the second amended
complaint in April 2022. A decision on Imperial's motion to dismiss
is not expected until the third quarter of 2022 at the earliest. In
the event the motion to dismiss is denied, the court has set a
schedule for further proceedings, with trial commencing in July
2023.
Separately, two other groups of prospective claimants have
indicated that they intend to file a lawsuit against Imperial in
federal court in Miami, Florida. Neither claim has been filed. The
threatened claims relate to other properties in Cuba, which the
prospective claimants claim were confiscated from their ancestors
by the Cuban government in the 1960s and which they claim are now
used by Corporación Habanos S.A for commercial activities. The
prospective claimants claim to be entitled to treble damages from
Imperial.
No provision has been made for potential liabilities related to
Helms-Burton claims.
UK
In June 2020, the Group responded to a claimant law firm's
allegation of human rights issues in the Malawian tobacco supply
chain, which included allegations relating to child and forced
labour. In December 2020, a claim was filed in the UK High Court
against Imperial Brands plc, Imperial Tobacco Limited and four of
its subsidiaries (the Imperial Defendants) and two entities in the
British American Tobacco (BAT) group by a group of tobacco farm
workers. The Imperial Defendants have acknowledged service and
confirmed to the claimants that they intend to defend the claim in
full. The Imperial Defendants have not yet been required to file
their Defence.
The Claimants' disclosure application to be heard at the end of
November 2021 was adjourned. The deadline for Imperial and BAT to
file a defence has been postponed pending other case management
actions and will be determined at a subsequent case management
hearing. The claim is unquantified and given the early stage of the
litigation a provision would not be appropriate.
MOROCCO
A number of cases have been raised against Société Marocaine des
Tabacs SA (SMT) disputing a reduction to retirees' pensions. These
cases have been in the courts for several years and SMT has
successfully defended many of them in the lower courts. A total of
128 cases have been reviewed by the Cour de Cassation (Supreme
Court) in Morocco, and it is understood that they have been decided
against SMT and in favour of retirees. To date SMT has filed
retractions proceedings against 14 of these decisions.
The written reasoned judgment of the Cour de Cassation has not
been received by SMT at the time of signing these accounts.
Furthermore, the judgments in favour of the retirees reportedly
relate to unquantified claims. Because of this, it is not possible
to assess the impact of the decided cases on the remaining cases
within the Moroccan courts. SMT continues to rigorously defend its
position. SMT is due to present further legal arguments before the
Court of Appeal by June 2022.
SPAIN
A claim has been made against the Group's subsidiary, Altadis
SA, by the General Attorney of Spain (GA) seeking repayment of
state aid paid out between c. 2004 - 2010 (a period prior to the
Group's acquisition of Altadis, which took place in 2008). State
aid was paid by the regional government of Andalusia to various
insurance companies, to finance the early retirement costs of
Altadis ex-employees following the termination of their employment
contracts related to closure of an Altadis factory. In January 2022
the Court ordered that the claim should proceed to the next stage
and that Altadis should file a bank guarantee in the sum of EUR27.3
million at Court (the amount claimed plus 1/3 required under
Spanish law). There is no immediate requirement to pay this sum and
Altadis has challenged the ruling on the guarantee. The Group does
not expect this claim to succeed and no associated provision has
been recognised.
15. POST BALANCE SHEET EVENTS
COMPLETION OF THE RUSSIAN BUSINESS TRANSFER AFTER THE BALANCE
SHEET DATE
The transfer of the Russian assets and operations completed on
27 April 2022 and has been treated as a non-adjusting post balance
sheet event with the transaction being accounted for in the second
half of the financial year ended 30 September 2022. The sales
consideration will be recognised and the net assets of the Disposal
Group be derecognised. There is then a requirement to recycle the
cumulative foreign exchange losses arising on the retranslation of
non-sterling assets of the Disposal Group into the income
statement. Given that the net assets of the Disposal Group have
already been written down to their fair value loss costs to sell
value as at 31 March 2022 the loss on disposal will be primarily
due to these foreign exchange losses.
We estimate the associated cumulative foreign exchange losses
arising on completion is in the range of GBP150 million - GBP190
million.
The Russian assets and operations contributed GBP54 million (31
March 2021: GBP61 million) of net revenue and GBP8 million (31
March 2021: GBP4 million) of operating profit before tax in the six
month period and was part of the Africa, Asia and Australasia
division. The business comprised Imperial Tobacco Sales and
Marketing LLC a company involved in tobacco sales in Russia and
Imperial Tobacco Volga LLC a company which owns the Volgograd
factory which manufactures tobacco products for Russia and a small
number of other countries.
US FOOD AND DRUG ADMINISTRATION MARKETING DENIAL ORDERS
On 8 April 2022 the US Food and Drug Administration issued
Marketing Denial Orders against a number of myblu products. We are
currently seeking to overturn the decision through an appeal
process. This decision has been treated as a non-adjusting post
balance sheet event and consequently had not had any impact on the
carrying value of associated assets as at 31 March 2022.
16. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. No related party transactions have taken
place in the 6 months ended 31 March 2022 (6 months to 2021: none)
that have materially affected the financial position or performance
of the group during that period.
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END
IR XQLLFLELZBBK
(END) Dow Jones Newswires
May 17, 2022 10:04 ET (14:04 GMT)
Grafico Azioni Imperial Brands (LSE:IMB)
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Grafico Azioni Imperial Brands (LSE:IMB)
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