Annual report 2010 - Imperial Tobacco Group

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Notes to the Financial Statements1 Segment InformationStrategy Performance Governance FinancialsImperial Tobacco comprises two distinct businesses – Tobacco and Logistics. In addition to regularly reviewing resultsand plans for the Tobacco and Logistics businesses, the Chief Executive’s Committee (which is the chief operatingdecision maker for the purposes of IFRS 8) regularly reviewed during the year the performance and plans of the Tobaccobusiness analysed on a geographic basis, reflecting the importance of certain individual markets and geographic groupings.The segments presented below are therefore the Group’s six Tobacco regions and the Logistics business.The information provided to the Chief Executive’s Committee is used as the basis of the segment revenue and profitdisclosures provided below, with the geographic analysis of Tobacco based on the location of customers, and central Groupcosts allocated consistently based on management’s assessment of the level of support provided. The main measure ofprofit used by the Chief Executive’s Committee to assess performance is adjusted operating profit. Segment balance sheetinformation is not routinely provided to the Chief Executive’s Committee.The Tobacco business comprises the manufacture, marketing and sale of tobacco and tobacco-related products, includingsales to (but not by) the Logistics business. The Logistics business comprises the distribution of tobacco products fortobacco product manufacturers, including Imperial Tobacco, as well as a wide range of non-tobacco products and services.The Logistics business is run on an operationally neutral basis ensuring all customers are treated equally, and consequentlytransactions between the Tobacco and Logistics businesses are undertaken on an arm’s length basis reflecting marketprices for comparable goods and services.For the purposes of the analysis below, European Union comprises the EU member states plus Norway, Iceland,Liechtenstein and Switzerland. The Cuban joint ventures are included in the Rest of the World. All of the Logistics businessis located in the European Union.Tobacco£ million unless otherwise indicated 2010 2009Revenue 20,210 18,587Net revenue 7,055 6,818Operating profit 2,490 2,291Adjusted operating profit 2,889 2,750Adjusted operating margin 40.9% 40.3%Logistics£ million unless otherwise indicated 2010 2009Revenue 8,980 8,961Distribution fees 936 964Operating profit 36 40Adjusted operating profit 176 177Adjusted distribution margin 18.8% 18.4%RevenueTotalrevenue2010 2009ExternalrevenueTotalrevenueExternalrevenue£ millionTobaccoUK 5,105 5,105 4,862 4,862Germany 3,755 3,755 3,432 3,432Spain 594 79 620 84Rest of European Union 5,275 4,773 4,770 4,275Americas 1,373 1,373 1,414 1,414Rest of the World 4,108 4,108 3,489 3,489Total Tobacco 20,210 19,193 18,587 17,556Logistics 8,980 8,980 8,961 8,961Eliminations (1,017) – (1,031) –Total Group 28,173 28,173 26,517 26,517112
Tobacco net revenue£ million 2010 2009UK 911 893Germany 853 826Spain 594 610Rest of European Union 1,577 1,490Americas 780 861Rest of the World 2,340 2,138Total Tobacco 7,055 6,818Adjusted operating profit and reconciliation to profit before tax£ million 2010 2009TobaccoUK 614 601Germany 432 403Spain 268 275Rest of European Union 638 566Americas 244 288Rest of the World 693 617Total Tobacco 2,889 2,750Logistics 176 177Eliminations 2 6Adjusted operating profit 3,067 2,933Acquisition accounting adjustments – Tobacco (24) –Amortisation of acquired intangibles – Tobacco (315) (315)Amortisation of acquired intangibles – Logistics (136) (136)Restructuring costs – Tobacco (60) (144)Restructuring costs – Logistics (4) (1)Operating profit 2,528 2,337Net finance costs (410) (1,392)Profit before tax 2,118 945Other segment informationAdditions tointangibleassets2010 2009Additions toproperty, plantand equipmentDepreciationand softwareamortisationAdditions tointangibleassetsAdditions toproperty, plantand equipmentDepreciationand softwareamortisation£ millionTobaccoUK 1 18 31 1 29 31Germany 2 119 22 1 114 22Spain 1 12 9 1 8 11Rest of European Union 1 51 30 2 32 30Americas – 7 3 1 3 4Rest of the World 1 36 41 1 37 37Total Tobacco 6 243 136 7 223 135Logistics 8 26 34 5 22 34Total Group 14 269 170 12 245 169113
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Imperial Tobacco Group PLCAnnual Re
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…to deliver sustainableshareholde
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Operational HighlightsDelivering Su
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and product portfolio to evolving c
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In this section9 Strategic Review10
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Our StrategyWe are focused on deliv
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Total Tobacco5 % Our Powerful Brand
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Our global strategic cigarette bran
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Our global team is fully aligned be
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Satisfying consumers and aligning o
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We are a responsive business with s
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Operating responsibly, combined wit
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Our growth drivers of sales growth,
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Principal Risks and UncertaintiesA
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Competition LawOverviewWe take comp
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Reconciliation of Adjusted Performa
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Key Performance Indicators (KPIs) 1
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Lambert & Butler and Richmond remai
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Within this the travel retail marke
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OutlookThe strength of our portfoli
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Blondes. In the Middle East, we aga
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Corporate ResponsibilityOur Corpora
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Corporate Responsibility and our St
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We have revised our IMS and employe
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Environmental Performance 1Absolute
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across the business. More informati
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Supplier RelationshipsOur main supp
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Non-financial performance indicator
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“High standards of corporategover
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5. Pierre Jungels, CBE (HON), PHD,
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Management and Corporate StructureB
Page 63 and 64: Meetings of the Board, Board Commit
Page 65 and 66: and supplemented by our Non-Executi
Page 67 and 68: 6 Performance evaluation: How do we
Page 69 and 70: The Board recognises that we operat
Page 71 and 72: Assurance process for financial rep
Page 73 and 74: - receiving reports from, and quest
Page 75 and 76: Directors’ Report: Other Informat
Page 77 and 78: - state whether IFRSs as adopted by
Page 79 and 80: We understand that a purported coll
Page 81 and 82: This Report covers the following:1
Page 83 and 84: 2 Directors’ Emoluments for the Y
Page 85 and 86: Directors’ Interests in Ordinary
Page 87 and 88: Executive Directors’ Service Agre
Page 89 and 90: When setting base salary the Remune
Page 91 and 92: First ElementFifty per cent of the
Page 93 and 94: In respect of the October 2007 - Oc
Page 95 and 96: Any annual bonus earned up to 100 p
Page 97 and 98: Benefit Trusts have also been provi
Page 99 and 100: Independent Auditors’ Reportto th
Page 101 and 102: Consolidated Statement ofComprehens
Page 103 and 104: Consolidated Statement of Changes i
Page 105 and 106: Accounting PoliciesBasis of Prepara
Page 107 and 108: Duty and Similar ItemsDuty and simi
Page 109 and 110: InventoriesInventories are stated a
Page 111 and 112: Restructuring CostsSignificant one-
Page 113: Property, Plant and Equipment and I
Page 117 and 118: 3 Restructuring Costs£ million 201
Page 119 and 120: Factors affecting the tax charge fo
Page 121 and 122: 9 Intangible Assets2010£ million G
Page 123 and 124: 10 Property, Plant and Equipment201
Page 125 and 126: 13 Trade and Other Receivables2010
Page 127 and 128: Sensitivity analysisIFRS 7 requires
Page 129 and 130: At 30 September 2009Balance sheetam
Page 131 and 132: (iii) Currency analysis and effecti
Page 133 and 134: (iv) Derivative financial instrumen
Page 135 and 136: Matures in financial year ending in
Page 137 and 138: The following tables are provided i
Page 139 and 140: Matures in financial year ending in
Page 141 and 142: (vi) Hedge of net investments in fo
Page 143 and 144: 18 Retirement Benefit SchemesThe Gr
Page 145 and 146: Assumptions regarding future mortal
Page 147 and 148: 21 Share SchemesThe Group recognise
Page 149 and 150: Year from 1 October 2008 to 30 Sept
Page 151 and 152: 23 CommitmentsCapital commitments£
Page 153 and 154: 27 Reconciliation of Cash Flow to M
Page 155 and 156: Imperial Tobacco Group PLC Balance
Page 157 and 158: (iii) Debtors: Amounts Falling Due
Page 159 and 160: Principal SubsidiariesThe principal
Page 161 and 162: Shareholder InformationRegistered O
Page 163 and 164: IndexAAccounting Policies 103Acquis
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Annual report 2010 - Imperial Tobacco Group

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