Annual report 2010 - Imperial Tobacco Group

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Notes to the Financial Statements continued25 Cash Flows from Operating ActivitiesStrategy Performance Governance Financials£ million 2010 2009Profit for the year 1,522 677Adjustments for:Taxation 596 268Investment income (844) (1,180)Finance costs 1,254 2,572Share of post-tax profits of associates – (1)Depreciation, amortisation and impairment 666 635Profit on disposal of property, plant and equipment (3) (1)Post-employment benefits (25) 1Costs of employees’ services compensated by share schemes 28 21Acquisition accounting adjustments 14 –Movement in provisions (198) (45)Operating cash flows before movement in working capital 3,010 2,947(Increase)/decrease in inventories (213) 288(Increase)/decrease in trade and other receivables (118) 202Increase in trade and other payables 545 495Movement in working capital 214 985Taxation paid (365) (363)Net cash flows from operating activities 2,859 3,56926 Analysis of Net DebtThe movements in cash and cash equivalents, borrowings, derivative financial instruments and finance lease liabilities in theyear were as follows:Cash and cashequivalentsCurrentborrowingsNon-currentborrowingsDerivativefinancialinstrumentsFinanceleaseliabilities£ millionTotalAt 1 October 2009 1,036 (2,560) (9,507) (985) (28) (12,044)Cash flow (208) 2,276 (1,028) 229 2 1,271Accretion of interest – 1 9 (11) – (1)Change in fair values – – – 327 – 327Exchange movements (55) (46) 523 – 1 423At 30 September 2010 773 (329) (10,003) (440) (25) (10,024)Adjusted net debtManagement monitors the Group’s borrowing levels using adjusted net debt which excludes interest accruals, the fair valueof derivative financial instruments providing commercial cash flow hedges and finance lease liabilities.£ million 2010 2009Reported net debt (10,024) (12,044)Accrued interest 292 291Fair value of derivatives providing commercial hedges 410 890Finance lease liabilities 25 28Adjusted net debt (9,297) (10,835)150
27 Reconciliation of Cash Flow to Movement in Net Debt£ million 2010 2009(Decrease)/increase in cash and cash equivalents (208) 334Settlement of exchange rate derivative financial instruments 299 5(Decrease)/increase in collateralisation deposits (70) 125Increase in borrowings (1,542) (4,324)Repayment of borrowings 2,790 6,042Repayment of finance leases 2 2Change in net debt resulting from cash flows 1,271 2,184Other non-cash movements including revaluation of derivative financial instruments 326 (1,192)Exchange movements 423 (1,349)Movement in net debt during the year 2,020 (357)Opening net debt (12,044) (11,687)Closing net debt (10,024) (12,044)28 Balances and Transactions with Associates and Joint Ventures2010AccountsreceivableAssets Liabilities Goods and servicesAccountspayable Purchases Sales£ millionCurrent loansAssociates 1 – (1) 15 5Joint ventures 9 12 (9) 80 4810 12 (10) 95 532009AccountsreceivableAssets Liabilities Goods and servicesAccountspayable Purchases Sales£ millionCurrent loansAssociates 6 – (4) 19 13Joint ventures 9 16 (3) 44 4415 16 (7) 63 5729 Acquisitions2010During 2010, agreement was reached with the sellers of Reemtsma regarding the reimbursement and settlement of costsincurred by the Group as a consequence of investigations into alleged foreign trading violations prior to our acquisition ofReemtsma in 2002. Reimbursement of £27 million received in cash and £14 million of costs settled directly by the sellerson behalf of the Group have been treated as an adjustment to the cost of the Reemtsma acquisition and so are reflected asa reduction in goodwill of £41 million in note 9. To the extent that costs were settled directly by the sellers they have beenshown as a non-cash movement of £14 million to arrive at operating cash flow before movement in working capital in note25. Costs of £24 million incurred in 2010 have been recognised in the 2010 consolidated income statement in administrativeand other expenses, and have been excluded from our adjusted performance measures since the costs do not relate to thecurrent trading performance of the Group. We have not restated our adjusted measures for prior years as the costs incurredwere not significant in any individual year.2009On 7 October 2008 the Group paid deferred consideration of US$81 million (£46 million) to acquire the outstanding49 per cent minority shareholdings in 800 JR Cigar and MCM Management. The holding was already 100 per centconsolidated as control was obtained in prior periods.151
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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
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Meetings of the Board, Board Commit
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and supplemented by our Non-Executi
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6 Performance evaluation: How do we
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The Board recognises that we operat
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Assurance process for financial rep
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- receiving reports from, and quest
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Directors’ Report: Other Informat
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- state whether IFRSs as adopted by
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We understand that a purported coll
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This Report covers the following:1
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2 Directors’ Emoluments for the Y
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Directors’ Interests in Ordinary
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Executive Directors’ Service Agre
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When setting base salary the Remune
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First ElementFifty per cent of the
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In respect of the October 2007 - Oc
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Any annual bonus earned up to 100 p
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Benefit Trusts have also been provi
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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 and 114: Property, Plant and Equipment and I
Page 115 and 116: Tobacco net revenue£ million 2010
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: 23 CommitmentsCapital commitments£
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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