Annual report 2010 - Imperial Tobacco Group

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PerformanceIn this section28 Financial Review32 Operating Review41 Corporate ResponsibilityFinancial ReviewStrategy Performance Governance FinancialsRevenue£ million 2010 2009Tobacco 20,210 18,587Logistics 8,980 8,961Eliminations (1,017) (1,031)Group revenue 28,173 26,517Group Earnings PerformanceAdjustedReported£ million 2010 2009 2010 2009Operating profitTobacco 2,889 2,750 2,490 2,291Logistics 176 177 36 40Eliminations 2 6 2 6Group operating profit 3,067 2,933 2,528 2,337Net finance costs (600) (700) (410) (1,392)Profit before taxation 2,467 2,233 2,118 945Taxation (637) (581) (596) (268)Profit for the year 1,830 1,652 1,522 677Earnings per ordinaryshare (pence) 178.8 161.8 148.5 65.5RevenueWe have grown our reported revenue as our results benefitedfrom strategic cigarette brand gains, excellent fine cut tobaccovolumes and strong pricing.Group Earnings PerformanceWe grew adjusted operating profit by 5 per cent to £3,067million (2009: £2,933 million) reflecting our focus on salesgrowth and cost optimisation. Leaf cost pressures remainwhich we continue to actively manage. Reported operatingprofit was up 8 per cent to £2,528 million (2009: £2,337million). Adjusted net finance costs were 14 per cent lowerthan in 2009, reflecting our continued focus on working capital,debt reduction and active management of our financing. Afternet finance costs and tax, adjusted earnings per share grewby 11 per cent to 178.8 pence (2009: 161.8 pence). Reportedearnings per share were 148.5 pence (2009: 65.5 pence),additionally reflecting fair value gains on derivative financialinstruments, amortisation of acquired intangibles and otheradjusting items in line with our usual practice.“Our results benefitedfrom strategic cigarettebrand gains, excellentfine cut tobacco volumesand strong pricing.”Robert DyrbusFinance Director28
Reconciliation of Adjusted Performance MeasuresResults have been adjusted in line with our normal practice and a reconciliation is provided below.Operating profit(£ million)Net finance costs(£ million)Earnings per share(pence)2010 2009 2010 2009 2010 2009Reported 2,528 2,337 (410) (1,392) 148.5 65.5Acquisition accounting adjustments 24 – – – 2.0 –Amortisation of acquired intangibles 451 451 – – 37.1 37.4Fair value adjustments on derivative financial instrumentsproviding commercial hedges – – (210) 660 (14.9) 46.9Restructuring costs 64 145 – – 4.8 9.9Post-employment benefits net financing cost – – 20 32 1.3 2.1Adjusted 3,067 2,933 (600) (700) 178.8 161.8The acquisition accounting adjustments of £24 millioneliminates one-off costs incurred as a consequence ofinvestigations into alleged foreign trading violations in theperiod prior to our acquisition of Reemtsma.Amortisation of acquired intangibles was unchanged at£451 million.As explained in our accounting policies, our adjustednet finance costs exclude fair value gains and losseson derivative financial instruments providing commercialhedges. Movements in foreign exchange and interest rateshave been less volatile in the current year and fair value gainson derivative financial instruments included in net financecosts were £210 million (2009: loss of £660 million).The net financing cost of post-employment benefitsamounted to £20 million compared with £32 million in2009 and is excluded from adjusted net finance costs.Geographic Analysis of TobaccoUK net revenue increased by 2 per cent to £911 millionreflecting price increases in cigarette, and a strongperformance in our fine cut tobacco business. Adjustedoperating profit rose 2 per cent to £614 million.In Germany due to price increases and growth in fine cuttobacco volumes we delivered a 3 per cent increase in netrevenue to £853 million and 7 per cent growth in adjustedoperating profit to £432 million.29
Page 1 and 2: Imperial Tobacco Group PLCAnnual Re
Page 3 and 4: …to deliver sustainableshareholde
Page 5 and 6: Operational HighlightsDelivering Su
Page 7 and 8: and product portfolio to evolving c
Page 9 and 10: In this section9 Strategic Review10
Page 11 and 12: Our StrategyWe are focused on deliv
Page 13 and 14: Total Tobacco5 % Our Powerful Brand
Page 15 and 16: Our global strategic cigarette bran
Page 17 and 18: Our global team is fully aligned be
Page 19 and 20: Satisfying consumers and aligning o
Page 21 and 22: We are a responsive business with s
Page 23 and 24: Operating responsibly, combined wit
Page 25 and 26: Our growth drivers of sales growth,
Page 27 and 28: Principal Risks and UncertaintiesA
Page 29: Competition LawOverviewWe take comp
Page 33 and 34: Key Performance Indicators (KPIs) 1
Page 35 and 36: Lambert & Butler and Richmond remai
Page 37 and 38: Within this the travel retail marke
Page 39 and 40: OutlookThe strength of our portfoli
Page 41 and 42: Blondes. In the Middle East, we aga
Page 43 and 44: Corporate ResponsibilityOur Corpora
Page 45 and 46: Corporate Responsibility and our St
Page 47 and 48: We have revised our IMS and employe
Page 49 and 50: Environmental Performance 1Absolute
Page 51 and 52: across the business. More informati
Page 53 and 54: Supplier RelationshipsOur main supp
Page 55 and 56: Non-financial performance indicator
Page 57 and 58: “High standards of corporategover
Page 59 and 60: 5. Pierre Jungels, CBE (HON), PHD,
Page 61 and 62: 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
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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
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Consolidated Statement ofComprehens
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Consolidated Statement of Changes i
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Accounting PoliciesBasis of Prepara
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Duty and Similar ItemsDuty and simi
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InventoriesInventories are stated a
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Restructuring CostsSignificant one-
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Property, Plant and Equipment and I
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Tobacco net revenue£ million 2010
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3 Restructuring Costs£ million 201
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Factors affecting the tax charge fo
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9 Intangible Assets2010£ million G
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10 Property, Plant and Equipment201
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13 Trade and Other Receivables2010
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Sensitivity analysisIFRS 7 requires
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At 30 September 2009Balance sheetam
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(iii) Currency analysis and effecti
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(iv) Derivative financial instrumen
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Matures in financial year ending in
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The following tables are provided i
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Matures in financial year ending in
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(vi) Hedge of net investments in fo
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18 Retirement Benefit SchemesThe Gr
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Assumptions regarding future mortal
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21 Share SchemesThe Group recognise
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Year from 1 October 2008 to 30 Sept
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23 CommitmentsCapital commitments£
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27 Reconciliation of Cash Flow to M
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Imperial Tobacco Group PLC Balance
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(iii) Debtors: Amounts Falling Due
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Principal SubsidiariesThe principal
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Shareholder InformationRegistered O
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IndexAAccounting Policies 103Acquis
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Annual report 2010 - Imperial Tobacco Group

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