preliminary results 2014 · reduction in leaf inventory improved creditor balance net capex...

Preliminary Results 2014 Imperial Tobacco Group PLC

4 November 2014

Alison Cooper Chief Executive

3

Disclaimer 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.

4

Maximise sustainable shareholder returns

A Reminder of our Strategy four operational priorities; one strategic objective

Strengthen Portfolio

Develop Footprint

Drive Cost Optimisation

Embed Capital Discipline

Simplify portfolio Invest in global brands Drumbeat of initiatives Fontem Ventures

Focus on opportunities to grow share in Growth Markets

Balanced approach in Returns Markets

Optimised manufacturing

Reduced brand tail Global procurement Overhead reduction

Target cash conversion Working capital

efficiency Focus on ‘core’ assets Reduce net debt

5

FY14: Driving strategy forward a strong foundation for growth


More revenue from brands with strongest equity

Successful brand migration programme underway

Stock optimisation removed 9bn SE

Fontem: Puritane launched

Develop Footprint

Cost Optimisation

More than £60m savings delivered in FY14

Continuing to embed disciplined approach

Capital Discipline

Cash conversion improvement from 86% to 91%

Divestment of Logista releases £0.4bn from non core asset

Significant net debt reduction of £1bn

10% increase in full year dividend to 128.1p

1 Profit progression is at constant currency. Net revenue progression is at constant currency and underlying (excluding stock optimisation)

Resilient in Returns Markets: profit +1%1

Growth market net revenue +7%1

Presence in new markets

US deal strengthens competitive position & improves income diversity

Oliver Tant Chief Financial Officer

7

Group Results

FY13 Foreign

Exchange

Constant Currency

Growth FY14 ∆

Constant Currency

∆ Tobacco net revenue (£m) 7,007 (355) (76) 6,576 -6% -1%

Tobacco operating profit (£m) 3,003 (153) - 2,850 -5% -

Operating margin % 42.9 43.3 +40 bps +50 bps

Logistics operating profit (£m) 176 (4) (6) 166 -6% -3%

Adjusted operating profit (£m) 3,180 (157) 3 3,026 -5% -

Adjusted EPS (p) 210.7 (11.7) 4.4 203.4 -3% +2%

DPS (p) 116.4 128.1 +10%

Cash conversion (%) 86.4 91.4 +500 bps

Adjusted net debt (£m) (9,098) (8,135) +11% +7%

All numbers on an adjusted basis.

8

Circa 9bn SE reduction in trade inventories

Key markets – Russia, Iraq, other Middle East, Taiwan

Programme now completed

Drives benefits by supporting: Clearer view of market dynamics Route to market improved Improved speed to market for product initiatives Improved working capital management

Stock Optimisation improving supply efficiency

9

Underlying Performance

HY 14 ∆ FY 14 ∆ Volume (bn SE) -4% -4%

Tobacco net revenue (£m) +2% +2%

Growth Brand volume (bn SE) +4% +7%

Growth Brand tobacco net revenue (£m) +6% +9%

Specialist Brand tobacco net revenue (£m) +6% +2%

Growth Market tobacco net revenue (£m) +7% +7%

Returns Market tobacco net revenue (£m) - -1%

bn SE is billion stick equivalent; all volume is underlying (excluding stock optimisation). Net revenue is at constant currency and underlying (excluding stock optimisation)

10

Growth Brands strengthening our portfolio

FY 14 FY13 Actual ∆ Constant

FX ∆ Underlying

∆ Volume (bn SE) 131 129 +2% +7%

Market share (%) 5.7 5.4 +30 bps

Tobacco net revenue (£m) 2,737 2,729 +0% +4% +9%

Growth Brands % of group volume 44.5 40.7 +380 bps +460 bps

Growth Brands % of tobacco net revenue 41.6 38.9 +270 bps +220bps +280 bps

Growth Brands growing volume +7% and tobacco net revenue +9% Growth Brands market share increased 30bps Successful start to migration programme which continues in FY15


11

Specialist Brands

FY14 FY13 Actual ∆ Constant

FX ∆ Underlying

∆ Tobacco net revenue (£m) 811 866 -6% -2% +2%

Specialist Brands % of tobacco net revenue 12.3 12.4 -10 bps -10 bps -

Specialist Brands growing tobacco net revenue 2% Supply constraints impacted Cuban cigars during H2 Mass Market Cigars growing – particularly Backwoods in US Skruf grew net revenue by over 30%

strengthening our portfolio

12

Growth Markets

FY14 FY13 Actual ∆ Constant

FX ∆ Underlying

∆ Market share (%) 5.8 5.7 +10 bps

Tobacco net revenue (£m) 2,113 2,254 -6% 0% +7%

Adjusted operating profit (£m) 597 668 -11% -2%

Growth Brands % tobacco net revenue 38.3 36.8 +150 bps +90 bps +330 bps

Growth Brands volume (bn SE) 53 53 0% +11%

Profit impacted by stock optimisation Market share slightly ahead - US & Russia marginal decline masks growth elsewhere Strong underlying growth in Middle East, Asia and Scandinavia Quality of growth improving


13

Returns Markets

FY 14 FY 13 Actual ∆ Constant

FX ∆ Underlying

∆ Market share (%) 26.7 27.3 -60bps

Tobacco net revenue (£m) 4,463 4,753 -6% -2% -1%

Tobacco net revenue per ‘000 SE (£) 23.1 23.4 -1% +3% +4%

Adjusted operating profit (£m) 2,253 2,335 -4% +1%


Operating profit up for the year Net revenue decline driven by Returns South, in part offset by Returns North Quality of growth improving


14

Logistics

∆

FY 2014

FY 2013 Actual ∆

Constant FX ∆

Distribution fees (£m) 848 850 0% +2%


Margin (%) 19.6% 20.7% -110 bps -120 bps

continued robust performance

Overall distribution fees grew by 2% Cost efficiency programmes helping mitigate impact of declining tobacco volumes Sales in direct delivery pharma and convenience products continues to grow Sale of c.30% for €518m (£395m net of costs) – proceeds used to reduce Group debt

15

Over £60m savings in FY14 Savings driven by: Increasingly global procurement Operational excellence programme Manufacturing savings

Cost optimisation savings £85m in FY15 FY15 investment likely to exceed this On track for £300m p.a. by 2018

Cost Optimisation funding investment in growth

£300m savings pa by 2018

Product Cost Overheads

More than £90m delivered to

date

Further £85m in FY15

£125m between 2016-2018

16

Clear Objectives for Cash Sources of Free Cash

Cash flow from operations

Cost optimisation

Capital discipline Cash conversion Working Capital Balance sheet

Focus on core assets

Free Cash Flow Generation

Uses of Free Cash

Other returns to shareholders

Dividend growth at least 10%

Reduce debt

Investment to drive returns Brands and markets Operational improvements

17

Cash Conversion driving improvement, embedding process

500 bps improvement on FY13 Driven by; Reduction in leaf inventory Improved creditor balance Net capex reduction

Targeting sustained improvement across the Group

Average 2011-13 2013 2014

82%

86%

91%

18

Openingnet debt

EBITDA Workingcapital

Netcapex

Tax &Interest

RestructuringPensions &

Other

Dividends Share BuyBacks

LogistaIPO

FX Closingnet debt

£1.0bn

FY14 Adjusted Net Debt

£3.2bn

£9.1bn £8.1bn

£0.1bn £0.2bn

£0.3bn £1.2bn £0.3bn £0.4bn

11% or £1bn reduction in net debt

£0.1bn inflow versus 2011-13 average £0.2bn

outflow

Net capex reduced by

c.£50m

£0.3bn

19

FY14 FX adverse impact of c. 5% on operating profit and EPS Current Spot rates imply c. 2% impact for FY15

FY15 – Logista, Finance, Tax & FX

FY14 reported rate benefits from deferred tax credit on intangibles FY14 adjusted rate of 21%: expect to maintain in FY15

Average cost of debt c.4.9% in FY14: expect to maintain in FY15 New facilities currently not drawn – revisit overall finance post US completion

FY pro forma minority interest £42m – 4.4p impact to adjusted EPS

20


A Reminder of our Strategy four operational levers; one strategic objective

Drive Cost Optimisation

Optimised manufacturing

Reduced brand tail Global procurement Overhead reduction

Embed Capital Discipline

Target cash conversion Working capital

efficiency Focus on ‘core’ assets Reduce net debt

Alison Cooper Chief Executive

22


A Reminder of our Strategy four operational levers; one strategic objective


Simplify portfolio Invest in global brands Drumbeat of initiatives Fontem Ventures

Develop Footprint

Focus on opportunities to grow share in Growth Markets

Balanced approach in Returns Markets

Strengthening our Portfolio

24

building equity: Gauloises

Queensize now 4% SoM in Iraq

0.8% of French FCT after 5 months

New Generation range capturing

demand for ‘Retro’

New Global campaign and pack Revamp

Additive Free and Biodegradable Filter

Strengthening our Portfolio

25

Strengthening our Portfolio building equity: JPF chassis

Parker & Simpson now in 27 countries

JPS driving growth in Australia – share up

c. 600bps

Continued growth driving share in

Cambodia

RYO/MYO now in 16 markets with volume

growth of 12%

* Trade communication

*

26

Strengthening our Portfolio building equity: West chassis

Introduction of Blue variant growing share of L&B to 10%

News MYO volumes +29% Growing market share in Taiwan

Leading our offer in Japan

27

Strengthening our Portfolio building brand equity: Davidoff

Glidetec launched in Russia

Global pack change rolled out to 59 markets

Flagship store opened in Dubai

Boudoir Superfine wins innovation award

28

Migration Process improving growth trajectories

Oct’13 Nov’13 Dec’13 Jan’14 Feb’14 Mar’14 Apr’14 May’14 Jun'14 Jul'14 Aug'14

Taiwan: Kane to Parker & Simpson

Market Share %

0.93

0.99 0.99 1.01

1.03 1.03 1.07

1.14 1.19

1.10

1.20

29

Migration Process

22 started in FY14 (5 complete)

Market by market approach

More migrations in FY15

Mid term target c.80% net revenue from Growth and Specialist Brands

Building a stronger portfolio

good early results – more to come 2015

Czech Moon to Parker & Simpson

Spain Brooklyn to West

Developing our Footprint

31

Market Decline has Eased Slightly encouraged but remain cautious

Rate of market decline has eased slightly

Low price segment remains competitive

Expect Russian decline to accelerate in FY15

FY15 planning does not assume further material improvement

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%UK Germany Australia Ukraine Spain France Morocco Russia Italy USA Returns Growth Total

HY MAT

FY MAT

+0.5%

+1.3% +1.0%

+1.1%

+4.2%

+0.8%

+3.5%

+0.6%

+4.1% +0.3% +1.5% (0.1%) +0.4%

Market size data drawn from external sources. HY MAT shows 12 months to Feb ‘14 & FY MAT 12 months to Aug ‘14. Returns, Growth and Total data is aggregated across markets (where reliable data is available) within our footprint

Growth Markets

33


Sales Growth

investing in Growth Markets

Significant market c.80bn SE Partnership with leading distributor Gauloises & Davidoff – focus on equity build Share now 0.6%

Large consumer and profit pool Focus on convenience (c.60% of market) West now listed in all key accounts Latest share 0.7%

Egypt Japan

34


Sales Growth

strengthening our position in Growth Markets

SKRUF now No.1 brand in Norway Slim Fresh biggest SKU Growing and significant contribution

Norway

30%

32%

34%

36%

38%

2013 2014

Italy

JPS driving growth Activity to build distribution & equity JPS spot share now c.2%

2%

3%

4%

2013 2014

32.0%

36.0%

3.1%

3.6%

35

Iraq and Russia

Sales Growth

Russia

Royale Club migration progressed well

Political/security situation worsened

Sales activity focused on main cities and secure areas

Impacts full year volume by c.3bn SE

Not yet seen full impact of tax and regulatory changes on market

Expect market decline to continue

Share stabilised during H2

protecting our position in changing markets Iraq

36

USA continuing to build equity and grow share

USA Gold growing share in our 19 focus states

H2 equity and awareness campaign

USA Gold GlideTec pack now widely distributed

Business continuing to grow profit

37

Acquisition of USA assets investing in key Growth Market

Acquisition consistent with strategy to develop in Growth Markets

Enhanced portfolio grows presence and retail influence

Under invested but well recognised brands present growth opportunity

Large attractive market with growing profit pool

Experienced, knowledgeable team with strong track record

Diversifies Group net revenue

Preparation for integration well underway

Returns Markets

39

Spain, Morocco and France economy and affordability remain key drivers

Spain France Morocco

Early signs of lessening market decline

Stabilisation in illicit Migrations underway through

Brooklyn and Ducados Rubio Market very price sensitive in

ultralow segment

Market decline driven by excise and illicit

Market share decline has slowed over H2

Launch of ‘MQS’ in FMC RYO/MYO launches

establish FCT market

Structural decline of dark tobacco segment continues to impact performance

Growth of Gauloises, News and JPS MYO contribute to stabilising FCT share

Implementing national advocacy plan

40

UK

Trading environment competitive

Downtrading still prevalent

Portfolio approach

Focus on distribution and availability yielding benefits

Gold Leaf Latest share >10% No.1 in RYO economy

Lambert & Butler Has achieved 1.5% market share L&B share returns to +10%

continued resilient performance GV Smooth Appealing to modern smoker and rejuvenating GV brand - Share now 8%

41

Germany

Market overall remains solid

FMC share stable driven by performance of Growth Brands

JPS, Gauloises and Davidoff performing strongly

Growth in profit continuing

large, resilient and profitable market

42

Australia growing market share and profit

Growth of JPS key to share growth of 440 bps during 2014

Joined up planning and execution

Focused brand approach fundamental

JPS driving share growth

Customer engagement has been key

Excise increases influence consumer behaviour

* Trade communication

*

43

Fontem Ventures

Focused mainly on e-Vapour solutions

First product Puritane launched this year

Application for MHRA licence progressing

Expect new Fontem products during 2015

Continue measured approach

developing new consumer experiences

44

FY15 Outlook focused and disciplined


Enhance brand equity to build sustainability

Build on success of early migrations

Investment focused on primary brands in all markets

New launches from Fontem

Cost Optimisation

Deliver further savings as part of £300m pa 2018 target

Continue to refine ways of working

Develop Footprint

Building momentum across Growth Markets

Continue to optimise performance in Returns Markets

Rapid and efficient integration of US assets

Capital Discipline

Embedding cash conversion discipline

Further improvements to capital deployment

Continue to manage structure and level of debt

Long standing target of at least 10% increase in dividend

Preliminary Results 2014 Imperial Tobacco Group PLC

4 November 2014

Appendices

47

Returns Markets North


FX ∆ Underlying

∆ Market share (%) 24.8 25.5 -70 bps

Net revenue per ‘000 SE (£) 27.0 27.0 - +5% +6%

Adjusted operating profit (£m) 1,511 1,543 -2% +2%


48

Returns Markets South


FX ∆ Underlying

∆ Market share (%) 29.4 29.9 -50 bps

Net revenue per ‘000 SE (£) 18.6 19.3 -4% - +1%


Growth Brands % of tobacco net revenue 37.3 33.7 +360 bps +350 bps +310 bps

Financials

50

Group Adjusted Results £m FY 2014 FY 2013

Tobacco net revenue 6,576 7,007

Logistics distribution fees 848 850

Tobacco operating profit 2,850 3,003

Operating margin % 43.3 42.9

Logistics operating profit 166 176

Distribution margin % 19.6 20.7

Eliminations 10 1

Adjusted operating profit 3,026 3,180

Interest (516) (532)

Tax rate % 21.1 21.6

Adjusted EPS (p) 203.4 210.7

DPS (p) 128.1 116.4

Results are adjusted and presented on our usual basis

51

Income Statement £m FY 2014 FY 2013

Revenue 26,625 28,269


Amortisation and impairment of acquired intangibles (644) (952)

Restructuring costs (305) (270)

Net finance costs* (544) (739)R

Profit before tax 1,520 1,219

Tax (69) (290)

Profit after tax 1,451 929

Minority interests (29) (24)

Basic EPS (p) 148.5 92.9

Adjusted EPS (p) 203.4 210.7

*Including net fair value and exchange losses on financial instruments and post-employment benefits net financing costs R – Restated for IAS 19 (Revised)

52

Reconciliation: Reported to Adjusted

£m Reported

FY 2014 Acquisition

costs

Amortisation of acquired intangibles

Fair value gains / losses on

financial instruments

Post employment

net financing

Re-structuring

costs

Tax on un-recognised

losses

Adjusted non-

controlling interests

Adjusted FY 2014

Operating profit 2,064 13 644 - - 305 - - 3,026

Finance costs (544) - - (12) 40 - - - (516)

Profit before tax 1,520 13 644 (12) 40 305 - - 2,510

Tax (69) - (301) (13) (12) (84) (51) - (530)

Profit after tax 1,451 13 343 (25) 28 221 (51) - 1,980

Non-controlling interests (29) - - - - - - (4) (33)

Earnings attributable 1,422 13 343 (25) 28 221 (51) (4) 1,947

Basic EPS (p) 148.5p 1.4 35.8 (2.5) 2.8 23.1 (5.3) (0.4) 203.4

53

Tobacco Net Revenue

£m Actual1

FY 2014 Foreign

Exchange Constant

Currency2 FY 2013

% Change Constant Currency

% Change Underlying

Growth Markets 2,113 (152) 11 2,254 0% +7%

Returns Markets North 2,801 (142) 14 2,929 0% +1%

Returns Markets South 1,662 (61) (101) 1,824 -6% -4%

Total Returns Markets 4,463 (203) (87) 4,753 -2% -1%

Total Tobacco 6,576 (355) (76) 7,007 -1% +2%

1Based on average exchange rates for twelve months ended 30 September 2014; 2Assumes that average exchange rates in FY 2014 were the same as in FY 2013

54

Tobacco Operating Profit

£m Actual1

FY 2014 Foreign

Exchange Constant

Currency2 FY 2013

% Change Constant Currency

Growth Markets 597 (57) (14) 668 -2%

Returns Markets North 1,511 (63) 31 1,543 +2%

Returns Markets South 742 (33) (17) 792 -2%

Total Returns Markets 2,253 (96) 14 2,335 +1%

Total Tobacco 2,850 (153) - 3,003 -

1Based on average exchange rates for twelve months ended 30 September 2014; 2Assumes that average exchange rates in FY 2014 were the same as in FY 2013; Results are adjusted and presented on our usual basis

55

Foreign Exchange Average Closing

FY 2013 FY 2014 Change FY 2013 FY 2014 Change US $ 1.5612 1.6567 -6% 1.6153 1.6188 0%

EURO € 1.1900 1.2213 -3% 1.1961 1.2865 -7%

AUD $ 1.5716 1.8003 -13% 1.7327 1.8580 -7%

Russian Rouble 49.1494 57.5509 -15% 52.4179 64.023 -18%

56

Balance Sheet £m FY 2014 FY 2013 Non-current assets: tangible 2,844 2,652

intangible 15,859 17,382

Current assets: inventories 2,935 3,296

other 4,371 5,092

Current liabilities (7,809) (11,082)

Non-current liabilities (12,719) (11,688)R

Net assets 5,481 5,652

R – Restated for IAS 19 (Revised)

57

Cash Flow £m FY 2014 FY 2013 Cash flows from operating activities pre tax 3,005 3,038 Tax paid (457) (686) Cash flows from operating activities 2,548 2,352 Net capex (238) (291) Logista IPO 395 - Dragonite IP (46) - Employee Share Ownership Trust 4 - Share buy backs (341) (500) Dividends paid (inc. minority interests) (1,170) (1,084) Net interest paid (540) (513) Net cash flow 612 (70) Opening net debt (9,518) (8,965) Closing net debt before non-cash movements (8,906) (9,035) Non-cash movements Exchange movement 341 (237) Interest accretion and derivative fair value adjustments 16 (246) Closing net debt after non-cash adjustments (8,549) (9,518)

58

Cash Conversion £m FY 2014 FY 2013 Net cash flow from operating activities 2,548 2,352

Tax 457 686

Net capex (238) (291)

Cash flow post capex pre interest and tax 2,767 2,747


Cash conversion (%) 91.4 86.4

Working capital inflow/(outflow) 130 (82)

59

Net Finance Costs £m FY 2014 FY 2013 Net finance costs 544 739R

Adjusted for:

- interest income on net defined benefit assets 138 126

- interest cost on net defined benefit liabilities (174) (168)

- unwind of discount on redundancy and long term provisions (4) (9)

- net fair value and exchange gains/(losses) on financial instruments 12 (156)

Adjusted net finance costs 516 532

R = Restated for IAS 19 (Revised)

60

Net Debt Reconciliation

£m Reported

FY 2014 Accrued interest

Fair value of derivatives

Adjusted FY 2014

Opening net debt (9,518) 321 99 (9,098) Free cash flow 1,774 (49) 1,725 Share buy backs (341) (341) Dividends (1,170) (1,170) Logista IPO 395 395 Dragonite (46) (46) Accretion of interest (8) 8 - Change in fair values 24 35 59 Exchange movements 341 341 Closing net debt (8,549) 280 134 (8,135)

Volume

62

Total Tobacco Volume

bn SE* FY 2014 FY 2013 Actual

∆ Underlying

∆

Growth Markets 101 114 -11% -2%

Returns Markets North 104 109 -4% -5%

Returns Markets South 89 94 -5% -5%

Total Returns Markets 193 203 -5% -5%

Total Group 294 317 -7% -4%

* bn SE is billion stick equivalent; Total Tobacco includes cigarettes, fine cut tobacco, cigar, snus and other tobacco products

63

Total Growth Brand Volume

bn SE* FY 2014 FY 2013 Actual

∆ Underlying

∆

Growth Markets 53 53 -1% +11%

Returns Markets North 46 44 +4% +4%

Returns Markets South 32 31 +5% +6%

Total Returns Markets 78 75 +4% +5%

Total Group 131 129 +2% +7%

* bn SE is billion stick equivalent; Total Tobacco includes cigarettes, fine cut tobacco, cigar, snus and other tobacco products

64

Financing

65

Description Maturity date Amount £m equiv.

USD Committed 2 Year A Term Loan Acquisition Facility1,2 Jul-17 $4,100m £2,533m

USD Committed 3 Year B Term Loan Acquisition Facility1 Jul-18 $1,500m £927m

USD Committed 5 Year C Term Loan Acquisition Facility1 Jul-20 $1,500mh £927m

Committed 3 Year Revolving Credit Facility A 3 Jul-17 €1,000m £777m

Committed 5 Year Revolving Credit Facility B Jul-19

EUR tranche €2,835m £2,203m

GBP tranche £500m £500m

Total Facilities £7,867m

1 Facility runs from the earlier of the date of completion of US acquisition or 15 July 2015 2 1-year facility with a 1-year extension period at Imperial’s option 3 1.5 year facility with three 0.5 year extension periods at Imperial’s option All facilities are at competitive margins, and there are margin step-ups and utilisation fees applicable to certain tranches

Committed Bank Facilities 30 September 2014

66

Amount Issuer Coupon Issue Date Maturity Date £m equiv. Margin €500m Altadis Emisiones Financieras SAU 4.000% Dec-05 Dec-15 £389m 1.1% €1,500m Imperial Tobacco Finance PLC 8.375% Feb-09 Feb-16 £1,166m 5.0% £450m Imperial Tobacco Finance PLC 5.500% Nov-06 Nov-16 £521m1 0.6%1 $1,250m Imperial Tobacco Finance PLC 2.050% Feb-13 Feb-18 £772m 1.1% €850m Imperial Tobacco Finance PLC 4.500% Jul-11 Jul-18 £661m 1.7% £200m Imperial Tobacco Finance PLC 6.250% Dec-03 Dec-18 £228m1 1.1%1 £500m Imperial Tobacco Finance PLC 7.750% Jun-09 Jun-19 £500m 3.7% €750m Imperial Tobacco Finance PLC 5.000% Dec-11 Dec-19 £583m 2.6% €1,000m Imperial Tobacco Finance PLC 2.250% Feb-14 Feb-21 £777m 1.1%

£1,000m Imperial Tobacco Finance PLC 9.000% Feb-09 Feb-22 £926m1 4.8%1

$1,000m Imperial Tobacco Finance PLC 3.500% Feb-13 Feb-23 £618m 1.1% £600m Imperial Tobacco Finance PLC 8.125% Sep-08 Mar-24 £600m 3.1% €650m Imperial Tobacco Finance PLC 3.750% Feb-14 Feb-26 £505m 1.5% £500m Imperial Tobacco Finance PLC 5.500% Sep-11 Sep-26 £500m 2.7% £500m Imperial Tobacco Finance PLC 4.875% Feb-14 Jun-32 £487m1 2.2%1

Total/Weighted Average Margin £9,233m1 2.5%1

1 Including the effect of cross currency swaps

Bond Issues 30 September 2014

67

Core Financing

Facilities in place as at 30 September c.£13.0bn1

71% bond issues, 27% bank facilities, 2% ECP Headroom as at 30 September c.£4.4bn

£m e

quiv

alen

t

1 Excluding US acquisition facilities of USD 7.1bn (GBP 4.4bn equiv.) 2 Including the effect of cross currency swaps

ECP

Bank Facilities

Bond Issues2

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Sep'14

Sep'15

Sep'16

Sep'17

Sep'18

Sep'19

Sep'20

Sep'21

Sep'22

Sep'23

Sep'24

Sep'25

Sep'26

Sep'27

Sep'28

Sep'29

Sep'30

Sep'31

Sep'32

maturity profile at 30 September 2014

Main Market Classifications

69

Main Market Classifications Growth Markets Returns Markets North Returns Markets South

Cambodia Australia Algeria China Azerbaijan Austria Iraq Belux Czech Republic Italy Germany France Japan Ireland Hungary Russia Netherlands Morocco Saudi Arabia New Zealand Portugal Taiwan Poland Slovenia Turkey UK Spain USA Ukraine Tunisia Vietnam

70

Basis of Results Presentation Use of Adjusted Measures Management believes that non-GAAP or adjusted measures provide a useful comparison of business performance and reflect the way in which the business is controlled. Accordingly, adjusted measures of operating profit, net finance costs, profit before tax, taxation, attributable earnings and earnings per share exclude, where applicable, acquisition accounting adjustments, amortisation and impairment of acquired intangibles, restructuring costs, post-employment benefits net financing cost, fair value gains and losses on derivative financial instruments in respect of commercially effective hedges, exchange gains and losses on borrowings in respect of commercially effective hedges, and related taxation effects and significant one-off tax provision charges or credits arising from the resolution of prior year tax matters. Reconciliations between adjusted and reported measures are included in our published financial statements. Adjusted measures are not defined terms under IFRS and may not be comparable with similarly titled measures reported by other companies. Imperial Tobacco also uses the following non-GAAP measures in presenting its results: Net Revenue Net revenue comprises the Tobacco business revenue less associated duty and similar items less revenue from the sale of peripheral and non-tobacco related products. Management considers this an important measure in assessing the performance of Tobacco operations. Distribution Fees Distribution fees comprises the Logistics segment revenue less the cost of distributed products. Management considers this an important measure in assessing the performance of Logistics operations. Adjusted Net Debt Management monitors the Group's borrowing levels using adjusted net debt which excludes interest accruals, the fair value of derivative financial instruments providing commercial cash flow hedges and finance lease liabilities.

71

Contacts Investor Relations Matt Sharff Jo Brewin Investor Relations Manager Investor Relations Manager

[email protected] [email protected]

Tel: +44 (0) 117 933 7396 Tel: +44 (0) 117 933 7549

preliminary results 2014 · reduction in leaf inventory improved creditor balance net capex...

Documents