TIDM94JK
RNS Number : 8705W
Imperial Brands Finance PLC
13 December 2019
Company Number: 03214426
IMPERIAL BRANDS FINANCE PLC
Annual Report and Financial Statements 2019
STRATEGIC REPORT
For the year ended 30 September 2019
The Directors present their Strategic Report together with the
audited financial statements of Imperial Brands Finance PLC (the
"Company") for the year ended 30 September 2019.
Principal activity and principal risks and uncertainties of the
Company
The principal activity of the Company is to provide treasury
services to Imperial Brands PLC and its subsidiaries (the
"Group").
The Company, as the main financing and financial risk management
company for the Group, undertakes transactions to manage the
Group's financial risks, together with its financing and liquidity
requirements. Financial risks comprise, but are not limited to,
market, credit and liquidity risk. A summary of the Company's
policies in respect of foreign exchange, interest, credit and
liquidity risks is included in note 14.
The Company is a wholly owned indirect subsidiary of Imperial
Brands PLC, which is the ultimate parent company within the Group,
and the Directors of the Group manage operations at a Group level.
For this reason, the Company's Directors believe that analysis
using key performance indicators for the Company is not necessary
or appropriate for an understanding of the development, performance
or position of the business of the Company. The development,
performance and position of the treasury operations of the Group,
which includes the Company, are discussed in note 20 of the Group's
annual report which does not form part of this report, but is
available at www.imperialbrandsplc.com. Financial risk management
disclosures can be found in note 14.
BREXIT
The Company has looked into potential Brexit impacts under a
number of different scenarios: soft, hard and no deal. The Company
provides financing for the wider Group and may be impacted by
Brexit risks that could affect the Group. The key risks that have
been identified include potential increase in import duties and
impact on UK customers of the Group, additional risk of tobacco
smuggling, inventory requirements to ensure supply, impact on
consumer confidence and implications on existing international tax
treaties. In the event of a no deal Brexit, we estimate there could
be additional costs of around GBP100 million relating to the
restructuring of the Group for tax purposes.
LIBOR
Following the announcement of the potential discontinuation of
LIBOR after the end of 2021, the Company has commenced an
evaluation of its floating rate debt positions maturing after that
date. The Company currently expects that an appropriate alternative
basis for the calculation of interest will be available in the
event LIBOR can no longer be used.
Review of the business
The performance of the Company is dependent on external
borrowings and intragroup loans payable and receivable and interest
thereon, together with fair value gains and losses on derivative
financial instruments.
The profit for the financial year was GBP109 million (2018:
GBP159 million).
Total equity as at 30 September 2019 was GBP2,408 million (2018:
GBP2,299 million).
The aggregate dividends on the ordinary shares recognised as a
charge to shareholders' funds during the year amount to GBPnil
million (2018: GBPnil million).
On behalf of the Board
T R Tildesley
Director
12 December 2019
REPORT OF THE DIRECTORS
For the year ended 30 September 2019
The Directors submit their report together with the Strategic
Report and the audited financial statements of the Company for the
year ended 30 September 2019.
Principal activity and financial risk management
As set out in the Strategic Report, the principal activity of
the Company is to provide treasury services to the Group. The
principal risks and uncertainties facing the Company are outlined
in the Strategic Report, with the management of those risks
discussed in note 14 to the financial statements.
Financial results and dividends
The financial results of the Company for the year are outlined
in the Strategic Report.
The Directors do not recommend the payment of a final dividend
for the year (2018: GBPnil million).
Responsibility statements under the Disclosure and Transparency
Rules
Each of the directors confirm that to the best of their
knowledge:
-- The financial statements, prepared in accordance with
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practise), including
Financial Reporting Standards 101 'Reduced Disclosure Framework'
("FRS101"), give a true and fair view of the assets, liabilities,
financial position and profit of the company, and
-- The Strategic Report and Report of the Directors report
includes a fair review of the development and performance of the
business and the position of the Company together with a
description of the principal risks and uncertainties that it
faces.
Corporate governance
The Company is a wholly owned indirect subsidiary of Imperial
Brands PLC and the Directors of the Group manage corporate
governance at a Group level. The Group's statement on corporate
governance can be found in the corporate governance report in the
Group's annual report, which does not form part of this report, but
is available at www.imperialbrandsplc.com. A description of the
internal control framework is provided in the Strategic Report with
consideration given to the risk management policies of the Company
included in note 14 to the financial statements. For this reason,
the Company's Directors consider further detail of corporate
governance in this report not necessary.
Financial reporting
The Company has in place internal control and risk management
systems in relation to the Company's financial reporting process
and the process for the preparation of financial statements. These
systems include clearly defined lines of accountability and
delegation of authority, policies and procedures that cover
financial planning and reporting, preparation of monthly management
accounts, review of the disclosures within the report and accounts
to ensure that the disclosures made appropriately reflect the
developments within the Company in the year and meet the
requirement of being fair, balanced and understandable.
The above disclosures are made in accordance with the United
Kingdom Listing Authority Disclosure and Transparency Rules Section
7.2.5, requiring disclosure of internal control and risk compliance
systems.
Insurance
Imperial Brands PLC has purchased Directors' and Officers'
liability insurance that has been in force throughout the financial
year and is currently in force. The Directors of the Company have
the benefit of this insurance, which is a qualifying third party
indemnity provision as defined by the Companies Act 2006.
Future outlook
The business activity is expected to continue at levels similar
to the current level. The Company will continue to manage the
financing, liquidity and financial risk management requirements of
the Group as they change over time.
Board of Directors
The Directors of the Company who were in office during the year
and up to the date of signing the financial statements are:
-- J M Jones
-- O R Tant
-- T R W Tildesley
-- M A Wall
Going concern
The Directors are satisfied that the Company has adequate
resources to meet its operational needs for the foreseeable future
and accordingly they continue to adopt the going concern basis in
preparing the financial statements.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic
Report, the Report of the Directors and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 "Reduced Disclosure
Framework", and applicable law). Under company law, the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that
period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgements and accounting estimates that are reasonable
and prudent;
-- state whether applicable United Kingdom Accounting Standards,
comprising FRS 101, have been followed, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Independent Auditors and disclosure of information to
Auditors
Each of the Directors in office as of the date of approval of
this report confirms that:
-- so far as they are aware, there is no relevant audit
information of which the Company's Auditors are unaware; and
-- they have each taken all the steps that they ought to have
taken as a Director in order to make themselves aware of any
relevant audit information and to establish that the Company's
Auditors are aware of that information.
A decision to tender the audit was made by the Board of Imperial
Brands PLC and due to the length of its tenure, our auditor
PricewaterhouseCoopers LLP was not invited to participate. In
February 2019 the Board of Imperial Brands PLC made a decision to
appoint Ernst & Young as auditor. PricewaterhouseCoopers LLP
will resign following the completion of the audit of these
financial statements allowing the new auditor to be appointed.
On behalf of the Board
T R W Tildesley
Director
12 December 2019
FINANCIAL STATEMENTS
For the year ended 30 September 2019
Income Statement
(In GBP million) Notes 2019 2018
------------------------------ ----- ------- -------
Administrative expenses (3) (1)
Other operating income 1 1
============================== ===== ======= =======
Operating loss 4 (2) -
Investment income 5 1,903 1,504
Finance costs 6 (1,766) (1,327)
============================== ===== ======= =======
Profit before taxation 135 177
Tax on profit 8 (26) (18)
============================== ===== ======= =======
Profit for the financial year 109 159
============================== ===== ======= =======
The Company has no other comprehensive income other than that
included above and, therefore, a separate statement of
comprehensive income has not been presented.
Balance Sheet
As at 30 September 2019
(In GBP million) Notes 2019 2018
--------------------------------- ----- -------- --------
Non-current assets
Trade and other receivables 10 110 30
Derivative financial instruments 15 677 462
787 492
================================= ===== ======== ========
Current assets
Trade and other receivables 10 33,238 33,337
Current tax assets 8 - -
Deferred tax assets 11 - -
Cash and cash equivalents 1,505 28
Derivative financial instruments 15 137 37
================================= ===== ======== ========
34,880 33,402
================================= ===== ======== ========
Total assets 35,667 33,894
================================= ===== ======== ========
Current liabilities
Borrowings 13 (1,892) (2,369)
Derivative financial instruments 15 (28) (105)
Trade and other payables 12 (18,234) (18,450)
(20,154) (20,924)
================================= ===== ======== ========
Non-current liabilities
Borrowings 13 (11,697) (9,598)
Derivative financial instruments 15 (1,408) (1,073)
(13,105) (10,671)
================================= ===== ======== ========
Total liabilities (33,259) (31,595)
================================= ===== ======== ========
Net assets 2,408 2,299
================================= ===== ======== ========
Equity
Share capital 16 2,100 2,100
Retained earnings 308 199
Total equity 2,408 2,299
================================= ===== ======== ========
The financial statements were approved by the Board of Directors
on 12 December 2019 and signed on its behalf by:
T R W Tildesley ________________
Director
J M Jones _________________
Director
Company Number: 03214426
Statement of Changes in Equity
For the year ended 30 September 2019
Share Retained Total
(In GBP million) capital earnings equity
-------------------------------------------------- -------- --------- -------
At 1 October 2018 2,100 199 2,299
Total comprehensive income
================================================== ======== ========= =======
Profit for the financial year - 109 109
------------------------------------------------------ -------- --------- -------
Total comprehensive income for the year - 109 109
====================================================== ======== ========= =======
At 31 September 2019 2,100 308 2,408
====================================================== ======== ========= =======
Share Retained Total
(In GBP million) capital earnings equity
-------------------------------------------------- -------- --------- -------
At 1 October 2017 2,100 390 2,490
Total comprehensive income
================================================== ======== ========= =======
Profit for the financial year - 159 159
------------------------------------------------------ -------- --------- -------
Total comprehensive income for the year - 159 159
Transactions with the shareholders of the Company
================================================== ======== ========= =======
Dividends paid - (350) (350)
------------------------------------------------------ -------- --------- -------
At 30 September 2018 2,100 199 2,299
====================================================== ======== ========= =======
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2019
1. Authorisation of financial statements and statement of
compliance with FRS101
The principal activity of the Company is to provide treasury
services to the Group. The Company is a public limited company
incorporated and domiciled in England and Wales. The registered
address is 121 Winterstoke Road, Bristol, BS3 2LL. The Company is
classified as a financial institution as defined by FRS 101.
The financial statements of the Company for the year ended 30
September 2019 were authorised for issue by the Board of Directors
on 12 December 2019, and the balance sheet was signed on the
Board's behalf by and T R W Tildesley and J M Jones.
These financial statements have been prepared on the going
concern basis and in accordance with the Companies Act 2006, FRS
101 and in accordance with applicable accounting standards.
The Company's financial statements are presented in pounds
sterling, its functional currency, and all values are rounded to
the nearest million pounds (GBP million) except when otherwise
indicated.
The principal accounting policies adopted by the Company are set
out in note 2.
2. Accounting policies
Basis of preparation of financial statements
The preparation of financial statements in conformity with FRS
101 requires the use of certain critical accounting estimates and
judgements in applying the Company's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial
statements are disclosed in note 3.
The Company has taken advantage of the following disclosure
exemptions under FRS 101:
a) the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share-based payments
b) the requirements of paragraphs 62, B64(d), B64(e), B64(g),
B64(h), B64(j) to B64(m), B64(n)(ii), B64 (o)(ii), B64(p),
B64(q)(ii), B66 and B67 of IFRS 3 Business Combinations
c) the requirement in paragraph 38 of IAS 1 Presentation of
Financial Statements to present comparative information in respect
of paragraph 79(a)(iv) of IAS 1 Presentation of Financial
d) the requirements of paragraphs 10(d) and 10(f) of IAS 1 Presentation of Financial Statements.
e) the requirements of IAS 7 Statement of Cash Flows
f) the requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors
g) the requirements of paragraph 17 of IAS 24 Related Party Disclosures
h) the requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between two or
more members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member; and
i) the requirements of paragraphs 134(d) to 134(f) and 135(c) to
135(e) of IAS 36 Impairment of Assets.
The financial statements have been prepared on the historical
cost basis, except as described in the accounting policies on
financial instruments below. Historical cost is generally based on
the fair value of the consideration given in exchange for the
assets.
New accounting standards and interpretations
The Group has adopted IFRS 9 'Financial Instruments' and IFRS 15
'Revenue from Contracts with Customers' with effect from 1 October
2018. The detail of adoption is provided below. There have been no
other new standards or amendments which became effective for the
current reporting period that have had a material effect on the
Group.
On 1 October 2018 the Group adopted IFRS 9, with no revision of
prior periods as permitted by the standard. IFRS 9 has replaced IAS
39 'Financial Instruments: Recognition and Measurement' and
includes revised guidance on:
Classification and measurement: Financial assets are now
classified as either being accounted for as amortised cost, fair
value through other comprehensive income, or fair value through
profit or loss. There are no changes to the classification or
accounting for financial liabilities. Other than trade receivables
and derivative financial instruments, the Company does not
currently hold any significant financial assets.
Impairment of financial assets: Impairment provisions are
calculated using a forward looking expected credit loss approach
for financial assets, rather than the incurred loss approach
applicable under IAS 39. The expected credit loss model requires
the recognition of a provision which reflects future impairment
risk. Provision levels are calculated on the residual credit risk
after consideration of any credit protection which is used by the
Company.
Receivables which have already become overdue will continue to
be provided in line with the current provisioning policy. There was
no additional expected credit loss provisions recognised on the
adoption of IFRS 9.
2. Accounting policies (continued)
New accounting standards and interpretations (continued)
On 1 October 2018 the Company adopted IFRS 15. IFRS 15 has
introduced an amended framework for revenue recognition and has
replaced the prior guidance in IAS 18 'Revenue'. The standard
provides revised guidance on revenue accounting, matching income
recognition to the delivery of performance obligations in
contractual arrangements for the provision of goods or services. It
also provides different guidance on the measurement of revenue
contracts involving discounts, rebates and payments to customers.
There was no impact on the net assets or results of the Company on
adoption of the standard.
IFRIC 23 'Uncertainty over income tax treatments' will be
effective, subject to EU endorsement, for the period beginning 1
October 2019. The interpretation clarifies how to apply the
recognition and measurement requirements in IAS 12 'Income Taxes'
when there is uncertainty over income tax treatments. The adoption
of this interpretation is not expected to have a material effect on
the Company's net assets or results.
IFRS 16 'Leases' will be effective for the period beginning 1
October 2019. As the Company does not currently have any leases
there will be no impact on adoption of the standard.
Interest
Interest payable and receivable is recognised in the income
statement using the effective interest method.
The principal activity of the Company is to provide treasury
services to the Group. However, the Company has chosen to present
interest receivable and payable below operating profit, including
foreign exchange gains and losses on financing activities, in order
to have a consistent treatment with the format of the consolidated
financial statements of the Group. This is considered appropriate
since the Company undertakes transactions on behalf of the
Group.
Foreign currencies
Monetary assets and liabilities denominated in foreign
currencies are translated into pound sterling at the rates of
exchange ruling at the balance sheet date.
Transactions in currencies other than pound sterling are
initially recorded at the exchange rate ruling at the date of the
transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions are taken to the income
statement.
Taxes
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in shareholders' funds. In this case, the tax is
also recognised in other comprehensive income or directly in the
shareholders' funds, respectively.
Current tax is the expected tax payable on the taxable income
for the period, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustments to tax payable in
respect of previous periods.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date,
where transactions or events that result in an obligation to pay
more tax in the future or a right to pay less tax in the future
have occurred at the balance sheet date.
A net deferred tax asset is recognised only to the extent that
it is probable that future taxable profit will be available against
which the asset can be utilised.
Deferred tax is determined using tax rates that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised
or the deferred tax liability is settled. Deferred tax is measured
on a non-discounted basis.
Dividends
Final dividends are recognised as a liability in the period in
which the dividends are approved by shareholders, whereas interim
dividends are recognised in the period in which the dividends are
paid.
2. Accounting policies (continued)
Financial instruments
Following the adoption of IFRS 9, the Company's accounting
policies for financial instruments and hedging remain the same as
disclosed in the 30 September 2018 financial statements, except for
changes to the classification and measurement of certain
non-derivative financial assets and the calculation of expected
credit losses, as detailed below.
At 30 September 2018 all non-derivative financial assets were
classified as loans and receivables. Receivables were all initially
recognised at fair value and subsequently stated at amortised cost
using the effective interest method. From 1 October 2018,
receivables held under a hold to collect business model continue to
be stated at amortised cost. Receivables held under a hold to sell
business model, which are expected to be sold via a non-recourse
factoring arrangement are now separately classified as fair value
through profit or loss, within trade and other receivables.
Up to 30 September 2018, provisions for impairment of
receivables would have been established if there was objective
evidence that the Company was not be able to collect all amounts
due according to the original terms of those receivables.
Provisions were only recognised when an impairment had
crystallised. From 1 October 2018 the calculation of impairment
provisions is subject to an expected credit loss model, involving a
prediction of future credit losses based on past loss patterns. The
revised approach involves the recognition of provisions relating to
potential future impairments, in addition to impairments that have
already occurred. The expected credit loss approach involves
modelling of historic loss rates and consideration of the level of
future credit risk. Expected loss rates are then applied to the
gross receivables balance to calculate the impairment
provision.
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions of the
relevant instrument. Financial assets are de-recognised when the
rights to receive benefits have expired or been transferred, and
the Company has transferred substantially all risks and rewards of
ownership. Financial liabilities are de-recognised when the
obligation is extinguished.
Non-derivative financial liabilities are initially recognised at
fair value and are subsequently stated at amortised cost using the
effective interest method. For borrowings, the carrying value
includes accrued interest payable, as well as unamortised
transaction costs..
Cash and cash equivalents include cash in hand and deposits held
on call, together with other short-term highly liquid
investments.
The Company transacts both intragroup and external derivative
financial instruments to manage the Company's and the Group's
underlying exposure to foreign exchange and interest rate risks.
The Company does not transact derivative financial instruments for
trading purposes. Derivative financial instruments are initially
recorded at fair value plus any directly attributable transaction
costs. Derivative financial assets and liabilities are included in
the balance sheet at fair value, and include accrued interest
receivable and payable where relevant. The Company has decided (as
permitted under FRS 101) not to hedge account for its derivative
financial instruments and so changes in fair values are recognised
in the income statement in the period in which they arise.
Collateral transferred under the terms and conditions of credit
support annex documents under International Swaps and Derivatives
Association ("ISDA") agreements in respect of certain derivatives
are net settled and are, therefore, netted off the carrying value
of those derivatives in the balance sheet.
3. Critical accounting estimates and assumptions
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are addressed below. There were no critical
judgements involved in the preparation of these financial
statements.
Derivatives
The fair value of derivatives is determined based on quoted
market prices, where available, or on estimates using present
values. Those techniques are significantly affected by the
assumptions used, including discount rates, estimates of future
cash flows, exchange rates and interest rates. The valuation of
derivatives is subject to changes in the underlying assumptions
used by financial markets in valuing financial instruments. The
impact of changes in these assumptions can be significant resulting
in volatility in valuations. Further information as to the
sensitivity of valuations is disclosed in note 14.
The categorisation within the fair value hierarchy (i.e. level
1, 2 or 3) of the inputs to the fair value measurements of
derivatives carried at fair value is set out in note 14.
4. Operating loss
Auditors' fees of GBP43,285 (2018: GBP42,024) were met by
Imperial Tobacco Limited ("ITL"), a wholly owned indirect
subsidiary of Imperial Brands PLC. There were no non-audit fees
paid during the year (2018: GBPnil million). The Company has been
recharged office rental costs from another Group company of
GBP15,480 (2018: GBPnil).
5. Investment income
(In GBP million) 2019 2018
----------------------------------------------------------------- ------ ------
Interest receivable from Group undertakings 905 874
Interest on bank deposits 4 1
Fair value gains on external derivative financial instruments 671 492
Fair value gains on intragroup derivative financial instruments 323 137
1,903 1,504
================================================================= ====== ======
6. Finance costs
(In GBP million) 2019 2018
---------------------------------------------------------------- ------ ------
Interest payable to Group undertakings 200 127
Interest on bank loans and other loans 442 481
Exchange losses on monetary assets and liabilities 279 152
Fair value losses on external derivative financial instruments 845 567
1,766 1,327
================================================================ ====== ======
7. Directors' emoluments and pensions
Employment costs, which do not include pension costs, are paid
by ITL and subsequently recharged to the Company.
The total salary costs recharged in the year was GBP645,314
(2018: GBPnil) and social security costs of GBP78,626 (2018:
GBPnil). The average monthly number of employees during the year
was 10 (2018: nil).
The emoluments of the Directors are paid by ITL. The Directors'
services to the Company and to a number of fellow subsidiaries
below the ultimate parent company are of a non-executive nature and
their emoluments and retirement benefits are deemed to be wholly
attributable to their services to ITL and the Group. Accordingly,
no emoluments or retirement benefits are disclosed in these
financial statements.
8. Tax on profit
Analysis of charge in the year:
(In GBP million) 2019 2018
------------------------------------------------ ----- -----
UK Corporation tax on profits for the year 26 -
Adjustments in respect of prior years - (1)
Withholding tax 1 1
Double taxation relief (1) -
================================================ ===== =====
Current tax 26 -
================================================ ===== =====
Origination and reversal of timing differences - 18
Deferred tax - 18
================================================= ===== =====
Total tax charge 26 18
================================================= ===== =====
Factors affecting the tax charge for the year
Tax for the year is equal to (2018: lower) the standard rate of
corporation tax in the UK for the year of 19 per cent (2018: 19 per
cent). The differences are explained as follows:
(In GBP million) 2019 2018
-------------------------------------------------------------------- ----- -----
Profit before taxation 135 177
===================================================================== ===== =====
Profit before taxation multiplied by standard rate of corporation
tax in the UK of 19.0% (2018: 19%) 26 33
Effects of:
Adjustments to tax charge in respect of prior years (current tax) - (1)
Adjustments to tax charge in respect of prior years (deferred tax) - 18
Foreign tax paid - 1
UK-UK transfer pricing adjustment - (36)
Group relief surrendered - 3
Total tax charge 26 18
===================================================================== ===== =====
An adjustment for UK-UK transfer pricing has been included in
the prior year in accordance with the Taxation (International and
Other Provisions) Act 2010, Part 4. The corporation tax charge for
the year has been adjusted by GBPnil (2018: GBP3 million) due to
the surrender of group relief for nil consideration for other
Imperial Brands PLC subsidiaries.
Movement on current tax account
(In GBP million) 2019 2018
-------------------------------------------------------- ----- -----
At 1 October - 50
Credit to the income statement - prior year adjustment - 1
Charged to the income statement - current year 26 (1)
Cash paid (1) (50)
At 30 September 25 -
========================================================= ===== =====
Factors that may affect future tax charges
There is no guarantee that the surrender of group tax losses by
other Group subsidiaries will occur in the future.
A further reduction to 17.0 per cent on 1 April 2020 was enacted
at the balance sheet date.
9. Dividends
Dividend per share in respect of financial year
(In pence) 2019 2018
-------------------------- ----------- -----------
Final - -
-------------------------- ----------- -----------
Amounts recognised as distributions to the shareholders of the Group
(In GBP million) 2019 2018
--------------------------------------------------------------------------- ------ -----
Final dividend paid in the year in respect of the previous financial year - 350
============================================================================ ===== =====
- 350
---------------------------------------------------------------------------------- -----
10. Trade and other receivables
2019 2019 2018 2018
(In GBP million) Current Non-Current Current Non-Current
------------------------------------ -------- ------------ -------- ------------
Amounts owed by Group undertakings 33,234 110 33,335 30
Other receivables and prepayments 4 - 2 -
==================================== ======== ============ ======== ============
33,238 110 33,337 30
==================================== ======== ============ ======== ============
Amounts owed by Group undertakings are unsecured, both interest
bearing and non-interest bearing and can be either repayable on
demand or have fixed repayment dates. At 30 September 2019
GBP29,737 million (2018: GBP29,749 million) of the amounts owed by
Group undertakings was repayable on demand and GBP3,607 million
(2018: GBP3,616 million) were term loans. Within current
receivables there is a euro denominated loan due from Imperial
Tobacco Overseas Holdings Limited Dutch Branch with a carrying
value of GBP902 million (2018: GBP872 million). As this loan has no
fixed repayment date and as it must be repaid on or before 1
October 2022 it has been classified as a current receivable. There
were GBP29,467 million (2018: GBP29,518 million) of interest
bearing loans and GBP4,017 million (2018: GBP3,847 million) of
non-interest bearing loans. Where loans were subject to interest
the rates charged varied from 0.125% to 12% (2018: 0.125% to
12%).
11. Deferred tax assets
(In GBP million) 2019 2018
-------------------- ----- -----
Deferred tax assets - -
-------------------- ----- -----
The amount regarding deferred tax consists of the following:
(In GBP million) 2019 2018
----------------------------------------- ----- -----
Deferred tax assets due within 12 months - -
========================================= ===== =====
Deferred tax assets
Total
(In GBP million) Carried forward losses
At 1 October 2017 18 18
Charged to the income statement (18) (18)
================================== ======================= ======
At 30 September 2018 - -
================================== ======================= ======
Charged to the income statement - -
================================== ======================= ======
As at 30 September 2019 - -
================================== ======================= ======
12. Trade and other payables
(In GBP million) 2019 2018
------------------------------------ ------- -------
Amounts owed to Group undertakings 18,209 18,450
Corporation tax payable 25 -
------------------------------------ ------- -------
18,234 18,450
------------------------------------ ------- -------
Amounts owed to Group undertakings are unsecured, both interest
bearing and non-interest bearing and repayable on demand. At 30
September 2019 all loans were repayable upon demand (2018: all
repayable on demand). There were GBP14,378 million (2018: GBP15,329
million) of interest bearing loans and GBP3,831 million (2018:
GBP3,121 million) of non-interest bearing loans. Where loans were
subject to interest the rates charged varied from 0.24% to 4.36%
(2018: 0.25% to 4.39%).
Amounts owed to Group undertakings are not included in the
borrowings analysis in note 13 of the financial statements which
only includes borrowings with external counterparties.
13. Borrowings
The Company's borrowings are held at amortised cost as
follows:
(In GBP million) 2019 2018
------------------------------------------- ------- -------
Current borrowings
Bank loans and overdrafts 1 119
Capital market issuance:
European commercial paper 177 1,530
GBP200m 6.25% notes due December 2019 - 210
GBP500m 7.75% notes due June 2019 - 510
EUR750m 5.0% notes due December 2019 692 -
EUR1,250m 2.95% notes due July 2020 1,022 -
Total current borrowings 1,892 2,369
============================================ ======= =======
Non-current borrowings
Capital market issuance:
EUR750m 5.0% notes due December 2019 - 693
$1,250m 2.95% notes due July 2020 - 963
EUR1,000m 2.25% notes due February 2021 897 898
EUR500m 0.5% notes due July 2021 443 443
GBP1,000m 9.0% notes due February 2022 1,055 1,055
$1,250m 3.75% notes due July 2022 1,023 963
$1,000m 3.5% notes due February 2023 815 768
EUR750m 1.25% notes due August 2023 664 -
GBP600m 8.125% notes due March 2024 626 626
$1,000m 3.125% notes due July 2024 816 -
EUR500m 1.375% notes due January 2025 446 447
$1,500m 4.25% notes due July 2025 1,222 1,151
EUR650m 3.375% notes due February 2026 587 588
$750m 3.5% notes due July 2026 612 -
GBP500m 5.5% notes due September 2026 500 499
EUR750m 2.125% notes due February 2027 671 -
$1,000m 3.875% notes due July 2029 816 -
GBP500m 4.875% notes due June 2032 504 504
-------------------------------------------- ------- -------
Total non-current borrowings 11,697 9,598
============================================ ======= =======
Total borrowings 13,589 11,967
============================================ ======= =======
Analysed as:
Capital market issuance 13,588 11,848
Bank loans and overdrafts 1 119
============================================ ======= =======
Current and non-current borrowings include interest payable of
GBP33 million (2018: GBP21 million) and GBP164 million (2018:
GBP172 million) respectively as at 30 September.
Interest payable on capital market issuances are at fixed rates
of interest and interest payable on bank loans and overdrafts are
at floating rates of interest.
On 4 December 2018, GBP200 million 6.25 per cent notes were
repaid and on 24 June 2019, GBP500 million 7.75 per cent notes were
repaid. On 12 February 2019 EUR750 million 1.125 per cent notes due
August 2023 and EUR750 million 2.15% notes due February 2027 were
issued and on 26 July 2019 $1,000 million 3.125 per cent notes due
July 2024, $750 million 3.5 per cent notes due July 2026 and $1,000
million 3.875 per cent notes due July 2029 were issued.
All borrowings are unsecured and the Company has not defaulted
on any during the year (2018: no defaults).
Non-current financial liabilities
The maturity profile of non-current liabilities outstanding as
at 30 September 2019 (including the impact of derivative financial
instruments detailed in note 15) is as follows:
2019 2018
------------------ ------------------ -------- ------------------ ----------------- --------
Net derivative Net derivative
financial financial
Borrowings and (assets)/ Borrowings and (assets) /
(In GBP million) overdrafts liabilities Total overdrafts liabilities Total
------------------- ------------------ ------------------ -------- ------------------ ----------------- --------
Amounts expiring:
Between one and
two years 1,340 (16) 1,324 1,656 4 1,660
Between two and
five years 4,999 14 5,013 4,129 123 4,252
In five years or
more 5,358 733 6,091 3,813 485 4,298
=================== ================== ================== ======== ================== ================= ========
11,697 731 12,428 9,598 612 10,210
=================== ================== ================== ======== ================== ================= ========
Fair value of borrowings
The fair value of borrowings as at 30 September 2019 is
estimated to be GBP14,275 million (2018: GBP12,456 million).
GBP14,274 million (2018: GBP12,337 million) relates to capital
market issuance and has been determined by reference to market
prices as at the balance sheet date. A comparison of the carrying
amount and fair value of capital market issuance by currency is
provided below. The fair value of all other borrowings is
considered to equal their carrying amount.
2019 2018
--------------------- ----------- --------------------- -----------
(In GBP million) Balance sheet amount Fair value Balance sheet amount Fair value
------------------ --------------------- ----------- --------------------- -----------
GBP 2,685 3,168 3,404 3,861
EUR 4,577 4,681 4,598 4,681
USD 6,326 6,425 3,846 3,795
================== ===================== =========== ===================== ===========
Total bonds 13,588 14,274 11,848 12,337
================== ===================== =========== ===================== ===========
Undrawn borrowing facilities
At 30 September the Company had the following undrawn committed
facilities:
(In GBP million) 2019 2018
---------------------------- ------ ------
Amounts expiring:
In less than one year 266 -
Between one and two years 3,011 1,040
Between two and five years - 3,016
3,277 4,056
============================ ====== ======
During the year bilateral facilities for a total of EUR573
million were cancelled.
14. Financial risk management
Overview
The Company, as the main financing and financial risk management
company for the Group, undertakes transactions to manage the
Group's financial risks, together with its financing and liquidity
requirements. As a result, the Company is exposed to risks
including, but not limited to, market, credit and liquidity risk.
This note explains the Company's exposure to these risks, how they
are measured and assessed, and summarises the policies and
processes used to manage them, including those related to the
management of capital.
The Group's treasury activities are overseen by the Treasury
Committee, which meets when needed and comprises the Chief
Financial Officer, the Company Secretary and the Director of
Treasury of Imperial Brands PLC. The Treasury Committee operates in
accordance with the terms of reference set out by the Board of
Directors of Imperial Brands PLC and a framework ("the Treasury
Committee Framework") which sets out the expectations and
boundaries to assist in the effective oversight of treasury
activities. The Director of Treasury reports on a regular basis to
the Treasury Committee.
The Board of Directors of Imperial Brands PLC reviews and
approves all major treasury decisions. The treasury function does
not operate as a profit centre, nor does it enter into speculative
transactions.
The Company's management of financial risks cover the
following:
(a) Market risk
Price risk
The Company is not exposed to equity securities price risk.
Foreign exchange risk
The Company is exposed to movements in foreign exchange rates
due to the translation of balance sheet items held in
non-functional currencies. The Company's financial results are
principally exposed to fluctuations in euro and US dollar exchange
rates.
Management of the Company's foreign exchange translation risk is
addressed below.
Translation risk
The Company has translation risk on cash, borrowings,
derivatives and intragroup loans held in non-functional currencies.
The Company enters into intragroup derivative contracts to manage
some of the Company's exposure to exchange rate movements.
The Company issues debt in the most appropriate market or
markets at the time of raising new finance and has a policy of
using derivative financial instruments, cross currency swaps or
foreign exchange rate contracts to change the currency of debt as
required.
Foreign exchange sensitivity analysis
The Company's sensitivity to foreign exchange rate movements,
which impacts the translation of monetary items held by the Company
in currencies other than its functional currency, is illustrated on
an indicative basis below. The sensitivity analysis has been
prepared on the basis that the proportion of cash, borrowings,
derivatives and intragroup loans held in non-functional currencies
remains constant.
The Company manages its sensitivity to foreign exchange rates
through the use of intragroup derivative contracts to minimise
foreign exchange gains or losses on the translation of financial
instruments. The sensitivity analysis does not reflect any change
to non-finance costs that may result from changing exchange rates
and ignores any taxation implications and offsetting effects of
movements in the fair value of derivative financial
instruments.
2019 2018
------------------- -------------------
(In GBP million) Increase in income Increase in income
------------------------------------------------------------------------- ------------------- -------------------
Income Statement impact on non-functional currency foreign exchange
exposures:
10% appreciation of euro (2018: 10%) 13 (42)
10% appreciation of US dollar (2018: 10%) (48) (29)
-------------------------------------------------------------------------- ------------------- -------------------
An equivalent depreciation in the above currencies would cause a
decrease in income of GBP16 million and increase of GBP59 million
for euro and US dollar exchange rates respectively (2018: increases
of GBP51 million and GBP35 million).
There is no direct net impact on equity (2018: GBPnil).
Interest rate risk
The Company's interest rate risk arises from its borrowings net
of cash and cash equivalents, with the primary exposures arising
from fluctuations in euro and US dollar interest rates. Borrowings
at variable rates expose the Company to cash flow interest rate
risk. Borrowings at fixed rates expose the Company to fair value
interest rate risk.
The Company manages its exposure to interest rate risk on its
borrowings by entering into derivative financial instruments and
interest rate swaps, to achieve an appropriate mix of fixed and
floating interest rate debt in accordance with the Treasury
Committee Framework and Treasury Committee decisions.
As at 30 September 2019, after adjusting for the effect of
derivative financial instruments detailed in note 15, approximately
57 per cent (2018: 66 per cent) of the Company's borrowings were at
fixed rates of interest.
Interest rate sensitivity analysis
The Company's sensitivity to interest rates on its euro and US
dollar monetary items which are primarily external borrowings, cash
and cash equivalents, is illustrated on an indicative basis below.
The impact in the Company's Income Statement reflects the effect on
net finance costs in respect of the Company's net debt and the
fixed to floating rate debt ratio prevailing at 30 September 2019,
ignoring any taxation implications and offsetting effects of
movements in the fair value of derivative financial
instruments.
The sensitivity analysis has been prepared on the basis that net
debt and the derivatives portfolio remain constant and that there
is no direct net impact on equity (2018: GBPnil).
The movement in interest rates is considered reasonable for the
purposes of this analysis and the estimated effect assumes a lower
limit of zero for interest rates where relevant.
(In GBP million) 2019 2018
----------------- -----------------
Change in income Change in income
-------------------------------------------------------- ----------------- -----------------
Income Statement impact of interest rate movements:
+/- 1% increase in euro interest rates (2018: 1%) 35 26
+/- 1% increase in US dollar interest rates (2018: 1%) 14 15
--------------------------------------------------------- ----------------- -----------------
(b) Credit risk
The implementation of IFRS 9 requires an expected credit loss
model to be applied to financial assets. The expected credit loss
model requires the Company to account for expected losses as a
result of credit risk on initial recognition of financial assets
and to recognise changes in those expected credit losses at each
reporting date. Allowances are measured at an amount equal to the
lifetime expected credit losses where the credit risk on the
receivables increases significantly after initial recognition. The
Company is primarily exposed to credit risk arising from cash
deposits, derivatives and other amounts due from external financial
counterparties arising on other financial instruments. The maximum
aggregate credit risk to these sources was considered to be
GBP2,319 million at 30 September 2019 (2018: GBP527 million). The
increase on prior year is due to the large cash balances resulting
from the US dollar bonds issued in July 2019. There is also a
potential credit risk associated with intercompany loans receivable
from other companies within the Group. Intragroup counterparty
credit risk may be mitigated where there is control of a
counterparty within the Group, allowing the Group to facilltate
repayment through realising counterparty assets or through
refinancing.
Trade and other receivables
Policies are in place to manage the risk associated with the
extension of credit to third parties, including companies within
the Group, to ensure that commercial intent is balanced effectively
with credit risk management. Credit is extended with consideration
to financial risk and creditworthiness. Analysis of trade and other
receivables is provided in note 10.
Financial instruments
In order to manage its credit risk to any one counterparty, the
Company places cash deposits and enters into derivative financial
instruments with a diversified group of financial institutions
carrying suitable credit ratings in line with the Treasury
Committee Framework. Utilisation of counterparty credit limits is
regularly monitored by treasury and ISDA agreements are in place to
permit the net settlement of assets and liabilities in certain
circumstances. In a few historical cases, collateral has been
deposited against derivative financial liabilities and supported by
an ISDA credit support annex.
The table below summarises the Company's largest exposures to
financial counterparties as at 30 September 2019. The increase in
the credit exposure is due to falling long term interest rates
increasing the value of interest rate swaps converting fixed rate
debt to floating rates and a weakening of sterling against the US
dollar affecting the buy US dollar leg of foreign exchange forward
contracts. At the balance sheet date management does not expect
these counterparties to default on their current obligations. The
impact of the Company's own credit risk on the fair value of
derivatives and other obligations held at fair value is not
considered to be material.
2019 2018
------------------- ----------------------------- ------------------ -----------------------------
S&P credit rating Maximum exposure to credit S&P credit rating Maximum exposure to credit
risk risk
GBP million GBP million
--------------- ------------------- ----------------------------- ------------------ -----------------------------
Highest A+ 20 A+ 6
2(nd) highest AA- 19 BBB+ 5
3(rd) highest A 12 A 3
4(th) highest A 8 A 3
5(th) highest A 8 - -
=============== =================== ============================= ================== =============================
(c) Liquidity risk
The Company is exposed to liquidity risk, which represents the
risk of having insufficient funds to meet its financing needs. To
manage this risk the Company has a policy of actively maintaining a
mixture of short, medium and long-term committed facilities that
are structured to ensure that the Company has sufficient available
funds to meet the forecast requirements of the Group over the short
to medium term. To prevent over-reliance on individual sources of
liquidity, funding is provided across a range of instruments
including debt capital market issuance, bank bilateral facilities,
bank revolving credit facilities and European commercial paper.
There are no financial covenants in the Company's material short
and long-term borrowings. Certain of these borrowings contain cross
default provisions and negative pledges. The core committed bank
facilities are subject to two financial covenants, these being
minimum interest cover ratio of four times and maximum gearing of
four times ( per the definition within the agreement). They are
also subject to pari passu ranking and negative pledge covenants.
Any non-compliance with covenants underlying the Company's
financing arrangements could, if not waived, constitute an event of
default with respect to any such arrangements, and any
noncompliance with covenants may, in particular circumstances, lead
to an acceleration of maturity on certain borrowings and the
inability to access committed facilities.
We remain fully compliant with all our banking covenants (2018:
fully compliant) and remain committed to retaining our investment
grade ratings.
The Group primarily borrows centrally in order to meet forecast
funding requirements, and the treasury function is in regular
dialogue with subsidiaries in the Group to ensure their liquidity
needs are met. Subsidiaries in the Group are funded by a
combination of share capital and retained earnings, intercompany
loans, and in very limited cases through external local borrowings.
Cash pooling processes are used to centralise surplus cash held by
subsidiaries in the Group where possible in order to minimise
external borrowing requirements and interest costs. Treasury
invests surplus cash in bank deposits and uses foreign exchange
contracts to manage short term liquidity requirements in line with
short term cash flow forecasts. As at 30 September 2019, the
Company held liquid assets of GBP1,505 million (2018: GBP28
million).
The table below summarises the Company's non derivative
financial liabilities by maturity based on their remaining
contractual cash flows as at 30 September 2019. The amounts
disclosed are undiscounted cash flows calculated using spot rates
of exchange prevailing at the relevant balance sheet date.
Contractual cash flows in respect of the Company's derivative
financial instruments are detailed in note 15.
At 30 September
2019
Contractual
Balance sheet cash flows Between 1 and 2 Between 2 and 5
(In GBP million) amount Total < 1 year years years > 5 years
------------------ ----------------- ---------------- ----------- ---------------- ---------------- ------------
Non-derivative
financial
liabilities
Bank loans 1 1 1 - - -
Capital market
issuance 13,588 15,787 2,345 1,773 5,806 5,863
Amounts owed to
group
undertakings 18,209 18,209 18,209 - - -
================== ================= ================ =========== ================ ================ ============
Total
non-derivative
financial
liabilities 31,798 33,997 20,555 1,773 5,806 5,863
================== ================= ================ =========== ================ ================ ============
At 30 September
2018
Contractual
Balance sheet cash flows Between 1 and 2 Between 2 and 5
(In GBP million) amount Total < 1 year years years > 5 years
------------------ ----------------- ---------------- ----------- ---------------- ---------------- ------------
Non-derivative
financial
liabilities
Bank loans 119 119 119 - - -
Capital market
issuance 11,848 13,745 2,670 2,002 4,843 4,230
Amounts owed to
group
undertakings 18,450 18,450 18,450 - - -
================== ================= ================ =========== ================ ================ ============
Total
non-derivative
financial
liabilities 30,417 32,314 21,239 2,002 4,843 4,230
================== ================= ================ =========== ================ ================ ============
Amounts owed to the Company by Group undertakings of GBP33,344
million (2018: GBP33,365 million) are excluded from the above
tables, as disclosure of contractual cash flows is only required
for liabilities.
Capital management
The management of the Company's capital structure forms part of
the Group's capital risk management, details of which can be found
in note 20 of the Group's annual report which does not form part of
this report, but is available at www.imperialbrandsplc.com.
Fair value estimation and hierarchy
All financial assets and liabilities are carried on the balance
sheet at amortised cost, other than derivative financial
instruments which are carried at fair value. Derivative financial
instruments are valued using techniques based significantly on
observable market data such as yield curves and foreign exchange
rates as at the balance sheet date (Level 2 classification
hierarchy per IFRS 13) as detailed in note 15. There were no
changes to the valuation methods or transfers between hierarchies
during the year. With the exception of capital market issuance, the
fair value of all financial assets and financial liabilities is
considered approximate to their carrying amount as outlined in note
13.
Netting arrangements of financial instruments
The following tables set out the Company's financial assets and
financial liabilities that are subject to netting and set-off
arrangements. Financial assets and liabilities that are subject to
set-off arrangements and disclosed on a net basis in the Company's
balance sheet primarily relate to collateral in respect of
derivative financial instruments under ISDA credit support annexes.
Amounts which do not meet the criteria for offsetting on the
balance sheet but could be settled net in certain circumstances
principally relate to derivative transactions executed under ISDA
agreements where each party has the option to settle amounts on a
net basis in the event of default of the other party.
2019
==============================================================================================
Gross financial Gross financial Net financial Related amounts not Net
assets / assets / assets /liabilities set off in the
(In GBP million) liabilities liabilities set off per balance sheet balance sheet
---------------------- -------------------- -------------------- -------------------- -------------------- ------
Assets
Derivative financial
instruments 852 (38) 814 (740) 74
852 (38) 814 (740) 74
====================== ==================== ==================== ==================== ==================== ======
Liabilities
Derivative financial
instruments (1,474) 38 (1,436) 740 (696)
====================== ==================== ==================== ==================== ==================== ======
(1,474) 38 (1,436) 740 (696)
====================== ==================== ==================== ==================== ==================== ======
2018
==============================================================================================
Gross financial Gross financial Net financial Related amounts not Net
assets / assets / assets /liabilities set off in the
(In GBP million) liabilities liabilities set off per balance sheet balance sheet
---------------------- -------------------- -------------------- -------------------- -------------------- ------
Assets
Derivative financial
instruments 581 (82) 499 (481) 18
581 (82) 499 (481) 18
====================== ==================== ==================== ==================== ==================== ======
Liabilities
Derivative financial
instruments (1,260) 82 (1,178) 481 (697)
====================== ==================== ==================== ==================== ==================== ======
(1,260) 82 (1,178) 481 (697)
====================== ==================== ==================== ==================== ==================== ======
15. Derivative financial instruments
The Company's derivative financial instruments are held at fair
value as follows:
Current derivative financial instruments 2019 2018
---------------------------------------------------------- ------- ------------ ------- ------------
(In GBP million) Assets Liabilities Assets Liabilities
---------------------------------------------------------- ------- ------------ ------- ------------
Interest rate swaps 24 (26) 28 (24)
Foreign exchange contracts 104 (2) 6 (7)
Cross currency swaps 9 - 3 (127)
Collateral(1) - - - 53
========================================================== ======= ============ ======= ============
Total current derivatives 137 (28) 37 (105)
========================================================== ======= ============ ======= ============
Non-current derivative financial instruments
---------------------------------------------------------- ------- ------------ ------- ------------
(In GBP million) Assets Liabilities Assets Liabilities
---------------------------------------------------------- ------- ------------ ------- ------------
Interest rate swaps 645 (1,079) 462 (700)
Cross currency swaps 32 (367) - (402)
Collateral(1) - 38 - 29
Total non-current derivatives 677 (1,408) 462 (1,073)
========================================================== ======= ============ ======= ============
Total carrying value of derivative financial instruments 814 (1,436) 499 (1,178)
========================================================== ======= ============ ======= ============
Net liability (622) (679)
========================================================== ======= ============ ======= ============
Analysed as:
---------------------------------------------------------- ------- ------------ ------- ------------
Interest rate swaps 669 (1,105) 490 (724)
Foreign exchange contracts 104 (2) 6 (7)
Cross currency swaps 41 (367) 3 (529)
Collateral(1) - 38 - 82
========================================================== ======= ============ ======= ============
Total carrying value of derivative financial instruments 814 (1,436) 499 (1,178)
========================================================== ======= ============ ======= ============
Net liability (622) (679)
========================================================== ======= ============ ======= ============
(1) Collateral deposited against derivative financial
liabilities under the terms and conditions of an ISDA credit
support annexes.
Fair values are determined based on observable market data such
as yield curves and foreign exchange rates to calculate the present
value of future cash flows associated with each derivative at the
balance sheet date. The classification of these derivative assets
and liabilities under FRS 101 fair value hierarchy is provided in
note 14.
Maturity of obligations under derivative financial
instruments
Derivative financial instruments have been classified in the
balance sheet as current or non-current on an undiscounted
contractual basis based on spot rates as at the balance sheet date.
Some of the Company's derivative financial instruments contain
early termination options. For the purposes of the above and
following analysis, maturity dates have been based on the
likelihood of an option being exercised with consideration to
counterparty expectations and market conditions prevailing as at 30
September 2019. Any collateral transferred to counterparties in
respect of derivative financial liabilities has been classified
consistently with the related underlying derivative.
The table below summarises the Company's derivative financial
instruments by maturity based on their remaining contractual cash
flows as at 30 September 2019. The amounts disclosed are the
undiscounted cash flows calculated using spot rates of exchange
prevailing at the relevant balance sheet date. Contractual cash
flows in respect of the Company's non derivative financial
instruments are detailed in note 14.
At 30 September
2019
Contractual
Balance sheet cash flows Between 1 and 2 Between 2 and 5
(In GBP million) amount Total < 1 year years years > 5 years
------------------ ----------------- ---------------- ----------- ---------------- ---------------- ------------
Net settled
derivatives (398) (616) (30) (37) (210) (339)
Gross settled (224) - - - -
derivatives -
Receipts - 6,852 2,151 165 2,738 1,798
Payments - (6,833) (2,199) (100) (2,701) (1,833)
================== ================= ================ =========== ================ ================ ============
(662) (597) (78) 28 (173) (374)
================== ================= ================ =========== ================ ================ ============
At 30 September
2018
Contractual
Balance sheet cash flows Between 1 and 2 Between 2 and 5
(In GBP million) amount Total < 1 year years years > 5 years
------------------ ----------------- ---------------- ----------- ---------------- ---------------- ------------
Net settled
derivatives (205) (508) (13) (38) (183) (274)
Gross settled (474) - - - -
derivatives -
Receipts - 5,364 2,249 102 1,228 1,785
Payments - (5,610) (2,349) (79) (1,234) (1,948)
================== ================= ================ =========== ================ ================ ============
(679) (754) (113) (15) (189) (437)
================== ================= ================ =========== ================ ================ ============
Derivatives as hedging instruments
As outlined in note 14, the Company hedges its underlying
interest rate exposure and foreign currency translation exposure in
an efficient, commercial and structured manner, primarily using
interest rate swaps and cross currency swaps. Foreign exchange
contracts are used to manage the Company's short term liquidity
requirements in line with short term cash flow forecasts as
appropriate. The Company does not apply cash flow or fair value
hedge accounting as permitted under IFRS 9, which results in fair
value gains and losses attributable to derivative financial
instruments being recognised in net finance costs.
Interest rate swaps
To manage interest rate risk on its borrowings, the Company
issues debt in the market or markets that are most appropriate at
the time of raising new finance with regard to currency, interest
denomination and duration, and then uses interest rate swaps and/or
cross currency swaps to re-base the debt into the appropriate
proportions of fixed and floating interest rates where necessary.
Interest rate swaps are also transacted to manage and re-profile
the Company's interest rate risk over the short, medium and long
term in accordance with the Treasury Committee Framework and
Treasury Committee decisions. Fair value movements are recognised
in investment income and finance costs in the relevant reporting
period.
As at 30 September 2019, the notional amount of interest rate
swaps outstanding that were entered into to convert fixed rate
borrowings into floating rates of interest at the time of raising
new finance were GBP13,448 million (2018: GBP10,353 million) with a
fair value of GBP657 million asset (2018: GBP240 million asset).
The fixed interest rates vary from 0.5 per cent to 8.7 per cent
(2018: 0.5 per cent to 8.7 per cent), and the floating rates are
EURIBOR, GBP LIBOR and USD LIBOR.
As at 30 September 2019, the notional amount of interest rate
swaps outstanding that were entered into to convert the Group's
debt into the appropriate proportion of fixed and floating rates to
manage and re-profile the Group's interest rate risk were GBP10,024
million (2018: GBP10,285 million) with a fair value of GBP1,055
million liability (2018: GBP445 million liability). The fixed
interest rates vary from 0.5 per cent to 4.4 per cent (2018: 0.8
per cent to 4.4 per cent), and the floating rates are EURIBOR, GBP
LIBOR and USD LIBOR. This includes forward starting interest rate
swaps with a total notional amount of GBP2,412 million (2018:
GBP1,476 million) of which there are GBP1,522 million with tenors
extending for 5 years, starting between October 2020 and May 2022,
GBP443 million with 10 year tenors starting in October 2019 and
GBP447 million with 13 year tenors starting in October and November
2019.
Cross currency swaps
The Company enters into cross currency swaps to change the
currency of debt into the appropriate currency with consideration
to the underlying assets of the Group as appropriate. Fair value
movements are recognised in investment income and finance costs in
the relevant reporting period.
As at 30 September 2019, the notional amount of cross currency
swaps entered into to convert floating rate sterling debt into the
desired currency at floating rates of interest was GBP2,600 million
(2018: GBP3,300 million) and the fair value of these swaps was
GBP364 million net liability (2018: GBP473 million net liability).
During the financial year foreign currency forward and
cross-currency swaps were transacted to convert $3.0 billion of US
dollar denominated debt to EUR2.8 billion euros with a fair value
of GBP134 million net asset.
Foreign exchange contracts
The Group enters into foreign exchange contracts to manage short
term liquidity requirements in line with cash flow forecasts. As at
30 September 2019, the notional amount of these contracts was
GBP1,087 million (2018: GBP1,430 million) and the fair value of
these contracts was a net asset of GBP6 million (2018: GBP1 million
net liability).
16. Share capital
(In GBP million) 2019 2018
------------------------------------------------------------------ ------ ------
Issued and fully paid
2,100,000,000 ordinary shares of GBP1 each (2018: 2,100,000,000) 2,100 2,100
------------------------------------------------------------------- ------ ------
17. Related party transactions
The Company has taken advantage of the Group exemption under the
terms of FRS 101 from disclosing related party transactions with
entities that are part of the Group since the Company is a wholly
owned indirect subsidiary of Imperial Brands PLC and is included in
the consolidated financial statements of the Group, which are
publicly available.
18. Guarantees
The Company is party to a cross guarantee of its bank accounts
held at HSBC Bank plc against accounts of Imperial Brands PLC and
some of its subsidiary companies. At 30 September 2019, the amount
drawn under this cross guarantee was GBPnil (2018: GBP22 million).
Together with other Group undertakings, the Company guarantees
various borrowings and liabilities of other subsidiary companies
under this arrangement with HSBC Bank plc.
The Company is party to seven counter-indemnity deeds, each
dated July 2017, made on substantially the same terms under which
certain insurance companies have made available to Imperial Brands
PLC, Imperial Tobacco Limited and the Company, a surety bond. In
each case issued on a standalone basis but in aggregate forming an
amount of GBP600 million, until January 2023. These surety bonds
provide support to the Imperial Tobacco Pension Trustees Ltd, the
main UK pension scheme.
At 30 September 2019, the contingent liability totalled GBP686
million (2018: GBP622 million).
The Directors have assessed the fair value of the above
guarantees and do not consider them to be material. They have,
therefore, not been recognised on the balance sheet.
19. Number of employees
The average number of employees during the year was 10 (2018:
nil).
20. Immediate and ultimate parent undertakings
The ultimate parent undertaking and controlling party of the
Company at 30 September 2019 was Imperial Brands PLC, a company
incorporated in Great Britain and registered in England and Wales.
The smallest and largest group in which the results of the Company
are consolidated is that headed by Imperial Brands PLC, whose
consolidated financial statements may be obtained from The Company
Secretary, Imperial Brands PLC, 121 Winterstoke Road, Bristol, BS3
2LL and are also available in the investors section of the Company
website at www.imperialbrandsplc.com.
The immediate parent undertaking of the Company at 30 September
2019 was Imperial Tobacco Holdings Limited, a company incorporated
in Great Britain and registered in England and Wales.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FFIFDDFUSELE
(END) Dow Jones Newswires
December 13, 2019 08:49 ET (13:49 GMT)
Imp.br.fin.26 (LSE:94JK)
過去 株価チャート
から 6 2024 まで 7 2024
Imp.br.fin.26 (LSE:94JK)
過去 株価チャート
から 7 2023 まで 7 2024
