IMPERIAL BRANDS PLC
ANNUAL REPORT 2024
ACCELERATING
GROWTH WITH
A CHALLENGER
MINDSET
INTRODUCTION AND CONTENTS
SUPPLEMENTARY
INFORMATION
Alternative Performance Measures
202
Glossary
210
IMPERIAL BRANDS PLC
FINANCIALS
Imperial Brands PLC
Balance Sheet
213
Imperial Brands PLC Statement of
Changes in Equity
214
Notes to the Financial Statements of
Imperial Brands PLC
215
SHAREHOLDER
INFORMATION
Shareholder Information
230
Cautionary Statement
231
By becoming more consumer focused, more agile and more performance driven we are better
able to deliver enhanced shareholder returns and meet the needs of our wider stakeholders.
MEET OUR PEOPLE
Agnès, Mathilde and Emilie,
Internal Communications Officer,
Social Affairs Manager and Trade
Marketing Manager, France
cover
Samanli, End-to-End Planning
Team Manager, Poland
1
Khadar, Information Systems
Support Specialist, France
1
Adeline, Merchandising
Manager, France
17
Amir, Brand Manager, Austria
24
Justin Norman, Packing
Operator, USA
29
Dimitra, Brand Executive, UAE
31
Lalanirina, Emmanuel and Julia,
Supply Chain Manager, Process
& Industrial Projects Manager
and Manufacturing Excellence
Manager, Madagascar
42
Andre, Lab Assistant, Germany
65
Chia-Wei and Chang-Wei,
Technicians, Taiwan
69
WE ARE A
CONSUMER-LED
CHALLENGER
BUSINESS
GOVERNANCE
Governance at a Glance
90
Board Leadership
92
Board and Culture
101
Section 172
102
Board Statements
103
People, Governance & Sustainability
Committee
104
Audit Committee
108
Remuneration Report
115
Directors’ Report
130
FINANCIALS
Independent Auditor’s Report
135
Consolidated Income Statement
145
Consolidated Statement
of Comprehensive Income
145
Consolidated Balance Sheet
146
Consolidated Statement
of Changes in Equity
147
Consolidated Cash
Flow Statement
148
Notes to the Consolidated Financial
Statements
149
Performance measures used
throughout the report
Reported (GAAP)
Complies with UK-adopted
International Accounting Standards
and the relevant legislation.
Adjusted (Non-GAAP)
Non-GAAP measures provide a
useful comparison of performance
from one period to the next.
The basis of our adjusted measures
is explained in the accounting
policies accompanying our financial
statements and the APM section
within Supplementary Information.
Constant currency basis
Removes the effect of exchange rate
movements on the translation of the
results of our overseas operations.
We translate current year results at
prior year foreign exchange rates.
See page 36 for more details.
Market share
Market share data is presented
as a 12-month moving average
weighted across the markets in
which we operate.
Stick equivalent
Stick equivalent volumes reflect our
combined cigarette, fine cut tobacco,
cigar and snus volumes.
For more information see
www.imperialbrandsplc.com
STRATEGIC REPORT
At a Glance
2
Our Consumer Focus
4
Our Investment Case
6
Chair’s Statement
8
Chief Executive’s Statement
10
Business Model
14
Our Strategy
16
Strategic Review
18
KPIs
22
Industry Overview
24
Operating Review
26
Group Financial Review
34
Principal Risks and Uncertainties
42
Stakeholder Engagement
54
Non-Financial and Sustainability
Information Statement
58
ESG Review
59
www.imperialbrandsplc.com
1
AT A GLANCE
DELIVERING
ON OUR STRATEGY
MARKETS WE
OPERATE IN
c.120
OUR FOCUSED STRATEGY
Strategic pillars
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FI
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N
T
£1.25bn
2024: £1.1bn
+5bps
2023: +10bps
NGP NET REVENUE GROWTH AT CONSTANT
CURRENCY (PER CENT)
AGGREGATE MARKET SHARE OF OUR FIVE PRIORITY
COMBUSTIBLE MARKETS (BASIS POINTS)
FY25 SHARE REPURCHASE ANNOUNCED (£ BILLION)
+26.4%
2023: +26.4%
Critical enablers
DIVIDEND PER SHARE
(PENCE)
153.42p
2023: 146.82p
ABSOLUTE CO2 EQUIVALENT EMISSIONS SCOPE 1
AND SCOPE 2 MARKET-BASED (TONNES)
89,120t
2023: 101,415t**
2024 Tobacco & NGP net revenue growth at constant
currency +4.6%
2024 Dividend per share growth +4.5%
Our target is to be Net Zero in our direct
operations by 2030
*
2017 is the baseline.
** Baseline and previous years have been restated due to Scope 2 market-based
emissions correction.
TOBACCO AND NGP NET REVENUE
(£ BILLION)
£8.2bn
2023: £8.0bn
24
22
21
£7.6bn
£7.7bn
23
£8.0bn
£8.2bn
24
22
21
139.08p
141.17p
23
146.82p
153.42p
24
22
17*
20,326**
81,089
85,829**
91,007
23
176,176**
114,270
15,683
73,437
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
2
3
OUR CONSUMER FOCUS
WE START WITH
THE CONSUMER
INTERNATIONAL BRANDS
LOCAL JEWELS
NEXT GENERATION PRODUCTS (NGP)
“I used to smoke socially, but vaping
is a bit more mellow, and the taste
isn’t so strong. A lot of my friends
smoke, so vaping means I’m not left
out. I can join in, but in my own way.
I like that the new blu bar kit is
rechargeable, and quite compact.”
Claudia,
UK
“Zone is my go-to pouch, it has a
soft mouth feel and just the right level
of intensity. My friends and family
have noticed that I no longer smell of
cigarettes, and I have more confidence
because of it.”
Vonte,
USA
“The best moment to smoke is
when I am alone, with my coffee
and I have zero issues on my mind.
A smoker always sees tobacco
quality first, and for me, why would
I pay more when Gauloises gives
me the quality I need?”
Mohamed,
Morocco
We put the consumer at the centre of our business, with strong insights guiding our
approach to building a portfolio of local and international challenger brands which
resonate with millions of adult consumers every day.
“I wanted to find something that
would not smell like a typical cigarette,
would be flavourful and enjoyable to
use among friends. I like the iSenzia
flavours and I like that the device is
small and handy. I like to use Pulze
when reading – it’s relaxing.”
Julia,
Poland
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
4
5
OUR INVESTMENT CASE
WHY INVEST
IN IMPERIAL?
BUILDING A SUSTAINABLE NEXT GENERATION
PRODUCT BUSINESS
Next generation products (NGP) offer adult smokers a route
to smoking cessation and remain relatively nascent in many
markets. As a challenger, our role is to offer consumers a choice
where they have already expressed an NGP preference and
where we can leverage our existing customer relationships.
Our partnership approach to product innovation enables us to
adapt swiftly to changing consumer preferences and with our
consumer focus and disciplined execution we have built an
NGP business that offers choice.
Aggregate priority market share
cumulative 2021-2024 (basis points)
+48bps
REVITALISED TOBACCO BUSINESS
Investment in our brand equity and sales force initiatives
has enabled us to balance market share delivery with strong
pricing. The tobacco value creation model remains resilient,
with affordability enabling sustainable pricing to offset
volume declines. In our top five combustible markets that
generate c.70% of operating profit, we have grown market
share after years of declines. This, combined with a more
disciplined focus on our broader market portfolio, is driving
improved combustible returns.
SELF-HELP INITIATIVES DELIVERING OPERATIONAL
IMPROVEMENT
We have identified multiple initiatives to deliver operational
improvements that will enhance our decision making and
drive efficiencies. For example, we are adopting new ways of
working with our enabling functions using a global business
service model and implementing a new ERP system to replace
our 60 legacy systems.
COMBINED, THESE ARE GENERATING A STRONG
FINANCIAL OUTLOOK
Improving tobacco and NGP net revenue trajectory,
with a compound annual growth rate of 1% to 2%.
Enhancing profitability through operational leverage,
better geographic mix from continued stabilisation of priority
market shares, reduced losses from our investment in NGP and
restructuring cost savings driving a mid single-digit compound
annual growth rate for Group adjusted operating profit.
The business is highly cash generative with low capital
intensity, a working capital focus and disciplined capital
expenditure producing adjusted operating cash conversion
of typically 90% to 100%.
Free cash flow generated in FY24
£2.4bn
2023: £2.4bn
ENHANCING OUR CAPITAL RETURNS
We have a clear capital allocation framework alongside
our strategy:
1. Invest in strategic delivery
Since our strategy is largely organic and we work with
innovation partners, our capital expenditure needs are
relatively light. Any M&A is likely to be small.
2. Maintain leverage
We are committed to an investment grade credit rating
and will maintain our leverage at the lower end of the
range 2.0-2.5 times adjusted net debt/EBITDA.
3. Progressive dividend growth
We have committed to grow our dividend every year,
taking into account the underlying business performance.
4. Return surplus capital to shareholders
We have an ongoing share buyback programme,
with £1.25 billion committed in FY25.
Further information on our strategy can be found
on pages 16 to 21.
Capital returns to shareholders committed in FY25
£2.8bn
2024: £2.4bn
We are a consumer-focused business underpinned by a disciplined capital allocation
framework. This gives us the ability to invest in our strategy, while maintaining a strong,
efficient balance sheet and delivering enhanced shareholder returns.
24
22
21
£188m
£208m
23
£265m
£329m
NGP net revenue
(£ million)
£329m
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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7
CHAIR’S STATEMENT
Dear Shareholders
I am pleased to report a further step-up in performance:
operationally, financially, and in the delivery of our ambitious
People and Planet objectives. Our success in 2024 builds on
the consistent track record we have been developing since the
launch of our current strategy four years ago. As we enter the
final year of the plan, I couldn’t be more proud of the progress
the company has made leaning into our challenger status and
embedding the consumer at the heart of everything we do.
Against an unpredictable environment, the team has been
innovative, resourceful and resilient, and has demonstrated
a laser focus on delivery of their commitments.
While Imperial Brands’ transformation journey continues,
and there are always risks associated with a change
programme of this ambition and scale, it is undoubtedly
a much stronger business than it was when we began this
journey in 2021. We are now better able to create predictable
and sustainable value for shareholders and meet the needs
of our wider stakeholders.
STARTING WITH THE CONSUMER
The scale of our transformation, particularly within our
growing consumer capabilities, was brought home to me
by two Board visits over the past year.
In March, we visited the Czech Republic, a highly competitive
market for next generation products (NGP). I was pleased to
see our team using a challenger mindset to compete
successfully against our larger competitors.
Fresh consumer insights were being used to build targeted,
differentiated brands. Our agile sales teams were getting new
products to market at pace and identifying new channels and
promotional opportunities. This activity was underpinned by
a deep sense of responsibility and clearly focused on adult
smokers and existing nicotine consumers.
Our second visit in July was to our fast-developing innovation
centre – or “Sense Hub” – in Liverpool. It is a great case study
for Imperial’s challenger way of developing new products.
We saw how our team was bringing together consumers and
third-party partners in the same space to drive new insights
and accelerate development cycles. This distinctive way of
working has taken us from a position four years ago where
our products were uncompetitive to a point now where
we have attractive offerings in multiple categories.
ACCELERATING CAPITAL RETURNS
FOR SHAREHOLDERS
Our consumer-focused transformation has supported a further
improvement in financial performance. This year we met
our strategic objectives of low-single-digit growth in tobacco
and mid-single-digit adjusted operating profit growth. In NGP,
we achieved double-digit net revenue growth while also
reducing our losses.
We have clearly defined our capital allocation priorities,
which start with investment to support our strategic delivery.
Our objective is to support the long-term sustainable cash
flows of the business to enable us to maintain our progressive
dividend policy and ongoing share buyback. The Board is
recommending a total annual dividend of 153.42 pence per
share, which represents an increase of 4.5% on the prior
financial year in line with the Group’s progressive policy.
We also announced a change to the future dividend payment
profile to four equal dividend payments for FY25 onwards.
Smoothing of the dividend payment profile will result in more
consistent cash returns to shareholders throughout the year,
compared to the current 30:70 split. This is enabled by the
strong visibility of cash flows from our portfolio following
the successful execution of our strategy.
During the five-year period of our current strategy we expect
to make total capital returns including dividends and share
buybacks of £10 billion – equivalent to 67% of our market value
in January 2021 when we launched our strategy.
DELIVERING ON PEOPLE AND PLANET OBJECTIVES
Our challenger mindset has been important in the way we are
now consistently delivering on our People and Planet priorities,
which focus on building a healthier future for our consumers,
colleagues and wider environment. Our recent progress is a
result of the resourcefulness, deep accountability and purposeful
collaboration of a great many people in our business.
In September I kicked off an ESG webinar for investors. We have
come a long way in the two years since our previous event
covering this topic. We have driven significant reductions in
carbon emissions, waste and workplace accidents.
Our broad plan to improve diversity, equity and inclusion is
starting to yield results. In particular, we have seen
improvements in female representation in senior management.
The Board plays a highly engaged role providing support
and challenge to management as they develop and deliver
their ESG plans. Over the past year, we have made further
improvements to the way we provide oversight, including
an expansion of the remit for the People & Governance
Committee, now known as the People, Governance
& Sustainability Committee, which is chaired by me.
For more on People and Planet
see pages 59-77
For the People, Governance & Sustainability
Committee report, see page 104
ENGAGING FOR CONSUMER HEALTH
A key ESG priority is to play a growing role in tobacco harm
reduction by developing our NGP business and engaging for
balanced, strongly enforced regulatory environments.
We are building on our long-term commitment to science
which analyses the harm reduction potential of our NGP
and their real-world use as smoking cessation tools.
In our major markets, we seek regulation that balances
the need to make an attractive range of smoke-free products
available to adult smokers, while driving out irresponsible
products and preventing youth access.
We continue to be concerned with policy in some markets
which leans towards prohibition. In August, I visited our
employees, consumers and customers in Australia, one of the
most challenging markets in our portfolio, where around 30%
of tobacco products are illicit. The Australian market is a
sobering example of the unintended consequences of
over-restrictive regulation. Onerous limits on the availability
of NGP and extremely high taxation on tobacco products have
led to a spiralling trade in illegal products. These prohibitive
policies have been damaging both for consumers seeking
trusted reduced harm products and for the government,
which receives decreasing excise revenues.
BOARD CHANGES
Our Board has a strong and diverse mix of skills and experiences,
and we continue to develop our capabilities through education
sessions and new appointments. In January, we welcomed
Julie Hamilton to the Board and to our People, Governance
& Sustainability Committee. In October 2024, she also joined the
Remuneration Committee. Julie, who was Chief Commercial
and Global Sales Officer at Diageo, has over 30 years’ experience
in marketing, strategy and digital transformation. Prior to
Diageo, Julie spent 25 years at the Coca-Cola Company where
she held a range of leadership positions, including Chief
Customer and Commercial Leadership Officer.
Diane de Saint Victor has decided to retire from the Board at
the conclusion of the 2025 AGM. Diane has been a valued
member of the Board, with roles on the Remuneration and
People, Governance & Sustainability Committees. I would like
to thank Diane for her insights and contribution over the
past three years and on behalf of the Board, wish her the
best for the future.
BECOMING AN EVEN STRONGER CHALLENGER
As we enter the final year of our current strategy,
our transformation will carry on at pace as we continue to
develop consumer capabilities, agile ways of working and our
performance culture. In March 2025, I look forward to joining
Stefan and our management team, when we provide detail of
our next five-year strategy, which will build on our recent
success and evolve Imperial Brands into an even stronger
challenger business.
Thérèse Esperdy
Chair
DEVELOPING
OUR TRACK RECORD
“We are better able to create
predictable and sustainable value
for shareholders and meet the
needs of our wider stakeholders.”
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
8
9
CHIEF EXECUTIVE’S STATEMENT
As we enter the final year of our current
strategy, I am pleased with how we have
strengthened the Company and delivered
a more consistent performance.
Imperial Brands has become a more effective
challenger business through new consumer
capabilities, agile ways of working, and a
high-performance culture.
This ongoing transformation is driving
improving operational and financial
outcomes, and growing capital returns.
STRONG PERFORMANCE
In combustible tobacco, our focus on operational excellence
has enabled us to grow aggregate market share in our five
priority markets with a five basis point improvement, while
driving further strong pricing.
Since the launch of our strategy in 2021, these five largest
markets, which account for c.70% of operating profit, have
recorded a cumulative aggregate share increase of 48 basis
points. This performance is consistent with our strategic
objective to hold or grow aggregate share across these
markets, balancing market share delivery with value creation.
Over the past year, tobacco pricing increased 7.8%, more than
offsetting declining volumes, to deliver tobacco net revenue
growth of 3.8% at constant currency.
In next generation products (NGP), we continue to grow
through product innovation and scaling up within our existing
market footprint. NGP net revenue grew by 26% on a constant
currency basis. At actual exchange rates, this takes our
cumulative growth over the four years since 2020 to 64%.
The Company’s strong performance has driven constant
currency net revenue growth in tobacco and NGP revenue of
4.6% – the strongest like-for-like top-line growth in more than
10 years. Logista in our Distribution segment also contributed
positively to our financial results with gross profit up 4.4%.
This was driven by strong performance in the underlying
business particularly in Spain and Italy as well as the benefit
of prior year acquisitions.
All of this helped to drive Group adjusted operating profit
growth of 4.6% at constant currency and reported operating
profit growth of 4.5%.
A STRONGER CHALLENGER BUSINESS
This strong financial performance is underpinned by our
transformation into a strong challenger business better
able to deliver consistent growth.
Being a successful challenger is about getting closer to
consumers, making targeted technology investments to
improve agility, and building a culture of high performance.
Our Global Consumer Office, set up in 2021, is now well
established, with a team of 1,000 experts in insights,
innovation, marketing and revenue growth management,
working seamlessly with our markets.
A highlight of my year was visiting our new sensory
laboratory in Shenzhen, which further strengthens our
innovation capabilities, helping us link our consumers
to our valued partners.
Over the past 12 months, we passed important milestones
in our long-term digital investment programme. In particular,
in October 2024 the first market cluster went live in our
project to create a unified enterprise resource planning
system replacing 60 legacy systems.
We continue to add to our capabilities through senior
appointments. During the year we welcomed three new
members of the Executive Leadership Team. Priyali Kamath
joined us from P&G as President of Africa, Asia, Australasia
and Central & Eastern Europe. Deborah Binks-Moore brings
deep experience of regulated businesses to the new role of
Chief Corporate Affairs Officer. Kevin Massie has been
appointed General Counsel, having held a range of senior
roles, most recently at the international consumer business
PZ Cussons.
Across the organisation, we continue to invest in developing
our culture. 850 colleagues have now completed Connected
Leadership, our intensive seven-day programme which enables
our senior people to become better coaches to their teams.
This year in our Employee Experience survey we maintained
our 74% engagement score, which is one percentage point
above the global benchmark.
CONSISTENT COMBUSTIBLE PERFORMANCE
Our transformation is leading to further success at a market
level, where in combustibles we focus on the performance
of our five priority markets.
Share gains in the US, Germany, Spain and Australia have
been offset by a decline in the UK.
In the US, our portfolio, which offers adult smokers a brand
offering at each key price point, enabled us to continue to gain
share. This structured approach, combined with our continued
investment in improving our sales and marketing capabilities,
has supported more than four years of stable or growing share
and an improved financial performance.
In Germany, our initiatives have stabilised our market share
after more than a decade of steep losses. In Spain, we delivered
another year of share gains coupled with improved pricing.
The UK and Australia are challenging markets with elevated
market size declines caused by high excise and growth in
illicit trade. Here, we have continued to balance value
creation through increased pricing while managing our
market share performance.
We are also delivering strong performances in our medium-
sized and smaller markets. For example, in our Africa, Asia,
Australasia and Central & Eastern European (AAACE) region,
we delivered an improved financial performance after a
difficult first half which was affected by disruption to
shipment timings in the Middle East.
SUSTAINABLE GROWTH IN NEXT
GENERATION PRODUCTS
In NGP, we made significant progress towards our goal of a
sustainable business which makes a strong contribution to
both Group performance and reducing harm for consumers.
For the first time, we reported increased revenue in all three
regions. We are also growing revenue and market share across
all three categories.
In the US, our return to growth was spearheaded by the launch
in February of Zone, our modern oral nicotine proposition.
Early feedback from both consumers and the retail trade has
been extremely positive.
In the Europe region, we saw strong growth in vape, led by the
UK and supported by new products including the 1,000-puff
blu bar disposable and the rechargeable blu bar kit. In this
category, we now have a highly competitive product portfolio
focused on responsibly meeting the needs of adult smokers
and existing nicotine consumers.
In AAACE, improving revenues were supported by progress in
the heated category. In our focus markets in Central & Eastern
Europe, we are building consumer loyalty and securing our
fair share against strong competition. Our iSenzia tea-based
heat sticks are emerging as an important addition to our offering.
Following the launch of our strategy in 2021, we needed to reset
our NGP operations while we gathered consumer insights and
modernised our product portfolio. Now, following a period of
test-and-learn launches, we are operating at scale with NGP
available in over 20 markets. In eight markets, NGP account
for 20% or more of total tobacco and NGP net revenue and in
11 markets, we have brands which occupy top three positions
in their categories. Our growing success has meant that we
have been able to continue to reduce losses while continuing
to invest in future growth. We still have a long way to go on
this journey, but we have built the foundations for a sustainable
business, underpinned by disciplined investment and increased
agility to meet changing consumer needs.
DELIVERING
ON OUR STRATEGY
“Being a successful challenger
is about getting closer to
consumers, making targeted
technology investments to
improve agility, and building
a culture of high performance.”
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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11
CHIEF EXECUTIVE’S STATEMENT continued
TOWARDS A HEALTHIER FUTURE
Our NGP business is not just growing consistently – it is also
growing responsibly.
During the year we completed several scientific studies
which validated the potential of our new products to support
smokers seeking to quit cigarettes.
We maintain rigorous marketing standards to ensure
we only target adults who already smoke or consume
nicotine products. Additionally, we continue to engage
with policymakers to develop strong regulatory regimes
which build trust in NGP by minimising youth access and
eliminating illegal products.
Strong progress continues to be made on our other People
& Planet priorities, including our “Triple Zero” objectives,
which cover carbon emissions, waste and workplace injuries.
Direct carbon emissions are now down 69% since our baseline
year of 2017 and we remain on course to become Net Zero
across our supply chain by 2040. Since May 2024, within our
own operations we have sent zero waste to landfill and have
reduced absolute waste by 32% compared to our 2017 baseline.
The number of lost-time accidents has reduced by 47%
compared to our 2019 baseline year.
In September, we were pleased to showcase our evolving
approach to ESG through an investor webinar. For more
information on our progress see pages 59-77. A replay of
our webinar, together with our presentation, is available
at www.imperialbrandsplc.com.
ALLOCATING CAPITAL WITH DISCIPLINE
As a highly cash generative business, we recognise the
importance of a clear and transparent capital allocation
framework to our stakeholders. Consistency and discipline are
key principles that underpin our four capital allocation priorities:
• Invest behind the strategy to deliver our growth initiatives
• Maintain a strong and efficient balance sheet with a target
leverage towards the lower end of our adjusted net debt to
EBITDA range of 2-2.5 times
• A progressive dividend policy with dividends
growing annually, taking into account underlying
business performance
• Return surplus capital to shareholders
Since reaching our target leverage in September 2022, we have
entered into an ongoing, multi-year buyback, which began
with an initial buyback of £1 billion during FY23, and a further
£1.1 billion for FY24. In October 2024, we announced a third
year of buybacks with a £1.25 billion programme – an increase
of 14% on the prior year. This will be largely completed during
FY25 and will bring our capital returns via buybacks under the
current strategy to £3.35 billion.
In line with our progressive dividend policy, we are
recommending a 4.5% increase for the FY24 dividend to
153.42 pence per share. In October, we announced our intention
to change the payment profile of our dividend to four equal
quarterly payments for FY25 onwards. This change in the
dividend payment profile will lead to more consistent cash
returns to shareholders throughout the year and, during the
transitional period of FY25, will result in increased dividend
payments of 40.08 pence per share in June and September 2025.
OUTLOOK
We are now working on our strategy for the next five-year
period through to 2030, which will build on the foundations
established under the current strategy. Further details will be
provided at a capital markets event on 26 March 2025. In the
meantime, our priority is to deliver on the final 12 months of
the current five-year plan and, while we take nothing for
granted, we remain confident in our ability to deliver on our
existing operational and financial commitments.
In the coming year, at constant currency we expect to deliver
low single-digit tobacco and NGP net revenue growth and to
grow our Group adjusted operating profit close to the middle
of our mid-single-digit range. This will be driven by continued
profit growth from our combustible tobacco business and a
further reduction in operating losses in our NGP portfolio.
Given the strong momentum in our NGP business, we will
continue to invest to drive another year of double-digit
constant currency net revenue growth, while balancing our
objective to build a sustainable and profitable business.
In line with previous years, performance will be weighted
to the second half of the year driven by the phasing of
combustible pricing and investment. As a result, first half
Group adjusted operating profit is expected to grow at low
single digits at constant currency.
We expect to deliver at least high-single-digit earnings per
share growth at the full year at constant currency supported
by the ongoing share buyback and partly offset by higher
adjusted finance and tax costs. At current rates, foreign
exchange translation is expected to be a headwind of 1-2% to
net revenue, adjusted operating profit and earnings per share.
We remain focused on driving sustainable growth in cash
flows to underpin another year of shareholder returns and
to support our growing role in this industry’s transition to
a healthier future.
Stefan Bomhard
Chief Executive Officer
1. Stefan Bomhard (German)
Chief Executive Officer
2. Lukas Paravicini (Swiss)
Chief Financial Officer
3.Deborah Binks-Moore (British)
Chief Corporate
Affairs Officer
4. Alison Clarke (British)
Chief People and
Culture Officer
5. Javier Huerta (Mexican)
Chief Supply Chain Officer
6. Priyali Kamath (Indian)
President, Africa, Asia,
Australasia, and Central
& Eastern Europe
(AAACE) Region
7. Kevin Massie (Canadian)
General Counsel
8. Murray McGowan (British)
Chief Strategy and
Development Officer
9. Paola Pocci (Italian)
Chief Consumer Officer
10. Kim Reed (American)
President and CEO,
Americas Region
11. Aleš Struminský (Czech)
President, Europe Region
A TEAM WITH DIVERSE EXPERIENCE
Our Executive Leadership Team (ELT) has a strong blend
of experience from across leading global consumer
companies and deep tobacco and local market knowledge.
For more information see
www.imperialbrandsplc.com
1
5
6
3
9
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4
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LEADERSHIP
7
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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BUSINESS MODEL
OUR DISTINCTIVE
APPROACH
Our colleagues
Our colleagues are our most
important asset. We have
25,000 committed and
passionate employees who
want to make a difference.
Our brands
Our portfolio of 160 brands
provides enjoyment and
pleasure for millions of
adult consumers every day.
Our relationships
We have solid, trusted
partnerships with
stakeholders, including
customers and suppliers
across c.120 markets.
Our operations
We have a network of
27 manufacturing sites that
source and process tobacco
raw materials to provide
high-quality products at
lowest cost.
Our industry knowledge
Our deep knowledge of
the tobacco and nicotine
industry, including our
consumer insights, helps
us to operate responsibly
in all our markets.
Our financial strength
We are able to raise prices
to more than offset
volume declines to deliver
high margins and strong
cash flows to invest and
drive returns.
ADULT CONSUMER INSIGHTS
We start with the consumer –
and everything we do is based
around a deep understanding
of existing adult smokers and nicotine
consumers. Our insights research is
led by our Global Consumer Office and
we unlock value by ensuring we offer
our consumers the right product choices
to meet their needs. These insights
provide competitive advantage and
inform our product offerings in both
combustible tobacco and NGP.
SCIENCE & REGULATION
We use our know-how and smaller
size to be agile in how we respond to
regulatory changes. This is supported
by our science and corporate affairs
teams, who understand the regulatory
environment in all our markets and
ensure we operate responsibly and
provide high-quality products compliant
with local standards. We work to
scientifically substantiate the harm
reduction potential of all our NGP
relative to cigarettes.
MARKETING & INNOVATION
Our marketing and innovation teams
add value by using consumer insights
to develop a portfolio of combustible
tobacco and potentially reduced-harm
products to engage and excite adult
consumers. We use sales and marketing
communications and innovation to
differentiate our brands and meet
evolving consumer needs, while at
the same time ensuring our products
are not marketed to youth.
OUR ASSETS
WHAT WE DO
The choices we make in running our business
differentiate us from our global peers.
Consumer centricity
We put the consumer at
the centre of our business
with strong consumer
insight guiding all our
decision-making.
Local and international
brands
Our differentiated brand
portfolio means we offer
consumers heritage brands
with local provenance and
international brands that have
a broader geographic appeal.
Focus
We focus our investment on
clear performance drivers in
our five priority combustible
markets and drive value from
our broader market portfolio.
We are building our NGP
business in markets where
consumers have already
expressed their preferences
and where we already have
established distribution.
Partnerships
Our partnership approach
to innovation enables us
to compete in multiple NGP
categories with an agile
response to changing market
dynamics and fast product
development.
SUSTAINABLE SOURCING
Our leaf purchasing teams work with
a diverse and complex supply chain
from smallholder farmers to
multinational companies to procure
high-quality leaf and nicotine for our
products. Our procurement teams add
value by responsibly meeting all our
sourcing needs including leaf, nicotine
and non-tobacco materials such as
papers, filters and packaging, as well
as the power and water we use to run
our factories. Their decisions are
guided by our ESG commitments.
EFFICIENT MANUFACTURING
Our manufacturing teams employ
the latest production methods,
working to the highest quality and
product manufacturing standards.
Our scale and knowledge are
competitive strengths, enabling us to
supply quality products at lowest cost.
Where appropriate, for example with
NGP devices, we use third-party
manufacturers with the technical
expertise to deliver high-quality
products. We also use third-party
logistics companies to distribute
our products.
STRONG RETAIL PARTNERSHIPS
We sell our products to our customers.
Our sales and marketing teams have
built strong partnerships with them
through sales force coverage,
retailer incentivisation and point-of-
sale advertising, where appropriate.
We understand their needs and
help them to navigate the changing
regulatory environment. Our goal is to
deliver mutually attractive commercial
arrangements that support growth
and value creation for our retailer,
wholesaler and distributor customers.
STAKEHOLDER VALUE
Consumers
Millions of adults worldwide choose to enjoy our
tobacco and next generation products. Meeting
their expectations of quality and understanding
their evolving requirements are vital for the
long-term sustainable growth of our business.
Governments and regulators
Approaches to legislation vary significantly
across geographies. We support reasonable
regulation of tobacco and nicotine products
and look to have constructive engagement
with policymakers and regulators.
Colleagues
It is essential we create a supportive, safe and
rewarding work environment to enable them
to deliver our goals and develop their careers.
Investors
Our investors provide capital to the business
and monitor management’s allocation of that
capital within the business.
Customers
We work closely with distributors, wholesalers
and retailers to ensure our products are available
to adult consumers in a diverse range of outlets
worldwide. They play a crucial role in our
business model.
Suppliers
We maintain strong relationships with our
tobacco, non-tobacco materials (NTM) and NGP
suppliers to help ensure sustainable supply and
business continuity, underpinned by fair contract
and payment terms.
For more information
see pages 54-57.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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OUR STRATEGY
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OUR STRATEGY
IN ACTION
STRATEGIC PILLARS
CRITICAL ENABLERS
The choices we make are
guided by our strategy,
purpose and vision as well as
our approach to managing
our environmental, social and
governance (ESG) priorities.
OUR PURPOSE
Forging a path to a healthier
future for moments of
relaxation and pleasure.
OUR VISION
To build a strong
challenger business
powered by responsibility,
focus and choice.
HOW WE MEASURE OUR PERFORMANCE
To measure our performance we have 10 financial and four
non-financial key performance indicators. We also measure
the performance of several other indicators.
Financial performance is reported on pages 34-41, and
non-financial performance is reported on pages 59-77.
For more information
see pages 18-19.
For more information
see pages 20-21.
OUR BEHAVIOURS
HEALTHIER FUTURES
POSITIVE CONTRIBUTION TO SOCIETY
SAFE & INCLUSIVE WORKPLACE
Consumer health
Climate change
Packaging and waste
Farmer livelihoods
& welfare
Sustainable &
responsible sourcing
Human
rights
Employee health,
safety & wellbeing
Diversity, equity
& inclusion
OUR APPROACH TO ESG
For more information
see pages 59-77.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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STRATEGIC PILLARS
FOCUSING ON
PRIORITY MARKETS
Our approach is creating growing revenue
and profit from our largest tobacco businesses
Five markets – the United States, Germany, the UK, Spain
and Australia – contribute around 70% of operating profit.
A key pillar of our strategy is a focus on driving value in these
businesses through targeted brand building, improvements in
sales capabilities and careful portfolio management.
Our ambition is to maintain stable market share in aggregate
and in any given year some markets will grow share while
other markets may see reductions. In 2024, we recorded the
fourth consecutive year of stable or growing aggregate share
alongside strong pricing. Share gains in the US, Germany,
Spain and Australia have more than offset declines in the UK.
STRATEGIC REVIEW
DRIVING VALUE
FROM OUR
BROADER MARKET
PORTFOLIO
We focus on the medium-sized and smaller
markets with the strongest opportunities
for future growth
We have developed a rigorous approach to managing our
broader portfolio of markets. This involves stronger consumer
engagement, targeted investment in brands and improved
sales execution.
The establishment of the Africa, Asia, Australasia and
Central & Eastern Europe region has enabled stronger
performance management of these markets and more
effective sharing of best practices. We utilise the same tools
as our largest five markets to drive performance across our
broader market portfolio.
BUILDING SCALE
IN NEXT
GENERATION
PRODUCTS
We are defining a distinctive challenger
position offering strong consumer choices
across multiple categories
Our consumer-led, partnership approach to innovation and
development means we now have attractive propositions
across all categories: vape, heated products and oral nicotine.
However, we continue to be disciplined in our market entry
strategy – only launching products where there is existing
consumer demand for the category and where we already
have strong routes to market. Since 2020, at actual exchange
rates we have grown NGP net revenue by 64%, and NGP now
accounts for 4% of tobacco and NGP net revenue.
During 2024, we grew NGP net revenue across all three of
our global regions – and across all categories. US performance
was driven by the launch of our new Zone oral nicotine pouches.
In the Europe region, growth was led by our refreshed portfolio
of vaping products including the new blu bar disposable and
the rechargeable blu bar kit. In AAACE, we are building
consumer loyalty in heated products, including our new
iSenzia tea-based sticks.
2021
Definition of key
operational levers to
drive performance in
each of our five largest
combustible markets; US,
the largest global market
established as separate
region led by Kim Reed;
aggregate market share
for priority markets
stabilised after a period
of decline
2022
Branding refreshed for
local jewel brands
including Winston in
US and Nobel in Spain
2023
Focused investment in
sales force in US and
Germany continues
2024
Aggregate market share
growth alongside strong
pricing; German market
share growth
2021
AAA (later AAACE) region
established to enable
stronger focus on
attractive medium-sized
and smaller markets
2022
Exits from Japan,
Russia and several
Central Asian markets
2023
Strong revenue growth
reported in Africa; Asia,
Middle East & Turkey;
Central & Eastern Europe
2024
Further consumer
experience added to the
ELT with the appointment
of AAACE President
Priyali Kamath from P&G
2020
NGP reboot: disciplined
market exits and
underperforming
investments cut
2021
Investment aligned
behind new strategy;
test and learn approach
in heated tobacco with
trials in Greece and
Czech Republic
2022
blu 2.0 pod device pilots
in France; roll-out of new
oral pouch flavours in
European markets
2023
Multiple vape and heated
product and market
launches; NGP now
available in more than
20 European markets
2024
Launch of Zone oral
pouches in US; NGP
accounts for 20% or more
of tobacco and NGP net
revenue in eight European
markets
USA
+15bps
Germany
+2bps
UK
-50bps
Five priority markets and their FY24 share gains/losses
12-month share
In each of these markets Imperial
enjoys a top-three market position,
with established brands and strong
customer relationships. Our aggregate
market share has improved by +5bps
versus the prior year.
Spain
+5bps
Australia
+5bps
NGP as a percentage of Imperial’s tobacco and NGP net
revenue in European markets
FY24 Tobacco and NGP net revenue growth by wider
market clusters
OUR TRANSFORMATION IN ACTION
KEY DEVELOPMENTS
Middle East &
Turkey
Africa
6.0%
Central &
Eastern Europe
4.9%
1.9%
Germany
Hungary
France
Spain
Czech Republic
UK
Poland
Sweden
Finland
Norway
Austria
Estonia
Portugal
Italy
Greece
43%
36%
27%
21%
20%
12%
9%
9%
6%
6%
5%
2%
31%
27%
34%
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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CRITICAL ENABLERS
PUTTING THE
CONSUMER AT
THE CENTRE OF
THE BUSINESS
Investments in insights, innovation,
marketing and portfolio management are
supporting success in global markets
The tobacco and nicotine environment is undergoing
transformative change with consumer tastes becoming more
eclectic. The pace of innovation is accelerating and there is
now a broad NGP ecosystem where partnering is important
to success. To capitalise on these long-term trends, we have
been patiently investing in our consumer capabilities.
In consumer insights, there has been a step change in our
level of consumer interactions. During FY24 we conducted
a total of 220,000 interviews and, at any one time, we have at
least 70 research programmes in flight. Also during the year,
we opened a new sensory laboratory in Shenzhen adding to
our existing facilities in Liverpool and Hamburg. In revenue
growth management, after initial pilots, we have begun a
global roll-out of SWIPE, our new price simulation tool.
STRATEGIC REVIEW continued
DEVELOPING OUR
PERFORMANCE
CULTURE
We have a structured approach to becoming
a more accountable, collaborative and
inclusive organisation
Our progress towards becoming a consistently high-performing
business has been driven by an integrated multi-year
programme. Underpinning all our activities have been our
five behaviours: Start with the Consumer; Collaborate with
Purpose; Take Accountability with Confidence; Be Authentic
and Inclusive to all; and Build our Future.
Key activities for 2024 have included an expansion of the
Connected Leadership programme, which enables our senior
people to become better coaches and unlock the full potential
of their teams. We have also launched new initiatives to support
career development and the acceleration of high-potential
female leaders.
This year we maintained our strong engagement score of 74%,
one point above the global benchmark.
SIMPLIFYING
AND BECOMING
MORE EFFICIENT
New ways of working and improvements in
tech and data are enabling more sustainable
growth
Our 2021 strategy identified a need to better integrate our
operations to become simpler and more efficient.
We have made significant structural changes to our
enabling functions including finance, IT and People & Culture
to help these teams partner more closely with the business.
Our Global Business Services unit, set up in 2022, is now
well established and across our global factory footprint,
we are improving standardisation, driving a safety-first
and quality-first approach.
We have also embarked on Unify, our multi-year business
transformation programme, enabling the simplification of our
operations and making them more efficient by standardising
our core business processes, harmonising our data and
unifying our core system that connect us globally to provide
enhanced business and consumer insights, enabling informed
decisions at speed for us to be an agile and challenger
business. In October 2024, we passed an important milestone
with the first market cluster adopting these tools.
2021
Group Consumer Office
established, creating
new centre of expertise
for insights, innovation,
marketing and portfolio
management
2022
Acceleration of
development
cycles enables new
NGP launches
2023
Innovation hubs open in
Liverpool and Hamburg;
launch of “Dimensions”,
global insights project
segmenting individual
consumer moments; New
York capital markets day
showcasing consumer
capabilities; Paola Pocci
appointed as Chief
Consumer Officer
2024
Opening of Shenzhen
sensory laboratory,
enabling closer
collaboration
with partners
2021
Strategy launch identifies
Culture as key enabler for
improved performance;
Connections programme
to embed five core
behaviours
2022
Connected Performance
– more rigorous
performance management
for objective setting and
bonuses; Board approves
long-term diversity, equity
and inclusion ambitions
2023
Connected Leadership
coaching courses begin.
By end FY24, 850 leaders
have graduated from this
seven-day programme
2024
We maintained our
engagement score at
74%, one percentage
point above the
global benchmark
2021
New performance
management approach
introduced; market
clusters reduced
from 13 to 10
2022
Changes to business
support functions;
investment in new ERP
system announced
2023
300 roles moved to
new Global Business
Services unit
2024
Connected Change
programme launched
to embed change
management skills
among senior leaders;
new ERP system live in
first market October 2024
Consumer interviews in FY24
220,000
OUR TRANSFORMATION IN ACTION
Innovation centres
3
People in the Global Consumer universe
1,000
Legacy systems to be replaced by 2028
60
People employed in our Global Business Services unit
>320
Productivity gains
10%
Employee engagement
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66%
74%
74%
74%
73%
Global benchmark
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KEY DEVELOPMENTS
Imperial Brands PLC | Annual Report and Accounts 2024
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KPIs
We use key performance indicators to assess the progress
we are making in delivering our purpose, vision and strategy.
1. Definitions for financial KPIs can be found in Supplementary Information.
FINANCIAL KPIs1
NON-FINANCIAL KPIs1,2
Tobacco & NGP
net revenue (£bn)
Performance
Tobacco & NGP net revenue grew by 1.8% at
actual exchange rates and increased by 4.6%
on a constant currency basis. Tobacco net
revenue was up 3.8% at constant currency,
reflecting progress made in the two
combustible strategic priorities of: “focus on
our priority markets” and “driving value from
our broader portfolio”.
*
Excluding Russia.
Tobacco & NGP adjusted
operating margin (%)
Performance
Margins declined 70 basis points at actual
rates and 10 basis points at constant currency.
While gross margins increased, the decline in
adjusted operating margin is a result of
inflation and increased depreciation.
*
Excluding Russia.
Performance
NGP revenue grew by 26.4% on a constant
currency basis in the year. This growth in
our NGP revenue reflects our strategic priority
to “build a targeted NGP business” and the
step up in investment during the period.
Performance
Our “focus on our priority markets” has enabled
us to stabilise the market share loss we
experienced for a number of years. We balance
market share with value creation so we are
no longer the major market share donor to
our competitors in our higher value markets.
Gains in the US, Germany, Spain and
Australia offset declines in the UK.
Performance
Adjusted earnings per share increased
6.5% at actual exchange rates and increased
10.9% on a constant currency basis. Reported
earnings per share grew 19.1%. This movement
is explained in the Group Financial Review.
*
Excluding Russia.
Adjusted earnings
per share (pence)
R
HOW WE ARE
PERFORMING
NGP net revenue
(£m)
R
Aggregate priority
market share vs prior
year (basis points)
R
R
KPIs used as bonus and LTIP
performance criteria for Executive
Directors. See Remuneration Report
on pages 115-129 for more information
24
23
21
£7.6bn
22
£7.7bn*
£8.0bn
£8.2bn
24
23
21
246.5p
22
264.8p*
278.8p
297.0p
Performance
Adjusted net debt to EBITDA reduced to 1.8x
in FY24, close to our capital allocation target
of 2.0x to 2.5x. Adjusted net debt reduced to
£7.7 billion, after £2.3 billion of returns to
shareholders via dividend and share buyback.
EBITDA increased year-on-year, reflecting
the growth in adjusted operating profit
during the financial year.
Adjusted net debt to EBITDA
(multiple)
R
24
23
21
2.2x
22
2.0x
1.9x
1.8x
Performance
2024 adjusting cash conversion of 100%
was higher than the prior year due to
an improvement in working capital.
Adjusted operating cash
conversion rate (%)
R
24
23
21
83%
22
102%
92%
100%
24
23
22
21
-2bps
+10bps
+35bps
+5bps
Dividend per share (pence)
Performance
The dividend grew 4.5% reflecting our
progressive dividend policy and in line
with our capital allocation policy.
24
23
21
139.08p
22
141.17p
146.82p
153.42p
24
23
21
£188m
22
£208m
£265m
£329m
24
23
21
43.5%
22
44.4%*
44.7%
44.0%
Absolute Scope 1 and 2
market-based C02 equivalent
emissions (tonnes)3
R
Performance
We have seen a 69% decrease in our total
Scope 1 and Scope 2 market-based emissions
from our 2017 baseline year. *The baseline
and previous years’ data has been restated
due to the correction in Scope 2 market-
based emissions relating to the source of
heat and steam in our factory in Türkiye.
1. Definitions for non-financial KPIs can be found
in the ESG Review on pages 59-77 and in the
Reporting Criteria document available at
www.imperialbrandsplc.com.
2. Certain 2024 non-financial data has been
independently assured by Ernst & Young LLP (EY)
under the limited assurance requirements of the
ISAE 3000 standard. EY’s Assurance Opinion is
available on our website. Our reporting scope and
definitions are detailed in the Reporting Criteria
document published on our website.
See www.imperialbrandsplc.com/sustainability
for more information.
3. Our 2024 environmental data follows the reporting
period Q4 financial year 2023 to Q3 financial year
2024. This is to allow for data collection,
validation and external assurance. Our reporting
scope and definitions are detailed in the Reporting
Criteria document published on our website.
4. Our health and safety data is for the full 2024
financial year. Our reporting scope and definitions
are detailed in the Reporting Criteria document
published on our website.
Performance
Return on invested capital improved in the
year by 120bps to 19.7%, benefiting from a
reduction in FY24 invested capital compared
to the prior year, mainly due to the foreign
exchange impact on intangible assets.
Return on invested capital (%)
R
Lost time accident frequency rate
(per 200,000 hours)4
Performance
Although we have reduced the number of
lost time accidents in FY24, the lost time
accident rate has remained unchanged from
last year due to a corresponding reduction
in hours worked.
We have seen a 25% decrease in the LTA rate
compared to the 2019 baseline year.
24
23
19
0.40
0.30
22
0.24
0.30
24
23
21
16.5%
22
17.7%
18.5%
19.7%
Scope 1
Total value is total Scope 1 and Scope 2
market-based absolute CO2e emissions
Scope 2 market-based
2024
2023
2022
2017
114,270
91,007
81,089
73,437
15,683
176,176*
85,829*
20,326*
Waste (tonnes)3
Performance
Our target is to reduce waste by 20%
by 2030. We have exceeded this target
with a 32% reduction in waste compared
to the 2017 baseline year. We will set a
new waste reduction target subject to
ESG Committee approval.
24
23
17
49,141
35,744
22
41,969
33,211
Total shareholder return
R
Performance
We have delivered total shareholder
returns of 76% over the prior three-year
period. Delivery in line with our guidance
supports growing investor confidence
in our management team’s ability to
implement our strategy.
0
40
80
120
160
200
2024
2023
2022
2021
Imperial Brands total return
Energy consumption (GWh)3
R
Performance
We set a target to reduce absolute energy
consumption by 25% by 2030 versus the
2017 baseline year. In FY24 we exceeded
this target with a 32% reduction compared
to the baseline year. We will set a new
energy reduction target subject to
ESG Committee approval.
Our 2024 relative energy consumption
is 72,943 kWh/£m net revenue.
24
23
17
875
650
22
712
595
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Employee experience
To monitor the progress of our cultural
change programme, we conduct an
annual Employee Experience survey.
In FY24, our employee engagement score
was 74%, the same level as the prior
year and above the global benchmark.
Participation in the survey was 83%.
Additionally, we have developed an
internal bespoke index with which to
monitor the outcome of our leadership
talent development programmes.
More non-financial performance
indicators can be found in the
ESG Review on pages 59-77 and
in our Reporting Criteria document
available on our website.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
22
23
INDUSTRY OVERVIEW
GLOBAL MARKET
CONTEXT
As the highly regulated global market for
tobacco transforms into a more diverse
market for nicotine across multiple categories,
Imperial is leveraging its challenger mindset
to deliver for consumer needs and
consumer health.
EVOLVING CONSUMER DEMAND
The global nicotine market represents US$ 957 billion of retail
sales, with 92% of this accounted for by combustible tobacco.
Within combustible tobacco, cigarettes remain the largest
category, with more than 5.3 trillion consumed each year.
However, the development and consumer adoption of next
generation products (NGP) and smokeless tobacco over the
past decade has led to retail sales of US$ 77 billion, accounting
for the remaining 8%. NGP encompasses vaping products,
heated tobacco devices and sticks, and oral nicotine pouches.
Despite the well-known health risks of smoking, more than
20% of the world’s adult population still choose to smoke.
Our consumers tell us they value our products for the moments
of relaxation and pleasure they provide. Many of these
consumers also tell us that they are looking for potentially
less harmful alternatives to traditional combustible products,
but that they have yet to find a perfect replacement for
cigarettes. (For more information see pages 64-65.)
This means we are seeing a growing diversity of behaviour,
with consumers using different products for different
moments in their day.
Our strategy prepares us for a market where multiple nicotine
categories coexist, but these market developments are not
without their challenges. A greater number of nicotine product
categories introduces supply chain complexity – which Imperial
mitigates using a strong supplier partnership model. It also
introduces regulatory complexity, which can be harder to
mitigate. (For more information see pages 46-48.)
Thanks to our focused investments in transformation, we are
now well placed to provide much greater consumer choice and
to make a positive contribution to this wider market transition.
PROMOTING HARM REDUCTION
Regional and market regulators have diverse policies
towards tobacco harm reduction. Public health bodies agree
it is the smoke created by the burning of tobacco leaf that
contains most of the harmful chemicals responsible for
smoking-related disease. This is not always reflected in policy.
Some governments, such as the UK and New Zealand,
have policies that support existing smokers’ transition
to potentially less harmful products, and these markets
have seen positive public health benefits.
Other governments and the World Health Organization (WHO)
do not recognise the public health benefits of NGP. This is often
due to a sole focus on concerns about a youth access “on-ramp”.
This is an important consideration, although it should not
detract from the much larger – and scientifically substantiated
– value of the “off-ramp” that NGP can provide to many
millions of existing smokers.
We will continue to advocate for policies that embrace the
concept of tobacco harm reduction.
NAVIGATING REGULATION AND EXCISE
The traditional tobacco market remains heavily regulated.
Such regulation continues to evolve and remains a significant
influence on how we manufacture, advertise and sell our
products, and how our consumers buy and enjoy them.
Regulation varies widely across regions and markets.
Nationally, countries such as New Zealand and Australia
have unveiled comprehensive programmes of new regulation,
while other countries such as the US and Greece have further
developed product-by-product approval pathways for the
marketing of tobacco and nicotine products.
At a regional level, the EU is re-examining its Tobacco
Products Directive, Tobacco Advertising Directive and
Tobacco Excise Directive.
Combustible tobacco is heavily taxed, contributing more than
€80 billion to European governments alone each year, and is
often seen as a non-controversial source of urgent additional
government funding.
High excise taxes are also a tool governments use to curb
combustible demand. Excise taxes vary; some are based on a
percentage share of the retail price while others are linked to
inflation, such as in the UK, where we have seen drastic excise
rises over the last year.
Imperial Brands supports reasonable and rational regulation
of tobacco and nicotine products. We believe NGP offer potential
harm reduction and should be subject to excise rates at
significantly lower levels than combustible products to help
encourage smoker transition.
We are also clear that all our products are for adult nicotine
consumers only. (For more information see pages 64-65.)
Global nicotine market retail sales:
US$ 957 billion
of which NGP and smokeless tobacco accounts for:
US$ 77 billion
Source: Euromonitor 2024
Cigarettes consumed globally each year:
5.3 trillion
Source: Euromonitor 2024
Percentage of world’s adult population
who smoke:
>20%
Source: OurWorldinData.org
Combustible tobacco tax contribution
to European governments:
€80 billion
Source: EU Commission (2022, last full year available)
COMBATTING ILLICIT TRADE
The prevalence of the illicit trade in tobacco and nicotine
products means that we face competition from a criminal
supply chain.
Illicit tobacco deprives the responsible industry of revenue,
deprives governments of vital excise and deprives consumers of
the security of enjoying rigorously tested, high-quality products.
The illicit trade is a complex phenomenon, driven by economic,
practical and political factors.
Where governments have adopted aggressive policies against
NGP to limit the development of the nicotine market, we have
seen negative consequences for population-level public health
and the growth of an illicit trade in NGP.
At the extreme end is the difference between New Zealand,
where the legalisation of vape coincided with a steep fall in
youth smoking rates, and Australia, where there has never been
a significant legal market for NGP and yet a black market thrives.
Fighting illicit trade requires a co-ordinated approach from
government and industry. Imperial continues to work with
enforcement agencies and to encourage proportionate
regulation that will minimise the likelihood of nicotine
products being targeted by criminal organisations.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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OPERATING REVIEW
HEADLINES
• Financial performance driven by strong pricing
across multiple markets as volume decline rates
continue to improve
• Encouraging stabilisation in German market share,
with market share growth in Spain and decline in
the UK
• Leveraging our local jewel brand strategy to drive
operational and financial performance
• NGP net revenue performance reflects scale building
in existing markets and new product innovations
• Successful roll-out of new vapour products including
the 1,000-puff blu bar disposable and the rechargeable
blu bar kit during the year
• Adjusted operating profit growth reflects strong
combustible performance and improving NGP
gross margins
Tobacco volume
-3.7%
Tobacco & NGP
net revenue*
+5.6%
Tobacco net revenue*
+4.5%
NGP net revenue*
+20.5%
Adjusted
operating profit*
+7.5%
*
Change at constant currency.
EUROPE
REGION
AT A GLANCE
Our results in Europe are driven by strong
combustible pricing, an improvement in
volume decline rates and growth in NGP
net revenue.
Strategic initiatives in our priority markets supported our
combustible tobacco performance. In Germany, we delivered
an encouraging stabilisation in market share after more than
a decade of market share declines. Investments in our sales
force size and capabilities have led to an improvement of our
retailer coverage and mean we are better able to take advantage
of market opportunities. We leveraged our portfolio and revenue
management capabilities to support the roll-out of new formats
in both the premium and the value pricing points. In Spain,
our brand equity investments supported price increases while
still delivering market share growth. Strong sales growth was
driven by our local jewel brands strategy with a new value
proposition with Fortuna GO to capture down-trading as the
pricing ladder expands and a focus on key distribution channels.
In the UK, our continued brand equity investment in our
local jewel brands, underpinned the roll-out of a new fine
cut offer and supported price increases which helped to partially
mitigate the challenging market volume declines and market
share declines.
Tobacco volumes were broadly in line with long-term decline
rates at 3.7%. German volumes benefited from the easing of
pressures on consumer incomes combined with an encouraging
market share performance. This offset the impact of elevated
excise regimes in markets, such as the UK, which contributed to
continuing pressure on volumes in those markets. Tobacco net
revenue increased 4.5% at constant currency, reflecting a strong
price mix of 8.2%, which more than offset the volume declines.
Our NGP portfolio has delivered strong net revenue growth
of 20.5% at constant currency with growth across all three
categories as we gained scale in our existing market footprints.
Our consumer-led partnership model on NGP innovation
supported new product roll-outs in all three categories. In vaping,
in the UK, France and Spain we introduced a new disposable
device under the blu brand which delivers an increased 1,000
puffs. Additionally, in response to consumer demand for a
more sustainable product, towards the end of the year we
rolled out our pod-based blu bar kit, in France and the UK,
offering consumers the same experience as blu bar but with a
rechargeable battery. In heated tobacco, we introduced iSenzia
tea-based heat sticks into Italy and Greece to extend choice
to adult smokers with flavoured non-tobacco sticks which
can be used in our Pulze 2.0 devices. In modern oral nicotine,
we continue to meet evolving consumer preferences with
flavour launches in ZoneX and Skruf Modern in Norway.
Tobacco and NGP adjusted operating profit for the year
increased 7.5% at constant currency, mainly reflecting the
strong tobacco performance together with improvement in
NGP gross margins.
Aleš Struminský
President, Europe Region
Full year result
Change
2024
2023
Actual
Constant
currency
Tobacco volume
bn SE
86.6
89.9
-3.7%
–
Tobacco & NGP net revenue
£m
3,366
3,240
+3.9%
+5.6%
Tobacco net revenue
£m
3,106
3,020
+2.8%
+4.5%
NGP net revenue
£m
260
220
+18.2%
+20.5%
Adjusted operating profit
£m
1,541
1,482
+4.0%
+7.5%
Priority market
Performance
Tobacco share
Germany
• 18.3% (+2bps)
• 13% of tobacco & NGP net
revenue
We have delivered an encouraging turnaround in our market share as investments in our strategic
initiatives gained traction. Sales force expansion has improved our distribution coverage and
enabled greater frequency of store visits, while capability enhancements supported improved
agility to capture channel shifts. We continue to manage our brand portfolio across all key price
segments to appeal to a range of consumer needs. In the premium sector, we grew our Davidoff
brands with new pack formats and in the value sector, we extended our Paramount brand with
the successful launch of roll-your-own format in fine-cut tobacco. In NGP, our blu bar vapour
product has continued to grow share since its launch in 2023.
UK
• 37.9% (-50 bps*)
• 7% of tobacco & NGP net
revenue
The UK market remains an important value contributor to the Group. We increased prices in
the period as we continued to balance value creation alongside managing our overall share,
which declined over the year. Our strategic investments in our local jewel brands underpinned
the successful roll-out of a fine-cut offer. This somewhat offset the overall market size decline,
driven by above inflation excise tax increases across both cigarettes and fine cut tobacco and
growth in the illicit market for tobacco and vaping products. Our NGP sales benefited from the
successful roll-out of new products including the 1,000-puff blu bar disposable and the
rechargeable blu bar kit.
Spain
• 26.6% (+5 bps*)
• 5% of tobacco & NGP net
revenue
We delivered market share gains for the sixth successive year, offsetting the modest decline in
the overall tobacco market volume. Our market share increase was driven by innovation such as
the continued success of West pack format extensions and a focus on key distribution channels.
In NGP, the roll-out of the 1,000-puff blu bar disposable and blu box, an ergonomic design popular
with consumers in Spain, has been well received by consumers and the trade. The blu brand is
the joint market-leader in vapour by retail sales value as at August 2024.
*
Market share has been restated to reflect more accurate data sources and channel mix.
Imperial Brands PLC | Annual Report and Accounts 2024
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OPERATING REVIEW continued
We delivered a strong performance with market
share gains in our cigarette portfolio coupled
with strong pricing, which supported growth
in net revenue and adjusted operating profit.
We are pleased to report strong growth in
our NGP net revenue, driven by the successful
launch of our modern oral brand, Zone.
Share gains supported an outperformance in our tobacco
volumes, down 7.7%, against an industry volume decline of
9.0% in cigarettes and a 6.7% fall in industry mass market cigar
volumes. Industry cigarette declines are steeper than the
long-term average driven by macroeconomic pressure on
consumer disposable income and increased sales of illicit
vaping products. Mass market cigar industry volume declines
reflect sales of illicit products at the lowest price point.
On a constant currency basis, tobacco net revenue increased
by 4.0%, as strong pricing of around +11.7% offset volume declines.
Our cigarette out-performance reflects the improvement in our
cigarette market share of 15 basis points to 10.9% – our sixth
consecutive year of market share growth. This was driven
by our investment in sales execution and brand building,
and the careful positioning of our brand portfolio to meet
the needs of consumers across a range of price points.
We continue our focused investment on sales force
effectiveness, and the expansion of the number of retail
stores where we sell our brands. For example, investment
supported share growth in Winston within the premium
segment, which helped to offset KOOL performance in the
face of increased competitor discounting in the menthol
segment. Improved sales force execution enabled an
expansion of store listings for Crowns, supporting market
share growth of the brand in the growing deep discount
segment. This progress in cigarettes is despite continued
pricing actions from our competitors.
Our mass market cigar portfolio improved against a weak
comparator in the prior year due to supply disruptions as
a result of Hurricane Ian in September 2022. Additionally,
continued innovation and investment in quality supported
market share gains in the natural leaf segment with
Backwoods, our premium iconic heritage brand.
AMERICAS
REGION
Tobacco volume
-7.7%
Tobacco & NGP
net revenue*
+4.3%
Tobacco net revenue*
+4.0%
NGP net revenue*
+29.4%
Adjusted
operating profit*
+1.8%
*
Change at constant currency.
HEADLINES
• Cigarette share growth up 15 basis points to 10.9%
• Tobacco net revenue growth at constant currency
reflects strong pricing (+11.7%) and market share
gains offsetting volume declines
• Mass market cigar performance improved, benefiting
from product innovation and brand loyalty
• NGP net revenue growth reflecting successful
targeted launch of modern oral brand, Zone,
in 12 metropolitan areas
• Adjusted operating profit grew at constant currency,
reflecting strong cigarette pricing, which more than
offset the reduction in volumes, increased NGP
investment, higher leaf costs, leaf inventory
adjustments and wage inflation. At actual exchange
rates, adjusted operating profit declined
Kim Reed
President and CEO, Americas Region
AT A GLANCE
Full year result
Change
2024
2023
Actual
Constant
currency
Tobacco volume
bn SE
19.1
20.7
-7.7%
–
Tobacco & NGP net revenue
£m
2,836
2,812
+0.9%
+4.3%
Tobacco net revenue
£m
2,793
2,778
+0.5%
+4.0%
NGP net revenue
£m
43
34
+26.5%
+29.4%
Adjusted operating profit
£m
1,235
1,257
-1.8%
+1.8%
Our NGP net revenue grew 29.4% on a constant currency basis,
the first year of growth under the current strategy. This has
been driven by our entry into the fast-growing modern oral
nicotine pouch segment in February, with a targeted launch
under the Zone brand in 12 metropolitan areas. The brand
offers a differentiated option for consumers with a range of
14 product variants and leverages the Company’s existing
US sales force. We are encouraged by early consumer
repurchase rates and have increased the number of stores
since launch.
Adjusted operating profit grew 1.8% at constant currency,
reflecting strong cigarette pricing, which more than offset
the reduction in volumes, increased NGP investment into
supporting the launch of Zone, higher leaf costs, leaf inventory
adjustments and wage inflation. At actual exchange rates,
adjusted operating profit declined -1.8%.
Imperial Brands PLC | Annual Report and Accounts 2024
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OPERATING REVIEW continued
AFRICA, ASIA, AUSTRALASIA
AND CENTRAL & EASTERN EUROPE
HEADLINES
• Strong financial results at constant currency reflecting
recovery in the second half of the year as earlier
disruption due to shipment timings abated
• Tobacco and NGP net revenue growth at constant
currency driven by our African, Central & Eastern
European and Asia, Middle East & Turkey
market clusters
• At actual exchange rates, tobacco & NGP net
revenue declined
• Positive tobacco price mix across region offset
volume declines
• Market size pressures in Australia somewhat offset by
market share growth and pricing supported by active
brand portfolio management
• NGP net revenue growth reflecting new product
introductions in Central & Eastern Europe markets
• Adjusted operating profit delivery at constant currency
driven by strong tobacco performance and reduction of
NGP losses. At actual exchange rates, adjusted operating
profit declined
The region delivered a solid operational and
financial performance, benefiting from a
recovery in the second half as we mitigated
the impact of disruption of Red Sea trade.
Tobacco and NGP net revenue grew 3.3% at constant currency
reflecting continued focus on pricing discipline across the
region, with tobacco price mix of 6.0% offsetting volume
declines of 3.5%. These results reflect the targeted approach we
are taking to our investment in sales execution and marketing
in Australia, our one priority market in the region, and our
improved consumer insight and revenue growth management
tools applied to our broad market clusters. At actual exchange
rates, tobacco and NGP net revenue declined -0.3%.
Australia delivered a resilient profit performance with further
market share gains for the fifth consecutive year. This has
been driven by the active management of brand portfolio to
ensure we have an offer for consumers across all key price
points, as well as a continued close partnership with our retail
customers. These gains have been delivered against a backdrop
of increased volume declines driven by excise tax increases
and growth in both illicit combustible and vaping products.
In our African markets, we grew revenue through strong pricing
as we focused on increasing consumer engagement through
the management of our local jewel and key international
brands. In our sub-Saharan African markets our local jewel
brands performed well, with Fine taking share in Ivory Coast
supported by format innovation, strengthening distribution
and point of sales presence. This more than offset pressures in
Morocco where recent excise tax changes have disadvantaged
the low price segment and impacted Gauloises.
In our Asia, Middle East and Turkey (AMET) cluster, the impact
of the Red Sea disruption seen in the first half of the year was
mitigated and we exercised strong pricing discipline. Our global
brand Davidoff resonates with local consumers and performed
well in Saudi Arabia. Davidoff also has strong brand loyalty in
Taiwan, where a refocus to convenience channels together
with brand innovation has led to market share growth after
several years of decline and an improving contribution to
performance throughout the year.
In our Central & Eastern European (CEE) market cluster our
combustible and NGP portfolios performed well. NGP net revenue
doubled over the period as we refined our go-to-market approach
in Poland applying learnings from our Czech Republic market.
In combustibles, strong pricing offset volume declines to
support financial delivery.
NGP net revenue growth in the period reflects the launch
of our 1,000 puff blu bar vaping product in Poland. In heated
tobacco products, the introduction of iSenzia, tea-based heat
sticks, to Czech Republic and Poland, extended the choice to
adult smokers with a flavoured non-tobacco stick that can
be used in our Pulze 2.0 device.
Adjusted operating profit grew 2.3% at constant currency,
driven by a strong tobacco performance in all market clusters
and a reduction in NGP losses. At actual exchange rates,
adjusted operating profit declined -3.9%.
Priyali Kamath
President, Africa, Asia, Australasia
and Central & Eastern Europe
NGP net revenue*
+136.4%
Adjusted
operating profit*
+2.3%
*
Change at constant currency.
AT A GLANCE
Tobacco volume
-3.5%
Tobacco & NGP
net revenue*
+3.3%
Tobacco net revenue*
+2.5%
Full year result
Change
2024
2023
Actual
Constant
currency
Tobacco volume
bn SE
84.3
87.4
-3.5%
–
Tobacco & NGP net revenue
£m
1,955
1,960
-0.3%
+3.3%
Tobacco net revenue
£m
1,929
1,949
-1.0%
+2.5%
NGP net revenue
£m
26
11
+136.4%
+136.4%
Adjusted operating profit
£m
811
844
-3.9%
+2.3%
Priority market
Performance
Tobacco share
Australia
• 32.2% (+5 bps*)
• 3% of Group tobacco & NGP
net revenue
The Australian market contributed to Group profit growth in the period. Against a backdrop
of steep market volume declines as consumers normalised use of illicit products, we grew our
market share supported by a focused approach to revenue growth management. Clear price
tiering and product differentiation supported stable market share for JPS. In the fifth price
segment, L&B is now Australia’s fastest growing cigarette brand since inception in 2021, driven
by pack format extensions. In fine cut tobacco, our local jewel brand, Champion, in the higher
price segment, extended its lead of the category, while Riverstone remained stable. Continued
improvements in the supply chain supported increased efficiencies and underpinned positive
profit contribution from the market.
*
Market share has been restated to reflect more accurate data sources and channel mix.
Imperial Brands PLC | Annual Report and Accounts 2024
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OPERATING REVIEW continued
DISTRIBUTION
HEADLINES
• Gross profit reflects good underlying growth and
integration of prior year acquisitions
• Diversification strategy means over 50% gross profit
from non-tobacco-related businesses
• Adjusted operating profit includes strong contribution
from profit on inventory following tobacco price increases
Gross profit*
+4.4%
Adjusted operating
margin excluding
eliminations*,**
+109bps
Adjusted operating
profit excluding
eliminations*,**
+9.8%
Distribution consists of our 50.01% stake in
Logista, a Spanish-listed distributor of
tobacco and other convenience products and
provider of freight, parcel, courier services
and pharmaceutical logistics. It operates an
end-to-end distribution model that covers
the full value chain from collection to more
than 200,000 points of sale across Europe.
Performance was in line with expectations and includes the
incremental financial contribution from acquisitions made
during this period and the prior two financial years in line
with Logista’s strategy to accelerate growth in European
non-tobacco distribution. These include the acquisition of
Belgium Parcel Service (BPS); the acquisition of SGEL Libros,
a national book distribution and publishing company,
which was formally acquired by Logista Libros, a 50%
subsidiary of Logista and Grupo Planeta in October 2023;
and the acquisition of Gramma Farmaceutici, a pharmaceutical
distribution company in Italy, which completed in July 2023.
In May 2024, Logista acquired the remaining 30% stake in
Speedlink as expected under the original agreement.
Furthermore, in July 2024, Logista acquired the remaining 26.7%
stake in Herinvemol S.L., trading as “Transportes El Mosca”,
giving Logista 100% ownership of the company.
Full year result
Change
2024
2023
Actual
Constant
currency
Distribution gross profit*
£m
1,503
1,466
+2.5%
+4.4%
Adjusted operating profit
£m
330
306
+7.8%
+9.8%
Adjusted operating profit margin
%
22.0
20.9
+108bps
+109bps
Eliminations
£m
(6)
(2)
-200.0%
-200.0%
Adjusted operating profit (inc. eliminations)
£m
324
304
+6.6%
+8.6%
*
Distribution gross profit is Distribution revenue less the cost of distributing products.
AT A GLANCE
Adjusted operating
profit including
eliminations*,**
+8.6%
*
Change at constant currency.
** Eliminations relate to sales of
tobacco and NGP product to
Logista that are still held in
their inventory.
Gross profit – Gross profit at £1,503 million was 4.4% higher
on a constant currency basis with good performance in
particular in Spain and Italy reflecting the integration of
prior year acquisitions.
In Iberia, growth in gross profit was driven in part by
tobacco and related products, with the former benefiting
from manufacturer price increases in Spain for the third
consecutive year. Transport services recorded growth year
on year, with a positive contribution from long-distance
transport which includes Logista Freight and Transportes
El Mosca, the latter incorporated at the end of October
2022. There was good growth in Nacex, the express courier
business, and Logista Parcel, supported by the opening of
new temperature-controlled capacity during the period.
Pharmaceutical distribution continues to expand both its
customer base and product offering.
In Italy, gross profit was supported by good performance
in tobacco, benefiting from growth in volumes and
manufacturer price increases which led to a higher
profit on inventory than in the prior year. The period
benefits from the first full incorporation of Gramma
Farmaceutici, with the acquisition completing in July
2023. This acquisition is the first stage of our expansion
into the pharma segment in Italy.
In France, gross profit reflects tobacco volume declines,
partially offset by price increases following excise tax
increases and subsequent manufacturer price increases
which led to a profit on inventory higher than in the prior
year. Logista also successfully completed a pilot for NGP
recycling during the period.
Operating profit – Adjusted operating profit margin increased
by 109 basis points at constant currency reflecting the strong
performance from profit on inventory in tobacco following
manufacturers’ price increases in the period. After eliminations,
the adjusted operating profit contribution to the Group
increased 8.6% on a constant currency basis. In line with our
policy of adjusting items for only Board-approved restructuring
programmes, charges and profits/losses on disposals relating
to restructuring activities have not been recognised as
adjusting items.
Cash – In line with the rest of Imperial Brands, Logista is part
of the inter-company cash pooling arrangement, which further
enhances the Group’s liquidity. On a 12-month basis, the daily
average cash balance loaned to the Group by Logista was
c.£1.8 billion, with movements in the cash position during the
12-month period varying from a high of c.£2.5 billion to a low
of c.£0.7 billion, primarily due to the timing of excise duty
payments. At 30 September 2024, the loan position was
c.£1.9 billion compared to c.£2.0 billion at 30 September 2023.
Imperial Brands PLC | Annual Report and Accounts 2024
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GROUP FINANCIAL REVIEW
Volumes
-4.0%
reflecting wider industry market size
declines across our footprint
Tobacco & NGP net revenue
+4.6%
at constant currency, driven by robust
tobacco price mix and NGP growth
Adjusted operating
cash conversion
100%
2023: 92%
Reported operating profit
+4.5%
reflecting operating performance, with
adverse foreign exchange movements
Adjusted operating profit
+4.6%
at constant currency, driven by tobacco
pricing, reduced NGP losses and Logista
Adjusted net debt/EBITDA
1.8x
2023: 1.9x
Reported basic EPS
300.7p
an increase of 19.1%
Adjusted EPS
297.0p
an increase of 10.9% on a constant
currency basis
Lukas Paravicini
Chief Financial Officer
ACCELERATING
RETURNS
SUMMARY FINANCIAL INFORMATION
Cash generation remains a key focus, and we have delivered
£2.4 billion of free cash flow, with 100% adjusted operating
cash conversion. The strong cash generation has enabled us
to invest in our strategy, committing to return £2.4 billion to
shareholders via dividend and share buyback. Reported net
debt reduced by £0.1 billion to £8.3 billion with adjusted net
debt/EBITDA at 1.8x in FY24.
On a reported basis, cash flow improved year on year due
to a working capital cash inflow.
We have announced a further £1.25 billion share buyback,
which we expect to complete no later than 29 October 2025.
This represents approximately 6.8% of the share capital as
at 30 September 2024 and is a 13.6% increase on last year’s
£1.1 billion buyback, where we repurchased 54,087,312 shares,
or 6.0% of our share capital, in FY24. In support of our
progressive dividend policy, we are also increasing our
dividend per share by 4.5% for FY24.
We anticipate our growth phase will continue for the
remainder of our five-year strategy as the business capitalises
on the gains and investments we have previously made.
As we enter the final year of our current strategy, these results
reflect Imperial’s improved resilience to withstand geopolitical
and macroeconomic pressures and the benefit of our
continued investments in consumer capability and cultural
transformation. We have delivered market share gains in our
priority markets and achieved robust tobacco pricing to
support the delivery of another year of improving financial
performance and growing capital returns.
On a constant currency basis, tobacco & NGP net revenue
grew 4.6%, reflecting strong tobacco price mix and NGP growth.
Group adjusted operating profit rose 4.6%, on a constant currency
basis. Logista in our Distribution segment contributed positively
to our results with gross profit up 4.4%. This was driven by
strong performance in the underlying business particularly in
Spain and Italy, as well as the benefit of prior year acquisitions.
Reported revenue declined -0.2% reflecting volume declines
in our high excise markets and adverse foreign exchange,
largely offset by growth in NGP and Distribution revenues.
Reported operating profit increased +4.5%, driven by strong
operating performance, with adverse foreign exchange
movements offset by the non-repeat of charges relating to
legal provisions and fair value adjustments and impairment
of other financial assets.
SUMMARY INCOME STATEMENT
Reported
Adjusted
£ million (unless otherwise indicated)
2024
2023
2024
2023
Revenue/net revenue/gross profit*
Tobacco & NGP revenue/net revenue
21,307
21,656
8,157
8,012
Distribution revenue/gross profit
11,104
10,819
1,503
1,466
Operating profit
Tobacco & NGP
3,238
3,106
3,587
3,583
Distribution
322
298
330
306
Eliminations
(6)
(2)
(6)
(2)
Group operating profit
3,554
3,402
3,911
3,887
Net finance costs
(534)
(298)
(402)
(410)
Share of profit/(losses) of investments accounted for using the equity method
9
7
9
7
Profit before tax
3,029
3,111
3,518
3,484
Tax
(282)
(655)
(799)
(781)
Profit for the year
2,747
2,456
2,719
2,703
Minority interests
(134)
(128)
(138)
(131)
Earnings per ordinary share (pence)
300.7
252.4
297.0
278.8
Dividend per share (pence)
153.42
146.82
153.42
146.82
*
Reported revenue includes duty, similar items, distribution and sale of peripheral products, which are excluded from net revenue; net revenue comprises reported revenue
less duty and similar items, excluding sale of peripheral products and distribution revenue. Distribution gross profit is Distribution revenue less the cost of distributing
products. This was previously referred to as Distribution net revenue.
Alternative performance measures (APM)
When managing the performance of our business we focus on
non-GAAP measures, which we refer to as adjusted measures.
We believe they provide a useful comparison of underlying
performance from one period to the next, as GAAP measures
can include one-off, non-recurring items and recurring items
that relate to earlier acquisitions. These adjusted measures are
supplementary to, and should not be regarded as a substitute
for, GAAP measures, which we refer to as reported measures.
The basis of our adjusted measures is explained in the
accounting policies accompanying our financial statements
and the APM section within the Supplementary Information.
Reconciliations between reported and adjusted measures are
included in the Supplementary Information. Percentage growth
figures for adjusted results are given on a constant currency
basis, where the effects of exchange rate movements on the
translation of the results of our overseas operations are removed.
While we believe that APMs can provide helpful information
which supplements reported measures, we are also aware of
the need to ensure that an appropriate balance is maintained
between the two sets of reporting metrics, with adjusted
disclosures not being given greater prominence than
GAAP measures.
In the prior year, we included measures of performance to
exclude our exit from Russia in April 2022 in the comparator
values. Reference to these comparator values is not required
in this financial year. Thus we have reduced the number of
APMs used in the period.
Imperial Brands PLC | Annual Report and Accounts 2024
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35
44.4%
45.6%
10.0%
Europe
86.6bn SE
Americas
19.1bn SE
AAACE
84.3bn SE
39.4%
20.7%
8.3%
31.6%
Europe
£1,541m
Americas
£1,235m
AAACE
£811m
Distribution
£324m
41.3%
23.9%
34.8%
Europe
£3,366m
Americas
£2,836m
AAACE
£1,955m
+4.6%
FY24 Constant
currency net revenue
£8,378m
FY24 Tobacco &
NGP net revenue
+1.8%
£8,157m
FY23 Tobacco &
NGP net revenue
£8,012m
NGP
net revenue
£70m
-2.8%
Translational FX
£(221)m
Tobacco
volume
£(311)m
Tobacco
price mix
£607m
FY24 adjusted
operating profit at
constant currency
£4,065m
FY23 adjusted
operating profit
£3,887m
Logista
£26m
Reduced NGP losses
£58m
Tobacco
performance
£94m
+4.6%
Translation FX
£(154)m
-4.0%
FY24 adjusted
operating profit
£3,911m
+0.6%
Tobacco & NGP net revenue
(actual FX rate), £ million
Adjusted operating profit
(actual FX rate), £ million
Volumes, billion stick equivalent
(SE)
GROUP RESULTS – ADJUSTED CONSTANT CURRENCY ANALYSIS
£ million
(unless otherwise indicated)
Full year
ended 30
September
2023
Foreign
exchange
Constant
currency
movement
Full year
ended 30
September
2024
Change
Constant
currency
change
Tobacco & NGP net revenue
Europe
3,240
(56)
182
3,366
3.9%
5.6%
Americas
2,812
(96)
120
2,836
0.9%
4.3%
Africa, Asia, Australasia and Central & Eastern Europe
1,960
(69)
64
1,955
(0.3%)
3.3%
Tobacco & NGP net revenue
8,012
(221)
366
8,157
1.8%
4.6%
Tobacco & NGP adjusted operating profit
Europe
1,482
(52)
111
1,541
4.0%
7.5%
Americas
1,257
(44)
22
1,235
(1.8%)
1.8%
Africa, Asia, Australasia and Central & Eastern Europe
844
(52)
19
811
(3.9%)
2.3%
Tobacco & NGP adjusted operating profit
3,583
(148)
152
3,587
0.1%
4.2%
Distribution
Gross profit
1,466
(27)
64
1,503
2.5%
4.4%
Adjusted operating profit including eliminations
304
(6)
26
324
6.6%
8.6%
Group adjusted results
Adjusted operating profit
3,887
(154)
178
3,911
0.6%
4.6%
Adjusted net finance costs
(410)
15
(7)
(402)
2.0%
(1.7%)
Adjusted EPS (pence)
278.8
(12.2)
30.4
297.0
6.5%
10.9%
GROUP FINANCIAL REVIEW continued
SALES PERFORMANCE
• Reported revenue declined -0.2% reflecting volume declines
in high excise markets and adverse foreign exchange,
largely offset by growth in NGP and Distribution revenues
• Tobacco & NGP net revenue grew +4.6% at constant currency,
comprising +3.8% from tobacco and +26.4% from NGP
• Tobacco volume was down -4.0%, reflecting wider industry
market size declines across our footprint
• Aggregate market share growth in our five priority markets
of +5bps (FY23 +10bps)
• Tobacco price mix was strong at +7.8% due to positive pricing
offsetting a small negative mix
• NGP net revenue increased +26.4% to £335m at constant
currency, driven by growth across all geographies with the
US region back to growth
• Distribution gross profit grew +4.4%, driven by strong
tobacco pricing and benefit of prior year acquisitions
• Translation FX was a headwind at -2.8% due to average
sterling strengthening against the dollar and euro
Reported revenue
-0.2%
Tobacco & NGP
net revenue
+4.6%
Reported operating
profit
+4.5%
Group adjusted operating
profit
+4.6%
OPERATING PROFIT
• Reported Group operating profit of £3,554m increased by
+4.5% reflecting strong operating performance, with adverse
foreign exchange offset by the non-repeat of charges relating
to legal provisions and the write-down of financial assets
• Adjusted Group operating profit increased +4.6% at constant
currency, driven by strong tobacco pricing offsetting tobacco
volume declines, lower NGP losses and Logista performance
• Tobacco adjusted operating profit increased by +2.5% at
constant currency, reflecting strong pricing offsetting
volume declines
• NGP losses reduced 43.0% at constant currency to £77m,
with improved gross margin and volume growth supporting
continued investment in new product launches
• Translation FX on adjusted operating profit of -4.0% reflects
average sterling strengthening against the dollar and euro
Imperial Brands PLC | Annual Report and Accounts 2024
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37
FY23
adjusted EPS
278.8p
+10.9%
Adjusted
operating
profit
19.3p
Interest
(0.8)p
Minorities
& JV
(0.5)p
Tax
(5.5)p
Number of
shares
17.9p
FY24
adjusted constant
currency EPS
309.2p
Translation
FX
(12.2)p
-4.4%
FY24
adjusted EPS
297.0p
+6.5%
Reported EPS
+19.1%
Adjusted EPS
+10.9%
EARNINGS PER SHARE
• Reported EPS increased +19.1% to 300.7 pence reflecting strong
operating performance, lower tax charge and reduced share
count, offsetting higher interest costs
• Adjusted EPS was 297.0 pence, up +10.9% at constant currency
with adjusted operating profit growth enhanced by the
reduced share count due to the ongoing share buyback
GROUP FINANCIAL REVIEW continued
SUMMARY CASH FLOW STATEMENT*
Reported
Adjusted
£ million
2024
2023
2024
2023
Group operating profit
3,554
3,402
3,911
3,887
Depreciation, amortisation and impairments
647
632
294
270
EBITDA
4,201
4,034
4,205
4,157
Loss on disposal of subsidiary
–
1
–
–
Profit on disposal of assets
(13)
(39)
(13)
(39)
Other non-cash movements
(93)
70
(54)
46
Operating cash flows before movement in working capital
4,095
4,066
4,138
4,164
Working capital
100
(347)
100
(347)
Tax cash flow
(888)
(590)
(888)
(590)
Cash flows from operating activities
3,307
3,129
3,350
3,227
Net capital expenditure
(321)
(254)
(321)
(254)
Restructuring
–
–
(43)
(98)
Cash interest
(416)
(407)
(416)
(407)
Minority interest dividends
(136)
(104)
(136)
(104)
Free cash flow
2,434
2,364
2,434
2,364
Acquisitions
(42)
(183)
(42)
(183)
Acquisition of non-controlling interests
(49)
–
(49)
–
Shareholder dividends
(1,299)
(1,312)
(1,299)
(1,312)
Share buyback
(1,020)
(1,006)
(1,020)
(1,006)
Net cash inflow/(outflow)
24
(137)
24
(137)
Leases paid
(93)
(92)
Increase in borrowings
3,848
1,462
Repayment of borrowings
(3,948)
(1,518)
Cash flow relating to derivative instruments
(34)
(64)
Net decrease in cash and cash equivalents
(203)
(349)
* See Financial Statements for full Cash Flow Statement.
CASH FLOW
Cash flows from operating activities were £3,307 million
(2023: £3,129 million).
As anticipated, gross capital expenditure of £371 million
was higher than the prior year (2023: £325 million).
Capital expenditure net of the proceeds from the sale of
assets, or net capital expenditure, was £321 million, and was
also higher than the prior year (2023: £254 million). Net capital
expenditure is anticipated to remain within an expected range
of £300 million to £350 million in 2025. The increased capital
expenditure is supporting projects to drive simplified and
efficient operations in line with our strategic plan.
Adjusted operating cash conversion was 100% (2023: 92%)
on a 12-month basis.
£ million (unless otherwise indicated)
2024
2023
Adjusted operating profit
3,911
3,887
Cash flow from operating activities post
capital expenditure pre interest and tax
3,917
3,563
Adjusted operating cash conversion
100%
92%
Free cash flow of £2,434 million (2023: £2,364 million) is above
the prior year primarily due to the higher cash flows from
operating activities as a result of the working capital inflow
compared to the outflow in the prior year, offset by higher
cash taxes.
Restructuring cash costs relating to Board-approved
restructuring programmes totalled £43 million (2023: £95 million),
and comprised three previous programmes: Cost Optimisation
Programme I of £8 million (2023: £24 million), Cost Optimisation
Programme II of £10 million (2023: £10 million) and the 2021
Strategic Review Programme of £25 million (2023: £61 million).
Together, the cumulative cash spend for all three restructuring
programmes is £1,389 million to date. The remaining cash
spend is ongoing, although not expected to be in excess of
the existing provisions.
£ million
2024
2023
Restructuring cash cost
43
98
Cumulative to date
1,389
1,346
The net cash inflow of £24 million (2023: £137 million outflow)
improved year on year, reflecting positive working capital
movement and lower acquisitions compared to the prior year.
Acquisition costs were £42 million (2023: £183 million) and
include Imperial’s deferred consideration for intellectual
property relating to nicotine pouches marketed in the US
and Logista’s acquisition of Belgium Parcel Service (BPS).
Acquisition of non-controlling interests of £49 million relate
to Logista’s acquisition of the remaining stakes in El Mosca,
Speedlink and Carbo Collabatelle. Of the £1.1 billion share
buyback announced in October 2023, £1.0 billion was
completed in the period with the remaining £0.1 billion to
be finalised in October. We have announced a further share
buyback of up to £1.25 billion of shares during FY25.
RETURN ON INVESTED CAPITAL
Return on invested capital (ROIC) increased by 120 basis points,
driven by a reduction in invested capital. ROIC is 19.7%
(2023: 18.5%).
Adjusted operating profit increased by £24 million.
Our FY24 invested capital has reduced compared to the
prior year mainly due to the foreign exchange impact on
intangible assets.
£ million
2024
2023
Reported operating profit
3,554
3,402
Adjusting items (APM section within
Supplementary Information)
357
485
Adjusted operating profit
3,911
3,887
Equivalent tax charge
(888)
(871)
Net adjusted operating profit after tax
3,023
3,016
Working capital
(2,772)
(2,567)
Intangible assets
15,938
16,944
Property, plant and equipment
1,561
1,617
Invested capital
14,727
15,994
Average annual invested capital
15,361
16,304
Return on invested capital
19.7%
18.5%
ADJUSTED NET DEBT/EBITDA
Adjusted net debt reduced by £286 million to £7,740 million
(2023: £8,026 million) in the year and continued strong cash
generation supported additional return of capital to
shareholders via a share buyback. Adjusted net debt/EBITDA
is 0.1x below prior year at 1.8x.
Reported net debt reduced by £98 million to £8,340 million
(2023: £8,438 million). Excluding accrued interest, lease liabilities
and the fair value of interest rate derivatives providing
commercial hedges of interest risk, Group adjusted net debt
was £7,740 million (2023: £8,026 million).
£ million
2024
2023
Reported net debt
(8,340)
(8,438)
Accrued interest
95
125
Lease liabilities
386
349
Fair value of interest rate derivatives
119
(62)
Adjusted net debt
(7,740)
(8,026)
Adjusted EBITDA
4,205
4,157
Adjusted net debt/EBITDA
1.8x
1.9x
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GROUP FINANCIAL REVIEW continued
RECONCILIATION BETWEEN REPORTED AND ADJUSTED PERFORMANCE MEASURES
£ million unless otherwise indicated
Operating profit
Net finance (costs)/income
Earnings per share (pence)
2024
2023
2024
2023
2024
2023
Reported
3,554
3,402
(534)
(298)
300.7
252.4
Russia, Ukraine and associated markets
–
4
–
–
–
0.4
Amortisation and impairment of acquired intangibles
353
347
–
–
40.6
38.0
Fair value adjustment and impairment
of other financial assets
–
36
–
–
–
3.4
Loss on disposal of subsidiaries
–
1
–
–
–
0.1
Charges related to legal provisions
–
85
–
–
(0.2)
6.4
Structural changes to defined benefit pension schemes
4
12
–
–
0.5
1.0
Net fair value and exchange movements
on financial instruments
–
–
110
(149)
(13.1)
(25.8)
Post-employment benefits net financing cost/(income)
–
–
11
(13)
0.7
(1.4)
Tax interest cost
–
–
10
50
1.3
5.2
Effects of discounting long-term provisions
–
–
1
–
0.1
–
Recognition of deferred tax assets
–
–
–
–
(33.7)
(23.0)
Provision for state aid recoverable
–
–
–
–
(11.6)
–
Uncertain tax positions
–
–
–
–
18.9
22.4
Prior year adjustments
–
–
–
–
(6.6)
–
Adjustments above attributable to
non-controlling interests
–
–
–
–
(0.6)
(0.3)
Adjusted
3,911
3,887
(402)
(410)
297.0
278.8
Adjusting items
The main reconciling items of the Group’s reported to adjusted
operating profit are shown above.
In the period to 30 September 2024 adjusting items relate
mainly to amortisation of acquired intangibles of £353 million
(2023: £347 million) and fair value movements on derivative
financial instruments of £110 million (2023: £(149) million).
Restructuring charges relating to Board-approved restructuring
programmes have already been fully recognised in profit and
loss in previous years but provisions and cash spend are
ongoing. Any further restructuring costs in the financial year
have therefore not been recognised as adjusting items in the
FY24 results. There will be ongoing cash spend from past
restructuring programmes.
During the period factory footprint rationalisation costs were
supported by profit on sale of former operational sites and
have not been included in adjusted items.
Finance costs
Adjusted net finance costs were lower at £402 million
(2023: £410 million), due to savings from swapping our
outstanding US dollar bonds to euro in September 2023,
a tailwind from a higher GBP/EUR FX rate and lower average
adjusted net debt over the course of the year offset by the
refinancing of naturally maturing cheaper debt at higher
rates in both FY23 and FY24. Reported net finance costs
were £534 million (2023: £298 million), incorporating the
impact of net fair value and foreign exchange losses on
financial instruments of £110 million (2023: £149 million gain),
post-employment benefits net financing costs of £11 million
(2023: £13 million income) and net tax settlement interest
costs of £10 million (2023: £50 million). The net fair value
losses of £119 million on financial instruments are primarily
due to negative valuation movement of the Group’s interest
rate derivatives reflecting lower future market interest
rate expectations.
Our all-in cost of debt modestly decreased to 4.2% (2023: 4.3%)
reflecting the previously mentioned factors.
Our interest cover increased to 10.5x (2023: 10.1x) reflecting
the Group’s higher adjusted EBITDA and lower adjusted net
finance costs for the year.
While interest rates are expected to fall, they are likely to
remain higher than they were prior to the start of FY23,
meaning we will continue to refinance naturally maturing
cheaper debt at higher rates. We therefore still expect upward
pressure on finance costs going forward although we have
hedging in place for 83% of our expected debt in FY25.
Taxation
Our adjusted effective tax rate is 22.7% (2023: 22.4%) and the
reported effective tax rate is 9.3% (2023: 21.1%). The increase
in the adjusted effective tax rate on the prior year is driven by
upward pressure from a higher UK corporation tax rate offset
by reduced negative impacts from the prior year’s adjustment
of our priority markets. The adjusted tax rate is higher than the
reported rate mainly due to the positive outcome in the state
aid litigation following the European Court of Justice decision
on 19 September 2024 and foreign exchange movements arising
on consolidation which are not subject to tax.
We expect our adjusted effective tax rate for the year ended
30 September 2025 to be between 23% to 24%.
The effective tax rate is sensitive to the geographic mix of
profits, reflecting a combination of higher rates in certain
markets such as the USA and lower rates in other markets
such as the UK. The rate is also sensitive to future legislative
changes affecting international businesses such as changes
arising from the OECD’s (Organisation for Economic Cooperation
and Development) Base Erosion and Profits Shifting (BEPS)
work. Whilst we seek to mitigate the impact of these changes,
we anticipate there will be further upward pressure on the
adjusted and reported tax rate in the medium term, due to
global pressures to increase CIT tax rates.
Our Group tax strategy is publicly available and can be found
in the Governance section of our corporate website.
Exchange rates
Foreign exchange had a negative impact on Group
adjusted operating profit and adjusted earnings per share
at average exchange rates (4.0% and 4.4%, respectively).
Sterling strengthened against the US dollar (3.4%) and
against the euro (1.8%). Other major currencies remained
broadly flat compared to the prior year.
Dividend payments
The Group paid two interim dividends of 22.45 pence per share
in June and September 2024.
The Board has approved a further interim dividend of
54.26 pence per share and will propose a final dividend of
54.26 pence per share bringing the total dividend for the year
to 153.42 pence. This represents a 4.5% increase to the amount
of 146.82 pence per share paid in the prior year and is in line
with the Group’s progressive dividend policy.
The annual dividend represents a payout ratio of 51.0% with
respect to basic earnings per share.
The third interim dividend will be paid on 31 December 2024
to shareholders registered on 29 November 2024. Subject to
AGM approval, the proposed final dividend will be paid on
31 March 2025 to shareholders registered on 21 February 2025.
We have announced a change to the future dividend payment
profile to four equal quarterly dividend payments for FY25
onwards. This smoothing of the dividend payment profile
will result in more consistent cash returns to shareholders
throughout the year, compared to the current 30:70 split.
This is enabled by the strong visibility of cash flows from
our portfolio following the successful execution of our
strategy. The change will also help to reduce our leverage
variance within the year, particularly around the half year,
which is partly a result of the current dividend phasing.
To create the base for future quarterly payments, we intend
to pay two interim cash dividends of 40.08 pence per share
in June and September 2025.
Dividend payments
Amount (pence)
Ex-date
Record date
Payment date
FY24 First interim
22.45
23-May-24
24-May-24
28-Jun-24
FY24 Second interim
22.45
22-Aug-24
23-Aug-24
30-Sep-24
FY24 Third interim
54.26
28-Nov-24
29-Nov-24
31-Dec-24
FY24 Final
54.26
20-Feb-25
21-Feb-25
31-Mar-25
FY25 First interim
40.08
22-May-25
23-May-25
30-Jun-25
FY25 Second interim
40.08
21-Aug-25
22-Aug-25
30-Sep-25
Funding/liquidity
During the year, we repaid our £600 million bond which matured in March 2024 and our US$ 1 billion bond which matured in
July 2024. In June 2024, we issued bonds totalling US$ 2 billion; US$ 1.25 billion with a coupon of 5.5%, maturing in February 2030,
and US$ 750 million with a coupon of 5.875%, maturing in July 2034. Simultaneously, we also repurchased US$ 550 million of
the existing US$ 1.5 billion bond maturing in July 2025 via a capped tender offer. We swapped the new US dollar bonds to euro,
therefore closing adjusted net debt continues to be materially all euro. As at 30 September 2024, the Group had committed
financing in place of around £12.1 billion, which comprised 30% bank facilities and 70% raised from capital markets. During the
year, the maturity date of €3,125 million of the Group’s existing syndicated multi-currency facility was extended to 30 September
2027. One further tranche of €184 million was not extended and therefore maintains its maturity date of 30 September 2025.
In October 2024, the second tranche of €184 million which had not been extended during the year and had a maturity date of
30 March 2026 was sold to another financial institution and the maturity date of that tranche was extended to 30 September 2027.
The Group also put in place an additional £700 million of committed bilateral bank facilities with maturity dates in September 2025.
The Group remains fully compliant with all our banking covenants and remains committed to retaining our investment grade ratings.
Lukas Paravicini
Chief Financial Officer
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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MANAGING
RISK
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks faced by the Group
and Imperial’s risk management approach
are described in the following pages.
Risks represent the various potential outcomes that are
managed whilst implementing the Group’s strategy.
Imperial defines a risk as the exposure to the consequences
of uncertainty. Risk is anything that could disrupt the
achievement of the Group’s strategy and objectives.
The Board and management have reviewed the risk landscape
(current and emerging) and related profiling, with risk
mitigations and impacts assessed.
Many of these risks are external and cannot be fully mitigated,
and while the Group continues to monitor its risk landscape,
there can be no guarantee that additional risks will not arise,
or that other known risks not mentioned increase in materiality.
Risk appetite
The Board is responsible for setting the Group’s risk appetite
and has completed its annual exercise to ensure this is
aligned to, and supports, delivery of the Group strategy.
The resultant risk management approach supports the
achievement of objectives and the Board’s wider responsibility
for risk management through clear communication of the
expected outcomes of key controls and related monitoring.
Risk landscape
The Group operates in highly competitive global markets
and faces general commercial risks associated with a large
consumer packaged goods (CPG) business.
Imperial constantly assesses and evaluates the risks posed
by the changing environments in which the Group operates,
whether geopolitical, socioeconomic or technological.
The consideration of potential impacts and most likely
causes ensures a timely, measured and appropriate response.
The Group, along with all other businesses, has faced
challenges due to inflationary pressures which have led to
higher commodity and energy prices as well as economic
pressures on consumer spending.
Risk management framework
The framework is designed to ensure accountability for the
identification, assessment and mitigation of risks throughout
the business, supported by appropriate capabilities.
The success of the risk management approach relies upon the
effectiveness of the control frameworks in place to manage
risks and seize opportunities that arise.
Imperial’s approach to governance, risk management and
internal control follows the “three lines model”, which enables
the business to achieve its strategic objectives while remaining
aligned to the Board’s risk appetite.
To enhance the Group’s risk management framework,
we continuously look for ways to improve and further
standardise the application of risk management and controls
across the Group. For example this year we have established the
Integrated Assurance Forum and published a Group Risk Policy.
RISK CAUSES
As a Group we face a number of issues which we treat as
causes of current risks rather than evaluating them as
risks in themselves. By adopting this approach, we ensure
consideration of impacts and required mitigations across the
business and increase the effectiveness and accountability
for assessments on a “bottom-up” basis, enabling local and
Group initiatives to be developed to optimise our responses.
Climate risk
The impacts of climate risk on the business have been
evaluated across the Group in relation to their impact on
existing risks. Key impacts exist within our manufacturing
footprint and wider supply chain, with short- and long-term
consideration of possible vulnerabilities and required
mitigations to ensure resilience.
Inflation
The impact of inflationary pressures on both the business
and consumers has been assessed as part of risk
assessments.
This creates more dynamic feedback between “bottom-up”,
“top-down” and cross-functional perspectives, ensuring
the broadest consideration of impacts and mitigations.
Geopolitical risk
The Group is exposed to geopolitical and economic
conditions of the countries and regions in which it
operates, which could impact its largest markets and
may affect continuity of supply.
Any adverse geopolitical or economic developments
in, or affecting, the Group’s key countries and regions,
including, but not limited to, increased international
trade tensions or the outbreak of conflict could impact
the Group and its operations.
The identification and effective mitigation of geopolitical
risks has become an increasingly important factor within
the Group’s operational continuity planning for our internal
resilience and the resilience of our wider supply chain,
key customers and service providers. This consistent
and complete assessment better informs Group actions.
EMERGING RISKS
As part of the risk assessment performed by the Group Risk
Committee and the Board, emerging risk topics have been
discussed and considered.
Regulatory change
Due to the highly regulated nature of the industry the
Group operates in, new regulatory change risks are
continuously emerging.
The Group considers any emerging regulatory change
risks beyond the general three-year risk horizon, so that
mitigations can be developed to manage the impacts of
future changes.
Further regulatory changes are being considered, with the
UK generational smoking ban and further restrictions on
vaping being under consideration in multiple European
markets. The Group is assessing this emerging risk and
developing appropriate mitigations.
IT service concentration risk
Dependence on a single IT service provider for multiple
business capabilities poses a risk. A failure could disrupt
multiple business aspects or indirectly impact the Group
through upstream service providers.
New types of cyber risk
Some systems may be particularly vulnerable to ransomware
due to underinvestment or technical debt, potentially
causing prolonged business disruptions or more significant
impacts. The Group continuously assesses cyber threats,
especially amid geopolitical tensions, and monitors the
effectiveness of security controls.
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TOP-DOWN AND BOTTOM-UP RISK ASSESSMENT APPROACH
Who is involved?
What activities are completed?
Assessment and evaluation of risks
How do we confirm risks are managed?
Board
• Oversight of the Group’s internal control systems,
risk management process and framework
• Provides operational and strategic risk perspectives,
ensuring these are considered in Group strategy
• Sets the Group’s risk appetite annually
• Reviews the Group’s principal risks and considers
emerging risks and themes identified in twice
yearly risk assessment process
• Oversees risk management approach
and reporting
• Reviews results of twice yearly risk
assessment, including the Group’s
principal risks
• Discusses and agrees risk appetite for the
Group’s principal risks
Audit
Committee
• Reviews scope, quality and results of assurance
provided by internal and external audit
• Reviews results of other internal assurance
provision over key controls of the Group
• Oversees risk management approach
and reporting
• Regularly reviews results of assurance activities
ELT
• High-impact risks identified in “bottom-up”
assessments are consolidated for review by ELT
• Respective ELT risk domain owners’ validation of
risk assessment output prior to Risk Committee
• Regularly reviews results of Group Controls Matrix
(GCM) internal control testing
• Reviews results of assurance activities
to ensure effective closure of any
observations raised
Risk
Committee
• Provides “top-down” insights to risk
assessment process
• Considers emerging risks and themes identified
in risk assessment process
• Provides input into development of risk
management activities
• Meets throughout the year to oversee risk
management approach and reporting
• Reviews results of assurance activities to
ensure the effectiveness of risk mitigations
Integrated
Assurance
Forum
• Co-ordinates assurance activities to ensure all
relevant risks and compliance requirements are
adequately addressed
• Provides appropriate information to the Group Risk
Committee and Board for it to be able to attest to the
effectiveness of material controls
• Selection of senior stakeholders, meets
quarterly to ensure an appropriate assurance
approach is in place for material controls
Third line
• Group Internal Audit performs risk-based,
challenging audits and provides insights and
recommendations to the Audit Committee
and management
• Provides the Board with independent assurance
over the effectiveness of the design and
operation of the risk management framework
• Provides audit reports and reporting to
management and the Audit Committee
Second line
• Evaluation of first line, “bottom-up” risk
assessments by subject matter experts,
in line with Board risk appetite
• Review and agreement of functional risk registers
by functional leadership teams, with minimum
six-monthly formal update
• Formal completion of legal and regulatory
disclosures (e.g. ESG-related, TCFD, Human Rights,
Group Science regulatory certifications)
• Define and implement policy and risk
management activities aligned to risk appetite
• Provide support to business in design and
implementation of local mitigations
• Review results of GCM testing and identify
common themes
• Review results of assurance activities to ensure
effective closure of observations raised
First line
• Local ownership and accountability for completion
and continued update of risk register, with minimum
twice yearly formal update
• Local leadership team input to review and formally
agree risk assessment outcomes
• Approach includes requirement to assess
effectiveness of related risk mitigations on
an ongoing basis
• Completion of regular key control testing across
the business – GCM communicates key
requirements and required testing
• Leadership accountability for risk assessment
and mitigation effectiveness
• Regional leadership team oversight and input
• Dedicated Global Business Services (GBS)
Compliance function responsible for
performing control assurance activities
in selected first line operations
• Management certification of compliance
with Group policies, GCM financial control
compliance, laws and regulations and
notification of fraud on a six-monthly basis
The mitigation and management of identified risks is vital to the success of the Group. The Group’s risk management and internal
control framework and related reporting are further discussed in the Audit Committee report on page 108.
“Top-down”
“Bottom-up”
PRINCIPAL RISKS AND UNCERTAINTIES continued
PRICING & EXCISE CHANGE
Risks relating to the impact of future excise changes and our ability to achieve
planned pricing
Risk profile change
Strategic impacts
Change in year
• At a global level, reduction in year-on-year inflation rates reducing pressure
on pricing
• Pricing pressure remains where there is a need to offset accelerated excise
schemes and market size and volume declines
Impact
Mitigation
• In markets where the increased cost of living makes
consumers more price-sensitive, significant price increases
affect both product demand and sales volumes
• Pricing pressure may be exacerbated by excise increases which
further elevates product prices. This could result in downtrading
to lower price products/categories or an increase in the
attractiveness of illicit product, impacting sales volumes
• Illicit products thrive in high-excise environments, reducing
the size of the legitimate tobacco market, increasing risks
to consumers from non-compliant product, and financing
organised crime
• Inferior counterfeit product could result in damage to brands
• Clear pricing strategy and strong oversight by regional
leadership teams, supported by analysis and evaluation
of pricing dynamics, elasticity and segments evolution
• The Group’s Revenue Growth Management function is
systematically supporting market teams with assessment
of new excise structures, proposing optimum solutions via
scenario planning and consumer pricing analytics
• AI enabled tools developed to better model and predict
impacts of excise, inflation and other consumer pressures
• Engagement with authorities providing informed input
and evidence about the unintended consequences of
disproportionate changes in product taxation, supported
by above-market engagement, argumentation, and data
• Continuous monitoring and intelligence gathering for
developments to help predict and prepare our responses
to excise change proposals
The following section highlights the principal
risks the Group faces and identifies the
mitigations that are in place to manage them,
with all risks reported on a mitigated basis.
Not all of these principal risks are within Imperial’s direct
control, and the list cannot be considered to be exhaustive,
as other risks and uncertainties may emerge in a changing
business environment.
The risks reported are those currently considered by the
Board to have the most likely impact on achievement of
the Group’s objectives.
As explained in our half year results statement, the wording
used to describe the principal risks has been updated, but the
risks remain aligned with those identified in the 2023 Annual
Report and Accounts.
RISK ASSESSMENT PRINCIPLES
• Risk assessments are aligned with the business planning
cycle and strategic objectives, focusing not only on the
identification and assessment of risks, but most importantly
on the effectiveness of the mitigations in place
• Imperial adopts a dynamic approach which facilitates and
collates views from functional risk owners and a broad
spectrum of other relevant stakeholders, providing end-to-
end insights from a wide collection of second line experts
– enabling a richer, more balanced perspective on current
and emerging risks
• Current and emerging risks are considered on an ongoing
basis across the business, with a general three-year
horizon (though longer where applicable, e.g. climate risk).
This horizon ensures appropriate focus and includes
consideration of changes in the causes of existing risks
(e.g. specific proposed regulatory change) ensuring
timely evaluation of the effectiveness of current and
future mitigations
• Specific risk topics are presented to the Board,
Audit Committee, Risk Committee and ELT during the year.
These discussions provide further detail from first- and
second-line management on their risk management
responsibilities
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Risk profile change
Risk profile increasing
Risk profile unchanged
An illustration of the primary
impact each risk might have
on relevant strategy elements
and the change in risk profile
compared to last year is
included for each principal
risk using these symbols
Refer to page 16 for more details
on our strategic pillars
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REGULATORY CHANGE
Risks relating to the impact of future regulatory change on our ability to produce,
market and sell our products
Risk profile change
Strategic impacts
Change in year
• The regulatory landscape continues to evolve, with the introduction of more
restrictive combustible regulations and increasing complexity e.g. characterising
flavour bans, category bans and generational access bans
• Wider alignment between Tobacco and NGP regulation could arise in the EU under
expected reforms to the EU Tobacco Products Directive (EUTPD) and other legislation,
and globally as a result of decisions made at the WHO Conference of Parties
• Youth Access Prevention is driving political and social pressure in many markets
resulting in legislation to ban disposable vapes, together with continuing focus on
single use plastics extended producer responsibility legislation in Europe
• Track & Trace regulations may take unwelcome non-digital forms when implemented
in countries outside of Europe. Continued risk of NGP Track & Trace introduction
• New marketing denial orders (MDOs) have been issued from the FDA in connection
with some flavoured disposable products. These are subject to ongoing litigation
• While new regulations and excise taxes are being considered in some markets,
there have been other instances where legislation has been removed, such as
“Smokefree” restrictions in New Zealand which included a generational ban,
or delayed, such as the US menthol ban
Impact
Mitigation
• Regulatory change can restrict product specification,
such as bans on menthol or other flavours or ingredients,
consumer interaction, and product supply. These restrictions
can affect consumers’ ability to enjoy our products,
potentially impacting sales volumes and market size and
related access to potentially reduced-risk nicotine products
• Compliance with increasingly complex regulatory requirements
increases the risk of additional cost to the Group and
inadvertent non-compliance. Non-compliance could result in
regulatory censure, financial penalty and reputational damage
• When regulations require interpretation, the resulting
judgements can lead to disputes or investigations by
regulators. This can incur financial costs or cause
reputational damage, even if no fault is proven
• Group policies and standards and a reviewed set of
Group public policy positions are in place to align with
regulatory developments
• Continuous monitoring of and engagement with regulators
to highlight risks of disproportionate regulation; proposal of
moderate alternatives; and development of sustainable
regulatory framework for NGP
• Subject matter experts employed to assess the impacts
of proposed regulatory change and Group-wide impacts
• Project teams in place to manage the impacts of regulatory
change, ensuring required compliance is achieved and
opportunities identified
• Legal action can be taken to defend against or prevent
regulatory change where this impacts legal freedoms
PRINCIPAL RISKS AND UNCERTAINTIES continued
PRODUCT SUPPLY
Risks relating to the supply of materials and services to support our ability to operate
and produce
Risk profile change
Strategic impacts
Change in year
• While at a global level, year-on-year inflation rates have reduced, fluctuations in
leaf and commodity pricing continue to pose risks, and upsides, to our cost of goods
• Geopolitical tensions have continued to increase however our exposure in these
areas e.g. Middle East, so far has not seen any material impacts in the Group’s
key countries and regions
• Climate change is potentially increasing the frequency and intensity of adverse
weather impacting supply chains, notably cigar operations in our Caribbean
factories and the Philippines
• Recent adverse weather impacts on US leaf crop may shift demands (and prices)
outside of the US, increasing cost risk
Impact
Mitigation
• Loss of a key manufacturing site or capacity could impact
the Group’s ability to meet short-term production demands
• Failure to supply markets could lead to a loss of short-term
sales volume and potentially erode consumer loyalty,
which may impact longer-term sales volumes and brand value
• Failure to manage cost inflation could result in increased
cost of goods
• Severe weather episodes could impact raw material supply,
manufacturing sites and warehousing, potentially affecting
short-term supply to markets
• A lack of availability of raw materials, or raw materials of
poor quality, could impact short-term supply to markets
• Material stocks (leaf and non-tobacco) maintained in line
with assessed supply continuity plans, and aligned to sales
forecast requirements
• Production capacity planning includes agreed business
continuity measures in the event of machine failure
or site issue
• Supplier agreements, standards and practices include
requirement to comply with Group policies, including quality
requirements for goods and services supplied
• Ongoing risk assessments and supplier reviews including
quality, ESG, and business continuity and contingency plans
• Alternative locations for NGP production have been explored.
Work continues to reduce the relocation times and
proactively manage safety stocks for combustibles
TECHNOLOGY RESILIENCE
Risks relating to the ability of IT infrastructure to support business and regulatory
requirements
Risk profile change
Strategic impacts
Change in year
• The Group continues to operate in an external environment with heightened
geopolitical risks, which highlight the continued risk of, and increasing exposure
to corporate cyber-attacks
• External cyber threats remain pervasive, including an increase in third-party
security incidents
• While not a direct cyber incident, the global Crowdstrike/Microsoft outage
highlighted supply chain risks in technology management
• The proliferation of Artificial Intelligence (AI) presents new challenges and
opportunities to security of systems, data and physical facilities. We expect
and prepare for increasing trends in the sophistication and complexity of
technology attacks
Impact
Mitigation
• Loss of critical systems could impact product supply
to distributors or retailers resulting in revenue loss and
reputation damage with customers and other stakeholders
• Failure to protect personal or sensitive corporate data
from loss could result in inability to achieve strategic
goals, regulatory breach and related censure, significant
financial costs or penalty, reputational damage or lost
competitive advantage
• Vulnerability scanning and penetration testing to reduce
attack surface
• High risk suppliers vetted and periodically reviewed
• Ongoing investment in security tools and capabilities
• Crisis management and disaster recovery plans for critical
systems tested to support the ability to respond and recovery
from unplanned events
• Employee awareness and training to educate colleagues
on the cyber risks that we face
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PRODUCT INNOVATION
AND PORTFOLIO
Risks relating to effective product innovation, aligned to consumer preferences
and regulatory requirements
Risk profile change
Strategic impacts
Change in year
• Continued emergence and growth of new lower-price / value-brands in combustible
tiers across many markets
• Continuation of downtrading trend as consumers become increasingly
value-driven due to inflationary pressures on disposable income and
increasing excise taxes on tobacco products
• Continued competitor activity in the NGP market with growth in category size
through new product developments, product launches and marketing initiatives
• Increasing trends towards purchasing innovative and new vape subcategories
• Evolving regulation of NGP, with potential further flavour bans, disposables bans,
and plain packaging being considered
Impact
Mitigation
• If the Group’s product portfolio does not align with consumer
preferences, it could lead to reduced preference for our
products, lower sales volumes and diminished brand equity
• Failure to act upon consumer trends and insights could result
in lost opportunities, notably in NGP where innovations are
more prevalent and faster to markets
• Failure to ensure effective implementation of market or retail
initiatives could result in lost opportunities, wasted investments
and potential loss of market share
• Failure to identify intellectual property (IP) constraints in the
innovation of new products could impact development and/
or launch, limiting the ability to respond to competitor offerings
and potential litigation
• Failure to align NGP portfolio to consumer needs and
expectations could result in failure to achieve NGP ambition
• Failure to develop NGP categories could impact achievement
of key ESG priorities
• Failure to develop a sustainable commercial model for all
NGP categories could result in failure to achieve NGP ambition
• Wide portfolio across all combustible value tiers
• Acquisition of US range of nicotine pouches from TJP Labs
to facilitate entry into the US modern oral market
• Consolidated NGP category management approach enabling
holistic view of opportunities and informed investment strategy
• Global Consumer Office accountability for product/brand
strategy and initiatives, together with strong partnership
and collaboration with supply chain for market
developments and introductions
• Consumer capabilities strengthened with all three Sense Hub
innovation centres now fully operational
• Further elevation of consumer insights and brand building
skills to ensure consumer relevance across innovation
• Innovations and go-to-market plans are validated against
consumer needs and preferences
• Regulatory strategies, marketing guidelines and
product standards developed to support our consumers
and our business
• Brand monitoring, including equity tracking
• Innovation processes develop consumer products based
upon robust analysis, testing and scientific support
PRINCIPAL RISKS AND UNCERTAINTIES continued
CONSUMER AND MARKET TRENDS
Risks relating to the impact of changing consumer behaviour and market trends on
commercial objectives.
Risk profile change
Strategic impacts
Change in year
• Continued rise in illicit trade due to widening gap between duty paid and non-duty
paid prices as a result of excise impacts, notably in Europe, and Australia where
excise levels are very high
• US illicit trade has recently become more pronounced, especially within disposable
flavour vapes
• Continued rapid development and proliferation together with innovation in new
NGP categories
• Continued economic pressure on consumers due to inflation, the increased cost
of living and economic uncertainty across our market footprint, resulting in down
trading and increasing propensity to purchase illicit product
Impact
Mitigation
• Failure to obtain or effectively respond to commercial
insights and learnings, would result in loss of market share
or inability to capitalise on commercial opportunities
• Failure to respond to changes in market environment could
result in the Group’s portfolio being less attractive to consumers,
resulting in reduced sales
• Economic pressure on consumers could result in
reduced spend on tobacco products and alternatives,
reducing market size
• Increases in illicit trade impact the size of the legitimate
market, impacting sales volumes
• Enhanced consumer insights operating model with continued
increase in capabilities and tools, including a separate Business
Intelligence Vertical that includes Competitor Analysis
• Strengthening of the innovation pipeline and governance
• Market impacts analysed as part of market size calculations
• Cigarette Empty Pack Survey collection reporting provides
trend analysis of illicit impacts enabling more targeted and
effective interventions
• Pilot vape Empty Pack Survey completed in UK – continuous
updates planned
• Excise and price monitoring provides insights into possible
changes in illicit impacts through widening disparity
between the price of legitimate and illicit product
• Industry trade groups and joint operations with enforcement
agencies to combat illicit trade
ENVIRONMENT
Risks relating to the impact from business operations on the natural environment in
which we operate
Risk profile change
Strategic impacts
Change in year
• Carbon emissions in our operations have reduced 69% since 2017 and remain
on track to reach Net Zero across our value chain by 2040
• Achieved an energy consumption reduction of 32% since 2017, achieving our
original 2030 target of 25%, which has been reset to a 45% reduction by 2030
• New impending reporting requirements, such as the EU Corporate Sustainability
Reporting Directive. Compliance by in-scope subsidiaries required by 2025
• The Group continues to face increasing climatic impacts across its global footprint.
According to our TCFD analyses (pages 78-89) we do not expect this to result in
significant cost exposure within the next 10 years
Impact
Mitigation
• Failure to mitigate environmental impacts of our products
and processes may result in a reduced or negative perception
of Imperial negatively impacting market share and revenue
• Failure to meet expectations, or to ensure at least parity
with industry peers, may impact the Group’s reputation
as a sustainable business and adversely affect stakeholder
sentiment or share price
• Poor ESG ratings could result in reduced access to capital
or higher capital costs
• Failure to comply with key ESG-related regulation, including
environmental legislation, would result in a material impact
to the Group, including, but not limited to, financial penalties
• Failure to comply with increasing regulatory reporting
requirements for non-financial data, e.g. the EU Corporate
Sustainability Reporting Directive could result in legal,
operational, and reputational consequences for Imperial
• ESG strategy, agenda and communications, including
ongoing development and materiality assessment,
aligned to strategic goals and targets
• Climate targets are embedded in executive remuneration
• ESG Committee with executive representation in place
to provide oversight
• Investor and stakeholder presentations ensure alignment with
expectations and transparency on progress of Group actions
• CSRD working group to prepare for mandatory disclosures,
and Environment working group in place to manage them
• Dedicated climate risk reporting through TCFD framework
• Our actions to mitigate climate risks have earned us a position
on the CDP’s A List for climate for a fifth consecutive year
• Sustainable Tobacco Programme (STP) and reforestation
schemes help reduce the environmental impact of leaf growing
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SOCIAL
Risks relating to social considerations within and from our business operations
and extended supply chain
Risk profile change
Strategic impacts
Change in year
• Continued focus on ESG-related matters from investors and external stakeholders
• The recently adopted EU Corporate Sustainability Due Diligence Directive
introduces further requirements to conduct due diligence throughout our global
value chain, and will be applicable from 2027
Impact
Mitigation
• Failure to comply with key ESG-related regulation, including
human rights legislation, would result in a material impact
to the Group, including, but not limited to, financial penalties
• Reputational damage may result from allegations,
even where no wrongdoing has occurred
• Employee engagement or attractiveness of the Group
as an employer may be adversely affected as a result
of any perception that the Group is acting in an
inappropriate manner
• ESG strategy, agenda and communications, including
ongoing development and materiality assessment,
aligned to strategic goals and targets
• ESG Committee with executive representation in place
to provide oversight
• Investor and stakeholder presentations ensure alignment with
expectations and transparency on progress of Group actions
• Human Rights Compliance working group meets regularly,
specialist human rights capabilities recruited, Human Rights
Policy in place and Human Rights Audits conducted by the
ESG function
• Human Rights Policy and risk management framework
• Sedex (Supplier Ethical Data Exchange) used for supplier
ethical trading risk assessments
LEGAL COMPLIANCE
Risks relating to compliance with laws and regulations and the management of
significant legal matters
Risk profile change
Strategic impacts
Change in year
• Continued external trend of ESG-related litigation risks with external focus on
human rights issues in international supply chains and greenwashing claims
Impact
Mitigation
• As with other corporates, litigation and other claims are
pending against the Group. The interpretation of the law
and the related judgments can lead to disputes or investigation
and possible financial costs or reputational damage
• Failure to comply with regulations could result in
investigation and the enforcement of financial penalties
or regulatory censure
• Investigations or allegations of wrongdoing can demand
significant management time, potentially diverting focus
from other operational matters
• If any claim against the Group was to be successful, it might
result in a significant liability for damages and could lead to
further claims
• Regardless of the outcome, the costs of defending such
claims can be substantial and may not be fully recoverable
• The reputational damage arising from investigations or
allegations of non-compliance could have a greater impact
with external stakeholders than the penalties or actions
related to the matter itself
• Internal and external lawyers employed, specialising in
the defence of product liability claims and other litigation.
To date, no tobacco litigation claim brought against the
Group has been successful and/or resulted in the recovery
of damages or settlement monies
• Advice is provided to mitigate the causes of litigation, along
with guidance on defence strategies to direct and manage
litigation risk and monitor potential claims around the Group
• The Group’s Code of Conduct and core behaviours articulate
the way employees are expected to act, with compliance
certified by management across the business
• The Group’s policies and standards mandate that employees
must comply with legislation relevant to both a UK-listed
company and local law
PRINCIPAL RISKS AND UNCERTAINTIES continued
BUSINESS TRANSFORMATION
Risks relating to the design, implementation and benefit realisation of organisational
change initiatives
Risk profile change
Strategic impacts
Change in year
• Continuing high volume of transformation activity across the Group,
including the ERP consolidation programme
• High volume of change and resource demand required to support transformation
programmes across the business
• Increasing scale and complexity of cross-functional integration requiring careful
management of project interdependencies.
Impact
Mitigation
• Ineffective business transformation could result in disruption
to delivery of business objectives or higher cost of
implementation than forecast
• High demand for local resources to support transformation
may impact employee engagement
• Transformation Centre of Expertise working in conjunction
with Independent Quality Assurance and Internal Audit to
support successful delivery
• All strategic programmes undergo a “setup for success”
review of key programme attributes
• “Air traffic control” planning with the business to ensure
sufficient resources available to enable programme delivery
in addition to business as usual commitments
• Change capability embedded into major change
programmes and standardised approach to change
management being developed
• Specialist Organisation Effectiveness expertise safeguards
design and development of organisational capabilities
in line with strategic objectives
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LIQUIDITY AND GOING CONCERN STATEMENT
The Group’s policy is to ensure that we always have sufficient
capital markets funding and committed bank facilities in place
to meet foreseeable peak borrowing requirements.
The Group recognises there can be uncertainty in the external
environment, however, during past periods of disruption
(e.g. COVID-19, political uncertainty in Russia and Ukraine and
Middle East), the Group effectively managed operations across
the world and has proved it has an established mechanism to
operate efficiently despite this uncertainty. The Directors consider
that a one-off discrete event with immediate cash outflow is of
greatest concern to the short-term liquidity of the Group.
The Directors have assessed the emerging and principal risks
of the business, including stress testing a range of different
scenarios that may affect the business. These included
scenarios which examined the implications of:
• A one-off discrete event resulting in immediate cash outflow
such as unexpected duty and tax payments; and/or other
legal and regulatory risks materialising of c.£500 million
• A rapid and lasting deterioration to the Group’s profitability
because markets become closed to tobacco products or there
are sustained failures to our tobacco manufacturing and
supply chains. These assumed a permanent reduction in
profitability of 10% from 1 October 2024
The scenario planning also considered mitigation actions
including reductions to capital expenditure, dividend payments
and share buyback programme. There are additional actions
that were not modelled but could be taken including other
cost mitigations such as staff redundancies, working capital
management, retrenchment of leases and discussions with
lenders about capital structure.
Under the reverse stress test scenario, after considering
mitigation actions including reductions of capital expenditure,
dividend payments and share buyback programme, we have
modelled that a 37% EBITDA reduction would lead the Group
to have sufficient headroom until 30 November 2025.
The Group believes this reverse stress test scenario to be remote
given the relatively small impact on our trading performance
and bad debt levels during the COVID-19 pandemic and political
uncertainty with regard to Ukraine and Russia. In this scenario
the Group would implement a number of mitigating actions
including revoking the uncommitted dividend, pausing the
share buyback and reducing discretionary spend such as
capital expenditure.
Based on its review of future cash flows covering the period
through to 30 November 2025, and having assessed the principal
risks facing the Group, the Board is of the opinion that the
Group as a whole and Imperial Brands PLC have adequate
resources to meet their operational needs for a period of twelve
months from the date of approval of the financial statements
and concludes that it is appropriate to prepare the financial
statements on a going concern basis.
VIABILITY STATEMENT
The Board has reviewed the long-term prospects of the Group
to assess its viability. This review, which is based on the business
plan which was completed in July 2024, incorporated the
activities and key risks of the Group together with the factors
likely to affect the Group’s future development, performance,
financial position, cash flows, liquidity position and borrowing
facilities as described in the ‘Managing risk’ section of this
report on pages 42 to 44.
In addition, we describe in notes 21 to 22 the Group’s objectives,
policies and processes for managing its capital, its financial
risk management objectives, details of its financial instruments
and hedging activities and its exposures to market,
credit and liquidity risk.
Assessment
To report on the long-term viability of the Group, the Board
reviewed the overall funding capacity and headroom available
to withstand severe events and conducted a robust assessment
of the emerging and principal risks facing the Group, including
those that would threaten its business model, future performance,
solvency or liquidity. The assessment assumes that any bank
debt maturing in the next three years can be refinanced at
commercially acceptable terms or via our current standby
facility. The Board believes that three years is an appropriate
time horizon given the current business portfolio and limited
visibility beyond three years. This assessment also included
reviewing and understanding both the impact and the mitigation
factors in respect of each of those risks. The viability
assessment has two parts:
• First, the Board considered the period over which it has
a reasonable expectation that the Group will continue to
operate and meet its liabilities, considering current debt
facilities and debt headroom; and
• Second, it considered the potential impact of severe but
plausible scenarios over this period, including:
• assessing scenarios for each individual principal risk,
for example commercial issues and the impact of
regulatory challenges; and
• assessing scenarios that involve more than one principal
risk including multi-risk scenarios.
Findings
Viability review period
Whilst the Board has no reason to believe the Group will not
be viable over a longer period, the period over which the Board
considers it possible to form a reasonable expectation as to the
Group’s longer-term viability, based on the risk and sensitivity
analysis undertaken, is the three-year period to 30 September
2027. This reflects the period used for the Group’s business
plans and has been selected because, together with the planning
process set out above, it gives management and the Board
sufficient, realistic visibility on the future in the context of
the industry environment.
The Group’s annual corporate planning processes include
completion of a strategic review, preparation of a three-year
business plan and a periodic re-forecast of current-year business
performance and likely landing. The plans and projections
prepared as part of these corporate planning processes consider
the Group’s cash flows, committed funding, forecast future
funding requirements, banking covenants and other key
financial ratios, including those relevant to maintaining our
investment grade ratings. These projections represent the
Directors’ best estimate of the expected future financial prospects
of the business, based on all currently available information.
The use of the strategic plan enables a high level of confidence
in assessing viability, even in extreme adverse events, due to a
number of mitigating factors such as:
• Flexibility of cash outflow with respect to the ability to
manage dividend returns to investors, capital expenditure
projects planned to take place within the three-year horizon,
return of surplus capital to investors via share buyback,
plus promotional marketing programmes
• The Group has mature business relationships and operates
globally within well-established markets
• The Group’s operations are highly cash generative,
and the Group has access to the external debt markets
to raise further funding
PRINCIPAL RISKS AND UNCERTAINTIES continued
RISK IMPACT REVIEW
For each of our principal risks, plausible risk impact scenarios have been assessed together with a multiple risk scenario.
The following table summarises the key scenarios that were considered, both individually and in aggregate:
Risk scenarios modelled
Level of severity reviewed
Link to principal risk
The consequences of adverse
operating and commercial
pressures, involving volume
reduction and/or falls in
margin, driven by unforeseen
reductions in the size of
the legitimate tobacco
market or other changes
in the level of consumer
demand for our products.
The maximum quantifiable impact of all
envisaged business risks, including the
impact of a loss of market size and share
and lack of pricing.
The value of these combined risks totals
£0.5 billion over the three-year period
under review.
A further worst-case scenario has also
been considered, modelling a 10% reduction
on remaining EBITDA after consideration of
the isolated business risks. The value of this
EBITDA modelled totals £1.3 billion over the
three-year period under review.
We have reduced the EBITDA reduction from
15% in the prior year to 10% this year to better
represent a plausible downside scenario.
• Pricing and excise change
• Regulatory change
• Product supply
• Technology resilience
• Product innovation and portfolio
• Consumer and market trends
• Social
• Environment
• Business transformation
The possible costs associated
with legal and other
regulatory challenges,
including competition
enquiries and tax audits.
Failure to successfully defend existing
and reasonably foreseeable future legal
and regulatory challenges, at the expected
financial exposure.
The value of these combined risks is
c.£1.3 billion.
• Legal compliance
• Social
• Environment
None of the scenarios reviewed, either individually or in aggregate, would cause Imperial Brands to cease to be viable.
Climate-related risks have been assessed as causes of a number of our underlying risks which are included within the scenario
modelling, including, but not limited to, the failure to supply product due to weather-related impacts on individual factories,
the cost of complying with environmental legislation such as carbon pricing, and the impact that climate change has upon
the supply of raw materials (notably leaf).
In 2023, we also conducted a quantified climate scenario analysis with 4°C and 1.5-2°C pathways aligned with the recommendations
of the TCFD (Task Force on Climate-related Financial Disclosures) and Paris Agreement. The scenario analysis takes into consideration
climate-related physical and transition risk to 2050, which we disclose in detail for the next 10 years. The Group does not consider
climate change to be a risk from a viability perspective. The Group holds c.12 months of leaf stock protecting against any shortage
or incremental cost caused by a natural event, hence it would not materially impact the period under review. Any incremental cost
would have an EBITDA impact lower than that modelled as part of the scenario testing.
CONCLUSION
On the basis of this robust assessment of the emerging and principal risks facing the Group, and on the assumption that they
are managed or mitigated in the ways disclosed, the Board’s review of the business plan and other matters considered and
reviewed during the year, and the results of the sensitivity analysis undertaken and described above, the Board has a reasonable
expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to
30 September 2027.
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STAKEHOLDER ENGAGEMENT
Building and maintaining trust with our stakeholders
underpins the success and reputation of Imperial Brands.
Through stakeholder collaboration we aim to develop the
Company, minimise our environmental impact, make a positive
social contribution and uphold high standards of governance.
This section of the Annual Report provides insight into
how stakeholder engagement is taken into consideration by
the Board and the Executive Leadership Team (ELT) in their
decision-making processes. It goes on to describe how we
monitor the effectiveness of our engagement.
BUILDING TRUST WITH OUR STAKEHOLDERS
Our strategy starts with our consumers. Millions of adults
worldwide choose to enjoy our tobacco and next generation
products. The better we understand the preferences of our
consumers, the better we are able to serve them. This helps
us grow our business, and it helps us identify and capitalise
on opportunities as a challenger business.
• The Board participated in a number of consumer immersion
events over the course of the year, in the Czech Republic and
the UK. These afforded Board members the opportunity to get
closer to the consumer by hearing directly from them about
their behaviours, likes and dislikes. Board members were also
able to discuss matters important to both combustible and
nicotine product consumers, with a particular focus on
heated tobacco and NGP product innovation
• Our CEO also met separately with consumers during the year
• A visit to one of our Innovation Hubs provided Board
members with first-hand insights to consumer preferences
HOW THE BOARD CONSIDERS
THIS STAKEHOLDER
• Consumer roundtables and focus groups are held to understand
consumers’ specific requirements and preferences
• Feedback from these focus groups is used in our decision-
making for investments in brand refreshes and marketing
• The Global Consumer Office, headed by the Chief Consumer
Officer, leads consumer-listening initiatives across the Group
HOW WE ENGAGE WITH
THIS STAKEHOLDER
• Our focus groups informed us that adult consumers
want a choice of brands and quality products at the
right price points
• Consumer preferences such as cigarette pack formats,
flavours and filters, as well as the choice of potentially
less harmful NGP, evolve over time
• Fully understanding consumer needs allows us to remain
relevant and underpins consumer loyalty to brands
WHAT MATTERS TO
THIS STAKEHOLDER
• We hold regular consumer focus groups to assess the impact
of our brand refreshes and marketing campaigns on consumers
• We believe market share changes across products,
channels and geographies reflect the effectiveness
of our engagement with consumers
• Regular data-led updates from the Global Consumer Office
provide the Executive with evidence and an opportunity to
challenge assumptions when making decisions related to
our product portfolio
HOW WE MONITOR
THE EFFECTIVENESS
OF OUR ENGAGEMENT
Further information on how the Board has considered
stakeholders when making key decisions is given on the
following pages and also in the Governance Report on
pages 98 to 103.
The Board’s decision-making process is illustrated in our
Section 172(1) statement on page 102 which is incorporated
into this Strategic Report by reference.
CONSUMERS
COLLEAGUES
CUSTOMERS
Our colleagues are Imperial’s most important asset and are
critical to the success of the business. It is essential we
create a supportive, safe and rewarding work environment
to enable them to deliver our goals and develop their careers.
We believe that a diverse and engaged workforce is imperative
for business success.
Where it is difficult to engage directly with consumers,
engaging with retailers provides useful insights into our
consumers’ behaviour and preferences. This helps us grow
our business, even where there are regulatory headwinds,
and identify opportunities to be a successful challenger.
We work closely with distributors, wholesalers and retailers
to ensure our products are available to adult consumers in a
diverse range of outlets. These stakeholders play a crucial
role in our business model.
• Collective responsibility for workforce engagement has been
embedded into the Board’s governance framework in the
remit of the People, Governance & Sustainability Committee,
of which every Non-Executive Director is a member
• The Board held three “Meet the Board” events with groups
of colleagues during the year, giving the Board the opportunity
to hear colleagues’ perspectives, allowing the Board to
incorporate colleagues’ views into its decision-making
• The Board also engages with a broad cross-section of
employees by way of dinners, informal drinks and site visits
• The Board receives regular feedback from our employees
through updates at the PGS Committee
• The Board has participated in store visits in the
Czech Republic over the course of the year. These visits
provided the opportunity to talk directly to retailers
• Our CEO meets with customers regularly throughout the year
• “Connections”, our purpose, vision and behaviours
development programme, continued, ensuring all colleagues
experience training to enhance their understanding of these
behaviours, and what they mean for them in their role
• Over 300 senior leaders were equipped with skills in
performance coaching through the Connected Leadership
Programme: asking powerful questions, recognising and
valuing difference and actively listening to engage and
empower employee performance
• CEO and leadership town hall meetings, in person
and virtually, providing direct feedback opportunities
• Our market cluster leadership teams engage with our
customers to understand how to improve the effectiveness
of their sales forces
• We work closely with our distributors to understand how
we can best manage our relationships, and have a dedicated
team to support distributor sales and build best practice in
distributor management across the Company
• We use key account management practices to engage with
our largest customers to better understand their needs and
to create strong commercial partnerships to help our
businesses create value together
• Continued progress on DE&I and issues of authenticity
and inclusion, particularly around gender, ethnicity,
LGBTQ+ and disability, are taken seriously
• Responsibility and accountability, underpinned by a fair
assessment of contribution, with senior managers leading
by example
• Health, safety and wellbeing continue to be a priority
• A diverse portfolio of quality products that appeal
to consumers, with consistent communication on the
launch pipeline and investment behind relevant brands
• Ease of ordering and a strong supply chain to maintain
high levels of on-shelf availability
• Support to protect against illicit trade and underage sales
and guidance through industry changes, such as display
bans or plain packaging
• We review the results of our annual workforce engagement
in the Employee Experience survey, and ask people leaders
to create action plans as a result of the survey and we review
completion and progress of these plans
• We review the results of our interim pulse surveys
• The ESG Committee, chaired by the CEO, receives feedback
from the Business Employee Resource Groups (BERGs)
• Feedback is shared by BERG members and the Global DEI
Team in the DEI Steering Group
• We collate feedback from exit interviews to find out why
employees choose to leave us
• We monitor our performance relative to other FMCG
companies through the Advantage Survey and other
benchmarking surveys. Feedback from these surveys
is reviewed and taken into account in our engagement
plans and in setting priorities
• We hold management roundtable events with regional
customers to hear first-hand how Imperial is performing
relative to peers
• A quarterly pulse report provides performance feedback
which is used to highlight areas for improvement
• We have KPIs to monitor progress against
operational initiatives
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The regulation of tobacco and nicotine varies significantly
across our global markets. We believe that reasonable and
balanced regulation of tobacco and nicotine products is
essential to support consumers on their harm reduction
journey, and we seek constructive engagement with policy
makers and regulators to achieve this.
• Our corporate strategy includes building a portfolio of next
generation products (NGP) with potentially reduced harm
• The Board would like to engage more with this stakeholder
but opportunities have been limited
• Our Chief Corporate Affairs Officer presents to the Board
regularly on the Group’s regulatory risks and our corporate
affairs strategy to manage these risks
• Management provides updates to the Board as part of
the regional business reviews, including, where relevant,
any updates on the regulatory landscape
• The Board welcomes constructive engagement with
regulators, with management being primarily responsible
for understanding and ensuring compliance with applicable
laws and regulations
• Management regularly drafts responses to government
consultation exercises, highlighting the potential impact of
any regulatory changes under consideration on our business,
our consumers, customers, suppliers, workforce, and other
stakeholders and, where relevant, sharing our scientific
evidence and consumer research with government,
and to explore policy alternatives
• We also assess regulatory impact on product design
and marketing support around brand launches
• This monitoring allows the Board to take relevant legislation
and regulation into account when making its decisions
• Tobacco excise revenues
• Public health spending on smoking-related health issues
• Assessment of reduced harm from NGP
• Confidence that our business is operating in compliance
with local laws and regulations in each government’s or
regulator’s region
• Collaboration with law enforcement agencies countering
illicit trade and preventing youth access to tobacco and
nicotine products
• We track regulatory approval of products that we submit
for listing in markets where this is required
• We review proposed new legislation and the Company’s
ability to be involved in the development of regulation
effectively supporting public health objectives
• We monitor both direct and indirect feedback from regulators
HOW THE BOARD CONSIDERS
THIS STAKEHOLDER
HOW WE ENGAGE WITH
THIS STAKEHOLDER
WHAT MATTERS TO
THIS STAKEHOLDER
HOW WE MONITOR THE
EFFECTIVENESS OF OUR
ENGAGEMENT
STAKEHOLDER ENGAGEMENT continued
Our investors provide capital to the business with a view to
receiving a return on that investment through capital growth
and dividend returns.
Suppliers are essential partners in our business operations –
and their commitment to quality, innovation, and ethical
practices supports both our commercial success and our
People and Planet agenda.
• Our CEO, CFO and Chair have regular meetings with our
major investors to update them on our performance,
hear their views directly and consult with them
• The Board receives a report at every meeting on stock market
performance, investor engagement, and investor/analyst
feedback following all investor events
• During the year, the Board commissioned an investor
perception study to gather feedback on our delivery of our
strategy, performance and communications
• Our AGM provides an opportunity for the Board to meet
with investors
• The Board reviews and approves our Modern Slavery
Statement annually
• Suppliers within our supply chain are included as part
of the Board’s ESG considerations (focus on sustainable
and responsible sourcing and farmer’s livelihood as part of
our People and Planet strategy)
• Factory and site visits help the Board understand the
complexities of our global supply chain
• Our Annual and Interim results presentations inform
investors how the business is performing
• We maintain a programme of active dialogue with our key
financial stakeholders, including institutional shareholders,
potential investors, holders of our bonds and sell-side
research analysts
• Our CEO, CFO and senior management present at various
conferences throughout the year, including the Deutsche Bank
Consumer Conference in Paris in June 2024 and the Barclays
Global Consumer Staples Conference in September 2024
• Our Chair and CEO led an ESG investor webinar in September
2024, providing an update on progress with our ESG priorities
• Our Supplier Relationship Management “Connect”
Programme creates further opportunities to align with
suppliers on our strategic goals, strive for mutual growth
and communicate to suppliers the importance of our
People and Planet agenda and align with them on our
broader Company objectives
• Our Supplier Qualification Programme is a screening process
for all new non-tobacco materials and NGP suppliers
• Partner suppliers complete a self-assessment questionnaire
covering the following categories: Labour, Health and Safety,
Environment, and Business Ethics
• Our Supplier Code of Conduct helps ensure we engage
suppliers that meet our minimum standards
• Confidence in the Board that it has appropriate oversight
of the management team
• Trust in the management team to have a strategy and
operational plan to optimise value creation and ensure
the long-term sustainability of returns, and to deliver on
that strategy
• The setting of realistic expectations combined with
transparent reporting of performance against KPIs,
both financial and non-financial, including ESG metrics
• Disciplined capital allocation
• Sourcing products and services in a compliant,
sustainable and socially conscious manner
• Fair and ethical treatment, openness and transparency.
If they have a concern suppliers can use the Speak Up process
• Supporting and developing farming communities and
promoting sustainable agriculture
• Achieving a decent standard of living
• Our Leaf Partnership Projects support communities
in tobacco-growing countries most in need
• Our CEO, CFO and Chair engage with investors to gather
feedback on how we are performing against our strategy
• Topics discussed during the year included the continued
delivery against the strategy, sustainability of the tobacco
value model, development of our NGP business, capital
allocation considerations and ESG
• The Board receives an investor relations update at every Board
meeting, which sets out the latest investor views, share register
movements and recent market and competitor developments
• Investor perception is assessed on an ongoing basis through
feedback on meetings, our events and our conference
presentations. This feedback is shared with the Board in
the IR Board Report
• Ongoing legal and trading compliance screening
• Supplier performance reviews
• Bi-annual strategic business reviews including 360º
feedback process across our most strategic suppliers
• Detailed vendor rating system
• Annual Sustainable Tobacco Programme assessment forms
part of supplier ratings, along with quality, cost and value
• Critical suppliers are required to undertake on-site quality
assurance audits as part of onboarding and further
risk-based audits after that
• Ethical trading risks are monitored through our ethical
trading risk assessment platform, and other channels
GOVERNMENTS AND REGULATORS
INVESTORS
SUPPLIERS
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NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
The following table constitutes our
Non-Financial and Sustainability Information
Statement in compliance with Sections
414CA and 414CB of the Companies Act 2006.
The information listed is incorporated by
cross-reference. Additional non-financial
information is also available on our website.
Reporting requirement
Policies
Further information
Page
Environmental matters*
• Environmental Policy
• Filter Policy
• Sustainable Tobacco Programme
• Biodiversity Statement
Environmental targets
23, 66, 68, 88
International management systems
67, 78
Climate and energy
66, 78
Reducing waste
68
Sustainable tobacco supply
70, 72
Employees*
• Code of Conduct
• Group-wide Employment Policy
• Fairness at Work Policy
• Speaking Up Policy
• Occupational Health, Safety and
Environmental Policy and framework
Diverse and engaged workforce
76
Workplace health and safety
74
International management systems
74, 75, 77
Lost time accident (LTA) rate
75
Respect for
human rights*
• Human Rights Policy
• Code of Conduct
• Supplier Code of Conduct
• Health Protection and
Wellbeing Policy
• Fairness at Work Policy
• Speaking Up Policy
Diverse and engaged workforce
76
Workplace health and safety
74
Human rights
73
International management systems
73
Social matters*
• International Marketing Standards
• Policy on taxation
• Community Contributions and
Volunteering Policy
• Information Security Policy
Human rights
73
Youth access prevention
65
Farmer livelihoods and welfare
70
Charitable and political donations
130
Anti-corruption
and anti-bribery*
• Code of Conduct
• Fraud Risk Management Policy
• Speaking Up Policy
• Supplier Code of Conduct
How we manage risk
42
Governance, risk management and
internal control
42, 113
Powered by responsibility
61
Description of principal
risks and impact of
business activity
Principal risks and uncertainties
45
Governance, risk management
and internal control
42, 113
Description of the
business model
Business model
Our Distinctive Approach
14
Non-financial key
performance indicators
Key performance indicators
22
Sustainability
performance indicators
63, 66, 68
Climate-related
financial disclosures
TCFD report
78
*
Further information on our policies, due diligence and outcomes in these areas is contained throughout the Strategic Report.
ESG REVIEW
DELIVERING ON
OUR ESG PRIORITIES
THROUGH OUR STRONG
PERFORMANCE CULTURE
Purpose: Forging a path to a healthier future for moments
of relaxation and pleasure.
Vision: To build a strong challenger business powered
by responsibility, focus and choice.
Reduced our Scope 1 and Scope 2 market-based
emissions by
69%
since 2017
Last year we supported more than
128,000
New beneficiaries through our Leaf Partnership
Programme
Reduced lost time accidents by
47%
since 2019 (absolute numbers)
Our commitment to environmental,
social and governance (ESG) issues is
a core element of our business strategy
and aligns to our purpose and vision.
The Company’s overarching vision is to be a strong challenger
business, and we apply this same mindset to our ESG priorities.
In ESG, being a challenger means starting with the consumer
and looking at issues, such as consumer health or sustainable
packaging, through the lens of the people who use our products.
It is also about acting with agility. The teams who lead our
ESG priorities operate close to our businesses and their
goals are aligned to our commercial objectives. We see
clear synergies, for example in our drive to reduce carbon
emissions and our wider ambitions to build more efficient
manufacturing processes.
Being a challenger is also about having a high-performance
culture. In each of our priority areas, we have clearly defined
accountabilities, metrics and objectives. We have been building
capabilities through external hires, the upskilling of our
existing people and the application of new systems enabling
us to become more data driven.
We continue to strengthen our governance framework in
relation to ESG, with distinct, well-defined roles for the Board
and management. Please see page 61 for further details.
Delivery of our ESG targets is supported by active engagement
from our senior executives. Each priority area is sponsored by
members of the Executive Leadership Team, who challenge
strategy development, drive integration and set the tone
from the top.
An ESG executive sponsor forum convenes three times a
year to identify synergies, share best practice, develop future
strategy and to really harness the power of the collective.
Our eight focus areas are grouped into three categories:
Healthier Futures, Positive Contribution to Society, and Safe
& Inclusive Workplace. Each focus area aligns with at least one
of the United Nations’ Sustainable Development Goals (UN SDGs).
During 2024 there has been a particular focus on galvanising
our people behind our ESG priorities, which we refer to
internally as our “People and Planet” agenda. An important
element of this engagement has been our Triple Zero initiative,
highlighting our aspirations for zero carbon, zero waste and
zero injuries.
To educate and raise awareness, we dedicated an episode
of Connections TV, our global internal channel, to People
and Planet, which was viewed by more than 3,000 colleagues.
Other activities included a CEO-led event for our top 500
leaders on the role they need to play in our ESG strategy.
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ESG REPORTING FRAMEWORK
Our Reporting Criteria document provides further information
on ESG-related metrics.
We report ESG-related information in accordance with the
core options of the Global Reporting Initiative (GRI) Standards
and against the Sustainable Accounting Standards Board
(SASB) framework for tobacco. Details can be found in our
2024 GRI and SASB Index.
Note: Logista is a public company listed on the Bolsa de Madrid
and is managed remotely due to commercial sensitivities
and is responsible for its own data, including ESG-related
data, and, accordingly, remains out of scope for all Imperial
ESG-related KPIs. However, the steps Logista is taking to
address the impacts on its business of climate change are
detailed in our TCFD disclosures on page 78.
ESG: People and Planet Performance Summary 2024
Further information and data related to each of the
material ESG issues is available on our website in our
2024 ESG: People and Planet Performance Summary.
In FY24 ESG metrics continue to be part of executive
remuneration. See page 117 for more information.
Our performance culture drives ESG accountability.
POWERED BY
RESPONSIBILITY
We are committed to conducting our
operations responsibly and respecting our
people, our communities and our planet.
We fulfil our ESG responsibilities by maintaining a strong
governance framework that emphasises high standards of
corporate governance, transparency and ethics. We are
committed to continuously reviewing and enhancing our
risk management processes and disclosure practices to
align with evolving standards and best practice.
To ensure the Board has oversight of all relevant ESG issues,
the People & Governance Committee has been reframed as
the People, Governance & Sustainability (PGS) Committee and
is chaired by the Chair of Imperial Brands. The PGS Committee
receives direct reports from two key Executive Committees:
the Group ESG Committee and the Group Ethics and Compliance
Committee, both chaired by our CEO. The PGS Committee plays
a key role in reviewing Imperial’s ESG and ethics and compliance
practices and how risks in these areas are managed.
The Group Ethics and Compliance Committee is responsible
for providing leadership and monitoring of our ethics and
compliance programme. It supports and reinforces effective
management of ethics and compliance risk, has oversight
of investigations, reviews the Group and Supplier Codes of
Conduct and establishes activities and processes that foster
ethical business conduct, legal and regulatory compliance.
The ESG Committee is responsible for overseeing, advising and
guiding the implementation of our People and Planet agenda.
It monitors the Company’s progress on ESG commitments
and objectives, ensuring that sufficient resources are allocated
to achieve these goals.
There are a number of operational working groups that address
each of the ESG priority topics and relevant updates from
these groups are reported to the ESG Committee. For more
information, please see our 2024 ESG Performance Summary.
REFRESHED CODE OF CONDUCT
We launched a refreshed Group Code of Conduct in FY24.
Front and centre of this new Code is the message that our people
should feel free to speak up about any concern they may have
relating to compliance or ethics matters, anonymously if
necessary, and without fear of retaliation. There is also new
coverage of diversity, equity and inclusion, and the introduction
of a dedicated section on integrity in science.
Our Code is the foundational document of our Imperial Brands
governance framework. It is our guide to doing the right thing
and outlines the standards of behaviour that we expect from
everyone who works for our organisation.
It is aligned with the policies, internal controls and risk
management processes that underpin our strategy. The Code
sets out the responsible behaviours we expect including from
employees in their dealings with colleagues, customers,
consumers, suppliers, agents, intermediaries, advisers,
governments and competitors. All employees and business
partners are expected to act with integrity and in accordance
with the standards of behaviour set out in the Code.
At the end of FY24, the refreshed Code had been translated
into six languages. Further translations into 23 languages
are planned by the end of calendar year 2024.
The roll-out of the Code will continue through FY25,
supported by a dedicated learning programme.
We expect our suppliers to conduct their business in an ethical
and responsible manner and to comply with all applicable
laws and regulations. Our Supplier Code of Conduct, refreshed
in 2023, is available in 20 languages and sets out the behaviours
we expect our suppliers to demonstrate.
The Supplier Code of Conduct is embedded into our Procurement
Policy and processes, which govern how we select and contract
with our suppliers.
SPEAKING UP
Our Speaking Up platform is available both to our employees
and to other stakeholders, including suppliers and farmers.
The platform offers a wide range of reporting routes and
supports anonymous reporting and feedback.
The Speaking Up Policy is made available both internally
and on the Group website in over 30 languages.
All reports made to our Speaking Up platform during the
year were investigated by appropriate senior management,
including members of our People and Culture team,
Group Finance, Global Security Operations, and Group Legal.
At all times, protection of the individual making the report
was a key consideration.
The majority of reports made in FY24 related to employee
grievances. Allegations were also received of misuse and/or theft
of Company property (including through our fraud reporting
process). Some of these allegations were found to be valid in
whole or part. None were found to be material in nature or
value. Where appropriate, corrective action was taken.
ANTI-BRIBERY AND CORRUPTION POLICY
We have a zero-tolerance approach to bribery and corruption.
These commitments are made in our Code of Conduct,
Supplier Code of Conduct and in our dedicated Anti-Bribery
and Corruption (ABAC) Policy. Mandatory ABAC training is
provided to online employees. Measures are in place to assess
our business partners for compliance risk, including ABAC.
Where appropriate (risk and value based), our business partners
are required to commit to specific contractual commitments
relating to ABAC compliance. Processes exist both to allow
reporting (including anonymously) of any allegations of
bribery and also to detect and investigate any allegations.
During FY24 there were no confirmed cases of bribery
against the Group.
ESG REVIEW continued
DOUBLE MATERIALITY ASSESSMENT
In 2023, we conducted our first double materiality assessment
(DMA). This year, as part of our preparation for the upcoming
Corporate Sustainability Reporting Directive (CSRD) we have
designed our DMA approach to meet CSRD requirements.
Double materiality identifies both how a company’s operations
impact people and the environment (impact materiality) and
how sustainability matters impact the company itself
(financial materiality).
To support this exercise, we have followed the European
Financial Reporting Advisory Group (EFRAG) best practice by
adopting an approach combining data and technology with
PRELIMINARY RESULTS FOR DOUBLE MATERIALITY ASSESSMENT
ESRS topic
Financial materiality
Impact materiality
Link to ESG topic
E1 - Climate Change
Material
Material
Climate Change
E2 - Pollution
Material
Material
Climate Change and Packaging & Waste
E3 - Water and marine resources
Not material
Not material
E4 - Biodiversity and ecosystems
Not material
Not material
E5 - Circular economy
Material
Material
Packaging & Waste
S1 - Own workforce
Material
Material
Diversity, Equity, & Inclusion,
Health, Safety & Wellbeing, and Human Rights
S2 - Workers in the value chain
Material
Material
Diversity, Equity, & Inclusion,
Health, Safety & Wellbeing, and Human Rights
S3 - Affected communities
Not material
Not material
S4 - Consumers and end users
Material
Material
Consumer Health
G1 - Business conduct
Material
Material
Sustainable & Responsible Sourcing
and Farmer Livelihoods & Welfare
stakeholder validation. We have used Datamaran, an ESG
software solution, to provide the process and data to facilitate
the identification, assessment and monitoring of material issues
across our value chain. Analysis of information from thousands
of data points, including corporate reports, mandatory and
voluntary regulations and online news, informed our stakeholder
engagement. We are working towards a traceable and
auditable process, suitable for external assurance as required
by CSRD, which supported us in the following three key areas:
1. Identify the European Sustainability Reporting Standards
(ESRS) disclosure requirements and data points to report on.
2. Build and update the ESG strategy; and 3. Set up ongoing
governance and due diligence oversight.
While our DMA is still in progress and pending sign off
from independent auditors, early headline results indicate
that our eight ESG topics and their relevant impacts, risks,
and opportunities have been identified as material to our
business. In addition to this, the DMA has highlighted additional
areas of focus, particularly in governance. We have controls
and frameworks in place for these areas, to ensure they are well
managed. The full, confirmed results will be disclosed in next
year’s Annual Report.
Further details on our DMA results and process can be found
in the ESG Performance Summary.
While we face many challenges, overall, we are meeting our
commitments and demonstrating a consistent track record
in ESG performance. The transformation in our performance
culture and engagement of the workforce has helped to drive
this progress. However, we recognise there is more work to
do for us to deliver our ESG agenda.
Tony Dunnage
Global ESG Director
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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ESG REVIEW continued
OUR ACTIONS RECOGNISED
ESG HIGHLIGHTS
2023 CDP A List for Climate
Change:
Our actions to cut emissions and mitigate
climate risks have earned us a position
on the CDP’s A List for climate change,
for a fifth consecutive year.
Our 2023 CDP scorecard is available
on our website Performance page.
CDP Supplier Engagement Leader:
We have been recognised as a Supplier
Engagement Leader by the CDP for a
fifth successive year.
All companies making climate change
disclosures to the CDP receive a
Supplier Engagement Rating (SER),
in addition to their climate change score,
rating them on how effectively they
engage their suppliers on climate issues.
2024 Climate Leader:
Imperial has been recognised as a
2024 Climate Leader by the Financial
Times for a fourth consecutive year,
in its ranking of actions taken by
European businesses.
SBTi
The Science Based Targets initiative
(SBTi) has verified both our near-term
and long-term science-based emissions
reduction targets.
Our overarching target to be Net Zero
by 2040 has also been approved by
the SBTi.
Race to Zero
In 2021, we joined the UN’s Race to Zero,
the world’s largest coalition of non-state
actors taking immediate action to halve
global emissions by 2030. In doing so,
we joined other members in our goal
to reduce emissions across all scopes
swiftly and fairly, in line with the
Paris Agreement, and with transparent
action plans and near-term targets.
Business Ambition for 1.5 degrees
The Business Ambition for 1.5 degrees
campaign was an urgent call to action
from a global coalition of UN agencies,
business and industry leaders, in a
partnership with the Race to Zero.
We joined in November 2021, reaffirming
our commitment to be Net Zero across
all three scopes by 2040.
INVESTOR BENCHMARKS
Our ESG management and performance is evaluated by a wide
range of external rating agencies.
We believe it is important for rating agencies to work together
with companies, investors and other stakeholders to improve
consistency and transparency in producing robust ESG data
and ratings.
In its last updated report in August 2023,
Sustainalytics notes that Imperial Brands
is at high risk of experiencing material
financial impacts from ESG factors,
due to its medium exposure and strong
management of material ESG issues.
The company is noted for its strong
corporate governance performance,
which is reducing its overall risk.
We have participated in the investor-
backed Workforce Disclosure Initiative
(WDI) since 2019. This benchmark is
based on a disclosure score.
In 2024 we received a 97% disclosure
score for our WDI submission.
MSCI has given Imperial Brands an
A rating in its latest report updated in
September 2024. They note that Imperial
Brands continues to lead global peers
on corporate governance practices.
However, scrutiny over its supply
chain labour practices remains.
Moody’s Analytics gave Imperial Brands
an overall ESG score of 44/100 in their
last review update in January 2024.
INDEPENDENT ASSURANCE
We appointed Ernst & Young LLP to provide limited independent
assurance over selected ESG content within the Annual Report
for the period ended 30 September 2024.
The assurance engagement was planned and performed
in accordance with the International Standard for
Assurance Engagements (ISAE) 3000 Revised, Assurance
Engagements Other Than Audits or Reviews of Historical
Financial Information.
These procedures were designed to conclude on the accuracy
and completeness of selected ESG indicators, which are
indicated in the report with an “A”. An unqualified opinion
was issued and is available on our website along with further
details of the scope, respective responsibilities, work performed,
limitations and conclusions.
CONSUMER HEALTH
We are committed to strengthening
our next generation products (NGP)
and making a more meaningful
contribution to harm reduction by
offering adult smokers a range of
potentially less harmful products.
CLIMATE CHANGE
We are committed to reducing our
impact on the climate throughout
our value chain. Focusing on both
mitigation and adaptation.
PACKAGING & WASTE
We are committed to minimising
waste associated with our products,
packaging and production processes.
FARMER LIVELIHOODS & WELFARE
We are committed to engaging with our suppliers
to support and develop farming communities and
promote sustainable agriculture.
SUSTAINABLE & RESPONSIBLE SOURCING
We are committed to sourcing products and services in
a compliant, sustainable and socially conscious manner.
We will work with suppliers to ensure improvements.
HEALTHIER FUTURES
POSITIVE CONTRIBUTION TO SOCIETY
SAFE & INCLUSIVE WORKPLACE
NGP net revenue
has increased
64%
since 2020
Reduced our Scope 1 and Scope 2
market-based emissions by
69%
since 2017
Reduced absolute waste
across our operations by
32%
since 2017
180,000
tobacco community members benefiting from
Leaf Partnership projects aimed at increasing
access to clean water.
We have been recognised by the CDP as
a supplier engagement leader in 2023 for a
5th year
EMPLOYEE HEALTH,
SAFETY & WELLBEING
We are committed to
achieving world-class
occupational health,
safety and wellbeing
for all our employees.
Reduced lost time
accidents by
47%
since 2019 (absolute numbers)
HUMAN RIGHTS
We are committed to raising
awareness and improving
processes in our supply chains,
recognising the importance,
influence and role we have
in promoting and protecting
human rights.
Factory sites self-assessment
compliance
98%
with human rights
leading indicators
Disclosure score
97%
in the 2024 Workforce Disclosure
Initiative (WDI)
DIVERSITY, EQUITY
& INCLUSION
We are committed to creating a truly
diverse and inclusive organisation
renowned for celebrating difference,
enabling our people to feel that
they belong and be their authentic
selves. We will respect, recognise
and value the diversity of our
consumers and reflect the
communities in which we operate.
Our ESG strategy remains aligned
with the United Nations
Sustainable Development Goals.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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HEALTHIER FUTURES: CONSUMER HEALTH
CONSUMER HEALTH
FY24 Performance
NGP net revenue has increased by 64% since 2020.
COMMITMENT:
We are committed to strengthening our next generation
products (NGP) to make a more meaningful contribution
to harm reduction by offering adult smokers a range of
potentially less harmful products.
Imperial Brands continues to transform, driven by consumer-
centric science and innovation and a commitment to make
a meaningful contribution to tobacco harm reduction (THR)
through our NGP portfolio.
Access to choice
Focusing on consumer choice, we now sell NGP in more
than 20 countries and offer potentially harm reduced
cigarette alternatives to over 200 million adult smokers
and adult nicotine users.
Last year we upscaled our heated, vape and oral nicotine
delivery (OND) propositions within existing market footprints.
Our blu vaping portfolio expanded with new formats like blu
bar kit and blu bar box, while we continued to responsibly
launch new NGP flavours in markets without flavour restrictions.
Aligned with our challenger approach, we also entered the
rapidly expanding US tobacco-free oral nicotine pouch market
with Zone.
iSenzia – our new tobacco-free heated herbal product – was also
launched in several markets.
Scientific substantiation
We continue to substantiate the harm reduction potential of
all our NGP relative to cigarettes through our multi-discipline
scientific assessment framework.
As part of our meaningful contribution to THR, this research
often goes significantly beyond the routine testing required
by regulators.
Last year, for instance, we undertook in-market observational
studies focusing on providing adult smokers – with no
intention to quit – with our heated and vaping propositions.
The studies investigated how adult smokers use our products
over time to reduce their smoking or quit cigarettes entirely.
Our consumer health ambitions are underpinned
by three pillars:
1. Consumer Choice: Providing adult smokers
and nicotine consumers with a range of NGP.
2. Scientific Substantiation: Demonstrating our NGP
are potentially harm reduced compared to smoking.
3. Unintended Use Prevention: Ensuring our NGP are
used by adult smokers and adult nicotine users only.
Status: On track
KPI
NGP net revenue
METRIC
NGP net revenue
from tobacco and
NGP net revenue
• SDG 3: We are committed to
tobacco harm reduction
Behaviours
Links to SDGs
We undertake a range of safeguarding activities to protect our
consumers by taking care in the product design, manufacture,
scientific substantiation and marketing of our NGP.
One such activity relates to governance, in particular the Product
Stewardship and Health Group, which is responsible for
advising the Board on all consumer safety issues. Please see
our ESG Performance Summary 2024 for more information.
Unintended use prevention
We share concerns that the continuing irresponsible
marketing and retailing of NGP – and a concerning rise
in illicit products – are undermining trust in the category’s
public health potential.
To address key issues like these, we have accelerated external
engagement, education and communication. Over the last
year we have:
• Enhanced our contribution to external NGP debates
(for example, discussions on the importance of flavours
and nicotine misperceptions) by hosting and participating
in THR-themed events in Brussels, Miami, Dubai,
Warsaw and Athens.
• Successfully piloted a trade-focused education programme
to our own sales force and external retailers to upskill their
THR and NGP knowledge and to build grassroots capability
and advocacy through our internal Science Academy.
2024'
Baseline Year (2020)
£329mA
£201m
We actively participate within international product standards
bodies like the International Organization for Standardization
(ISO) and the European Committee for Standardization (CEN),
and established industry scientific associations like the
Cooperation Centre for Scientific Research Relative to
Tobacco (CORESTA).
We continue to engage extensively with regulators and public
health bodies across the world to advocate for balanced
regulation, which offers adult smokers a range of effective
alternatives to cigarettes while minimising unintended use.
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard. EY’s Assurance Opinion
is available on our website. Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
Our diverse network of professional scientists is spread across
several countries and ISO-certified laboratories. Planning has
begun for a new state-of-the-art facility in Hamburg.
We also continue to evolve our innovative Alternatives to
Animal Testing (ATAT) programme. This year, using ATAT
methods our scientists demonstrated significant reductions
in markers of smoking-related disease for our vape and heated
products, compared to cigarettes.
Imperial Brands’ continuing contribution to the wider body
of academic research around NGP includes publishing 31
peer-reviewed papers and presenting 24 scientific posters
at conferences over the last five years.
Please visit our science website
for more information.
In the Czech Republic, we conducted a study of 300 smokers
with no intention to quit and introduced them to our heated
products. By the end of the study, half of the consumers
had completely switched or cut smoking by at least 50%.
In a similar study conducted in the UK, where adult
smokers were offered our blu vapes, we found that one in
three had halved their smoking in just three weeks. By week
six, up to 40% had either completely switched or cut their
cigarette consumption.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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CLIMATE CHANGE
COMMITMENT:
We are committed to reducing our impact on the climate
throughout our value chain, focusing on both mitigation
and adaptation.
For more targets and metrics related to climate change,
please see our ESG Performance Summary 2024.
TARGET
25% Reduction in energy
consumption by 2030
METRIC
Absolute energy
consumption in our
operations (GWh)1
Status: Achieved, new target to be implemented
TARGET
50% Reduction in Scope 1
and Scope 2 GHG
emissions by 2025
METRIC
Absolute Scope 1 and Scope
2 market-based CO2e
emissions (Tonnes)1
Status: Achieved
Status: On track
TARGET
50% Reduction in absolute
Scope 3 emissions by 2030
METRIC
Total Scope 3 CO2e
emissions (Tonnes)
HEALTHIER FUTURES: CLIMATE CHANGE
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY) under
the limited assurance requirements of the ISAE 3000 standard. EY’s Assurance
Opinion is available on our website. Our reporting scope and definitions are
detailed in the Reporting Criteria document published on our website.
1. Our 2024 environmental data covers the reporting period Q4 2023 to Q3 2024.
This is to allow for data collection, validation and external assurance.
We use the industry leading Greenhouse Gases (GHG) Protocol standard
to inform our reporting of Scope 1 and 2 emissions.
energy transition. As we transition to lower carbon
alternatives, we will take actions such as the introduction and
expansion of electric vehicles where it makes practical sense,
as well as the use of hybrid vehicles as part of our approach.
Progress on our indirect targets
Achieving our Net Zero goal by 2040 requires us to manage
carbon reduction across our Scope 3 emissions, which
account for more than 90% of our total carbon footprint.
Our strategy is to prioritise our large suppliers, those
with high spend and emissions. We are working with these
suppliers to gain a more precise understanding of their most
material emission sources. We also encourage them to
establish reduction targets, improve disclosure, and seek
external validation of their plans through the SBTi. Suppliers
are being engaged both through the CDP Supply Chain
Programme and our own internal Supplier Relationship
Management (SRM) initiative known as SRM Connect.
For additional details, please see page 72.
We have mapped a five-step approach towards Net Zero:
1
Undertake energy-
efficiency initiatives
2
Switch to
100% renewable
grid electricity
3
Transition all other
energy types to
renewable sources
4
Achieve Net
Zero in our
operations
5
Become climate positive, which means
saving more greenhouse gas emissions
than we are generating
2024
Baseline Year (2017)
595 GWhA
875 GWh
2024
Baseline Year (2017)
89,120A
290,446*
2024
Baseline Year (2017)
981,703
1,478,494**
Climate change is a key priority for our stakeholders and it
is also a critical business concern that has the potential to
directly impact financial performance and risk management.
Extreme weather events and supply chain disruptions can
pose direct threats to our people, operations, assets and
revenue streams. We assess and quantify these challenges
and mitigate significant risks.
Relevant risks and opportunities are disclosed in our Task
Force on Climate-related Financial Disclosures (TCFD) report;
see page 78 for details.
We are committed to addressing our climate change impact,
aiming to be fully Net Zero by 2040. This long-term goal
involves eliminating our net greenhouse gas (GHG) emissions,
not only within our business operations but also throughout
our entire supply chain.
We have also set two key intermediate goals for 2030.
1. To be Net Zero for our Scope 1 and 2 emissions.
2. To have reduced all our carbon emissions related to
our business – that is Scope 1, 2 and 3 GHG emissions
together – by 50% compared to the 2017 baseline year.
Our journey to Net Zero presents an opportunity for us to play
our part in curbing global warming and also to introduce
improved manufacturing and sales techniques, and to
strengthen supply chain relationships.
During 2024, the Science Based Targets initiative (SBTi) validated
our 2040 Net Zero target, along with our short and medium-term
objectives, reaffirming our alignment with the Paris Agreement.
Behaviours
Links to SDGs
• SDG 13: Take urgent action
to combat climate change
and its impacts
• SDG 7: Ensure access to
affordable, reliable, sustainable
and modern energy for all
Our target to be fully Net Zero by 2040 is one part of our
Triple Zero campaign.
Delivering on our direct targets
During 2024, we made further progress reducing our direct
emissions and can report a 69% reduction in our direct Scope 1 and
2 market-based emissions compared to the 2017 baseline year.
Most of these emissions reductions come from changes to
manufacturing activities, where we take a data-led approach
to improve operational efficiency. In the past year, we invested
in a new global energy management system to continually
collect usage data. This system has allowed us to map and
compare our manufacturing energy usage across our footprint
which is already providing specific, actionable insights.
We are now building a framework of leading environmental
indicators and accompanying guidance, and over the next
year, this will be introduced to all factory sites.
Carbon reduction through fleet management
Emissions from our global fleet of around 4,600 vehicles
account for around 29% of Scope 1 emissions. We are seeking
solutions that drive energy efficiencies and support the
In 2025, we will focus on expanding the use of the CDP
Supply Chain Programme to enhance data collection and
transparency. We will explore opportunities to collaborate
with suppliers to reduce emissions and work closely with
them to improve our overall Scope 3 emission calculations.
Within Scope 3, the Purchased Goods and Services category
is the most material at 678,527A tonnes of CO2e, accounting
for approximately 63% of total carbon emissions. This year
we have obtained independent assurance of this data. Further
information is provided in our ESG Performance Summary 2024.
We have achieved our 2024 objective of ensuring that 50% of
suppliers by spend in this category commit to science-based
targets. Please see page 72 for more details.
In 2025 we will be launching Net Zero supplier contract
clauses to reinforce our commitment to reducing emissions
across our supply chain.
We have mapped our journey to Net Zero with a five-step plan
illustrated below.
LOGISTA EMISSIONS
Performance indicator
Unit
2017 (base year)
2021
2022
2023
Commentary
Logista absolute
Scope 1 and 2
CO2e emissions
Tonnes
38,554
45,557
47,099
132,262 Logista is managed remotely due to commercial sensitivities and is
responsible for its own data. Logista has provided independently
assured data from 2023 for absolute Scope 1, 2 and 3 emissions.
Data for 2024 is still undergoing independent assurance.
The increase in Scope 1 and 2 emissions seen in 2023 can be attributed to
acquisitions and the expansion of the emissions accounting boundary to
include maritime and rail transport. This change reflects the diverse
transport services provided by the newly acquired entities.
Logista’s 2023 relative Scope 1 and 2 emissions comprise 57 tonnes
(2022: 23 tonnes) of CO2e per £million of 2023 distribution fees
(our non-GAAP revenue measure for Logista).
Further information on the scope of Logista’s GHG reporting is available
at www.grupologista.com.
Logista absolute
Scope 3 CO2e
emissions
Tonnes
193,611
194,634 189,709
335,851
SCOPE 1 AND 2 EMISSIONS – UK AND GLOBAL1,2,3
Performance indicator
Units
2024
2023
UK and
offshore area
Global
(Excluding UK and
offshore area)
UK and
offshore area
Global
(Excluding UK and
offshore area)
Scope 1 emissions
tCO2e
1,688
71,749
1,841
79,248
Relative Scope 1 emissions
tCO2e/£m net revenue
0.2
8.8
0.2
9.9
Scope 2 location-based emissions
tCO2e
876
107,594
872
113,187
Relative Scope 2 location-based emissions tCO2e/£m net revenue
0.1
13.2
0.1
14.1
Scope 2 market-based emissions
tCO2e
0
15,683
0
20,326*
Relative Scope 2 market-based emissions
tCO2e/£m net revenue
0
1.9
0
2.5*
Total Gross Scope 1 and Scope 2
location-based emissions
tCO2e
2,564
179,343
2,713
192,435
Relative Scope 1 and Scope 2 location-based tCO2e/£m net revenue
0.3
22.0
0.3
24.0
Total Gross Scope 1 and Scope 2
market-based emissions
tCO2e
1,688
87,432
1,841
99,574*
Relative Scope 1 and Scope 2 market-based
tCO2e/£m net revenue
0.2
10.7
0.2
12.4*
Energy consumption
kWh
12,495,251
582,776,582
13,233,516
637,059,838
1. We have provided reporting in compliance with UK Streamlined Energy and Carbon Reporting (SECR) regulations (being the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008, as amended by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and the SECR under
the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
2. For details on the methodology used for SECR calculations, please see our Reporting Criteria document available on our website.
3. Energy efficiency measures taken in FY24 are reported in our 2024 CDP Climate Change disclosures available on the CDP website.
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard.
EY’s Assurance Opinion is available on our website. Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
*
Previous years’ have been restated due to the correction in Scope 2 market-based emissions relating to the source of heat and steam in our factory in Türkiye.
FY24 Performance
We achieved our energy reduction target ahead of time with a 32%
decrease in energy consumption compared to the 2017 baseline year.
We will set a new target subject to approval by the ESG Committee.
We achieved a 69% reduction in our total Scope 1 and Scope 2
market-based CO2e emissions compared to the baseline year. *The
baseline has been restated due to the correction in Scope 2 emissions
relating to the source of heat and steam in our factory in Türkiye.
In FY24, we updated our Scope 3 calculation methodology and as a
result we have restated our 2017 baseline year** based on this new
methodology. We have seen a 34% decrease in total Scope 3
emissions compared to the 2017 baseline year.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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HEALTHIER FUTURES: PACKAGING & WASTE
PACKAGING
& WASTE
COMMITMENT:
We are committed to minimising waste associated
with products, packaging and production processes.
As a responsible manufacturer, we are committed to minimising
our environmental impact and promoting sustainability
throughout our value chain. The Group Environmental Policy
makes our commitment clear, which extends through
several Group policies, including our Code of Conduct and
Supplier Code of Conduct. These set out the foundations of
our approach to environmental sustainability which all our
employees, suppliers, and business partners are required to
adhere to. Our due diligence processes are designed to
uphold high standards to minimise our environmental
impact by reducing our carbon footprint, energy, waste,
and water consumption, as well as protecting biodiversity.
This commitment involves responsible production, usage,
and disposal of our products, requiring all employees and
partners to understand their roles.
The consumer is the starting point for our strategy.
And as consumers’ and policy makers’ attention shifts to more
sustainable manufacturing and recyclable packaging, we aim
to efficiently use resources and minimise waste at source.
We are working towards ensuring all our packaging is
reusable, recyclable or compostable and to minimise waste
across our products, packaging and production processes.
Innovating for waste reduction
Our research suggests that, while consumers value product
quality and are unwilling to compromise on this, they also highly
value waste reduction but do not want to pay extra for this.
Working with third-party experts to assess the recyclability
of our packaging, we developed new ways to create the same
quality or better packaging where our existing packaging was
not recyclable.
This underpins our target for all our EU and UK packaging to
be reusable, recyclable or compostable by 2025. In FY24 based
on third-party certifications, 94%A of our packaging formats
are now deemed recyclable.
We also set a target for all our products sold in the EU and UK,
to have an average packaging recyclability score of more than
80% by 2030. Based on third-party packaging recyclability
assessments, for the volume of packaging from products sold
in the year, in FY24 we achieved an average packaging
recyclability score of 84%A.
Recent innovations include make-your-own cigarette buckets
with reduced quantities of plastic, without compromising on
consumer acceptance. In Spain, we introduced the industry’s
first roll-your-own tobacco pouch, featuring a food-grade
recycled plastic content of 42%. We have also launched a
snus can made from food-approved, bio-circular plastic.
For more targets and metrics related to packaging and waste,
please see our ESG Performance Summary 2024.
TARGET
20% Reduction in waste
generated in our
operations by 2030
METRIC
Absolute waste (Tonnes)1
Status: Achieved, new target to be implemented
Status: On track
TARGET
Zero Waste to landfill in
our operations by 2025
METRIC
Absolute non-hazardous
waste sent to landfill
(Tonnes)1
TARGET
100% of all wood
fibre in our packaging
will be sustainably
sourced by 2025
METRIC
Percentage of
wood fibre in our packaging
sustainably sourced
Status: On track
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY)
under the limited assurance requirements of the ISAE 3000 standard.
EY’s Assurance Opinion is available on our website. Our reporting scope
and definitions are detailed in the Reporting Criteria document published
on our website.
1. Our 2024 environmental data covers the reporting period Q4 2023 to Q3 2024.
This is to allow for data collection, validation and external assurance.
Links to SDGs
Behaviours
• SDG 12: Ensure
sustainable consumption
and production patterns
2024
Baseline Year (2017)
264A
7,200
2024
Baseline Year (2022)
96%A
97%
2024
Baseline Year (2017)
33,211A
49,141
Zero Waste ambition
In pursuit of our Zero Waste ambition, we established a goal
to eliminate landfill waste from all our operations by 2025.
We can report that since May 2024, we have sent zero waste
to landfill from our manufacturing operations and main
offices. Three sites in the Central African Republic, Mali and
Ukraine are currently out of scope due to ongoing conflicts
in these regions. Due to this and other challenges our focus is
on maintaining this zero landfill status at our in-scope sites.
To support the next phase of our waste reduction programme,
we have formed a global community of “Zero Heroes” to
champion ongoing initiatives. We achieved our 20% waste
reduction target ahead of time and will set a new target
subject to approval by the ESG Committee.
Cigarette butts
We believe that the most effective approach to combating
littering is through partnership with other key stakeholders,
such as tobacco manufacturers, government agencies,
retailers and local communities, educating consumers on
the importance of the proper disposal of used cigarette butts.
We participate in Extended Producer Responsibility schemes,
both on a voluntary basis and to fulfil regulatory requirements
under various legislation, including the EU Single-Use Plastics
Directive. The costs of these can cover waste management,
the clean-up of litter and consumer awareness-raising measures.
Consumer acceptance and emissions regulation have meant
that we are yet to find an adequate alternative substitute for
the traditional cigarette filter. However, we continue to search
for alternative materials for our filters.
NGP waste
We are committed to enhancing the sustainability and
recyclability of NGP materials and packaging.
Our blu bar kit was developed to enable consumers to move
from disposable products into rechargeable pod systems.
Whilst our current blu bar 1000 already had a removable
battery, our new blu bar kit enables consumers to have the
same sensory experience but in a pod format, allowing them
to keep the device and responsibly dispose of the pod only.
To support our consumers with the responsible disposal of our
blu products, “take-back” schemes for vaping devices and pods
continue in some markets.
FY24 Performance
We achieved our waste reduction target ahead of time with a 32%
decrease in waste compared to the 2017 baseline year. We will set
a new target subject to approval by the ESG Committee.
We achieved a 96% reduction in non-hazardous waste sent to
landfill compared to the baseline year.
96%A of wood fibre in our packaging is now sustainably sourced.
The slight reduction of this score seen in 2024 is due to a change
in the calculation methodology.
Our target to maintain Zero Waste to landfill is one part
of our Triple Zero campaign.
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69
POSITIVE CONTRIBUTION TO SOCIETY: FARMER LIVELIHOODS & WELFARE
FARMER
LIVELIHOODS
& WELFARE
For more targets and metrics related to farmer livelihoods
and welfare please see our ESG Performance Summary 2024.
COMMITMENT:
We are committed to engaging with our suppliers
to support and develop farming communities
and promote sustainable agriculture.
For us to be able to serve our consumers over the long term,
it is important that farmers continue choosing to grow tobacco.
We purchase approximately 97% of our tobacco through
both global and niche suppliers from more than 30
countries worldwide, and around 3% from our own directly
contracted farms.
Tobacco farmers are facing new challenges including
extreme weather events, succession challenges, and inflation.
In addition farmers have choices over whether to prioritise
growing tobacco over other crops.
We engage with our leaf suppliers to ensure security of
supply, develop farming communities and promote
sustainable agriculture. These activities include improving
farmer access to basic needs, a decent standard of living and
income diversification, enabling them to continue to grow
tobacco sustainably.
The Sustainable Tobacco Programme
We collaborate with our suppliers to enhance standards in
our leaf supply chain and manage leaf supply risks with our
suppliers and through partnerships, such as those created
through the Sustainable Tobacco Programme (STP).
The STP is an industry body which verifies annual supplier
self-assessments. To accelerate positive social and
environmental impact in tobacco-growing communities
we aim to enhance agricultural supply chain due diligence.
The STP is independently managed and provides us with
enhanced visibility over our leaf supply chain in two ways:
1. By empowering our suppliers to report on the actions they
are taking to address any risks identified, and how they are
having a positive impact on the ground.
2. By verifying these actions either remotely or in the field.
This informs our strategy to support our suppliers in taking
effective action.
All our tobacco leaf suppliers are expected to participate in
the STP. In 2024 (based on the 2023 tobacco leaf crop year),
100% of our suppliers reported on their due diligence.
Our key suppliers have mature due diligence processes
in place, underpinned by the suppliers’ on-farm monitoring
technology. Our suppliers contract with farmers at the
beginning of a growing season with the necessary training
and inputs to grow tobacco responsibly. Their technicians
monitor the crop and labour practices throughout the year.
KPI
All leaf suppliers expressing
a commitment to supporting
their farmers to access a
decent standard of living
METRIC
Percentage of leaf
suppliers expressing a
commitment to support
their farmers to access a
decent standard of living
Status: On track
TARGET
100% Sustainable
wood used as tobacco
curing fuel1 by 2025
METRIC
Percentage of sustainably
sourced wood or matched
by managed planting
Status: On track
KPI
100% of our tobacco leaf
suppliers participating in
the Sustainable Tobacco
Programme (STP)
METRIC
Percentage of total
leaf suppliers participating
in the STP
Status: Achieved
1. Based on flue cured and dark fire cured tobacco, which are the tobacco types
that require wood for curing.
2. Based on suppliers’ directly contracted farmers in 2021 sourcing origins that
are rated as high risk for poverty according to Maplecroft.
A. Data has been independently assured by Ernst & Young LLP (EY) under the
limited assurance requirements of the ISAE 3000 standard. EY’s Assurance
Opinion is available on our website.
Links to SDGs
Behaviours
2024'
Baseline Year (2023)
98%A
83%
2024 Sustainably
sourced wood
Baseline Year (2023)
2024 Managed
planting
86%A
13%
85%*
2024
Baseline Year (2022)
100%
96%
Forestry
Many of our suppliers’ contracted farmers use wood in tobacco
production, either as a fuel in the curing of tobacco or for
constructing barns required for the curing of tobacco.
We have committed to supporting suppliers to provide their
farmers access to 100% sustainable wood for use as tobacco
curing fuel by 2025. The ambition is for 100% of the wood
harvested to be sourced sustainably or that the wood used
will be matched by managed planting.
In FY24, 86%A of the wood was sourced from sustainable and
traceable sources with an additional 13% matched by managed
planting. Therefore, 99% of the wood used for tobacco curing is
now sustainably sourced or matched by managed planting.
We also financially support forestry programmes. This includes
Imperial Brands’ own dedicated forestry programme managed
through a key supplier in Tanzania. Planting trees sustainably
that farmers can access decreases the pressures on the
indigenous woodland that is being harvested for use in tobacco
production. There are also economic benefits for farmers in
labour saving, reduced cost of wood and transport.
Addressing child labour
As with other agricultural industries, the risk of child labour is
highest in the cultivation part of our supply chain. Child labour
is a multi-stakeholder issue, which no single entity can
address in isolation. In collaboration with key stakeholders
including the industry and suppliers operating in these
communities, we seek to address the risk of child labour
through three main activities:
1. The Sustainable Tobacco Programme (STP)
The Human and Labour Rights section of the STP is aligned
with the relevant International Labour Organization (ILO)
core conventions and the principles and guidance
contained within the United Nations Guiding Principles
(UNGP) on Business and Human Rights.
2. Our Leaf Partnership Programme
Working directly with our suppliers to fund projects that
aim to tackle some of the root causes of child labour.
3. Eliminating Child Labour in Tobacco Growing Foundation
(ECLT)
We are members of the ECLT and support its aims to tackle
the root causes of child labour.
For more information on how we are addressing the issue of
child labour, please see our ESG Performance Summary 2024.
Decent standard of living
The industry has formally adopted the Living Income
Benchmark which is detailed in the STP Workbook 2023.
This is the guidance document developed by the STP
secretariat which our suppliers can reference when
completing the annual STP self-assessment.
The benchmark varies by country and includes costs for food,
housing, education, healthcare, transport, clothing and other
essential needs.
Overall farm net income, including income from outside
the farm, is measured against the relevant Living Income
Benchmark for that location. This income needs to exceed
the benchmark to be considered a living income, meaning
the farmer can afford a decent standard of living.
At the end of FY24, 98%A of our leaf suppliers expressed a
commitment to supporting their farmers to access a decent
standard of living.
We are collaborating with our suppliers to identify those
farmers that have difficulties in achieving a living income
and to support them with specific actions via our Leaf
Partnership Programme.
Leaf Partnership Programme
Through our Leaf Partnership Programme, we support the
supply chain and the journey of farmers to achieving a decent
standard of living.
The Leaf Partnership Programme is integral to our leaf sourcing
strategy and an essential part of our farmer livelihoods and
welfare ambition. The programme is conducted in close
partnership with suppliers. In each country, we identify the
best local solutions that the suppliers then implement using
our funding.
In FY24, Imperial provided financial support for projects in
13 countries, with more than 128,000 beneficiaries, focusing
on three broad initiatives:
1. Dedicated financial sustainability projects to help farmers
enhance their income. We have a target to improve farmers’
access to projects that improve their financial sustainability
by 2030. This year we enabled our suppliers to roll out
financial literacy training to more than 1,500 farmers in
three countries.
2. Increasing access to basic needs to make farming
communities a better place to live. We have a target to
support suppliers to improve access to basic needs for
180,000 farmers2 by 2030. This target aims to reach 180,000
active beneficiaries in each project category: childcare and
education; clean water; and sanitation and hygiene. In FY24
we reached the target of 180,000 tobacco community
members benefiting from projects aimed at increasing
access to clean water.
3. The introduction of sustainable agricultural practices
where they are not already in place. We have a target to
support suppliers to provide access to 100% sustainable
wood for use as tobacco curing fuel by 2025.
FY24 Performance
98%A of our leaf suppliers have expressed a commitment to
support their farmers to access a decent standard of living.
86%A of the wood was sourced from sustainable and traceable
sources with an additional 13% matched by managed planting.
The baseline number* has been restated following a retesting
of supplier data.
100% of our leaf suppliers participated in the STP.
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71
POSITIVE CONTRIBUTION TO SOCIETY: SUSTAINABLE & RESPONSIBLE SOURCING
SUSTAINABLE
& RESPONSIBLE
SOURCING
COMMITMENT:
We are committed to sourcing products and services in
a compliant, sustainable and socially conscious manner.
We will work with our suppliers to ensure continuous
improvements.
Sustainable and responsible sourcing ensures the long-term
viability of our supply chain, supports the communities we
operate in, and aligns with our commitment to minimising
our environmental impact.
Suppliers are essential partners in our business operations
– and their commitment to quality, innovation and ethical
practices supports both our commercial success and our
People and Planet agenda.
Supplier engagement
This year we launched our new Supplier Relationship
Management (SRM) programme, called SRM Connect.
This framework offers the tools, governance, data and
incentives needed to build strong, consistent and sustainable
partnerships across all procurement spending areas globally.
The SRM Connect framework also provides us with an
improved ability to communicate to suppliers the importance
of our People and Planet agenda and align with them on our
broader ESG objectives.
We have continued to engage with our suppliers via the CDP
Supply Chain Programme to better understand our suppliers’
operational emissions. This programme provides tools and
frameworks to gather and analyse Scope 1, 2 and 3 emissions
data directly from our suppliers. This approach allows us to
more precisely assess the emissions profile of the entire
supply chain.
Sedex
We have opted to use Sedex (Supplier Ethical Data Exchange)
to enhance supply chain visibility, assess risks and ensure
compliance with legislation. We expect our partner suppliers
to be registered with Sedex (or an equivalent platform) and
to have initially completed a self-assessment questionnaire
covering the following categories: Labour, Health & Safety,
Environment, and Business Ethics.
We have implemented ethical trading risk assessments for
our partner suppliers, covering over 60% of our supplier spend.
We have established a risk-based approach to determine when
suppliers need to undergo a Sedex Members Ethical Trade
Audit (SMETA). Using the audit results, we will collaborate
with our suppliers to minimise risks and enhance their overall
ESG performance.
We will integrate the use of Sedex and SMETA audits into
our procurement process, ensuring that suppliers adhere to
ethical standards and sustainability practices. Supplier
improvement plans will be developed and monitored to drive
continuous improvement and foster long-term partnerships
based on shared sustainability goals.
Suppliers with science-based targets (SBTs)
Our supply chain team continues to support our wider ambitions
to become a fully Net Zero emissions business by 2040.
During 2024, we achieved our target of ensuring that 50% of
suppliers by spend within the Purchased Goods and Services
category are committed to science-based targets.
TARGET
50% of Purchased Goods
and Services (PGS)
suppliers by spend are
committed to science-
based targets by 2024
METRIC
Percentage of suppliers
in the PGS category by
spend committed to
science-based targets
TARGET
50% of partner suppliers
by spend have an ethical
trading assessment via
Sedex or equivalent
by 2024
METRIC
Percentage of partner
suppliers by spend
with an ethical trading
assessment via Sedex
or equivalent
Status: Achieved
Status: Achieved
Links to SDGs
Behaviours
SDG 12: We aim to
ensure sustainable
consumption and
production patterns
2024
Baseline Year (2022)
50%
25%
2024
Baseline Year (2023)
0%
86%
KPI
Factory sites self-assessment compliance with our
human rights leading indicators
SAFE & INCLUSIVE WORKPLACE: HUMAN RIGHTS
HUMAN RIGHTS
COMMITMENT:
We are committed to raising awareness and improving
processes in our supply chains, and we recognise the
importance, influence and role we have in promoting
and protecting human rights.
Links to SDGs
Behaviours
SDG 8: We are
committed to
decent work for all
and to sustainable
economic growth
Human rights are the fundamental rights and freedoms
that belong to every person. They apply regardless of where
we are from, what we believe or how we choose to live our
lives. As a responsible business, we do not tolerate human
rights violations. If we identify potential or actual violations,
we act quickly and deliberately to address them.
Human rights leading indicators
To continue to minimise our risk of being exposed to modern
slavery and labour exploitation, we reframed our modern
slavery indicators to human rights leading indicators (HRLI)
covering a wide range of topics including employment
contracts, training, recruitment, and speaking up, which go
beyond the notion of modern slavery. We have revised the
wording of these indicators, added extra guidance for each
one, and included examples of how to meet them.
Using HRLI is helping us to achieve a more consistent
understanding of the requirements and improve the
accuracy of our reporting and ensure alignment with
our Human Rights Policy.
Modern slavery audits
A key tool for understanding human rights risks and preventing
violations is our ongoing programme of modern slavery audits.
During FY24 we conducted audits at factories in the Ivory Coast,
the US and Morocco. These provided more in depth insights
into the local context and allowed us to work with factory teams
to mitigate the risk of modern slavery. In addition, we piloted
additional lighter-touch audits conducted online. These targeted
sites which consistently reported 100% compliance with leading
indicators and helped identify potential inconsistencies and
share best practices.
In FY25, we plan to review a risk-based selection of priority
locations to assess their exposure to human rights risks and
develop action plans to address these issues.
Raising awareness
We believe knowledge is crucial in reducing our risk of human
rights abuses. Enhancing employee awareness of human rights
enables us to better identify potential or actual violations.
Human rights training is mandatory for a large proportion of
our management population. This learning covers definitions
of human rights and our role as a company in protecting
them; recognising signs of modern slavery; and how to report
concerns, both informally and through our Speaking Up
service. Over 2,000 employees have completed the training.
In addition, more than 900 colleagues participated in 19 human
rights webinars, sharing our work and commitments.
In FY25, we intend to develop more non-English language
resources and ensure all sites have communication plans
in place to raise awareness about how to report human
rights concerns.
For more information please see our latest Modern Slavery
Statement available on our website.
2024
Baseline Year (2021)
98%
76%
Status: On track
FY24 Performance
We achieved our target of 50% of suppliers by spend in
the PGS category committed to science-based targets.
We exceeded our target for our partner suppliers by
spend having an ethical trading assessment via Sedex
or equivalent, with 86% at the end of FY24.
FY24 Performance
98% of our factory sites self-assessments are compliant
with our human rights leading indicators. There are two
sites that will address gaps to reach compliance with
our internal standard in FY25.
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73
SAFE & INCLUSIVE WORKPLACE: EMPLOYEE HEALTH, SAFETY & WELLBEING
EMPLOYEE
HEALTH, SAFETY
& WELLBEING
COMMITMENT:
We are committed to achieving world-class occupational
health, safety & wellbeing for all our employees.
Links to SDGs
Behaviours
• SDG 3: Good health
and wellbeing
• SDG 8: Decent work
and economic growth
Our Group Health Safety and Wellbeing Policy sets out our
commitment to provide a safe, healthy, and supportive
working environment for our employees and everyone
involved in our business.
We adopt a “Plan, Do, Check, Act” approach to set objectives
and action plans, focusing on systematically identifying
and controlling hazards and risks, to support a continuous
improvement cycle. Our commitment includes seeking
improvement opportunities, providing necessary resources
and training, fostering effective communication, and ensuring
compliance with local health, safety, and wellbeing regulations.
Our Zero Injury aspiration is part of our
Triple Zero campaign
Developing a stronger safety culture
Our integrated approach is underpinned by a long-term
campaign with the unifying theme of “I Own Safety”.
This seeks to build awareness, develop strong accountability
and give people confidence to speak up in unsafe situations.
This campaign has included both global events and targeted
local initiatives.
In FY25 we aim to extend the updated health and safety
standards to all office locations, ensuring a more consistent
approach across the organisation.
Improving processes
Each of our factory locations conducted a self-assessment of
leading indicators, supported by 38 trained internal reviewers
which highlighted good practices and made recommendations
for improvement. We also conduct on-site visits to review
and assess compliance. Since FY22, we have completed
38 of these visits.
To enhance data-driven decision-making and implement
effective control measures, we strengthened our existing
process of incident investigation by incorporating additional
data fields to identify correlations and trends.
We developed an app for incident investigations that
standardises information capture, providing a clearer view
of gaps and root causes for Group-level issue resolution.
Additionally, a real-time dashboard was implemented,
allowing leaders to monitor trends and gain insights,
thereby enhancing their ownership of safety issues.
We will continue to improve the quality of incident
investigations by further incorporating behavioural
factors into root cause analyses.
Developing capabilities and positive behaviours
During 2024 we continued to take initiatives to improve
the health and safety skills of our senior managers.
In FY24, 210 leaders were trained on the Behavioural Science
Programme for safety leadership, a course certified by the
Institution of Occupational Safety and Health.
For more targets and metrics related to health and safety
please see our ESG Performance Summary 2024.
TARGET
75% Reduction in lost time
accident (LTA) rate by 2030
METRIC
Lost time accidents
per 200,000 hours worked1,2
Status: Requires focus
KPI
Reduction in total number
of accidents each year
METRIC
Absolute total
number of accidents1,2
Status: On track
TARGET
60% Reduction in fleet
collision rate by 2025
METRIC
Fleet collisions
per million kilometres1
Status: Achieved
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY)
under the limited assurance requirements of the ISAE 3000 standard. EY’s
Assurance Opinion is available on our website. Our reporting scope and definitions
are detailed in the Reporting Criteria document published on our website.
1. Our health and safety data is for the full 2024 financial year.
2. Accidents reported do not include commuting to or from work, or those
sustained by third parties such as distributors.
2024
Baseline Year (2019)
0.3A
0.4
2024
Baseline Year (2019)
318
850
2024
Baseline Year (2022)
1.82A
5.03
This aimed to improve understanding of the role of
conversations with peers and team members and identifying
and influencing safe behaviours. In addition, we have established
the Safety Synergy forum, facilitating the exchange of best
practices across Sales and Marketing functions.
Building on the success of the Behavioural Safety Programme
in FY24, we will continue to roll this out to more colleagues
across Imperial to promote a safer work environment.
Performance to date has shown an improvement.
However, to reach our longer-term ambition to be a Zero Injury
business, we know we need to do more to build awareness,
drive consistency through our organisation and improve
our capabilities.
Wellbeing
The wellbeing of our employees is of great importance.
Our employee wellbeing support is locally managed and
encompasses a variety of initiatives, including resilience
training, employee assistance programmes, health checks,
awareness campaigns, flexible working arrangements,
family-friendly policies and facilities, as well as workplace
celebrations and social events.
In October 2023, we celebrated World Mental Health Day with
a campaign focused on empowering leaders and employees
to discuss mental health more openly. The key message was
“Let’s care for each other”. Our goal was to inform employees
that conversations about mental health are essential skills
everyone should have, and to foster a sense of comfort and
acceptance around these discussions. The campaign included
educational and awareness materials such as briefings for
People Leaders on how to lead on check-in conversations
with employees, team-building activities, leaflets, posters,
and cards with mental health conversation starters.
OUR WELLBEING PLAN
• Foster a mentally healthy culture by incorporating
these principles into People Leader training.
• Run regular initiatives to raise awareness of mental
health issues at work.
• Enable local sites to tailor initiatives addressing local
wellbeing needs.
FY24 Performance
We have seen a 25% reduction in the LTA rate compared
to the 2019 baseline year.
We have seen a 63% reduction in the total number of accidents
compared to the 2019 baseline year.
We have achieved the target set for fleet collision rate with
a 64% reduction compared to the 2019 baseline year.
HEALTH AND SAFETY PERFORMANCE1
Performance indicator
Unit
2019
(base year)
2022
2023
2024
Commentary
Employee fatalities
Number
2
0
0
0
There have been no work-related fatalities to employees. Sadly, one of our
employees did pass away during commuting in one of our vehicles
following a road accident.
Contractor
fatalities
Number
0
0
1
0
There have been no work-related fatalities to contractors.
Members of the
public fatalities
involving Imperial
Brands vehicles
Number
1
0
0
0
Road safety remains a priority across all our operations.
Lost time accidents
(LTAs)2
Number
101
57
57
54
We have reduced our absolute number of lost time accidents by 5%
compared to last year and by 47% compared to the 2019 baseline year.
LTA rate2
LTAs per
200,000 hours
worked
0.40
0.24
0.30
0.30A
Although we have reduced the number of lost time accidents, the lost
time accident rate has remained unchanged from last year due to a
corresponding reduction in hours worked.
We have seen a 25% decrease in the LTA rate compared to the 2019
baseline year.
Total number
of accidents2
Number
850
522
420
318
We have seen a 24% decrease in total accidents compared to last year
and a 63% reduction compared to the 2019 baseline year.
Accident rate2
Total accidents
per 200,000
hours worked
3.39
2.24
2.24
1.75
The accident rate reduced by 22% compared to last year and by 48%
compared to the 2019 baseline year.
Fleet collision rate
Accidents per
million
kilometres
5.03
2.80
2.29
1.82A
There has been a 21% decrease in our vehicle accident rate compared
to last year and a 64% decrease compared to the 2019 baseline year.
Road safety remains a key priority for us. We adopt global standards for
road safety and use our Drive Safe campaign to promote awareness and
influence behaviour.
Fleet vehicles fitted
with an in-vehicle
monitoring system
(IVMS)
%
–
57.3
46.9
60.3
Evidence shows that in-vehicle monitoring systems typically lead to fuel
reduction and improved safety performance and we will continue to test
and extend coverage.
Compliance with
the Health and
Safety Framework
(Manufacturing)
%
–
87
93
99
We aim to be at 100% compliance with our framework standards by 2025.
Compliance with the
Health and Safety
Framework (Sales)
%
–
93
94
98
We aim to be at 100% compliance with our framework standards by 2025.
ISO 45001
certification
%
79
71
72
79
Of the factories in scope, 79% have certification for the international
standard for health and safety at work.
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard. EY’s Assurance Opinion
is available on our website. Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
1. Our health and safety data is for the full 2024 financial year.
2. Accidents reported do not include commuting to or from work, or those sustained by third parties such as distributors.
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75
DIVERSITY, EQUITY
& INCLUSION
SAFE & INCLUSIVE WORKPLACE: DIVERSITY, EQUITY & INCLUSION
COMMITMENT:
We are committed to creating a truly diverse and inclusive
organisation renowned for celebrating difference, enabling
our people to feel that they belong and be their authentic
selves We will respect, recognise and value the diversity of our
consumers and reflect the communities in which we operate.
For more targets and metrics related to DEI,
please see our ESG Performance Summary 2024.
Diversity, equity and inclusion (DEI) support the development
of our performance-based culture. An important focus is to
drive positive commercial outcomes by creating a more diverse
and inclusive workforce. It is also important that our employee
base mirrors the varied global communities where we operate
– a diverse workforce allows us to better understand and
serve our consumers.
Our Fairness at Work Policy aims to promote high standards of
conduct and job performance among employees, foster positive
working relationships, and eliminate harassment. It ensures
that no employee or job applicant faces discrimination based
on gender, race, disability, marital status, nationality,
sexual orientation, age, religious beliefs, or any other unrelated
factors. The Group complies with this policy by promoting
equal opportunities and addressing discrimination while
ensuring fair performance management. Formal grievance
procedures protect employees from harassment.
Improving gender balance in senior management
We have a well-defined five-year DEI strategy, which includes
gender diversity objectives at three of the most senior levels
within the organisation.
These commitments extend to setting global and local gender
diversity goals and ensuring accountability for DEI objectives
with each ELT member.
Furthermore, we conduct quarterly reviews against clearly
defined local targets in each region and function to monitor
progress, review attrition, recruitment and promotion levels,
and create action plans.
To support these objectives, we have implemented targeted
talent attraction plans, provided inclusive interview skills
training for line managers, and developed the “Accelerating
Women into Leadership” programme, which will begin
during FY25.
I Belong campaign
In 2023-24, we launched a global employee self-identification
campaign called “I Belong”, enabling employees to confidentially
share additional personal information in our Workday system.
Understanding our employees better helps us track DEI progress,
especially regarding ethnicity representation in key markets.
Obtaining employee self-identification data has been
challenging due to the diverse markets and complex legal
and cultural landscapes. However, employees can now
confidentially share their diversity data in 32 of the countries
in which we operate. Some of these countries allow only
limited information, such as nationality or disability,
while a few permit the collection of race/ethnicity and
sexual orientation data.
Employee diversity data sharing encourages inclusivity analysis
and goal setting. We have set ethnicity goals in the US and
plan to do the same in the UK once we gather sufficient data.
KPI
Female representation
at Executive Leadership
Team (ELT) level
METRIC
Percentage of
females at ELT level
KPI
Female representation
on the Board
METRIC
Percentage of
female Board members
Status: On Track
Status: On Track
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY)
under the limited assurance requirements of the ISAE 3000 standard.
EY’s Assurance Opinion is available on our website. Our reporting scope
and definitions are detailed in the Reporting Criteria document published
on our website.
Links to SDGs
Behaviours
• SDG 5: We aim to achieve
gender equality and a more
inclusive organisation
2024'
Baseline Year (2021)
33%
45%A
2024'
Baseline Year (2021)
22%
45%A
Raising awareness and accountability for DEI
In 2024, we introduced an interactive DEI training module for
all employees. It emphasises our collective role in making DEI
a reality by fostering an inclusive culture and respecting our
differences. All employees, including new hires, are expected
to complete this module as part of their mandatory learning
and development or induction.
Additionally, we have developed and implemented an
allyship training programme to enhance understanding
and build allyship skills for enhanced workplace inclusivity.
This initiative began in 2024 and will continue in 2025.
We also conduct targeted DEI workshops, webinars, and speaker
sessions on LGBTQ+, neurodiversity, race/ethnicity, gender,
and inclusive leadership. Our global Business Employee
Resource Groups (BERGs) continue to play a key role in
championing DEI progress. This year, we initiated a
development programme to support BERG executive
sponsors and leaders.
OUR FOUR GLOBAL BUSINESS EMPLOYEE
RESOURCE GROUPS COVERING:
• Gender
• Ethnicity
• Disability
• LGBTQ+
Are important sources of expertise and enthusiastic
champions of our agenda.
FY24 Performance
Two female ELT members were appointed in FY24.
One female Board member was appointed in FY24.
DIVERSITY, EQUITY AND INCLUSION PERFORMANCE1
Performance indicator
Unit
2021
2022
2023
2024
Commentary
Female employees in
the workforce2
%
40
40
39
41A
Female representation has remained broadly
consistent across the last three years.
FY24: 7,653 female, 11,112 male, 82 not declared.
Female senior
management3
%
–
29
31
33A
Targeted talent attraction and development
plans have seen an increase in female
representation at senior management level.
FY24: 218 female, 430 male, 3 not declared.
Female Executive
Leadership Team
(ELT) members
%
33
30
30
45A
Female representation on the ELT has
increased in FY24, following the appointments
of Deborah Binks-Moore and Priyali Kamath.
FY24: 5 female, 6 male.
Female PLC
Board members
%
22
40
40
45A
Female representation on the Board has
increased following the appointment of
Julie Hamilton in January 2024.
FY24: 5 female, 6 male.
Ethnic minority
background on
our Board
%
10
20
20
18A
On 30 September 2024 (end of FY24), 18% of
the Board members identified as being from
an ethnic minority background.
FTSE Women Leaders
Review Combined
Executive Leadership
Team & Direct Reports
%
21.4
24.3
26.7
32.1A
The FTSE Women Leaders Review is the
successor to the Hampton-Alexander Review.
It is the UK’s independent, voluntary initiative
aimed at increasing the representation of
women on FTSE 350 boards and leadership
teams. The reporting date is 31 October 2024.
Employee turnover rate4
%
10
30*
16
14
Turnover has fallen slightly compared
to FY23, and is significantly lower than
FY22’s spike caused by divestiture
and business transformation.
A. Select 2024 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard.
EY’s Assurance Opinion is available on our website.
Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
1. We recognise the need to gain more comprehensive employee demographic data in order to understand the diversity of our employee base and drive inclusion.
This will form a key part of our new DEI strategy and will help us measure (where appropriate) ethnic minority, disability, LGBTQ+ and other key DEI dimensions.
2. Based on employees recorded in Imperial Brands Group Human Resources Information Systems, excluding Logista, contractors and casual labour.
3. The proportion of senior management employees (Global Grades 3, 4, 5) recorded as female across Imperial Brands Group, excluding Logista.
4. This reflects all employees excluding those employed by Logista.
*
Includes divestiture of our Russian business.
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ESG REVIEW continued
TASK FORCE
ON CLIMATE-RELATED
FINANCIAL DISCLOSURES
After conducting our first double materiality
assessment in 2023, climate change
continues to be a critical focus area for us,
both within our organisation and in our
external engagements. Our ESG strategy,
with climate change as a key priority, is
integral to the delivery of our business
strategy and our approach to the TCFD report.
While preparing this report, we have taken into account
the TCFD framework, which covers Governance, Strategy,
Risk Management, and Metrics and Targets. Additionally,
we have considered more recent frameworks, including
the International Sustainability Standards Board (ISSB IFRS
S1 and S2) and the European Sustainability Reporting
Standards (ESRS), as part of our commitment to complying
with future requirements.
We provide further details about our climate strategy in our
Climate Transition Plan and ESG: People and Planet Performance
Summary 2024. In addition, our performance related to climate
change is outlined in the climate change pages of this Annual
Report. We believe we are on track to achieve our Net Zero
target, as specified in more detail on page 66.
CLIMATE-RELATED GOVERNANCE
Our climate-related governance risk
management structure
79
CLIMATE-RELATED RISKS AND
OPPORTUNITIES STRATEGY
Our approach
80
Our scope
81
Impact, risk mitigation, and associated
metrics and targets
81
Physical risks
82
Chronic drought risk
82
Changes in tobacco crop yield
82
Increased frequency and severity of
extreme weather events
83
Severe hurricane risk
83
Transition risks
84
Policy and legal impact
84
Market impact
84
Climate-related opportunities
85
Renewable energy sourcing impact
85
Impact of risks in financial reporting
Assumptions
85
Future requirements
85
CLIMATE-RELATED RISK MANAGEMENT
86
Logista
87
Logista’s risks and opportunities
87
METRICS AND TARGETS
88
In accordance with the UK Listing Rule 6.6.6(8)R, we
have made disclosures in this TCFD report that are fully
consistent with each of the TCFD Recommendations
and Recommended Disclosures. Specifically, we have
made climate-related financial disclosures for the year
ending 30th September 2024 related to governance,
strategy, risk management, and metrics and targets.
For more information on our double materiality assessment,
please see page 60
CLIMATE-RELATED
GOVERNANCE
ESG oversight and management are
integrated throughout our organisation.
The Board reviews performance against climate-related targets
and our Climate Transition Plan, which encompasses financial
risks and opportunities. During the year, the Board expanded
the role of the People & Governance Committee to enhance
their oversight of sustainability and ESG. The Committee
meets quarterly, is attended by all Non-Executive Directors,
and received four updates on climate-related risks and
opportunities in FY24. It reviews ESG progress and oversees
how ESG risks are managed. It also reviews the Group’s
non-financial reporting, internal verification and external
assurance, in conjunction with the Audit Committee.
Directors stay informed about climate-related risks,
opportunities and performance through the quarterly
ESG report, ensuring oversight and monitoring as needed.
We have two Non-Executive Directors with climate-related
matter experience. Diane de Saint Victor served as an
executive committee member at a leading technology
solutions provider, helping industries reduce their energy
consumption. Alan Johnson served as the president and chair
of the Board at the International Federation of Accountants
(IFAC), which successfully advocated for the establishment
of the International Sustainability Standards Board (ISSB).
As chair of the Stakeholder Advisory Council of the Audit
and Ethics Standard Settings Board, he continues to support
the assurance of climate-related disclosures. In FY24 we
introduced ESG Sponsor days, led by Alison Clarke, Chief People
and Culture Officer and Executive Leadership Team (ELT)
lead for ESG. These reviews encompass all eight ESG topics,
including climate change (see page 59), with topic owners and
other subject matter experts sharing progress, performance
and requests for support with each other. We have also
established a TCFD steering group. This group oversees our
annual climate risk and opportunity strategy and action
plan, integrating efforts from both ESG and Finance teams.
Our Director of Corporate Financial Planning & Analysis oversees
long-term financial planning and takes climate-related risks
and opportunities into account. They are actively involved in
the TCFD steering group dedicated to managing actions and
disclosures on climate-related risks and opportunities.
For further details on our climate management efforts,
please see our Climate Transition Plan and Environment
Policy available on our website.
People, Governance &
Sustainability Committee
A Board-level committee chaired by a NED
Remuneration Committee
A Board-level committee chaired by a NED
Audit Committee
A Board-level committee chaired by a NED
reported into by Internal Audit,
our third line of defence
Second line
of defence
is either managed at
the ELT or functional
leadership level,
depending on the
materiality of the risk.
Climate risk and
opportunity reporting
are integrated into
business functions,
and multiple forums
provide updates on these
matters to the ELT.
ESG Committee
CHAIRED BY CEO
The ESG Committee receives quarterly updates on the
performance and progress of our strategy from the
ESG team and other internal subject matter experts.
The Committee includes all members of the Executive
Leadership Team (ELT) and additional senior management
from across the organisation. The Chief Financial Officer
(CFO) serves as the executive-level sponsor for climate
change. Additionally, the Global ESG Director, reporting to
the Chief People and Culture Officer, leads the Global ESG
team and acts as the secretariat for the ESG Committee.
Group Risk Committee
CHAIRED BY CEO
Our Group Risk Committee oversees our
risk management approach and reporting.
It convenes at least three times a year to
provide “top-down” insights into the periodic
risk assessment process, which includes
assessments of climate-related risks.
For additional details on our enterprise
risk management, please see page 42.
First line
of defence
is assigned either to
members of the Planet
Strategy Group or to
members of the groups
that contribute to it,
depending on who
manages the topic
operationally.
Planet Strategy Group
Oversees all planet-related activities across our ESG
pillars. It comprises directors and function heads from
across the business, and is run by the Global ESG team.
Global Risk & Internal Control
Coordinates risk and control framework
improvement and manages the periodic risk
assessment to provide a consolidated view
of risk movement, mitigation and gaps.
Environment Compliance Working Group
Owns the Environment Policy
Individual working groups covering material areas
of activity, including TCFD, factories and fleet.
Board of Directors
The Board of Directors provides oversight of our climate-related risks
and opportunities programme. It has endorsed all climate-related
targets, including the necessary investments for implementing
programmes aimed at reducing carbon emissions and achieving our
climate action goals. Additionally, the Board reviews business plans
and major plans of action, including expenditure (such as climate-related
capital expenditure). It oversees enterprise risk appetite, assessment,
and management; longer-term strategy; and the annual budget plan,
which includes provision for climate change activities. It also monitors
implementation and performance against objectives and oversees
acquisitions and divestitures.
In April the Board expanded the role of the
People & Governance Committee to enhance their
oversight of sustainability and ESG. The People,
Governance & Sustainability Committee meets
quarterly, attended by all Non-Executive Directors.
It reviews ESG progress and oversees how ESG
risks are managed. It also reviews all aspects of
the Group’s non-financial reporting, its internal
verification and external assurance, in conjunction
with the Audit Committee.
Informing
Informing
Informing
Reporting
Reporting
Reporting
Reporting
Reporting
Informing
Informing
Reporting
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ESG REVIEW continued
Our climate change strategy is well-defined.
To support it, we integrate climate-related
risks and opportunities management into
business functions. The strategy is established
and overseen by the Global ESG team,
with teams across the business taking
operational responsibility as our first line
of defence. Additionally, we regularly
conduct climate scenario analyses to keep
our approach up to date.
OUR APPROACH
In line with the TCFD recommendations, our climate-related
financial analyses cover the period from 2023 to 2050. We
conducted an initial analysis in 2022, updated in 2023. These
analyses covered two temperature scenarios: Representative
Concentration Pathway (RCP) 2.6 (corresponding to a 1.5-2oC
scenario) and RCP 8.5 (representing a 4oC scenario). RCP 2.6
aligns closely with our Net Zero ambition, while RCP 8.5
represents a worst case scenario. The resulting risks have been
integrated into our broader Group risk management framework.
When defining the scope of the physical and transitional
scenario analyses, we considered a range of potential
hazards, including physical impacts and changes in local
or global policies related to transition. Based on this analysis,
we have explored various options for our operational and
financial planning. To establish the scope of assets for the
analysis, our global asset base was analysed for greatest value
alongside our tobacco and NGP supply chains, establishing a
list of 54 sites and locations. The risks and opportunities in
tables 3-9 are the results of the analysis and prioritisation.
In FY24, we evaluated our global climate-related insurance
outlook in conjunction with third-party scenario analyses.
Our collaboration with FM Global ensures insurance coverage
for all our sites, including climate-related risks. We account
for both physical and transition risks associated with climate
change within our supply chain and direct operations,
incorporating them into Imperial’s principal risk considerations.
These assessments guide our management and monitoring
of climate risks for critical business decisions.
The third-party scenario risk analysis identified four distinct
risks and one opportunity aligned with Imperial Brands’ risk
framework, illustrated in Table 1. These are associated with
the maximum financial impact (MFI), which relates to the
gross risk and assumes no mitigation or adaptation activities.
The analysis covers both temperature scenarios across the
Company’s asset base from 2023 to 2050. We disclose the
financial impact in Table 1 for the period from 2024 to 2033,
following our time horizons associated with financial and
risk assessment, also used in CDP (Table 2). The estimated
accumulated financial impact has been factored into our
financial models for goodwill, impairment, deferred tax assets
(notes 12, 8, and 23 respectively), going concern and viability
(page 103). The MFI calculation excludes inflation and cannot
predict the impacts of future government policies. Risks and
opportunities have been prioritised based on the findings of
the scenario analyses.
We employed a third line of defence our internal audit team—
throughout the disclosure process, and have contracted an
independent third party with TCFD expertise to assure our
disclosure against the listing rule. This gives us confidence
in our assessment and resulting mitigation and
adaptation strategy.
CLIMATE-RELATED RISKS
AND OPPORTUNITIES STRATEGY
OUR SCOPE
Imperial Brands PLC has analysed all its assets in the MFI analysis, except for Logista, which operates independently to protect
commercial sensitivities. In this report, we also summarise Logista’s separate findings on page 87.
TABLE 1:
THE ESTIMATED FINANCIAL IMPACT OF CLIMATE-RELATED RISKS AND OPPORTUNITIES OVER
THE NEXT 10 YEARS
Estimated accumulated
maximum financial impact
(MFI) over 10 years (£m)1
Impact2
Impact predicted as a
result of our climate
change strategy3
1.5-2oC
4oC
PHYSICAL RISKS
Chronic weather
50
Acute weather
52
TRANSITION RISKS
Policy and legal
9
Market
311
CLIMATE-RELATED OPPORTUNITIES
Energy sourcing
464
Lower impact
Lower impact is considered to be at <0.2% of asset value.
Medium impact
Medium impact is considered to be at 0.2-1% of asset value.
High impact
High or significant impact is considered to be >1% of asset value.
We have adopted a risk-based approach to address
climate-related risks by analysing identified risks and
opportunities and integrating their management into our
Climate Change strategy. Recognising the critical role of
climate risk and opportunity management, these considerations
have informed our FY25-27 business plans. It’s important
to note that, apart from market, the risks mentioned above
are not deemed financially significant, as defined in Table 1
(where significance is measured as more than 1% of asset value).
After conducting this analysis, we adjusted our Climate
Change strategy to ensure comprehensive consideration of
these risks and opportunities. We have implemented action
plans aimed at minimising their potential impact.
In our 2024 risk matrix (found on page 49), Environment,
including the reputational risks of not delivering our climate
change strategy, is flagged as a principal risk. Going forward,
we will closely monitor these factors, integrating them into
our business risk management practices.
IMPACT, RISK MITIGATION, AND ASSOCIATED
METRICS AND TARGETS
Among the four risks identified in Table 1, specific contributing
risks have been deemed most material, contributing to the
estimated financial impact. We detail these in the following
four pages (tables 3-9), and as part of our business planning
and climate strategy activities.
Although the analyses cover the period up to 2050, we believe
that a more detailed examination over a 10-year horizon better
aligns with our business planning and risk management
horizons as illustrated in Table 2.
TABLE 2: ALL RISKS ARE CONSIDERED WITHIN A 10-YEAR TIME
HORIZON
Our timeframe
used in CDP
Short
Medium
Long
0-1 years
1-3 years
3-10 years
Alignment to
our business
planning
Short-term
business
planning cycle
3-year business
planning cycle
Goodwill
impairment &
risk horizon
1. Maximum financial impact taken for the scenario most likely to produce a higher financial impact.
2. Assuming no decarbonisation measures are taken by Imperial Brands.
3. In accordance with Imperial Brands’ risk assessment, our climate change strategy includes action to mitigate these risks, which if taken should affect the likely financial
impact as a proportion of asset value, as well as capitalise on opportunities.
4. Cost avoidance as a result of energy transition.
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Based on the scenario analysis undertaken in 2023, we have
assessed nine physical risks, including coastal inundation,
soil subsidence, surface water flooding, riverine flooding,
extreme wind, forest fire, and water stress. These risks apply
to both our direct operations and our tobacco purchasing
regions. From this analysis, we have identified four critical
physical risks. In Table 1, we outline the potential financial
impact of chronic and acute weather events. The specific risks
contributing to this impact are outlined in Tables 3 to 6.
TABLE 3
CHRONIC DROUGHT RISK
Short
Medium
Long
Scenario materiality
1.5-2°C
4.0°C
Impact predicted as a result of our
climate change strategy
Predicted impact
Drought poses a risk to our tobacco farms and broader supply
chain, with a potential impact on revenues.
Despite this, these risks are not deemed financially significant.
Associated opportunity
Projects regarding adaptation, water and decent standard
of living for farmers, as set out within the farmer livelihoods
pillar of our ESG strategy (page 70).
Sustainable sourcing of wood fibre for our packaging
and products, which helps to stabilise local risks of drought.
Mitigating actions
Our tobacco leaf procurement strategy relies on an outsourced
model, with 97% of the leaf sourced from third parties in 2023.
We have identified interchangeable tobaccos across suppliers
and locations, enabling us to establish contingency sourcing
options for our tobacco leaf supply. Collaborating closely
with suppliers is essential for implementing effective
mitigation and adaptation. Our global risk-based approach
involves analysing key tobacco sourcing locations at risk,
in order to address potential challenges.
In FY24 we implemented water access projects in collaboration
with farmers across Brazil, Mozambique, and India. Additionally,
within our broader supply chain, we procure wood fibre products
for non-tobacco materials (NTMs) and packaging, aiming for
100% sustainable wood fibre sourcing by 2025. Our ongoing
efforts involve working closely with suppliers to achieve 100%
sustainably sourced wood fibre for our packaging, and we are
exploring ways to extend this initiative to include NTMs.
For further details,
please refer to page 68.
Related metrics and targets
• £296,000 spent on water access projects in FY24.
• 96% of our packaging is from sustainably sourced wood fibre*.
LINKS TO OUR ESG STRATEGY
TYPE OF RISK ACCORDING TO OUR GLOBAL RISK STRUCTURE
Product supply
*
Please refer to the Reporting Criteria document for method, definition and scope.
TABLE 4
CHANGES IN TOBACCO CROP YIELD
Short
Medium
Long
Scenario materiality
1.5-2°C
4.0°C
Impact predicted as a result of our
climate change strategy
Predicted impact
There is a risk that leaf supply is disrupted due to these events,
which may affect our ability to generate revenues. Key factors
contributing to this situation include water access challenges
for tobacco farmers, as well as concerns related to soil health
and biodiversity.
Despite this, these risks are not deemed financially significant.
Associated opportunity
Projects regarding adaptation, water and decent standard of
living for farmers, as set out within the farmer livelihoods
pillar of our ESG strategy (page 70).
Mitigating actions
While we anticipate some revenue decline due to disruptions
in the agricultural supply chain, there is a potential offset
from increased tobacco yields in certain regions due to rising
temperatures. Our tobacco leaf procurement strategy leverages
supplier expertise in tobacco cultivation, ensuring contingency
sourcing options are available. Additionally, within our leaf
supply chain, we maintain approximately 12 months’ worth
of leaf stock to mitigate climate-related interruptions and
minimise the risk of shortages.
As part of our tobacco leaf engagement efforts, we collaborate
with suppliers to encourage farmers to cultivate complementary
or secondary crops.
For further details,
please refer to page 70.
Related metrics and targets
• 89% of our tobacco leaf suppliers by spend are engaged
in water risk projects.
• 97% of our directly contracted farmers grow
complementary crops*.
LINKS TO OUR ESG STRATEGY
TYPE OF RISK ACCORDING TO OUR GLOBAL RISK STRUCTURE
Product supply
PHYSICAL RISKS:
CHRONIC WEATHER
Refer to page 59 for more details on links to our
ESG strategy and page 42 for how we manage risk.
Lower impact
Medium impact
High impact
ESG REVIEW continued
TABLE 5
INCREASED FREQUENCY AND SEVERITY OF
EXTREME WEATHER EVENTS
Short
Medium
Long
Scenario materiality
1.5-2°C
4.0°C
Impact predicted as a result of our
climate change strategy
Predicted impact
In our tobacco leaf supply chain, we anticipate a decline in
revenues due to supply chain disruptions impacting production
capacity. However, the analyses indicate that the business
remains relatively unaffected by both chronic and acute
physical risks in the short term.
Regarding our manufacturing operations, our leased factory
in the Dominican Republic is expected to be most affected,
primarily due to surface water flooding. Physical risks in
other locations were deemed immaterial.
Despite this, these risks are not deemed financially significant.
Associated opportunity
Improved adaptation and mitigation at sites directly impacts
on insurance premiums.
Mitigating actions
To ensure operational continuity, we have a policy for all
our manufacturing sites to put robust business continuity
plans in place.
Additionally, we have global property damage and business
interruption insurance through FM Global, which covers
potential property damage resulting from weather-related events.
FM Global conducts thorough risk assessments at each site,
performing approximately 50 to 60 site visits annually.
Their focus includes evaluating fire risks and natural
catastrophes. When gaps are identified, recommendations
are prioritised based on expected losses. Over the past five
years, Imperial has successfully implemented more than
30 FM Global natural hazard recommendations.
In our tobacco supply chain, we actively participate in relief
and community support during extreme weather events,
as part of our commitment to help tobacco farmers achieve
a decent standard of living. In FY24, we collaborated with
suppliers to provide relief in the tobacco-growing regions
affected by cyclone Freddie in Mozambique. Our efforts
focused on improving access, providing food relief,
and enhancing farming infrastructure.
Related metrics and targets
• We have a policy for 100% of our manufacturing sites to have
business continuity plans in place to mitigate any potential
interruption to operations.
LINKS TO OUR ESG STRATEGY
TYPE OF RISK ACCORDING TO OUR GLOBAL RISK STRUCTURE
Product supply
5. NOAA, 2021.
TABLE 6
SEVERE HURRICANE RISK
Short
Medium
Long
Scenario materiality
1.5-2°C
4.0°C
Impact predicted as a result of our
climate change strategy
Predicted impact
While supply chain disruptions and their impact on production
capacity could potentially lead to decreased revenues,
the analysis indicates that storms are likely to increase in
severity by approximately 5% over the 21st century5.
We have some sites such as our factories in Puerto Rico,
Dominican Republic, and the Philippines which are specifically
exposed to an increasing risk of severe hurricanes.
Despite this, these risks are not deemed financially significant.
Associated opportunity
Improved adaptation and mitigation at sites directly impact
insurance premiums.
Mitigating actions
Within our direct operations, the Group maintains supply
chain contingency plans and insurance coverage to address
this risk. Additionally, we explore alternative sourcing options
for our broader tobacco supply chain.
Our insurer, FM Global, conducts on-site visits to analyse
wind exposures, with a specific focus on sites located in
known high-wind zones. During these evaluations, FM Global
assesses the resilience of building envelopes. This includes
examining uplift pressures on roof systems, debris impact
on building walls, and the effects of high winds on other
elements such as dock doors. FM Global provides practical
recommendations to enhance resilience, encompassing both
physical improvements and human element procedures,
such as emergency response planning.
Related metrics and targets
• We have a policy for 100% of our manufacturing sites to
have business continuity plans in place to mitigate any
potential interruption to operations.
• We will measure the percentage of tobacco leaf produced
in high-risk locations with alternate sourcing options.
LINKS TO OUR ESG STRATEGY
TYPE OF RISK ACCORDING TO OUR GLOBAL RISK STRUCTURE
Product supply
PHYSICAL RISKS:
ACUTE WEATHER
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TABLE 7
POLICY AND LEGAL
Short
Medium
Long
Scenario materiality
1.5-2°C
4.0°C
Impact predicted as a result of our
climate change strategy
Predicted impact
The emergence of regulations like carbon taxation and carbon
pricing mechanisms may lead to increased costs.
Despite this, these risks are not deemed financially significant.
Associated opportunity
A transition to renewable energy can avoid these costs,
see our climate-related opportunity: renewable energy sourcing.
Mitigating actions
To address the impact of carbon pricing and emerging regulations,
we rely on our climate change strategy, specifically aiming
to achieve Net Zero in our direct operations by 2030. In 2023,
we re-evaluated the impact of carbon pricing, considering
the global economy’s improved ability to transition, including
a higher share of renewable energy in the energy mix.
In FY24, our factory in Belgium responded to local regulations
by installing solar panels on its roof. The factory proposed this
initiative, with support from Global engineering. The solar panels
necessary to meet the 2030 regulation have been approved
through our business approval plan system.
Related metrics and targets
• 97% traceable renewable purchased grid electricity*
• 42% renewable energy*
LINKS TO OUR ESG STRATEGY
TYPE OF RISK ACCORDING TO OUR GLOBAL RISK STRUCTURE
Environment
*
Please refer to the Reporting Criteria document for method, definition and scope.
TABLE 8
MARKET
Short
Medium
Long
Scenario materiality
1.5-2°C
4.0°C
Impact predicted as a result of our
climate change strategy
Predicted impact
The anticipated increase in our suppliers’ cost base due to
carbon taxation and physical risks may impact materials
costs for both non-tobacco materials (NTM) and tobacco leaf.
These cost increases could arise from higher operating
expenses for raw material suppliers.
While the absolute risk related to increased materials cost
is significant, the accumulated value over the next decade
is projected to remain below 2% of our NTM and tobacco
leaf expenditure if no additional mitigating measures
are implemented.
Associated opportunity
The presence of Net Zero goals throughout our supply chain
offers an opportunity for cost avoidance in material sourcing.
Additionally, in FY24, our revenue from products produced at
renewable energy sites reached 2.4%.
Mitigating actions
By executing our climate change strategy to be Net Zero
by 2040, we expect to significantly reduce material costs
exposure to carbon pricing. Our collaboration with partners
to address Scope 3 emissions plays a crucial role in achieving
this goal. In FY24, we focused on achieving our supplier
engagement target: to engage 50% of our Purchased Goods
and Services suppliers by spend to commit to science-based
targets. We also independently assured our Purchased Goods
and Services emissions accounting methodology in FY24,
please see our climate change pages 66 to 67 for more detail.
We have published a comprehensive Climate Transition
Plan** that encompasses policy, energy, technology and other
pathways as part of our climate change strategy and includes
our Scope 3 emissions.
We have expanded the number of suppliers invited to respond
to the CDP supply chain survey from 115 to 249 in FY24.
Related metrics and targets
• 50% of our Purchased Goods and Services suppliers by spend
will commit to science-based targets*
• 249 suppliers invited to CDP supply chain
• 2.4% of our net revenue is from products produced in
a renewable energy site*
• In FY25 we will explore how to add Net Zero clauses into
our new contracts
LINKS TO OUR ESG STRATEGY
TYPE OF RISK ACCORDING TO OUR GLOBAL RISK STRUCTURE
Environment
** Please refer to our Climate Transition Plan, available on the healthier futures
page of our website.
TRANSITION
RISKS
The transition risks identified in our climate scenario
analysis are integrated into our risk framework and effectively
communicated with the relevant sites and functions. Our climate
change strategy is closely linked to these transition risks,
particularly focusing on two primary areas: carbon taxation for
our operations and material costs associated with our products,
packaging, and leaf supply chain. In Table 1, we outline the
potential financial impact of these transitional risks,
with further details provided in Tables 7 and 8.
ESG REVIEW continued
Refer to page 59 for more details on links to our
ESG strategy and page 42 for how we manage risk.
Lower impact
Medium impact
High impact
TABLE 9
ENERGY SOURCING
Short
Medium
Long
Scenario materiality
1.5-2°C
4.0°C
Impact predicted as a result of our
climate change strategy
Predicted impact
By leveraging our climate change strategy, we can mitigate
costs associated with carbon tax within our operations.
In FY24, both the UK and Germany implemented carbon
taxes on energy sources. These countries are Tier 1 markets
where we have sites, including a factory in Germany.
The total exposure to carbon tax in FY24 amounts to 0.6%
of our energy expenditure.
Actions
Successfully implementing our climate change strategy allows
us to maximise the benefits of the green energy transition
and avoid carbon costs in the 1.5-2°C climate scenario.
We have developed a decarbonisation glide path and
transition plan that maps our emissions reduction efforts
towards achieving Net Zero.
For further details, refer to our ESG Review (page 59) and
explore the ESG: People and Planet Performance Summary
2024 on our website.
In both scenarios, our strategic approach to renewable energy
procurement is expected to positively impact cost management.
However, we remain vigilant about the potential impact of
carbon prices and evaluate the business’s ability to manage
or pass through these costs.
Currently, all sites except Taiwan are purchasing traceable
renewable grid electricity. Our proactive approach aims to
limit costs and mitigate impact, as evidenced by the
significant increase in traceable renewable grid electricity.
Looking ahead, in FY25, we plan to conduct a pilot to enhance
our understanding and capabilities related to power purchase
agreements, further strengthening our renewable energy
procurement efforts.
Related metrics and targets
• Carbon tax cost exposure within FY24 is 0.6% of global
energy spend
LINKS TO OUR ESG STRATEGY
TYPE OF RISK ACCORDING TO OUR GLOBAL RISK STRUCTURE
Environment
CLIMATE-RELATED
OPPORTUNITIES
In Table 1 we set out the potential financial impact
of a climate-related opportunity: energy sourcing.
This is expanded more in Table 9.
IMPACT OF RISKS IN FINANCIAL REPORTING
Imperial Brands’ long-term financial planning spans a
three-year period. Of the most material risks identified
(Tables 3-9), only Market has been identified as significant.
We anticipate that climate-related risks will not materially
impact the Group, with the largest risk projected to remain
below £14 million for 2025 (and £58 million over the three-year
period). This risk primarily pertains to increased operating
costs associated with NTM and tobacco leaf, calculated based
on the maximum financial impact (MFI) resulting from the
1.5-2°C scenario.
We currently have no committed liabilities with third
parties related to climate impact that should be provided for.
However, for financial statement areas covering periods
beyond our three-year financial planning and Imperial Brands’
climate-related risk horizon of 10 years, we have considered
the MFI of material climate-related risks specific to those areas.
We assess our market MFI in goodwill and intangible assets
impairment (note 12) as well as in our evaluation of the
recoverability of deferred tax assets (note 23), summarised
on page 156. The Directors’ assessment of climate change
impact is included in the going concern section and viability
disclosures (page 103). In FY24, we incorporated these
considerations into our business plans, ensuring climate-related
risks and opportunities are balanced alongside other elements.
If new climate-related risks or opportunities emerge, we remain
committed to adjusting our strategy accordingly and
integrating relevant costs into our profit and loss.
ASSUMPTIONS
The analyses assume no action is taken to decarbonise within
our supply chain or operations. Additionally, they do not account
for inflation, future government policies or subsidies, or existing
mitigation efforts. Material costs include the expenses
associated with physical risks materialising in the supply chain.
Moving forward, we will closely monitor the evolving impact
of climate-related risks and opportunities. Our plan includes
updating this analysis in 2025. As we have done previously,
we will review the outcomes and incorporate them into
our climate change strategy and decarbonisation planning
as needed.
FUTURE REQUIREMENTS
The landscape of regulatory requirements and available
standards for climate-related risks and opportunities is
continually evolving. As a large UK-listed company with
European subsidiaries, we are committed to achieving CSRD
(Corporate Sustainability Reporting Directive) compliance.
This means we will report against the ESRS (European
Sustainability Reporting Standards) in the coming years.
Additionally, we closely monitor the development of other
climate-related disclosure requirements, such as IFRS S1 and S2.
Our intention is to work towards meeting these standards as well.
It is as a result of this that the impact for transition within a
1.5 degree scenario is higher.
The UK’s Transition Plan Taskforce has been instrumental
in outlining the requirements for a transition plan. We have
published our first carbon transition plan this year, ahead of
mandatory reporting, and aim to work towards fully complying
with the recommendations. With all ESG-related regulations
and requirements, we remain vigilant, following international
standards development closely to enhance our actions
and disclosures.
For physical risks, we anticipate a higher impact within the
4 degree scenario, as more extreme weather is predicted.
We will continue to monitor this in future years.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
84
85
In our principal risk structure, we acknowledge
risks related to the impact of business
operations on the natural environment where
we operate as fundamental to operations.
We also ensure that other principal risks also take into
account the risks and opportunities associated with climate
change, as appropriate.
Assessment by each risk owner ensures that we accurately
determine materiality and integrate ownership of associated
climate-related risks and opportunities into the broader business.
With support from the global ESG team, risk owners review
the potential causes and likelihood of any climate-related
risks materialising. For further details on our risk management
practices, and how risks are weighed against each other,
please refer to the dedicated risk section on pages 42-53.
The Group’s formal approach to risk management includes
bi-annual updates to the Board regarding the results of the
Group risk assessment, including our principal risks.
Our risk management framework specifies accountability
for identifying, assessing, and mitigating risks throughout
the organisation. This framework aligns with the “three lines
of defence” model, as outlined for climate change in the
governance diagram on page 79.
As the second line, the Global ESG team has accountability
to assess climate-related risks identified by the first line.
During this process, the first line also propose to mitigate,
transfer, accept or control climate-related risks, a process
that is reviewed and governed by both the second and third
line, as appropriate. We set out our process for identifying,
assessing and managing climate-related risks on page 80.
In FY24, Group Internal Audit conducted a comprehensive
audit of our climate change strategy. Their assessment
covered completeness, governance, progress, and integration
into business functions. The audit received the highest
assurance rating of “substantial”. Additionally, we periodically
engage a third party to independently validate the risks
identified by the business.
For this TCFD report, we have introduced a fourth line of
defence by seeking assurance against the UK Listing Rules
from a third party. In formulating this report, we have also
factored climate-related risks and opportunities into our
business plans, with a focus on their expected impact from
FY25 to FY27.
Principal risk
Product supply
Risk profile:
Strategic impact:
• Focusing on our priority markets
• Building a targeted NGP business
• Driving value from our broader portfolio
Environment
Risk profile:
Strategic impact:
• Focusing on our priority markets
• Simplified and efficient operations
Climate change is considered within our risk
management structure 47-49
Product supply
Environment
ESG REVIEW continued
At our factory in Greensboro, North Carolina, USA,
located in an area where hurricanes represent a risk,
we have enhanced our emergency procedures to include a
specific protocol for external climate-related emergencies.
This protocol identifies the safest locations for employees
and visitors to seek shelter. Additionally, we conduct
bi-annual practice sessions to ensure that everyone can
follow the protocol swiftly and safely.
Our Group risk assessment standard reinforces the
importance of considering climate-related event
protocols across all sites as appropriate.
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Refer to page 45 for more details on
risk profile and strategic impact
CLIMATE-RELATED
RISK MANAGEMENT
Risk profile change
Risk profile increasing
Risk profile unchanged
LOGISTA
Imperial Brands PLC has analysed all its assets in the MFI
analysis, except for Logista, which operates independently
to protect commercial sensitivities. As such, we consider
Logista’s separate analysis, disclosing a summary here.
Logista’s sustainability policy 2/2023 sets the pillars for the
management of sustainability, including climate-related risks
and opportunities. This structure, set out below, can also explain
the relationship between Imperial Brands and Logista as regards
to ESG, including climate-related matters:
1
The Board of Directors approved the sustainability policy.
This body is ultimately responsible for supervising the
observance of the policy, through the Audit, Control and
Sustainability Committee.
The Board of Directors takes into consideration sustainability
issues with regard to the determination of the risk control and
management policy, and the supervision of the internal
information and control systems.
2
Five employees of Imperial Brands sit on the Logista board,
the Chief Strategy and Development Officer, the Corporate
Development Director, the Group Finance Director, the Director
of Strategy for Global Supply Chain and the Senior Investor
Relations Manager, all of whom have regard to Imperial’s
climate change strategy.
The Director of Strategy for Global Supply Chain is also a topic
owner for climate change at Imperial. Any climate-related
risks raised to the board of Logista are reported to the
overarching Imperial Board through these representatives,
following the structure set out above.
3
The Imperial Brands Global ESG team, responsible for managing
climate risk and opportunity and the Group-level TCFD report,
has prepared this disclosure with the teams responsible for
the management of climate risk within Logista.
Logista maintains close links between its investor relations
team and those at Imperial Brands. Our global insurance
provider, FM Global, also serves Logista in a manner consistent
with the disclosure mentioned above. Additionally, Logista
outlines its methods for managing climate-related risk
through its sustainability policy.
The Sustainability Committee at Logista is responsible for
preparing and co-ordinating sustainability strategy plans in
collaboration with Logista’s businesses. The Sustainability
Committee reports at least twice a year on progress of
climate-related goals and associated KPIs to the Executive
Committee and the Audit, Control and Sustainability Committee.
Furthermore, the Corporate Finance function ensures the
integrity of financial and non-financial information for both
the Company and its subsidiaries. It also manages risks
associated with financial and non-financial aspects.
LOGISTA’S RISKS AND OPPORTUNITIES
Logista conducted a separate scenario analysis for 2°C and
4°C pathways (aligned with RCP 4.5 and RCP 8.5) in accordance
with the TCFD recommendations. This analysis evaluates
climate-related physical and transitional risks, as well as
opportunities across short-term (0-3 years), medium-term
(3-5 years), and long-term (more than 5 years) horizons.
Logista’s analysis incorporates physical scenarios from
the Intergovernmental Panel on Climate Change (IPCC)
(RCP 4.5 and RCP 8.5), and transition scenarios (STEPS and APS)
from the International Energy Agency’s World Energy Outlook
(IEA WEO). They evaluate their climate-related risks following
a risk methodology which takes into account several weighted
criteria, to reach a final risk impact. Within the criteria they
include economical metrics, reputational, legal and strategic
criteria among others. The resulting risks for Logista are
not included in Table 1 on page 81, but are in Logista’s own
Annual Reports. None of these risks are considered financially
significant at Imperial Brands level, as the risk value is small
compared to the Groups revenue.
Significance
over 0-3 years
Risk
2oC
4oC
Physical risks
Heavy precipitation
Transitional risks
Emerging regulation
Technology
Significant
High impact on financial value, Legal and Compliance,
Processes, Health and Safety, Reputational and Strategic
and a high probability of occurrence
Very significant
Very high impact on financial value, Legal and Compliance,
Processes, Health and Safety, Reputational and Strategic
and a high probability of occurrence
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
86
87
METRICS AND TARGETS
Our climate change targets present
business opportunities: energy-saving
initiatives and efficiency programmes
can have both environmental benefits
and result in cost savings.
Since 2019 we have had Scope 1, 2 and 3 targets aligned with
the necessary reductions to limit climate warming to 2°C
approved by the Science Based Targets initiative (SBTi).
In FY21, we raised our ambitions by joining the Business
Ambition for 1.5°C Race to Zero initiative, led by the SBTi.
In FY24, the SBTi validated our new targets1, which align
with the 1.5-2°C Paris Agreement. We report on performance
against these and other climate change targets in our ESG
pages (59). Notably, our strategy focuses on achieving absolute
reductions rather than relying on carbon credits1.
Beyond the disclosed metrics and targets related to specific risks,
we also focus on overarching areas that support our climate
change strategy and the management of climate-related risks
and opportunities.
We have consistently disclosed emissions intensity and tracked
energy intensity as key metrics to measure our climate
performance. Our ongoing monitoring allows for a balanced
review of our progress as we strive for absolute emissions
reduction. For additional climate-related metrics and targets
related to our climate strategy, including intensity metrics,
emissions, energy, waste, and water, please see our climate
change pages 66 to 67, our ESG: People and Planet Performance
Summary 20244, or our Climate Transition Plan4.
ESG REVIEW continued
0
5
10
15
20
25
30
35
40
2017
2018
2019
2020
2021
2022
2023
2024
Relative energy consumption (MWh/net revenue in million £)
Relative Scope 1 & 2 Market-based emissions (tCO2e/net revenue in million £)
XXX
0
15
30
45
60
75
90
105
120
MWh/net revenue in million £
tCO2e/net revenue in million £
Metric/Aim
Target/Action
Start date
Performance in 2023
Performance in 2024
Climate-related risk or
opportunity linked to
Energy intensity
Track energy intensity
2017
81 (MWh/m £
net revenue)
73 (MWh/m £
net revenue)
Energy sourcing
policy & legal,
market
Proportion of renewables
in energy mix
We aim to reach 100%
renewable energy by 2030*
2021
40%
42%
Energy sourcing
& carbon tax
Fleet energy mix
Proportion of electric
or hybrid vehicles in
our fleet*
June 2023
2%
14%
Energy sourcing,
policy and legal
Scope 3 categories
assured and disclosed
Assure increased coverage
of Scope 3 emissions to
include our most material
topics by 2028*
October 2024 Business travel
assured and disclosed
(1.3% of Scope 3
emissions)
Category 3.1**
assured and
disclosed
(69% of Scope 3
emissions)
Market, policy
and legal
Climate change targets
linked to executive
remuneration
Include allocation for
climate change in
Long-Term Incentive Plan
October 2023 5% in 1-year plan
10% in 3-year plan2
Policy and legal,
energy sourcing
Internal carbon pricing
mechanism integrated
into decision-making
framework3
Integrate into global
supply chain decision-
making framework
by 2025
March 2023
Shadow price
established for use in
decision-making
Integrate shadow
price into
manufacturing
decision framework
Energy sourcing,
market, policy
& legal
Conduct water
assessments
for extremely high
and high risk water
stressed areas
In 2025 we will pilot a water
risk assessment in one of
our high or extremely high
water stressed sites
October 2025 Water risk assessment
conducted to identify
sites in water
stressed areas
Alliance for
Water Stewardship
assessment
identified for pilot
Chronic drought,
extreme weather
1. Details of our validated SBTi targets are located on our website: https://www.imperialbrandsplc.com/content/dam/imperialbrands/corporate/documents/healthier-futures/
sbti-targets/SBTi-targets-announcement-03-24.pdf.downloadasset.pdf.
2. For more information, please see our Remuneration report, from page 115.
3. For more information, please refer to our 2024 CDP submission.
4. https://www.imperialbrandsplc.com/healthier-futures.
*
Please refer to the Reporting Criteria document for method, definition and scope.
** Category 3.1 of Scope 3 as set out by the Global Greenhouse Gas Protocol is Purchased Goods and Services.
The Strategic Report was approved by the Board and signed on its behalf.
By order of the Board.
Emily Carey
Company Secretary
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
88
89
GOVERNANCE AT A GLANCE
The Board confirms that the Group complied with the principles
and all relevant provisions of the UK Corporate Governance
Code 2018 (the “Code”) for the period under review. The Code is
publicly available at www.frc.org.uk. The Board has reviewed
GOVERNANCE
Board and Committee membership and attendance as at 30 September 2024
Board
Audit
Committee
Remuneration
Committee
People,
Governance &
Sustainability
Committee
Non-Executive Directors
Thérèse Esperdy
7/71
–
–
4/41
Sue Clark2
7/7
5/5
3/31
4/4
Diane de Saint Victor
7/7
–
3/3
4/4
Ngozi Edozien3
7/7
1/1
2/2
4/4
Andrew Gilchrist
7/7
5/5
–
4/4
Julie Hamilton4
5/5
–
–
3/3
Alan Johnson5
7/7
5/5
–
3/4
Bob Kunze-Concewitz
7/7
–
3/3
4/4
Jon Stanton5
6/7
5/51
3/3
3/4
Executive Directors
Stefan Bomhard (CEO)
7/7
–
–
–
Lukas Paravicini (CFO)
7/7
–
–
–
1. Denotes Chair.
2. Senior Independent Director.
3. Appointed to Remuneration Committee and stepped down from Audit Committee on 31 December 2023.
4. Appointed as a Director on 31 January 2024.
5. Unable to attend Board and/or Committee meeting due to rescheduling. Any Director unable to attend a meeting receives the Board/Committee papers in advance,
with the opportunity to provide comments to the Chair.
Board nationality
British*
American
German
French
Italian*
Swiss
Nigerian
Austrian
*
Alan Johnson has dual British-Italian nationality.
Structure and content of the Governance Report
Governance at a Glance
90
Board Leadership
92
Section 172
102
Board Statements
103
People, Governance & Sustainability Committee
104
Audit Committee
108
Remuneration Report
115
Directors’ Report
130
Statement of Directors’ Responsibilities
134
and is considering the changes to be introduced by the UK
Corporate Governance Code 2024 (which will begin applying
to the Company from 1 October 2025), and will report on
preparation and implementation at the appropriate time.
As at 30 September 2024 and the date of this report, the Company meets all three Board diversity targets specified by the UK
Listing Rules, namely that: (a) at least 40% of the Board are women; (b) at least one senior Board position is held by a woman;
and (c) at least one person on the Board is from a minority ethnic background.
Board and executive management gender diversity as at 30 September 2024
Number of board
members
Percentage of the
board
Number of senior
positions on the board
(CEO, CFO, SID and Chair)
Number in
executive
management
Percentage of
executive
management
Men
6
55
2
6
55
Women
5
45
2
5
45
Prefer not to say
0
0
0
0
0
Board and executive management ethnic diversity as at 30 September 2024*
Number of
board members
Percentage of
the board
Number of senior positions
on the board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (including
minority-white groups)
9
82
4
6
55
Mixed/Multiple Ethnic Groups
0
0
0
0
0
Asian/Asian British
0
0
0
0
0
Black/African/Caribbean/Black British
2
18
0
1
9
Other ethnic group, including Arab
0
0
0
0
0
Not specified/prefer not to say
0
0
0
4
36
*
The data collected is based upon the guidance published by the FCA in Policy Statement 22/3. The Company Secretary collated data on behalf of the Chair and
Non-Executive Directors and executive management provide their data via Workday. All data is provided with consent and anonymity is protected.
Non-Executive Director skills,
experience and knowledge
<1 year
1-2 years
2-3 years
4-5 years
3-4 years
5-6 years
6-7 years
1
4
0
0
1
2
0
0
7-8 years
8-9 years
1
Board Ethnicity as at
30 September 2024
Board gender as at 30 September
2024
Male
55%
Female
45%
Senior management and
direct reports1 gender as
at 30 September 2024
White British
82%
Black/African/Caribbean
/Black British
18%
Fast moving consumer
goods (FMCG)
Innovation and
product development
Global business leadership
Finance and risk
Corporate & regulatory affairs
Business transformation
& change programmes
Environment & sustainability
Consumer health
6/9
4/9
6/9
5/9
6/9
3/9
6/9
4/9
Technology & digital
5/9
Non-Executive Director tenure
Male
62%
Female
38%
1. Senior management as defined by the Code
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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91
GOVERNANCE BOARD LEADERSHIP
A SKILLED AND EXPERIENCED BOARD
Stefan Bomhard
Chief Executive Officer
Tenure: Appointed July 2020.
Nationality: German
Biography
Stefan joined Imperial from Inchcape
plc, a global distribution and retail leader
in the premium and luxury automotive
sectors, where he delivered successful
transformational change during a
five-year tenure as chief executive.
Prior to Inchcape, Stefan was president
of Bacardi Limited’s European region
and was also responsible for Bacardi’s
Global commercial organisation and
Global Travel Retail. Previous roles have
included chief commercial officer of
Cadbury plc and chief operating officer
of Unilever Food Solutions Europe.
This followed senior management and
sales and marketing positions at Diageo
(Burger King) and Procter & Gamble.
Skills and experience
Stefan brings to the Board a wealth
of experience managing strategic
change and brand leadership in retail
and consumer companies. His deep
and wide-ranging career in FMCG and
challenger businesses makes him
ideally suited to provide insight and
direction as Imperial delivers its strategy.
Outside interests
Non-executive director of Compass
Group plc.
Thérèse Esperdy
Chair P
Tenure: Appointed to the Board in July
2016 and became Senior Independent
Director in May 2019 before being
appointed Chair in January 2020.
Nationality: American
Biography
Thérèse has significant international
investment banking experience having
held a number of roles at JP Morgan
including global chair of JP Morgan’s
Financial Institutions Group, co-head
of Asia-Pacific Corporate & Investment
Banking, global head of Debt Capital
Markets, and head of US Debt Capital
Markets. She began her career at
Lehman Brothers and joined Chase
Securities in 1997 prior to the firm’s
merger with JP Morgan in 2000.
Thérèse was previously senior
independent director of National Grid plc.
Skills and experience
Thérèse has enjoyed a pre-eminent
career as a leader in the financial sector,
with deep knowledge of banking and
business. She is an experienced board
member of international corporates,
with valuable experience in highly
regulated industries. Thérèse continues
to drive engagement and debate within
the Board and constructive challenge of
Imperial’s strategy.
Outside interests
Non-executive director of Moody’s
Corporation.
BOARD OF DIRECTORS AS AT 30 SEPTEMBER 2024
Find out more at
www.imperialbrandsplc.com/how-we-are-
transforming/our-leadership-team
Lukas Paravicini
Chief Financial Officer
Tenure: Appointed May 2021.
Nationality: Swiss
Biography
Lukas has a proven track record in
multinational consumer goods companies
around the world. He joined Imperial
from agricultural commodities and
brokerage group ED&F Man Holdings,
where he was chief financial officer.
He has also held senior positions at
Fonterra, a New Zealand and Australia
listed co-operative and the world’s
largest dairy exporter, with sales in 130
countries. He was chief financial officer
from 2013-2017 and chief operating
officer, Global Consumer and
Foodservice Business from 2017-2018.
Prior to that, he spent 22 years with
Nestlé in various senior finance and
general management roles.
Skills and experience
Lukas is an experienced finance
professional, having delivered global
shared services and major technology
transformation across a variety of
multinational companies. He brings a
breadth of financial and commercial
insight to the Board and extensive
knowledge of digital, cyber and IT
security matters from his career in
consumer-focused companies.
Outside interests
Member of The 100 Group of finance
directors of the FTSE 100.
Sue Clark
Senior Independent Director A P R
Tenure: Appointed Non-Executive
Director in December 2018, Chair of the
Remuneration Committee in February
2019 and Senior Independent Director
in January 2020.
Nationality: British
Biography
Sue has strong international business
credentials with over 20 years’ executive
committee and board-level experience
in the FMCG, regulated transport and
utility sectors. Sue held the role of
managing director of SABMiller Europe
and was an executive committee
member of SABMiller plc. She joined
SABMiller in 2003 as corporate affairs
director and was part of the executive
team that built the business into a
top-five FTSE company.
Sue was previously a non-executive
director at Britvic plc.
Skills and experience
Sue has vast executive and non-executive
experience, gained in a variety of senior
roles spanning commercial, regulatory
and government affairs within
multinational companies. Her wide-
ranging board, regulatory and FMCG
knowledge has been invaluable during
discussions on performance and ESG.
Sue’s insight of corporate governance
practice and stakeholder views creates
a strong fit to her roles as Remuneration
Committee Chair and Senior
Independent Director.
Outside interests
Senior independent director of Mondi
plc (where she chairs the remuneration
committee) and easyJet plc.
Diane de Saint Victor1
Non-Executive Director P R
Tenure: Appointed November 2021.
Nationality: French
Biography
Diane has strong legal, regulatory,
M&A, business alliance and ESG
experience, having held a number of
general counsel, company secretary
and other key roles in an international
career. She spent 13 years on the
executive committee, as general
counsel & company secretary, of ABB,
the global technology company.
Prior to joining ABB, she served as a
senior vice president and general counsel
of Airbus Group and as vice president
and general counsel at SCA Hygiene
Products. Diane spent a decade working
at Honeywell, ultimately holding the
post of vice president and general
counsel international. She started
her career with various legal and
government relations positions at GE.
Previous non-executive director
positions include Barclays plc,
Altran, Natixis and Transocean.
Skills and experience
Diane brings over 30 years’ experience
of broad international legal, governance
and regulatory expertise gained from
a range of senior executive and
non-executive positions in multinational
organisations, as well as experience of
transforming organisations in sectors
undergoing change.
Outside interests
Non-executive director of WNS
(Holdings) Limited and C&A BV.
Member of the Global Centre for Risk
and Innovation – Industry Leadership
Europe board.
Ngozi Edozien
Non-Executive Director P R
Tenure: Appointed November 2021.
Nationality: Nigerian
Biography
Ngozi has over 35 years’ experience
in finance/private equity, general
management and strategy/business
development functions with
multinational companies in Europe,
the US and Africa. She has held roles
in McKinsey & Company, Pfizer Inc.,
Actis LLP and JP Morgan.
Previous non-executive director
positions include PZ Cussons, Barloworld,
Stanbic IBTC Holdings and Vlisco Group.
Skills and experience
Ngozi has enjoyed a wide-ranging career,
with extensive experience in corporate
finance, strategy and leading change. Her
knowledge gained through a career in
international, regulated and consumer-
focused companies allows her to share
deep insight during Board discussions on
performance, sustainability matters and
transformation. Ngozi’s skill set makes
her invaluable as the Board considers its
future strategic direction.
Outside interests
Non-executive director of Guinness
Nigeria PLC (until November 2024),
a listed subsidiary of Diageo, Unilever
Nigeria PLC, Bank of Africa –
BMCE Group and Ikeja Hotel PLC.
Committee membership
A
Audit Committee
P
People, Governance & Sustainability Committee
R
Remuneration Committee
Committee Chair
1. Diane de Saint Victor will retire from
the Board at the conclusion of the AGM
scheduled for 29 January 2025.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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93
GOVERNANCE BOARD LEADERSHIP continued
Andrew Gilchrist
Non-Executive Director A P
Tenure: Appointed March 2023.
Nationality: American
Biography
Andrew has a proven track record of
business development, strategic
planning and business integration
following two decades of operational
and financial experience in the tobacco
sector. He was Chief Financial Officer
of Reynolds American Inc until its
acquisition by British American
Tobacco (BAT) in 2017. Prior to this,
Andrew held a range of leadership
positions at Reynolds, including Chief
Information Officer, Chief Commercial
Officer and Business Development
Director. Earlier in his career,
he worked for BAT in marketing
and planning roles.
Skills and experience
Andrew has detailed understanding
and experience of the tobacco sector,
allowing him to provide deep insight
into Imperial’s businesses and brands.
His lengthy career in leadership
positions of peer companies has proved
invaluable across diverse performance,
financial and strategic topics at the
Board and its Committees.
Outside interests
None.
Alan Johnson CMG
Non-Executive Director A P
Tenure: Appointed January 2021.
Nationality: British and Italian
Biography
Alan has a financial background
following a 30+ year career in Unilever,
including chief audit executive and chief
financial officer of the Global Foods
Division. He was CFO and then non-
executive director of Jerónimo Martins
SGPS, S.A. until 2016, and remains the
independent chairman of the company’s
internal control committee.
He was non-executive director at
the UK Department for International
Development, president and chair of
the board of the International Federation
of Accountants and chair of the audit
committee of the International
Valuation Standards Council.
Skills and experience
Alan has a breadth and depth of
knowledge and insight into financial,
accounting and FMCG issues following
a distinguished career in senior roles
across the commercial and regulatory
spheres. This unique skill set allows for
challenge and debate at both the Audit
Committee and Board.
Outside interests
Non-executive director of DS Smith plc
and William Grant & Sons Ltd (where he
chairs the audit committee), chair of
the Stakeholder Advisory Council to the
Audit and Ethics Standards
Setting Boards and chair of the
Good Governance Academy.
Julie Hamilton
Non-Executive Director P R
Tenure: Appointed January 2024.
Nationality: American
Biography
Julie, who was Chief Commercial
and Global Sales Officer at Diageo
until August 2023, has over 30 years’
experience in marketing, strategy
and digital transformation. Prior
to Diageo, Julie spent 25 years at
The Coca-Cola Company where she
held a range of leadership positions,
including Chief Customer and
Commercial Leadership Officer.
Skills and experience
Julie is an experienced global leader
who brings deep knowledge of delivering
commercial change in multinational
consumer businesses. Her understanding
of digital transformation and global
brands is invaluable to the Board as it
continues to oversee Imperial’s strategy
and transformation.
Outside interests
None.
Bob Kunze-Concewitz
Non-Executive Director P R
Tenure: Appointed November 2020.
Nationality: Austrian
Biography
Bob is an experienced marketing
professional and has held a number
of senior roles at leading FMCG
companies. In April 2024 he retired
after 17 years as chief executive
officer of Campari Group, a major
player in the global spirits industry.
Bob previously held positions of
increasing responsibility and global
reach at Procter & Gamble, including
global prestige products corporate
marketing director.
He was previously a fellow at the Elis
Institute in Rome and vice chairman
of Altagamma, the Italian luxury
goods association.
Skills and experience
Bob has extensive and deep knowledge
of the global fast-moving consumer
goods sector following a lengthy career
in marketing and brand management
in multinational companies. His long
and distinguished tenure as CEO of
Campari Group provides unparalleled
insight and experience to draw on
during different aspects of Board
discussions.
Outside interests
Non-executive director of the
supervisory board of Carlsberg A/S,
Campari Group and Luigi Lavazza S.p.A.
(where he chairs the remuneration
committee).
Jon Stanton
Non-Executive Director A P R
Tenure: Appointed May 2019.
Nationality: British
Biography
Jon has a wide range of international
leadership experience, encompassing
transformation, M&A and all aspects of
finance, principally in the B2B sector.
In 2016 he was appointed chief executive
of The Weir Group plc, one of the world’s
leading engineering businesses,
having previously been CFO from 2010.
Prior to that he spent 22 years at
Ernst & Young, LLP, the last nine
years of which were as a partner in
its London office, where he led global
board-level relationships. Jon is a
Chartered Accountant and a member
of the Institute of Chartered Accountants
in England and Wales.
Skills and experience
Jon has enjoyed a lengthy and
illustrious career with over 30 years’
experience in international business
and accountancy. As the CEO of a FTSE
100 listed company, he brings wide-
ranging board, financial and regulatory
experience to Imperial, lending his deep
knowledge and insight into our
strategic and financial discussions.
Outside interests
Chief Executive of The Weir Group plc.
Emily Carey
Company Secretary
Tenure: Appointed May 2023.
Nationality: British
Biography
Emily, a chartered accountant and
Fellow of the Chartered Governance
Institute, has enjoyed a 25-year career in
finance, regulatory affairs, compliance,
governance and company secretarial
matters, with significant experience in
the oil and gas and sports betting and
gaming industries.
Prior to joining Imperial, Emily held a
number of roles of increasing seniority
including 14 years at BP plc and three
years at Entain plc where she was
Group Company Secretary.
Committee membership
A
Audit Committee
P
People, Governance & Sustainability Committee
R
Remuneration Committee
Committee Chair
Imperial Brands PLC | Annual Report and Accounts 2024
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95
GOVERNANCE BOARD LEADERSHIP continued
ROLE AND PURPOSE OF BOARD AND ITS COMMITTEES
EXECUTIVE
LEADERSHIP TEAM
See pages 13 and 97
BOARD
Audit
Committee
See page 108
People,
Governance &
Sustainability
Committee
See page 104
Remuneration
Committee
See page 115
Group
Ethics &
Compliance
Committee
See page 61
Group Risk
Committee
See page 44
Group ESG
Committee
See page 61
Management working groups, including treasury, pensions
and other functional and operational forums
Management
Committees
Executive
Committees
Board
Committees1
Delegation
IMPERIAL BRANDS GOVERNANCE STRUCTURE
Chief Financial Officer
Provides financial leadership and supports
the development and implementation of
the Group’s strategy.
Non-Executive Directors
Provide constructive challenge and monitor
performance. Assess the delivery of the strategy
within the risk and governance framework
agreed by the Board. Review the integrity of the
Group’s financial information, ESG issues and
succession planning of executive management
and set Directors’ remuneration.
Company Secretary
Advises the Board on corporate governance
matters and compliance with Board procedures
and corporate governance requirements.
1. Standing committees shown; ad hoc committees
may be established to review and approve specific
matters or projects.
Monitoring
Board roles and composition
While the Board shares collective responsibility
for its activities, some roles have been defined
in greater depth below.
Chair
Leads the Board and is responsible for its
effectiveness and promoting the highest
standards of corporate governance. Oversees
stakeholder engagement and ensuring the
Board as a whole determines the Group’s
strategy and objectives.
Chief Executive Officer
Delegated responsibility for overall performance
and day-to-day management of the Group,
together with implementation of the
Group’s strategy.
Senior Independent Director
Supports the Chair on governance issues and
acts as an intermediary for other Directors,
and, when required, with shareholders.
Leads Non-Executive Directors in evaluating
the performance of the Chair.
GOVERNANCE FRAMEWORK
The Board is responsible for the governance of the Company,
undertaking its duties within a framework of clear authorities
and governance structures.
The Board sets the tone for the Group from the top and delegates
specific tasks to its Committees. Each of these Committees
has specific written terms of reference issued by the Board,
adopted by the respective Committee and published on our
website. All Committee chairs report on the proceedings of
their Committee at the next meeting of the Board, and make
recommendations to the Board where appropriate. Minutes of
Committee meetings are circulated to all Board members.
To ensure Directors are kept up to date on developments and
to enhance the overall effectiveness of the Board, the Board
Chair and Committee chairs communicate regularly with
the Chief Executive Officer and the Chief Financial Officer.
Where appropriate the Board convenes virtually outside of
scheduled meetings to consider time-sensitive matters.
The Board is responsible to shareholders and stakeholders
for approving the strategy of the Group, for overseeing the
performance of the Group and evaluating and monitoring
the management of risk in a manner that is most likely to
promote the Company’s long-term success.
The Board has adopted a schedule of matters on which it
must take the final decision. These include approving the
Group’s strategy, business plans, dividend, major financial
announcements, and acquisitions and disposals exceeding
defined thresholds.
Board members have access, collectively and individually,
to the Company Secretary and are also entitled to obtain
independent professional advice at the Company’s expense,
should they decide it is necessary in order to fulfil their
responsibilities as Directors.
EXECUTIVE LEADERSHIP TEAM
The Board delegates responsibility for developing and
implementing strategy, and for the day-to-day running of
the business, to Stefan Bomhard, Chief Executive Officer,
who is assisted in his role by the Executive Leadership
Team (ELT) comprising the members listed on page 13.
The ELT is responsible for overseeing the operational execution
and delivery of our strategic and financial plans, as approved
by the Board. This includes: business performance management;
transformation and cultural change initiatives; talent,
capability and succession; major investments, divestment
and capital expenditure proposals; business development
considerations; ESG initiatives; and risk assessment
and management.
1. Board leadership and Company purpose
The Company is led by an effective and determined Board,
focused on the long-term sustainable success of the Company,
generating value for shareholders and other stakeholders,
and contributing to wider society.
Read more on
pages 16 and 92 to 101.
2. Division of responsibilities
The Chair and the Chief Executive Officer have clearly
defined and separate responsibilities, and there is an
appropriate combination of Executive and independent
Non-Executive Directors.
Read more on
page 96.
3. Composition, succession and evaluation
Appointments are subject to a formal, rigorous and transparent
procedure. Succession plans, designed to promote diversity,
including gender, social and ethnic backgrounds and
cognitive and personal strengths, are in place for the Board
and senior management. An evaluation of the Board and its
Committees is undertaken annually, in line with the Code.
Read more on
pages 104 to 107.
4. Audit, risk management
and internal control
Formal, transparent policies and procedures are in place to
ensure the independence and effectiveness of the internal
and external audit functions and the integrity of financial
and narrative statements, and to manage and mitigate risks.
Read more on
pages 108 to 114.
5. Remuneration
The Company has remuneration policies and practices
designed to support its strategy and promote long-term
sustainable success. Executive remuneration is aligned
to the Company’s purpose and vision, and is clearly linked
to the delivery of the Company’s long-term strategy.
Read more on
pages 115 to 129.
Imperial Brands PLC | Annual Report and Accounts 2024
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97
HIGHLIGHTS
OF THE YEAR
GOVERNANCE BOARD LEADERSHIP continued
BOARD IN ACTION
March 2024
SITE VISIT: PRAGUE,
CZECH REPUBLIC
In March 2024, Board members spent three days
visiting Imperial’s operations in the Czech Republic
to gain a deeper understanding of our business in the
Central & Eastern Europe cluster. The visit included:
• A briefing from our sales and operations team
in the cluster on the key features of each market
• A tour of different store and trade outlets
to highlight our direct and commercial
channel stakeholders
• To complement the deep dive on HTP,
a consumer speed dating session with three
groups of consumers to better understand
heated tobacco insights
• Lunch with local colleagues and dinner with cluster
leadership to hear about Imperial’s culture in action
B
March 2024
PRAGUE, CZECH REPUBLIC
• Site visit: Central & Eastern Europe
regional review
• Deep dive: Heated Tobacco products
• Stakeholder engagement: Consumer connection
• Employee engagement: “Meet the Board” lunch
• Strategy discussion: Macroeconomic outlook
2023
2024
B A P R
November 2023
LONDON, UK
• Deep dive: Non-financial reporting
regulation developments
• Strategy discussion: Logista
• NGP outlook
VIRTUAL MEETING
• Approval of Imperial Brands plc full year
results and Annual Report and Accounts
B R
October 2023
VIRTUAL MEETINGS
• Review of Imperial’s risk management
programme, including risk appetite
and mitigations
• Stakeholder engagement: Remuneration
Policy shareholder consultation
B A
January 2024
BRISTOL, UK
• Imperial Brands plc AGM: Attended
by all Directors
• Strategy discussion: Spain
• Deep dive: Cyber and technology
principal risk
• Analysts’ insights: outlook for the
combustible and NGP markets
• Employee engagement: Audit Committee
break-out with the Finance function
B
August 2024
VIRTUAL MEETING
• Deep dive: NGP – science
and harm reduction
B A P R
September 2024
LONDON, UK
• Strategy working session
• Investor perception study
• Business Plan 2025
• Capital allocation
• Board and Committees’ effectiveness reviews
VIRTUAL MEETING
• Stakeholder engagement: ESG Investor webinar
B A P R
May 2024
LONDON, UK
• Strategy discussion: Manufacturing,
UK and Germany
• Brokers’ perspective on Imperial Brands
VIRTUAL MEETING
• Approval of Imperial Brands PLC
interim results
• Employee engagement: Discussion with
employees on Executive and wider
workforce reward topics
B P
July 2024
VIRTUAL MEETING
• Deep dive: AI and audit
LIVERPOOL, UK
• Site visit: Innovation Centre
• Strategy discussions: NGP, US market
• Deep dive: Innovation pipeline,
opportunities and capability
• Employee engagement: “Meet the Board” lunch
B
June 2024
VIRTUAL MEETINGS
• Strategy interviews with each Non-Executive
Director and management
July 2024
SITE VISIT: LIVERPOOL
In July 2024, the Board visited Imperial’s Innovation Hub in
Liverpool and undertook a review of the Group’s NGP business.
The Board met a cross-section of colleagues involved in
merging technology and science with consumer insight.
Directors spent time in each of the key workstreams of our
Innovation Hub – including:
• Participating in consumer engagement sessions on NGP
in our Sense Hub
• Observing how consumer preference shapes the look and feel
of products in the Design Studio
• Exploring the role of technology in our Device Lab
• Considering the role of smell and taste in our NGP products
in our Consumable & Flavour labs
• Reflecting on testing and data collection in our Analytical
& Stability labs
B
Board
A
Audit Committee
P
People, Governance & Sustainability Committee
R
Remuneration Committee
Imperial Brands PLC | Annual Report and Accounts 2024
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99
GOVERNANCE BOARD AND CULTURE
ENGAGEMENT WITH COLLEAGUES
Every Non-Executive Director, individually and working
together as the People, Governance & Sustainability Committee,
has responsibility for workforce engagement; this is considered
to be effective as it allows every Board member to participate
rather than channelling engagement through a single Director.
Our “Meet the Board” engagement sessions continue to provide
an integrated listening experience between our colleagues and
NEDs that is authentic and inclusive, enabling the Board to gain
insights from a representative cross-section of our global
employee population. These open and honest sessions have
been positively received, and are considered by colleagues to
be helpful in connecting to the strategy and the enablers
for delivering it.
Specific engagement activity can be seen on pages 98 to 101.
ENGAGEMENT WITH INVESTORS
We value the support of our equity and debt investors and
how our engagement with these important stakeholders can
influence our ability to access capital. Our aim is to provide
balanced, clear and transparent communications enabling
investors to understand how we see our prospects and the
market environments in which we operate. Over the course
of FY24, we held around 620 meetings with debt and equity
investors, and research analysts through the following:
• results presentations and trading updates;
• CEO and CFO participation at investment banking conferences;
• investor roadshows in the UK, North America and Asia with
private client brokers and wealth managers and with debt
investors in support of a US dollar bond issue;
• a virtual ESG investor webinar to provide an update
on progress with our ESG priorities;
• our AGM, providing an opportunity for the Board to meet
with shareholders, particularly our retail investors;
• ad hoc events such as the sell-side analyst Board debate,
where two sector analysts presented opposing perspectives
and outlook for the sector; and
• ad hoc meetings to maintain an ongoing dialogue with
existing holders and to meet prospective investors.
To monitor the effectiveness of investor engagement,
the Board commissioned an investor perception study,
gathering feedback from investors and non-shareholders
on Imperial’s progress against the strategy. The key findings
were that shareholders are pleased with the delivery and
successful implementation of the plan. They appreciate the
revitalisation of the combustible business, realistic and
disciplined approach to NGP, deleveraging of the balance
sheet, clear capital allocation policy and shareholder returns.
The operational performance and financial delivery have
reinforced the credibility of the management team.
Imperial’s Chair maintained her ongoing engagement with
the Group’s largest shareholders through in-person and
virtual meetings.
The Board is kept informed of investor engagement throughout
the year, through the IR Board Report which is presented at
every Board meeting. Investor perception is assessed on an
ongoing basis through feedback on meetings, our events and
our conference presentations. This feedback is shared with the
Board in the IR Board Report.
BOARD IN ACTION continued
January
Engagement:
• Chair roadshow; AGM; Sell-side
analyst Board discussion
GOVERNANCE BOARD LEADERSHIP continued
March
Conferences:
• New York
April
Results:
• Pre-close trading update
September
Conferences:
• Boston
Engagement:
• ESG investor webinar
June
Conferences:
• Paris
July – August
Conferences:
• London
May
Results:
• HY Results
Roadshows:
• UK; North America
Conferences:
• Virtual; New York
October
Results:
• Pre-close trading update
November
Results:
• FY Results
Roadshows:
• UK; North America; Private
Client/Wealth Management
December
Engagement:
• Executive Leadership Team
investor event
Roadshows:
• Asia
Conferences:
• Virtual
INVESTOR ENGAGEMENT DURING FY24
Read more on how the Board
considers all our stakeholders,
and how the Directors fulfil
their duties under Section 172
of the Companies Act 2006,
in our S172(1) statement and
accompanying information
on pages 54 to 57 and 102.
GOVERNANCE BOARD AND CULTURE
HOW THE BOARD
MONITORS CULTURE
Workforce policies and
practices
The Board monitors wider
workforce policies and
practices to ensure they meet
Imperial’s values and support
the long-term sustainable
success of the Company.
Engagement survey
The Board reviews results of the
annual employee engagement
survey, together with data on
how engaged our workforce is
compared to peer companies.
Actions from the engagement
survey are monitored by the
Board through to completion.
Site visits
Regular site visits are scheduled
as part of the Board’s annual
programme in order that
Directors can gain further insight
into Imperial’s culture by meeting
colleagues, observing the Group’s
activities and seeing how our
systems and processes support the
workforce to deliver performance.
Employee engagement
programme
Directors participate in an
employee engagement
programme designed to allow the
Board to receive employees’
perspectives on Imperial’s culture
and better inform Board
decisions.
People topic updates
Directors receive updates on key
People topics. The Board further
monitors the work of the Group’s
business employee resource
groups (BERGs) which helps
the Board better understand
concerns of diverse groups
within the workforce.
Code of Conduct
The Code of Conduct sets out
what Imperial stands for and how
it operates. The Board reviews
the Code and its engagement
programme, including training
and communication.
Employee concerns
programme
Directors regularly
review the findings of the
Group’s whistleblowing and
employee concerns processes,
including trends data
and investigation closure.
Reward engagement
Members of the Remuneration
Committee participate in a focus
group session with a cross-section
of employees to discuss executive
remuneration and wider workforce
pay practices.
Imperial Brands PLC | Annual Report and Accounts 2024
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101
GOVERNANCE SECTION 172
Effective engagement with a wide range
of stakeholders, including consumers,
colleagues, governments and regulators,
our customers, suppliers and investors,
is key to the successful delivery of our
strategy and vision in the long term.
During the year, the Directors acted in the way they considered,
in good faith, most likely to promote the Company’s long-term
success for the benefit of its members as a whole, paying due
regard to the matters set out in Section 172(1) of the
Companies Act 2006. Those factors are as follows:
• The likely consequences of any decision in the long term
• The interests of the Company’s employees
• The need to foster business relationships with suppliers,
customers and others
• The impact of the Company’s operations on the community
and the environment
• The desirability of the Company maintaining a reputation
for high standards of business conduct
• The need to act fairly as between members of the Company
Across our business we have a regular and ongoing dialogue
with stakeholders and their views are taken into account,
not only in matters put to the Board for a decision, but in the
day-to-day management of our operations. In taking into
account the various interests of all relevant stakeholders
when making decisions, the Board recognises it is not always
possible to achieve each stakeholder’s preferred outcome.
Which stakeholder group’s interests are considered depends
on the decision at hand. The Board endeavours to balance
the different priorities and interests of our stakeholders in
a way compatible with the long-term, sustainable success
of the business and which aligns with our purpose,
vision and behaviours.
How the Board considers stakeholder views and inputs,
as well as Section 172(1) factors, in its decision-making
is illustrated below. More detail on, and examples of,
our stakeholder engagement initiatives and their impact
on Board decision-making is contained within the Strategic
Report on pages 54 to 57.
STATEMENT ON SECTION 172
OF THE COMPANIES ACT 2006
The broad skillset and knowledge base of Board members
promotes and enhances the diversity of thinking during Board
discussions.
The Board meeting calendar is planned by the Chair, Company
Secretary and Chief Executive, with input from other key
parties, such as the CFO, as required.
The Board receives detailed papers in good time ahead of
meetings to enable the time in meetings to be devoted to
discussion, debate and challenge following any presentation
that may also take place. As part of this process, relevant
stakeholder interests are identified in the Board papers.
The Board is responsible for setting the strategic direction of
the Company, as outlined on page 97, and ensuring
stakeholders are treated fairly as part of this is firmly
embedded in the culture of the Company. Decisions are
properly recorded in meeting minutes.
Decisions are cascaded as appropriate and stakeholders
engaged where necessary. Updates are provided to the Board
to allow it to review and monitor impact, effectiveness and the
fulfilment of its duties.
BOARD GOVERNANCE STATEMENTS
Section 172 of the Companies Act 2006
The Board seeks to consider the interests of all relevant
stakeholders when making decisions. Our formal statement is
disclosed on page 102. Throughout this Annual Report we have
included information on how the Board operates and considers
the interests of stakeholders when making its decisions.
Read more on
pages 54 to 57.
Viability statement
On the basis of a robust assessment of the emerging and
principal risks facing the Group, and the assumption that
they are managed or mitigated in the ways disclosed on
pages 42 to 53, the Board’s review of the business plan and
other matters considered and reviewed during the year,
and the results of the sensitivity analysis undertaken,
the Board has a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities
as they fall due over the period to 30 September 2027.
Read more on
page 52.
Going concern basis
Having assessed the principal risks facing the Group,
including the global economic environment, as well as
realisation of other key risks, including climate change
and the impact of the share buyback, the Board is of the
opinion that the Group as a whole and Imperial Brands PLC
have adequate resources to meet operational needs for a
period of 12 months from the date of approval of the financial
statements and, therefore, concludes that it is appropriate to
prepare the financial statements on a going concern basis.
Read more on
page 52.
Principal risks and uncertainties
The processes and related reporting described in the Principal
Risks and Uncertainties section on pages 42 to 53 enable the
Audit Committee to review and monitor the effectiveness of
our risk management and internal control systems and
provide assurance to the Board, in accordance with the
recommendations of the Code.
Read more on
pages 42 to 53.
Fair, balanced and understandable
The Directors confirm that they consider, taken as a whole,
this Annual Report and Financial Statements are fair,
balanced and understandable and provide the information
necessary for shareholders to assess the Company’s position,
performance, business model and strategy.
Read more on
page 112.
Modern Slavery Statement
In compliance with the UK Modern Slavery Act, every year since
2016, Imperial Brands submits its Modern Slavery Statement,
where we outline our commitments for the upcoming year.
You can read our 2023 Modern Slavery Statement on our
website. As part of these commitments, together with
Slave-Free Alliance, of which Imperial Brands is a founding
member, we developed a modern slavery toolkit to help our
colleagues to enhance their knowledge about modern slavery,
identify its key indicators and characteristics, respond
appropriately to potential victims, and escalate and report
any concerns. In 2023, we created a Modern Slavery Local
Champions Community to ensure our local champions had
all the support they needed, and we updated our Modern
Slavery Manufacturing Standard.
Read more on
page 73.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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103
2023
2024
GOVERNANCE PEOPLE, GOVERNANCE & SUSTAINABILITY COMMITTEE
REPORT OF THE PEOPLE, GOVERNANCE
& SUSTAINABILITY COMMITTEE
REGULAR ATTENDEES AT PEOPLE,
GOVERNANCE & SUSTAINABILITY COMMITTEE
MEETINGS DURING FY24
Information on Committee members and their
attendance at meetings is on page 90. Other regular
attendees during the year (by invitation and where
appropriate) included:
• Chief Executive Officer
• Chief Financial Officer
• Chief People and Culture Officer
• Global ESG Director
• Director of Internal Audit
• Deputy Group General Counsel – Legal Compliance
DEAR SHAREHOLDER,
I am pleased to introduce this year’s report for the recently
expanded People, Governance & Sustainability Committee.
An area of key focus for the Committee has continued to
be people and succession topics, notably executive and
non-executive succession planning and overseeing
management’s implementation of the operating model
transformation. Executive succession plans were reviewed
over the year, covering Imperial’s leadership team and
emerging talent within the organisation.
In FY24 we reviewed the activities of the Board and
its Committees and agreed that the remit for the People
& Governance Committee be expanded to include oversight of
ESG and E&C matters (including any appropriate ESG-related
performance objectives for Executive Director remuneration),
employee concerns and speak-up programmes and the integrity
of Imperial’s non-financial reporting (in tandem with the Audit
Committee). With an expanded role, it was felt the Committee’s
name should be changed to People, Governance & Sustainability
to better reflect its additional activities.
With the Committee’s remit broadening to include sustainability
matters, it received reports on ethical misconduct and
non-compliance, and ESG performance against our
“People and Planet” strategic aims. It reviewed the updated
Code of Conduct, including its launch and communications
plan, and recommended the approval of the Code to the Board.
The Committee further considered the proposed process for
the external auditor’s limited assurance exercise over
Imperial’s sustainability reporting and metrics.
We welcomed Julie Hamilton to the Committee when she
joined the Board on 31 January 2024.
Looking ahead to 2025, the Committee’s focus will remain
on succession, the Group’s initiatives on talent, diversity
and inclusion and oversight of the transformation of our
operating model.
It is further planned that the Committee will build on its
review of sustainability matters and non-financial reporting,
working with the Executive-level Group ESG and Group Ethics
& Compliance Committees to oversee these activities.
Thérèse Esperdy
Chair of the People, Governance & Sustainability
Committee
ROLE OF THE PEOPLE, GOVERNANCE &
SUSTAINABILITY COMMITTEE
The People, Governance & Sustainability Committee provides
oversight of the Company’s people and culture policies and
practices to ensure they align with the Group’s values, strategy,
performance and risk management framework. It keeps
succession plans for the Board and the Executive Leadership
Team under review. The Committee monitors the management
and mitigation of key environmental, social & governance (ESG)
and ethics and compliance (E&C) risks as well as the Group’s
ESG and E&C performance.
STRUCTURE AND CONTENT
OF THE PEOPLE, GOVERNANCE &
SUSTAINABILITY COMMITTEE REPORT
Committee Chair introduction
104
Committee activities in 2023/24
105
Sustainability
106
Succession planning
106
Employee engagement
106
AGM and reappointment of Directors
107
Board evaluation
107
The Committee’s full terms of reference can
be found at imperialbrandsplc.com/board
The skills and experience of our Board
are outlined on pages 92 to 95.
PEOPLE,
GOVERNANCE &
SUSTAINABILITY
COMMITTEE’S
ACTIVITIES 2023/24
A summary of topics covered by the
People, Governance & Sustainability
Committee in its meetings during the
financial year is provided below.
July 2024
• Review of the updated Code of Conduct
and roll out, and its recommendation
to the Board for approval
April 2024
• Operating model transformation update
• Diversity, Equity & Inclusion deep dive –
including Parker Review targets and progress
• Talent programme review
• Executive succession
• Proposed expansion to remit of
People & Governance Committee
• Ethics & compliance reporting update
• Quarterly ESG report
• Non-financial reporting assurance and
approach for 2024 Annual Report and Accounts
• Updates to the UK Corporate Governance Code
• Proposal for 2024 evaluation of the Board and
its Committees
September 2024
• Executive succession, including external talent mapping
• Executive Leadership Team performance review
• Review of Non-Executive Directors’ skills, tenure,
time commitment and independence in proposing
for re-election
November 2023
• Results of the Employee Experience survey
• Update on a Non-Executive Director search
• Composition, rotation and succession
planning for Board Committees
• Board training programme for FY24
• Non-Executive Director induction
programme review
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
104
105
ACTIVITIES DURING THE YEAR
Sustainability
During the year, the Committee agreed to expand its
responsibilities to include monitoring of the Group’s ESG
and E&C programmes, supported by the Executive-level
Group Ethics & Compliance and Group ESG Committees.
The Committee received ESG and E&C updates from
management, using a reporting framework of the Group’s
sustainability strategy pillars and Code of Conduct categories.
The Committee held a deep dive on the updated Code of
Conduct, including the Code’s roll-out programme across
different regions and businesses and its alignment to our
strategy, behaviours and Group policies.
Non-financial reporting assurance
The expanded remit of the Committee includes review of
non-financial materials intended for disclosure or publication
and their associated assurance, including the Modern
Slavery Act statement and ESG section of the Annual Report.
During the year, the Committee reviewed assurance processes
for Imperial’s non-financial reporting, including proposals to
strengthen readiness for the upcoming Corporate
Sustainability Reporting Directive (CSRD).
Succession planning
Executive
The Committee reviewed succession planning scenarios
for Executive Directors and the Executive Leadership
Team over the short, medium and long term. These scenarios
considered skills and capabilities needed to undertake these
roles and implement Imperial’s strategy and operating
model transformation.
As part of these activities, the Committee undertook a talent
mapping exercise of external candidates for Executive roles
and identified areas of focus and coaching for internal
candidates as part of the succession pathway.
Underpinning Executive succession planning was a review
of the Group’s talent model, which considered the pipeline
for potential leaders across different management grades
and programmes to identify and develop future leaders
within the organisation.
Non-Executive
During the year the Committee remained active in its
consideration of NED succession, reviewing the tenure,
skills, experience and diversity of existing Board members
and succession plans for the chairs and membership of the
Committees. Following these reviews, the Committee agreed
that Ngozi Edozien would move from the Audit to the
Remuneration Committee and that Julie Hamilton would join
the Remuneration Committee.
For the process that led to Julie Hamilton's Board appointment,
external search consultancy Lygon Group was appointed.
Lygon Group is a signatory to the Executive Search Firms’
Voluntary Code of Conduct and had no other connection
with the Company or its Directors during the year. Lygon
provided a long list of candidates who were considered
against an agreed role profile and balance from a diversity
and inclusion perspective. The Committee, Chief Executive
and Chief Financial Officer interviewed short-listed candidates,
with references obtained prior to recommendation for
appointment to the Board.
The Committee concluded that Julie Hamilton would be a
strong addition as a Non-Executive Director given her deep
knowledge of delivering commercial change in multinational
consumer businesses. Julie joined the Board following the
conclusion of the AGM in January 2024.
Employee engagement
As part of the Board’s employee engagement programme,
every Non-Executive Director, individually and working
together as the People, Governance & Sustainability Committee,
has responsibility for workforce engagement. This is considered
to be effective as it allows every Board member to participate
rather than channelling engagement through a single Director
and insights are heard collectively. The Committee reviews
the mechanism for employee engagement and its effectiveness
on an annual basis as part of the Committee evaluation.
In 2024, employee engagement sessions were aligned with
the themes of the Board’s agenda for the year – intended to
better inform the Board’s discussions and decision-making.
Directors met with a broad cross-section of our workforce,
including colleagues from our Finance function, our Bristol
offices, the Central & Eastern Europe cluster in Prague and
NGP business in Liverpool. Members of the Remuneration
Committee met colleagues from different businesses and
locations to understand views on reward. Participants shared
their insights on Imperial’s organisational transformation,
strategy, market challenges and regulatory developments.
Feedback and themes from each session were discussed
by the Board at its subsequent meetings.
As part of its annual evaluation, the Committee concluded
that the employee engagement programme remained
effective and was appropriate for Imperial, given its structure
and business model. The evaluation asked that consideration
be given to different formats for the programme in 2025.
Diversity
The Committee continued to appraise appointments to the
Board from the perspective of its commitment to diversity,
including with respect to gender and ethnicity, in its
composition and succession plans. The proportion of women
on the Board at 30 September 2024 was 45%, with the same
proportion of women in our Executive Leadership Team.
Female representation on the Board thus exceeds the UK
Listing Rules and the FTSE Women Leaders Review diversity
benchmark target of 40%, and we also meet the UK Listing
Rules and FTSE Women Leaders Review target for at least
one senior Board position (in our case both the Chair and
the Senior Independent Director) to be held by a woman.
The Board has two Directors who identify as being from an
ethnic minority background, meeting the Parker Review’s
current recommendation of at least one Director. One member
of our Executive Leadership Team identifies as being from
an ethnic minority background.
During the year, the Committee monitored progress against
Imperial’s diversity, equity and inclusion ambition and
five-year strategy, including work undertaken by management
to support progression of under-represented groups and
reviewing the Parker Review objective for companies to set
targets for ethnic minority representation. The Committee
considered employee data to inform priority areas for policy
and practice improvement, notably on ethnicity. Information
on Board and executive management diversity is on page 91.
Independence
The independence of NEDs is reviewed and confirmed annually
by the Committee. In accordance with the provisions of the
UK Corporate Governance Code, the Chair was considered
independent at the time of appointment to the Board and role,
and the Board considers all other NEDs to be independent,
including Julie Hamilton who joined Imperial Brands
during the year.
GOVERNANCE PEOPLE, GOVERNANCE & SUSTAINABILITY COMMITTEE continued
Conflicts of interest
The Company’s Articles of Association allow the Board
to authorise potential conflicts of interest as they arise and
to impose such limits as appropriate. During the year,
the Board approved a Board Conflicts of Interest policy
which sets out guidance and process for the identification
and approval of conflicts of interest. This and the register
of Directors’ commitments maintained by the Company
Secretary informs the Committee’s assessment of a
Non-Executive Director’s independence when proposing
a Director for election or re-election to the Board.
Time commitment and outside appointments
Each NED is expected to commit sufficient time to the Board
and the Company. Time commitments for Directors are
reviewed by the Committee on a regular basis, including ahead
of recommendation for appointment to the Board, on changes
in role (joining additional Committees or taking on further
responsibility) and prior to approving external appointments.
If any Director wishes to take on an additional external
appointment, they are required to seek permission from the
Board. The Board will take into consideration the additional
time commitments, independence and any potential conflicts
of interest in relation to the Directors’ current roles and
responsibilities before any permission is given. During the
year, the Board approved the appointments of Ngozi Edozien
as a non-executive director of Unilever Nigeria plc, Bob Kunze-
Concewitz as a non-executive director of Carlsberg A/S and
Diane de Saint Victor as a member of the Global Center for Risk
and Innovation - Industry Europe Board, having concluded
that each would continue to have sufficient time to dedicate
to their role at Imperial.
AGM and reappointment of Directors
With the exception of Diane de Saint Victor, all Directors are
being submitted by the Company for re-election at the 2025
Annual General Meeting. Prior to making recommendations
to the Board for election/re-election, the Committee undertook
an assessment of each Director, including performance and, for
each NED, their continued independence and time commitment.
Director induction
Upon appointment, all Directors receive a comprehensive
induction, tailored to their individual skills and experience
and the Committees they will join. In January 2024,
Julie Hamilton was appointed as an independent Non-Executive
Director to the Board. She undertook a formal induction,
including one-to-one meetings with our Executive Leadership
Team, business and functional leaders, internal and external
auditors and a visit to our US operations in Greensboro.
Julie further participated in an induction programme which
covered our Audit and Remuneration Committees and attended
meetings of both Committees as an observer prior to formally
joining the Remuneration Committee.
Feedback is sought from Directors undertaking their induction
programme and in the Committee’s evaluation to ensure the
programme is effective.
Board training
Beyond initial induction, Directors receive ongoing training
and development during the year. This includes sessions during
Board visits, such as the Board’s visit to our Innovation Centre in
Liverpool where members learned first-hand about our product
development process. Training is also delivered through targeted
“NEDucation” sessions with external and internal subject matter
experts. During 2024, NEDucation sessions were given by
external legal counsel on developments in non-financial
reporting regulations, by the external auditors on the use of AI
in audit and by Imperial’s Group Science and Regulatory Affairs
team on the science of harm reduction in NGP.
Review of the People, Governance
& Sustainability Committee
For its 2024 evaluation, the Committee undertook an internally
facilitated review using an anonymised online questionnaire.
The evaluation confirmed that the Committee was operating
effectively, with positive feedback on people and culture topics.
It was agreed that executive succession planning would remain
an area of focus for 2025, including consideration of talent,
capability and the broader diversity agenda. The broad remit
of the Committee’s agenda was noted and it was agreed that
a watching brief would be kept on the discharge of the
Committee’s expanded sustainability responsibilities.
BOARD EVALUATION
An evaluation of the Board, its Committees, the Chair and
individual Directors is undertaken on an annual basis.
Actions from the 2023 Board review
The Board undertook an externally facilitated review, with the
outcomes and agreed actions being focused on by the Board
throughout the year. Progress against these actions include:
2023 Action
Actions taken during the year
Board agenda and
focus
Co-ordination across
the Board and its
Committees to ensure
that strategic and
operational priorities
are linked
• The Chair, CEO, Committee Chairs
and Company Secretary reviewed
the forward agendas for each forum
to ensure key topics were covered
• The remit of the People
& Governance Committee
was expanded to include
sustainability matters
Adding value and
optimising challenge
Meeting structure and
exploring different
styles of discussion to
allow Board members
to bring their
experience to the
decision-making
process
• The forward Board calendar
was refreshed, including cadence
and structure, to optimise Board
members’ time commitment
and the reporting cycle
• Different formats for discussions
were utilised during the year,
including NED-only breakfasts
and informal Board events
with management
Strategy
Optimising the
methods for engaging
the Board on the
development of the
next five-year strategy
• Holding a series of strategy
“building block” sessions
throughout the year on key
elements of a future strategy
• 1:1 interviews with each NED
were held to explore potential
strategic themes and check in
on discussions to date
2024 Board review
An internally facilitated Board review was held in 2024,
led by the Chair and Company Secretary. The Chair’s
performance review was led by the Senior Independent
Director and a review of the CEO’s performance was led by
the Chair. In addition, the Chair held one-to-one meetings
with each NED which covered their individual performance.
Feedback from the review was consolidated and presented
to the Board. The review concluded that the Board and its
Committees continued to operate effectively, with the right
balance of skills, experience and diversity to oversee the
Group’s strategy. Several actions were highlighted to further
enhance the Board’s effectiveness during 2025, including
further refinement of meeting and agenda logistics to create
more space for reflection, continued oversight of the ongoing
development of the risk management and controls programme
and consideration of how to pull the different “strands” of the
next five-year strategy together.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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107
GOVERNANCE AUDIT COMMITTEE
AUDIT
COMMITTEE
DEAR SHAREHOLDER
During the year the Audit Committee has provided assurance
over the integrity of the Group’s financial statements and related
announcements, providing a high level of scrutiny over
judgements made by management in key accounting matters,
particularly at the year-end. The Committee also supported
the Board at year-end with the assessment of the Company’s
Annual Report as being fair, balanced and understandable.
The Company’s risk management and internal control
framework has undergone a series of enhancements to
the way it operates, and this has been a key area of focus
for the Committee during the year as it supports the
Board with the Group’s wider risk management agenda.
The Committee received updates from regional finance
directors during the year, as well as across central functions.
Time was also spent with members of the Head Office Central
Finance team, providing Committee members a much-valued
opportunity to hear first-hand about life at Imperial from a
broad cross-section of employees as well as gaining an insight
on their views of the Company and, amongst other things,
personal ambitions.
The Internal Audit function and the Company’s external
auditor are critical relationships overseen by the Committee;
ensuring the independence and objectivity of the external
auditor is a key matter for the Committee. The Committee has
regular private meetings separately with both internal and
external audit across the year.
The area of non-financial reporting will be very much in focus,
and the Committee’s interaction with other Board Committees
as the levels of assurance required around this critical area
continue to expand. Similarly, risk will remain a critical focus,
particularly as we prepare for implementation of the UK
Corporate Governance Code 2024 and, looking forward, where
we can provide assurance around material internal controls.
The Company will have a new external audit partner next
year, as part of the mandatory rotation, and I will be keen to
maintain the open and productive level of engagement I have
enjoyed with the incumbent, to whom I would like to express
my thanks for the strong and constructive challenge provided
during their tenure.
The following pages provide further insight into the range of
activities and deliberations of the Audit Committee during the
financial year.
Jon Stanton
Chair of the Audit Committee
COMMITTEE MEMBERS AND OTHER REGULAR
ATTENDEES AT AUDIT COMMITTEE MEETINGS
DURING FY24
Information on Committee members and
their attendance at meetings is on page 90.
Other regular attendees during the year
(by invitation and where appropriate) included:
• Board Chair
• Chief Executive Officer
• Chief Financial Officer
• Company Secretary
• Global Finance Director
• Director of Internal Audit
• Deputy Company Secretary, as Secretary
to the Audit Committee
• Group Financial Controller
• Global Tax Director
• Representatives from EY, our external auditor
STRUCTURE AND CONTENT OF THE AUDIT
COMMITTEE REPORT
Audit Committee Chair introduction
108
Role of the Audit Committee
109
About the Audit Committee
109
Audit Committee’s activities
110
Significant financial reporting judgements
111
Governance, risk management
and internal control
113
Internal audit
113
External audit
113
The Committee’s full terms of reference can
be found at imperialbrandsplc.com/board
The insight on the following pages into the range of activities
and deliberations of the Audit Committee during the financial
year is supported by a fuller list of key matters considered by the
Audit Committee set out on pages 110 to 112.
ROLE OF THE AUDIT COMMITTEE
The Audit Committee assists the Board in fulfilling its corporate
governance responsibilities relating to financial and narrative
reporting and controls. This includes oversight of the Group’s
internal control systems, risk management process and
framework, the Group Internal Audit department and the
external audit.
It also involves ensuring the integrity of the Group’s financial
statements and related announcements.
This report sets out how the Audit Committee has discharged
its duties in accordance with the UK Corporate Governance Code
2018 (the Code) for the year ended 30 September 2024, and details
the key matters considered and findings during the year.
KEY RESPONSIBILITIES
In line with the authority delegated by the Board,
the Audit Committee:
• Reviews and challenges the critical management
judgements and estimates which underpin the financial
statements, drawing on the views of the external auditor
in making an informed assessment, particularly in relation
to each of the key matters detailed on pages 111 to 112
• Maintains appropriate oversight over the work and
effectiveness of Group Internal Audit, including confirming
it is appropriately resourced, reviewing its audit findings
and monitoring management’s responses
• Monitors and evaluates the effectiveness of Imperial’s
risk management and internal control systems,
including obtaining assurance that controls are
operating effectively and are evidenced as such through,
for example, the internal self-certification exercise and
subsequent internal audit testing
• Reviews the adequacy and security of the Company’s
procedures for detecting fraud, and its systems and
controls for preventing bribery
• Scrutinises the independence, approach, objectivity,
effectiveness, compliance and remuneration of the
external auditor
• Assesses the going concern status and medium-term
viability of the Group
• Assists the Board in confirming that, taken as a whole,
the Annual Report is fair, balanced and understandable,
and provides the information necessary for shareholders
to assess the Company’s position, performance, business
model and strategy (see page 112)
ABOUT THE AUDIT COMMITTEE
Membership
Membership and attendance of the Committee
can be found on page 90.
Biographical details of the current members of the Audit
Committee are set out on pages 92 to 95. Members of the
Audit Committee are appointed by the Board following
recommendation by the People, Governance & Sustainability
Committee. Ngozi Edozien stepped down as a member of the
Audit Committee during the year following her appointment
as a member of the Remuneration Committee.
In addition to the members of the Committee, other regular
attendees during FY24 can be found on page 108.
Governance
The Audit Committee consists entirely of independent
Non-Executive Directors as defined by the Code. The Audit
Committee chair, and both Alan Johnson and Andrew Gilchrist
meet the Code’s standard of having recent and relevant financial
experience and also have competence in accounting and/or
auditing. The Board is satisfied that the Committee as a whole
has the required competence relevant to the sector in which
the Company operates, supported by the FMCG experience
of Sue Clark, Andrew Gilchrist and Alan Johnson.
The Audit Committee’s terms of reference state it must meet
at least three times a year. The quorum for meetings is two.
At each meeting, both the Director of Group Internal Audit
and EY had the opportunity to meet with the Audit Committee
without management present.
The Audit Committee is authorised to seek external legal advice
and other independent professional advice as it sees fit.
Audit Committee evaluation
An internal evaluation of the Board and Committees
was undertaken in 2024. Further information on the
process undertaken can be found within the People,
Governance & Sustainability Committee report, on page 107.
The evaluation found members to believe the Audit Committee
functions well and maintains a constructive and healthy
relationship with the external auditor. Risk and internal
control remain focus areas for the Committee, particularly
as we prepare for implementation of the UK Corporate
Governance Code 2024 and the Committee’s role supporting
the Board attesting the Group’s material internal controls in
the coming years.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
108
109
AUDIT COMMITTEE’S
ACTIVITIES 2023/24
GOVERNANCE AUDIT COMMITTEE continued
A summary of the topics covered by
the Audit Committee in its meetings
during the financial year is provided
below. In addition to the matters listed,
the Committee also held private review
meetings, separately, with internal and
external audit, as well as engaged members
of management as required for deep dives
where issues required greater scrutiny.
April/May 2024
• Review of HY24 Results, including going concern
and accounting estimates and judgements
• HY24 attestations
• Recommended half-year reporting to the Board
• Distributable reserves and interim dividend review
• Update on alternative performance measures (APMs)
• Regional Finance Review
• External Audit HY24 Review Report
• Group Treasury update, including risk management
• Insurance Update
• Internal control and risk management update
• Audit/Non-Audit Services and Independence review
2023
2024
January 2024
• Finance update
• Finance Transformation update
• External audit effectiveness review
• Regional Finance Review
• Tax review including strategy confirmation
• Group Internal Audit update
• FY24 audit plan update
• Non-audit services pre-concurrence review
• Internal control and risk management update
• Ethics and compliance report
• “Meet the Committee” lunch session with
Group Finance teams
• Updates to the UK Corporate Governance Code
September 2024
• FY24 Financial results and audit overview
and accounting estimates and judgements
initial review
• Audit/Non-Audit Services review
• Distributable Reserves overview and
dividend review
• External Audit FY24 Update Report
• Compliance Review
• Group Internal Audit update, including FY25
plan and approval of Charter
• Cybersecurity report
• Internal control and risk management update
• Fraud and Financial whistleblowing review
• Committee evaluation and independence
review of Audit Committee members
November 2023
• FY23 Financial results and audit overview
and accounting estimates and judgements
update and recommendations to the Board
• Recommended final dividend to the Board
• Audit/Non-Audit Services
and Independence review
• Recommended reappointment
of external auditor to the Board
• Financial controls self-certification
and FY23 attestations update
• Group Internal Audit annual review
• Pensions review
• Update on FY24 Audit Committee planner
• Confirmed audit/non-audit service fees
• Internal controls and risk management
• Recommended preliminary announcement
and Annual Report and Accounts to Board,
including the Audit Committee report and
risk management disclosure
SIGNIFICANT FINANCIAL
REPORTING JUDGEMENTS
The Audit Committee considered the appropriateness of the following areas of significant judgement, complexity or estimation
in connection with the FY24 financial statements:
Matter considered
How the Committee addressed this
Goodwill and intangible asset impairment reviews
(See note 12 to the financial statements for further information)
Goodwill and intangible assets form a major part of the Group’s
balance sheet, and their current valuations must be supported
by future prospects. Additional internal validation was prepared
in respect of long-term market prospects, facilitating three-year
modelling and taking account of updates to the near and
medium-term business planning process.
The Audit Committee also considered detailed reporting
from, and held discussions with, the external auditor.
Following these reviews the Audit Committee concluded that
there is significant headroom above the valuation of goodwill.
The Audit Committee concluded that there was no requirement
to impair goodwill and intangibles and that the disclosure of
sensitivities was appropriate and on this basis the Committee
approved the note disclosure in the financial statements.
Taxation
(See notes 8 and 23 to the financial statements
for further information)
The Group is subject to taxation in a number of international
jurisdictions, requiring significant management judgement
in relation to effective tax rates, tax compliance and the
reasonableness of tax provisions, which could materially
affect the Group’s reported results.
The Group is subject to periodic challenges by local tax
authorities on a range of matters and there are uncertain
tax positions in relation mainly to three principal matters:
German branch capital structure; German transfer pricing;
and a French tax authority challenge in respect of an
intra-Group disposal.
The Audit Committee received a detailed update from management
at each Committee meeting on the status of ongoing enquiries and
tax audits with local authorities; the Group’s effective tax rate for
the current year; recognition of material assets, including deferred
tax assets; and the level of provision for known and potential
liabilities, including the third-party counsel received in developing
estimates. In addition, the Audit Committee discussed material
positions with the external auditor in support of developing an
independent perspective on the positions presented.
The Audit Committee received specific progress reports in
connection with: the recognition of the Maltese tax credits;
ongoing French tax litigation; a German tax authority audit into
debt and equity allocation to branches; and transfer pricing on
financing. In addition, following the conclusion in prior years of
transfer pricing audits (excluding financing), including settlement
on UK, German and French transfer pricing audits, ongoing mutual
agreement procedures impacting provisions and reporting disclosures
were further discussed. The Audit Committee continued to consider
the appropriateness of items treated as adjusting and concluded
that the items satisfied tax adjusting item criteria on the basis
of materiality and nature.
The Audit Committee reviewed the status of each material
tax judgement, including a range of possible outcomes,
noted that independent third-party support had been obtained
for each judgement and agreed that the level of tax provisions
and disclosures was appropriate.
Litigation matters and competition investigations
The Group is exposed to litigation matters arising from
claimants seeking remedies from the Company or its
subsidiary companies. A small number of claims alleging
smoking-related health effects remain, as well as NGP-related
product litigation in the US only. A claim arising from specific
US legislation (Helms Burton) remains ongoing, one element
of the US state settlement agreements remains unresolved,
employment related claims arising from a number of legacy
disputes are ongoing and the Group faces one ESG related
claim (see notes 25 and 30). Three decisions by national
Competition Authorities in the EU are under appeal and
judgments of the national courts are awaited by the Group.
The Audit Committee considered reports from the Group’s lawyers
which confirmed that the Group continues to have meritorious
defences to a number of actual and threatened legal proceedings.
The Audit Committee concluded that risks in respect of these actual
and threatened legal proceedings and litigation matters otherwise
covered in this report, along with any proceedings appealing
competition authority decisions, are appropriately disclosed or
provided for in the Group’s Annual Report and Accounts.
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GOVERNANCE AUDIT COMMITTEE continued
Matter considered
How the Committee addressed this
Going concern and viability statement
The Directors are required to consider whether it is
appropriate to prepare the financial statements on a going
concern basis and explain how they have assessed the
prospects of the Company over a longer period, particularly
in the context of uncertainty in the external environment.
Management performed a comprehensive series of stress
tests to confirm that the going concern basis and viability
statement remain appropriate. These tests are described in
the going concern statement on page 52. The tests involved
the stress testing of the resilience of the Group to certain
changes in trading conditions that may come about as a
result of the global economic environment, as well as
realisation of other key risks, including climate change
and the impact of the share buyback.
The Audit Committee reviewed these tests on operating cash flows,
the ongoing resilience of demand and supply, disruption to global
supply chains and the impact of the war in Ukraine on the business.
The Audit Committee noted the Group’s ability to raise funds,
with significant oversubscription to the Group’s debt financing
offers, even in challenging markets.
Together, these points allowed the Audit Committee to form an
opinion as to the ability of the Group to remain a going concern
for a period of 12 months from the date of approval of the financial
statements, and make its recommendation to the Board. The Audit
Committee determined this was appropriate given the Group’s
cash flow resilience and strong access to funding markets
when required, and also noted that it was in line with
statutory requirements.
The Audit Committee also considered management’s view of
the Group’s ability to remain viable, for the agreed three-year
period, following the forecast realisation of a number of key risks,
including the possible impacts of climate change, and concluded
that it is appropriate to sign off the Group’s viability statement.
Revenue recognition
There is a risk that revenue could be overstated through
the inclusion of sales which are not in compliance with
the Group’s revenue recognition policy.
Discussions were held with management and the external auditor
which satisfied the Audit Committee that the Group’s criteria for
revenue recognition continued to be appropriate and that the
central monitoring of trade weight at period ends ensured any
material breaches to the Group’s revenue recognition policy
would be both detected and reported to the Audit Committee
and, where applicable, disclosed externally.
The Audit Committee is satisfied that the Group’s policy was
operating effectively. No breaches were found during the year.
Fair, balanced and understandable
The Board is required to state that the Group’s external
reporting is fair, balanced and understandable. The Audit
Committee is requested by the Board to provide advice to
support the assertion.
The Audit Committee received a report from management
summarising the processes that had been undertaken to ensure that
the Group’s external reporting is fair, balanced and understandable.
This included, but was not limited to, the following: (i) a full
document review by the Disclosure Committee, including ensuring
no undue reporting of good news and material information is given
due prominence; (ii) engagement of a cross-functional group of
internal and external subject matter experts and content owners
in the preparation and review of materials, including the ELT,
Group Corporate Communications, Group Finance, Group Internal
Audit, Group Legal, Investor Relations, ESG team and Company
Secretariat; (iii) input and advice from appropriate external
advisers, including the Company’s brokers, legal advisers, and
external audit challenge and scrutiny; (iv) regular research to
identify emerging practice and guidance from relevant regulatory
bodies; and (v) regular meetings involving the key contributors to
the document, during which specific consideration was given to
the fair, balanced and understandable assertion.
During the year the Audit Committee has continued its review of
the use of APMs, including ensuring the appropriate balance of
reported and adjusted measures in the Annual Report, which
included the addition of “Distribution gross profit”, and the removal,
as proposed, of three APMs adopted for FY23 only, relating to the
disposal of the Russia business. After consideration of the Annual
Report against these criteria the Audit Committee recommended to
the Board, which accepted the recommendation, that taken as a
whole the Annual Report is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Company’s position, performance, business model and strategy.
GOVERNANCE, RISK MANAGEMENT
AND INTERNAL CONTROL
Assessing and managing the risks faced by the Group is
fundamental to achieving our strategic objectives,
safeguarding our stakeholders’ interests and protecting the
Group from reputational or legal challenges. This is reflected
in our risk management framework, which ensures significant
risks are identified, managed and monitored.
The Board has responsibility for the oversight of the Group’s
internal control systems, risk management process and
framework. The Board delegates to the Audit Committee
the detailed risk assessment review and assurance over
the operation of the risk management framework.
The Group’s risk management approach is described in the
Principal Risks and Uncertainties section on pages 42 to 45
and is designed to manage, rather than eliminate, the significant
risks the Group may face. Consequently, our internal controls
can only provide reasonable, and not absolute, assurance
over our principal risks.
During the year the Board considered the Group’s “bottom-up”
risk assessment, which included consideration of both current
and emerging risks and issues as discussed in the Principal
Risks and Uncertainties section on pages 42 to 53.
MONITORING THE EFFECTIVENESS
OF RISK MANAGEMENT
The Audit Committee is responsible for oversight of the
ongoing effectiveness of the Company’s approach to risk
management as approved by the Board.
The Board and Audit Committee received regular updates
throughout the year on the continued development of the
Group’s internal control systems, risk management process
and framework, as well as on the results of risk assessments
and internal control effectiveness assessments.
The Board and Audit Committee have been informed of,
and looked at, all significant whistleblowing reports and reported
frauds in the year, including financial, and are comfortable that
none of these gave rise to evidence of systemic non-compliance
with relevant laws and regulations.
The Audit Committee receives presentations from the
Executive on their respective functions. This direct dialogue
with the Audit Committee provides further assurance to the
Audit Committee regarding the effective management of
significant risks to the Group.
Reporting provided to the Audit Committee enables the review
and monitoring of the effectiveness of our risk management
and internal control systems. The Audit Committee has
considered and confirmed to the Board that this is in accordance
with the recommendations of the Code and the FRC Guidance
on Risk Management, Internal Control and Related Financial
and Business Reporting and that such systems were in place
throughout the year and up to the date of the approval of the
financial statements.
INTERNAL AUDIT
Group Internal Audit (GIA) is responsible for providing objective
assurance on the adequacy and effectiveness of the risk
management and internal controls framework.
During the year GIA performed a risk-based audit programme
aligned to the Group’s strategic priorities, resulting in relevant
recommendations and insights to further strengthen the
Group’s control framework.
The Audit Committee reviewed key reports from GIA at each
Audit Committee meeting to monitor the effectiveness of
the control framework and considered the effectiveness
and results of the audits undertaken by GIA, and monitored
management responses to the audit matters raised.
The Audit Committee also met independently with the
Director of Internal Audit to discuss additional insights.
The Audit Committee reviews the effectiveness of GIA
routinely through post-audit surveys and KPI reporting,
and monitors progress on GIA’s own strategic priorities
through updates provided.
The Audit Committee also reviewed and approved the FY25
GIA plan, including the scope, risk coverage and resourcing
model to deliver it.
EXTERNAL AUDIT
The Audit Committee is responsible for oversight of EY as
the Group’s external auditor, agreeing its audit strategy
and related work plan, as well as approving its fees. At the
Committee’s January 2024 meeting, EY set out its external
audit plan for the year, which continued to build on its previous
experience, EY’s continued focus on audit quality and the
feedback it received from management, the Board and the
Audit Committee. EY provided the Audit Committee with an
overview of its evolving audit strategy, tailored to the Group,
including its audit risk assessment, Group audit materiality
and scope, and the key areas of its proposed audit approach.
The Audit Committee considered the external auditor’s feedback,
management letter and half year review. EY also provided
feedback to relevant Group and local management in a
number of debrief sessions and audit close meetings.
The Audit Engagement Letter detailing the provision of statutory
audit and half year review services in respect of FY24 was
considered and approved in a prior year.
The Audit Committee has had regular private meetings with
EY and is satisfied that EY has been given full access and
complete transparency by management throughout the year.
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GOVERNANCE AUDIT COMMITTEE continued
Independence of our external auditor
As part of the continual requirement to ensure the independence
and objectivity of EY as our external auditor, the Audit
Committee maintains and regularly reviews our Auditor
Independence Policy (AIP). This policy, which provides clear
definitions of services that the external auditor may and may
not provide as determined by the FRC’s Revised Ethical
Standard published in December 2019, can be found on our
website at www.imperialbrandsplc.com.
Our AIP requires that the Group Audit Partner rotates after a
maximum of five years. Our FY24 Annual Report and Accounts
represents the fifth year for Marcus Butler, our signing Audit
Partner. Accordingly, a new Group Audit Partner, Kath Barrow,
has been identified for the coming years (subject to the
reappointment of EY by shareholders at our AGM).
Our AIP states that EY may only provide non-audit services
where those services do not conflict with its independence.
It also establishes a formal authorisation process, including
tendering for individual non-audit services expected to
generate fees in excess of £100,000, and prior approval by the
Audit Committee for allowable non-audit work that EY may
perform. Non-audit services are also documented as part of EY’s
pre-concurrence processes under the International Ethics
Standards Board for Accountants (IESBA) Code. Guidelines
for the recruitment of employees or former employees of EY,
and for the recruitment of our employees by EY, are contained
in the AIP.
During the year EY undertook limited non-audit work, all
of which was required by law for the auditor to undertake
and/or assurance or attestation-related. This non-audit work
was awarded to EY due to its knowledge of the Group and it
being deemed best placed to provide effectively the services
required. In the current year, non-audit fees were 11% (2023: 5%)
of total audit-related fees (see note 4). EY did not undertake
any advisory or consultancy work for the Group. Following the
auditor independence reviews during the year, the Audit
Committee concluded that the level of non-audit fees is
appropriate in the light of the above activities and the Audit
Committee does not believe that the objectivity of the external
audit has been impaired as a result of this non-audit work.
To ensure compliance with the AIP, during the year the Audit
Committee carried out four auditor independence reviews,
including consideration of the remuneration received by EY
for audit services, audit-related services and non-audit work.
The Audit Committee also considered reports by both
management and EY, which did not raise any concerns in
respect of EY’s independence, and confirmed that EY maintains
appropriate internal safeguards to ensure its independence
and objectivity. The outcome of these reviews was that
performance of the relevant non-audit work by EY was in
compliance with the policy and was the most cost-effective
way of conducting our business. No conflicts of interest were
found to exist between such audit and non-audit work.
The Audit Committee therefore confirmed that the Company
and Group continue to receive an independent audit service.
AUDIT FEES
In the current year audit fees were £10.5 million
(2023: £10.1 million) (see note 4).
AUDIT QUALITY
The Board and Audit Committee place great importance on
ensuring that the Group receives a high-standard and effective
external audit and any recommendation to re-appoint the
auditor is based on continuing satisfactory performance.
The key tool in assessing the performance of our external auditor
is an audit effectiveness questionnaire. The questionnaire covers
audit scope, planning, quality and delivery, challenge and
communication, and independence, and is completed by
members of the Audit Committee, Logista’s Audit Committee
and senior managers and finance executives from across the
Group. Responses indicated that EY had delivered a high-quality
and effective audit, with no pervasive Group-wide concerns
identified. Based on its consideration of the responses,
together with its own ongoing assessment, for example through
the quality of EY’s reports to the Audit Committee and the
Committee’s interaction with the Group Audit Partner, the
Audit Committee remains satisfied with the efficiency and
effectiveness of the audit.
The FRC Audit Quality review team also carried out a review
of EY’s audit of our consolidated financial statements for 2023
as part of their routine review process. The Audit Committee
has received a full copy of the findings and recognises that
there were no significant findings resulting from the review
and that a number of areas of good practice were highlighted.
The Committee also noted that the FRC rated the majority
of audits carried out by EY as requiring no or only limited
improvements, with none requiring significant improvement.
Audit tender
The external audit was last tendered in 2019. EY was awarded
the audit in February 2019, with a 1 October 2019 start date.
The next time the audit will be tendered will likely be in 2029,
as required by regulation. The Audit Committee continues to
review the independence and the quality of the external audit
to assess whether a tender should be undertaken in advance
of the regulatory requirement. The Committee's current view
is that the current proposed timing is in the best interests of
shareholders since, with the upcoming rotation of the external
audit partner, the Group will receive fresh challenge from a
new lead auditor, while continuing to benefit from an effective
and efficient audit. The Company is in compliance with the
requirements of the Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014.
The Audit Committee recommended to the Board that EY
should be reappointed as external auditor at the next AGM.
STATEMENT OF AUDITORS’ RESPONSIBILITIES
EY is responsible for forming an independent opinion on the
financial statements of the Group as a whole and on the
financial statements of Imperial Brands PLC as presented by
the Directors. In addition, it also reports on other elements of
the Annual Report as required by legislation or regulation and
reports its opinion to members. Further details of EY’s
opinions start on page 135.
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the financial year ended
30 September 2024. Our Report shows how the Policy has been
implemented during FY24 and implementation for FY25.
Shareholders approved our Directors’ Remuneration Policy at
the 2024 AGM with a vote of 95.51%. On behalf of the
Committee I would again like to thank our shareholders and
wider stakeholders for their engagement and support during
the process.
PERFORMANCE CONTEXT
FY24 was the fourth year of the Company’s five-year strategy
launched in 2021. During that period Imperial Brands has been
transformed into a demonstrably stronger business, delivering
returns to shareholders over this period of 78.7%. Investment
in consumer capabilities, simplified and more efficient
operations, and a transformed performance culture, have
translated into strong financial results and capital returns to
shareholders.
2024 marked another year of strong operational and financial
delivery. Aggregate weighted market share grew across our
five priority markets in line with the Group’s strategic
objective while achieving strong pricing and net revenue
growth. In next generation products, net revenue increased
26% at constant currency with growth across all regions and
categories to build scale and improve gross margins. This
supported full year adjusted operating profit growth and cash
generation in line with the Group’s medium-term guidance.
The Company’s disciplined approach to capital allocation over
the past three years has underpinned investment in the
business, a strong and efficient balance sheet and a track
record of capital returns with three-year cumulative returns of
£6 billion including share buybacks and dividends. Total
shareholder return since the strategy was launched in
January 2021 was 78.7% as of 30 September 2024, significantly
outperforming the FTSE 100 market, up 42.7% as at the same
date.
The Board looks forward to continuing its work on the next
phase of the strategy in the coming months.
TOTAL SHAREHOLDER RETURN PERFORMANCE
SINCE FIVE-YEAR STRATEGY LAUNCHED1
ANNUAL STATEMENT FROM
REMUNERATION COMMITTEE CHAIR
Committee focus in 2024
• Ensuring remuneration continues to support the
Group’s strategy and performance metrics operate as
intended
• Attraction and retention of high-performing
individuals in a competitive global marketplace
• Remuneration and terms for new members of the
Executive Leadership Team
• Review of wider workforce reward considerations
Looking ahead to 2025
• Ensure remuneration continues to support delivery of
the final year of the Group’s existing five-year strategy
and alignment with the next strategic phase
• Review wider workforce reward strategy to ensure
alignment with strategy, purpose, values and overall
people strategies
• Retention and incentivisation of our international
Executive Leadership Team
• Impact of forthcoming EU Pay Transparency
regulations on remuneration
Key sections of this report are as follows:
Annual Statement
115
Remuneration at a glance
118
Summary of Directors’ Remuneration Policy and
implementation in FY25
119
Annual Report on Remuneration
120
Remuneration earned for FY24
120
Determination of FY24 Annual Bonus and LTIP
121
Executive share ownership and Directors’ interests
123
Comparison with employees’ remuneration
125
CEO pay ratio
126
Remuneration Committee membership and duties
128
GOVERNANCE REMUNERATION REPORT
0
40
80
120
160
200
2021
2022
2023
2024
1. Shows value of £100 invested in the Company from the launch of our five year
strategy up to financial year end 30 September 2024.
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115
IMPLEMENTATION FOR FY25
The annual salary review is effective from 1 October 2024.
Salary increases awarded to employees for FY25 will typically
range from 2% to 7% across the markets we operate in
(excluding higher increases made in countries experiencing
hyperinflation). Our budgeted average increase for the UK
workforce is 3.4% for FY25.
In setting the salary for the Executive Directors, the
Committee took into consideration the approach taken for
colleagues, performance and contribution, and the impact
on total remuneration.
After careful consideration, the Committee decided to award a
salary increase of 3.4% to both Stefan and Lukas, aligned to our
average UK workforce increase. The increases reflect the
strong performance and contribution from both our Executive
Directors during the year. Stefan’s new salary is £1,447,637 pa
and Lukas’ new salary is £816,413 pa.
The Committee considers carefully the measures and targets
for FY25 across both the Annual Bonus and LTIP, and has
sought to ensure a set of metrics that balance key financial
measures, continued growth in NGP and commitment to our
long-term sustainability goals, recognising that we continue to
operate in an uncertain and challenging macroeconomic and
geopolitical environment.
The Annual Bonus performance metrics for FY25 will be:
organic adjusted operating profit at constant currency (40%
weighting), market share growth (15% weighting), cash
conversion (15% weighting), ESG/NGP consumer health (10%
weighting) and individual/strategic objectives (20% weighting).
The FY25 LTIP will be granted in February 2025. The measures
for the FY25 award will be: organic adjusted EPS growth at
constant currency (weighting 40%), relative TSR (weighting 20%),
return on invested capital (weighting 15%), cumulative free cash
flow measure (weighting 15%), and ESG climate change
(weighting 10%).
FY25 is the last year of our five-year strategy. In the coming
months the Board will therefore be developing and approving
the plan for the next strategic phase. For the forthcoming FY25
award, in order to allow targets to be aligned to our new strategy,
these will be set following finalisation of the strategic plans.
We will be announcing our strategy for the next five years on
26 March 2025 and that LTIP targets for the FY25 award will be
published on our website shortly thereafter.
CHAIR FEES
The Committee reviewed and approved a 3.4% fee increase for
the Company Chair. Thérèse Esperdy’s fee will be £686,866 pa
from 1 October 2024.
WORKFORCE ENGAGEMENT DURING THE YEAR
The Committee was directly involved in the Board’s employee
engagement programme which is described in more detail on
pages 101 and 106. Our employee engagement sessions are a
valuable way of having open conversations on the themes of
the Board’s agenda for the year, which have included
Imperial’s organisational transformation, our strategy, market
challenges, and regulatory developments. As we have done in
previous years, we also specifically explored the topic of
reward, hearing participants’ views on a range of reward
topics covering the alignment of performance and reward,
executive pay principles, rewarding ethical and responsible
behaviours, DEI and ESG in reward and the approach taken in
locations where there are ongoing social and economic
challenges. I have been encouraged by, and appreciate, the
continued level of openness, engagement and interest shown
by our colleagues in these regular sessions and would like to
thank them for their valued contribution.
CONCLUSION
As Imperial Brands enters the final year of our current
strategy, we are proud of the progress we have made and the
value created for our stakeholders. As we look to develop the
next phase of our strategy, the Committee will continue to
monitor the effectiveness of our policy in retaining and
incentivising a world-class Executive Leadership Team.
Finally, I should like to thank my fellow Committee members
for their support throughout the year and to welcome Julie
Hamilton who joined the Committee from 1 October 2024.
Should you have any questions or feedback, please get in
touch with me at RemcoChair@impbrands.com. We hope that
you will support the Annual Report on Remuneration at our
AGM.
Sue Clark
Chair of the Remuneration Committee
GOVERNANCE REMUNERATION REPORT continued
SUPPORTING OUR COLLEAGUES
While there continues to be macroeconomic volatility across
the globe, during FY24 we did see a slowing down of the
inflationary environment. The Committee has continued to
monitor the impact of a landscape that remains very
challenging on our workforce in certain locations, with a
number of targeted actions taken in FY24 to support our
colleagues in these countries.
Annual salary budgets for FY25 have been determined taking
both wage and price inflation into account. Across the
countries we operate in, this year salary increases will
typically range from 2% to 7% (excluding higher increases
made in countries experiencing hyperinflation), with average
increases in the UK at 3.4% for FY25.
REMUNERATION OUTCOMES FOR FY24
Annual Bonus plan
The FY24 Annual Bonus was based on stretching financial
measures with 40% based on adjusted operating profit, 15% on
adjusted operating cash conversion, 15% on market share, and
10% on NGP/consumer health (NGP net revenue). Strategic
objectives formed the remaining 20% of the bonus.
Adjusted operating profit grew 4.6%, driven primarily by an
improved profitability in tobacco and NGP and growth in
Distribution. Working capital improvements contributed to an
adjusted operating cash conversion of 100%. Our cash flow
position has supported the business in maintaining
investment and shareholder returns. Our aggregate market
share in our priority markets was +5bps higher than FY23,
with four out of our five priority markets having grown with
strong pricing continuing to support our financial delivery.
NGP net revenue delivered strong growth of +26.4%, driven by
growth across all categories and geographies with the US
region back to growth.
The cash conversion and market share targets were met in
full, while NGP net revenue and adjusted operating profit
targets were achieved in part.
The Executive Directors performed exceptionally well against
specific and quantifiable strategic objectives. For Stefan
Bomhard, achievements included strong progress in building
a sustainable NGP business and outperformance of targets in
all global markets including in Europe and AAACE; successful
launch of the Zone brand in the US; continuing company
transformation including improved global processes and
digital strategies; and progressing the strategic plan
preparation for FY26-30. Lukas Paravicini’s achievements
against objectives included significant progress in driving
working capital reductions, delivery of effective risk
adjustment funding and continuing company transformation
through developing our internal finance talent and business
resilience and productivity.
In aggregate, as a percentage of maximum, Stefan received a
bonus of 83.8% and Lukas received a bonus of 83.8%. Further
details on performance measures and achievements against
targets are shown on page 121. Stefan Bomhard has met his
shareholding guideline in full and therefore the Committee
determined 25% of his bonus will be deferred into Imperial
Brands shares for three years. For Lukas Paravicini, 50% of his
bonus will be deferred for three years.
The Committee believes this outcome reflects fairly the
performance of the business during the year. No discretion has
been applied by the Committee.
Long-Term Incentive Plan
The LTIP awards made in February 2022 were subject to EPS
(40%), net debt/EBITDA (20%), ROIC (20%), and TSR (20%)
performance conditions.
The Committee considered the performance outturns against
the targets set.
As a Committee we believe it is appropriate to exercise
judgement in certain circumstances, to ensure that
performance metrics operate as originally intended and
deliver out-turns that are fair to both shareholders and
management. In line with the original terms of the award, the
Committee considers potential adjustments in respect of
significant events that could not have been anticipated at the
time the targets were set and which have a distorting impact
on out-turns. The intention is to ensure that vesting outcomes
reflect genuine underlying business performance.
The UK Mini Budget on 23 September 2022 significantly
disrupted foreign currency markets, impacting the year-end
valuation of intangible assets as at 30 September, which are
determined on a spot price basis. For a short number of days,
the £:EUR and £:$ rates fell sharply and subsequently recovered.
This unforeseen volatility event had a very significant impact
on ROIC due to the proximity of timing to our September year
end, negatively impacting the ROIC measure. The Committee
therefore determined that it would be appropriate to measure
ROIC based on average FX rate in the calculation of the out-turn.
This also aligns to the methodology under our financial gearing
covenants which allow for the use of average FX rates where the
impact of extreme events has a distorting impact on spot rate
calculations. The impact of this decision was to increase vesting
for the ROIC element from 0% to 13.0%, out of an overall weighting
of 20% of the award. The Committee is satisfied that this partial
vesting is a fair reflection of performance over the period.
Overall three-year average ROIC was 19.13% which was an
improvement of over 100 basis points (on both the spot and
average FX basis) versus the prior three-year average out-turn,
reflecting Imperial Brands strong performance against this
measure.
In line with the Committee’s approach since the
announcement of the share buyback programme and
consistent with best practice, the Committee excluded the
benefit of the share buyback on vesting of the EPS element.
This methodology resulted in a reduction in EPS used for the
LTIP calculation versus our reported actual EPS.
Further adjustments were made to exclude the impact of
certain acquisitions and disposals during the period, including
the Logista and US OND acquisitions and disposal of our
Russian operations. The approach taken was in line with the
Committee’s agreed principles of consideration of acquisitions
and disposals on a case-by-case basis, to ensure out-turns are
a fair reflection of performance and strategy delivery to date.
The treatment of cash flows, which has an impact on net debt,
was aligned to our auditor approved policy on the adjustment
of certain material, non-recurring items, which in this case
related to inherited, historic tax litigations. Further details of
all adjustments and methodology are provided on page 122.
The EPS elements vested at 28.6% out of 40% weighting, and
the net debt/EBITDA vested at 12.9% out of the 20% weighting.
Under the TSR element, Imperial was ranked 2/24 against the
FMCG peer group, therefore this element vested in full.
The Committee confirmed that 74.5% of the overall maximum
award will vest. The Committee is satisfied that the overall
vesting fairly reflects the Company’s performance during the
three-year period and the wider experience of our stakeholders.
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117
Stefan Bomhard
Lukas Paravicini
Fixed pay
Annual Bonus
LTIP
21%
18%
31%
26%
48%
56%
62.7%
100.0%
100.0%
86.7%
100.0%
100.0%
83.8%
83.8%
71.6%
64.6%
65.0%
100.0%
74.5%
GOVERNANCE REMUNERATION REPORT continued
SUMMARY OF DIRECTORS’ REMUNERATION POLICY AND IMPLEMENTATION IN FY25
Our Directors’ Remuneration Policy was approved by shareholders at our AGM held on 31 January 2024 with a vote of 95.51%.
The below summarises the policy and how we intend to implement pay arrangements for FY25. A full version of the policy
can be found on pages 147 to 153 of our Annual Report and Accounts 2023 available on the Company website.
Element
Implementation for FY25
Salary
Increases generally effective from 1 October.
Set considering Company and individual performance, role
and responsibility changes, peer market data and general
increases for wider workforce.
Base salary as at
Oct 23
Oct 24 base
increase %
Base salary as at
Oct 24
Stefan Bomhard
£1,400,036
3.4%
£1,447,637
Lukas Paravicini
£789,568
3.4%
£816,413
Increases for the workforce typically ranged from 2% to 7%, with
average increases for the UK workforce at 3.4%.
Pension
Provision in line with other employees.
The maximum pension contribution or allowance for Executive
Directors will be aligned with the workforce (currently 14% of salary).
Benefits
Car (or cash allowance in lieu), health insurance, life
insurance and income protection insurance. Other benefits
may be provided on the basis they are also available to the
wider workforce.
Implementation in line with policy.
Annual Bonus
Maximum opportunity: 200% of base salary.
Subject to performance measures to reflect Group KPIs.
50% deferred into an award of shares for three years, up
until the minimum shareholding guideline of 300% of gross
base salary has been met. Once met, the Committee may
determine that a lower portion is deferred into shares
(subject to a minimum deferral of 25%).
Malus and clawback provisions are in place.
Measures and weightings
Adjusted operating profit growth at constant currency
40%
Adjusted operating cash conversion
15%
Weighted market share growth
15%
ESG – Consumer health/NGP revenue
10%
Strategic/individual
20%
Underlying targets are commercially sensitive and will be fully
disclosed in next year’s Annual Report
Long-Term Incentive Plan
Maximum opportunity: CEO: 350% of base salary, CFO 250%
of base salary.
Performance period of three financial years.
Retention of net-of-tax number of vested LTIP award shares
for two years post vesting.
Malus and clawback provisions are in place.
Measures and weightings
Adjusted EPS growth at constant currency
40%
Return on invested capital (ROIC)
15%
Cumulative free cash flow (CFCF)
15%
Relative TSR
20%
ESG – Climate change
10%
FY25 is the last year of our five-year strategy and as such the
three-year performance period for the FY25 award will extend
beyond the current strategy. In order to align targets to our new
strategy, these will be set following strategy announcement on
26 March 2025. Targets will be published on the Company’s
website.
Shareholding requirement
Expected to build a holding in the Company’s shares to a
minimum value of 300% of base salary.
Requirement to hold shares after cessation of employment
to the value of the shareholding guideline (or the existing
shareholding if lower at the time) for a period of one year,
with the requirement reducing to half the shareholding
guideline for the second year.
Implementation in line with policy.
TIME HORIZONS FOR REMUNERATION
Year 1
Year 2
Year 3
Year 4
Year 5
Fixed pay
Annual Bonus plan
One-year performance
Portion deferred into shares for three years
Long-Term Incentive Plan
Three-year performance period
Two-year holding period
REMUNERATION AT A GLANCE
EXECUTIVE DIRECTORS’ VARIABLE REMUNERATION OUTCOMES FOR 2024
Maximum %
of bonus/
LTIP
Out-turn as a %
of maximum
bonus/LTIP
% of weighting achieved
Annual
Bonus
Adjusted operating profit growth at constant currency
40%
25.1%
Adjusted operating cash conversion
15%
15.0%
Weighted market share growth
15%
15.0%
ESG – Consumer health/NGP revenue
10%
8.7%
Strategic/individual – Stefan Bomhard
20%
20.0%
Strategic/individual – Lukas Paravicini
20%
20.0%
Total
Stefan Bomhard
100%
83.8%
Lukas Paravicini
100%
83.8%
Long-Term
Incentive
Plan
Adjusted EPS growth at constant currency
40%
28.6%
Adjusted net debt/EBITDA
20%
12.9%
Return on invested capital (ROIC)
20%
13.0%
Relative TSR
20%
20.0%
Total
100%
74.5%
OUR EXECUTIVE PAY PRINCIPLES
• To attract and retain the very best global talent
• To reward executives well for maximising shareholder returns sustainably and delivering long-term quality growth that
benefits all our stakeholders
• To motivate executives to consistently perform to the best of their ability
• To reinforce the behaviours that support our values
• To align executive reward with the experience of our shareholders through encouraging share ownership and an
“ownership” mindset
• To balance restraint with fair reward for contribution, in the way we reward executives, as we do for the wider workforce
(£,000)
Stefan Bomhard
Lukas Paravicini
Base salary
£1,400
£790
Benefits and pension
£213
£113
Total fixed pay
£1,613
£903
Annual Bonus
£2,346
£1,323
LTIP1
£5,123
£2,051
Total remuneration
£9,082
£4,277
TOTAL SINGLE FIGURE IN 2024
2024 PERFORMANCE HIGHLIGHTS
ADJUSTED
EPS
+10.9%
NGP NET
REVENUE
+26.4%
£1.0BN
SHARE
BUYBACK IN
2024
INCREASED
DIVIDEND
+4.5%
CASH
CONVERSION
OF 100%
ADJUSTED
NET DEBT
TO EBITDA
OF 1.8X
1. The LTIP figure in the table includes the gain made under the Sharesave Plan during the year for Stefan Bomhard.
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119
GOVERNANCE REMUNERATION REPORT continued
Chair and Non-Executive Directors’ fees
Increases generally effective from 1 October.
Reimbursement of business-related
expenses and reasonable benefits. An
allowance may be paid when regular
intercontinental travel is required.
With effect from 1 October 2024
Chair’s fee will increase from £664,280 to £686,866 pa.
The Board, excluding Non-Executive Directors, reviewed NED fees during the year,
taking into account increasing time commitments and responsibilities of
Non-Executive Directors, and ensuring that fees are at an appropriate level for a
large, multinational company with a diverse and international board.
NED base fee will increase from £87,305 to £90,000 pa.
Senior Independent Director fee will increase from £28,500 to £30,000 and chairs
of the Remuneration and Audit Committees’ fees will increase from £28,500 to
£37,500 pa reflecting increased time commitment and responsibility.
Committee membership fees will increase from £5,500 to £10,000 pa and a
membership fee will be introduced for the expanded People, Governance &
Sustainability (PGS) Committee (Page 104 for further details on the PGS
Committee).
ANNUAL REPORT ON REMUNERATION
The Annual Report on Remuneration has been split into the following sections:
1. The remuneration earned by our Directors for the financial year ended 30 September 2024
2. Details of share awards granted, share interests held and historical CEO total single figure versus shareholder returns
3. How Directors’ remuneration compares with employee pay including the CEO pay ratio, our relative spend on pay and current dilution
4. Remuneration Committee membership and work undertaken during the year, details of advice received and consideration of
shareholders’ views
1. REMUNERATION EARNED BY OUR DIRECTORS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
Single Total Figure of Remuneration for each Director (Audited)
Executive Directors
Year
Salary £’000
Benefits
£’0001
Pension
£’0002
Total fixed pay
Annual Bonus
£’0003
LTIP £’0004
Other £’0005
Total variable
pay
Total pay
Stefan Bomhard
2024
1,400
17
196
1,613
2,346
5,117
6
7,469
9,082
2023
1,340
16
188
1,544
1,919
5,437
–
7,356
8,900
Lukas Paravicini
2024
790
2
111
903
1,323
2,051
–
3,374
4,277
2023
752
4
105
861
1,062
2,226
–
3,288
4,149
Total
2024
2,190
19
307
2,516
3,669
7,168
6
10,843
13,359
Total
2023
2,092
20
293
2,405
2,981
7,663
–
10,644
13,049
1. Stefan Bomhard received an annual car allowance of £15,000. Lukas Paravicini received a company car; Stefan Bomhard received private medical insurance and Lukas
Paravicini received a health cash plan.
2. Each individual received a cash supplement of 14% of salary in lieu of membership of the pension fund.
3. Annual Bonus for the year ended 30 September 2024. As the CEO has met his shareholding guideline, the Committee determined that 25% of his bonus earned for FY24 will
be deferred into shares for three years. 50% of the CFO’s bonus for FY24 will be deferred into shares for three years.
4. LTIP represents the value of the FY22-24 LTIP awards with a performance period ended on 30 September 2024. As these awards do not vest until February 2025 they are
based on a share price of £21.45, being the three-month average to 30 September 2024, and an estimate of dividend roll-up based on announced dividend payable on
31 December 2024. Of the FY22-24 LTIP value shown, £868k and £348k relates to share price appreciation for Stefan Bomhard and Lukas Paravicini respectively. The LTIP
value for FY23 has been restated to reflect the actual vesting value as at 15 February 2024.
5. For Stefan Bomhard “Other” represents the gain from the FY21 Sharesave which matured on 1 August 2024.
Non-Executive Directors
Fees £’000
Taxable benefits1
Total
2024
2023
2024
20232
2024
2023
Thérèse Esperdy
664
639
61
50
725
689
Sue Clark2
150
144
2
2
152
146
Diane de Saint Victor
93
89
2
3
95
92
Ngozi Edozien3
105
101
13
–
118
101
Andrew Gilchrist3
105
59
20
–
125
59
Alan Johnson
93
89
6
3
99
92
Bob Kunze-Concewitz
93
89
3
3
96
92
Julie Hamilton3, 4
67
–
19
–
86
–
Jon Stanton5
121
117
1
1
122
118
Total
1,491
1,327
127
62
1,618
1,389
1. Benefits in kind for Non-Executive Directors relate to the reimbursement of travelling expenses to meetings held at the Company’s registered office, and assistance
towards tax advisory services for non-UK based Non-Executive Directors.
2. Includes payments in respect of Senior Independent Director of £28,500 and Chair of the Remuneration Committee fees of £28,500 pa respectively.
3. Ngozi Edozien and Andrew Gilchrist’s amounts include a payment of £12,000 (full year) and Julie Hamilton’s amount includes a payment of £7,000 (February to September)
in respect of a non-European travel allowance in recognition of the extra time commitment required for travel.
4. Julie Hamilton was appointed to the Board on 31 January 2024.
5. Includes payment in respect of chair of the Audit Committee fees of £28,500 pa.
The aggregate remuneration of all Executive and Non-Executive Directors under salary, fees, benefits, cash supplements in lieu of
pensions, Annual Bonus and LTIP was £14,977k (2023 restated: £14,438k).
No Director is eligible to participate in the closed defined benefit pension fund. Each Director eligible for membership of the
defined contribution pension fund has opted to receive a cash supplement in lieu and therefore, no pension disclosure is required.
Determination of 2024 Annual Bonus (Audited)
The 2024 Annual Bonus was based on a scorecard of measures. Details of the measures, their weightings, targets and extent of
achievement are set out in the table below.
Measure
Weighting
Cut-in
Target
Max
Achievement
Payout
Adjusted operating profit at constant currency
40%
1.0%
4.5%
6.0%
4.6%
25.1%
Adjusted operating cash conversion
15%
90%
93%
100%
100.0%
15.0%
Weighted market share
15%
-3bps
+1bps
+5bps
+5bps
15.0%
Consumer health – NGP net revenue (£m)1
10%
283
311
347
335m
8.7%
Strategic/individual – Stefan Bomhard
20%
–
–
–
100%
20.0%
Strategic/individual – Lukas Paravicini
20%
–
–
–
100%
20.0%
Total bonus Stefan Bomhard
100%
83.8% of max
Total bonus Lukas Paravicini
100%
83.8% of max
1. At constant currency.
The Committee set the following strategic goals for the Executive Directors:
Strategic/individual measures and targets
Performance assessment highlighting key achievements
Stefan Bomhard
• Build a sustainable NGP
business (10%)
• Growth metrics achieved across all NGP categories and regions, delivering
market leading performance
• Global NGP net revenue targets exceeded, with strong achievement in Europe
and AAACE markets
• Exceeded total vape share target for FY24 in our largest vapour market (UK)
• Significant increase in heated tobacco sales versus FY23, including achievement
of market share objectives in largest markets
• Successful launch of Zone, with net revenue and operating profit targets exceeded
• Continue company and
culture transformation
(5%)
• Unify programme successfully launched in the UK and Ireland
• Sales force excellency programmes successfully implemented, including in the US
• Enhancement of global processes and digital strategies with technology, Global
Business Services and ERP delivered in line with budget
• Meaningful progress made in DE&I KPIs
• Progress on next
strategic plan preparation
(FY26-30) (5%)
• Completion of 10-year strategic market development assessment and
progression of the next phase of the strategic plan
• Acceleration options for next phase of NGP strategy developed in July 2024
Total payout as a % of maximum bonus: 83.8%
Lukas Paravicini • Drive shareholder
value (10%)
• Average working capital reduction of £180 million across Australia, USA, UK,
Germany and Morocco achieved, significantly exceeding the target reduction
• Global IT and Unify operating expenditure and capex delivered in line with targets
• Cost of risk adjusted funding achieved below the maximum cost of funding target
• Delivery of profitable NGP growth, with Group growth in line with target, and
outperformance in our largest market (Europe)
• Continue company
transformation (10%)
• Sustained strong Finance, IT (FIT) engagement against evolved operating model,
with PL Index rising to 84% (+8pp vs FY23)
• Completed the build of refreshed FIT leadership team to drive the business forward
• FIT Business Partner impact on-market stakeholders strengthened with a 7+/10
score in all areas
• Successfully rolled out Unify transformation initiative, with UK & Ireland go live
of Unify on track
• Improved productivity across FIT with 5% productivity gains vs FY21
• Improved business resilience and effective risk management framework in
place, with Chief Information Security Officer (CISO) organisation and
cybersecurity training performed
Total payout as a % of maximum bonus: 83.8%
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121
GOVERNANCE REMUNERATION REPORT continued
Individual Annual Bonus payments:
Executive Directors
Total Annual Bonus £’000
Maximum
Actual1
Stefan Bomhard
£2,800
£2,346
Lukas Paravicini
£1,579
£1,323
1. As the CEO has met his shareholding guideline, the Committee determined that only 25% of his bonus earned for FY24 will be deferred into shares for three years. 50% of
the CFO’s bonus for FY24 will be deferred into shares for three years.
Long-Term Incentive Plan awards vesting (Audited)
Performance awards vesting in February 2025 are based on performance measured over the three-year period ended
30 September 2024.
The Committee considers it appropriate to exercise judgement in certain circumstances to ensure that performance metrics
operate as originally intended. The UK Mini Budget on 23 September 2022 significantly disrupted foreign currency markets,
impacting the year-end valuation of intangible assets as at 30 September, which are determined on a spot price basis. For a short
number of days, the £:EUR and £:$ rates fell sharply and subsequently recovered. This unforeseen volatility event had a very
significant impact on ROIC due to the proximity of timing to our year end, negatively impacting the ROIC measure. The Committee
therefore determined that it would be appropriate to measure ROIC based on an average FX rate in the calculation of the out-turn.
This also aligns to the methodology under our financial gearing covenant which allow for the use of average FX rates where the
impact of extreme events has a distorting impact on spot rate calculations.
In line with best practice, the methodology excludes the benefit of share buybacks on vesting of the EPS element. Further
adjustments were made in line with our existing principles around case-by-case consideration of acquisitions and disposals, and
the treatment of cash flows was aligned to our auditor-approved Alternative Performance Measures (APM) policy in relation to
certain material, non-recurring items.
Measure
Weighting
Cut-in
(25% vesting)
Target
(60% vesting)
Maximum
(100% vesting)
Actual
performance
Percentage of
award vesting
Adjusted EPS growth at constant currency
(average annual growth)
40%
3.7%
4.6%
5.6%
4.9%
28.6%
Adjusted net debt/EBITDA (for FY24)
20%
1.46
1.37
1.28
1.36
12.9%
Return on invested capital (ROIC) (average annual)
20%
18.7%
19.1%
19.5%
19.13%
13.0%
Relative TSR (return over three financial years)
20%
Median
n/a
Upper quartile
2/24
20.0%
Achievement
74.5%
Adjusted EPS excludes the impact of share buybacks and associated financing costs.
Due to the impact of the UK Mini Budget on 23 September 2022, which significantly disrupted foreign currency markets and
impacted the year-end valuation of intangible assets as at 30 September 2022 which are determined on a spot price basis, an
average FX rate was used in the calculation of the out-turn. This aligns to the methodology under our financial gearing covenants
which allow for the use of average FX rates where the impact of extreme events have a distorting impact on spot rate calculations.
The impact of this decision was to increase vesting for the ROIC element from 0% to 13.0%, out of an overall weighting of 20% of the
award.
In respect of acquisitions and disposals made during the period, the Committee applied its agreed principles of consideration on a
case-by-case basis. The methodology applied adjusted out the impact of the disposal of the Russian operations and the US OND
and Logista acquisitions from the EPS and net debt/EBITDA metrics.
An adjustment was made in respect of a cash outflow relating to inherited, historic tax litigations carried on the balance sheet.
This was to align it to the treatment under our auditor approved Alternative Performance Measures (APM) policy in relation to
distorting non-recurring items.
The TSR measure compared the Company’s performance against the following companies: Altria Group, Anheuser-Busch InBev,
British American Tobacco, Brown-Forman, Carlsberg, Carnival, Clorox, Constellation Brands, Diageo, Heineken, Henkel, Japan
Tobacco, Kimberly-Clark, Kirin Holdings, L’Oréal, Monster Beverage, Pernod Ricard, PepsiCo, Philip Morris International, Procter &
Gamble, Reckitt Benckiser Group, Unicharm and Unilever PLC.
Vested awards are subject to a two-year holding period.
Payments for loss of office and payments to former Directors (Audited)
No payments to report.
2. DETAILS OF SHARE AWARDS GRANTED, SHARE INTERESTS HELD AND HISTORICAL CEO TOTAL SINGLE
FIGURE VERSUS SHAREHOLDER RETURNS
Performance awards granted during the year (Audited)
When determining the Directors’ awards, the Committee took into account the prevailing share price performance over the year
and the number of shares awarded as a result.
Date of grant
Share price1
Number of
nil-cost options
Face value
Amount of
base salary
End of performance period
Stefan Bomhard
15 February 2024
£18.92
258,991
£4,900,110
350%
30 September 2026
Lukas Paravicini
15 February 2024
£18.92
104,329
£1,973,905
250%
30 September 2026
1. Valued using the closing share price the trading day prior to grant.
The targets for the above performance awards are as follows:
Measure
Weight
Minimum performance (25% vesting)
Maximum performance (100% vesting)
Cut-in
Max
Adjusted EPS growth at constant currency
40%
3.9%
5.8% or higher
Return on invested capital (ROIC) (average annual)
15%
19.1%
21.9% or higher
Cumulative free cash flow (CFCF) (£m)
15%
5.9bn
7.5bn or higher
Relative TSR
20%
Median
Upper quartile
ESG – Scope 1 & 2 emissions reduction
5%
70%
75%
ESG – Energy reduction
5%
4.5%
7.5%
Adjusted EPS excludes the impact of share buybacks and associated financing costs.
The TSR comparator group comprises the following companies: Altria Group, Anheuser Busch InBev, British American Tobacco,
Carlsberg B, Coca Cola Company, Constellation Brands, Diageo, Heineken, Japan Tobacco, Kimberly-Clark, Kirin Holdings, L’Oreal,
Monster Beverage, Pernod Ricard, PepsiCo, Philip Morris International, Procter & Gamble, Reckitt, Unicharm, and Unilever.
Each measure operates independently and is capable of vesting regardless of the Company’s performance in respect of the other
metrics. The Committee retains discretion to adjust up or down including to zero the number of shares that vest taking into account
a number of factors including personal or corporate performance and circumstances that were unforeseen at the date of grant.
SHARE INTERESTS AND INCENTIVES (AUDITED)
Shares held at
30 September
2023
Shares held at earlier of
30 September 2024 and
leaving date
Dividends
reinvested post
year end
Conditional awards and options held at earlier of
30 September 2024 and leaving date
Options
exercised during
the year
Owned
outright1
Subject to a
holding period
Owned
outright
Awards
unvested and
subject to
performance
conditions
Awards
unvested and
subject to
continued
employment
Options
unvested and
subject to
continued
employment
Vested but not
exercised
Executive Directors
Stefan Bomhard
134,955
244,772
201,688
627
746,511
158,517
581
–
297,683
Lukas Paravicini
21,618
64,887
64,185
670
297,056
70,150
–
–
121,592
Non-Executive Directors
Thérèse Esperdy2
61,729
61,861
–
21
–
–
–
–
–
Sue Clark
8,040
8,628
–
22
–
–
–
–
–
Diane de Saint Victor
625
6,737
–
68
–
–
–
–
–
Ngozi Edozien3
621
644
–
3
–
–
–
–
–
Andrew Gilchrist4
3,238
6,238
–
0
–
–
–
–
–
Alan Johnson
984
1,061
–
0
–
–
–
–
–
Bob Kunze-Concewitz
50,974
50,974
–
0
–
–
–
–
–
Julie Hamilton5
0
500
–
0
–
–
–
–
–
Jon Stanton
3,260
3,402
–
20
–
–
–
–
–
1. The number of shares owned outright includes those shares subject to a holding period.
2. Thérèse Esperdy’s shares are in the form of American Depositary Receipts.
3. Ngozi Edozien’s share amount of 644 includes 353 American Depositary Receipts.
4. Andrew Gilchrist’s shares are in the form of American Depositary Receipts.
5. Julie Hamilton was appointed to the Board on 31 January 2024. Julie’s shares are in the form of American Depositary Receipts.
6. There have been no changes in Director share figures reported in the table above, between 30 September 2024 and the date this report was signed, other than the dividend
reinvestment post year end figures included in the table.
Our middle market share price at the close of business on 30 September 2024, being the last trading day of the financial year, was
£21.73 and the range of the middle market price during the year was £15.80 to £22.57.
Full details of the Directors’ share interests are available for inspection in the Register of Directors’ Interests at our registered office.
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122
123
30-Sep-24
30-Sep-23
30-Sep-22
30-Sep-21
30-Sep-20
30-Sep-19
30-Sep-18
30-Sep-17
30-Sep-16
30-Sep-15
30-Sep-14
Imperial Brands
FTSE 100 Return Index
Index value
60
80
100
120
140
160
180
200
GOVERNANCE REMUNERATION REPORT continued
EXECUTIVE SHAREHOLDINGS (AUDITED)
Shares held at
start of year1
Shares held at
end of year1, 2
Increase in
shares held
during year
Value of shares
held at start of
year3 £’000
Value of shares
held at end of
year4 £’000
Difference in
value £’000
Shareholding
required
(% salary)
Current
shareholding
(% salary/fees)
Requirement
met – pro
rata basis5, 6
Requirement
met – in full5, 6
Executive Directors
Stefan Bomhard5
134,955
328,786
193,831
2,250
7,145
4,895
300
510
Yes
Yes
Lukas Paravicini6
21,618
102,067
80,449
360
2,218
1,858
300
281
Yes
No
1. Shares held is inclusive of shares owned outright, those vested but subject to a holding period awarded, including shares awarded under the Deferred Share Bonus Plan
being the deferred element of the Annual Bonus.
2. Or date of leaving if earlier.
3. Based on a share price of £16.67, being the closing price on 29 September 2023.
4. Based on a share price of £21.73, being the closing price on 30 September 2024.
5. Stefan Bomhard joined the Board on 1 July 2020 and has satisfied his obligation to build his shareholding to 300% of his salary within five years.
6. Lukas Paravicini joined the Board on 1 May 2021 and has five years to build to his shareholding requirement.
REVIEW OF PAST PERFORMANCE
The chart below shows the value of £100 invested in the Company on 1 October 2014 compared with the value of £100 invested in
the FTSE 100 Index for each of our financial year-ends to 30 September 2024. We have chosen the FTSE 100 Index as it provides the
most appropriate and widely recognised index for benchmarking our corporate performance over a 10-year period.
Total shareholder return performance
CHANGE IN CHIEF EXECUTIVE OFFICER REMUNERATION
2024
Stefan
Bomhard
2023
Stefan
Bomhard
2022
Stefan
Bomhard
2021
Stefan
Bomhard
2020
Stefan
Bomhard
2020
Joerg
Biebernick
2020
Dominic
Brisby
2020
Alison
Cooper
2019
Alison
Cooper
2018
Alison
Cooper
2017
Alison
Cooper
2016
Alison
Cooper
2015
Alison
Cooper
Total remuneration
£’000
9,082
8,900
5,432
3,421
1,104
963
943
448
2,137
3,935
4,657
5,404
3,637
Annual Bonus
as a percentage
of maximum
83.8
71.6
84
64.1
401
401
401
401
312
87
60
72
80
Shares vesting
as a percentage
of maximum
74.5
85
19.83
30.84
nil
nil
nil
nil
nil
20
44.4
45.7
15.8
1. 48.4% was the formulaic out-turn; however, the Remuneration Committee accepted the CEO’s recommendation and used its discretion to reduce this to 40%.
2. 51% was the formulaic out-turn; however, the Remuneration Committee used its discretion and reduced this to 31%.
3. Relates to vesting of Long-Term Incentive Plan (excluding Recruitment Award).
4. Relates to vesting of Recruitment Award based on performance criteria of former employer.
3. HOW DIRECTORS’ REMUNERATION COMPARES WITH EMPLOYEES’ REMUNERATION
There is a strong alignment between how we approach pay for our Executive Directors and the wider workforce, with a focus on
performance-related pay and similar performance metrics in our Annual Bonus and LTIP. Our reward packages are designed to
attract, incentivise and retain the best talent, driven by market practice, skills and experience.
Executive Directors
UK employees
Increase in line with or below wider workforce
Salary
Average increase of 3.4% for FY25
Mix of financial/strategic measures, with a portion of
bonus deferred into award over shares
Annual Bonus
Mix of financial/strategic measures
100% paid in cash
Performance metrics measured over three years,
with two-year holding period after vesting
LTIP
Performance metrics measured over three
years. No holding period
14% cash or contributions into Company’s pension fund
Pension
The majority of UK employees receive a
contribution of 14% of salary
£250 per month and three-year savings period
Sharesave
£250 per month and three-year savings period
Consideration of colleagues’ views
Our colleagues are at the core of our business, and during the year the Board continued its employee engagement sessions which
gave us an opportunity to hear feedback from colleagues on a variety of topics including our organisational transformation,
strategy, market challenges and regulatory developments. We also explored the topic of reward, giving participants the
opportunity to discuss how the Committee aligns executive reward with the approach to pay for all employees, and to understand
their views on reward at Imperial Brands. This is the fourth year that the Board has held this reward session and the level of
engagement was extremely high with a constructive discussion covering:
• The alignment of performance and reward, following the transformation undertaken in the last four years to a more inclusive
and performance-based culture
• Our executive pay principles and how they are achieving their goals
• Aligning reward with our DEI and ESG agendas
• Encouraging and rewarding ethical and responsible behaviours
• Reward challenges in locations experiencing ongoing social and economic challenges
The Board continues its commitment to listening to colleagues and appreciates the opportunity this forum provides them with in
understanding what is important to the Group’s employees and how their priorities evolve with each year of our employee
engagement programme. These views are considered in decision-making and actions taken in the year.
We look forward to continuing our employee engagement session on reward in FY25 to ensure that we stay close to the evolving
priorities of our diverse workforce.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
124
125
GOVERNANCE REMUNERATION REPORT continued
PERCENTAGE CHANGE IN BOARD REMUNERATION
The table below shows the percentage change in the salary, benefits and Annual Bonus for the Directors, between FY24 and FY23,
as well as the disclosures for FY23, FY22, FY21 and FY20.
Year-on-year change in pay for Directors compared with UK employees
2024
2023
2022
2021
2020
Salary
(%)
Benefits
(%)
Annual
Bonus
(%)
Salary
(%)
Benefits
(%)
Annual
Bonus
(%)
Salary
(%)
Benefits
(%)
Annual
Bonus
(%)
Salary
(%)
Benefits
(%)
Annual
Bonus
(%)
Salary
(%)
Benefits
(%)
Annual
Bonus
(%)
Executive
Director
Stefan Bomhard
(from 1 Jul 20)
4.5
6.3
22.3
3.0
(5.9)
(12.2)
2.5
0.0
34.3
58.62 183.32
540.62
–
–
–
Lukas Paravicini
(from 1 May 21)
5.1
(50.0)
24.6
3.0
(73.3)
(11.9)
140.12
150.02
241.42
–
–
–
–
–
–
Non-
Executive
Directors
Thérèse Esperdy
3.9
22.0
-
3.1
22.0
-
2.5
–
–
24.7
(100)
–
353.32
(41.3)
–
Sue Clark
4.2
0.0
-
2.1
(50.0)
-
2.2
–
–
7.0
(100)
–
55.4
(50.0)
–
Alan Johnson
(from 1 Jan 21)
4.5
100.0
-
2.3
(40.0)
-
–
–
–
–
–
–
–
–
–
Andrew
Gilchrist
(from 1 Mar 23)
78.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Bob Kunze-
Concewitz
(from 1 Nov 20)
4.5
0.0
-
2.3
(40.0)
-
11.52
–
–
–
–
–
–
–
–
Jon Stanton
3.4
0.0
-
2.6
(50.0)
-
1.8
–
–
17.9
(100)
–
187.92
0.0
–
Ngozi Edozien
(from 15 Nov 21)
4.0
-
-
16.12 (100.0)
-
–
–
–
–
–
–
–
–
–
Diane de Saint
Victor
(from 15 Nov 21)
4.5
(33.3)
-
15.62
(40.0)
-
–
–
–
–
–
–
–
–
–
Julie Hamilton
(from
31 January
2024)
-
-
-
All UK
employees
4.8
12.0
3.1
6.6
5.9
4.1
2.7
7.3
2.9
0.0
2.4
7.9
6.69
(5.72)
32.44
1. A year-on-year comparison is not possible in the year that a Director joins the Board.
2. Increase reflects first full year.
CEO PAY RATIO
The table below shows the multiple of our CEO’s pay ratio to median, lower quartile and upper quartile pay in the UK. The
calculations are based on methodology Option A as defined by the regulations and by calculating the pay and benefits of all UK
employees on a full-time equivalent basis. Option A was chosen as it is the most robust approach. The CEO pay ratio is based on
comparing the CEO’s pay to that of Imperial Brands’ UK-based employee population, a large proportion of whom are in sales roles.
The Committee anticipates that the ratios are likely to be volatile over time, largely driven by the CEO’s incentive outcomes which
are dependent on Group-wide results.
The pay levels shown for the percentiles reflect remuneration for the 12 months to 30 September 2024.
Financial year
Calculation methodology
P25 (lower quartile) x:1
P50 (median) x:1
P75 (upper quartile) x:1
2024
A
154.6
102.3
67.5
20231
A
156.6
116.0
72.0
2022
A
98.0
75.8
49.6
2021
A
60.7
48.4
31.1
2020
A
50.2
38.7
24.4
2019
A
53.0
36.5
22.0
Stefan Bomhard
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
Total remuneration
£9,082,022
154.6
102.3
67.5
Base salary
£1,400,036
31.3
24.5
16.0
1. 2023 CEO pay ratios have been updated to reflect the value of the updated 2023 CEO single figure which incorporates long-term incentives based on actual vesting, rather
than the estimate used for the 2023 disclosure.
The CEO total remuneration pay ratio has decreased across all percentiles, despite a small increase in CEO total remuneration. The
decrease in pay ratio is driven largely by a lower LTIP vesting percentage compared to last year and by one-off payments made to
certain employees in respect of the closure of the UK Defined Benefit pension plan, increasing the total remuneration figures for
the P25, P50 and P75 comparison employees. The CEO base salary ratio has remained static.
The salary component for FY24 at each quartile is £44,688 (P25), £57,041 (P50) and £87,500 (P75). The equivalent total pay numbers
are £58,762 (P25), £88,774 (P50) and £134,532 (P75).
The Committee is satisfied that the overall picture presented by the 2024 pay ratios is consistent with the reward policies for our
UK employees. The Committee takes into account these ratios when making decisions around the Executive Director pay
packages, and Imperial Brands takes seriously the need to ensure competitive pay packages across the organisation.
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below shows the expenditure and percentage change in overall spend on employee remuneration, dividends and
share buybacks.
£ million unless otherwise stated
2024
2023
Percentage
change
Executive Directors’ total remuneration1, 2
13
13
-
Overall expenditure on pay2
923
882
4.6
Dividend paid in the year
1,299
1,312
(1.0)
Share buybacks in the year3
1,020
1,006
13.9
1. Executive Directors’ total remuneration is based on the total single figure for all Executive Directors and is included to provide a comparison between Executive Director
and overall employee pay.
2. Excludes employer’s social security costs.
3. In FY24, expenditure includes £1.014 billion of share buybacks and £6 million of fees and stamp duty.
EMPLOYEE BENEFIT TRUSTS
Our policy remains to satisfy options and awards under our employee share plans either from market-purchased ordinary shares
or ordinary shares held in treasury, distributed through our employee benefit trusts: the Imperial Tobacco Group PLC Employee
and Executive Benefit Trust (the Executive Trust) and the Imperial Tobacco Group PLC 2001 Employee Benefit Trust (the 2001
Trust) (together the Employee Benefit Trusts).
As at 30 September 2024, we held 68,289,137 ordinary shares in treasury which can be used to satisfy options and awards under our
employee share plans either directly or by gifting them to the Employee Benefit Trusts.
Options and awards may also be satisfied by the issue of new ordinary shares.
Details of the ordinary shares held by the Employee Benefit Trusts are as follows:
Balance at
01/10/2023
Acquired during
year
Distributed
during year
Balance at
30/09/2024
Ordinary shares
under award at
30/09/2024
Surplus/(shortfall)
Executive Trust
1,393,103
2,000,000
(3,157,871)
235,232
9,275,996
(9,040,764)
2001 Trust
176,301
0
(176,301)
0
0
0
SHARE PLAN FLOW RATES
The rules of each of the Company’s share plans contain provisions limiting the grant of options and awards to shares representing
no more than 10% of the issued share capital of the Company over a period of 10 years (or, in the case of options and awards
granted under the LTIP and Deferred Share Bonus Plan, 5% of issued share capital over the same 10-year period). As at
30 September 2024, an aggregate total of 1% of the Company’s issued share capital (including shares held in treasury) is subject to
options and awards under our executive and all-employee share plans.
SUMMARY OF OPTIONS AND AWARDS GRANTED
Limit on awards
Cumulative options and awards granted as a percentage of
issued share capital (including those held in treasury)
Options and awards granted during the year as a percentage of
issued share capital (including those held in treasury)
10% in 10 years
3.3
0.5
5% in 5 years
2.2
0.5
5% in 10 years (executive plans)
2.7
0.4
EXTERNAL BOARD DIRECTORSHIPS
The Committee recognises that external non-executive directorships are beneficial for both the Executive Director concerned and
the Company. Each serving Executive Director is restricted to one external non-executive directorship in a listed company and
may not serve as the chair of a FTSE 100 company. At the discretion of the Board, Executive Directors are permitted to retain fees
received in respect of any such non-executive directorship.
Stefan Bomhard is a non-executive director of Compass Group PLC and was permitted to retain the £99,575 fee received from this
position in the financial year.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
126
127
EXECUTIVE DIRECTORS’ SERVICE AGREEMENTS
Executive Director
Date of contract
Expiry date
Compensation on termination following a
change of control
Stefan Bomhard
31 January 2020
Terminable on 12 months’ notice
No provisions
Lukas Paravicini
11 April 2021
Terminable on 12 months’ notice
No provisions
1. Service agreement dated 31 January 2020 with a start date of 1 July 2020.
2. Service agreement dated 11 April 2021 with a start date of 1 May 2021.
Copies of Executive Directors’ service agreements are available to view at the Company’s registered office.
4. REMUNERATION COMMITTEE MEMBERSHIP AND DUTIES
The Board is ultimately accountable for executive remuneration, but has delegated this responsibility to the Committee,
at least three of whose members are independent Non-Executive Directors. The Chair, who is a member of the Committee,
was independent on appointment. We consider this independence fundamental in ensuring that Executive Directors’ and senior
management’s remuneration is set by those who have no personal financial interest, other than as shareholders, in the
matters discussed. To reinforce this independence, a standing item at each Committee meeting allows the members to meet
without any Executive Director or other manager being present.
Biographical details of the current members of the Remuneration Committee are set out at pages 92 to 95. Members of the
Committee are appointed by the Board following recommendation by the People, Governance & Sustainability Committee
(formerly known as the People & Governance Committee).
The Committee considers its key responsibility as being to support the Company’s strategy and its short and long-term
sustainable success. This is ensured by the adherence to our executive pay principles set out on page 118 and to the Directors’
Remuneration Policy which together set the right conditions for high-calibre executives to deliver and, further, to provide
long-term benefits to all stakeholders. It also determines the specific remuneration package, including service agreements and
pension arrangements, for the Chair, each Executive Director and our Executive Leadership Team. When setting the policy for
Executive Director remuneration, the Committee reviews workforce remuneration and related policies to ensure the alignment of
incentives and rewards across the Group.
The Committee’s other responsibilities include:
• Maintaining a competitive Remuneration Policy appropriate to the business environment of the countries in which we operate,
thereby ensuring we can attract, retain and motivate high-calibre individuals throughout the business;
• Aligning Executive Directors’ and senior management’s remuneration with the interests of long-term shareholders and other
stakeholders whilst ensuring that remuneration is fair but not excessive and reflects the contribution made;
• Setting measures and targets for the performance-related elements of variable pay;
• Oversight of our overall policy for employee remuneration, employment conditions and our employee share plans; and
• Ensuring appropriate independent advisers are appointed to provide advice and guidance to the Committee.
The Committee’s terms of reference are available on our website www.imperialbrandsplc.com
When carrying out its duties the Committee considers the Remuneration Policy and practices in the context of provision 40 of the
UK Corporate Governance Code, as follows:
Clarity – The Remuneration Policy sets out clearly each element of remuneration limits in terms of quantum and the discretions
the Committee can apply. The DRR sets out the arrangements clearly and transparently. Questions on the remuneration
arrangements can be raised at the AGM and through our employee engagement programme.
Simplicity – The remuneration structure for our Executive Directors consists of fixed pay (base salary, pension and benefits),
Annual Bonus and a Long-Term Incentive Plan. Our remuneration structures throughout the organisation are simple in nature and
understood by employees.
Risk – A number of features within the Remuneration Policy exist to manage different kinds of risks; these include:
• Malus and clawback provisions operating across all discretionary incentive plans;
• Deferral of remuneration and holding periods;
• Remuneration Committee discretion to override formulaic out-turns to ensure incentive payouts reflect underlying business
performance and shareholder experience;
• Limits on awards specified within the policy and plan rules; and
• Regular interaction with the Audit Committee.
Predictability – The Committee regularly reviews the performance of in-flight awards so it understands the likely outcomes.
Proportionality – The Committee is against rewarding poor performance and, therefore, a significant portion of remuneration is
performance-based and dependent on delivering the Company’s strategy. Performance targets are based on a combination of
measures to ensure there is no undue focus on a single measure.
Alignment – There is a clear progression of remuneration throughout the workforce with performance measures supporting the
key performance indicators and the long-term sustainability of the business. The Committee reviews the Remuneration Policy,
taking into account the feedback received from shareholders and the impact on the wider workforce.
Remuneration Committee meetings 2023/24
The Remuneration Committee met for three scheduled meetings during the year. Details of the main activities covered in the
meetings are set out below.
Nov-23
Jun-24
Sep-24
Approval of Bonus (FY23) and LTIP (2021-2023) out-turns
Review of Executive Directors' remuneration dashboard
Review of CEO pay ratio and approval of DRR (FY23)
Approval of Bonus (FY24) and LTIP (2024-2026) targets and weightings
Discussion on workforce remuneration
Review of forecasts for in-flight Bonus and LTIP out-turns
Discussion of Bonus (FY25) and LTIP (2025-2027)
Approval of base salaries for Executive Leadership Team and Chair's fee
Review of the Committee's terms of reference
The Remuneration Committee members as at the November 2023 meeting were Sue Clark (Chair), Bob Kunze-Concewitz, Diane de
Saint Victor and Jon Stanton with all attending the November meeting. Ngozi Edozien joined the Committee on 1 January 2024
and all Committee members attended the June and September 2024 meetings. Other regular attendees include the CEO, Company
Secretary, Chief People and Culture Officer, Global Reward Director and the Committee’s principal adviser. None of the individuals
were present for any decisions relating to their own remuneration.
Remuneration Committee evaluation 2023/24
The Board and its Committees undertook an internally facilitated review of its effectiveness during FY24. The evaluation
concluded that the Committee was performing effectively, with a good balance achieved between motivating the Executive and
ensuring that shareholder interests were met. Areas of focus for FY25 include the format of meetings and deep dives on the
forthcoming EU regulations on remuneration and gender pay comparisons across the Group.
Further information on the Board evaluation is on page 107.
Advice provided to the Remuneration Committee
Deloitte LLP was appointed as the independent adviser to the Committee throughout FY24. Deloitte was paid fees of £251,280 for
its services during the year.
Deloitte is a member of the Remuneration Consultants Group and complies with its Code of Conduct which sets out guidelines
to ensure that its advice is independent and free of undue influence. Deloitte LLP provided other advisory services including
corporate tax and employee mobility advice, employee engagement and technology consulting services.
The Committee is satisfied that advice received by Deloitte during the year was independent and objective and that all individuals
who provided remuneration advice to the Committee have no connections with Imperial Brands that may impair their
independence.
Other companies which provided advice to the Remuneration Committee are as follows:
Alithos Limited undertook total shareholder return (TSR) calculations and provided advice on all TSR-related matters. During the
year it was paid £23,400 and provided no other services to the Company. Willis Towers Watson provided market pay data and was
paid £9,600 for these services. Willis Towers Watson also provided actuarial and wider reward-related services to the Company.
Both advisers were appointed by the Committee, which remains satisfied that the provision of those other services in no way
compromises their independence. They are all paid on the basis of actual work performed rather than on a fixed fee basis.
VOTING ON THE REMUNERATION REPORT AT THE 2024 AGM
At the 2024 AGM there was a vote to approve the Directors’ Remuneration Report and our Directors’ Remuneration Policy.
Resolution
Votes for including
discretionary votes
Percentage for
Votes against
Percentage against
Total votes cast
excluding votes
withheld
Votes withheld1
Total votes cast
including votes
withheld
Directors’ Remuneration
Report
678,661,665
97.72
15,835,705
2.28
694,497,370
10,855,174
705,352,544
Directors’ Remuneration
Policy
673,024,462
95.51
31,631,996
4.49
704,656,458
696,086
705,352,544
1. Votes withheld are not included in the final figures as they are not recognised as a vote in law.
The strong support received for the Directors’ Remuneration Report and Directors’ Remuneration Policy followed engagement with
our largest shareholders during 2022 and 2023. The input we received from shareholders was extremely helpful. At the 2025 AGM,
shareholders will be invited to vote on the 2024 Directors’ Remuneration Report (advisory vote).
Sue Clark
Chair of the Remuneration Committee
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
128
129
GOVERNANCE REMUNERATION REPORT continued
DIRECTORS’ REPORT
GOVERNANCE DIRECTORS’ REPORT
The Directors present their report and audited financial
statements for the year ended 30 September 2024. This Directors’
Report, together with our Strategic Report, forms the
management report required under the Disclosure Guidance
and Transparency Rules (DGTR). The Company has chosen,
in accordance with Section 414 C(11) of the Companies Act
2006, to include certain matters in the Strategic Report that
would otherwise be required to be disclosed in the Directors’
Report. The Strategic Report can be found on pages 1 to 89
and includes an indication of future likely developments of
the Company, details of important Company events and the
Company’s business model and strategy. The Corporate
Governance information on pages 90 to 114 and the Directors’
Responsibilities Statement on page 134 are incorporated into
the Directors’ Report by reference. The Directors’ Report,
including the information incorporated by reference,
fulfils the requirements of the Corporate Governance
Statement for the purposes of the DGTR.
Specifically, the following disclosures and those referred to
under “Other information” on page 133 have been included
elsewhere in the Annual Report and are incorporated into
the Directors’ Report by reference:
Disclosure
Page
Future developments in the business
6
Going concern statement
52
Viability statement
52
Disclosure of greenhouse gas emissions,
energy consumption and energy efficiency action
67
Statement of Directors’ responsibilities
134
Disclosure of information to the auditor
134
Financial risk management
176
Shareholder information
230
EQUAL OPPORTUNITIES
We regard equality and fairness as a fundamental right of all
our people. We aim to create a work environment that allows
equal opportunities so people are employed fairly, safely and
in compliance with applicable employment laws and regulation.
We respect each person for who they are and what they can
contribute and provide the same opportunity for career
development and promotion regardless of disability, physical
or mental health, age, race, origin, gender, sexual orientation,
political views, religion, marital status or any other legally
protected status.
CHARITABLE AND POLITICAL DONATIONS
As part of our responsible approach, we continued to support
a number of communities in which we operate by allocating
a central budget. This budget largely funds our support of
the Eliminating Child Labour in Tobacco Growing (ECLT)
Foundation and our support of Hope for Justice. In addition,
a number of our subsidiaries donate to charitable and
community endeavours from local budgets.
All charitable donations and partnership investments
are subject to the requirements of our Code of Conduct.
No political donations were made to UK political parties,
organisations or candidates during the year (2023: nil).
This approach is aligned with our Group policy and
Code of Conduct.
One of the Group’s US legal entities, ITG Brands LLC
(“ITG Brands”), reported political contributions totalling
£57,960 (US$ 72,450) (2023: nil) for the financial year 2024 to
US political organisations and to non-federal-level political
party and candidate committees in accordance with their
contributions programme. No corporate contributions were
made to federal candidates or party committees and all
contributions were made in accordance with applicable laws.
All ITG Brands contributions are assessed and approved in
accordance with ITG Brands’ policies and procedures and to
ensure appropriate oversight and compliance with applicable
laws. No other political contributions were reported during the
year. Therefore, the Group’s total amount of contributions to
non-UK political parties during the year was £57,960 (2023: nil).
POWERS OF DIRECTORS AND SHARE CAPITAL
The business of Imperial is managed by the Board which may
exercise all the powers of the Company, subject to the provisions
of the Articles of Association and the Companies Act 2006.
Authority is sought from shareholders at each Annual General
Meeting to grant the Directors powers, in line with institutional
shareholder guidelines and relevant legislation, in relation to
the issue and buyback by the Company of its shares.
Details of our share capital are shown in note 26 to the
financial statements. All shares other than those held in
treasury are freely transferable and rank pari passu for voting
and dividend rights.
As at 30 September 2024 we held 68,289,137 shares in treasury,
which represented approximately 7.46% of the Company’s
issued share capital and had an aggregate nominal value
of £6,828,914.
We have not cancelled these shares but hold them in a
treasury shares reserve within our profit and loss account
reserve, and they represent a deduction from equity
shareholders’ funds.
Repurchases of own shares
On 6 October 2022, we announced a commitment to return
surplus capital to shareholders through regular annual share
buybacks if circumstances were right and in line with our
five-year strategy to deliver sustainable growth and enhanced
shareholder returns. The first buyback programme amounting
to £1 billion completed on 11 September 2023. The second
buyback programme amounting to £1.1 billion, announced
on 5 October 2023, completed on 29 October 2024.
On 8 October 2024, we announced a further £1.25 billion buyback
programme, to be completed no later than 29 October 2025.
At its AGM on 31 January 2024, the Company obtained
shareholder authorisation for the buyback of up to 88,800,000
shares (the “2024 Buyback Authority”), renewing and replacing
a similar authority granted at the AGM held on 1 February 2023.
54,087,312 ordinary shares with a nominal value of 10 pence each
were purchased in FY24 (representing 5.91% of the called up
share capital of the Company as at 30 September 2024), of which
34,384,809 were purchased under the 2024 Buyback Authority.
The aggregate amount of consideration paid by Imperial in FY24
was £1.02 billion. The 2024 Buyback Authority will expire at the
earlier of the close of business on 31 March 2025 and the end of
the AGM of the Company to be held in 2025.
As at close of business on 1 November 2024, a total of
50,212,638 million further shares could still be repurchased
under the 2024 Buyback Authority before it expires.
The Board continues to regard the ability to repurchase
issued shares in suitable circumstances as an important
part of Imperial’s financial management. The Directors will
continue to exercise this power only when, in the light of
market conditions prevailing at the time, they believe that
the effect of such purchases will be to increase earnings
per share and will be likely to promote the success of the
Company for the benefit of its members as a whole,
representing an appropriate mechanism to return capital to
investors alongside a progressive dividend. Other investment
opportunities, appropriate gearing levels and the overall position
of the Company are taken into account when exercising this
authority. A resolution will be proposed at the 2025 AGM to
renew the authority for the Company to purchase its own
shares, up to specified limits and in line with institutional
shareholder guidelines, for a further year. The proposal will
be described in more detail in the 2025 Notice of AGM. For all
recent share buyback programmes, Imperial has entered into
irrevocable, non-discretionary arrangements with a broker in
order to reduce the issued share capital of the Company.
INSURANCE AND INDEMNITIES
Imperial maintains directors’ and officers’ liability insurance
which provides appropriate cover for legal action brought against
its Directors and Officers. The Company has also granted
indemnities to each of its Directors to the extent permitted by
law. Qualifying third-party indemnity arrangements for the
benefit of Directors, in a form and scope which comply with
the requirements of the UK Companies Act 2006, were in force
throughout the year and up to the date of this Annual Report.
INTEREST IN VOTING RIGHTS
As at 30 September 2024, the Company has been notified
in accordance with Chapter 5 of the DGTR of the following
interests in its shares. Other than as described in the footnote
to the table, the Company has not been notified of any
changes to these interests since the year-end and up to
18 November 2024, being a date not more than one month
prior to the date of the AGM Notice of Meeting.
Disclosure
Number of
ordinary shares
at the date of
notification
(millions)
Percentage of
issued share
capital at
the date of
notification
Capital Group Companies Inc3
95
10.921
Spring Mountain Investments Ltd
61
7.042
BlackRock
53
5.251
FIL Limited
47
4.981
1. Direct holding.
2. Indirect holding.
3. On 18 October, 2024, the Capital Group notified the Company that its interest had
increased to 11.01%.
Information provided to the Company under the DGTRs is
publicly available via the regulatory information services,
and on our website at https://www.imperialbrandsplc.com/
creating-shareholder-value/stock-exchange-announcements.
RESULTS AND DIVIDENDS
We include a review of our operational and financial
performance on pages 26 to 41.
The profit attributable to equity holders of the Company
for the financial year was £2,613 million, as shown in our
consolidated income statement. Note 3 to the financial
statements gives an analysis of revenue and operating profit.
An analysis of net assets is provided in the consolidated
balance sheet and the related notes to the financial statements.
We pay quarterly dividends. The first and second dividends
for financial year 2024 were paid on 28 June 2024 and
30 September 2024 respectively. The third dividend will be
paid on 31 December 2024 and, subject to AGM approval,
the final dividend will be paid on 31 March 2025 to our
shareholders on the Register of Members at the close of
business on 21 February 2025. The associated ex-dividend
date will be 20 February 2025.
Following a review by the Audit Committee at its meeting in
September 2024, which confirmed the accounts showed
distributable reserves sufficient to support the expected third
interim and final dividends and the interim dividends in
financial year 2025, the Directors have declared and propose
dividends in respect of FY24 as follows:
Ordinary shares
2024
£ million
2023
£ million
Interim paid – June 2024
22.45p per share
193
196
Interim paid – September 2024
22.45p per share
192
195
Declared interim – December 2024
54.26p per share
459
461
Proposed final – March 2025
54.26p per share
459
453
Total ordinary dividends
153.42p per share (2023: 146.82p)
1,303
1,305
On 8 October 2024, the Company announced a change to its
future dividend payment profile to four equal quarterly
dividend payments for FY25 onwards. This will result in more
consistent cash returns to shareholders throughout the year,
compared to the current 30:70 split. This has been enabled by
the strong visibility of cash flows from our portfolio following
the successful execution of the Company’s strategy. The change
will also help to reduce the Company’s leverage variance within
the year, particularly around the half year, which is partly a
result of the current dividend phasing.
To create the base for future quarterly payments, the Company
announced two interim cash dividends of 40.08 pence per
share payable in June and September 2025. These payments
will be higher than would otherwise have been the case and
also include a further 4.5% year-on-year increase.
PENSION FUND
The Global Pensions Committee provides global oversight
on both risk and reward elements of the Group’s pension
arrangements.
The Committee’s objectives include tackling the risks inherent
in the Group’s defined benefit pension schemes as well as
reward matters.
The Group has three main pension arrangements, the largest
being the Imperial Tobacco Pension Fund, which is not
controlled by the Board but by a trustee company. Its board
consists of five Directors nominated by the Company, one
Director nominated by employee members and two Directors
nominated by current and deferred pensioners. This trustee
company is responsible for the assets of the pension fund, which
are held separately from those of the Group and are managed by
independent fund managers. The pension fund assets can only
be used in accordance with the fund’s rules and for no other
purpose. The Company maintains Pension Trustee Liability
insurance, for action resulting from a pension related claim.
Imperial Brands PLC | Annual Report and Accounts 2024
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ARTICLES
The Company’s Articles of Association do not contain any
entrenchment provisions and, therefore, may be altered or
added to, or completely new Articles may be adopted, by special
resolution, subject to the provisions of the Companies Act 2006.
SIGNIFICANT AGREEMENTS
The agreements summarised below are those which we
consider to be significant to the Group as a whole and which
contain provisions that take effect or give the other party or
parties a specific right to alter or terminate them if we are
subject to a change of control following a takeover bid.
The Group has seven credit facility agreements that provide
that, unless the lenders (as defined within each agreement)
otherwise agree, if any person or group of associated persons
and/or any connected persons acquires the right to exercise
more than 50% of the votes exercisable at a general meeting
of the Company, the respective borrowers (as defined within
each agreement) must repay any outstanding utilisation
owed by them under the facility agreement and the total
commitments under that facility agreement will be cancelled.
The seven credit agreements are:
• a credit facilities agreement dated March 2020 under which
certain banks and/or financial institutions make available to
Imperial Brands Finance PLC and Imperial Tobacco Germany
Finance GmbH (now Reemtsma Cigarettenfabriken GmbH)
committed credit facilities of €3,493 million for a period of up
to three years with bi-annual six-month auto-extensions;
• a credit facility agreement dated July 2024 under which a
certain bank makes available to Imperial Brands Finance PLC
committed credit facilities of £100 million from October 2024
until September 2025;
• a credit facility agreement dated September 2024 under
which a certain bank makes available to Imperial Brands
Finance PLC committed credit facilities of £200 million
until September 2025;
• four credit facility agreements dated September 2024 under
each of which a certain bank makes available to Imperial
Brands Finance PLC committed credit facilities of
£100 million until September 2025.
The Company acts as guarantor for all the above credit facilities.
In addition, three insurance companies (the Sureties) have
each made available to Imperial Tobacco Pension Trustees
Limited a surety bond, in each case issued on a standalone
basis but in aggregate forming an amount of £120 million,
until December 2028. These surety bonds are subject to deeds
of counter-indemnity each dated April 2023 and made on
substantially the same terms provided by the Company,
Imperial Brands Finance PLC and Imperial Tobacco Limited.
If any person or group of associated persons (as defined within
each agreement) acquires the right to exercise more than 50%
of the votes exercisable at a general meeting of the Company,
the Sureties may demand that Imperial Tobacco Limited,
amongst other things, pay a sum to a cash collateral account
equal to but not exceeding the aggregate amount outstanding
under each guarantee.
Imperial Brands Finance PLC has issued bonds under a Global
Medium Term Notes (GMTN) Debt Issuance Programme. The
Company acts as guarantor.
The final terms of these series of notes contain change of
control provisions under which the holder of each note will,
subject to any earlier exercise by the Issuer, have the option to
require the Issuer to redeem or, at the Issuer’s option, purchase
that note at its nominal value if: (a) any person, or persons
acting in concert or on behalf of any such person(s),
becomes interested in: (i) more than 50% of the issued or
allotted ordinary share capital of the Company; or (ii) such
number of shares in the capital of the Company carrying more
than 50% of the voting rights normally exercisable at a general
meeting of the Company; and (b) as a result of the change of
control, there is either: (i) a reduction to a non-investment grade
rating or withdrawal of the investment grade rating of the notes
which is not raised again, reinstated to or replaced by an
investment grade rating during the change of control period
specified in the final terms; or (ii) to the extent that the notes
are not rated at the time of the change of control, the Issuer fails
to obtain an investment grade credit rating of the notes within
the change of control period as a result of the change of control.
The bonds Imperial Brands Finance PLC issued in such
manner and which are still outstanding as of 30 September 2024
are as follows:
• 1 July 2024 US$ 1,250m 5.500% guaranteed notes due 2030; and
• 1 July 2024 US$ 750m 5.875% guaranteed notes due 2034.
Imperial Brands Finance PLC and Imperial Brands Finance
Netherlands B.V. have also issued bonds under Euro Medium
Term Notes (EMTN) Debt Issuance Programmes. The Company
acts as guarantor.
The final terms of these series of notes contain change of
control provisions under which the holder of each note will,
subject to any earlier exercise by the Issuer, have the option to
require the Issuer to redeem or, at the Issuer’s option, purchase
that note at its nominal value if: (a) any person, or persons
acting in concert or on behalf of any such person(s), becomes
interested in: (i) more than 50% of the issued or allotted ordinary
share capital of the Company; or (ii) such number of shares in
the capital of the Company carrying more than 50% of the voting
rights normally exercisable at a general meeting of the Company;
and (b) as a result of the change of control, there is either:
(i) a reduction to a non-investment grade rating or withdrawal
of the investment grade rating of the notes which is not raised
again, reinstated to or replaced by an investment grade rating
during the change of control period specified in the final terms;
or (ii) to the extent that the notes are not rated at the time of the
change of control, the Issuer fails to obtain an investment grade
credit rating of the notes within the change of control period as
a result of the change of control.
The bonds Imperial Brands Finance PLC issued in such
manner and which are still outstanding as of 30 September
2024 are as follows:
• 26 September 2011 £500 million 5.500% guaranteed
notes due 2026;
• 28 February 2014 €650 million 3.375% guaranteed
notes due 2026;
• 28 February 2014 £500 million 4.875% guaranteed
notes due 2032;
• 27 January 2017 €500 million 1.375% guaranteed
notes due 2025; and
• 12 February 2019 €750 million 2.125% guaranteed
notes due 2027.
The bonds Imperial Brands Finance Netherlands B.V. issued
in such manner and which are still outstanding as of
30 September 2024 are as follows:
• 18 March 2021 €1,000 million 1.750% guaranteed notes due 2033;
• 15 February 2023 €600 million 5.250% guaranteed notes due 2031;
• 12 September 2023 €350 million 5.250% guaranteed notes
due 2031*; and
• 4 April 2024 €100 million 5.250% guaranteed notes due 2031*.
*
Subsequent to the issuance dates, these notes became fungible with the original
€600 million issue to form a single tranche of €1,050 million 5.250% guaranteed
notes due 2031.
GOVERNANCE DIRECTORS’ REPORT continued
Imperial Brands Finance PLC has also issued bonds in the
US under the provisions of Section 144a and Regulation S
respectively of the US Securities Act (1933). The Company
acts as guarantor.
The final terms of this series of notes contain change of control
provisions under which the holder of each note will, subject to
any earlier exercise by the Issuer, have the option to require
the Issuer to redeem or, at the Issuer’s option, purchase that
note at 101% of its nominal value if: (a) (i) any person (as such
term is used in the US Securities Exchange Act of 1934
(the Exchange Act)) becomes the beneficial owner of more
than 50% of the Company’s voting stock; or (ii) there is a transfer
(other than by merger, consolidation, amalgamation or other
combination) of all or substantially all of the Company’s assets
and those of its subsidiaries to any person (as such term is
used in the Exchange Act); or (iii) a majority of the members
of the Company’s Board of Directors is not continuing in such
capacity; and (b) as a result of the change of control, there is a
reduction to a non-investment grade rating or withdrawal of
the investment grade rating of the notes which is not raised
again, reinstated to or replaced by an investment grade rating
during the change of control period specified in the final terms.
The bonds issued in such manner and which are still
outstanding as of 30 September 2024 are as follows:
• 21 July 2015 US$ 950 million 4.250% guaranteed notes due 2025;
• 26 July 2019 US$ 750 million 3.500% guaranteed notes due 2026;
• 26 July 2019 US$ 1,000 million 3.875% guaranteed notes
due 2029; and
• 27 July 2022 US$ 1,000 million 6.125% guaranteed notes
due 2027.
WAIVER OF DIVIDENDS
In respect of UKLR 6.6.1R (11) and (12) the trustee of the
Imperial Tobacco Group PLC Employee and Executive Benefit
Trust and the Imperial Tobacco Group PLC 2001 Employee
Benefit Trust agrees to waive dividends payable on the Group’s
shares it holds for satisfying awards under various Imperial
Brands PLC share plans.
2024 ANNUAL GENERAL MEETING VOTE
At the Annual General Meeting in 2024, the Company received
strong support for all its resolutions.
POST-YEAR-END EVENTS
Share buybacks
As noted above, on 8 October 2024 the Company announced
a further share buyback programme of up to £1.25 billion of
shares in the period to 29 October 2025.
2025 ANNUAL GENERAL MEETING
This year’s AGM will be held at the Bristol Marriott Royal Hotel
on 29 January 2025 at 9.30am.
Details of the resolutions to be put to the meeting can be found
in the Notice of Annual General Meeting sent to shareholders
and made available on the Company’s website.
UK LISTING RULES 6.6.1
For the purposes of the UK Listing Rules, the information
required to be disclosed by UKLR 6.6.1R can be found on the
pages set out below:
Section Information
Page
(1)
Interest capitalised
n/a
(2)
Publication of unaudited financial information
n/a
(3)
Details of long-term incentive schemes
n/a
(4)
Waiver of emoluments by a Director
n/a
(5)
Waiver of future emoluments by a Director
n/a
(6)
Non pre-emptive issues of equity for cash
n/a
(7)
Non pre-emptive issue by major
subsidiary undertakings
n/a
(8)
Listed subsidiary
n/a
(9)
Contracts of significance
132
(10)
Provision of services by a controlling shareholder
n/a
(11)
Shareholder waivers of dividends
See left
(12)
Shareholder waivers of future dividends
See left
(13)
Compliance with controlling shareholder rules
n/a
OTHER INFORMATION
In accordance with the Companies Act 2006, the following items
have been included in other sections of this Annual Report:
• a fair review of the business, as required by the Companies
Act 2006, is included in the Strategic Report;
• the information in our Governance Report, including
information on our Directors and rules around their
appointment and replacement, is included in this Directors’
Report by reference;
• future developments in the business are included in the
investment case commencing on page 6;
• information relating to our people, including colleague
engagement, is included in the Stakeholder Engagement
section on page 54, our People and Planet agenda on page 59,
Safe and Inclusive workplace on page 74 and on pages 100
and 106 in our Governance Report;
• our principal risks are detailed on pages 45 to 51;
• information relating to our sustainability approach that
supports our environmental, social and governance agenda
is included on pages 59 to 89;
• responsibilities to a broader stakeholder group, including
suppliers, consumers and customers, are included on pages
54 to 57, 100 and 102;
• information on our greenhouse gas emissions is included
on page 66; and
• the Directors of the Company are listed on pages 92 to 95.
Our report under the Streamlined Energy and Carbon
Reporting requirements can be found on page 67.
The Strategic Report and this Directors’ Report were approved
and signed by order of the Board.
Emily Carey
Company Secretary
18 November 2024
Imperial Brands PLC
Incorporated and domiciled in England and Wales No: 3236483
Imperial Brands PLC | Annual Report and Accounts 2024
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133
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and Group and Parent Company 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
are required to prepare the Group financial statements in
accordance with UK–adopted International Accounting
Standards. In addition, the Directors have elected to prepare
the Parent Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law),
including FRS 101 “Reduced Disclosure Framework”. 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 Group and Parent
Company and of the profit or loss of the Group and Parent
Company for that period.
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
• properly select and consistently apply suitable
accounting policies;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements in IFRS accounting standards are
insufficient to enable users to understand the impact of
particular transactions, other events and conditions on
the entity’s financial position and financial performance;
• state whether the Group financial statements have been
prepared in accordance with UK-adopted International
Accounting Standards, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the Group financial statements on the going concern
basis unless it is inappropriate to presume that the Group
will continue in business.
In preparing the Parent Company 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 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 Parent Company
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Parent Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
Parent Company on a consolidated and individual basis, and
to enable them to ensure that the Group financial statements
comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Parent Company and its
subsidiaries and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Remuneration Report and Corporate Governance Statement
that comply with the law and those regulations.
The Directors are responsible for the maintenance and
integrity of the Parent Company’s website. Legislation in the
United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in
other jurisdictions.
Each of the Directors in office as at the date of this report,
whose names and functions are listed on pages 92 to 95,
confirms that, to the best of their knowledge:
• the Group and Parent Company financial statements,
which have been prepared in accordance with UK-adopted
International Accounting Standards and UK GAAP FRS 101
respectively, give a true and fair view of the assets, liabilities,
financial position and profit of the Group and Parent
Company on a consolidated and individual basis;
• the Strategic Report and the Directors’ Report contained in
the Annual Report and Accounts include a fair review of the
development and performance of the business and position
of the Group and Parent Company, together with a description
of the principal risks and uncertainties that they face;
• there is no relevant audit information (that is, information
needed by EY in connection with preparing its report) of
which EY is unaware; and
• each has 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 EY is aware
of that information.
The Directors consider that the Annual Report and Accounts,
taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess
the Group and the Parent Company’s position and
performance, business model and strategy.
This Statement of Directors’ Responsibilities was approved
by the Board and signed on its behalf.
The Strategic Report and the Directors’ Report were approved
by the Board and signed on its behalf.
By order of the Board.
Emily Carey
Company Secretary
18 November 2024
Imperial Brands PLC
Incorporated and domiciled in England and Wales No. 3236483
GOVERNANCE DIRECTORS’ REPORT continued
OPINION
In our opinion:
• Imperial Brands PLC’s group financial statements and parent company financial statements (the “financial statements”) give a
true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2024 and of the group’s profit
for the year then ended;
• the group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Imperial Brands PLC (the ‘parent company’) and its subsidiaries (the ‘group’)
for the year ended 30 September 2024 which comprise:
Group
Parent company
Consolidated balance sheet as at 30 September 2024
Balance sheet as at 30 September 2024
Consolidated income statement for the year then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income
for the year then ended
Related notes I to X to the financial statements,
including material accounting policy information
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 35 to the financial statements, including material
accounting policy information and the supplementary information
on pages 202 to 209.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international
accounting standards. The financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”
(United Kingdom Generally Accepted Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion
INDEPENDENCE
We are independent of the group and parent in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company
and we remain independent of the group and the parent company in conducting the audit.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent
company’s ability to continue to adopt the going concern basis of accounting included:
• confirming our understanding of the directors’ going concern assessment process, including the controls over the review
and approval of the business plan and cash flow forecasts covering the period of twelve months from date of approval
of the financial statements;
• assessing the appropriateness of the duration of the going concern assessment period of twelve months from date of approval
of the financial statements and considering the existence of any significant events or conditions beyond this period based on
our procedures on the group’s business plan, cash flow forecasts and from knowledge arising from other areas of the audit;
• verifying inputs against the board-approved business plan, cash flow forecasts and debt facility terms, and reconciling the
opening liquidity position to the year end position as at 30 September 2024;
• Agreeing borrowing facilities to agreements to confirm both their availability to the group and the forecast debt repayments
through the going concern assessment period and to validate that there are only two financial covenants in relation to the
revolving credit facility;
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMPERIAL BRANDS PLC
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135
• evaluating management’s historical forecasting accuracy and the consistency of the going concern assessment with
information obtained from other areas of the audit, such as our audit procedures on the business plan and cash flow forecasts
which underpin management’s goodwill impairment assessments;
• testing the assessment, including forecast liquidity under base and downside scenarios, for clerical accuracy;
• assessing whether assumptions made, including those relating to current economic challenges, were reasonable and in the
case of downside scenarios, appropriately severe, in light of the group’s relevant principal risks and uncertainties and our
own independent assessment of those risks;
• assessing management’s considerations related to material climate change impacts in the going concern period;
• evaluating the amount and timing of identified mitigating actions available to respond to a severe but plausible downside
scenario, and whether those actions are feasible and within the group’s control;
• performing independent stress testing on management’s assumptions including applying incremental adverse cash flow
sensitivities. Our sensitivities included the impact of certain severe but plausible scenarios identified in other areas of our audit,
including litigation and tax, materialising within the going concern period; and,
• performing reverse stress testing on management’s base case scenario to understand how severe conditions would have to be
to breach liquidity or financial covenants and whether the reduction in EBITDA that result in breaches to liquidity or financial
covenants has no more than a remote possibility of occurring;
• assessing the appropriateness of the going concern disclosure on page 149.
OUR KEY OBSERVATIONS:
• The directors’ assessment forecasts that the group will maintain sufficient liquidity throughout the going concern assessment
period in the base case scenario and will not breach banking covenants. Management also assessed:
• a severe but plausible downside scenario corresponding to a 10% permanent reduction in EBITDA, which would result
in a minimum level of headroom of £0.6bn in March 2025.
• a reverse stress test scenario corresponding to a permanent reduction in EBITDA of 37% which would result in liquidity being
eroded in August 2025. This scenario is not considered plausible.
We have not identified any climate-related risks that would materially impact the group’s forecasts to the end of the going
concern period.
• Controllable mitigating actions available to management over the going concern assessment period, including reductions to
non-declared dividend payments and uncommitted share buybacks, are sufficient to ensure liquidity in both management’s
plausible downside scenario and the audit team’s additional downside sensitivities.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern
for a period of twelve months from when the financial statements are authorised for issue.
In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
group’s ability to continue as a going concern.
OVERVIEW OF OUR AUDIT APPROACH
Audit scope
• We performed an audit of the complete financial information of 5 components and audit procedures
on specific balances for a further 12 components.
• The components where we performed full or specific audit procedures accounted for 83% of Profit before
tax on an absolute basis, 81% of Revenue and 91% of Total assets.
Key audit matters
• Revenue recognition, including management override of controls
• Management override of controls or errors related to KPIs
• Uncertain tax positions
• Litigation
Materiality
• Overall group materiality of £156m which represents 5% of Profit before tax.
AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP AUDITS
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for each company within the group. Taken together, this enables us to form an opinion on the consolidated financial
statements. We take into account the level of revenue, assets, profit before tax, risk profile (including country risk, management’s
assessment of control effectiveness, internal audit findings and the extent of changes in the business environment), and other
known factors when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, of the 394 reporting components of the group, we selected 17
components covering entities within Australia, Czech Republic, the Dominican Republic, Germany, Morocco, Poland, Spain,
the UK and the USA, which represent the principal business units within the group.
Of the 17 components selected, we performed an audit of the complete financial information of 5 components (“full scope components”)
which were selected based on their size or risk characteristics. For the remaining 12 components (“specific scope components”),
we performed audit procedures on specific accounts within that component that we considered had the potential for the greatest
impact on the significant accounts in the financial statements either because of the size of these accounts or their risk profile.
The audit scope of specific scope components may not have included testing of all significant accounts of the component but will
have contributed to the coverage of significant accounts tested for the group. We increased our coverage of the total group cash
balance as at 30 September 2024 by performing specified procedures over cash balances by obtaining bank confirmation letters
for 16 additional business units in order to reduce the unaudited cash balance below our performance materiality.
The table below illustrate the coverage obtained from the work performed by our audit teams.
Reporting components
2024
2023
Number
% of
group PBT (on
absolute basis)1
% of group
Revenue
% of group
Assets
Number
% of
group PBT (on
absolute basis)1
% of group
Revenue
% of group
Assets
Full scope
5
68%
63%
80%
5
70%
63%
79%
Specific scope
12
15%
18%
10%
13
14%
18%
13%
Specified procedures
28
0%
0%
1%
22
0%
0%
1%
Full, specific, and specified
procedures coverage
45
83%
81%
91%
40
84%
81%
93%
Remaining components
349
17%
19%
8%
354
16%
19%
7%
Total reporting components
394
100%
100%
100%
394
100%
100%
100%
1. Coverage of profit before tax measured on an absolute basis for each component (components with a loss would be added to both the numerator and denominator).
CHANGES FROM THE PRIOR YEAR
The approach to audit scoping is similar to the prior year audit. Our scoping changes from the prior year arise due to changes
to incorporate unpredictability and include a rotation of component audits involved. As a result, one component in Spain moved
from specific scope to review scope and two components in the Czech Republic and Ivory Coast have moved from review scope
to specific scope and specified procedures respectively.
INVOLVEMENT WITH COMPONENT TEAMS
In establishing our overall approach to the group audit, we determined the type of work that needed to be undertaken at each of
the components by us, as the primary audit engagement team, or by component auditors from other EY global network firms
operating under our instruction. Of the 5 full scope components, audit procedures were performed on one of these directly by the
primary audit team and four by the component audit teams. For the 12 specific scope components, where the work was performed
by component auditors, we determined the appropriate level of involvement to enable us to determine that sufficient audit
evidence had been obtained as a basis for our opinion on the group as a whole.
Imperial Brands has centralised processes and controls in relation to certain accounts managed by its Finance Shared Services
(“FSS”) centres in Manila and Krakow. Members of the group engagement team provided direct oversight, review, and coordination
of the EY FSS audit teams. The EY FSS audit teams performed centralised testing for certain accounts covered at the Imperial
Brands’ FSS locations, including revenue, receivables, purchases and payables. In establishing our overall approach to the group
audit, we determined the work that needed to be undertaken at each of the locations by the group engagement team or by auditors
from local EY teams.
The group audit team continued to follow a programme of planned visits that has been designed to ensure that the Senior Statutory
Auditor, and other group Partners, visit all full scope and other key locations. During the current year’s audit cycle, visits were
undertaken by the primary audit team to the component teams in the Czech Republic, the Dominican Republic, Germany, Morocco,
Spain and the USA. These visits involved discussing the audit approach with the component team and any issues arising from
their work, meeting with local management and reviewing relevant audit working papers relating to risk areas. The primary team
interacted regularly with the component teams, where appropriate, during various stages of the audit, reviewed relevant working
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papers and were responsible for the scope and direction of the audit process. At critical periods of the audit, we increased the
use of online collaboration tools to facilitate team meetings, information sharing and the evaluation, review and oversight of
component teams. We requested more detailed deliverables from component teams, and we utilised fully the interactive capability
of EY Canvas, our global audit workflow tool, to review remotely the relevant underlying work performed. For the UK components,
communication has been maintained throughout the audit with the Senior Statutory Auditor covering the same areas described
above applicable to all non-UK component teams. This, together with the additional procedures performed at group level,
gave us appropriate evidence for our opinion on the group financial statements.
CLIMATE CHANGE
Stakeholders are increasingly interested in how climate change will impact Imperial Brands. The group has determined that the
most significant future impacts from climate change on their operations will be from:
• An increase in material costs due to increases in operating costs of suppliers and raw materials;
• Increased costs from emerging regulation such as carbon taxation;
• Changes in the tobacco crop yield that may lead to agricultural supply chain disruption; and,
• Other impacts that may cause supply chain disruption or affect production capacity, namely:
• Increased frequency and severity of extreme weather events;
• Physical hazards such as flooding;
• Chronic drought risk; and,
• More severe hurricane risk.
These are explained on pages 78 to 89 in the required Task Force On Climate Related Financial Disclosures. They have also explained
their climate commitments on pages 66 to 67. All of these disclosures form part of the “Other information,” rather than the audited
financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear
to be materially misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the group’s business and any
consequential material impact on its financial statements.
The group has explained in note 2, Accounting estimates and judgements, that governmental and societal responses to climate
change risks are still developing, and are interdependent upon each other, and consequently the financial statements cannot
capture all possible future outcomes as these are not yet known. The degree of certainty of these changes means that they cannot
be taken into account when determining asset and liability valuations under the requirements of UK adopted international
accounting standards.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks
disclosed on pages 80 to 85 and the significant judgements and estimates disclosed in note 2 and whether these have been
appropriately reflected in asset values and associated disclosures where values are determined through modelling future cash
flows, being goodwill and intangible assets impairment assessment (note 12) and the recoverability of deferred tax assets (note 23)
to determine the risks of material misstatement in the financial statements from climate change which needed to be considered
in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability
and associated disclosures.
Whilst the group have stated their commitment to the aspirations of the Paris Agreement to achieve net zero emissions by 2040,
the group are currently unable to determine the full future economic impact on their business model, operational plans and
customers to achieve this and therefore as set out above the potential impacts are not fully incorporated in these financial
statements.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter
or to impact a key audit matter.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk
Our response to the risk
Revenue recognition, including management
override of controls (2024: £32,411m,
2023: £32,475m)
Tobacco revenue is an area of focus for
stakeholders interested in the performance of the
company against an industry backdrop of declining
global sales volumes.
Most of the group’s sales arrangements require
little judgement to be exercised, with revenue
being recognised on the delivery of goods.
However, there is a risk that management may
override controls to intentionally misstate revenue
transactions by recording fictitious manual journals
to revenue (e.g. inappropriate rebate accounting).
There is also a risk of error relating to the accounting
for non-routine transactions (e.g. sales returns).
Due to the size of the revenue balance, even errors
representing a relatively small proportion could
lead to material misstatement of profit.
In addition, the impact of promotional activity
around period ends leading to trade loading can
have a material impact on performance in the
following period. This anticipated impact, if material,
should be described in the front half of the annual
report to provide investors with a fair and balanced
understanding of the drivers of business performance.
Refer to the audit committee report (page 112);
accounting policies (note 1); accounting estimates
and judgements (note 2); and segmental information
(note 3) of the consolidated financial statements.
We have reviewed Imperial’s Code of Conduct, Speaking-up, and Fraud risk
management policies in order to evaluate the ‘tone at the top’.
We obtained an understanding of the revenue process and controls and
understood how Imperial’s revenue recognition policies are applied. We also
assessed the processes and key controls over rebate accounting, by walking
through the process from identification to recording.
We reviewed the group revenue recognition policies, as documented in the
group Accounting Manual, for compliance with IFRS 15 ‘Revenue from
contracts with customers’.
We discussed and reviewed key contractual arrangements with
management and obtained relevant documentation, including those
in respect of rebate arrangements.
As part of our overall revenue recognition testing, for Tobacco & NGP
components with revenue in scope, we used data analytics techniques.
This included testing the occurrence of revenue by analysing the correlation
of journal entries posted to revenue with journals posted to accounts receivables
and then subsequently as cash receipts. We validated cash receipt postings
by tracing to bank statements on a sample basis. This provided us with a
high level of assurance over £15.8 billion (72%) of Tobacco & NGP revenue
recognised by the group.
For the Distribution component, we performed a combination of tests of
controls and substantive tests of detail to obtain assurance over £9.2 billion
(83%) of Distribution revenue recognised by the group.
We performed detailed, disaggregated, analytical review to identify
unusual trends and inventory positions at all full and specific scope
locations. Our procedures focused on variances in receivable days and
customers rebates/discounts at period ends, which could represent
inventory being ‘pushed’ into the channel.
We reviewed external factors for indicators of trade pull factors with a focus
on full scope and high-risk markets.
We made inquiries outside of finance to identify instances of late or unusual
requests for shipments or extensions of credit terms.
On a sample basis, we obtained third party confirmations of trade terms
from customers to assess for indicators of trade loading, where relevant,
such as unusual sales patterns, rebates/discounts or increased receivable
days at period-ends. We performed appropriate alternative procedures
where confirmations were requested and not received, including reviewing
contracts and recalculating rebates, validating the inputs of management’s
calculations, and tracing rebate provision amounts to post year end settlements.
Our remaining procedures, applicable to all full and specific scope
components included the following:
• Cut-off testing for a sample of revenue transactions near the period end
to check that they were recognised in the appropriate period;
• Targeted manual journal entry testing in response to the risk of fraud; and,
• Review of disclosures against the requirements of IFRS 15
The audit procedures performed to address this risk were performed by
component and shared service centre teams and reviewed by the group team.
Key observations communicated to the Audit Committee
Based on the procedures performed, including those in respect of manual adjustments to revenue, we did not identify any
evidence of material misstatement in the revenue recognised during the year.
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Risk
Our response to the risk
Management override of controls or errors related
to KPIs impacting executive remuneration
There is a risk that management could override
controls in order to manipulate KPIs which have
a bearing on remuneration. In the current year
we have identified the following items as areas
of focus:
• Manipulation of reported margins to overstate
operating profits;
• Incorrect classification of items as adjusting
costs in order to manipulate the adjusted
operating profit metric;
• Errors relating to working capital metrics,
particularly focused on inappropriate cash cut-off
to manipulate working capital and therefore the
adjusted operating cash conversion metric;
• Incorrect reporting of ESG metrics on which
aspects of executive remuneration are based.
Refer to the audit committee report (page 112);
accounting policies (note 1); accounting
estimates and judgements (note 2) of the
consolidated financial statements; and the
supplementary information.
In respect of our focus on reported margins, we have:
• Inquired of divisional finance leadership to identify any unusual and/or
new arrangements/projects entered into during the current financial year
that would be expected to have an impact upon operating profit margins.
• Used data analytical techniques to identify and investigate unusual trends
in margins in order to identify any unusual movements throughout the
year and in comparison to prior year.
In respect of our focus on the classification of adjusting items, we have:
• Challenged the timing of recognition of one-off costs and whether the
classification of any costs as adjusting is in line with group policy and
disclosed appropriately.
• Evaluated the classification of one-off adjustments for indicators of
management bias, in particular whether both income and expense
items are treated consistently.
In respect of our focus on working capital metrics, we have:
• Performed cut-off testing at year end on working capital balances to a
lower testing threshold. Namely, on trade receivables, inventory and trade
payables to ensure that working capital metrics are not recorded pre year
end and then reversed post year end to manipulate the adjusted operating
cash conversion metric.
• Performed detailed, disaggregated analytical review to identify unusual
trends and positions in key significant accounts such as cash, trade
receivables, trade payables and inventory to identify potential manipulation
of these balances that would influence working capital balances.
• Made inquires outside of finance, for example with Sales, to identify any
unusual and new arrangements entered into during the last quarter of
Imperial’s financial year to assess if these are being manipulated to flatter
working capital.
In respect of our focus on ESG metrics linked to executive remuneration,
we have:
• Conducted in-person and remote site visits to understand local level ESG
performance and data collection processes;
• Obtained an understanding of the process for collecting, collating and
reporting the ESG metrics during the reporting period;
• Performed analytical review procedures to understand the
appropriateness of the data.
• Performed testing, on a sample basis, against underlying source information
to check the accuracy and completeness of the data and the appropriate
application of the ESG criteria.
We reviewed the annual report disclosures, including Imperial’s management
rationale for treating as adjusting, whether equal prominence had been
given with statutory measures and the transparency of the reconciliation
of statutory measures to APM’s.
The audit procedures were designed and led by the group audit team,
with support from component teams whose work was reviewed by the
group audit team.
Key observations communicated to the Audit Committee
We did not identify any unusual trends in reported margin that would indicate manipulation.
We consider that items identified as being adjusted are appropriate and in line with the group accounting policy.
Following our procedures performed over working capital metrics, we consider these balances are materially correct.
We did not identify any issues with regards the completeness, accuracy or appropriateness of data used in the application of ESG
criteria related to executive remuneration.
Risk
Our response to the risk
Uncertain tax positions (Provision for uncertain
tax positions – 2024: £180m, 2023: £189m)
The global nature of the group’s operations results
in complexities in the payment of, and accounting
for, tax.
Management applies judgement in assessing tax
exposures in each jurisdiction, many of which
require interpretation of local tax laws.
Given this judgement, there is a risk that tax
provisions are misstated.
Refer to the audit committee report (page 111);
accounting policies (note 1); accounting estimates
and judgements (note 2); and tax disclosure (note 8)
of the consolidated financial statements.
We challenged management’s judgements using tax specialists, both domestic
and overseas, to provide technical support regarding developments in the
period and to consider whether the amounts provided reflected an appropriate
best estimate of the expected economic outflow.
The group audit team, including tax specialists, evaluated the tax consequences
of the transactions undertaken in the period. We confirmed that the tax
figures appropriately reflect the transactions and there are no additional
material risks for which an uncertain tax position (UTP) should be recorded.
We challenged whether the tax exposures identified were complete.
Our work included inquiring with management regarding the current status
of discussions with tax authorities, the impact of legislative developments
and the review of transfer pricing policies.
We assessed whether the group’s disclosures, detailing the year end status
of material open tax inquiries, adequately disclose relevant facts and
circumstances and potential liabilities of the group.
The audit procedures were designed and led by the group audit team,
with support from component teams whose work was reviewed by the
group audit team.
Key observations communicated to the Audit Committee
Based on our assessment of tax risks and the latest status of tax audits, we conclude that the group’s approach to judgements
for uncertain tax positions is balanced and that the amounts provided are reasonable. We consider the group’s tax disclosures
are also appropriate.
Litigation
There are a number of ongoing legal cases in
different jurisdictions relating to competition,
product liability, intellectual property and
commercial litigation. Significant judgements are
involved in determining the likelihood of a probable
outflow occurring from legal cases, together with
the estimate of the likely financial cost. The group’s
assessment includes evaluating the relevant law,
historical and pending court rulings with the
support of legal counsel.
Given the judgements and the significance
of the amounts involved, there is a risk that
legal provisions are misstated or that contingent
liabilities are inadequately disclosed.
Specifically, our audit risk relates to legal cases for
which the financial cost to the business could be
material if the potential exposures were to be realised,
and any cases which could indicate non-compliance
with the legal and regulatory frameworks with
which the group is required to comply.
Refer to the audit committee report (page 111);
accounting policies (note 1); accounting estimates
and judgements (note 2), and contingent liabilities
(note 30) of the consolidated financial statements.
We evaluated the processes and controls over litigation operated by
management at group, by walking through the process from identification
of potential litigation to the evaluation of probability of outcome and the
quantification and recording of a provision or disclosure of a
contingent liability.
We inspected Imperial’s litigation log and communications to the Executive
Leadership Team and met with group Finance and group General Legal
Counsel to discuss the developments in significant cases.
We requested, received and read letters received directly from
management’s external legal counsel that evaluated the current status
of legal proceedings and independently quantified the estimate of any
economic outflow arising from settlement of the litigation.
We evaluated whether any of the fines levied, ongoing litigation cases,
whistleblower reports or reported frauds in the year gave rise to evidence
that there had been instances of non-compliance with the relevant laws
and regulations.
We assessed whether the group’s disclosures detailing contingent liabilities
and financial commitments adequately disclose relevant facts and
circumstances and potential liabilities of the group.
The audit procedures were designed and led by the group audit team,
with support from component teams whose work was reviewed by the
group audit team.
Key observations communicated to the Audit Committee
Having met with internal Legal Counsel and received responses from external lawyers, we consider that where an economic
outflow is probable management have appropriately recorded a provision. For those cases which we consider meet the criteria
of a contingent liability we concluded that sufficient disclosure exists in the annual report to allow users to understand the range
of exposures facing the company, where that is possible.
Both in the current year and prior year, our auditor’s report includes key audit matters in relation to revenue recognition including
management override, Management override of controls or errors related to KPIs impacting executive remuneration, uncertain tax
positions and litigation. The risk associated with these matters remained consistent with the prior year.
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OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be expected
to influence the economic decisions of the users of the
financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the group to be £156 million
(2023: £156 million), which is 5% (2023: 5%) of Profit before tax.
We believe that Profit before tax provides the most relevant
performance measure to the stakeholders of the group.
We determined materiality for the Parent Company to be
£194 million (2023: £210 million), which is 2% (2023: 2%) of net
assets. In performing our procedures, materiality was capped
at the group allocated materiality of £35 million
(2023: £35 million).
Performance materiality
The application of materiality at the individual account
or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate
of uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the group’s overall control environment,
our judgement was that performance materiality was
75% (2023: 75%) of our planning materiality, namely
£117 million (2023: £117 million).
Audit work at component locations for the purpose of obtaining
audit coverage over significant financial statement accounts
is undertaken based on a percentage of total performance
materiality. The performance materiality set for each component
is based on the relative scale and risk of the component to the
group as a whole and our assessment of the risk of misstatement
at that component. In the current year, the range of performance
materiality allocated to components was £23 million to
£35 million (2023: £23 million to £35 million).
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of £8 million
(2023: £8 million), which is set at 5% of planning materiality,
as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming
our opinion.
Other information
The other information comprises the information included in the
annual report set out on pages 1 to 134, other than the financial
statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a
material misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006
In our opinion, the part of the directors’ remuneration report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the strategic report and the
directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
• the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group
and the parent company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements and the part of
the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit
CORPORATE GOVERNANCE STATEMENT
We have reviewed the directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the group and company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 103;
• Directors’ explanation as to its assessment of the company’s
prospects, the period this assessment covers and why the
period is appropriate set out on page 52;
• Director’s statement on whether it has a reasonable
expectation that the group will be able to continue in
operation and meets its liabilities set out on page 52;
• Directors’ statement on fair, balanced and understandable
set out on page 103;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out
on page 103;
• The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on pages 42 to 44; and;
• The section describing the work of the audit committee
set out on pages 109 to 110
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities
statement set out on page 134, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group and parent company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of these financial statements.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect irregularities,
including fraud. The risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with
governance of the company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the group and determined
that the most significant are frameworks which are directly
relevant to specific assertions in the financial statements
and are those that relate to the reporting framework
(UK adopted international accounting standards, the
Companies Act 2006 and the UK Corporate Governance
Code) and the relevant tax laws and regulations in the
jurisdictions in which the group operates. In addition,
we concluded that there are certain significant laws and
regulations which may have an effect on the determination
of the amounts and disclosures in the financial statements
being the UK Listing Rules of the UK Listing Authority,
and those laws and regulations relating to health and safety,
employee matters and country-specific regulations on
tobacco and nicotine alternatives control.
• We understood how the group is complying with those
frameworks by making inquiries of management, internal
audit, those responsible for legal and compliance procedures
and the company secretary. We corroborated our inquiries
through our review of board minutes, papers provided to the
Audit Committee and attendance at meetings of the Audit
Committee, as well as consideration of the results of our
audit procedures across the group.
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• We assessed the susceptibility of the group’s financial
statements to material misstatement, including how fraud
might occur by meeting with management from various
parts of the business to understand where it considered
there was susceptibility to fraud and assessing whistleblowing
incidences for those with a potential financial reporting
impact. Where necessary, our procedures included our
forensic investigation specialists. We also considered
performance targets and their influence on efforts made
by management to manage earnings or influence the
perceptions of analysts. We considered the programmes
and controls that the group has established to address risks
identified, or that otherwise prevent, deter and detect fraud;
and how senior management monitors those programs
and controls. Where the risk was considered to be higher,
we performed audit procedures to address each identified
fraud risk. These procedures included testing manual
journals and were designed to provide reasonable assurance
that the financial statements were free from fraud or error.
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws
and regulations. Our procedures involved inquiries of group
management, those charged with governance and legal
counsel, as well as journal entry testing, with a focus on
manual consolidation journals and journals indicating
significant or unusual transactions based on our
understanding of the business. Through our testing we
challenged the assumptions and judgements made by
management in respect of significant one-off transactions
in the financial year and significant accounting estimates
as referred to in the key audit matters section above.
At a component level, our full and specific scope component
audit team’s procedures included inquiries of component
management; journal entry testing; and focused testing,
including in respect of the key audit matter of revenue
recognition. We also leveraged our data analytics platform
in performing our work on the order to cash and purchase
to pay and inventory processes to assist in identifying
higher risk transactions for testing.
• Where we identified potential non-compliance with laws
and regulations, we developed an appropriate audit response
and communicated directly with components impacted.
Our procedures involved: understanding the process and
controls to identify non-compliance, inquiring of internal
and external legal counsel, performing an analysis of press
reporting on these matters, understanding the fact patterns
in each case and documenting the positions taken by
management, and using specialists to support us in
concluding on the matters identified.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
OTHER MATTERS WE ARE REQUIRED TO ADDRESS
• Following the recommendation from the audit committee,
we were appointed by the shareholders at the AGM
on 31 January 2024 to audit the financial statements
for the year ending 30 September 2024 and subsequent
financial periods.
The period of total uninterrupted engagement including
previous renewals and reappointments is five years, covering
the years ending 2020 to 2024.
• The audit opinion is consistent with the additional report
to the audit committee.
USE OF OUR REPORT
This report is made solely to the company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Marcus Butler (Senior statutory auditor)
For and on behalf of Ernst & Young LLP, Statutory Auditor
London
18 November 2024
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMPERIAL BRANDS PLC continued
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2024
£ million unless otherwise indicated
Notes
2024
2023
Revenue
3
32,411
32,475
Duty and similar items
(13,925)
(14,398)
Other cost of sales
(11,707)
(11,397)
Cost of sales
(25,632)
(25,795)
Gross profit
6,779
6,680
Distribution, advertising and selling costs
(2,383)
(2,338)
Administrative and other expenses
(842)
(940)
Operating profit
4
3,554
3,402
Investment income
5
560
772
Finance costs
5
(1,094)
(1,070)
Net finance costs
(534)
(298)
Share of profit of investments accounted for using the equity method
15
9
7
Profit before tax
3,029
3,111
Tax
8
(282)
(655)
Profit for the year
2,747
2,456
Attributable to:
Owners of the parent
2,613
2,328
Non-controlling interests
134
128
Earnings per ordinary share (pence)
• Basic
10
300.7
252.4
• Diluted
10
299.0
250.8
Investment income and finance costs for 2023 have been reclassified with no impact to net finance costs. See note 5 for more information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2024
£ million
Notes
2024
2023
Profit for the year
2,747
2,456
Other comprehensive income
Exchange movements
(602)
(508)
Hyperinflation adjustment in the year
1
6
5
Current tax on hedge of net investments and quasi-equity loans
(197)
(115)
Items that may be reclassified to profit and loss
(793)
(618)
Net actuarial losses on retirement benefits
24
(99)
(376)
Deferred tax relating to net actuarial losses on retirement benefits
37
135
Items that will not be reclassified to profit and loss
(62)
(241)
Other comprehensive expense for the year, net of tax
(855)
(859)
Total comprehensive income for the year
1,892
1,597
Attributable to:
Owners of the parent
1,783
1,484
Non-controlling interests
109
113
Total comprehensive income for the year
1,892
1,597
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
144
145
CONSOLIDATED FINANCIAL STATEMENTS continued
CONSOLIDATED BALANCE SHEET
at 30 September 2024
£ million
Notes
2024
2023
Non-current assets
Intangible assets
12
15,938
16,944
Property, plant and equipment
13
1,561
1,617
Right of use assets
14
362
326
Investments accounted for using the equity method
15
56
55
Retirement benefit assets
24
376
414
Trade and other receivables
17
118
63
Derivative financial instruments
21/22
330
824
Deferred tax assets
23
889
653
19,630
20,896
Current assets
Inventories
16
4,080
4,522
Trade and other receivables
17
2,645
2,490
Current tax assets
8
249
112
Cash and cash equivalents
18
1,078
1,345
Derivative financial instruments
21/22
144
126
8,196
8,595
Total assets
27,826
29,491
Current liabilities
Borrowings
20
(1,191)
(1,499)
Derivative financial instruments
21/22
(187)
(174)
Lease liabilities
14
(86)
(81)
Trade and other payables
19
(9,497)
(9,579)
Current tax liabilities
8
(412)
(418)
Provisions
25
(89)
(148)
(11,462)
(11,899)
Non-current liabilities
Borrowings
20
(7,506)
(7,882)
Derivative financial instruments
21/22
(622)
(829)
Lease liabilities
14
(300)
(268)
Trade and other payables
19
(86)
(27)
Deferred tax liabilities
23
(780)
(871)
Retirement benefit liabilities
24
(819)
(807)
Provisions
25
(222)
(266)
(10,335)
(10,950)
Total liabilities
(21,797)
(22,849)
Net assets
6,029
6,642
Equity
Share capital
26
91
97
Share premium and capital redemption
26
5,849
5,843
Retained earnings
(479)
(674)
Exchange translation reserve
(19)
755
Equity attributable to owners of the parent
5,442
6,021
Non-controlling interests
587
621
Total equity
6,029
6,642
The financial statements on pages 145 to 229 were approved by the Board of Directors on 18 November 2024 and signed on its behalf by:
Lukas Paravicini
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2024
£ million
Share
capital
Share
premium
and capital
redemption
Retained
earnings
Exchange
translation
reserve
Equity
attributable
to owners
of the
parent
Non-
controlling
interests
Total
equity
At 1 October 2023
97
5,843
(674)
755
6,021
621
6,642
Profit for the year
–
–
2,613
–
2,613
134
2,747
Exchange movements on retranslation of net assets
–
–
–
(1,235)
(1,235)
(25)
(1,260)
Exchange movements on net investment hedges
–
–
–
540
540
–
540
Exchange movements on quasi-equity loans
–
–
–
118
118
–
118
Hyperinflation adjustment in the year
–
–
6
–
6
–
6
Current tax on hedge of net investments and quasi-equity
loans
–
–
–
(197)
(197)
–
(197)
Net actuarial losses on retirement benefits
–
–
(99)
–
(99)
–
(99)
Deferred tax relating to net actuarial losses on retirement
benefits
–
–
37
–
37
–
37
Other comprehensive expense
–
–
(56)
(774)
(830)
(25)
(855)
Total comprehensive income/(expense)
–
–
2,557
(774)
1,783
109
1,892
Transactions with owners
Costs of employees' services compensated by share
schemes
–
–
45
–
45
–
45
Current tax on share-based payments
–
–
4
–
4
–
4
Repurchase of shares
(6)
6
(1,115)
–
(1,115)
–
(1,115)
Changes in non-controlling interests
–
–
(4)
–
(4)
(7)
(11)
Deferred tax on share-based payments
–
–
2
–
2
–
2
Remeasurement of put/call option
–
–
5
–
5
–
5
Dividends paid
–
–
(1,299)
–
(1,299)
(136)
(1,435)
At 30 September 2024
91
5,849
(479)
(19)
5,442
587
6,029
At 1 October 2022
103
5,837
(443)
1,363
6,860
613
7,473
Profit for the year
–
–
2,328
–
2,328
128
2,456
Exchange movements on retranslation of net assets
–
–
–
(942)
(942)
(15)
(957)
Exchange movements on net investment hedges
–
–
–
427
427
–
427
Exchange movements on quasi-equity loans
–
–
–
22
22
–
22
Hyperinflation adjustment in the year
–
–
5
–
5
–
5
Current tax on hedge of net investments and quasi-equity
loans
–
–
–
(115)
(115)
–
(115)
Net actuarial gains on retirement benefits
–
–
(376)
–
(376)
–
(376)
Deferred tax relating to net actuarial gains on retirement
benefits
–
–
135
–
135
–
135
Other comprehensive expense
–
–
(236)
(608)
(844)
(15)
(859)
Total comprehensive income/(expense)
–
–
2,092
(608)
1,484
113
1,597
Transactions with owners
Costs of employees' services compensated by share
schemes
–
–
41
–
41
–
41
Repurchase of shares
(6)
6
(1,006)
–
(1,006)
–
(1,006)
Changes in non-controlling interests
–
–
1
–
1
(1)
–
Deferred tax on share-based payments
–
–
1
–
1
–
1
Registration of put/call option
–
–
(48)
–
(48)
–
(48)
Dividends paid
–
–
(1,312)
–
(1,312)
(104)
(1,416)
At 30 September 2023
97
5,843
(674)
755
6,021
621
6,642
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
146
147
CONSOLIDATED FINANCIAL STATEMENTS continued
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2024
£ million
2024
2023
Cash flows from operating activities
Operating profit
3,554
3,402
Dividends received from investments accounted for using the equity method
9
7
Depreciation, amortisation and impairment
647
632
Profit on disposal of non-current assets
(13)
(39)
Loss on disposal of subsidiaries
–
1
Post-employment benefits
(45)
(29)
Share-based payments
46
31
Other non-cash items
(1)
40
Movement in provisions
(102)
21
Operating cash flows before movement in working capital
4,095
4,066
Decrease/(increase) in inventories
205
(551)
(Increase)/decrease in trade and other receivables
(318)
46
Increase in trade and other payables
213
158
Movement in working capital
100
(347)
Tax paid
(888)
(590)
Net cash generated from operating activities
3,307
3,129
Cash flows from investing activities
Interest received
15
10
Proceeds from the sale of non-current assets
50
71
Purchase of non-current assets
(371)
(325)
Purchase of brands and operations
(42)
(183)
Net cash used in investing activities
(348)
(427)
Cash flows from financing activities
Acquisition of non-controlling interests
(49)
–
Interest paid
(431)
(417)
Lease liabilities paid
(93)
(92)
Increase in borrowings
3,848
1,462
Repayment of borrowings
(3,948)
(1,518)
Cash flows relating to derivative financial instruments
(34)
(64)
Repurchase of shares
(1,020)
(1,006)
Dividends paid to non-controlling interests
(136)
(104)
Dividends paid to owners of the parent
(1,299)
(1,312)
Net cash used in financing activities
(3,162)
(3,051)
Net decrease in cash and cash equivalents
(203)
(349)
Cash and cash equivalents at start of year
1,345
1,850
Effect of foreign exchange rates on cash and cash equivalents
(64)
(156)
Cash and cash equivalents at end of year
1,078
1,345
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements comprise the results of
the Company, a public company limited by shares, incorporated
in England and Wales, and its subsidiary undertakings, together
with the Group's share of the results of its associates and joint
arrangements. The Company’s registered number is 3236483
and its registered address is 121 Winterstoke Road, Bristol,
BS3 2LL.
The consolidated financial statements have been prepared in
accordance with UK-adopted International Accounting
Standards (“UK-adopted IAS”).
The financial statements have been prepared under the
historical cost convention except where fair value
measurement is required under IFRS Accounting Standards
("IFRS") as described below in the accounting policies on
financial instruments, and on a going concern basis.
The consolidated financial statements are presented in pounds
sterling, the presentation currency of the Group, and the
functional currency of the Company. All values are rounded to
the nearest one million (£1 million) except where otherwise
indicated.
Alternative performance measures
Information on Alternative Performance Measures (APMs) is
presented within the Supplementary Information section of
this document.
Basis for going concern
The Group’s policy is to ensure that we always have sufficient
capital markets funding and committed bank facilities in place
to meet foreseeable peak borrowing requirements.
The Group recognises there can be uncertainty in the external
environment, however, during past periods of disruption (e.g.
COVID-19, political uncertainty in Russia, Ukraine and the
Middle East), the Group effectively managed operations across
the world and has proved it has an established mechanism to
operate efficiently despite this uncertainty. The Directors
consider that a one-off discrete event with immediate cash
outflow is of greatest concern to the short-term liquidity of
the Group.
The Directors have assessed the emerging and principal risks
of the business, including stress testing a range of different
scenarios that may affect the business. These included
scenarios which examined the implications of:
• A one-off discrete event resulting in immediate cash outflow
such as unexpected duty and tax payments; and/or other
legal and regulatory risks materialising of c.£500 million
• A rapid and lasting deterioration to the Group’s profitability
because markets become closed to tobacco products or there
are sustained failures to our tobacco manufacturing and
supply chains. These assumed a permanent reduction in
profitability of 10% from 1 October 2024
The scenario planning also considered mitigation actions
including reductions to capital expenditure, dividend payments
and share buyback programme. There are additional actions
that were not modelled but could be taken including other cost
mitigations such as staff redundancies, working capital
management, retrenchment of leases and discussions with
lenders about capital structure.
Under the reverse stress test scenario, after considering
mitigation actions including reductions of capital expenditure,
dividend payments and share buyback programme, we have
modelled that a 37% EBITDA reduction would lead the Group to
have sufficient headroom until 30 November 2025.
The Group believes this reverse stress test scenario to be
remote given the relatively small impact on our trading
performance and bad debt levels during the COVID-19
pandemic and political uncertainty with regard to Ukraine and
Russia. In this scenario the Group would implement a number
of mitigating actions including revoking the uncommitted
dividend, pausing the share buyback and reducing
discretionary spend such as capital expenditure.
Based on its review of future cash flows covering the period
through to 30 November 2025, and having assessed the
principal risks facing the Group, the Board is of the opinion that
the Group as a whole and Imperial Brands PLC have adequate
resources to meet their operational needs from the date of this
report for a period of twelve months from the date of approval
of the financial statements and concludes that it is appropriate
to prepare the financial statements on a going concern basis.
Imperial Brands PLC (the Company) provides guarantees to a
number of subsidiaries under section 479A of the Companies
Act 2006, whereby the subsidiaries, incorporated in the UK and
Ireland, are exempt from the requirements of the Act relating to
the audit of individual accounts for the financial year ending 30
September 2024. See note VIII Guarantees of the Imperial
Brands PLC financial statements for further details.
An amendment to IAS 1 Presentation of Financial Statements
requires the disclosure of material accounting policy
information as part of the notes to the accounts and these are
set out below. Accounting policy information is material if,
when considered together with other information included in
an entity's financial statements, it can reasonably be expected
to influence a decision that the primary users of general
purpose financial statements make on the basis of those
financial statements.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
148
149
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
The material accounting policies, which have been applied
consistently other than where new policies (detailed below)
have been adopted, are set out below.
Basis of consolidation
Subsidiaries are those entities controlled by the Group. Control
exists when the Group is exposed to, or has the rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that
control commences until the date that control ceases. Where
necessary, accounting policies of subsidiaries are changed to
ensure consistency with the policies adopted by the Group.
The acquisition method of accounting is used to account for the
purchase of subsidiaries. The excess of the value transferred to
the seller in return for control of the acquired business together
with the fair value of any previously held equity interest in that
business over the Group’s share of the fair value of the
identifiable net assets is recorded as goodwill.
Intragroup transactions, balances and unrealised gains on
transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless costs cannot
be recovered.
Material accounting policies
Foreign currency
Items included in the financial statements of each Group
company are measured using the currency of the primary
economic environment in which the company operates (the
functional currency).
The income and cash flow statements of Group companies
using non-sterling functional currencies are translated to
sterling (the Group’s presentational currency) at average rates
of exchange in each period. Assets and liabilities of these
companies are translated at rates of exchange ruling at the
balance sheet date. The differences between retained profits
and losses translated at average and closing rates are taken to
reserves, as are differences arising on the retranslation of the
net assets at the beginning of the year.
Transactions in currencies other than a company’s functional
currency 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 and from the
translation at exchange rates ruling at the balance sheet date of
monetary assets and liabilities denominated in foreign
currencies are recognised in the consolidated income
statement with exchange differences arising on trading
transactions being reported in operating profit, and those
arising on financing transactions being reported in net finance
costs unless as a result of net investment hedging they are
reported in other comprehensive income.
The Group designates as net investment hedges certain
external borrowings and derivatives up to the value of the net
assets of Group companies that use non-sterling functional
currencies after deducting permanent intercompany loans.
Gains or losses on these hedges that are regarded as highly
effective are transferred to other comprehensive income, where
they offset gains or losses on translation of the net investments
that are recorded in equity, in the exchange translation reserve.
The Group’s financial results are principally exposed to euro
and US dollar exchange rates, which are detailed in the
table below.
2024
2023
Closing rate
Average rate
Closing rate
Average rate
Euro
1.1985
1.1694
1.1545
1.1487
US dollar
1.3384
1.2681
1.2214
1.2264
Revenue recognition
For the Tobacco & Next Generation Products (Tobacco & NGP)
business, revenue comprises the invoiced value for the sale of
goods net of sales taxes, rebates and discounts. Revenue is
based on the completion of performance obligations that
constitute the delivery of goods. The performance obligation is
recognised as complete at the point in time when a Group
company has delivered products to the customer, the customer
has accepted the products and collectability of the related
receivables is reasonably assured.
The Group recognises income arising from the licensing of
intellectual property, occurring in the ordinary course of
business, which is treated as revenue. Licensing revenue will be
recognised over the period of the licence. The licences granted
are distinct from other promises in the contract.
For the Distribution business, revenue comprises the invoiced
value for the sale of goods and services net of sales taxes,
rebates and discounts when goods have been delivered or
distribution services have been provided. The Distribution
business only recognises commission revenue on purchase
and sale transactions in which it acts as a commission agent.
Distribution and marketing commissions are included in
revenue. Revenue is recognised on products on consignment
when these are sold by the consignee. The performance
obligations associated with distribution services, which include
fees for distributing certain third-party products, are linked to
the successful distribution of products for customers.
Payments are made to both direct and indirect customers for
rebates, discounts and other promotional activities. Direct
customers are those to which the Group supplies goods or
services. Indirect customers are other entities within the supply
chain to the end consumer. Rebates and discounts are
deducted from revenue. Where the contract with customers has
an entitlement to variable consideration due to the existence of
retrospective rebates and discounts, revenue is estimated based
on the amount of consideration expected to be received. This
estimation is a determination of the most likely amount to be
received using all known factors including historic experience.
Typically, there is a high degree of certainty over the amount of
retrospective rebates/discounts paid due to relatively low year-
on-year variations in the volume and pattern of product sales.
As the provision of distribution services typically involves
product delivery tasks undertaken in a short period of time,
revenue and any associated rebates and discounts relating to
these services do not normally span an accounting year end.
Payments for promotional activities will also be deducted from
revenue where the payments relate to goods or service that are
closely related to or indistinct from associated sales of goods or
services to that customer. The calculated costs are accrued and
accounted for as incurred and matched as a deduction from the
associated revenues (i.e. excluded from revenues reported in
the Group’s consolidated income statement).
Duty and similar items
Duty and similar items includes duty and levies having the
characteristics of duty. In countries where duty is a production
tax, duty is included in revenue and in cost of sales in the
consolidated income statement. Duty is regarded as a sales tax
and excluded from revenue where:
• duty becomes payable to the tax authority when the goods
are sold;
• there is an obligation to change the sales price when a
change in the rate of duty is imposed; and
• there is a requirement to identify the duty separately on sales
information such as invoices.
Payments made in the USA under the Master Settlement
Agreement are recognised in other cost of sales; for further
disclosure see note 30 contingent liabilities.
Taxes
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date, and any adjustments to tax payable in
respect of previous years. Current tax assets and liabilities are
offset to the extent the entity has a legally enforceable right to
set off the recognised amounts, and it intends to either settle on
a net basis or realise the asset and settle the liability
simultaneously.
Uncertain tax positions are assessed and measured on an issue
by issue basis within the jurisdictions where we operate using
management’s estimate of the most likely outcome. Where
management determines that a greater than 50% probability
exists that the tax authorities would accept the position taken
in the tax return, amounts are recognised in the consolidated
financial statements on that basis. Where the amount of tax
payable or recoverable is uncertain, the Group recognises a
liability or asset based on either: management’s judgement of
the most likely outcome; or, when there is a wide range of
possible outcomes, a probability weighted average approach.
The Group recognises interest on late paid taxes as part of
financing costs. The Group recognises penalties, if applicable,
as part of administrative and other expenses.
Deferred tax is provided in full on temporary differences
between the carrying amount of assets and liabilities in the
financial statements and the tax base, except if it arises from
the initial recognition of an asset or liability in a transaction,
other than a business combination, that at the time of the
transaction affects neither accounting nor taxable profit or
loss and does not give rise to equal taxable and deductible
temporary differences. Deferred tax is provided on temporary
differences arising on investments in subsidiaries, except
where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred
tax assets are recognised only to the extent that it is probable
that future taxable profits will be available against which the
assets can be realised. Deferred tax is determined using the tax
rates that have been enacted or substantively enacted at the
balance sheet date, and are expected to apply when the
deferred tax liability is settled or the deferred tax asset
is realised.
Deferred tax assets and deferred tax liabilities are offset to the
extent the entity has a legally enforceable right to set off
current tax assets against current tax liabilities and the
deferred tax assets and the deferred tax liabilities relate to
income taxes levied by the same taxation authority on either:
the same taxable entity or different taxable entities which
intend either to settle current tax liabilities and assets on a
net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to be
settled or recovered.
Dividends
Final dividends are recognised as a liability in the period in
which the dividends as approved by the Board of Directors are
approved by shareholders, whereas interim dividends as
approved by the Board of Directors are recognised in the period
in which the dividends are paid.
Intangible assets - goodwill
Goodwill represents the excess of value transferred to the seller
in return for control of the acquired business together with the
fair value of any previously held equity interest in that business
over the Group’s share of the fair value of the identifiable net
assets.
Goodwill is tested at least annually for impairment and carried
at cost less accumulated impairment losses. Any impairment is
recognised immediately in the consolidated income statement
and cannot be subsequently reversed. If any negative goodwill
arises this is recognised immediately in the consolidated
income statement. For the purpose of impairment testing,
goodwill is allocated to groups of cash-generating units that are
expected to benefit from the business combination in which
the goodwill arose.
Intangible assets - other
Other intangible assets are initially recognised in the
consolidated balance sheet at historical cost unless they are
acquired as part of a business combination, in which case they
are initially recognised at fair value. They are shown in the
balance sheet at historical cost less accumulated amortisation
and impairment. The Group does not operate a revaluation
model and therefore assets are not subject to ongoing
revaluations.
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
These assets consist mainly of acquired trademarks,
intellectual property, product development, acquired customer
relationships and computer software. The Davidoff cigarette
trademark is considered by the Directors to have an indefinite
life based on the fact that it is an established international
brand with global potential. Trademarks with indefinite lives
are not amortised but are reviewed annually for impairment.
The carrying value of Davidoff is subject to an annual
impairment review under the requirements of IAS 36 as the
Group does not currently foresee a limit to the period over
which the asset is expected to generate net cash inflows.
The most recent assessment indicates that the carrying value
is not impaired.
Intellectual property (including trademarks), product
development, supply agreements (including customer
relationships) and computer software are amortised over
their estimated useful lives as follows:
Intellectual property
5 - 30 years
straight line
Supply agreements
3 - 15 years
straight line
Software
3 - 10 years
straight line
Product development
3 - 10 years
straight line
Property, plant and equipment
Property, plant and equipment are recognised in the
consolidated balance sheet at historical cost or at their initial
fair value where they are acquired as part of an acquisition,
subject to depreciation or impairment. The Group does not
operate a revaluation model and therefore assets are not
subject to ongoing revaluations.
Land is not depreciated and depreciation on assets under
construction does not commence until they are complete and
available for use. Depreciation is provided on other property,
plant and equipment so as to write down the initial cost of each
asset to its residual value over its estimated useful life as
follows:
Property
up to 50 years
straight line
Plant and
equipment
2 - 20 years
straight line/reducing balance
Fixtures and
motor vehicles
2 - 15 years
straight line
The assets’ residual values and useful lives are reviewed and, if
appropriate, adjusted at each balance sheet date.
Financial instruments and hedging
Financial assets and financial liabilities, in respect of financial
instruments, are recognised on the Group’s consolidated
balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Receivables held under a hold to collect business model are
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 separately classified as fair
value through profit or loss, within trade and other receivables.
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 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.
Cash and cash equivalents include cash in hand and deposits
held on call, together with other short-term highly liquid
investments.
Non-derivative financial liabilities, including borrowings and
trade payables, are stated at amortised cost. For borrowings,
their carrying value includes accrued interest payable, as well
as unamortised issue costs. Current liabilities include amounts
where the entity does not have an unconditional right to defer
settlement of the liability for at least 12 months after the
balance sheet date.
The Group transacts derivative financial instruments to
manage the underlying exposure to foreign exchange and
interest rate risks. The Group does not transact derivative
financial instruments for trading purposes. Derivative financial
instruments are initially recorded at fair value. Derivative
financial assets and liabilities are included in the consolidated
balance sheet at fair value, and include accrued interest
receivable and payable where relevant. However, as the Group
has decided (as permitted under IFRS 9) not to cash flow or fair
value hedge account for its derivative financial instruments,
changes in fair values are recognised in the consolidated
income statement in the period in which they arise unless the
derivative qualifies and has been designated as a net
investment hedging instrument in which case the changes in
fair values, attributable to foreign exchange, are recognised in
other comprehensive income.
Right of use assets
The Group has lease contracts relating to property and other
assets (which predominantly relates to motor vehicles).
The Group recognises right of use assets, at the
commencement date of the lease (i.e. the date the underlying
asset is available for use). Right of use assets are measured at
cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities.
The cost of right of use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any
lease incentives received. Unless the Group is reasonably
certain to obtain ownership of the leased asset at the end of the
lease term, the recognised right of use asset is depreciated on a
straight-line basis over the shorter of its estimated useful life
and the lease term. Right of use assets are subject to
impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments
include fixed payments less any lease incentives receivable,
variable lease payments which depend on an index or a rate,
and amounts expected to be paid under residual value
guarantees. Lease payments include the exercise of purchase
options if determined reasonably certain to be exercised and
termination payments if the lease term reflects the exercise of
an option to terminate.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate, defined as the rate of
interest that a lessee would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right of use asset in a similar
economic environment, at the lease commencement date if the
interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is
increased to reflect the accumulation of interest and reduced
for the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the in-substance fixed
lease payments or a change in the assessment to purchase the
underlying asset.
Lease payments on short-term leases and leases of low value
assets are recognised as an expense on a straight line basis
over the lease term in cost of sales or distribution, advertising
and selling costs.
Short-term leases, leases of low value assets and
practical expedients applied
The Group has applied a number of practical expedients
permitted by IFRS 16 Leases. These include:
• the exclusion of leases where the lease term ends within 12
months of the commencement of the lease or date of initial
application; and
• the exclusion of leases of low value assets, defined as those
of less than US$ 5,000.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first in first out (FIFO)
method. The cost of finished goods and work in progress
comprises raw materials, direct labour, other direct costs and
related production overheads (based on normal operating
capacity). Net realisable value is the estimated selling price in
the ordinary course of business, less the estimated costs of
completion and selling expenses. Inventory is considered for
obsolescence or other impairment issues and an associated
provision is booked where necessary.
Leaf tobacco inventory which has an operating cycle that
exceeds 12 months is classified as a current asset, consistent
with recognised industry practice.
Provisions
A provision is recognised in the consolidated balance sheet
when the Group has a legal or constructive obligation as a result
of a past event, it is more likely than not that an outflow of
resources will be required to settle that obligation, and a reliable
estimate of the amount can be made.
A provision for restructuring is recognised when the Group has
approved a detailed formal restructuring plan, and the
restructuring has either commenced or has been publicly
announced, and it is more likely than not that the plan will be
implemented, and the amount required to settle any obligations
arising can be reliably estimated. Future operating losses are
not provided for.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may
be small.
Contingent liabilities
Contingent liabilities are possible obligations that arise from
past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future
events, not wholly within the control of the Group. Contingent
liabilities are not recognised, only disclosed, unless the
possibility of a future outflow of resources is considered remote,
or where a disclosure would seriously prejudice the position of
the Group.
Retirement benefit schemes
For defined benefit schemes, the amount recognised in the
consolidated balance sheet is the difference between the
present value of the defined benefit obligation at the balance
sheet date and the fair value of the scheme assets to the extent
that they are demonstrably recoverable either by refund or a
reduction in future contributions. The defined benefit obligation
is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated
future cash flows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the
benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension obligation.
The service cost of providing retirement benefits to employees
during the year is charged to operating profit. Past service costs
are recognised immediately in operating profit, unless the
changes to the pension plan are conditional on the employees
remaining in service for a specified period of time.
All actuarial gains and losses, including differences between
actual and expected returns on assets and differences that
arise as a result of changes in actuarial assumptions, are
recognised immediately in full in the statement of
comprehensive income for the period in which they arise. An
interest charge is made in the consolidated income statement
by applying the rate used to discount the defined benefit
obligations to the net defined benefit liability of the schemes.
Interest income and costs arising on defined benefit assets and
liabilities are presented net in the consolidated income
statement. Prior year amounts have been restated having
previously presented gross.
For defined contribution schemes, contributions are recognised
as an employee benefit expense when they are due.
Treasury shares
When the Company purchases its own equity share capital
(treasury shares), the consideration paid, including any directly
attributable incremental costs (net of income taxes), is
deducted on consolidation from equity attributable to owners of
the parent until the shares are reissued or disposed of. When
such shares are subsequently sold or reissued, any
consideration received, net of any directly attributable
incremental transaction costs and the related income tax
effects, increases equity attributable to owners of the parent.
When such shares are cancelled they are transferred to the
capital redemption reserve.
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Where the Group enters into a contract with a third party that
contains an obligation to repurchase its own shares for cash or
another financial asset, a financial liability is recognised for the
present value of the redemption amount. One example is an
obligation under a forward contract to repurchase shares in
Imperial Brands PLC for cash. The financial liability is
recognised initially at the present value of the redemption
amount, and is reclassified from equity. Subsequently, the
financial liability is measured in accordance with IFRS 9, and is
revalued at subsequent reporting points as appropriate. If the
contract expires without delivery, the carrying amount of the
financial liability is reclassified to equity.
OTHER ACCOUNTING POLICIES
Joint ventures
The Group applies IFRS 11 Joint Arrangements to all joint
arrangements. Under IFRS 11 investments in joint
arrangements are classified as either joint operations or joint
ventures depending on the contractual rights and obligations of
each investor. The Group has assessed the nature of its joint
arrangements and determined them to be joint ventures. The
financial statements of joint ventures are included in the Group
financial statements using the equity accounting method, with
the Group’s share of net assets included as a single line item
entitled "Investments accounted for using the equity method".
In the same way, the Group’s share of earnings is presented in
the consolidated income statement below operating profit
entitled "Share of profit of investments accounted for using the
equity method".
Share-based payments
The Group applies the requirements of IFRS 2 Share-based
Payment to both equity-settled and cash-settled share-based
employee compensation schemes. The majority of the Group's
schemes are equity-settled.
Equity-settled share-based payments are measured at fair
value at the date of grant and are expensed over the vesting
period, based on the number of instruments that are expected
to vest. For plans where vesting conditions are based on total
shareholder returns, the fair value at the date of grant reflects
these conditions. Earnings per share and net revenue vesting
conditions are reflected in the estimate of awards that will
eventually vest. For cash-settled share-based payments, a
liability equal to the portion of the services received is
recognised at its current fair value at each balance sheet date.
Where applicable the Group recognises the impact of revisions
to original estimates in the consolidated income statement,
with a corresponding adjustment to equity for equity-settled
schemes and current liabilities for cash-settled schemes. Fair
values are measured using appropriate valuation models,
taking into account the terms and conditions of the awards.
The Group funds the purchase of shares to satisfy rights to
shares arising under share-based employee compensation
schemes. Shares acquired to satisfy those rights are held in
Employee Share Ownership Trusts. The Employee Share
Ownership Trust is a separate entity which is consolidated
within the Group. On consolidation, these shares are accounted
for as a deduction from equity attributable to owners of the
parent. When the rights are exercised, equity is increased by the
amount of any proceeds received by the Employee Share
Ownership Trusts.
Hyperinflation
The Turkish economy was designated hyperinflationary from
April 2022. The Group has applied IAS 29 Financial Reporting in
Hyperinflationary Economies to its Turkish operations with
effect from 1 October 2021. In accordance with IAS 21 The
Effects of Changes in Foreign Exchange Rates, the comparative
figures for the year ended 30 September 2023 have not been
modified. The adjustments required by IAS 29 are set out below.
• Adjustment of historical cost non-monetary assets and
liabilities from their date of initial recognition to the balance
sheet date (1 October 2021) to reflect the changes in
purchasing power of the currency caused by inflation, as
measured by the official Consumer Price Index (CPI)
published by the Turkish Statistical Institute (TurkStat).
• Adjustment of the components of the income statement and
cash flow statement for the inflation index since their
generation, with a balancing entry in the income statement
and a reconciling item in the cash flow statement,
respectively.
• Adjustment of the income statement to reflect the impact of
inflation on holding monetary assets and liabilities in local
currency, where necessary.
• The financial statements of the Group’s Turkish operations
have been translated into sterling at the closing exchange
rate at 30 September 2024.
• The impact of adjustments to non-monetary assets
recognising inflation from the adoption date to the closing
balance sheet date, on translation into sterling at the closing
balance sheet rate has been recognised within other
comprehensive income.
The TurkStat CPI index was 2526.16 at 30 September 2024
(1,691.04 at 30 September 2023 and 1,046.89 at 30 September
2022). The inflation index for the year is therefore 1.4939 (2023:
1.6153). The impact on the Group’s results remains immaterial.
New accounting standards
There have been no changes to accounting standards that have
significantly impacted the accounting or disclosures within the
financial statements for the year ended 30 September 2024.
New accounting standards that are effective after the
year ended 30 September 2024
There are a number of amendments and clarifications to IFRS,
effective in future years and, with the exception of IFRS 18
Presentation and Disclosure in Financial Statements, none of
these are expected to significantly impact the Group’s
consolidated results or financial position.
IFRS 18 - Presentation and Disclosure in Financial Statements
This new accounting standard is effective for the year ended 30
September 2028 and will involve a change to the structure of
the primary financial statements. This requires entities to
classify income and expenses into five categories – operating,
investing, financing, income tax and discontinued operations.
In addition, certain “non-GAAP” measures – alternative
performance measures (APMs) – will now form part of the
audited financial statements, and require mandatory
definitions and reconciliation to GAAP measures. The Group is
presently reviewing the impact of this standard which is
expected to fundamentally change the structure of the
presentation of the Income statement. The Group already
complies with the requirements related to Alternative
Performance Measures through the voluntary disclosures that
are included within the Supplementary Information section of
this report. Therefore, there is expected to be minimal impact
related to APM disclosures.
2. ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and judgements associated with
accounting entries which will be affected by future events.
Estimates and judgements are continually evaluated based on
historical experience, and other factors, including current
information that helps form a forward-looking view of expected
future outcomes.
Estimates involve the determination of the quantum of
accounting balances to be recognised. Judgements typically
involve decisions such as whether to recognise an asset
or liability.
The actual amounts recognised in the future may deviate from
these estimates and judgements.
Estimates
Significant estimates
Companies are required to state whether estimates have a
significant risk of a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
We have reviewed the items below where estimation
uncertainty exists. While a number of these areas do involve
estimation of the carrying value of assets or liabilities that are
potentially significant within the context of the financial
statements, the Group considers the probability of a significant
risk of material adjustment to be low. None of these estimates
are expected to present a material adjustment to the carrying
amount of assets and liabilities in the next financial year.
Therefore, no significant estimates are required to be disclosed.
Other estimates
Other estimates involve other uncertainties, such as those
carrying lower risk, which have a smaller potential impact or
would be expected to crystallise over a longer time frame than a
significant estimate. These items, listed below, are only
disclosed where this provides material relevant information.
Determination of useful economic life of intangible assets
For non-goodwill intangible assets, there is a need to estimate
the useful economic life of each asset. This includes
determining whether the asset has an indefinite useful
economic life, or not. The Davidoff trademark has a significant
market share and positive cash flow growth expectations.
There are no regulatory or contractual restrictions on the use of
this trademark, and there are no plans to significantly redirect
resources elsewhere which would reduce the value of this
asset. Consequently, in the view of management, the Davidoff
trademark does not have a foreseeable and definite end to its
ability to generate future cash flows and hence it is not
amortised. The carrying value of Davidoff is subject to an
annual impairment review under the requirements of IAS 36.
The most recent assessment indicates that the carrying value
is not impaired.
Amortisation and impairment of intangible assets
For non-indefinite life assets, which are amortised, the useful
economic life and recoverable amounts are estimated based
upon the expectation of the time period during which an
intangible asset will support future cash flows, and the
quantum of those cash flows. Due to estimation uncertainties
the useful economic lives and associated amortisation rates
have to be reviewed and revised where necessary. In addition,
where there are indications that the current carrying value of
an intangible asset is greater than its recoverable amount, an
impairment to the carrying value of the asset may be required.
Factors considered important that could trigger an impairment
review of intangible assets include the following:
• significant underperformance relative to historical or
projected future operating results;
• significant changes in the manner of the use of the acquired
assets or the strategy for the overall business; and
• significant negative industry or economic trends.
The complexity of the estimation process and issues related to
the assumptions, risks and uncertainties inherent in the
application of the Group’s accounting estimates in relation to
intangible assets can affect the amounts reported in the
financial statements, especially the estimates of the expected
useful economic lives and the carrying values of those assets. If
business conditions significantly change it is possible that
materially different amounts could be reported in the Group’s
financial statements in future periods. Indefinite life intangible
assets, including goodwill, are subject to annual impairment
testing where an assessment of the carrying value of the asset
against its recoverable amount is undertaken. There are long-
term uncertainties associated with estimating the value of the
recoverable amount, particularly with regard to long-term cash
flow growth rates which are influenced by the future size and
shape of the tobacco sector. While long-term growth rates
currently used in impairment assessments are based on
current best estimates of future performance, there may be
changes in these assumptions when conducting impairment
tests in subsequent years. Details of goodwill and intangible
asset impairment assessments are included in note 12.
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Corporate income taxes
Where tax liabilities have been judged to exist, estimation is
often required to determine the potential future tax payments.
The Group is subject to tax in numerous jurisdictions and
significant estimation is required in determining the provision
for tax. There are many transactions and calculations for which
the ultimate tax determination is uncertain. The Group
recognises provisions for tax based on estimates of the taxes
that are likely to become due. Where the final tax outcome is
different from the amounts that were initially recorded, such
differences will impact the current income tax and deferred tax
provisions in the period in which such determination is made.
Consideration of the valuation estimates related to tax
provisions is given in note 8 to these financial statements.
Other legal proceedings and disputes
Where a liability is determined there can be a degree of
estimation of the potential level of damages expected. Key
areas of estimation uncertainty include consideration as to the
expected future amount to be paid out in the event the claim
succeeds. In some situations where a probability risk
calculation is required to determine the amount of an
associated provision, both the quantum of future payments and
the probability of those payments crystallising needs to be
considered, both factors having a degree of uncertainty. More
detail as to the considered position of these claims is given in
note 25 and note 30 of the financial statements. To the extent
that the Group’s assessments at any time do not reflect
subsequent developments or the eventual outcome of any
claim, its future financial statements may be materially
affected, with a favourable or adverse impact upon the Group’s
operating profit, financial position and liquidity.
Climate change
The Group has a designated programme to manage and
mitigate climate-related risks. The effect of climate change is
not considered to have a material effect on the estimates in the
financial statements. Governmental and societal responses to
climate change risks are still developing and consequently
financial statements cannot capture all possible future
outcomes as these are not yet known or don't have sufficient
certainty to be taken into account when determining asset and
liability valuations and the timing of future cash flows under
the requirements of UK-adopted IAS. Please refer to the
following sections for further discussion on the impact of
climate change relating to going concern assumptions in note 1,
intangible assets impairment assumptions in note 12 and
recoverability of deferred tax assets in note 23.
Judgements
Paragraph 122 of IAS 1 requires disclosure of judgements made
by management in applying an entity’s accounting policies,
other than those relating to estimation uncertainty. Paragraph
125 of IAS 1 requires more wide-ranging disclosures of
judgements that depend on management assumptions about
the future, and other major sources of estimation uncertainty
("significant judgements").
Corporate income taxes
Judgement is involved in determining whether the Group is
subject to a tax liability or not in line with tax law. The Group is
subject to income tax in numerous jurisdictions and significant
judgement is required in determining whether there is a
liability requiring a provision for tax. Recognition of tax
liabilities in situations where there is uncertainty is based on
precedent in similar tax cases and external advice as to
whether challenges by tax authorities are likely to result in
future tax payments being made. The recognition of a tax
liability involves consideration of the probability of tax
authorities accepting the position taken in the tax return and
there is therefore some uncertainty.
Deferred tax assets
Deferred tax assets are recognised for deductible temporary
differences, unused tax losses and unused tax credits to the
extent that it is probable that taxable profit will be available
against which the temporary differences, losses and credits can
be utilised. Significant management judgement is required to
determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and the level of future
taxable profits, together with future tax planning strategies. The
Group has determined that it cannot recognise deferred tax
assets on the temporary differences, tax losses and tax credits
carried forward for certain subsidiaries. Further details of the
estimates related to deferred taxes are given in note 23 to these
financial statements.
Legal proceedings and disputes
The Group reviews outstanding legal cases following
developments in the legal proceedings at each balance sheet
date, considering the nature of the litigation, claim or
assessment; the legal processes and potential level of damages
in the jurisdiction in which the litigation, claim or assessment
has been brought; the progress of the case (including progress
after the date of the financial statements but before those
statements are issued); the opinions or views of legal counsel
and other advisers; experience of similar cases; and any
decision of the Group’s management as to how it will respond
to the litigation, claim or assessment. Judgement is required as
to whether a liability exists. A provision will only be recognised
where it is probable that the Group will be required to settle a
claim.
Control of Logista
A key judgement relates to whether the Group has effective
control of Logista sufficient that the Group can consolidate this
entity within its Group accounts in line with the requirements
of IFRS 10 Consolidated Financial Statements. The Group holds
50.01% of the voting shares. The Group has reviewed its control
of Logista and that it is appropriate to consolidate this entity in
line with the requirements of IFRS 10 Consolidated Financial
Statements. The Group continues to have Director presence
on the Board of Logista, representing 5 out of 12 Directors.
The Group has powers to control as set out in the Relationship
Framework Agreement which specifies certain areas of
operation reserved for shareholder approval and through
these measures the Group is able to exercise control of Logista.
The Group has therefore concluded that it continues to be
appropriate to recognise Logista as a fully consolidated
subsidiary.
3. SEGMENT INFORMATION
Imperial Brands comprises two distinct businesses – Tobacco & NGP and Distribution. The Tobacco & NGP business comprises the
manufacture, marketing and sale of Tobacco & NGP and Tobacco & NGP-related products, including sales to (but not by) the Distribution
business. The Distribution business comprises the distribution of Tobacco & NGP products for associated manufacturers, including
Imperial Brands, as well as a wide range of products and services. The Distribution business is run on an operationally neutral basis
ensuring all customers are treated equally, and consequently transactions between the Tobacco & NGP and Distribution businesses are
undertaken on an arm’s length basis reflecting market prices for comparable goods and services.
The function of the Chief Operating Decision Maker (defined in IFRS 8), which is to review performance and allocate resources, is
performed by the Board and the Chief Executive, who are regularly provided with information on the Group's segments. This information
is used as the basis of the segment revenue and profit disclosures provided below. The main profit measure used by the Board and the
Chief Executive is adjusted operating profit. Segment balance sheet information is not provided to the Board or the Chief Executive.
The Group's reportable segments are Europe, Americas, Africa, Asia, Australasia and Central & Eastern Europe (AAACE) and Distribution.
Operating segments are comprised of geographical groupings of business markets. The main Tobacco & NGP business markets within
the Europe, Americas and AAACE reportable segments are:
Europe – United Kingdom, Germany, Spain, Luxembourg, France, Italy, Greece, Sweden, Norway, Belgium and the Netherlands.
Americas – United States.
AAACE – Australia, Saudi Arabia, Taiwan, Poland, Czech Republic, Ukraine, Slovakia, Hungary, Slovenia and African markets including
Algeria and Morocco.
Tobacco & NGP
2024
2023
£ million unless otherwise indicated
Tobacco
NGP
Tobacco &
NGP
Tobacco
NGP
Tobacco &
NGP
Revenue
21,708
376
22,084
22,114
299
22,413
Net revenue
7,828
329
8,157
7,747
265
8,012
Operating profit/(loss)
3,321
(83)
3,238
3,262
(156)
3,106
Adjusted operating profit
3,587
3,583
Adjusted operating margin %
44.0
44.7
Distribution
£ million unless otherwise indicated
2024
2023
Revenue
11,104
10,819
Distribution gross profit
1,503
1,466
Operating profit
322
298
Adjusted operating profit
330
306
Adjusted operating margin %
22.0
20.9
Revenue
2024
2023
£ million
Total
revenue
External
revenue
Total
revenue
External
revenue
Tobacco & NGP
Europe
12,037
11,260
11,749
10,992
Americas
3,657
3,657
3,700
3,700
AAACE
6,390
6,390
6,964
6,964
Total Tobacco & NGP
22,084
21,307
22,413
21,656
Distribution
11,104
11,104
10,819
10,819
Eliminations
(777)
–
(757)
–
Total Group
32,411
32,411
32,475
32,475
The eliminations all relate to Tobacco & NGP sales to Distribution.
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Tobacco & NGP net revenue
£ million
2024
2023
Tobacco
NGP
Total
Tobacco
NGP
Total
Europe
3,106
260
3,366
3,020
220
3,240
Americas
2,793
43
2,836
2,778
34
2,812
AAACE
1,929
26
1,955
1,949
11
1,960
Total Tobacco & NGP
7,828
329
8,157
7,747
265
8,012
Adjusted operating profit and reconciliation to profit before tax
£ million
2024
2023
Tobacco & NGP
Europe
1,541
1,482
Americas
1,235
1,257
AAACE
811
844
Total Tobacco & NGP
3,587
3,583
Distribution
330
306
Eliminations
(6)
(2)
Adjusted operating profit
3,911
3,887
Russia, Ukraine and associated markets - Tobacco & NGP
–
(4)
Amortisation and impairment of acquired intangibles - Tobacco & NGP
(345)
(339)
Amortisation of acquired intangibles - Distribution
(8)
(8)
Fair value adjustment and impairment of other financial assets - Tobacco & NGP
–
(36)
Loss on disposal of subsidiaries - Tobacco & NGP
–
(1)
Charges related to legal provisions - Tobacco & NGP
–
(85)
Structural changes to defined benefit pension schemes - Tobacco & NGP
(4)
(12)
Operating profit
3,554
3,402
Net finance costs
(534)
(298)
Share of profit of investments accounted for using the equity method
9
7
Profit before tax
3,029
3,111
Other information
2024
£ million
Additions to
property, plant
and equipment
Depreciation
and software
amortisation
Other
intangible asset
amortisation
Inventory
impairments
Tobacco & NGP
Europe
60
88
7
16
Americas
30
27
1
4
AAACE
51
40
–
11
Total Tobacco & NGP
141
155
8
31
Distribution
38
37
–
–
Total Group
179
192
8
31
2023
£ million
Additions to
property, plant
and equipment
Depreciation
and software
amortisation
Other
intangible asset
amortisation
Inventory
impairments
Tobacco & NGP
Europe
69
79
10
30
Americas
36
20
1
3
AAACE
46
41
–
13
Total Tobacco & NGP
151
140
11
46
Distribution
40
41
–
–
Total Group
191
181
11
46
The above tables include items that have been recognised within segment. Materiality has been assessed on both a qualitative and
quantitative basis.
Additional geographic analysis
External revenue and non-current assets are presented for individually significant countries. The geographical analysis is based on
country of origin. The Group's products are sold in over 120 countries.
2024
2023
£ million
External
revenue
Non-current
assets
External
revenue
Non-current
assets
UK
3,781
161
3,926
148
Germany
4,501
3,156
4,142
3,245
France
3,374
2,282
3,428
2,350
USA
3,648
4,968
3,657
5,646
Other
17,107
7,350
17,322
7,553
Total Group
32,411
17,917
32,475
18,942
Non-current assets comprise intangible assets, property, plant and equipment, right of use assets and investments accounted for using
the equity method.
4. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
£ million
2024
2023
Raw materials and consumables used
950
773
Changes in inventories of finished goods - Tobacco & NGP
2,516
2,630
Changes in inventories of finished goods - Distribution
8,243
7,994
Depreciation and impairment of fixed assets
153
153
Amortisation and impairment of intangible assets and investments accounted for using the equity method
399
394
Expenses relating to short-term leases
10
4
Expenses relating to low value asset leases
2
1
Depreciation and impairment of right of use assets
95
85
Net foreign exchange gains
(3)
(11)
Write down of inventories
28
40
Profit on disposal of non-current assets
13
39
Write back of trade receivables
(3)
(5)
Analysis of fees payable to Ernst & Young LLP and its associates
£ million
2024
2023
Parent Company and consolidated financial statements
3.2
3.1
The Company's subsidiaries
6.8
6.5
Total audit fees
10.0
9.6
Audit-related assurance services
0.5
0.5
Total audit-related fees
10.5
10.1
Other assurance services
1.2
0.5
Total non-audit fees
1.2
0.5
Total auditor's remuneration
11.7
10.6
Audit fees for the year ended 30 September 2023 reflect the final amounts paid.
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159
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
5. INVESTMENT INCOME AND FINANCE COSTS
£ million
2024
2023
Investment income
Fair value gains on derivative financial instruments
513
707
Net exchange gains on financing activities
9
10
Interest income on net defined benefit assets
22
43
Interest income on bank deposits
16
12
Total investment income
560
772
Finance costs
Fair value losses on derivative financial instruments
(632)
(568)
Interest cost on net defined benefit liabilities
(33)
(30)
Tax interest cost
(10)
(50)
Interest cost on lease liabilities
(14)
(10)
Interest cost on bank and other loans
(404)
(412)
Effect of discounting on long-term provisions
(1)
–
Total finance costs
(1,094)
(1,070)
Net finance costs
(534)
(298)
Prior year amounts for interest income/(cost) on net defined benefit assets/(liabilities) have been reclassified to be in accordance with IAS
19 to show the net amounts per defined benefit scheme, having previously been presented gross. Total investment income and total
finance costs have been reclassified accordingly. The effect is offsetting in nature and reduces both amounts by £135 million. There is no
impact to net finance costs or the other primary statements.
6. RESTRUCTURING COSTS
2024
2023
£ million
Costs
Cash spend
Costs
Cash spend
2021 Strategic review programme
–
25
–
61
Other
–
18
–
37
–
43
–
98
Restructuring projects involve significant one-off costs that are incurred in integrating acquired businesses and in major rationalisation
and optimisation initiatives together with their related tax effects.
As these projects are not part of business as usual, any costs incurred are classified as restructuring costs and are included within
administrative and other expenses in the consolidated income statement and treated as adjusting items.
No accounting charges have been recognised in the current period in relation to historic restructuring programmes, however there
remain some ongoing cash costs to be incurred which are not expected to be in excess of existing provisions.
7. DIRECTORS AND EMPLOYEES
Employment costs
£ million
2024
2023
Wages and salaries
923
882
Social security costs
202
186
Other pension costs (note 24)
29
41
1,154
1,109
Share-based payments (note 27)
32
31
1,186
1,140
Operating executive (excluding executive directors)
£ million
2024
2023
Base salary
4.6
4.7
Benefits
0.7
0.9
Pension salary supplement
0.6
0.7
Bonus
4.9
4.8
Termination payments
0.2
2.1
LTIP annual vesting1
7.2
7.8
18.2
21.0
1. Share plans vesting represent the value of LTIP awards (inclusive of Recruitment Awards) where the performance periods ends in the year.
Note: aggregate remuneration paid to or receivable by Executive Directors, Non-Executive Directors and members of the Executive
Leadership Team for qualifying services in accordance with IAS 24, which includes National Insurance and similar charges,
was £37,049,852 (2023: £39,323,966).
Key management compensation1
£ million
2024
2023
Short-term employee benefits
17.7
17.0
Termination payments
0.2
2.1
Share-based payments (in accordance with IAS 24)
14.4
15.0
32.3
34.1
1. Key management includes Directors, members of the Executive Committee and the Company Secretary.
Details of Directors' emoluments and interests, and of key management compensation which represent related-party transactions
requiring disclosure under IAS 24, are provided within the Directors' Remuneration Report. The Directors' Remuneration Report includes
details on salary, benefits, pension and share plans. These disclosures form part of the financial statements.
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161
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Number of people employed by the Group during the year
2024
2023
At 30
September
Average
At 30
September
Average
Tobacco & NGP
18,900
18,400
18,800
19,100
Distribution
6,700
6,500
6,400
6,400
25,600
24,900
25,200
25,500
Number of people employed by the Group by location during the year
2024
2023
At 30
September
Average
At 30
September
Average
UK and European Union
12,400
12,100
12,200
11,900
Americas
4,900
4,700
4,700
5,100
Rest of the World
8,300
8,100
8,300
8,500
25,600
24,900
25,200
25,500
8. TAX
The major components of income tax expense for the years ended 30 September 2024 and 2023:
2024
2023
UK current tax
Current year credited to the consolidated income statement
(95)
(55)
Current year charged to consolidated other comprehensive income
197
115
Total current year UK current tax
102
60
Adjustments in respect of prior years (credited)/charged to the consolidated income statement
(80)
15
Total UK current tax
22
75
Overseas current tax
Current year charged to the consolidated income statement
704
620
Total current year overseas current tax
704
620
Adjustments in respect of prior years charged to the consolidated income statement
40
233
Total overseas current tax
744
853
Total current tax charged to the consolidated statement of other comprehensive income
766
928
£ million
2024
2023
UK current tax
Current year
(95)
(55)
Adjustments in respect of prior years
80
15
Overseas current tax
Current year
704
620
Adjustments in respect of prior years
40
233
Total current tax
569
813
Deferred tax
Relating to origination and reversal of temporary differences
(287)
(158)
Total tax charged to the consolidated income statement
282
655
£ million
2024
2023
Tax related to items recognised in consolidated other comprehensive income during the year:
Current tax on hedge of net investment and quasi-equity loans
197
115
Total current tax
197
115
Deferred tax on actuarial gains and losses
(37)
(135)
Deferred tax on hyperinflation adjustment
2
1
Total deferred tax
(35)
(134)
Total tax credited to consolidated other comprehensive income
162
(19)
£ million
2024
2023
Tax related to items recognised in equity during the year:
Current tax on share-based payments
(4)
–
Deferred tax on share-based payments
(2)
(1)
Total tax credited to equity
(6)
(1)
Factors affecting the tax charge for the year
The tax on the Group's profit before tax differs from the theoretical amount that would arise using the average UK corporation tax rate of
25.0% (2023: 22.0%) as follows:
£ million
2024
2023
Profit before tax
3,029
3,111
Tax at the UK corporation tax rate of 25.0% (2023: 22.0%)
757
684
Tax effects of:
Differences in effective tax rates on overseas earnings
(56)
24
Movement in provision for uncertain tax positions
170
211
Remeasurement of deferred tax balances arising from changes in tax rates
5
–
Recognition of deferred tax assets for tax credits
(293)
–
Remeasurement of previously recognised deferred tax assets
(2)
(6)
Increase in previously unrecognised deferred tax assets
–
1
Deferred tax on unremitted earnings
12
5
Share of profit of investments accounted for using the equity method
(2)
(2)
Non-deductible expenses
24
24
Non-taxable gains on net foreign exchange on financial instruments
(198)
(122)
Recognition of deferred tax assets
–
(212)
Provision for state aid tax recoverable
(101)
–
Adjustments in respect of prior years
(34)
48
Total tax charged to the consolidated income statement
282
655
Differences in effective tax rates on overseas earnings represent the impact of worldwide profits being taxed at rates different from 25.0%.
The remeasurement of deferred tax balances arising from changes in tax rates for the year is £5 million (2023: £nil).
During the year the Group has increased the provision for deferred tax on unremitted earnings by £7 million (2023: £5 million increase).
The tax will arise on the distribution of profits through the Group and on planned Group simplification.
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163
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Movement on the current tax account
£ million
2024
2023
At 1 October
(306)
27
Charged to the consolidated income statement
(569)
(813)
Charged to other comprehensive income
(197)
(115)
Credited to equity
4
–
Cash paid
888
590
Exchange movements
17
6
Balance sheet reclassification
–
(1)
At 30 September
(163)
(306)
The cash tax paid in the year is £303 million higher than the current tax charge (2023: £223 million lower). This arises as a result of
timing differences between the accrual of income taxes and the actual payment of cash and the movement in the provision for
uncertain tax positions.
Analysis of current tax account
£ million
2024
2023
State aid tax recoverable
101
–
Current tax assets
148
112
Current tax liabilities
(412)
(418)
(163)
(306)
Uncertain tax positions
As an international business the Group is exposed to uncertain tax positions and changes in legislation in the jurisdictions in which it
operates. The Group’s uncertain tax positions principally include cross-border transfer pricing, interpretation of new or complex tax
legislation and tax arising on the valuation of assets.
Provisions arising from uncertain tax positions taken in the calculation of tax assets and liabilities are included within current and
deferred tax liabilities. At 30 September 2024 the total value of these provisions excluding offsetting assets under mutual agreement
procedure was £365 million (2023: £261 million excluding offsetting assets). The assessment of uncertain tax positions is subjective and
significant management judgement is required. This judgement is based on current interpretation of legislation, management experience
and professional advice. Until matters are finally concluded it is possible that amounts ultimately paid will be different from the
amounts provided.
Management have assessed the Group’s provision for uncertain tax positions and have concluded that apart from the matters referred to
below the provisions in place are not material individually or in aggregate, and that a reasonably possible change in the next financial
year would not have a material impact on the results of the Group.
French tax litigation
The Group has an ongoing challenge from the French tax authorities, which is now in litigation, and could lead to total liabilities of £254
million including tax, interest, and penalties. The challenge concerns the valuation placed on the shares of Altadis Distribution France
(now known as Logista France) following an intragroup transfer of shares in October 2012 and the tax consequences flowing from a
potentially higher value that is argued for by the tax authorities. In May 2023 the Administrative Tribunal of Montreuil issued its decision,
ruling in favour of the French tax authorities. In July 2023 the Group appealed to the Administrative Court of Appeal of Paris, with any
hearing not expected until December 2024 at the earliest. Whilst the Group has appealed, in the light of the Administrative Tribunal of
Montreuil’s decision, and having subsequently reassessed the probability of a successful appeal, the Group determined it was appropriate
to maintain the provision for uncertain tax positions, of which £64 million was paid in September 2024, at £111 million (30 September 2023:
£180 million).
State aid UK CFC
In April 2019, the EU Commission’s final decision regarding its investigation into the UK’s Controlled Foreign Company (CFC) regime was
published. It concluded that the legislation up until December 2018 partially represented state aid. The UK Government (along with a
number of UK corporates, that made a similar application) appealed to the European Court seeking annulment of the EU Commission’s
decision. Based, however, on the Commission’s decision and despite the appeals, the UK Government was obliged to recover the
purported state aid received. In June 2022 the European General Court rejected the appeals, resulting in a subsequent appeal to the CJEU
in January 2024. The CJEU handed down its decision on 19 September 2024, annulling the EU Commission decision and setting aside the
judgment of the General Court, ruling that the taxation of a CFC regime did not constitute state aid. In light of the CJEU decision, the
Group has now reversed a provision in order to recognise a receivable for c.£101 million state aid (and c.£9 million of interest) previously
paid. Noting the recovery of the receivable is pending a change in UK regulations which is required to facilitate the repayment of the
previously collected state aid.
Transfer pricing
The Group has been subject to tax audits relating to transfer pricing matters in several jurisdictions, principally UK, France and Germany.
The Group holds a provision of £245 million excluding offsetting assets (2023: £68 million excluding offsetting assets) in respect of these
items. In December 2021 the Group concluded a transfer pricing audit with the French tax authorities. In September 2022 the Group
concluded transfer pricing audits with the UK and German tax authorities. Settlements of the French and UK audits were made during
2022. Settlement of the German audit was made during 2023. In September 2023 an additional separate transfer pricing audit was opened
by the German tax authorities. Due to new regulations introduced in FY24 in Germany which could be considered to be of a clarifying
nature rather than any new principle, the Group has made additional provision of £155 million considering the range of potential
outcomes and the balance of probabilities associated with each potential outcome, the maximum potential exposure being £213 million.
The Group believes the total transfer pricing provision held appropriately provides for this and other transfer pricing issues.
9. DIVIDENDS
Distributions to ordinary equity holders
Pence per share
£ million
2024
2023
2022
2024
2023
2022
Cash:
December
51.82
49.31
48.47
461
464
458
March
51.82
49.32
48.49
453
457
458
June
22.45
21.59
21.27
193
196
202
September
22.45
21.59
21.27
192
195
202
Total
148.54
141.81
139.50
1,299
1,312
1,320
The dividends note, which previously contained details of both paid and proposed distributions, has been reformatted. The table now
aligns the paid dividends with the equivalent amount recorded as a payment to equity shareholders of the Parent Company shown within
the Consolidated Statement of Changes in Equity. Details of proposed dividends are given in narrative form below. The change in the
format of this note does not constitute a restatement within the requirements of IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors.
The declared third interim dividend for the year ended 30 September 2024 of 54.26 pence per share amounts to a proposed dividend of
£459 million, which will be paid in December 2024. The proposed final dividend for the year ended 30 September 2024 of 54.26 pence per
share amounts to a proposed dividend payment of £459 million in March 2025 based on the number of shares ranking for dividend at 30
September 2024, and is subject to shareholder approval. If approved, the total dividend paid in respect of 2024 will be £1,303 million (2023:
£1,305 million). The dividend paid during 2024 is £1,299 million (2023: £1,312 million).
10. EARNINGS PER ORDINARY SHARE
Basic earnings per share is based on the profit for the period attributable to the owners of the parent and the weighted average number of
ordinary shares in issue during the period excluding shares held to satisfy the Group’s employee share schemes and shares purchased by
the Company and held as treasury shares. Diluted earnings per share have been calculated by taking into account the weighted average
number of shares that would be issued if rights held under the employee share schemes were exercised. No instruments have been
excluded from the calculation for any period on the grounds that they are anti-dilutive.
£ million
2024
2023
Earnings: basic and diluted - attributable to owners of the Parent Company
2,613
2,328
Millions of shares
Weighted average number of shares:
Shares for basic earnings per share
869.0
922.5
Potentially dilutive share options
4.9
5.7
Shares for diluted earnings per share
873.9
928.2
Pence
Basic earnings per share
300.7
252.4
Diluted earnings per share
299.0
250.8
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165
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
11. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES
Logista
Acquisition of 3 For One SA (Belgium Parcels Service SRL)
In December 2023, Logista Group reached an agreement to acquire 100% ownership of “3 for one SA”, the parent company of Belgium
Parcels Service SRL. Belgium Parcels Service SRL is a company that offers 24-hour courier services in Belgium and Luxembourg, and 24
to 48 hours delivery in the Netherlands, France and Germany. The Belgian company specialises in the distribution of temperature
sensitive products, mainly pharmaceuticals to hospitals and pharmacies.
The total purchase price of these shares amounted to approximately €8 million (£7 million).
As of 30 September 2024, the company had a goodwill of €4 million (£3 million). The valuation of the assets at fair value has been carried
out by an independent expert assessing the acquired intangible assets, which include customer relationships of €2 million (£2 million)
and trademarks for €1 million (£1 million). Cash of €2 million (£2 million), property, plant and equipment of €1 million (£1 million), and non-
current financial liabilities of €2 million (£2 million) were also acquired.
Acquisition of Speedlink Worldwide Express B.V.
On 16 February 2022, the Group’s subsidiary Logista acquired 70% of the share capital of Speedlink Worldwide Express B.V. for a purchase
consideration of €20 million (£16 million) which has been paid in cash. In May 2024, the remaining 30% of the share capital was acquired
for an amount of €10 million (£8 million).
Acquisition of Herinvemol, S.L. (Transportes El Mosca)
On 17 June 2022, the Group's subsidiary Logista announced the acquisition of 60% of the shares of Herinvemol S.L. Herinvemol S.L. is the parent
company of a group of companies over which it holds control, trading as “Transportes El Mosca”. This acquisition completed on 28 October 2022.
Transportes El Mosca offers national and international intermodal transport services by road, sea and air, as well as frozen or refrigerated
transport. The main destination markets for the international road transport activity are the United Kingdom, Germany, Portugal, France,
the Netherlands, and Italy, and its clients are mainly producers and large distribution chains in the food sector.
On 3 August 2023, Logista announced the acquisition of an additional 13.33% of equity for a consideration of €23 million (£20 million),
increasing its total ownership to 73.33%.
At 30 September 2023, Logista had a purchase option for the remaining 26.67%, which was recorded at fair value as a non-current liability
for an amount of €25 million (£22 million) and a current liability for an amount of €25 million (£22 million), with a corresponding
adjustment taken to equity reserves.
In July 2024, Logista announced the increase of its stake to 100%, with an additional payment of €44 million (£37 million). The movement,
recorded under the heading "Remeasurement of put/call option", amounting to €6 million (£5 million) corresponds to the difference
between the payment of the purchase option and its valuation as at 30 September 2023.
Acquisition of Carbó Collbatallé S. L.
In April 2022, the Group's subsidiary Logista reached an agreement for the acquisition of 100% of the shares of Carbó Collbatallé, a
company that offers transport and logistics services for refrigerated and frozen foods, which carries out its commercial activity mainly in
the Spanish market. This acquisition was completed in October 2022.
The total consideration of the shares acquired was €55 million (£46 million). The valuation of the assets at fair value has been carried out
by an independent expert. This valuation includes, as intangible assets, customer relationships for €20 million (£17 million) and
trademarks for €1 million (£1 million).
Acquisition of Gramma Farmaceutici, S.R.L.
In July 2023, the Group’s subsidiary Logista acquired 100% of the equity shares of Gramma Farmaceutici, S.R.L., a company specialised in
logistics services for the pharmaceutical industry in Italy. The total purchase price of these shares amounted to €3 million (£3 million), paid in
cash at the time of purchase. As at 30 September 2023, the company had a goodwill of €1 million (£1 million) in the Distribution segment.
The valuation of the assets at fair value has been carried out by an independent expert. This valuation includes, as intangible assets,
customer relationships for €2 million (£2 million), property plant and equipment of €2 million (£2 million), trade and other receivables of
€4 million (£3 million) and trade and other payables of €5 million (£4 million).
12. INTANGIBLE ASSETS
2024
£ million
Goodwill
Intellectual
property and
product
development
Supply
agreements
Software
Total
Cost
At 1 October 2023
13,785
13,042
1,457
630
28,914
Additions
–
115
2
143
260
Acquisitions
2
1
2
–
5
Disposals
–
(1)
(2)
(4)
(7)
Reclassifications
29
–
1
(30)
–
Exchange movements
(632)
(814)
(53)
(17)
(1,516)
At 30 September 2024
13,184
12,343
1,407
722
27,656
Amortisation and impairment
At 1 October 2023
1,556
8,650
1,389
375
11,970
Amortisation charge for the year
–
354
7
38
399
Disposals
–
–
–
(3)
(3)
Exchange movements
(56)
(525)
(50)
(17)
(648)
Accumulated amortisation
–
7,940
1,346
392
9,678
Accumulated impairment
1,500
539
–
1
2,040
At 30 September 2024
1,500
8,479
1,346
393
11,718
Net book value
At 30 September 2024
11,684
3,864
61
329
15,938
2023
£ million
Goodwill
Intellectual
property and
product
development
Supply
agreements
Software
Total
Cost
At 1 October 2022
14,228
13,871
1,433
522
30,054
Additions
–
136
1
119
256
Acquisitions
67
5
54
2
128
Disposals
–
(115)
–
(3)
(118)
Reclassifications
–
(2)
–
2
–
Exchange movements
(510)
(853)
(31)
(12)
(1,406)
At 30 September 2023
13,785
13,042
1,457
630
28,914
Amortisation and impairment
At 1 October 2022
1,587
8,925
1,414
351
12,277
Amortisation charge for the year
–
352
6
34
392
Disposals
–
(109)
–
(3)
(112)
Reclassifications
–
(1)
–
1
–
Exchange movements
(31)
(517)
(31)
(8)
(587)
Accumulated amortisation
–
8,111
1,389
374
9,874
Accumulated impairment
1,556
539
–
1
2,096
At 30 September 2023
1,556
8,650
1,389
375
11,970
Net book value
At 30 September 2023
12,229
4,392
68
255
16,944
Assets under construction included above:
At 30 September 2024
261
At 30 September 2023
160
Amortisation and impairment of acquired intangibles excluded from adjusted operating profit amounted to £353 million (2023:
£347 million); this comprises amortisation on intellectual property of £346 million (2023: £341 million) and amortisation on supply
agreements of £7 million (2023: £6 million).
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Intellectual property mainly comprises brands acquired in the USA in 2015 and through the purchases of Altadis in 2008 and
Commonwealth Brands in 2007.
Supply agreements include Distribution customer relationships acquired as part of the purchases of Altadis, Carbó Collbatallé S.L. and
Herinvemol S.L. (Transportes El Mosca) in prior financial years.
Intangible amortisation and impairment are included within cost of sales, distribution, advertising and selling costs, and administrative
and other expenses in the consolidated income statement.
Amortisation and impairment in respect of intangible assets other than software and internally generated intellectual property are
treated as reconciling items between reported operating profit and adjusted operating profit, except to the extent these have been treated
as restructuring costs.
During the period ending 30 September 2023, the Group purchased intellectual property relating to tobacco pouches to be marketed within
the United States. The purchase consideration was US$ 130 million (£106 million) comprising US$ 50 million (£41 million) which was paid
in cash on completion, deferred consideration of US$ 31 million (£25 million) paid in December 2023 and contingent consideration
estimated at US$ 49 million (£40 million) payable over a five-year period up until 2028. All deferred and contingent consideration has
been discounted at a rate of 13% and a corresponding consideration liability of US$ 81 million (£66 million) has been recognised. The total
initial intangible asset value recognised was US$ 130 million (£106 million). During the period additional contingent consideration of
US$ 56 million (£41 million) was recognised to reflect the latest sales forecast. As at 30 September 2024, the total intangible asset value
recognised was US$ 186 million (£139 million).
Goodwill and intangible asset impairment review
The Group’s Cash Generating Unit Groupings (CGUG) are used for annual goodwill impairment testing and are aligned to the Group's
operating segments, namely Europe, Americas and AAACE for the Tobacco & NGP business, and Distribution. Goodwill is allocated at a
CGUG level where components of that grouping are expected to benefit from the business combination in which the goodwill arose. The
groupings represent the lowest level at which goodwill is monitored for internal management purposes. A summary of the carrying value
of goodwill and intangible assets with indefinite lives is set out below.
2024
2023
£ million
Goodwill
Intangible
assets with
indefinite
lives
Goodwill
Intangible
assets with
indefinite
lives
Europe
3,919
296
4,123
307
Americas
3,945
–
4,147
–
AAACE
2,076
156
2,181
162
Tobacco & NGP
9,940
452
10,451
469
Distribution
1,744
–
1,778
–
11,684
452
12,229
469
Goodwill has arisen principally on the acquisitions of Reemtsma in 2002 (all CGUG), Commonwealth Brands in 2007 (USA), Altadis in 2008
(all CGUG) and ITG Brands in 2015 (USA). Intangible assets with indefinite lives relate to the tobacco trademark, Davidoff, which was
purchased as part of the acquisition of Reemtsma in 2002.
The Group tests goodwill and intangible assets with indefinite lives for impairment annually, or more frequently if there are any
indications that impairment may have arisen. The value of a CGUG is based on value in use calculations. These calculations use cash flow
projections derived from financial plans of the business which are based on detailed bottom-up market-by-market forecasts of projected
sales volumes for each product line. These forecasts reflect, on an individual market basis, numerous assumptions and estimates
regarding anticipated changes in market size, prices and duty regimes, consumer uptrading and downtrading, consumer preferences and
other changes in product mix, based on long-term market trends, market data, anticipated regulatory developments, and management
experience and expectations. We consider that pricing, market size, market shares and cost inflation are the key assumptions used in
our plans.
Growth rates and discount rates used
The compound annual growth rates implicit in these value in use calculations are shown below.
2024
2023
%
Pre-tax
discount rate
Initial growth
rate
Long-term
growth rate
Pre-tax
discount rate
Initial growth
rate
Long-term
growth rate
Europe
9.9
4.1
0.2
10.4
4.5
1.0
Americas
8.7
6.5
1.9
8.9
5.8
2.1
AAACE
13.3
2.0
1.9
12.5
4.3
2.2
Distribution
12.1
4.1
1.6
12.3
5.0
1.6
The calculation to determine the value in use involves a discounted future cash flow forecast model. Nominal cash flows are used in the
calculation which will themselves already factor in the effects of inflation. The cash flows are sourced from the Group business plan
which considers and factors in the risk of variability of future business performance and hence cash flow variation. A nominal discount
rate is used within the model based on the Group's weighted average cost of capital which is calculated using the Capital Asset Pricing
Model. As risk has been applied within the undiscounted cash flows no adjustment is made to the discount rate for risk, except for the
application of country risk premia over and above the Group’s weighted average cost of capital where appropriate.
Country-specific discount rates are used based on the Group’s weighted average cost of capital adjusted for country risk premium.
The impairment review is undertaken at a CGUG level which involves the aggregation of the individual value in use amounts for the
individual countries which constitute each CGUG. Our impairment projections are prepared under the basis set out in IAS 36 which can
differ from our internal plans.
Nominal cash flows from the business plan period are used for years one, two and three, then extrapolated out to year five using the
implicit growth rate, shown in the table above as the initial growth rate. In certain markets, the extrapolated cash flow growth rate can
exceed the long-term growth rate based on the business plan being a better reflection of the anticipated initial growth. Where there are
specific indications that the cash flow growth rates for years four and five are lower than those for the earlier years, the lower rates will be
used. Estimated long-term weighted average compound growth rates are used beyond year five.
Long-term growth rates are determined as the lower of:
• the nominal GDP growth rates for the country of operation;
• the extrapolation of the initial growth rates as estimated by management for years one to five; and
• the management long-term expectations of growth for a specific market.
Long-term growth rates are based on management’s long-term expectations, taking account of industry-specific factors such as the
nature of our products, the role of excise in government fiscal policy, and relatively stable and predictable long-term macro trends in the
tobacco industry. Year-on-year variations in initial growth rates may result in consequential changes to estimated long-term rates.
Europe's long-term growth rate reduced by 0.8%. This is primarily a reflection of a reduction in the long-term growth outlook for the
UK market.
Americas was broadly in line with the prior year growth assumptions for the initial and long-term growth rate. The key change was a 0.7%
increase in the initial growth rate driven by improved expectations for product growth, particularly related to NGP.
AAACE had a 2.3% reduction in the initial growth rate primarily driven by the lower expectation for the Australia market with other
reductions related to Morocco and Kuwait.
The Distribution initial growth rate reduced by 0.9% compared to prior year reflecting the fact that significant growth has now been
delivered in the current financial year.
Goodwill and intangible asset impairment review conclusion
Our impairment testing confirms there are sufficient cash flows to support the current carrying values of the goodwill held at 30
September 2024. Any reasonable movement in the assumptions used in the impairment tests would not result in an impairment. The
complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the
Group’s accounting estimates in relation to intangible assets can affect the amounts reported in the financial statements, especially the
estimates of the expected useful economic lives and the carrying values of those assets. If business conditions significantly change it is
possible that materially different amounts could be reported in the Group’s financial statements in future periods. There are uncertainties
associated with estimating the valuation of the recoverable amount.
At the present time the recoverable amount is significantly in excess of the carrying value of goodwill and other intangible assets.
However, given the uncertainties mentioned above this could change in the future.
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Consideration of the impact of climate change
The Group has completed an assessment of the impact of climate change which includes how it will vary future costs and therefore cash
flows. The review has concluded that there are impacts on future cash flows as a result of climate change, with the most significant being
relating to NTM and leaf costs due to increases in the operating costs of suppliers and raw materials. We have factored the additional
costs to the Group relating to forecast climate costs into our discounted cash flow forecasts used for impairment testing valuation
purposes. The modelled impact for the Group was £504 million (2023: £338 million). This concluded that there continues to be sufficient
headroom. There is therefore no impairment recognised as result of incremental climate change costs. However, the Group will continue
to review the climate change impact going forward and any future changes in impact assessment could potentially result in changes to
the impairment assessment.
Other intangible assets
Other intangible assets are considered for impairment risk. The carrying values of brand intangibles are reviewed against expected future
cash flows of associated products. Impairment will only be recognised where there is evidence that the carrying value of the brand
cannot be recovered through those cash flows. Included within these reviews is a test to determine the recoverability of the Davidoff
indefinite life brand intangible asset. The carrying value of this asset as at 30 September 2024 was £452 million (2023: £469 million).
Recoverability of Davidoff has been measured against the net brand contribution which confirms that the carrying value of the brand will
be recovered within a two-year period. No impairments (2023: £nil) have been recognised for brand intangibles.
Intellectual property and product development intangible assets have also been reviewed to identify potential impairment triggers.
No such impairment triggers were noted in the year ended 30 September 2024 and hence no impairment charge has been incurred
(2023: £nil).
No impairment charge (2023: £nil) was incurred in the year relating to software.
13. PROPERTY, PLANT AND EQUIPMENT
2024
£ million
Property
Plant and
equipment
Fixtures
and motor
vehicles
Total
Cost
At 1 October 2023
756
2,065
484
3,305
Additions
10
127
41
178
Acquisitions
–
1
–
1
Disposals
(24)
(69)
(48)
(141)
Hyperinflation adjustment (note 1)
1
10
1
12
Reclassifications
18
(5)
(13)
–
Exchange movements
(25)
(81)
(15)
(121)
At 30 September 2024
736
2,048
450
3,234
Depreciation and impairment
At 1 October 2023
177
1,203
308
1,688
Depreciation charge for the year
16
102
36
154
Impairment
(3)
2
–
(1)
Disposals
(12)
(47)
(46)
(105)
Reclassifications
–
4
(4)
–
Exchange movements
(10)
(42)
(11)
(63)
At 30 September 2024
168
1,222
283
1,673
Net book value
At 30 September 2024
568
826
167
1,561
2023
£ million
Property
Plant and
equipment
Fixtures
and motor
vehicles
Total
Cost
At 1 October 2022
806
2,080
455
3,341
Additions
3
130
58
191
Acquisitions
–
5
9
14
Disposals
(22)
(74)
(24)
(120)
Hyperinflation adjustment (note 1)
–
5
–
5
Exchange movements
(31)
(81)
(14)
(126)
At 30 September 2023
756
2,065
484
3,305
Depreciation and impairment
At 1 October 2022
181
1,200
301
1,682
Depreciation charge for the year
17
98
32
147
Impairment
–
6
–
6
Disposals
(11)
(60)
(15)
(86)
Exchange movements
(10)
(41)
(10)
(61)
At 30 September 2023
177
1,203
308
1,688
Net book value
At 30 September 2023
579
862
176
1,617
Assets under construction included above:
At 30 September 2024
122
At 30 September 2023
107
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171
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
14. RIGHT OF USE ASSETS AND LEASE LIABILITIES
The movements in right of use assets in the year were as follows:
2024
£ million
Property
Plant and
equipment
Fixtures
and motor
vehicles
Total
Net book value
At 1 October 2023
256
2
68
326
Additions and modifications
82
4
69
155
Terminations
(4)
(1)
(5)
(10)
Depreciation and impairment
(57)
(3)
(35)
(95)
Exchange movements
(10)
–
(4)
(14)
At 30 September 2024
267
2
93
362
The movements in lease liabilities in the year were as follows:
£ million
Lease
Liabilities
At 1 October 2023
349
Cash flow
(107)
Accretion of interest
14
New leases, terminations and modifications
144
Exchange movements
(14)
At 30 September 2024
386
The maturity profile and the future minimum lease payments of the carrying amount of the Group's lease liabilities and the contractual
cash flows as at 30 September 2024 are disclosed in Note 21.
The following are the amounts recognised in the consolidated income statement:
£ million
2024
2023
Expenses relating to short-term leases
10
4
Expenses relating to low value asset leases
2
1
Depreciation and impairment expense of right of use assets
95
85
Interest on lease liabilities
14
10
The movements in right of use assets in the year ending 30 September 2023 were as follows:
2023
£ million
Property
Plant and
equipment
Fixtures
and motor
vehicles
Total
Net book value
At 1 October 2022
194
3
31
228
Additions and modifications
74
3
35
112
Acquisitions
50
–
34
84
Terminations
(3)
–
(2)
(5)
Depreciation
(53)
(4)
(28)
(85)
Exchange movements
(6)
–
(2)
(8)
At 30 September 2023
256
2
68
326
The movements in lease liabilities in the year ending 30 September 2023 were as follows:
£ million
Lease
Liabilities
At 1 October 2022
248
Cash flow
(92)
Accretion of interest
10
New leases, terminations and modifications
106
Acquisitions
84
Exchange movements
(7)
At 30 September 2023
349
The maturity profile and the future minimum lease payments of the carrying amount of the Group's lease liabilities and the contractual
cash flows as at 30 September 2023 are disclosed in Note 21.
15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
The principal joint venture during the year was Global Horizon Ventures Limited. Summarised financial information for the Group's joint
ventures, which are accounted for using the equity method, is shown below:
2024
£ million
Global
Horizon
Ventures
Others
Total
Revenue
25
40
65
Profit after tax
17
3
20
Non-current assets
–
8
8
Current assets
60
62
122
Total assets
60
70
130
Current liabilities
(11)
(56)
(67)
Non-current liabilities
–
(13)
(13)
Total liabilities
(11)
(69)
(80)
Net assets
49
1
50
2023
£ million
Global
Horizon
Ventures
Others
Total
Revenue
19
28
47
Profit after tax
13
4
17
Non-current assets
–
7
7
Current assets
56
49
105
Total assets
56
56
112
Current liabilities
(7)
(41)
(48)
Non-current liabilities
–
(14)
(14)
Total liabilities
(7)
(55)
(62)
Net assets
49
1
50
Transactions and balances with joint ventures
£ million
2024
2023
Purchases from
9
4
Accounts payable to
(4)
(2)
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Movement on investments accounted for using the equity method
£ million
2024
2023
At 1 October
55
56
Share of profit for the year from joint ventures
9
7
Share of profit for the year from associates
1
2
Impairment of investment in associates
–
(2)
Dividends
(9)
(7)
Foreign exchange losses
–
(1)
At 30 September
56
55
16. INVENTORIES
£ million
2024
2023
Raw materials
960
1,159
Work in progress
84
81
Finished inventories
2,887
3,106
Other inventories
149
176
4,080
4,522
Other inventories mainly comprise duty-paid tax stamps.
Within finished inventories of £2,887 million (2023: £3,106 million) there is excise duty of £1,118 million (2023: £1,192 million).
It is generally recognised industry practice to classify leaf tobacco inventory as a current asset, although part of such inventory, because
of the duration of the processing cycle, ordinarily would not be consumed within one year. We estimate that around £204 million (2023:
£337 million) of leaf tobacco held within raw materials will not be utilised within a year of the balance sheet date.
17. TRADE AND OTHER RECEIVABLES
2024
2023
£ million
Current
Non-current
Current
Non-current
Trade receivables
2,395
1
2,211
3
Less: loss allowance
(64)
(1)
(63)
(3)
Net trade receivables
2,331
–
2,148
–
Other receivables
156
37
149
26
Prepayments
158
81
193
37
2,645
118
2,490
63
Trade receivables may be analysed as follows:
2024
2023
£ million
Current
Non-current
Current
Non-current
Within credit terms
2,194
–
1,996
–
Past due by less than 3 months
111
–
121
–
Past due by more than 3 months
26
–
31
–
Amounts that are impaired
64
1
63
3
2,395
1
2,211
3
£ million
2024
2023
At 1 October
66
79
Net decrease in provision
(1)
(13)
At 30 September
65
66
Trade receivables are reviewed by their risk profiles and loss patterns to assess credit risk. Historical and forward-looking information is
considered to determine the appropriate expected credit loss allowance. Provision levels are calculated on the residual credit risk after
consideration of any credit protection which is used by the Group. Expected credit losses (ECLs) are applied to net trade receivables which
are measured reflecting lifetime ECLs using the simplified approach.
18. CASH AND CASH EQUIVALENTS
£ million
2024
2023
Cash at bank and in hand
607
683
Short-term deposits and other liquid assets
471
662
1,078
1,345
£217 million (2023: £135 million) of total cash and cash equivalents is held in countries in which prior approval is required to transfer the
funds abroad. Nevertheless, if the Group complies with these requirements such liquid funds are at its disposition within a reasonable
period of time, which in all cases is three months or less from the date the transfer is requested.
19. TRADE AND OTHER PAYABLES
2024
2023
£ million
Current
Non-current
Current
Non-current
Trade payables
1,499
–
1,507
–
Duties payable
5,156
–
5,297
–
Other taxes and social security contributions
1,381
–
1,375
–
Other payables
623
–
526
–
Accruals
838
86
874
27
9,497
86
9,579
27
20. BORROWINGS
The Group’s borrowings, held at amortised cost, are as follows:
£ million
2024
2023
Current borrowings
Bank loans and overdrafts
34
49
Capital market issuance:
European commercial paper (ECP)
21
–
£600m 8.125% notes due March 2024
–
627
US$ 1,000m 3.125% notes due July 2024
–
823
€500m 1.375% notes due January 2025
421
–
US$ 950m 4.25% notes due July 2025
715
–
Total current borrowings
1,191
1,499
Non-current borrowings
Bank loans
–
2
Capital market issuance:
€500m 1.375% notes due January 2025
–
437
US$ 1,500m 4.25% notes due July 2025
–
1,236
€650m 3.375% notes due February 2026
553
574
US$ 750m 3.5% notes due July 2026
563
617
£500m 5.5% notes due September 2026
500
500
€750m 2.125% notes due February 2027
634
657
US$ 1,000m 6.125% notes due July 2027
752
822
US$ 1,000m 3.875% notes due July 2029
751
822
US$ 1,250m 5.5% notes due February 2030
944
–
€1,050m 5.25% notes due February 2031
898
838
£500m 4.875% notes due June 2032
505
505
€1,000m 1.75% notes due March 2033
840
872
US$ 750m 5.875% notes due July 2034
566
–
Total non-current borrowings
7,506
7,882
Total borrowings
8,697
9,381
Analysed as:
Capital market issuance
8,663
9,330
Bank loans and overdrafts
34
51
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175
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Current and non-current borrowings include interest payable of £10 million (2023: £33 million) and £102 million (2023: £96 million)
respectively as at the balance sheet date.
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 15 March 2024, £600 million 8.125% notes were repaid. On 5 April 2024, €100 million (£86 million equivalent) 5.25% notes were issued,
supplementary to the 15 February 2023 €600 million, and 12 September 2023 €350 million combined issues, listed as €1,050 million 5.25%
notes due February 2031 in the above table. On 1 July 2024, US$ 1,250 million (£984 million equivalent) 5.5% notes were issued. On 1 July
2024, US$ 750 million (£591 million equivalent) 5.875% notes were issued. On 11 July 2024, a partial repayment of the US$ 1,500 million
4.25% notes was made; US$ 550 million (£425 million equivalent) was repaid with the remaining US$ 950 million due July 2025.
On 26 July 2024, US$ 1,000 million (£777 million equivalent) 3.125% notes were repaid.
All borrowings are unsecured and the Group has not defaulted on any borrowings during the year (2023: no defaults).
The maturity profile of the Group's bonds and the contractual cash flows as at September 2024 are disclosed in note 21.
Fair value of borrowings
The fair value of borrowings as at 30 September 2024 is estimated to be £8,567 million (2023: £8,669 million). £8,533 million (2023: £8,617
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.
2024
2023
£ million
Balance
sheet
amount
Fair value
Balance
sheet
amount
Fair value
GBP
1,006
985
1,632
1,524
EUR
3,367
3,245
3,378
2,996
USD
4,290
4,303
4,320
4,097
Total capital market issuance
8,663
8,533
9,330
8,617
Undrawn revolving credit facilities
At 30 September the Group had the following undrawn committed facilities:
£ million
2024
2023
Amounts maturing:
In less than one year
853
550
Between one and two years
153
159
Between two and five years
2,608
2,866
3,614
3,575
During the year the maturity of €3,125 million of the Group's syndicated multicurrency facility of €3,493 million (2023: €3,493 million) was
extended to 30 September 2027. One existing syndicate member's participation of €184 million has a maturity date of 30 September 2025.
At 30 September another syndicate member's participation of €184 million had a maturity date of 30 March 2026; in October 2024 this
participation was sold to a new financial institution, who therefore became a syndicate member, and the maturity date was extended to
30 September 2027.
During the year six new bilateral facilities for a total £700 million were arranged, all maturing in September 2025.
21. FINANCIAL RISK FACTORS
Financial risk management
Overview
In the normal course of business, the Group is exposed to financial risks including, but not limited to, market, credit and liquidity risk. This
note explains the Group'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 operates a centralised treasury function which is responsible for the management of the financial risks of the Group, together
with its financing and liquidity requirements. Financial risks comprise, but are not limited to, exposures to funding and liquidity, interest
rate, foreign exchange and counterparty credit risk. The treasury function is also responsible for the financial risk management of the
Group’s global defined benefit pension schemes and management of Group-wide insurance programmes. The treasury function does not
operate as a profit centre, nor does it enter into speculative transactions.
The Group's treasury activities are overseen by the Treasury Committee, which meets four times per year and comprises the Chief
Financial Officer, the Director of Treasury, the Group Finance Director, the Group General Counsel, the Chief Strategy and Development
Officer and three Group Regional Finance Directors. The Treasury Committee operates in accordance with the terms of reference set out
by the Board and a policy (the Treasury Operations Policy) which sets out the expectations and boundaries to assist in the effective
oversight of treasury activities.
The Board reviews and approves all major treasury decisions.
The Group's management of financial risks covers the following:
(A) Market risk
Price risk
The Group is not exposed to equity securities price risk other than assets held by its pension funds disclosed in note 24. The Group is
exposed to commodity price risk in that there may be fluctuations in the price of tobacco leaf. As with other agricultural commodities, the
price of tobacco leaf tends to be cyclical as supply and demand considerations influence tobacco plantings in those countries where
tobacco is grown. Also, different regions may experience variations in weather patterns that may affect crop quality or supply and so lead
to changes in price. The Group seeks to reduce this price risk by sourcing tobacco leaf from a number of different countries and
counterparties and by varying the levels of tobacco leaf held. Currently, these techniques reduce the expected exposure to this risk over
the short to medium term to levels considered not material and accordingly, no sensitivity analysis has been presented.
Foreign exchange risk
The Group is exposed to movements in foreign exchange rates due to its commercial trading transactions and profits denominated in
foreign currencies, as well as the translation of cash, borrowings and derivatives held in non-functional currencies.
The Group’s financial results are principally exposed to fluctuations in euro and US dollar exchange rates. Management of the Group's
foreign exchange transaction and translation risk is addressed below.
Transaction risk
The Group’s material transaction exposures arise on costs denominated in currencies other than the functional currencies of
subsidiaries, including the purchase of tobacco leaf, which is sourced from various countries but purchased principally in US dollars, and
packaging materials which are sourced from various countries and purchased in a number of currencies. The Group is also exposed to
transaction foreign exchange risk on the conversion of foreign subsidiary earnings into sterling to fund the external dividends to
shareholders. This is managed by selling euros and US dollars monthly throughout the year. Other foreign currency flows are matched
where possible and remaining foreign currency transaction exposures are not hedged.
Translation risk
The Group's currency mix of debt and related derivatives is held with consideration to the currency mix of its net assets and profits,
which are primarily euros and US dollars. The Group issues debt in the most appropriate market or markets at the time of raising new
finance and has a policy of using cross-currency swap derivative financial instruments to change the currency of debt as required.
Borrowings denominated in, or swapped into, foreign currencies to match the Group’s investments in overseas subsidiaries are treated as
a hedge against the net investment where appropriate.
Foreign exchange sensitivity analysis
The Group's sensitivity to foreign exchange rate movements, which impacts the translation of monetary items held by subsidiary
companies in currencies other than their functional currencies, is illustrated on an indicative basis below. The sensitivity analysis has
been prepared on the basis that net debt and the proportion of financial instruments in foreign currencies remain constant, and that there
is no change to the net investment hedge designations in place at 30 September 2024. The sensitivity analysis does not reflect any
change to revenue or 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.
2024
2023
£ million
Increase/
(decrease)
in income
Increase/
(decrease)
in income
Income statement impact of non-functional currency foreign exchange exposures:
10% appreciation of sterling against euro (2023: 10%)
87
33
10% appreciation of sterling against US dollar (2023: 10%)
(17)
(9)
10% depreciation of sterling against euro (2023: 10%)
(106)
(41)
10% depreciation of sterling against US dollar (2023: 10%)
20
11
Movements in equity in the table below relate to intercompany loans treated as quasi-equity under IAS 21 and hedging instruments
designated as net investment hedges of the Group's euro and US dollar denominated assets.
2024
2023
£ million
Change in
equity
Change in
equity
Equity impact of non-functional currency foreign exchange exposures:
10% appreciation of sterling against euro (2023: 10%)
928
1,035
10% appreciation of sterling against US dollar (2023: 10%)
272
205
10% depreciation of sterling against euro (2023: 10%)
(1,134)
(1,265)
10% depreciation of sterling against US dollar (2023: 10%)
(332)
(250)
At 30 September 2024, after the effect of derivative financial instruments, approximately 102% of the Group’s net debt was denominated in
euro and non US dollar currencies (2023: 111%) and (2)% in US dollars (2023: (11)%).
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Interest rate risk
The Group'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 Group to cash flow interest rate risk. Borrowings
at fixed rates expose the Group to fair value interest rate risk.
The Group manages its exposure to interest rate risk on its borrowings by entering into derivative financial instruments, interest rate
swaps, to achieve an appropriate mix of fixed and floating interest rate debt in accordance with the Treasury Operations Policy and
Treasury Committee discussions.
As at 30 September 2024, after adjusting for the effect of derivative financial instruments detailed in note 22, approximately 109% (2023:
107%) of reported net debt was at fixed rates of interest and (9)% (2023: (7)%) was at floating rates of interest. After adjusting for cash held in
subsidiary bank accounts and cash in transit, accrued interest, the mark to market of the derivative portfolio, finance leases, and the trade
receivables that were sold to a financial institution under a non-recourse factoring arrangement, approximately 97% (2023: 94%) of debt
was at fixed rates of interest and 3% (2023: 6%) was at floating rates of interest.
Interest rate sensitivity analysis
The Group'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 Group's income statement reflects the effect on net finance
costs in respect of the Group's net debt and the fixed to floating rate debt ratio prevailing at 30 September 2024, 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
net impact on other comprehensive income.
2024
2023
£ million
Change in
income
Change in
income
Income statement impact of interest rate movements:
+/- 1% increase in euro interest rates (2023: 1%)
1
12
+/- 1% increase in US dollar interest rates (2023: 1%)
(2)
(9)
(B) Credit risk
IFRS 9 requires an expected credit loss (ECL) model to be applied to financial assets. The expected credit loss model requires the Group 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 Group is primarily exposed to credit risk arising from the
extension of credit to its customers, on cash deposits and derivatives. The maximum aggregate credit risk to these sources was
£3,947 million at 30 September 2024 (2023: £4,507 million).
Trade and other receivables
Policies are in place to manage the risk associated with the extension of credit to third parties to ensure that commercial intent is
balanced effectively with credit risk management. Subsidiaries have policies in place that require appropriate credit checks on customers
and credit is extended with consideration to financial risk and creditworthiness. If a customer requires credit beyond an acceptable limit,
security may be put in place to minimise the financial impact in the event of a payment default. Instruments that may typically be used
as security include non-recourse receivables factoring and bank guarantees. At 30 September 2024 the level of trade receivables that were
sold to a financial institution under a non-recourse factoring arrangement, and subsequently derecognised, totalled £570 million (2023:
£570 million). The total value of trade receivables reclassified as fair value was £53 million at 30 September 2024 (2023: £22 million). There
was no valuation difference between amortised cost and fair value. Analysis of trade and other receivables is provided in note 17.
Financial instruments
In order to manage its credit risk to any one counterparty, the Group 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 Operations Policy. 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.
The table below summarises the Group's largest exposures to financial counterparties as at 30 September 2024. At the balance sheet date
management does not expect these counterparties to default on their current obligations.
2024
2023
Counterparty exposure
Maximum
exposure to
credit risk
£ million
Maximum
exposure to
credit risk
£ million
Highest
253
311
2nd highest
134
104
3rd highest
50
84
4th highest
27
83
5th highest
10
80
These exposures are held with counterparties with investment grade credit ratings or in money market funds with a AAA rating.
(C) Liquidity risk
The Group is exposed to liquidity risk, which represents the risk of having insufficient funds to meet its financing needs in any particular
location when needed. To manage this risk the Group has a policy of actively maintaining a mixture of short, medium and long-term
committed facilities that are structured to ensure that the Group 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 term loans, bank revolving credit facilities and European commercial paper.
The Group primarily borrows centrally in order to meet forecast funding requirements, and the treasury function is in regular dialogue
with subsidiary companies to ensure their liquidity needs are met. Subsidiary companies 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 where possible in order to minimise external borrowing requirements and interest costs.
Treasury invests surplus cash in bank deposits and money market funds and uses foreign exchange contracts to manage short term
liquidity requirements in line with short-term cash flow forecasts. As at 30 September 2024, the Group held liquid assets of £1,078 million
(2023: £1,345 million).
The table below summarises the Group’s non-derivative financial liabilities by maturity based on their contractual cash flows as at
30 September 2024. 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 Group's derivative financial instruments are detailed in note 22.
2024
£ million
Balance sheet
amount
Contractual
cash flows
total
<1 year
Between 1 and
2 years
Between 2 and
5 years
> 5 years
Non-derivative financial liabilities:
Bank loans
34
34
34
–
–
–
Capital market issuance
8,663
10,218
1,497
1,911
2,752
4,058
Trade payables
1,499
1,499
1,499
–
–
–
Lease liabilities
386
435
96
82
144
113
Total non-derivative financial liabilities
10,582
12,186
3,126
1,993
2,896
4,171
2023
£ million
Balance sheet
amount
Contractual
cash flows
total
<1 year
Between 1 and
2 years
Between 2 and
5 years
> 5 years
Non-derivative financial liabilities:
Bank loans
51
51
49
2
–
–
Capital market issuance
9,330
10,663
1,767
1,951
3,651
3,294
Trade payables
1,507
1,507
1,507
–
–
–
Lease liabilities
349
406
82
70
114
140
Total non-derivative financial liabilities
11,237
12,627
3,405
2,023
3,765
3,434
Capital management
The Group defines capital as adjusted net debt and equity and manages its capital structure through an appropriate balance of debt and
equity in order to drive an efficient mix for the Group. Besides the minimum capitalisation rules that may apply to subsidiaries in certain
countries, the Group’s only externally imposed capital requirements are interest cover and gearing covenants contained within its core
external bank debt facilities, with which the Group was fully compliant during the current and prior periods and expects to be so going
forward. Management have assessed that the likelihood of a future covenant breach is remote.
The Group continues to manage its capital structure to maintain investment grade credit ratings which it monitors by reference to a
number of key financial ratios, including ongoing consideration of the return of capital to shareholders via regular dividend payments
and share buybacks and in on-going discussions with the relevant rating agencies.
As at 30 September 2024 the Group was rated Baa3/positive outlook by Moody’s Investor Service Ltd, BBB/A-2/stable outlook by Standard
and Poor’s Credit Market Services Europe Limited and BBB/F2/stable outlook by Fitch Ratings Limited.
The Group regards its total capital as follows.
£ million
2024
2023
Adjusted net debt
7,740
8,026
Equity attributable to the owners of the parent
5,442
6,021
Total capital
13,182
14,047
Hedge accounting
The Group has investments in foreign operations which are consolidated in its financial statements and whose functional currencies are
euros or US dollars. Where it is practicable and cost effective to do so, the foreign exchange rate exposures arising from these investments
are hedged through the use of cross-currency swaps, foreign exchange swaps and foreign currency denominated debt.
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
The Group only designates the undiscounted spot element of the cross-currency swaps, foreign exchange swaps and foreign currency
debt as hedging instruments. Changes in the fair value of the cross-currency swaps and foreign exchange swaps attributable to changes
in interest rates and the effect of discounting are recognised directly in profit or loss within the “Net finance costs” line. These amounts
are, therefore, not included in the hedge effectiveness assessment.
Net investment gains and losses are reported in exchange movements within other comprehensive income and the hedging instrument
foreign currency gains and losses deferred to the foreign currency revaluation reserve are detailed in the statement of changes in equity.
The Group establishes the hedging ratio by matching the notional balance of the hedging instruments with an equal notional balance of
the net assets of the foreign operation. Given that only the undiscounted spot element of hedging instruments is designated in the
hedging relationship, no ineffectiveness is expected unless the notional balance of the designated hedging instruments exceeds the total
balance of the foreign operation’s net assets during the reporting period. The foreign currency risk component is determined as the
change in the carrying amount of designated net assets of the foreign operation arising solely from changes in spot foreign currency
exchange rates.
All net investment hedges were fully effective at 30 September 2024.
The following table sets out the maturity profile of the hedging instruments used in the Group's net investment hedging strategies:
2024
£ million
Total
notional
balance
Maturity
<1 year
Between 1 and
2 years
Between 2 and
5 years
> 5 years
Bonds
(4,595)
(438)
(1,103)
(2,120)
(934)
Cross-currency swaps
(5,501)
(1,715)
(1,099)
(1,581)
(1,106)
(10,096)
(2,153)
(2,202)
(3,701)
(2,040)
£ million
2023
Total
notional
balance
Maturity
<1 year
Between 1 and
2 years
Between 2 and
5 years
> 5 years
Bonds
(3,897)
–
(433)
(2,645)
(819)
Cross-currency swaps
(5,986)
(1,447)
(1,214)
(1,971)
(1,354)
Foreign exchange swaps
(541)
(541)
–
–
–
(10,424)
(1,988)
(1,647)
(4,616)
(2,173)
The following table contains details of the hedging instruments and hedged items used in the Group's net investment hedging strategies:
2024
£ million
Notional
balance
Carrying amount
Balance sheet line item
Changes in fair
value used for
calculating hedge
in-effectiveness
Assets
Liabilities
Hedging instrument:
Bonds
4,595
–
4,584
Borrowings
321
Cross-currency swaps
5,501
118
76
Derivative financial instruments
213
Foreign exchange swaps
–
–
–
Derivative financial instruments
6
Hedged item:
Investment in a foreign operation
n/a
10,096
–
540
2023
£ million
Notional balance
Carrying amount
Balance sheet line item
Changes in fair
value used for
calculating hedge
in-effectiveness
Assets
Liabilities
Hedging instrument:
Bonds
3,897
–
3,929
Borrowings
338
Cross-currency swaps
5,986
–
249
Derivative financial instruments
75
Foreign exchange swaps
541
1
–
Derivative financial instruments
14
Hedged item:
Investment in a foreign operation
n/a
10,424
–
427
Reconciliation of changes in the value of net investment hedges:
£ million
2024
At the
beginning of
the year
Income
statement
Other
comprehensive
income
Designations/(de-
designations)
At the end
of the year
Derivatives in net investment hedges of foreign
operations
(248)
71
219
–
42
Bonds in net investment hedges of foreign operations
(3,929)
42
321
(1,018)
(4,584)
Total
(4,177)
113
540
(1,018)
(4,542)
2023
£ million
At the
beginning of
the year
Income
statement
Other
comprehensive
income
Designations/(de-
designations)
At the end
of the year
Derivatives in net investment hedges of foreign
operations
(338)
1
89
–
(248)
Bonds in net investment hedges of foreign operations
(5,414)
(3)
338
1,150
(3,929)
Total
(5,752)
(2)
427
1,150
(4,177)
The Group also treats certain permanent intragroup loans that meet relevant qualifying criteria under IAS 21 as part of its net investment
in foreign operations where appropriate. Intragroup loans with a notional value of €3,714 million (£3,099 million equivalent) (2023: €3,714
million (£3,217 million equivalent)) were treated as part of the Group’s net investment in foreign operations at the balance sheet date.
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180
181
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
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 fair values are determined based on observable market data such as yield curves, foreign exchange
rates and credit default swap prices to calculate the present value of future cash flows associated with each derivative at the balance
sheet date (Level 2 classification hierarchy per IFRS 7). Market data is sourced from a reputable financial data provider and valuations are
validated by reference to counterparty valuations where appropriate. Some of the Group's derivative financial instruments contain early
termination options and these have been considered when assessing the element of the fair value related to credit risk. On this basis the
reduction in reported net derivative liabilities due to credit risk is £12 million (2023: £2 million) and would have been a £15 million (2023:
£5 million) reduction without considering the early termination options. 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.
Netting arrangements of financial instruments
The following tables set out the Group's financial assets and financial liabilities that are subject to netting and set-off arrangements.
2024
£ million
Gross
financial
assets/
(liabilities)
Net financial
assets/
(liabilities) per
balance sheet
Related
amounts not
set-off in the
balance sheet
Net
Assets
Derivative financial instruments
474
474
(462)
12
Liabilities
Derivative financial instruments
(809)
(809)
462
(347)
2023
£ million
Gross
financial
assets/
(liabilities)
Net financial
assets/
(liabilities) per
balance sheet
Related
amounts not
set-off in the
balance sheet
Net
Assets
Derivative financial instruments
950
950
(817)
133
Liabilities
Derivative financial instruments
(1,003)
(1,003)
817
(186)
The table below sets out the Group's accounting classification of each class of financial assets and liabilities:
2024
£ million
Fair value
through
income
statement
Fair value
through other
comprehensive
income
Assets and
liabilities at
amortised
cost
Total
Current
Non-Current
Trade and other receivables
–
–
2,524
2,524
2,487
37
Cash and cash equivalents
–
–
1,078
1,078
1,078
–
Derivatives
356
118
–
474
144
330
Total financial assets
356
118
3,602
4,076
3,709
367
Borrowings
–
–
(8,697)
(8,697)
(1,191)
(7,506)
Trade and other payables
–
–
(8,659)
(8,659)
(8,659)
–
Derivatives
(733)
(76)
–
(809)
(187)
(622)
Lease liabilities
–
–
(386)
(386)
(86)
(300)
Total financial liabilities
(733)
(76)
(17,742)
(18,551)
(10,123)
(8,428)
Total net financial assets/(liabilities)
(377)
42
(14,140)
(14,475)
(6,414)
(8,061)
2023
£ million
Fair value
through
income
statement
Fair value
through other
comprehensive
income
Assets and
liabilities at
amortised
cost
Total
Current
Non-current
Trade and other receivables
–
–
2,323
2,323
2,297
26
Cash and cash equivalents
–
–
1,345
1,345
1,345
–
Derivatives
949
1
–
950
126
824
Total financial assets
949
1
3,668
4,618
3,768
850
Borrowings
–
–
(9,381)
(9,381)
(1,499)
(7,882)
Trade and other payables
–
–
(8,705)
(8,705)
(8,705)
–
Derivatives
(754)
(249)
–
(1,003)
(174)
(829)
Lease liabilities
–
–
(349)
(349)
(81)
(268)
Total financial liabilities
(754)
(249)
(18,435)
(19,438)
(10,459)
(8,979)
Total net financial assets/(liabilities)
195
(248)
(14,767)
(14,820)
(6,691)
(8,129)
Derivatives classified as fair value through other comprehensive income relate to cross-currency swaps and foreign exchange swaps
designated as hedges of foreign currency denominated net investments. The Group only designates the undiscounted foreign exchange
spot element of these derivative instruments and the changes in fair value related to this element are posted to other comprehensive
income. Changes in the fair value of these derivative instruments attributable to changes in interest rates and the effect of discounting
are recognised in the income statement. The Group also designates certain external borrowings as hedges of foreign currency
denominated net investments and the foreign exchange revaluation of those external borrowings is recognised in other comprehensive
income. The carrying value at 30 September 2024 of those external borrowings included in the above table is £4,639 million (2023: £3,929
million). All of the Group's net investment hedges remain effective.
22. DERIVATIVE FINANCIAL INSTRUMENTS
The Group’s derivative financial instruments held at fair value, are as follows.
2024
2023
£ million
Assets
Liabilities
Net fair value
Assets
Liabilities
Net fair value
Current derivative financial instruments:
Interest rate swaps
65
(54)
11
30
(66)
(36)
Foreign exchange contracts
1
(4)
(3)
12
(5)
7
Cross-currency swaps
78
(129)
(51)
84
(103)
(19)
Total current derivatives
144
(187)
(43)
126
(174)
(48)
Non-current derivative financial instruments:
Interest rate swaps
240
(365)
(125)
745
(652)
93
Cross-currency swaps
90
(257)
(167)
79
(177)
(98)
Total non-current derivatives
330
(622)
(292)
824
(829)
(5)
Total carrying value of derivative financial
instruments
474
(809)
(335)
950
(1,003)
(53)
Analysed as:
Interest rate swaps
305
(419)
(114)
775
(718)
57
Foreign exchange contracts
1
(4)
(3)
12
(5)
7
Cross-currency swaps
168
(386)
(218)
163
(280)
(117)
Total carrying value of derivative financial
instruments
474
(809)
(335)
950
(1,003)
(53)
The classification of these derivative assets and liabilities under the IFRS 7 fair value hierarchy is provided in note 21.
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182
183
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
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. For the purposes of the above and following analysis, maturity dates have been
based on the likelihood of any early termination options being exercised with consideration to counterparty expectations and market
conditions prevailing as at 30 September 2024.
The table below summarises the Group's derivative financial instruments by maturity based on their remaining contractual cash flows as
at 30 September 2024. The amounts disclosed are the undiscounted cash flows calculated using interest rates and spot rates of exchange
prevailing at the relevant balance sheet date. Contractual cash flows in respect of the Group's non-derivative financial instruments are
detailed in note 21.
2024
£ million
Balance sheet
amount
Contractual
cash flows
total
<1 year
Between 1 and
2 years
Between 2 and
5 years
>5 years
Net settled derivatives
(114)
194
10
1
117
66
Gross settled derivatives
(221)
–
–
–
–
–
• receipts
–
20,719
6,490
2,730
5,762
5,737
• payments
–
(20,770)
(6,497)
(2,719)
(5,772)
(5,782)
(335)
143
3
12
107
21
2023
£ million
Balance sheet
amount
Contractual
cash flows
total
<1 year
Between 1 and
2 years
Between 2 and
5 years
>5 years
Net settled derivatives
57
200
(3)
34
143
26
Gross settled derivatives
(110)
–
–
–
–
–
• receipts
–
17,822
5,429
4,010
5,283
3,100
• payments
–
(17,675)
(5,374)
(3,941)
(5,247)
(3,113)
(53)
347
52
103
179
13
Derivatives as hedging instruments
As outlined in note 21, the Group hedges its underlying interest rate exposure and foreign currency translation exposures in an efficient,
commercial and structured manner, primarily using interest rate swaps and cross-currency swaps. Foreign exchange contracts are used
to manage the Group’s short term liquidity requirements in line with short term cash flow forecasts as appropriate.
The Group 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 unless they are designated as hedges of a net
investment in foreign operations, in which case they are recognised in other comprehensive income.
Interest rate swaps
To manage interest rate risk on its borrowings, the Group issues debt in the market or markets that are most appropriate at the time of
raising new finance with regard to currency, interest denomination or duration, and then uses interest rate swaps to re-base the debt into
the appropriate proportions of fixed and floating interest rates. Interest rate swaps are also transacted to manage and re-profile the
Group's interest rate risk over the short, medium and long term in accordance with the Treasury Operations Policy as approved by the
Treasury Committee. Fair value movements are recognised in net finance costs in the relevant reporting period.
As at 30 September 2024, 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 was £6,349 million equivalent (2023: £8,111 million equivalent) with a fair
value of £339 million liability (2023: £714 million liability). The fixed interest rates vary from 1.3% to 5.4% (2023: 1.3% to 7.9%), and the
floating rates are based on EURIBOR, SONIA and SOFR.
As at 30 September 2024, 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 was £12,119 million equivalent
(2023: £11,622 million equivalent) with a fair value of £225 million asset (2023: £771 million asset). The fixed interest rates vary from 3.1%
receivable to 4.0% payable (2023: 3.1% receivable to 4.0% payable), and the floating receivable rates reference EURIBOR and SOFR. This
includes forward starting interest rate swaps with a total notional amount of £4,719 million equivalent (2023: £4,055 million equivalent)
with tenors between 1 and 10 years, starting between October 2024 and May 2032.
Cross-currency swaps
The Group enters into cross-currency swaps to convert 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 net finance costs in the relevant reporting period
unless the swaps are designated as hedges of a net investment in foreign operations, in which case the fair value movement attributable
to changes in foreign exchange rates are recognised in other comprehensive income.
As at 30 September 2024, the notional amount of cross-currency swaps entered into to convert sterling debt into the desired currency
was £1,000 million (2023: £1,600 million) and the fair value of these swaps was £76 million net liability (2023: £111 million net liability); the
notional amount of cross-currency swaps entered into to convert US dollar debt into the desired currency was US$ 6,950 million
(2023: US$ 5,250 million) and the fair value of these swaps was £142 million net liability (2023: £6 million net liability). This includes
forward starting cross-currency swaps with a total notional amount of US$ 1,250 million equivalent (2023: no forward starting cross-
currency swaps) with tenors of 4.5 years, starting in July 2025.
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 2024, the notional amount of these contracts was £842 million equivalent (2023: £2,020 million equivalent) and the fair value of
these contracts was a net liability of £3 million (2023: £7 million net asset).
Hedges of net investments in foreign operations
As at 30 September 2024, cross-currency swaps with a notional amount of €6,593 million (2023: €6,910 million) were designated as hedges
of net investments in foreign operations. During the year, foreign exchange translation gains amounting to £213 million (2023: £75 million
gains) were recognised within exchange movements in other comprehensive income in respect of cross-currency swaps designated as
hedges of a net investment in foreign operations. No hedging ineffectiveness occurred during the year (2023: £nil).
As at 30 September 2024, foreign exchange swaps with a notional amount of €nil (2023: €624 million) were designated as hedges of net
investments in foreign operations. During the year, foreign exchange translation gains amounting to £6 million (2023: £14 million gains)
were recognised within exchange movements in other comprehensive income in respect of foreign exchange swaps that had been
designated as hedges of a net investment in foreign operations. No hedging ineffectiveness occurred during the year (2023: £nil).
The movements in other comprehensive income due to net investment hedging in the period were as follows:
£ million
2024
2023
Foreign exchange gains on borrowings
321
338
Foreign exchange gains on derivative financial instruments
219
89
540
427
23. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax relates to the following:
£ million
Consolidated
income
statement
2024
Consolidated
income
statement
2023
Consolidated
balance
sheet
2024
Consolidated
balance
sheet
2023
Temporary differences on depreciation and amortisation
(53)
164
(711)
(716)
Retirement benefits
(5)
(9)
48
30
Tax credits and losses
393
6
579
282
Accruals, provisions and other temporary differences
(48)
(3)
193
186
Deferred tax benefit
287
158
Net deferred tax assets/(liabilities)
109
(218)
Reflected in the consolidated balance sheet as follows
£ million
2024
2023
Deferred tax assets
889
653
Deferred tax liabilities
(780)
(871)
109
(218)
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Reconciliation of net deferred tax liabilities
£ million
2024
2023
At 1 October
(218)
(522)
Credited to the income statement
287
158
Credited to other comprehensive income
36
134
Credited to equity
2
1
Acquisitions
–
(15)
Exchange movements
2
22
Other movements
(16)
4
As at 30 September
109
(218)
Unrecognised deferred tax assets
£ million
Gross
2024
Net
2024
Gross
2023
Net
2023
Tax losses
245
64
235
62
Tax credits
806
282
15
15
Other temporary differences
77
22
84
24
1,128
368
334
101
Analysis of unrecognised deferred tax assets by expiry date
£ million
Gross
2024
Net
2024
Gross
2023
Net
2023
Tax losses expiring:
No expiry
245
64
235
62
245
64
235
62
Tax credits expiring:
Within 1 year
–
–
15
15
No expiry
806
282
–
–
806
282
15
15
Other temporary differences expiring:
No expiry
77
22
84
24
77
22
84
24
In December 2021, the OECD issued model rules for a new global minimum tax framework (Pillar Two), applicable for multinational
enterprise groups with global revenue over €750 million. The legislation implementing the rules in the UK was substantively enacted on
20 June 2023 and will apply to the Group from the financial year ending 30 September 2025 onwards. The Group has applied the
mandatory exception under IAS 12 in relation to the accounting for deferred tax assets and liabilities arising from the implementation of
the Pillar Two model rules.
Based on the assessments carried out so far, although additional tax liabilities are expected to be incurred, the Group does not expect any
significant exposure to Pillar Two income taxes in those jurisdictions where the minimum tax requirement is not met, based
predominantly on the data for the year ended 30 September 2023. The Group is continuing to review this legislation and monitors the
status of implementation of the model rules outside of the UK to assess the potential impact.
Included within net deferred tax liabilities are deferred tax assets recognised of £213 million (2023: £257 million) for tax credits arising in
the Group's Spanish business. These tax credits have no time expiry. Utilisation of these tax credits is restricted to 50% of the Spanish
business' taxable profits arising in any given year; those tax law restrictions extend the period over which the deferred tax assets would
otherwise be recovered. The Group considers there to be forecast future taxable profits which support the recognition of these long term
deferred tax assets. The period over which these deferred tax assets are utilised is sensitive to forecasting assumptions about future
growth rates (which may be influenced by the future effects of climate change) and regulatory changes. Any material effects of climate
change in the long term could extend the period over which the deferred tax asset will be recovered but as the tax credits do not expire,
the Group considers there is positive evidence that sufficient future taxable profits would still be available. Based on a range of forecast
scenarios modelling sensitivities (including the future effects of climate change) these deferred tax assets are expected to be utilised over
a period of 16 years.
Included within net deferred tax liabilities are deferred tax assets recognised for retirement benefits of £98 million (2023: £88 million)
arising in the Group's German business. These deferred tax assets are expected to be recovered both by way of utilisation against the
reversal of deferred tax liabilities of £49 million (2023: £40 million) arising in the Group's German business and by way of utilisation
against future taxable profits. The Group considers there to be forecast future taxable profits which support the recognition of these long
term deferred tax assets. Based on a range of forecast scenarios modelling sensitivities these deferred tax assets are expected to be
recovered over a period of 20-40 years corresponding to the life of the pension scheme. The period over which these deferred tax assets
are utilised is sensitive to forecasting assumptions about future growth rates of the underlying business (which may be influenced by the
future effects of climate change) and regulatory changes.
Included within net deferred tax liabilities are deferred tax assets recognised for intangibles of £179 million (2023: £199 million) arising in
the Group's Dutch business. These deferred tax assets are expected to be recovered by way of utilisation against future taxable profits. The
Group considers there to be forecast future taxable profits which support the recognition of these long term deferred tax assets. The
period over which these deferred tax assets are utilised is sensitive to forecasting assumptions about future growth rates (which may be
influenced by the future effects of climate change) and regulatory changes. These deferred tax assets are expected to be recovered over a
period of 15 years corresponding to the life of the intangibles.
Included within net deferred tax liabilities are deferred tax assets recognised of £293 million (2023: £0 million) in relation to tax credits
brought forward within the Group’s Maltese treasury centre, recognised as a result of clarifying tax guidance issued by the tax authorities
during FY24 and the resulting intention to utilise these brought forward tax credits against taxable income arising from long-term loans
of a fixed term tenure, which were refinanced during the financial year. The period over which these deferred tax assets are utilised is
sensitive to forecasting assumptions about future growth rates of the underlying business (which may be influenced by the future effects
of climate change) and regulatory changes. The Group considers there is positive evidence that sufficient future taxable profits would still
be available. Based on a range of forecast scenarios modelling sensitivities these deferred tax assets are expected to be utilised over a
period of 5-10 years. Tax losses arising within the Maltese group in periods prior to the formation of tax fiscal units, are kept in abeyance
and therefore unavailable for utilisation within the fiscal unit and no deferred tax asset has been recognised thereon, but amounts are
included within unrecognised deferred tax.
We have reviewed the recoverability of deferred tax assets in overseas territories in the light of forecast business performance. In 2024 we
have recognised deferred tax assets of £3 million that were previously unrecognised (2023: recognised deferred tax assets of £6 million
that were previously unrecognised) on the basis that it is more likely than not that these are recoverable.
A deferred tax liability of £46 million (2023: £43 million) is recognised in respect of taxation expected to arise on the future distribution of
unremitted earnings totalling £2.17 billion (2023: £2 billion).
The temporary differences associated with investments in the Group's subsidiaries, associates and joint ventures for which a deferred tax
liability has not been recognised in the periods presented, aggregate to £1,472 million (2023: £1,477 million) for which a deferred tax
liability of £37 million (2023: £38 million) has not been recognised. No liability has been recognised because the Group is in a position to
control the timing of the reversal of those temporary differences and it is probable that such differences will not reverse in the
foreseeable future.
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186
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
24. RETIREMENT BENEFIT SCHEMES
The Group operates a number of retirement benefit schemes for its employees, including both defined benefit and defined contribution
schemes. The Group's three principal schemes are defined benefit schemes and are operated by Imperial Tobacco Limited (ITL) in the UK,
Reemtsma Cigarettenfabriken GmbH in Germany and ITG Brands in the USA; these schemes represent 66%, 16% and 7% of the Group's
total defined benefit obligations (2023: 64%, 15% and 9%) and 0%, 41% and 11% of the current service cost (2023: 22%, 32% and 8%)
respectively.
Imperial Tobacco Pension Fund
The UK scheme, the Imperial Tobacco Pension Fund ("ITPF"), was closed to future accrual on 30 September 2023. All active members are
now enrolled into the defined contribution scheme as of 1 October 2023 alongside all new employees that have joined since 1 October
2010. Former active members of the defined benefit section of the ITPF are now deferred members who are able to draw their pension in
the same way as an existing deferred member and are in receipt of annual inflationary increases as existing deferred members. The
impact of the closure to future accrual was reported in the 2023 consolidated income statement. A further cost of £5.6 million is reported
in the 2024 consolidated income statement due to a legal ruling in the year which has become applicable to ITL. The ruling required some
elements of the compensation paid in 2023 to be subject to income tax and national insurance which ITL agreed to cover for impacted
members if such a ruling were made. The ITPF defined benefit obligation comprises 78% in respect of pensioners and dependants, 22% in
respect of deferred members and has a weighted average maturity of 12 years.
The ITPF operates under trust law and is managed and administered by the Trustees on behalf of the members in accordance with the
terms of the Trust Deed and Rules and relevant legislation. The ITPF assets are held by the trust.
The main risk for the company in respect of the ITPF is that additional contributions are required if the assets are not expected to be
sufficient to pay for the benefits. The investment portfolio is subject to a range of risks typical of the asset classes held, such as liquidity to
manage the Liability Driven Investment (LDI) portfolio, credit exposure within investment funds and exposure to the property market. The
ITPF holds a buy-in policy with Standard Life as an asset; this covers around 61% of the pensioner defined benefit obligation. The buy-in
eliminates investment return, longevity, inflation and funding risks in respect of those benefits covered. The ITPF also has access to a
loan facility to provide short-term liquidity to support the LDI portfolio in the event of significant changes in government bond yields.
The main uncertainties affecting the level of benefits payable under the ITPF are future inflation levels, as these impact increases to
pensions, and the actual longevity of the membership.
The contributions paid to the ITPF are set by the ITPF Scheme Actuary every three years. The Scheme Actuary is an external consultant,
appointed by the Trustees. Principal factors that the Scheme Actuary will have regard to include the covenant offered by the company,
the level of risk in the ITPF, the expected return on assets, the results of the funding assessment on the Technical Provisions basis and
the expected cost of securing benefits if the ITPF were to be wound up.
The latest valuation agreed at 31 March 2022 reported a 118% funding ratio on the Technical Provisions basis. ITL and the Trustee agreed to
maintain the existing dynamic contribution schedule, which means ITL’s annual contributions will reduce or increase depending on the
ITPF valuation going forward. The level of ITL's annual contribution to the ITPF was nil for the year to 31 March 2024, although £8.4 million
was paid into an escrow account over this period. ITL does not expect to pay any contributions to the ITPF or the escrow account for the
year to 31 March 2025. Further contributions were agreed to be paid by ITL in the event of a downgrade of the Group's credit rating to non-
investment grade by either Standard & Poor's or Moody's, if a funding deficit were to exist. In addition, a surety guarantee with a total
value of £120 million and a parental guarantee from Imperial Brands PLC remains in place. In certain circumstances, surplus funds in the
defined benefit section of the ITPF may be used to finance defined contribution section contributions on ITL's behalf with company
contributions reduced accordingly.
The IAS 19 measurement of the defined benefit obligation is sensitive to the assumptions made about future inflation as well as the
assumptions made about life expectancy. It is also sensitive to the discount rate, which depends on market yields on sterling
denominated AA corporate bonds. The main differences between the Technical Provisions and IAS 19 assumptions are a more prudent
longevity assumption for Technical Provisions and a different approach to setting the discount rate. A consequence of the ITPF’s
investment strategy, with a proportion of the assets invested in return-seeking assets, is that the difference between the market value of
the assets and the IAS 19 defined benefit obligation may be relatively volatile.
The ITPF has a pension surplus on the IAS 19 measure and, in line with IFRIC 14, recognition of the net asset on the fund is only
appropriate where it can be recovered. The ITPF trust deed gives the company an ability to receive a refund of surplus assets assuming
the full settlement of liabilities in the event of a wind-up. Furthermore, in the ordinary course of business the Trustee has no rights to
unilaterally wind up the ITPF or otherwise augment the benefits due to the ITPF's members. Based on these circumstances, any net
surplus in the ITPF is recognised in full.
The Reemtsma Cigarettenfabriken Pension Plan
The German scheme, the Reemtsma Cigarettenfabriken Pension Plan (RCPP), is primarily a career average pension plan, though a small
group of members have final salary benefits. The RCPP defined benefit obligation comprises 52% in respect of pensioners and
dependants, 23% in respect of deferred members and 25% in respect of active members and has a weighted average maturity of 16 years.
The RCPP was closed to new members from 1 January 2020, but existing active members at that date continue to accrue benefits.
The RCPP is unfunded and the company pays benefits as they arise. The RCPP obligations arise under a works council agreement and are
subject to standard German legal requirements around such matters as the benefits to be provided to employees who leave service, and
pension increases in payment. Over the next year Reemtsma Cigarettenfabriken GmbH expects to pay £24 million (2023: £24 million) in
respect of benefits.
The main uncertainties affecting the level of benefits payable under the RCPP are future inflation levels, as these impact increases to
pensions, and the actual longevity of the membership.
The IAS 19 measurement of the defined benefit obligation and the current service cost are sensitive to the assumptions made about the
above variables, as well as the discount rate, which depends on market yields on euro denominated AA corporate bonds.
ITG scheme
The main US pension scheme, the ITG Scheme held by ITG Brands, is a defined benefit pension plan that is closed to new entrants. The
ITG Scheme defined benefit obligation comprises 79% in respect of pensioners and dependants, 3% in respect of deferred members and
18% in respect of active members and has a weighted average maturity of nine years.
ITG Brands transacted a partial buy-out of some of the pensioner and dependant population during 2024. The buy-out resulted in a 2024
income statement credit of £4.8 million
The ITG Scheme is funded and benefits are paid from the ITG Scheme assets. Contributions to the plan are determined based on US
regulatory requirements. ITG Brands made no contributions this year and is not expected to make any contributions in the next year.
Annual benefits in payment are assumed not to increase from current levels. The main uncertainty affecting the level of benefits payable
under the plan is the actual longevity of the membership. Other key uncertainties impacting the plan include investment risk and
potential past service benefit changes from future union negotiations.
The IAS 19 measurement of the defined benefit obligation and the service cost are sensitive to the assumptions made about the above
variables, as well as the discount rate, which depends on market yields on US dollar denominated AA corporate bonds.
Other plans
Other plans of the Group include various pension plans, other post-employment and long-term employee benefit plans in several
countries of operation. Some of the plans are funded, with assets backing the obligations held in separate legal vehicles such as trusts,
whilst others are operated on an unfunded basis. The benefits provided, the approach to funding and the legal basis of the plans reflect
their local territories. IAS 19 requires that the discount rate for calculating the defined benefit obligation and service cost is set according
to the level of relevant market yields on corporate bonds where the market is considered "deep", or government bonds where it is not.
For the year ended 30 September 2024 the Group included one new scheme in the IAS 19 position.
In Ireland, the Company and Trustees agreed to offer a lump sum to deferred members of the plan which was completed in 2024. In the
US, the Company also agreed a partial pensioner buy-out with our smaller defined benefit plan alongside the ITG Scheme and also agreed
changes to our post retirement medical plan with the unionised population.
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188
189
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
The results of the most recent available actuarial valuations for the various plans have been updated to 30 September 2024 in order to
determine the amounts to be included in the Group's consolidated financial statements. The aggregate IAS 19 position is as follows:
Defined benefit plans
£ million
2024
2023
DBO
Assets
Total
DBO
Assets
Total
At 1 October
(3,370)
2,977
(393)
(3,609)
3,541
(68)
Consolidated income statement expense:
Current service cost
(18)
–
(18)
(25)
–
(25)
Settlements gains/(losses)
109
(107)
2
2
(6)
(4)
Past service income
12
–
12
9
–
9
Cost of termination benefits
(2)
–
(2)
(5)
–
(5)
Net interest (expense)/income on net defined benefit
(liability)/asset
(171)
160
(11)
(165)
178
13
Administration costs paid from plan assets
–
(5)
(5)
–
(5)
(5)
Cost recognised in the income statement
(22)
(17)
Remeasurements:
Actuarial gain/(loss) due to liability experience
13
–
13
(132)
–
(132)
Actuarial (loss)/gain due to financial assumption
changes
(161)
–
(161)
234
–
234
Actuarial gain due to demographic assumption
changes
1
–
1
–
–
–
Return on plan assets excluding amounts included
in net interest income/(expense) above
–
44
44
–
(478)
(478)
Remeasurement effects recognised in other
comprehensive income
(103)
(376)
Cash:
Employer contributions
–
55
55
–
59
59
Benefits paid directly by the Company
247
(247)
–
265
(265)
–
Net cash
55
59
Changes to immaterial benefit plans categorised as
an IAS 19 obligation recognised in the prior year
(11)
–
(11)
(8)
–
(8)
Exchange movements
64
(33)
31
64
(47)
17
Total other
20
9
At 30 September
(3,287)
2,844
(443)
(3,370)
2,977
(393)
Retirement benefit scheme costs charged to operating profit
£ million
2024
2023
Defined benefit expense in operating profit
11
30
Defined contribution expense in operating profit
23
16
Total retirement benefit scheme cost in operating profit
34
46
Split as follows in the consolidated income statement:
£ million
2024
2023
Cost of sales
12
15
Distribution, advertising and selling costs
13
20
Administrative and other expenses
9
11
Total retirement benefit scheme costs in operating profit
34
46
Assets and liabilities recognised in the consolidated balance sheet
£ million
2024
2023
Retirement benefit assets
376
414
Retirement benefit liabilities
(819)
(807)
Net retirement benefit liability
(443)
(393)
Key figures and assumptions used for major plans
2024
2023
£ million unless otherwise indicated
ITPF
RCPP
ITG Scheme
ITPF
RCPP
ITG Scheme
Defined benefit obligation (DBO)
2,157
524
235
2,142
496
311
Fair value of scheme assets
(2,459)
–
(264)
(2,481)
–
(337)
Net defined benefit (asset)/liability
(302)
524
(29)
(339)
496
(26)
Current service cost
–
7
2
6
8
2
Employer contributions
–
23
–
–
23
–
Principal actuarial assumptions used (% per annum)
Discount rate
5.1
3.4
4.8
5.6
4.2
5.7
Future salary increases
n/a
3.1
n/a
n/a
3.5
n/a
Future pension increases
3.2
2.0
n/a
3.4
2.4
n/a
Inflation
3.1
2.0
2.3
3.4
2.4
2.3
2024
ITPF
RCPP
ITG Scheme
Male
Female
Male
Female
Male
Female
Life expectancy at age 65 years:
Member currently aged 65
21.2
22.6
20.9
24.3
19.8
21.9
Member currently aged 50
22.0
23.9
22.9
25.9
21.0
23.0
2023
ITPF
RCPP
ITG Scheme
Male
Female
Male
Female
Male
Female
Life expectancy at age 65 years:
Member currently aged 65
21.2
22.5
20.8
24.2
19.7
21.7
Member currently aged 50
21.9
23.8
22.8
25.8
20.8
22.8
Assumptions regarding future mortality experience are set based on advice that uses published statistics and experience in each
territory. In particular for the ITPF, SAPS S3 (2023: SAPS S3) tables are used with various adjustments for different groups of members,
reflecting observed experience. The largest group of members uses the SAPS S3 All Pensioner Male Amounts Middle table with a 105%
multiplier. An allowance for improvements in longevity is made using the 2021 (2023: 2021) CMI improvement rates with a long-term
trend of 1.25% per annum.
Sensitivity analysis for key assumptions at the end of the year
Sensitivity analysis is illustrative only and is provided to demonstrate the degree of sensitivity of results to key assumptions. Generally,
estimates are made by re-performing calculations with one assumption modified and all others held constant.
% increase in DBO
2024
2023
ITPF
RCPP
ITG Scheme
ITPF
RCPP
ITG Scheme
Discount rate: 0.5% decrease
5.7
8.1
4.9
5.6
8.1
4.5
Rate of inflation: 0.5% decrease
(4.3)
(5.6)
n/a
(4.2)
(5.7)
n/a
One-year increase in longevity for a member currently age
65, corresponding changes at other ages
3.6
4.1
4.2
3.5
4.2
4.4
The sensitivity to the inflation assumption change includes corresponding changes to the future salary increases and future pension
increases assumptions, but is assumed to be independent of any change to discount rate.
We estimate that a 0.5% decrease in the discount rate at the start of the year would have increased the consolidated income statement
pension expense by approximately £8 million (2023: £12 million).
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190
191
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
An approximate split of the major categories of ITPF scheme assets is as follows:
2024
2023
£ million unless otherwise indicated
Fair value
Percentage of
ITPF scheme
assets
Fair value
Percentage of
ITPF scheme
assets
Bonds - index linked government / LDI funds
487
19.8
351
14.1
Property including ground leases
446
18.1
488
19.7
Secured finance and private debt funds
463
18.8
620
25.0
Insurance contract (buy-in policy)
1,035
42.1
1,044
42.1
Other - including cash and short-term loan drawings
28
1.1
(22)
(0.9)
2,459
100.0
2,481
100.0
The primary investment objective is to invest the ITPF's assets in an appropriate and secure manner such that members' benefit
entitlements can be paid as they fall due.
The majority of the assets are non-quoted. The ITPF holds £nil of self-invested assets (2023: £nil).
An approximate split of the major categories of ITG Scheme assets is as follows:
2024
2023
£ million unless otherwise indicated
Fair value
Percentage of
ITG Scheme
assets
Fair value
Percentage of
ITG Scheme
assets
Bonds - government, corporate and other
122
46.2
203
60.2
Other - including derivatives, commodities and cash
142
53.8
134
39.8
264
100.0
337
100.0
The majority of the assets are non-quoted.
25. PROVISIONS
2024
£ million
Restructuring
Employment
related claims
Other
Total
At 1 October 2023
180
144
90
414
Additional provisions charged to the consolidated income statement
–
14
34
48
Amounts used
(46)
(36)
(22)
(104)
Unused amounts reversed
–
(3)
(30)
(33)
Exchange movements
(4)
(7)
(3)
(14)
At 30 September 2024
130
112
69
311
Analysed as:
£ million
2024
2023
Current
89
148
Non-current
222
266
311
414
Restructuring provisions relate mainly to the 2021 Strategic Review Programme and Cost Optimisation programmes (see note 6).
The restructuring provision is split between the 2021 Strategic Review Programme of £63 million (2023: £88 million) and other
programmes of £67 million (2023: £92 million).
Employment-related claims provisions include £23 million (2023: £31 million) relating to local employment requirements including
holiday pay and £25 million (2023: £28 million) of distribution requirements relating to employment and duty. An amount of £64 million
(2023: £85 million) has been provided for employment-related claims arising from a number of legacy legal disputes. Although the
Company continues to appeal a number of these claims, in the current year the Group has resolved to engage with certain counterparties
where a valid claim has been established. There are uncertainties relating to the estimation and quantification of this provision and
amounts may change in the future, but this provision is expected to be utilised within the next two years.
Other provisions include £29 million (2023: £38 million) relating to various local tax or duty requirements, £8 million (2023: £9 million) of
market exit provisions and £12 million for factory closure provisions (2023: £30 million).
The provisions are spread throughout the Group and payment will be dependent on local statutory requirements.
Most of the provisions will also be utilised within the next two years, though certain employee-related and restructuring provisions may
be required to be held for a period of up to 10 years where they relate to requirements to provide benefits for defined periods of time after
an employee leaves employment.
26. SHARE CAPITAL
2024
2023
Ordinary shares 10p each
Ordinary shares 10p each
Number
£ million
Number
£ million
Authorised, issued and fully paid:
1 October
968,590,194
97
1,020,697,237
103
Shares cancelled
(54,087,312)
(6)
(52,107,043)
(6)
30 September
914,502,882
91
968,590,194
97
On 5 October 2023, the Board approved a £1,100 million share buyback programme in order to return capital to shareholders. The first
tranche purchased 30,317,505 shares for a cost of £550 million. Upon completion of the purchase, these shares were cancelled and
transferred to the capital redemption reserve. For the second tranche of the programme, the Group has entered into an irrevocable and
non-discretionary arrangement to buy back shares up to £550 million. The second tranche commenced on 11 March 2024 and in the
period to 30 September 2024 54,087,312 shares have been bought back and cancelled at a cost of £1,020 million. The stamp duty and other
tax costs were £12 million and the fees charged for the share repurchase were £1 million. Upon completion of the purchase, these shares
were cancelled and transferred to the capital redemption reserve. As at 30 September 2024, the Group has recognised a liability of £90
million for the remaining shares to be purchased.
For the year ended 30 September 2024 the amounts recognised in the share premium and capital redemption reserves were £5,833
million (2023: £5,833 million) and £16 million (2023: £10 million) respectively.
27. SHARE SCHEMES
The Group operates four types of share-based incentive programmes, designed to incentivise staff and to encourage them to build a stake
in the Group.
Share Matching Scheme
Awards are made to eligible employees who are invited to invest a proportion of their eligible bonus in shares for a period of three years,
after which matching shares are awarded on a 1:1 ratio, plus dividend equivalents.
Long-Term Incentive Plan (LTIP)
Awards of shares under the LTIP are made to the Executive Directors and senior executives at the discretion of the Remuneration
Committee. They vest three years after grant and are subject to performance criteria. Dividend equivalents accrue on vested shares.
Sharesave Plan
Options are granted to eligible employees who participate in a designated savings scheme for a three-year period.
Discretionary Share Awards Plan (DSAP)
Under the DSAP, one-off conditional awards are made to individuals to recognise exceptional contributions within the business. Awards,
which are not subject to performance conditions and under which vested shares do not attract dividend roll-up, will normally vest on the
third anniversary of the date of grant subject to the participant’s continued employment. The limit of an award under the DSAP is capped
at 25% of the participant’s salary at the date of grant. Shares used to settle awards under the DSAP will be market purchased.
Further details of the schemes including additional criteria applying to Directors and some senior executives are set out in the Directors'
Remuneration Report.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
192
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Analysis of charge to the consolidated income statement
£ million
2024
2023
Share Matching Scheme
2
2
Long-Term Incentive Plan
28
27
Sharesave Plan
1
1
Discretionary Share Awards Plan
1
1
32
31
The awards are predominantly equity settled. The balance sheet liability in respect of cash-settled schemes at 30 September 2024 was
£3.5 million (2023: £3.4 million).
Reconciliation of movements in awards/options
2024
Thousands of shares unless otherwise indicated
Share
Matching
Scheme
awards
LTIP
awards
Sharesave
options
DSAP
awards
Sharesave
weighted
average
exercise
price £
Outstanding at 1 October 2023
453
8,502
1,686
173
13.72
Granted
172
4,341
445
73
15.96
Cancelled/forfeited/lapsed
(20)
(1,608)
(138)
(11)
13.61
Exercised
(234)
(2,670)
(453)
(24)
13.10
Outstanding at 30 September 2024
371
8,565
1,540
211
14.78
Exercisable at 30 September 2024
–
–
42
–
13.09
2023
Thousands of shares unless otherwise indicated
Share
Matching
Scheme
awards
LTIP
awards
Sharesave
options
DSAP
awards
Sharesave
weighted
average
exercise
price £
Outstanding at 1 October 2022
486
8,120
1,934
120
13.21
Granted
161
3,853
862
67
13.24
Cancelled/forfeited/lapsed
(18)
(2,402)
(90)
(11)
12.63
Exercised
(176)
(1,069)
(1,020)
(3)
12.38
Outstanding at 30 September 2023
453
8,502
1,686
173
13.72
Exercisable at 30 September 2023
–
–
264
–
12.37
The weighted average Imperial Brands PLC share price at the date of exercise of awards and options was £20.06 (2023: £18.28). The
weighted average fair value of Sharesave options granted during the year was £3.40 (2023: £3.26).
Summary of awards/options outstanding at 30 September 2024
Thousands of shares unless otherwise indicated
Number of
awards/options
outstanding
Vesting
period
remaining
in months
Exercise price
of options
outstanding £
Share Matching Scheme
2022
128
5
n/a
2023
122
17
n/a
2024
121
29
n/a
Total awards outstanding
371
Long-Term Incentive Plan
2022
2,313
5
n/a
2023
2,675
17
n/a
2024
3,577
29
n/a
Total awards outstanding
8,565
Sharesave Plan
2021
42
–
13.09
2022
244
10
14.56
2023
815
22
14.29
2024
439
34
15.96
Total options outstanding
1,540
Discretionary Share Awards Plan
2022
74
5
n/a
2023
65
18
n/a
2024
72
29
n/a
Total options outstanding
211
The vesting period is the period between the grant of awards or options and the earliest date on which they are exercisable. The vesting
period remaining and the exercise price of options outstanding are weighted averages. Participants in the Sharesave Plan have six
months from the maturity date to exercise their options. Participants in the LTIP generally have seven years from the end of the vesting
period to exercise their options. The exercise price of the options is fixed over the life of each option.
Pricing
For the purposes of valuing options to calculate the share-based payment charge, the Black-Scholes option pricing model has been used
for the Share Matching Scheme, Sharesave Plan, Discretionary Share Awards Plan and one Long-Term Incentive Plan with no market
conditions. A summary of the assumptions used in the Black-Scholes model for 2024 and 2023 is as follows:
2024
Share
Matching
Scheme
Sharesave
DSAP
Risk-free interest rate %
4.2
4.3
4.2
Volatility (based on 3-year history) %
25.0
24.1
25.0
Expected lives of options granted years
3.0
3.0
3.0
Dividend yield %
7.6
7.6
7.6
Fair value £
14.56
3.40
14.55
Share price used to determine exercise price £
18.31
19.80
18.31
Exercise price £
n/a
15.96
n/a
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
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CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
2023
Share
Matching
Scheme
Sharesave
DSAP
Risk-free interest rate %
4.0
4.4
4.1
Volatility (based on 3-year history) %
33.1
27.7
33.2
Expected lives of options granted years
3.0
3.0
3.0
Dividend yield %
8.2
8.2
8.2
Fair value £
16.04
3.30
14.72
Share price used to determine exercise price £
20.53
17.88
18.84
Exercise price £
n/a
14.29
n/a
Market conditions were incorporated into the Monte Carlo method used in determining the fair value of LTIP awards at grant date.
Assumptions in 2024 and 2023 are given in the following table:
%
2024
2023
Future Imperial Brands share price volatility
18.1
23.3
Future Imperial Brands dividend yield
–
–
Share price volatility of the tobacco and alcohol comparator group
15.4-23.1
15.9-63.5
Correlation between Imperial Tobacco and the alcohol and tobacco comparator group
18.9
21.4
Employee Share Ownership Trusts
The Imperial Tobacco Group PLC Employee and Executive Benefit Trust and the Imperial Tobacco Group PLC 2001 Employee Benefit Trust
(the Trusts) have been established to acquire ordinary shares in the Company to satisfy rights to shares arising on the exercise and
vesting of options and awards. The purchase of shares by the Trusts has been financed by a gift of £19.2 million and an interest free loan
of £147.5 million. In addition the Group has gifted treasury shares to the Trusts. None of the Trusts' shares has been allocated to
employees or Executive Directors as at 30 September 2024. All finance costs and administration expenses connected with the Trusts are
charged to the consolidated income statement as they accrue. The Trusts have waived their rights to dividends and the shares held by
the Trusts are excluded from the calculation of basic earnings per share.
Shares held by Employee Share Ownership Trusts
Millions of shares
2024
2023
At 1 October
1.6
3.7
Gift of shares from Treasury
2.0
–
Distribution of shares held by Employee Share Ownership Trusts
(3.3)
(2.1)
At 30 September
0.3
1.6
The shares in the Trusts are accounted for on a first in first out basis and comprise nil shares acquired in the open market (2023: nil) and
0.3 million (2023: 1.6 million) treasury shares gifted to the Trusts by the Group. 2.0 million shares (2023: no shares) were gifted to the Trusts
in the financial year 2024.
28. TREASURY SHARES
Subject to authorisation by special resolution, the Group may purchase its own shares in accordance with the Companies Act. Any shares
which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the
purchase, thereby reducing the amount of Group’s issued share capital. Shares held in treasury do not qualify for dividends. Shares
purchased under the share buyback programme initiated on 5 October 2023 were cancelled immediately on completion of the purchase.
During the financial year 2.0 million shares were gifted to Employee Share Ownership Trusts (2023: no movements).
2024
2023
£ million unless otherwise indicated
Millions of
shares
(number)
Value
£
Millions of
shares
(number)
Value
£
At 1 October
70.3
2,183
70.3
2,183
Gifted to Employee Share Ownership Trusts
(2.0)
–
–
–
At 30 September
68.3
2,183
70.3
2,183
Percentage of issued share capital
7.5
n/a
7.3
n/a
29. COMMITMENTS
Capital commitments
£ million
2024
2023
Contracted but not provided for:
Property, plant and equipment and software
207
97
30. CONTINGENT LIABILITIES
The following summary includes updates to matters that have developed since the 2023 Annual Report and Accounts.
USA state settlement agreements
In November 1998, the major United States cigarette manufacturers, including Reynolds and Philip Morris, entered into the Master
Settlement Agreement (“MSA”) with 52 US states and territories and possessions. These cigarette manufacturers previously settled four
other cases, brought by Mississippi, Florida, Texas and Minnesota, by separate agreements with each state (collectively with the MSA, the
“State Settlement Agreements”, with Mississippi, Florida, Texas and Minnesota known collectively as the “Previously Settled States”). ITG
Brands (ITGB) is a party to the MSA and to the Mississippi, Minnesota, and Texas State Settlement Agreements.
In connection with its 12 June 2015 acquisition of four cigarette brands (Winston, Salem, Kool and Maverick, referred to as the “Acquired
Brands”) from Reynolds and Lorillard, ITGB has been involved in litigation and other disputes with the Previously Settled States, Philip
Morris, and Reynolds in their state courts.
Delaware
ITGB is involved in litigation with Reynolds in the Delaware court that has jurisdiction over disputes under the Asset Purchase Agreement
(APA) for the Acquired Brands. The current case in progress involves Reynolds’ claim to indemnity for Florida settlement payments. The
issue in this case is whether ITGB has satisfied its obligations to use “reasonable best efforts” to join the settlement with Florida under the
APA and whether regardless of that “reasonable best efforts” requirement ITGB is required to indemnify Reynolds for amounts the Florida
Court has required Reynolds to pay.
On 30 September 2022, the trial court granted summary judgment to Reynolds and denied summary judgment to ITGB. It held that the
Florida court’s determination that ITGB did not assume payments under the Florida settlement unless it agreed to do so was not binding
on the Delaware courts under principles of issue preclusion. It further held that as a matter of law the contract provisions were
unambiguous and no evidence was required, and that ITGB had assumed and was required to indemnify Reynolds for Florida settlement
payments. The Court did not determine the amount of Reynolds’ damages but left that question open for further proceedings.
On 2 October 2023 the Court issued an initial order on damages. The court rejected ITGB’s claim that no damages could be assessed but
declined to decide the amount of damages and other issues until after a trial. A trial was held on 8-9 July 2024 and a decision is now
pending. After trial court proceedings on damages are completed, ITGB will have the right to appeal (including from the court’s earlier
determinations) to the Delaware Supreme Court.
Reynolds’ claim for indemnification in Delaware is limited at most to the amounts it has been required to pay under the Florida
determination described above, plus interest and attorney’s fees. ITGB continues to deny that indemnity is appropriate and intends to
appeal that determination. ITGB further contends that Reynolds’ damages should be substantially reduced by the amount by which
Reynolds’ settlement payments have been reduced through operation of the “profit adjustment” by reason of ITGB not becoming a party to
the Florida settlement as well as by reason of Reynolds’ and third-parties’ conduct. On 31 October 2023 Philip Morris USA moved to
intervene in the damages determination on the theory that any profit adjustment gain belongs to Philip Morris, not ITGB or Reynolds. On 1
April 2024 the court denied intervention.
Amounts at issue range up to US$ 250 million through 2023, plus future payments of up to US$ 27 million annually going forward plus
interest of approximately US$ 68 million and attorney fees. Based on the current facts and circumstances it is currently unclear as to
what level of damages will become payable in this case.
MSA Previously Settled States Reduction
The MSA contains a downward adjustment, called the Previously Settled States Reduction, which reduces aggregate payments made by
Philip Morris, Reynolds, and ITGB by a specified percentage each year. The State of California, later joined by the remainder of the MSA
states and by Philip Morris, challenged the application of that Reduction to ITGB for every year from 2016 forward, claiming that it cannot
apply to ITGB since it is not making settlement payments to Florida, Minnesota, or Texas under their settlements. The Independent
Auditor to the MSA, which initially addresses disputes related to payments, has rejected that challenge every year. It is possible that one
of the parties making the challenge may seek to arbitrate the claim under the MSA. The PSS Reduction provides annual MSA payment
reductions of c.US$ 65 million.
Overall summary of liability position associated with USA state settlement agreements
The Group’s legal advice is that it has a strong position on pending claims related to the Acquired Brands and the Group therefore
considers that no provision is required for these matters.
Imperial Brands PLC | Annual Report and Accounts 2024
www.imperialbrandsplc.com
196
197
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
Product liability investigations
The Group is currently involved in a number of legal cases in which claimants are seeking damages for alleged smoking and health
related effects. In the opinion of the Group’s lawyers, the Group has meritorious defences to these actions, all of which are being
vigorously contested. Although it is not possible to predict the outcome of the pending litigation, the Directors believe that the pending
actions will not have a material adverse effect upon the results of the operations, cash flow or financial condition of the Group. This
assessment of the probability of economic outflows at the year-end is a judgement which has been taken by management. Consequently,
the Group has not provided for any amounts in respect of these cases in the financial statements. There have been no material updates to
matters in any product liability investigations in the period since the 2023 Annual Report and Accounts.
Competition authority investigations
Spain
On 12 April 2019 the Spanish National Commission on Markets and Competition (CNMC) announced penalties against Philip Morris Spain,
Altadis, JT International Iberia and Logista. Altadis and Logista received fines of €11.4 million and €20.9 million, respectively, from the
CNMC. According to the decision, Altadis and Logista are alleged to have infringed competition law by participating in an exchange of
sales volume data between 2008 and February 2017. The CNMC considers that this conduct had the effect of restricting competition in the
Spanish tobacco market. Both companies believe that the arguments made by the CNMC that define this conduct as anti-competitive are
flawed. In June 2019, both Altadis and Logista commenced appeals to the CNMC’s decision, and the fines imposed in the Spanish High
Court where they believe they will be successful, a decision supported by external legal counsel. In September 2019 Altadis and,
separately, Logista arranged bank guarantees for the full amount of the fines with the result that payment of the fines had been
suspended pending the outcome of the appeals. Therefore, provision for these amounts is not considered appropriate.
In both the Altadis and Logista appeals, the parties have concluded their submissions to the Court and a judgment is awaited in 2024/2025
In parallel to the main proceedings against the CNMC decision, on 28 February 2023, the Supreme Court annulled the unannounced
inspection carried out by the CNMC officials on Altadis' premises in February 2017 for lack of consent by Altadis. Therefore, all the
documents and evidence seized by the CNMC during Altadis' inspection have to be returned to the company and should be struck out
from the CNMC decision. It remains to be seen the impact of this Court decision on the main proceedings.
Other litigation
US Helms-Burton litigation
Imperial Brands PLC has been named as a defendant in a civil action in federal court in Miami, Florida under Title III of the Cuban Liberty
and Democratic Solidarity Act of 1996 (“Helms-Burton”) filed on 6 August 2020. Title III provides United States nationals with a cause of
action and a claim for treble damages against persons who have “trafficked” in property expropriated by the Cuban government. Although
the filed claim is for unquantified damages, we understand the claim could potentially reach approximately US$ 365 million, based on the
claimants’ claim to own 90% of the property, which they value at US$ 135 million (and then treble based on the claimants’ interpretation of
the legislation). The claim is based on allegations that Imperial, through Corporación Habanos S.A. (a joint venture between one of
Imperial’s now former subsidiaries and the Cuban government), has “trafficked” in a factory in Havana, Cuba that the Cuban government
confiscated from the claimants’ ancestor in the early 1960s, by using the factory to manufacture, market, sell, and distribute
Habanos cigars.
At the time the claim was filed against Imperial and up until the conclusion of the Brexit “transition period” on 31 December 2020, Imperial
was subject to an EU law known as the EU Blocking Statute (Regulation (EC) No. 2271/96), which conflicts with Helms-Burton, protected
Imperial against the impact of Title III, and impacted how Imperial might respond to the threatened litigation. The EU Blocking Statute
has been transposed into domestic law with only minimal changes. Accordingly, on 10 January 2021, Imperial submitted an application to
the UK Department for International Trade for authorisation from the Secretary of State for International Trade to defend the action or, at
a minimum, to file and litigate a motion to dismiss the action and this was granted on 8 February 2021.
Following a lengthy motion to dismiss proceedings, on 28 November 2023, a magistrate issued a recommended ruling, and recommended
dismissal of the case in its entirety as against Imperial on three separate grounds. On 8 April 2024, the judge adopted the magistrate’s
recommendation that the case be dismissed for lack of personal jurisdiction and entered an order dismissing and closing the case.
The Claimants filed an appeal against the judge’s dismissal of the claim on 7 May 2024. The claimants’ appeal submissions were filed on
16 August 2024 and the Group response was submitted on 16 October 2024. The appellate court has not scheduled a hearing in the appeal,
however it is likely that a hearing will be held in spring 2025. A decision on the appeal will follow the hearing. No provision has been made
for potential liabilities related to this claim.
UK
In June 2020, the Group responded to a claimant law firm’s allegation of human rights issues in the Malawian tobacco supply chain,
which included allegations relating to child and forced labour. In December 2020, a claim was filed in the English High Court against
Imperial Brands plc, Imperial Tobacco Limited and four of its subsidiaries (the Imperial Defendants) and two entities in the British
American Tobacco (the BAT Defendants) group by a group of Malawian tobacco farm workers. The Imperial Defendants have
acknowledged service and confirmed to the claimants that they intend to defend the claim in full.
The Imperial Defendants have not yet been required to file their defence. The deadline for the Imperial and BAT Defendants to do so has
been postponed pending other case management actions and will be determined at a subsequent case management hearing after the
completion of a matching exercise (which will seek to establish whether the claimants worked for farmers who grew tobacco purchased
by either Defendant group). That hearing is not likely to take place before 2025. The claim is unquantified and given the early stage of the
litigation a provision would not be appropriate.
31. NET DEBT
The movements in cash and cash equivalents, borrowings, and derivative financial instruments in the year were as follows:
£ million
Current
borrowings
Lease
liabilities
Non-current
borrowings
Derivative
financial
instruments
Liabilities
from financing
activities
Cash
and cash
equivalents
Total
At 1 October 2023
(1,499)
(349)
(7,882)
(53)
(9,783)
1,345
(8,438)
Reallocation of current borrowings from non-
current borrowings
(1,673)
–
1,673
–
–
–
–
Cash flow
1,760
107
(1,660)
34
241
(203)
38
Change in accrued interest
37
(14)
(21)
12
14
–
14
Change in fair values
–
–
–
(119)
(119)
–
(119)
New leases, terminations and modifications
–
(144)
–
–
(144)
–
(144)
Exchange movements
184
14
384
(209)
373
(64)
309
At 30 September 2024
(1,191)
(386)
(7,506)
(335)
(9,418)
1,078
(8,340)
£ million
Current
borrowings
Lease
liabilities
Non-current
borrowings
Derivative
financial
instruments
Liabilities
from financing
activities
Cash
and cash
equivalents
Total
At 1 October 2022
(1,011)
(248)
(8,996)
(87)
(10,342)
1,850
(8,492)
Reallocation of current borrowings from non-
current borrowings
(1,536)
–
1,536
–
–
–
–
Cash flow
891
92
(835)
64
212
(349)
(137)
Change in accrued interest
2
(10)
(24)
1
(31)
–
(31)
Change in fair values
–
–
–
139
139
–
139
New leases, terminations and modifications
–
(106)
–
–
(106)
–
(106)
Acquisitions
–
(84)
–
–
(84)
–
(84)
Exchange movements
155
7
437
(170)
429
(156)
273
At 30 September 2023
(1,499)
(349)
(7,882)
(53)
(9,783)
1,345
(8,438)
Average reported net debt during the year was £10,037 million (2023: £10,072 million).
Analysis by denomination currency
£ million
2024
GBP
EUR
USD
Other
Total
Cash and cash equivalents
356
179
129
414
1,078
Total borrowings
(1,014)
(3,383)
(4,291)
(9)
(8,697)
(658)
(3,204)
(4,162)
405
(7,619)
Effect of cross-currency swaps
1,022
(5,532)
4,292
–
(218)
364
(8,736)
130
405
(7,837)
Lease liabilities
(39)
(265)
(47)
(35)
(386)
Derivative financial instruments
(117)
Net debt
(8,340)
Imperial Brands PLC | Annual Report and Accounts 2024
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198
199
CONSOLIDATED FINANCIAL STATEMENTS continued
NOTES TO THE FINANCIAL STATEMENTS continued
£ million
2023
GBP
EUR
USD
Other
Total
Cash and cash equivalents
177
405
324
439
1,345
Total borrowings
(1,631)
(3,417)
(4,319)
(14)
(9,381)
(1,454)
(3,012)
(3,995)
425
(8,036)
Effect of cross-currency swaps
1,576
(6,016)
4,323
–
(117)
122
(9,028)
328
425
(8,153)
Lease liabilities
(43)
(247)
(26)
(33)
(349)
Derivative financial instruments
64
Net debt
(8,438)
32. RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT
£ million
2024
2023
Decrease in cash and cash equivalents
(203)
(349)
Cash flows relating to derivative financial instruments
34
64
Repayment of lease liabilities
107
92
Increase in borrowings
(3,848)
(1,462)
Repayment of borrowings
3,948
1,518
Change in net debt resulting from cash flows
38
(137)
Other non-cash movements including revaluation of derivative financial instruments
(105)
108
Lease liabilities
(144)
(190)
Exchange movements
309
273
Movement in net debt during the year
98
54
Opening net debt
(8,438)
(8,492)
Closing net debt
(8,340)
(8,438)
The increase in borrowings and repayment of borrowings reflect the cash flow movements relating to borrowings outstanding at the start
and at the end of each financial year; cash flows relating to short-term borrowings drawn down and repaid within the year are not
included in this analysis.
33. NON-CONTROLLING INTERESTS
Material non-controlling interests
Detailed below is the summarised financial information of Logista, being a subsidiary where the non-controlling interest of 49.99% is
considered material to the Group.
Summarised balance sheet
at 30 September
Euro million
2024
2023
Current assets
6,290
6,246
Current liabilities
(6,990)
(6,983)
Current net liabilities
(700)
(737)
Non-current assets
1,790
1,816
Non-current liabilities
(449)
(482)
Non-current net assets
1,341
1,334
Net assets
641
597
Summarised statement of comprehensive income
for the year ended 30 September
Euro million
2024
2023
Revenue
12,986
12,428
Profit for the year
308
274
Other comprehensive income
–
3
Total comprehensive income
308
277
Summarised cash flow statement
for the year ended 30 September
Euro million
2024
2023
Cash flows from operating activities
397
308
Cash flows from investing activities
(51)
(83)
Cash flows from financing activities
(370)
(250)
Net decrease in cash and cash equivalents
(24)
(25)
34. POST BALANCE SHEET EVENTS
Share buybacks
On 5 October 2023 Imperial Brands PLC (‘the Company’) announced a share buyback programme to repurchase up to £1.1 billion of shares.
This programme completed on 29 October 2024 with the Company having repurchased 4,010,463 million shares for a total consideration
of £90 million in the period from 1 October 2024 to 29 October 2024.
On 8 October 2024 Imperial Brands PLC ("the Company") announced the start of a new ongoing share buyback programme, to initially
repurchase up to £1.25 billion of shares in the period to 29 October 2025. On 30 October 2024, in order to execute the first tranche of this
buyback, the Company announced it had had entered into an irrevocable and non-discretionary arrangement with its broker Morgan
Stanley & Co. International Plc to buy back up to £625 million of its shares commencing from 30 October 2024 and expected to end no
later than 29 April 2025.
35. RELATED UNDERTAKINGS
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, and joint ventures, the
principal activity, the full registered address and the effective percentage of equity owned by Imperial Brands PLC, as at 30 September
2024, are provided in the entity financial statements of Imperial Brands PLC. There are no material related parties other than Group
companies.
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ALTERNATIVE PERFORMANCE MEASURES
Use of alternative performance measures
Management believes that non-GAAP or alternative performance measures provide an important comparison of business performance
and reflect the way in which the business is controlled. The alternative performance measures seek to remove the distorting effects of a
number of significant gains or losses arising from transactions which are not directly related to the ongoing underlying performance of
the business and may be non-recurring events or not directly within the control of management.
Accordingly, alternative performance measures exclude, where applicable, amortisation and impairment of acquired intangibles,
profit/loss on disposal of subsidiaries, Russia, Ukraine and associated market costs, restructuring costs, business acquisition and disposal
costs, fair value adjustment and impairment of other financial assets, charges related to legal provisions, structural changes to defined
benefit pension schemes, fair value and exchange gains and losses on financial instruments, post-employment benefits net financing
cost/income, and related tax effects and tax matters. Other significant gains or losses which are not representative of the underlying
business may also be treated as adjusting items where there is appropriate justification. The alternative performance measures in this
report are not defined terms under IFRS and may not be comparable with similarly titled measures reported by other companies. The
alternative performance measures that are used by the Group are defined and reconciled back to the associated IFRS metrics as detailed
below.
Summary of key adjusting items
The items excluded from adjusted performance results are those which are one-off in nature or items which arose due to acquisitions
and are not influenced by the day-to-day operations of the Group, and the movements in the fair value of financial instruments which are
marked to market and not naturally offset. Adjusted net finance costs also excludes all post-employment benefit net finance cost/income
since pension assets and liabilities and redundancy and social plan provisions do not form part of adjusted net debt. This allows
comparison of the Group's cost of debt with adjusted net debt. The adjusted performance measures are used by management to assess
the Group's financial performance and aid comparability of results year on year.
Consolidated income statement adjusting items
The following tables summarise the key items recognised within the consolidated income statement that have been treated as
adjusting items:
Adjusting items recognised within administrative and other expenses
£ million
2024
2023
Russia, Ukraine and associated markets
–
(4)
Amortisation and impairment of acquired intangibles
(353)
(347)
Fair value adjustment and impairment of other financial assets
–
(36)
Loss on disposal of subsidiaries
–
(1)
Charges related to legal provisions
–
(85)
Structural changes to defined benefit pension schemes
(4)
(12)
Total adjusting administrative and other expenses
(357)
(485)
Total non-adjusting administrative and other expenses
(485)
(455)
Administrative and other expenses
(842)
(940)
Amortisation and impairment of acquired intangibles
Acquired intangibles are amortised over their estimated useful economic lives where these are considered to be finite. Acquired
intangibles considered to have an indefinite life are not amortised. Any negative goodwill arising is recognised immediately in the
income statement. The Group excludes from adjusted performance measures the amortisation and impairment of acquired intangibles,
other than software and internally generated intangibles, and the deferred tax associated with amortisation of acquired intangibles.
It is recognised that there may be some correlation between the amortisation charges derived from the acquisition value of acquired
intangibles, and the subsequent future profit streams arising from sales of associated branded products. However, the amortisation of
intangibles is not directly related to the operating performance of the business. Conversely, the level of profitability of branded products is
directly influenced by day-to-day commercial actions, with variations in the level of profit derived from branded product sales acting as a
clear indicator of performance. Given this, the Group’s view is that amortisation and impairment charges do not clearly correlate to the
ongoing variations in the commercial results of the business and are therefore excluded to allow a clearer view of the underlying
performance of the organisation. The deferred tax arising on intangibles which are either being amortised or are fully amortised is
excluded on the basis that amortisation of intangibles is not directly related to the operating performance of the business. The related
current cash tax benefit is retained in the adjusted measure to reflect the ongoing tax benefit to the Group.
Total amortisation and impairment for the year is £399 million (2023: £392 million) of which £353 million (2023: £347 million) relates to
acquired intangibles and is adjusting and £46 million (2023: £45 million) relates to internally generated intangibles and is non adjusting.
In the year ended 30 September 2024 adjusting items all relate to amortisation. £345 million (2023: £339 million) is attributable to Tobacco
& NGP and £8 million (2023: £8 million) is attributable to Distribution.
Fair value adjustment and impairment of other financial assets
As the movement in the fair value of loan receivables associated with the investment in Auxly Cannabis Group Inc. has the potential to be
significant and does not show a fair representation of the day-to-day operational performance of the asset, it is treated as an adjusting
item. No fair value adjustments have been recognised in the year ended 30 September 2024. The fair value adjustment in the prior year
includes changes in the carrying value of certain financial assets held by ITG Brands.
Charges related to legal provisions
The adjusting item relates to legal provisions that the Group has provided for (see note 25). These are potential liabilities arising from a
number of legacy legal disputes across the Group that have been in the courts for several years and which the Group have considered as
being unrelated to ongoing business performance and therefore adjusted. The final settlement and agreement of these cases still remain
uncertain but future outflows are still expected.
Structural changes to defined benefit pension schemes
These are non-recurring pension scheme restructuring costs (see note 24). These comprise £6 million of costs following a tax legal ruling
that became applicable in relation to the closure of a defined benefit retirement scheme in the UK during the prior year, £4 million of
settlement losses in relation to a lump sum offered to deferred members of a defined benefit retirement scheme in Ireland, and £6 million
of settlement gains following the partial buy-out of some of the pensioner and dependent population of defined benefit retirement
schemes in the USA.
The prior year included £8 million of net costs related to the closure of the UK defined benefit retirement scheme to future accrual and a
£4 million settlement charge on the full closure of the New Zealand defined benefit scheme.
Adjusting items recognised within share of profit of investments accounted for using the equity method
£ million
2024
2023
Share of profit of investments accounted for using the equity method
9
7
Adjusting items recognised within tax
£ million
2024
2023
Deferred tax on amortisation of acquired intangibles
–
(4)
Tax on net foreign exchange and fair value gains and losses on financial instruments
224
89
Tax on post-employment benefits net financing cost
5
–
Tax on charges relating to legal provisions
2
26
Tax on structural changes to defined benefit pension schemes
–
3
Tax on fair value adjustment and impairment of other financial assets
–
5
Tax on interest settlements
(1)
2
Recognition of deferred tax assets
293
212
Provision for state aid tax recoverable
101
–
Uncertain tax positions
(164)
(207)
Prior year adjustments
57
–
Total adjusting taxation charges
517
126
Other non-adjusting taxation charges
(799)
(781)
Reported tax
(282)
(655)
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SUPPLEMENTARY INFORMATION continued
ALTERNATIVE PERFORMANCE MEASURES continued
Tax adjustments related to other pre-tax adjusting items
The adjusted tax charge has been calculated to include the tax effects of a number of pre-tax adjusting items including the amortisation
of acquired intangibles, net foreign exchange gains and losses, fair value movements on financial instruments, restructuring costs and
post-employment benefits net financing cost.
Significant one-off tax charges or credits
The adjusted tax charge also excludes significant one-off tax charges or credits arising from:
• prior period tax items (including re-measurement of deferred tax balances on a change in tax rates); or
• a provision for uncertain tax items not arising in the normal course of business; or
• newly enacted taxes in the year; or
• tax items that are closely related to previously recognised tax matters, and are excluded from our adjusted tax charge to aid
comparability and understanding of the Group’s performance.
The recognition and utilisation of deferred tax assets relating to tax losses and tax credits not historically generated in the normal course
of business are excluded on the same basis.
Recognition of deferred tax assets
Significant one-off tax charges or credits arising from prior period items, and arising due to a change of facts and circumstances in the
current year, are excluded from the adjusted tax charge. The recognition of a deferred tax asset in relation to tax credits brought forward
within the Group’s Maltese treasury centre, has been recognised as a result of clarifying tax guidance issued by the tax authorities during
the year ended 30 September 2024 and the resulting intention to utilise these brought forward tax credits against forecast taxable income
relating to loans refinanced for a further fixed term tenure during the financial year.
Provision for state aid tax recoverable
Significant one-off tax charges or credits arising from prior period items are excluded from the adjusted tax charge. The receivable
booked for the state aid tax recoverable is therefore excluded from the adjusted tax charge on this basis.
Uncertain tax positions
Significant one-off tax charges or credits arising from a provision for uncertain tax items not arising in the normal course of business are
excluded from the adjusted tax charge.
Prior period tax items
Significant one-off tax charges or credits arising from prior period items are excluded from the adjusted tax charge. A review of the
historic current tax position of Imperial Tobacco International GmbH was undertaken resulting in a prior year adjustment of £53 million.
In line with the policy, the relevant tax effect has been adjusted out.
Tax on unrecognised losses
The recognition and utilisation of deferred tax assets relating to losses not historically generated in the normal course of business are
excluded from the adjusted tax charge.
DEFINITIONS AND RECONCILIATIONS OF ALTERNATIVE PERFORMANCE MEASURES
A) Tobacco & NGP net revenue
Tobacco & Next Generation Products (NGP) net revenue comprises associated revenue less duty and similar items, excluding peripheral
products. Management considers this an important measure in assessing the performance of Tobacco & NGP operations.
The Group recognises revenue on sales to Logista, a Group company, within its reported Tobacco & NGP revenue figure. As the revenue
calculation includes sales made to Logista from other Group companies but excludes Logista's external sales, this metric differs from
revenue calculated under IFRS accounting standards. For the purposes of alternative performance measures on net revenue the Group
treats Logista as an arm’s length distributor on the basis that contractual rights are in line with other Third Party suppliers to Logista.
Variations in the amount of inventory held by Logista results in a different level of revenue compared to that which is included within the
income statement. For tobacco product sales, inventory level variations are normally not significant.
Reconciliation from Tobacco & NGP revenue to Tobacco & NGP net revenue
2024
2023
£ million
Tobacco
NGP
Total
Tobacco
NGP
Total
Revenue
21,708
376
22,084
22,114
299
22,413
Duty and similar items
(13,877)
(47)
(13,924)
(14,364)
(34)
(14,398)
Sale of peripheral products
(3)
–
(3)
(3)
–
(3)
Net revenue
7,828
329
8,157
7,747
265
8,012
B) Distribution gross profit
Distribution gross profit comprises the Distribution segment revenue less the cost of distributed products. Management considers this an
important measure in assessing the performance of Distribution operations.
Reconciliation from Distribution revenue to Distribution gross profit
£ million
2024
2023
Distribution revenue
11,104
10,819
Distribution cost of sales
(9,601)
(9,353)
Distribution gross profit
1,503
1,466
C) Adjusted operating profit
Adjusted operating profit is calculated as operating profit amended for a number of adjustments; the principal changes are detailed below.
This measure is separately calculated and disclosed for Tobacco, NGP and Distribution where appropriate.
Reconciliation from profit before tax to adjusted operating profit
£ million
2024
2023
Profit before tax
3,029
3,111
Net finance costs
534
298
Share of profit of investments accounted for using the equity method
(9)
(7)
Operating profit
3,554
3,402
Russia, Ukraine and associated markets
–
4
Amortisation and impairment of acquired intangibles
353
347
Fair value adjustment and impairment of other financial assets
–
36
Loss on disposal of subsidiaries
–
1
Charges related to legal provisions
–
85
Structural changes to defined benefit pension schemes
4
12
Total adjustments
357
485
Adjusted operating profit
3,911
3,887
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ALTERNATIVE PERFORMANCE MEASURES continued
Reconciliation from Tobacco & NGP operating profit to adjusted operating profit
2024
2023
£ million
Tobacco
NGP
Total
Tobacco
NGP
Total
Operating profit/(loss)
3,321
(83)
3,238
3,262
(156)
3,106
Russian, Ukraine and associated markets
–
–
–
4
–
4
Amortisation and impairment of acquired intangibles
341
4
345
334
5
339
Fair value adjustment and impairment of other financial
assets
–
–
–
20
16
36
Loss on disposal of subsidiaries
–
–
–
1
–
1
Charges related to legal provisions
–
–
–
85
–
85
Structural changes to defined benefit pension schemes
4
–
4
12
–
12
Adjusted operating profit/(loss)
3,666
(79)
3,587
3,718
(135)
3,583
Reconciliation from Distribution operating profit to Distribution adjusted operating profit
£ million
2024
2023
Distribution operating profit
322
298
Amortisation of acquired intangibles
8
8
Distribution adjusted operating profit
330
306
See note 12 for details on amortisation and impairment and note 24 for details on structural changes to defined benefit pension schemes.
D) Adjusted operating profit margin
Adjusted operating profit margin is adjusted operating profit divided by net revenue expressed as a percentage (see note 3). This measure
is separately calculated and disclosed for the Tobacco & NGP and Distribution businesses where appropriate. There is no reconciliation
required for this metric.
E) Adjusted net finance costs
Adjusted net finance costs excludes the movements in the fair value of financial instruments which are marked to market and not
naturally offset. This measure also excludes all post-employment benefit net finance costs since pension assets and liabilities and
redundancy and social plan provisions do not form part of adjusted net debt. This allows comparison of the Group's cost of debt with
adjusted net debt.
IFRS 9 requires that all derivative financial instruments are recognised in the consolidated balance sheet at fair value, with changes in the
fair value being recognised in the consolidated income statement unless the instrument satisfies the hedge accounting rules under IFRS
and the Group chooses to designate the derivative financial instrument as a hedge.
The Group hedges underlying exposures in an efficient, commercial and structured manner. However, the strict hedging requirements of
IFRS 9 may lead to some commercially effective hedge positions not qualifying for hedge accounting. As a result, and as permitted under
IFRS 9, the Group has decided not to apply cash flow or fair value hedge accounting for its derivative financial instruments. However, the
Group does apply net investment hedging, designating certain borrowings and derivatives as hedges of the net investment in the Group’s
foreign operations, as permitted by IFRS 9, in order to reduce income statement volatility.
The Group excludes fair value gains and losses on derivative financial instruments and exchange gains and losses on borrowings from
adjusted net finance costs. Fair value gains and losses on the interest element of derivative financial instruments are excluded as there is
no direct natural offset between the movements on derivatives and the interest charge on debt in any one period, as the derivatives and
debt instruments may be contracted over different periods, although they will reverse over time or are matched in future periods by
interest charges. The fair value gains on derivatives are excluded as they can introduce volatility in the finance charge for any given
period.
Fair value gains and losses on the currency element of derivative financial instruments and exchange gains and losses on borrowings
are excluded as the relevant foreign exchange gains and losses on the instruments in a net investment hedging relationship are
accumulated as a separate component of other comprehensive income in accordance with the Group’s policy on foreign currency.
Fair value movements arising from the revaluation of contingent consideration liabilities are adjusted out where they represent one-off
acquisition costs that are not linked to the current period underlying performance of the business. Fair value adjustments on loans
receivable measured at fair value are excluded as they arise due to counterparty credit risk changes that are not directly related to the
underlying commercial performance of the business.
The net interest on defined benefit assets or liabilities, together with the unwind of discount on redundancy, social plans and other long-
term provisions, are reported within net finance costs. These items together with their related tax effects are excluded from our adjusted
earnings measures, as they primarily represent charges associated with historic employee benefit commitments, rather than the ongoing
current period costs of operating the business.
Reconciliation from reported net finance costs to adjusted net finance costs
£ million
2024
2023
Reported net finance costs
534
298
Fair value gains on derivative financial instruments
513
707
Fair value losses on derivative financial instruments
(632)
(568)
Exchange gains on financing activities
9
10
Net fair value and exchange (losses)/gains on financial instruments
(110)
149
Interest income on net defined benefit assets
22
43
Interest cost on net defined benefit liabilities
(33)
(30)
Post-employment benefits net financing (cost)/income
(11)
13
Tax interest cost
(10)
(50)
Effect of discounting on long-term provisions
(1)
–
Adjusted net finance costs
402
410
Comprising:
Interest income on bank deposits
(16)
(12)
Interest cost on lease liabilities
14
10
Interest cost on bank and other loans
404
412
Adjusted net finance costs
402
410
F) Adjusted tax charge
The adjusted tax charge is calculated by amending the reported tax charge for significant one-off tax charges or credits, as detailed in the
table below. The adjusted tax rate is calculated as the adjusted tax charge divided by the adjusted operating profit before tax.
Reconciliation from reported tax to adjusted tax
£ million
2024
2023
Reported tax
282
655
Deferred tax on amortisation of acquired intangibles
–
(4)
Tax on net foreign exchange and fair value gains and losses on financial instruments
224
89
Tax on post-employment benefits net financing cost
5
–
Tax on charges relating to legal provisions
2
26
Tax on structural changes to defined benefit pension schemes
–
3
Tax on fair value adjustment and impairment of other financial assets
–
5
Tax on interest settlements
(1)
2
Recognition of deferred tax assets
293
212
Provision for state aid tax recoverable
101
–
Uncertain tax positions
(164)
(207)
Prior year adjustments
57
–
Adjusted tax charge
799
781
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ALTERNATIVE PERFORMANCE MEASURES continued
G) Adjusted earnings per share
Adjusted earnings is calculated by amending the reported basic earnings for all of the adjustments recognised in the calculation of the
adjusted operating profit, adjusted finance costs and adjusted tax charge metrics as detailed above. Adjusted earnings per share is
calculated by dividing adjusted earnings by the weighted average number of shares.
Reconciliation from reported to adjusted earnings and earnings per share
2024
2023
£ million unless otherwise indicated
Earnings
per share
(pence)
Earnings
Earnings
per share
(pence)
Earnings
Reported basic
300.7
2,613
252.4
2,328
Russia, Ukraine and associated markets
–
–
0.4
4
Amortisation and impairment of acquired intangibles
40.6
353
38.0
351
Fair value adjustment and impairment of other financial assets
–
–
3.4
31
Loss on disposal of subsidiaries
–
–
0.1
1
Charges related to legal provisions
(0.2)
(2)
6.4
59
Structural changes to defined benefit pension schemes
0.5
4
1.0
9
Net fair value and exchange movements on financial instruments
(13.1)
(114)
(25.8)
(238)
Post-employment benefits net financing cost/(income)
0.7
6
(1.4)
(13)
Tax interest cost
1.3
11
5.2
48
Effect of discounting on long-term provisions
0.1
1
–
–
Recognition of deferred tax assets
(33.7)
(293)
(23.0)
(212)
Provision for state aid tax recoverable
(11.6)
(101)
–
–
Uncertain tax positions
18.9
164
22.4
207
Prior year adjustments
(6.6)
(57)
–
–
Adjustments above attributable to non-controlling interests
(0.6)
(4)
(0.3)
(3)
Adjusted
297.0
2,581
278.8
2,572
Adjusted diluted
295.3
2,581
277.1
2,572
H) Return on invested capital (ROIC)
Return on invested capital measures the effectiveness of capital allocation and is calculated by dividing adjusted operating profit after tax
by the annual average of: intangible assets, property, plant and equipment, net assets held for sale, inventories, trade and other receivables
and trade and other payables. The equivalent tax charge is calculated by multiplying the adjusted effective tax rate for the Group by
adjusted operating profit.
The annual average is defined as the average of the opening and closing balance sheet values.
£ million unless otherwise stated
2024
2023
2022
Reported operating profit
3,554
3,402
2,683
Adjusting items (see section C)
357
485
1,011
Adjusted operating profit
3,911
3,887
3,694
Equivalent tax charge
(888)
(871)
(827)
Net adjusted operating profit after tax
3,023
3,016
2,867
Working capital
(2,772)
(2,567)
(2,823)
Intangibles
15,938
16,944
17,777
Property, plant and equipment
1,561
1,617
1,659
Invested capital
14,727
15,994
16,613
Average annual invested capital
15,361
16,304
16,240
Return on invested capital (%)
19.7
18.5
17.7
I) Constant currency
Constant currency removes the effect of exchange rate movements on the translation of the results of our overseas operations. The
Group translates current year results at prior year foreign exchange rates. An analysis of all key metrics can be found in the Group
Financial Review.
J) Adjusted net debt
Management monitors the Group's borrowing levels using adjusted net debt which excludes interest accruals, lease commitments and
the fair value of derivative financial instruments providing commercial hedges of interest rate risk. The adjusted net debt metric is used
in monitoring performance against various debt management obligations including covenant compliance.
Adjusted net debt calculation
£ million
2024
2023
Reported net debt
(8,340)
(8,438)
Accrued interest
95
125
Lease liabilities
386
349
Fair value of interest rate derivatives
119
(62)
Adjusted net debt
(7,740)
(8,026)
Average adjusted net debt during the year was £9,506 million (2023: £9,574 million).
K) Adjusted net debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) multiple
This is defined as adjusted net debt divided by adjusted EBITDA. Adjusted net debt is measured at balance sheet foreign exchange rates,
with a full reconciliation shown in table J above. Adjusted EBITDA is calculated as adjusted operating profit plus amortisation,
depreciation and impairments. An analysis of all key metrics can be found in the Group Financial Review. The reconciliation from
adjusted operating profit to adjusted EBITDA is shown below.
£ million
2024
2023
Adjusted operating profit (see section C above)
3,911
3,887
Depreciation, amortisation and impairments
294
270
Adjusted EBITDA
4,205
4,157
L) Adjusted operating cash conversion
Adjusted operating cash conversion is calculated as cash flow from operations pre-restructuring and before interest and tax payments
less net capital expenditure relating to property, plant and equipment, software and intellectual property rights as a percentage of
adjusted operating profit.
Adjusted operating cash conversion calculation
£ million unless otherwise stated
2024
2023
Net cash flows generated from operating activities
3,307
3,129
Tax
888
590
Net capital expenditure
(321)
(254)
Restructuring
43
98
Cash flow post capital expenditure pre interest and tax
3,917
3,563
Adjusted operating profit
3,911
3,887
Adjusted operating cash conversion
100%
92%
M) Free cash flow
Free cash flow is operating profit adjusted for certain cash and non-cash items. The principal adjustments are depreciation, working
capital movements, net capex, restructuring cash flows, tax cash flows, cash interest and minority interest dividends.
Net cash flows generated from operating activities to free cash flow
£ million
2024
2023
Net cash generated from operating activities
3,307
3,129
Net capital expenditure
(321)
(254)
Cash interest
(416)
(407)
Minority interest dividends
(136)
(104)
Free cash flow
2,434
2,364
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GLOSSARY
Financial terms
Adjusted closing net debt
Adjusted closing net debt is measured at balance sheet foreign exchange rates, with a full
reconciliation shown within section J of the supplementary information.
Adjusted earnings per share
This is an alternative performance measure which is defined within section G of the
supplementary information.
Adjusted EBITDA
Adjusted EBITDA is calculated as adjusted operating profit plus amortisation, depreciation and
impairments.
Adjusted net debt
This is an alternative performance measure which is defined within section J of the
supplementary information.
Adjusted net debt to EBITDA
multiple
This is an alternative performance measure. Adjusted net debt is defined within section J of the
supplementary information. EBITDA is defined within section K of the supplementary information
Adjusted net finance costs
This is an alternative performance measure which is defined within section E of the supplementary
information.
Adjusted (Non-GAAP)
Non-GAAP measures provide a useful comparison of performance from one period to the next.
Adjusted operating cash
conversion
This is an alternative performance measure which is defined within section L of the
supplementary information.
Adjusted operating profit
This is an alternative performance measure which is defined within section C of the
supplementary information.
Adjusted operating profit margin Adjusted operating profit margin is calculated as adjusted operating profit divided by net revenue.
Adjusted tax charge
This is an alternative performance measure which is defined within section F of the
supplementary information.
Aggregate priority market share Aggregate weighted market volume share, based on our five priority markets (USA, Germany, UK,
Spain and Australia). Market volume share is calculated based on a 12-month moving annual total
(MAT) volume share position from October to September. The market volume size used in the
weighting calculation is based on a constant prior year end actual market size.
All in cost of debt
Adjusted net finance costs divided by the average net debt in the year.
Cash conversion
Cash conversion is calculated as cash flow from operations pre-restructuring and before interest and
tax payments less net capital expenditure relating to property, plant and equipment, software
and intellectual property rights as a percentage of adjusted operating profit.
Constant currency
Removes the effect of exchange rate movements on the translation of the results of our overseas
operations. The Group translates current year results at prior year foreign exchange rates.
Dividend per share
Dividend per share represents the total annual dividends, being the sum of the paid interim dividend
and the proposed final dividend for the financial year.
DBO
Dividend Benefit Obligation.
EBITDA
Earnings before interest, taxation, depreciation and amortisation.
EPS
Earnings per share
GAAP
Generally accepted accounting principles.
Market share
Market share data is presented as a 12-month moving average weighted across the markets in
which we operate.
Net debt to EBITDA
Adjusted closing net debt divided by adjusted EBITDA.
Reported (GAAP)
Reported (GAAP) complies with UK-adopted International Accounting Standards and the relevant
legislation.
Return on invested capital
This is an alternative performance measure which is defined within section H of the
supplementary information.
Stick equivalent volumes
Stick equivalent volumes reflect our combined cigarette, fine cut tobacco, cigar and snus volumes but
exclude any NGP volume such as heated tobacco, modern oral nicotine and vapour.
Tobacco & NGP net revenue/
Distribution gross profit
This is an alternative performance measure which is defined within sections A and B of the
supplementary information.
Total shareholder return
Total shareholder return is the total investment gain to shareholders resulting from the movement
in the share price and assuming dividends are immediately reinvested in shares.
Other
AAACE
Africa, Asia and Australasia and Central & Eastern Europe.
BERG
Business Employee Resource Groups
CDP
Carbon Disclosure Project
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CO2E
Carbon Dioxide Equivalent
CSRD
The Corporate Sustainability Reporting Directive
DEI
Diversity, Equity and Inclusion
Distribution
Logistics Segment
ECLT
Eliminating Child Labour in Tobacco Growing Foundation
EFRAG
European Financial Reporting Advisory Group
ELT
Executive Leadership Team
EPR
Extended Producer Responsibility Scheme
ERP
Enterprise Resource Planning
ESG
Environmental, Social and Governance
ESRS
European Sustainability Reporting Standards
EU
European Union
EVP
Electronic Vape Products
EY
Ernst & Young LLP
FCT
Fine Cut Tobacco
FDA
US Food and Drug Administration
FMC
Factory Made Cigarettes
FMCG
Fast Moving Consumer Goods
GHG
Greenhouse Gas
GRI
Global Reporting Initiative
GWh / KWh
Gigawatt-Hour / Kilowatt-Hour
HRIA
Human Rights Impact Assessment
HT
Heated Tobacco
HTP
Heated Tobacco Products
ILO
International Labour Organization
IOSH
Institution of Occupational Safety and Health
IPM
Integrated Pest Management
ISAE
International Standard for Assurance Engagements
ISO
International Organization for Standardization
IVMS
In Vehicle Monitoring System
KPI
Key Performance Indicators
LCWG
Leaf Compliance Working Group
Leaf CARE
Leaf Compliance and Response Programme
LGBTQ+
Lesbian, Gay, Bisexual, Transgender, Queer or Questioning, Intersex, Asexual, and More
LTA
Lost Time Accident
LTIP
Long Term Incentive Plans
MMC
Mass Market Cigars
MOND
Modern Oral Nicotine Delivery
MPI
Manufacturer’s Price Increase
MSCI
Morgan Stanley Capital International index
NGOs
Non-Government Organisation
NGP
Next Generation Products
NTM
Non-Tobacco Materials
OHSE
Occupational Health Safety and Environment
OND
Oral Nicotine Delivery Category
PDCA
Plan Do Check Act
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SUPPLEMENTARY INFORMATION continued
GLOSSARY continued
Other continued
PG&S
Purchased Goods and Services
PGS Committee
People, Governance and Sustainability Committee
PPE
Personal Protective Equipment
Priority markets
Top 5 combustible markets USA, Germany, UK, Spain and Australia
PSHG
Product Stewardship and Health Group
RECs
Renewable Energy Certificates
SASB
Sustainable Accounting Standards Board
SBTi
Science Based Targets initiatives
SCIA
Supply Chain Impact Assessments
SDGs
Sustainable Development Goals
SE
Stick Equivalent volumes reflect our combined cigarette, fine cut tobacco, cigar and snus volumes
SECR
Streamlined Energy and Carbon Reporting
SER
Supplier Engagement Rating
STP
Sustainable Tobacco Programme
T&Cs
Terms and Conditions
TCFD
Task Force on Climate-Related Financial Disclosures
Tobacco & NGP
Tobacco & Next Generation Products
UK
United Kingdom
UN SDGs
United Nations Sustainable Development Goals
WDI
Workforce Disclosure Initiative
IMPERIAL BRANDS PLC FINANCIALS
IMPERIAL BRANDS PLC BALANCE SHEET
at 30 September 2024
£ million
Notes
2024
2023
Fixed assets
Investments
iii
7,968
7,968
Current assets
Debtors
iv
1,929
2,597
Creditors: amounts falling due within one year
v
(189)
(74)
Net current assets
1,740
2,523
Net assets
9,708
10,491
Capital and reserves
Called up share capital
vi
91
97
Capital redemption reserve
16
10
Share premium account
5,833
5,833
Retained earnings - brought forward
4,551
6,733
Retained earnings - profit for the year
1,616
136
Retained earnings - share options reserve
14
–
Retained earnings - dividends paid
(1,299)
(1,312)
Retained earnings - repurchase of shares
(1,114)
(1,006)
Total shareholders' funds
9,708
10,491
As permitted by section 408(3) of the Companies Act 2006, the profit and loss account of the Company is not presented. The profit
attributable to shareholders, dealt with in the financial statements of the Company, is £1,616 million (2023: £136 million).
The financial statements on pages 213 to 229 were approved by the Board of Directors on 18 November 2024 and signed on its behalf by:
Lukas Paravicini
Director
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IMPERIAL BRANDS PLC FINANCIALS continued
IMPERIAL BRANDS PLC STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2024
£ million
Share
premium and
capital
redemption
Retained
earnings
Share capital
Total equity
At 1 October 2023
97
5,843
4,551
10,491
Profit for the year
–
–
1,616
1,616
Total comprehensive income
–
–
1,616
1,616
Transactions with owners
Share options reserve
–
–
14
14
Repurchase of shares
(6)
6
(1,114)
(1,114)
Dividends paid
–
–
(1,299)
(1,299)
At 30 September 2024
91
5,849
3,768
9,708
At 1 October 2022
103
5,837
6,733
12,673
Profit for the year
–
–
136
136
Total comprehensive income
–
–
136
136
Transactions with owners
Repurchase of shares
(6)
6
(1,006)
(1,006)
Dividends paid
–
–
(1,312)
(1,312)
At 30 September 2023
97
5,843
4,551
10,491
Total distributable reserves were £3,754 million (2023: £4,537 million).
NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC
I. ACCOUNTING POLICIES
Basis of preparation and statement of compliance with FRS 101
Imperial Brands PLC (the Company) is the ultimate parent company within the Imperial Brands group of companies (the Group). The
Company is a public company limited by shares, incorporated in England and Wales and its principal activity continued to be that of
holding investments. The Company's registered number is 3236483 and its registered address is 121 Winterstoke Road, Bristol, BS3 2LL.
The average number of employees (all Directors and Senior Management) during the financial year was seven. The Directors of the Group
manage the Group's risks at a Group level, rather than at an individual entity level. These risks are detailed in note 2 Accounting
Estimates and Judgements of the Group's financial statements.
These financial statements were prepared in accordance with the Companies Act 2006 as applicable to Financial Reporting Standard 101
Reduced Disclosure Framework (FRS 101), and applicable accounting standards.
The financial statements have been prepared on the historical cost basis, and as a going concern. Historical cost is generally based on the
fair value of the consideration given in exchange for the assets.
As permitted by section 408(3) of the Companies Act 2006, no separate profit and loss account has been presented for the Company.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available in the preparation of the financial
statements, as detailed below:
• Paragraph 38 of IAS 1 'Presentation of financial statements' - comparative information requirements in respect of:
(i) paragraph 79(a)(iv) of IAS 1;
• The following paragraphs of IAS 1 'Presentation of financial statements':
(i) 10(d) - statement of cash flows;
(ii) 10(f) - a statement of financial position as at the beginning of the preceding period when an entity applied an accounting policy
retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial
statements;
(iii) 16 - statement of compliance with all IFRS;
(iv) 38A - requirement for minimum of two primary statements, including cash flow statements;
(v) 38B-D - additional comparative information;
(vi) 40A-D - requirements for a third statement of financial position;
(vii) 111 - cash flow information; and
(viii) 134-136 - capital management disclosures;
• IAS 7 'Statement of cash flows';
• Paragraph 30 and 31 of IAS 8 'Accounting Policies, changes in accounting estimates and errors' - requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but is not yet effective;
• Paragraph 17 of IAS 24 'Related party disclosures' - key management compensation;
• The requirements in IAS 24 'Related party disclosures' to disclose related party transactions entered into between two or more
members of a group;
• The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 'Share-based Payment';
• IFRS 7 'Financial Instruments: Disclosures'; and
• Paragraphs 91 to 99 of IFRS 13 'Fair value measurement' - disclosure of valuation techniques and inputs used for fair value
measurement of assets and liabilities.
The material accounting policies, which have been applied consistently are set out below. The Directors do not consider there to be any
critical accounting estimates or judgements in respect of the Company; see note 2 Accounting Estimates and Judgements of the
consolidated financial statements for further detail.
Investments
Investments held as fixed assets comprise the Company's investment in subsidiaries and are shown at historic purchase cost less
any provision for impairment. An annual review of investments is performed for indicators of impairment. If indicators of impairment
are identified investments are tested for impairment to ensure that the carrying value of the investment is supported by their
recoverable amount.
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. Dividends receivable are recognised as an asset when
they are approved.
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IMPERIAL BRANDS PLC FINANCIALS continued
NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued
Financial instruments
Receivables held under a hold to collect business model are stated at amortised cost.
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 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.
Treasury shares
When the Company purchases its own equity share capital (treasury shares), the consideration paid, including any directly attributable
incremental costs (net of income taxes), is deducted from equity until the shares are reissued or disposed of. When such shares are
subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effects, increases shareholders' funds. When such shares are cancelled they are transferred to the capital redemption reserve.
Income taxes
Judgement is involved in determining whether the Company is subject to a tax liability or not in line with tax law. Where liabilities exist,
estimation is often required to determine the potential future tax payments. The Company recognises provisions for tax based on
estimates of the taxes that are likely to become due. Where the final tax outcome is different from the amounts that were initially
recorded, such differences will impact the current income tax and deferred tax provisions in the period in which such determination is
made.
New accounting standards
There have been no changes to accounting standards that have significantly impacted the accounting or disclosures within the financial
statements for the year ended 30 September 2024.
New accounting standards that are effective after the year ended 30 September 2024
There are a number of amendments and clarifications to IFRS, effective in future years and, with the exception of IFRS 18 - Presentation
and Disclosure in Financial Statements, none of these are expected to significantly impact the Company's results or financial position.
IFRS 18 - Presentation and Disclosure in Financial Statements
This new accounting standard is effective for the year ended 30 September 2028 and will involve a change to the structure of the primary
financial statements. This requires entities to classify income and expenses into five categories - operating, investing, financing, income
tax and discontinued operations. In addition, certain ‘non-GAAP’ measures – alternative performance measures (APMs) – will now form
part of the audited financial statements, and require mandatory definitions and reconciliation to GAAP measures. The Company is
presently reviewing the impact of this standard which is expected to fundamentally change the structure of the presentation of the
Income statement. As the Company does not present an Income Statement, the impact of the standard is not expected to be significant.
II. DIVIDENDS
Distributions to ordinary equity holders
Pence per share
£ million
2024
2023
2022
2024
2023
2022
Cash:
December
51.82
49.31
48.47
461
464
458
March
51.82
49.32
48.49
453
457
458
June
22.45
21.59
21.27
193
196
202
September
22.45
21.59
21.27
192
195
202
Total
148.54
141.81
139.50
1,299
1,312
1,320
The dividends note, which previously contained details of both paid and proposed distributions, has been reformatted. The table now
aligns the paid dividends with the equivalent amount recorded as a payment to equity shareholders of the parent company shown within
the Consolidated Statement of Changes in Equity. Details of proposed dividends are given in narrative form below. The change in the
format of this note does not constitute a restatement within the requirements of IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors.
The declared third interim dividend for the year ended 30 September 2024 of 54.26 pence per share amounts to a proposed dividend of
£459 million, which will be paid in December 2024. The proposed final dividend for the year ended 30 September 2024 of 54.26 pence per
share amounts to a proposed dividend payment of £459 million in March 2025 based on the number of shares ranking for dividend at 30
September 2024, and is subject to shareholder approval. If approved, the total dividend paid in respect of 2024 will be £1,303 million (2023:
£1,305 million). The dividend paid during 2024 is £1,299 million (2023: £1,312 million).
III. INVESTMENTS
Cost of shares in Imperial Tobacco Holdings (2007) limited
£ million
2024
2023
At 1 October
7,968
7,968
At 30 September
7,968
7,968
The Directors confirm that the carrying value of the investment is supported by the cash flows generated by the underlying assets.
A list of the subsidiaries of the Company is shown in the section on Related Undertakings below.
IV. DEBTORS
£ million
2024
2023
Amounts owed from Group undertakings
1,929
2,597
Amounts owed from Group undertakings are unsecured, interest bearing, have no fixed date for repayment and are repayable on demand.
V. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
£ million
2024
2023
Amounts owed by Group undertakings
35
34
Bank overdrafts
2
2
Contracted liability for share buyback
90
–
Other creditors
62
38
189
74
Amounts owed by Group undertakings are unsecured, interest bearing, have no fixed date for repayment and are repayable on demand.
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IMPERIAL BRANDS PLC FINANCIALS continued
NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued
VI. CALLED UP SHARE CAPITAL
2024
2023
Ordinary shares
10p each
Ordinary shares 10p
each
Number
£ million
Number
£ million
Authorised, issued and fully paid:
1 October
968,590,194
97 1,020,697,237
103
Shares cancelled
(54,087,312)
(6)
(52,107,043)
(6)
30 September
914,502,882
91
968,590,194
97
On 5 October 2023, the Board approved a £1,100 million share buyback programme in order to return capital to shareholders. The first
tranche purchased 30,317,505 shares for a cost of £550 million. Upon completion of the purchase, these shares were cancelled and
transferred to the capital redemption reserve. For the second tranche of the programme, the Group has entered into an irrevocable and
non-discretionary arrangement to buy back shares up to £550 million. The second tranche commenced on 11 March 2024 and in the
period to 30 September 2024 54,087,312 shares have been bought back and cancelled at a cost of £1,020 million. The stamp duty and other
tax costs were £12 million and the fees charged for the share repurchase were £1 million. Upon completion of the purchase, these shares
were cancelled and transferred to the capital redemption reserve. As at 30 September 2024, the Group has recognised a liability of £90
million for the remaining shares to be purchased.
For the year ended 30 September 2024 the amounts recognised in the share premium and capital redemption reserves were £5,833
million (2023: £5,833 million) and £16 million (2023: £10 million) respectively.
VII. RESERVES
Treasury shares
Subject to authorisation by special resolution, the Group may purchase its own shares in accordance with the Companies Act. Any shares
which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the
purchase, thereby reducing the amount of Group’s issued share capital. Shares held in treasury do not qualify for dividends. Shares
purchased under the share buyback programme initiated on 5 October 2023 will be cancelled immediately on completion of the purchase.
During the financial year 2.0 million shares were gifted to Employee Share Ownership Trusts (2023: no movements).
£ million unless otherwise indicated
2024
2023
Millions of
shares
(number)
Value
£
Millions of
shares
(number)
Value
£
At 1 October
70.3
2,183
70.3
2,183
Gifted to Employee Share Ownership Trusts
(2.0)
–
–
–
At 30 September
68.3
2,183
70.3
2,183
Percentage of issued share capital
7.5
n/a
7.3
n/a
VIII. GUARANTEES
The Company provides guarantees to the following subsidiaries under section 479A of the Companies Act 2006, whereby the subsidiaries,
incorporated in the UK, are exempt from the requirements of the Act relating to the audit of individual accounts for the financial year
ending 30 September 2024:
• Imperial Tobacco Holdings (2007) Limited
• Imperial Tobacco Ventures Limited
• Rizla UK Limited
• Imperial Tobacco Overseas (Polska) Limited
• La Flor de Copan UK Limited
• Tabacalera de Garcia UK Limited
• Imperial Brands Ventures Limited
• Nerudia Consulting Limited
• Imperial Brands Ventures Finance Limited
• Imperial Brands Ventures Holdings (1) Limited
• Imperial Brands Ventures Holdings (2) Limited
The Company has guaranteed various committed and uncommitted borrowings facilities and liabilities of certain UK and overseas
undertakings. As at 30 September 2024, the amount guaranteed is £13,791 million (2023: £14,138 million).
Many of the committed revolving credit facilities remain undrawn as at 30 September 2024 but the maximum potential exposure under
each facility has been included due to the ongoing commitment; only drawn utilised balances have been included for facilities that are
uncommitted in nature.
The Company has also provided a parent guarantee to the Imperial Tobacco Pension Trustees Ltd (including their £300 million revolving
credit facility), the main UK pension scheme.
The Directors have assessed the fair value and expected credit loss of the above guarantees and do not consider them to be material. They
have therefore not been recognised on the balance sheet.
IX. POST BALANCE SHEET EVENTS
Share buybacks
On 5 October 2023 Imperial Brands PLC (‘the Company’) announced a share buyback programme to repurchase up to £1.1 billion of shares.
This programme completed on 29 October 2024 with the Company having repurchased 4,010,463 million shares for a total consideration
of £90 million in the period from 1 October 2024 to 29 October 2024.
On 8 October 2024 Imperial Brands PLC ("the Company") announced the start of a new ongoing share buyback programme, to initially
repurchase up to £1.25 billion of shares in the period to 29 October 2025. On 30 October 2024, in order to execute the first tranche of this
buyback, the Company announced it had had entered into an irrevocable and non-discretionary arrangement with its broker Morgan
Stanley & Co. International Plc to buy back up to £625 million of its shares commencing from 30 October 2024 and expected to end no later
than 29 April 2025.
X. RELATED PARTY DISCLOSURES
Details of Directors’ emoluments and interests are provided within the Directors’ Remuneration Report. The Directors Remuneration
Report includes details on salary, benefits, pension and share plans. These disclosures form part of the financial statements.
RELATED UNDERTAKINGS
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, and joint ventures, the
principal activity, the country of incorporation and the effective percentage of equity owned, as at 30 September 2024 are disclosed below.
With the exception of Imperial Tobacco Holdings (2007) Limited, which is wholly owned by the Company, none of the shares in the
subsidiaries is held directly by the Company.
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IMPERIAL BRANDS PLC FINANCIALS continued
NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued
SUBSIDIARIES: REGISTERED IN ENGLAND AND WALES, WHOLLY OWNED
Name
Principal activity and registered address
Altadis NewCo Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Attendfriend Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
British Tobacco Company Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Congar International UK Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Enterprise Finance Limited
Provision of treasury services to other Group companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Finance PLC
Provision of treasury services to other Group companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Finance Limited (v)
Provision of finance to other Group companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Holdings Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Holdings (1) Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Holdings (2) Limited (xi)
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Investments Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Altadis Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (1)
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (2)
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (3)
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (4)
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Group Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Holdings (1) Limited (iv)
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Holdings (2007) Limited (iv)
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Holdings Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Initiatives
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Lacroix Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Limited
Manufacture, marketing and sale of tobacco products in the UK
121 Winterstoke Road, Bristol BS3 2LL England
Imperial Tobacco Overseas (Polska) Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (1) Limited (viii)
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (2) Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (3) Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (4) Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Limited (x)
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Pension Trustees (Burlington House) Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
SUBSIDIARIES: REGISTERED IN ENGLAND AND WALES, WHOLLY OWNED CONTINUED
Name
Principal activity and registered address
Imperial Tobacco Pension Trustees Limited (iv)
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Ventures Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
ITG Brands Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Joseph & Henry Wilson Limited
Licensing rights for the manufacture and sale of tobacco products
121 Winterstoke Road, Bristol BS3 2LL England
Nerudia Limited
Research and development of e-vapour products
121 Winterstoke Road, Bristol, BS3 2LL, England
Nerudia Consulting Limited
Research and development of e-vapour products
121 Winterstoke Road, Bristol, BS3 2LL, England
La Flor de Copan UK Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Park Lane Tobacco Company Limited
Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Rizla UK Limited
Entity ceased trading
121 Winterstoke Road, Bristol, BS3 2LL, England
Tabacalera de Garcia UK Limited
Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
SUBSIDIARIES: INCORPORATED OVERSEAS, WHOLLY OWNED
Name
Country of incorporation
Principal activity and registered address
1213509 B.C. Limited
Canada
Holding investments in subsidiary companies
Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC. V6C 2X8, Canada
Altadis Canarias S.A.U. (ii)
Spain
Marketing and sale of tobacco products in the Canary Islands
C/Comandante Azcarraga 5, Madrid, 28016, Spain
Altadis Holdings USA Inc
United States of America
Holding investments in subsidiary companies
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
Altadis Middle East FZCO
United Arab Emirates
Sales and marketing of tobacco products in the Middle East
P.O. Box. No. 261718, Jebel Ali Free Zone, Dubai, 261718, United Arab
Emirates
Altadis Ocean Indien S.A.S.
France (La Reunion
Island)
Sales and distribution of tobacco products in La Reunion Island
ZI n° 2 - BP 256 - 97457 Saint Pierre Cedex, La Reunion
Altadis S.A.U.
Spain
Manufacture, sales and distribution of tobacco products in Spain
C/Comandaute Azcarraga 5, Madrid 28016, Spain
Altadis Shade Company LLC
United States of America
Manufacture and sale of tobacco products in the USA
217 Shaker Road, Somers, CT, 06071, USA
Athena IP Vermogensverwaltungs GmbH
Germany
Davidoff cigarette trademark owner
Behringstrasse 122 A, 22763, Hamburg
Cacique, SA - Comércio, Importaçao e Exportaçao
Brazil
Dormant
Rua Marechal Deodoro, 690 - Centro Arapiraca, Alagoas, Brazil
Commonwealth Brands Inc
United States of America
Manufacture and sale of tobacco products in the USA
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
Congar International Corp (Delaware)
United States of America
Manufacturing and distribution of mass market cigars
Road 14, Km. 72.2, Ave. Antonio R. Barcelo, Cayey, DE, PR 00736, USA
Connecticut Shade Corporation
United States of America
Holding investments in subsidiary companies
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
Consolidated Cigar Holdings Inc (vii)
United States of America
Holding investments in subsidiary companies
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
Coralma International S.A.S.
France
Holding investments in subsidiary companies
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
Dunkerquoise des Blends S.A.S.
France
Tobacco processing
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
Ets L Lacroix Fils NV/SA
Belgium
Manufacture and sale of tobacco products in Belgium
Sint-Bavostraat 66, 2610 Wilrijk, Belgium
Fontem (Beijing) Technology Solutions Limited (i)
People’s Republic of China Research and development
Room 201, Floor 2, Building 6, Yuan Dong science and technology park, 6
Hepingli North Street, Dong Cheng District, Beijing, 100013, China
Fontem Canada Limited
Canada
Import and distribution of tobacco and tobacco related products in Canada
C/O BDO Canada LLP, 6940 Mumford Road, Suite 510, Halifax, NS, B3L 0B&,
Canada
Fontem US LLC
United States of America
Sales and marketing of tobacco products in the US
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
Fontem Ventures B.V.
The Netherlands
Holding investments in subsidiary companies
Radarweg 60, Amsterdam, 1043 NT, The Netherlands
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SUBSIDIARIES: INCORPORATED OVERSEAS, WHOLLY OWNED CONTINUED
Name
Country of incorporation
Principal activity and registered address
Huotraco International Limited
Cambodia
Production and marketing of tobacco products
No 299, Preah Ang Duong Street, Sangkat Wat Phnom, Khan Daunh Penh,
Phnom Penh, Cambodia
Imperial Brands Bulgaria EOOD (i)
Bulgaria
Manufacture and sale of tobacco products in Bulgaria
EN 1 Building, floor 8, 1 Atanas Dukov Str. 1407 Sofia, Bulgaria
Imperial Brands CR s.r.o.
Czech Republic
Sales and marketing of tobacco products in the Czech Republic
Karla Engliše 3201/6, 15 00, Praha 5
Imperial Brands Finance Netherlands B.V.
The Netherlands
Provision of finance to other Group companies
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Imperial Brands Finland Oy
Finland
Sales and marketing of tobacco products in Finland
Auriga Business Center, Juhana Herttuan Puistokatu 21, 20100 Turku
Imperial Brands Global Duty Free & Export S.L.
Spain
Sale and export of duty-free tobacco products
C/Comandaute Azcarraga 5, Madrid 28016, Spain
Imperial Brands Hellas S.A.
Greece
Sales and marketing of tobacco products in Greece
300 Klisthenous Str, 15344 Gerakas, Attikis, Athens, Greece
Imperial Brands Holdings International B.V.
The Netherlands
Provision of finance to other Group companies
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Imperial Brands Italia S.r.l.
Italy
Sales and marketing of tobacco products in Italy
Via Luca Passi 22, Roma, 00166, Italy
Imperial Brands Japan G.K (v)
Japan
Sales and marketing of tobacco products in Japan
Shiodome Shibarikyu Building 21, 1-2-3 Kaigan
Minato-ku, Tokyo, Japan
Imperial Brands La Romana
Dominican Republic
Manufacture of cigars in the Dominican
Republic
Industrial Free Zone #1, La Romana, Domincan
Republic
Imperial Brands Luxembourg sarl
Luxembourg
Sale of tobacco products in Luxembourg
56 Rue Charles Martel, L-2134, Luxembourg
Imperial Brands Malta Limited
Malta
Provision of finance to other Group companies
Office 3, AX Business Centre, Ground Floor, Triq
id-Difiza Civili Mosta, MST 1741, Malta
Imperial Brands Norway A.S.
Norway
Sales and marketing of tobacco products in
Norway
Ryensvingen 2-4, 0680, Oslo, Norway
Imperial Brands Portugal, Sociedade Unipessoal Lda
Portugal
Advertising and support management
144, 7 DT, Avenida da Liberdade, Lisbon, Portugal
Imperial Brands Services Polska spolka z.o.o
Poland
Central Manufacturing and Central Supply Chain
Jankowice, Przemyslowa 1, 62-080 Tarnowo
Padgorne, Poland
Imperial Brands Ventures LLC
United States of America
Holding investments in subsidiary companies
251 Little Falls Drive, Wilmington, DE 19808 USA
Imperial Finance Ireland Limited
Ireland
Provision of finance to other Group companies
21 Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
Imperial Finance Malta Ltd
Malta
Provision of finance to other Group companies
Office 3, AX Business Centre, Ground Floor, Triq id-Difiza Civili Mosta, MST
1741, Malta
Imperial Tobacco (Asia) Pte. Ltd
Singapore
Trading of tobacco-related products
9 Raffles Place, #26-01 Repulic Plaza, Singapore, 048619
Imperial Tobacco Australia Limited
Australia
Sales and marketing of tobacco products in Australia
John Player Special House, Level 4, 4-8 Inglewood Place, Norwest, NSW
2153, Australia
Imperial Tobacco Austria Marketing Service GmbH
Austria
Marketing of tobacco products in Austria
Zieglergasse 6, A-1070 Vienna, Austria
Imperial Tobacco BH doo (i)
Bosnia-Herzegovina
Marketing and distribution of tobacco products in Bosnia
Adema Buce, Sarajevo, 71000, Bosnia & Herzegovina
Imperial Tobacco Distribution Romania srl
Romania
Marketing and distribution of tobacco products in Romania
Nicolae Canea Street no. 140-160, EOS Business Park, 1st Floor North, 2nd
District, Bucharest, Romania
Imperial Tobacco EFKA Management GmbH
Germany
Manufacture of tobacco products in Germany
Behringstrasse 122 A, 22763, Hamburg
Imperial Tobacco España, S.L.U.
Spain
Holding investments in subsidiary companies
C/Comandaute Azcarraga 5, Madrid 28016, Spain
Imperial Tobacco Estonia OÜ
Estonia
Dormant
Veskiposti 2, 10138 Tallinn, Tallinn , Estonia
Imperial Tobacco Holdings International B.V.
The Netherlands
Provision of finance to other Group companies
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Imperial Tobacco Intellectual Property Limited
Ireland
Ownership of trademarks
21, Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
SUBSIDIARIES: INCORPORATED OVERSEAS, WHOLLY OWNED CONTINUED
Name
Country of incorporation
Principal activity and registered address
Imperial Tobacco International GmbH
Germany
Export and marketing of tobacco products
Behringstrasse 122 A, 22763, Hamburg
Imperial Tobacco Ireland Unlimited Company (v)
Ireland
Dormant
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
Imperial Tobacco Italy S.r.l.
Italy
Holding investments in subsidiary companies
Via Luca Passi 22, Roma, 00166, Italy
Imperial Tobacco Kyrgyzstan LLC (i)
Kyrgyzstan
Marketing and distribution of tobacco products in Kyrgyzstan
115, Ibraimov Street, 10th Floor, Business Center 'Asyl-Tash', Bishkek,
720021, Kyrgyzstan
Imperial Tobacco La Romana S.A.S.
France
Manufacture of cigars in the Dominican Republic
320, Rue Saint-Honore, Paris, 75001, France
Imperial Tobacco Magyarország Dohányforgalmázo Kft (Imperial
Tobacco Hungary)
Hungary
Sales and marketing of tobacco products in Hungary
Váci út 141, 1138, Budapest, Hungary
Imperial Tobacco Management Luxembourg sarl
Luxembourg
Holding investments in subsidiary companies
56 Rue Charles Martel, L-2134, Luxembourg
Imperial Tobacco Marketing Sdn Bhd
Malaysia
Trading of tobacco products (in liquidation)
12th Floor Menara Symphony, No 5 Jalan Prof, Khoo Kay Kim, Seksyey,
46200 Petaling Jaya, Selangor, Malaysia
Imperial Tobacco New Zealand Limited
New Zealand
Manufacture and sale of tobacco products in New Zealand
Level 24, 157 Lambton Quay, Wellington Central, Wellington 6011, New
Zealand
Imperial Tobacco Polska Manufacturing S.A.
Poland
Manufacture of tobacco products in Poland
Ul. Tytoniowa 2/6, Radom, 26-600, Poland
Imperial Tobacco Polska S.A.
Poland
Manufacture and sale of tobacco products in Poland
Jankowice, ul. Przemyslowa 1, Pl-62-080, Tarnowo-Podgome, Poland
Imperial Tobacco Production Ukraine (i)
Ukraine
Manufacture of tobacco products in Ukraine
ul. Akademika Zabolotnogo, 35, 03026, Kiev, Ukraine
Imperial Tobacco SCG doo Beograd (i)
Serbia
Marketing and distribution of tobacco products in Serbia
Milutina Milankovica 11a, Novi Beograd, Serbia
Imperial Tobacco Sigara ve Tutunculuck Sanayi Ve Ticaret A.S.
Turkey
Manufacture of tobacco products in Turkey
Kecilikoy OSB, Mah Ahmet Tutuncuoglu Cad. No.11, 45030 Yunusemre,
Manisa, Turkey
Imperial Tobacco Slovakia A.S.
Slovak Republic
Sales and marketing of tobacco products in the Slovak Republic
7A Galvaniho, 824 53 Bratislava, Slovakia
Imperial Tobacco Taiwan Co. Limited
Taiwan
Sales and marketing of tobacco products in Taiwan
6F1-2 No.2 Sec. 3, Minsheng E road, Zhongshen District, Taipei, Taiwan,
Province of China
Imperial Tobacco Taiwan Manufacturing Company Limited
Taiwan
Manufacture of tobacco products in Taiwan
No 8 Cyunyi Road, Jhunan, MiaoLi County 350, Taiwan Province of China
Imperial Tobacco Tutun Urunleri Satis Ve Pazarlama A.S.
Turkey
Sales and marketing of tobacco products in Turkey
Kecilikoy OSB, Mah Ahmet Tutuncuoglu Cad. No.11, 45030 Yunusemre,
Manisa, Turkey
Imperial Tobacco Ukraine (i)
Ukraine
Sales and marketing of tobacco products in Ukraine
ul. Akademika Zabolotnogo, 35, 03026, Kiev, Ukraine
Imperial Tobacco US Holdings BV
The Netherlands
Holding investments in subsidiary companies
121, Winterstoke Road, Bristol, BS3 2LL
Imperial Tobacco West Africa S.A.S. (i)
Cote D'Ivoire
Holding investments in subsidiary companies
Cocody-Nord, Quartier Gendarmerie, TF 5937, 01 B.P. 724 Abidjan
Imperial Tobacco Zagreb doo (i)
Croatia
Dormant (in liquidation)
Julija Kniefera 7, HR-100, Croatia
IMPTOB South Africa (Pty) Limited
South Africa
Provision of services to other Group companies
5 Sandwood Hills, Dunkirk Estate, Zimbali, South Africa
ITG Brands Holdco LLC
United States of America
Holding investments in subsidiary companies
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
ITG Brands LLC
United States of America
Marketing and distribution of tobacco products in the USA
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
ITG Cigars Inc
United States of America
Manufacture and sale of cigars in the USA
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
ITG Holdings USA Inc (ix)
United States of America
Holding investments in subsidiary companies
628 Green Valley Road, Suite 500, Greensboro, NC 27408, USA
ITL Pacific (HK) Limited
Hong Kong
Manufacture and sale of tobacco and tobacco related products
Room 3905-06, 39th Floor, Hopewell Centre, 183 Queens Road East,
Wanchai, Hong Kong
Imperial Ventures Malta Limited
Malta
Provision of finance to other Group companies
Office 3, AX Business Centre, Ground Floor, Triq id-Difiza Civili Mosta, MST
1741, Malta
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SUBSIDIARIES: INCORPORATED OVERSEAS, WHOLLY OWNED CONTINUED
Name
Country of incorporation
Principal activity and registered address
JAW-Invest Oy
Finland
Trademark owner
Auriga Business Center, Juhana Herttuan puistokatu 21, 20100 Turku,
Findland
John Player & Sons Limited
Ireland
Sales and marketing of tobacco products in the Republic of Ireland
21, Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
JSNM SARL
France
Trademark owner
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
MYBLU Spain S.L.
Spain
Marketing and sale of e-vapour products in Spain
CR. Robledo de Chavela, S/N. San Lorenzo del Escorial, Madrid, 28200,
Spain
Millennium Tobacco Unlimited Company
Ireland
Provision of finance to other Group companies
21, Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
Newglade International Unlimited Company
Ireland
Dormant
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
Petone Vapes Limited
New Zealand
Non-trading
Russell McVeagh, Level 24, 157 Lambton Quay, Wellington Central,
Wellington, 6011 , New Zealand
Philippine Bobbin Corporation
Philippines
Manufacture of tobacco-related products
Cavite Economic Zone, Phase II, Rosario, Cavite, Philippines
Real Club de Golf la Herrería S.A.
Spain
Management of golf course
CR. Robledo de Chavela, S/N. San Lorenzo del Escorial, Madrid, 28200,
Spain
Reemtsma Cigarettenfabriken GmbH
Germany
Manufacture and sale of tobacco products in Germany
Behringstrasse 122 A, 22763 Hamburg, Germany
Skruf Snus AB
Sweden
Manufacture, marketing, sales of tobacco products in Sweden
PO Box 3068, Stockholm, SE-103 61, Sweden
Société Centrafricaine de Cigarettes S.A. (i)
Central African Republic
Manufacture and distribution of cigarettes in Central African Republic
Rue David Dacko, BP 1446, Bangui, Central African Republic
Société Centrafricaine de Distribution Sarl (i)
Central African Republic
Dormant
Avenue Boganda Pk4, Bangui, Central African Republic
Société du Mont Nimba Sarl (i)
Guinee Conakry
In liquidation
BP 3391, Conakry, Guinea
Société Nationale d’Exploitation Industrielle des Tabacs et
Allumettes S.A.S.
France
Manufacture and sale of tobacco products in France, and export of tobacco
products
200-216 rue Raymond Losserand, Paris, 75014, France
Société pour le Développement du Tabac en Afrique S.A.S.
France
Purchasing company
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
System Designed to Africa Sarl
Morocco
Distribution of tobacco products
Km 17, Route national de Rabat, Ain Harrouda, Morocco
Tabacalera de Garcia Limited
Bermuda
Holding investments in subsidiary companies
Claredon House, 2 Church Street, Hamilton, HM 11 Bermuda
Tahiti Tabacs SASU
France, Papeete (Tahiti)
Distribution of tobacco products in Denmark and Greenland
PK 4, 300 Côté mer, 98701 Arue, BP 20692 Papeete, French Polynesia
Tobaccor S.A.S. (v)
France
Holding investments in subsidiary companies
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
Tobačna 3DVA, trgovsko podjetje, d.o.o.
Slovenia
Retail of products in Slovenia
Cesta 24., junija 90, SI 1231 Ljubljana - Ĉrnuče, Slovenia
Tobačna Grosist d.o.o.
Slovenia
Marketing and distribution in Slovenia
Cesta 24., junija 90, SI 1231 Ljubljana - Ĉrnuče, Slovenia
Tobačna Ljubljana d.o.o. (v)
Slovenia
Sales and marketing tobacco products in Slovenia
Cesta 24., junija 90, SI 1231 Ljubljana - Ĉrnuče, Slovenia
Van Nelle Tabak Nederland B.V. (x)
The Netherlands
Manufacture and sale of tobacco products in the Netherlands
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Van Nelle Tobacco International Holdings B.V.
The Netherlands
Sale of tobacco and tobacco-related products
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Von Erl. Gmbh (i)
Austria
Sale of e-vapour products in the US and Europe
Hegelgasse 13/26, 1010 Vienna, Austria
SUBSIDIARIES: INCORPORATED OVERSEAS, PARTLY OWNED
Name
Country of incorporation
Principal activity and registered address
Percentage owned
3 For One, SA
Belgium
Holding Company
Avenue Hermann-Debroux 54. 1160 Anderghem
(Belgium)
50.0
24 Hours B.V
The Netherlands
Courier Express Sector
Wijkermeerstraat 31, 2131 HB, Hoofddorp, The
Netherlands
50.0
Albacetrans, S.L.U
Spain
Freight forwarding company
Poligono Industrial Campollano, Avenida Sexta,
0.02007 Albacete, Spain
50.0
Belgium Parcels Service, Srl
Belgium
Specialist in the urgent distribution of
pharmaceutical product in Belgium and
Luxembourg
Avenue Hermann-Debroux 54. 1160 Anderghem
(Belgium)
50.0
Be To Be Pharma, S.L.U.
Spain
Distribution of pharmaceuticals
C/ Trigo, 39 - Polígono Industrial Polvoranca,
Leganés, Madrid, 28914, Spain
50.0
Carbo Collbatalle, S.L.U.
Spain
Transportation of food at a controlled
temperature
Zona Franca, Sector E, Calle L, No 6-8. 08040
Barcelona, Spain
50.0
CDIL - Companhia de Distribuicao Integral Logista Portugal, SA.
Portugal
Marketing and sale of tobacco and other
products, and payment services in Portugal
Edificio Logista, Rua do Vale da Fote Coberta, 153
E 167, 2890-182, Alcochete, Portugal
50.0
Compagnie Agricole et Industrielle des Tabacs Africains S.A.S.
France
Management company
143 bd Romain Rolland, Cedex 14, Paris, 75685,
France
99.9
Compagnie Réunionnaise des Tabacs S.A.S.
France, St Pierre (La
Reunion Island)
Manufacture of cigarettes
ZI n° 2 - BP 256 - 97457 Saint Pierre Cedex, La
Reunion
98.9
Compañía de Distribución Integral de Publicaciones Logista S.L.U.
(iv)
Spain
Distribution of published materials and other
products
Avenida de Europa No.2, Edificio Alcor Plaza/Ala
Este Planta 4a - Modulo 3, Alcorcor, Madrid,
28922, Spain
50.0
Compañía de Distribución Integral Logista Polska, sp. Z o.o.
Poland
Distribution of tobacco products in Poland
Avenida Jerozolimskie 96 - 7ª Planta, Edificio
Equator II 133/131, 02-304 Varsaw, Poland
50.0
Compañía de Distribución Integral Logista S.A.U.
Spain
Distribution of tobacco products in Spain
C/ Trigo, 39 - Polígono Industrial Polvoranca,
Leganés, Madrid, 28914, Spain
50.0
Distribuidora Valenciana de Ediciones S.A.U.
Spain
Distribution of published materials and other
products in Valencia
Pedrapiquers 5, Poligono Industrial Vara de
Quart, Valencia, 46014, Spain
50.0
Dronas 2002, S.L.U.
Spain
Industrial parcel and express delivery service
Energía, 25-29; Polígono Industrial Nordeste,
Sant Andreu de la Barca, Barcelona, 08740, Spain
50.0
German-Ex B.V.
The Netherlands
Courier Express Sector
Wijkermeerstraat 31, 2131 HB, Hoofddorp, The
Netherlands
50.0
Herinvemol, S.L.
Spain
Freight forwarding company
Carretera De Madrid, KM. 276. 30500 Molina De
Segura (Murcia), Spain
50.0
Imperial Tobacco TKS a.d. (i)
Macedonia
Manufacture, marketing and distribution of
tobacco products in Macedonia
ul 11, Oktomvri 125, P O Box 37, 1000 Skopje,
Macedonia
99.1
Imperial Tobacco TKS a.d. - Dege Kosove
Kosovo
Manufacture, marketing and distribution of
tobacco products in Kosovo
Rrafshi i Kosoves, Nr. 80 (Magjistralja M2:
Prishtine-Shkup, km i 2-te Vetermik) Prishtine,
Republic of Kosovo
99.1
Imprimerie Industrielle Ivoirienne SA (i)
Cote D'Ivoire
Printing company
Zone Industrielle du Banco, Lots No 147-149-150,
01 BP 4124, Yopougon/Abdjan, Cote d'Ivoire
78.8
Innoreste, S.L.U.
Spain
Freight forwarding company
Carretera De Madrid-Cartegena, KM. 376. 30500
Molina de Segura (Murcia), Spain
50.0
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IMPERIAL BRANDS PLC FINANCIALS continued
NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued
SUBSIDIARIES: INCORPORATED OVERSEAS, PARTLY OWNED CONTINUED
Name
Country of incorporation
Principal activity and registered address
Percentage owned
La Mancha 2000, S.A., Sociedad Unipersonal
Spain
Distribution services
Trigo 39, Poligno Industrial Polvoranca - 28914
Leganes, Madrid, Spain
50.0
Logesta Deutschland Gmbh, Sociedad Unipersonal
Germany
Long haul transportation in Germany
Pilotystrasse, 4, 80538 München, Germany
50.0
Logesta Lusa LDA
Portugal
Long haul transportation in Portugal
Edifico Logista, Rua do Vale da Fonte Coberta,
153 E 167, 2890-182 Alcochete, Portugal
50.0
Logista France Holding S.A.
France
Holding investments in subsidiary companies
Inmeuble Le Bristol, 27 Avenue des Murs du
Parc, 94300 Vincennes, France
50.0
Logista France S.A.S.
France
Holding investments in subsidiary companies
Inmeuble Le Bristol, 27 Avenue des Murs du
Parc, 94300 Vincennes, France
50.0
Logesta Freight France Sarl
France
Long haul transportation in France
Inmeuble Le Bristol, 27 Avenue des Murs du
Parc, 94300 Vincennes, France
50.0
Logista Freight Italia S.R.L
Italy
Long haul transportation in Italy
Via Valadier, 37 - 00193 Roma, Italy
50.0
Logista Freight Polska S.r.l.
Poland
Long haul transportation in Poland
Av. Jerozolimskie 96 - 7ª Planta Edificio Equator
II, Varsovia, Poland
50.0
Logista Freight, S.A.U
Spain
Long haul transportation services in Spain
C/ Trigo, 39 - Polígono Industrial Polvoranca,
Leganés, Madrid, 28914, Spain
50.0
Logistica Integral, S.A. (iii)
Spain
Holding investments in subsidiary companies
C/ Trigo, 39 - Polígono Industrial Polvoranca,
Leganés, Madrid, 28914, Spain
50.0
Logista Italia Spa
Italy
Long haul transportation in Italy
Via Valadier, 37 - 00193 Roma, Italy
50.0
Logista Payments, S.L.U.
Spain
Provision of financial services
C/ Trigo, 39 - Polígono Industrial Polvoranca,
Leganés, Madrid, 28914, Spain
50.0
Logista Pharma Canarias, S.A.U.
Spain
Pharmaceutical products logistics in Canary
Islands
C/ Entreríos Nave 3; Las Palmas de Gran Canaria,
35600, Spain
50.0
Logista Pharma Italia, S.r.l.
Italy
The logistics, storage and distribution
throughout the Italian territory of
pharmaceutical, cosmetics and sanitary
products
Via Valadier, 37 - 00193 Roma, Italy
50.0
Logista Pharma S.A.U.
Spain
Distribution of pharmaceuticals
C/ Trigo Núm. 39 - Polígono Industrial
Polvoranca, Leganés, Madrid, 28914, Spain
50.0
Logista Promotion et Transport S.A.S.
France
Marketing and distribution of tobacco products
in France
Inmeuble Le Bristol, 27 Avenue des Murs du
Parc, 94300 Vincennes, France
50.0
Logista Regional de Publicaciones, S.A.U.
Spain
Marketing, distribution and sale to points of sale
in Spain.
Avenida de Europa No.2, Edificio Alcor Plaza/Ala
Este Planta 4a - Modulo 3, Alcorcor, Madrid,
28922, Spain
50.0
Logista Retail France S.A.S.
France
Long haul transportation in France
Inmeuble Le Bristol, 27 Avenue des Murs du
Parc, 94300 Vincennes, France
50.0
Logista Retail Italia S.P.A
Italy
Wholesale to tobacconists in Italy
Via Valadier, 37 - 00193 Roma, Italy
50.0
Logista Retail S.A.U
Spain
Sale of tobacco products in Spain
C/ Trigo, 39 - Polígono Industrial Polvoranca,
Leganés, Madrid, 28914, Spain
50.0
Logista Strator, SLU
Spain
Distribution of POS software
C/ Trigo, 39 - Polígono Industrial Polvoranca,
Leganés, Madrid, 28914, Spain
50.0
Logista Transport Europe B.V.
The Netherlands
Holding company
Wijkermeerstaat 31. 2131 HB, Hoofddorp, The
Netherlands
50.0
Logista, Transportes, Transitários e Pharma, Lda.
Portugal
Industrial parcel delivery and pharmaceutical
distribution in Portugal
Edifico Logista, Rua do Vale da Fonte Coberta,
153 E 167, 2890-182 Alcochete, Portugal
50.0
SUBSIDIARIES: INCORPORATED OVERSEAS, PARTLY OWNED CONTINUED
Name
Country of incorporation
Principal activity and registered address
Percentage owned
MABUCIG Industries SA
Burkina Faso
Manufacture of cigarettes in Burkina Faso
No 55, Rue 19.14, , B.P. 94, Kodeni, - Bobo
Dioulasso, Burkina Faso
72.7
MABUCIG SA (Manufacture Burkinabe de Cigarette)
Burkina Faso
Manufacture of cigarettes in Burkina Faso
Zone Industrielle de Bobo-Dioulasso, Secteur No
19, Rue 19.14 No adressage 55, B.P. 94 - Bobo
Dioulasso, Burkina Faso
72.7
Macotab S.A.S. (Manufacture Corse des Tabacs)
France, Bastia
Manufacture and sales of cigarettes
Route Nationale 193, Furiani, 20600, France
99.9
Manufacture de Cigarettes du Tchad SA
Tchad
Manufacture and distribution of cigarettes in Chad
0502 rue 1039, Arrondissement 1, N'DJamena, Chad
95.0
Midsid – Sociedade Portuguesa de Distribução, S.A.U
Portugal
Wholesale of tobacco and other products
Edificio Logista, Pracetta do Vale Da Fonte,
Coberta 153/167, Freguesia de Alcochete, Portugal
50.0
Mosca China Logistics Ltd
China
Freight forwarding company
603, no.32 Hong Kong Road, Nanfang district,
Qingdao City
50.0
Mosca Italia, Srl
Italy
Transport activities
Via Roma 2, Cap, 16121, Rome, Italy
50.0
Mosca Maritimo Baleares, S.L.
Spain
Freight forwarding company
Carretera De Madrid, S/N. 30500 Molina de
Segura (Murcia), Spain
50.0
Mosca Maritimo , S.L.U.
Spain
Freight forwarding company
Carretera De Madrid, S/N. 30500 Molina de
Segura (Murcia), Spain
50.0
Mosca Portugal, Lda
Portugal
Freight forwarding company
Santa Iria, Na Avenida Casal SA Serra No 9
50.0
MTOA SA (i)
Senegal
Manufacture and sales of cigarettes in Senegal
Km 2-5 Bld du Centenaire de la commune de
Dakar, Dakar, Senegal
98.3
Ordimur, SLU
Spain
Freight forwarding company
Calle Argentina, Margen Izquierda, Poligono
Industrial La Serreta, 30500 Molina de Segura,
Murcia
50.0
Publicaciones y Libros SA
Spain
Publishing company
Avenida de Europa No.2, Edificio Alcor Plaza/Ala
Este Planta 4a - Modulo 3, Alcorcor, Madrid,
28922, Spain
50.0
Reemtsma Kyrgyzstan OJSC (i)
Kyrgyzstan
In liquidation
115, Ibraimov Str., 10th Floor, Business Center
"Asyl-Tash",, Bishkek, Kyrgyzstan
99.7
S3T Pte Ltd (i)
Singapore
Holding investments in subsidiary companies
9 Raffles Place, #26-01 Republic Plaza, Singapore
048619
51.0
SACIMEM SA (i)
Madagascar
Manufacture of cigarettes in Madagascar
110 Antsirabe - Madagascar, Route d'Ambositra,
BP 128, Madagascar
65.4
SGEL Libros, S.L.U.
Spain
Edition and distribution of books and non-
periodical publication both in Spain and in any
other foreign country
Polígono Industrial La Quinta, Avda Castilla La
Mancha, 2, Nave 3-4, 19171 Cabanillas del Campo,
Guadalajara
50.0
SITAB Industries SA (i)
Cote D'Ivoire
Manufacture of cigarettes in Cote D'Ivoire
Rue de I'Industrie - Lot No 19, 01 - BP 607, Bouake,
Cote d'Ivoire
75.9
SITAR Holding S.A.S.
France (La Reunion
Island)
Holding investments in subsidiary companiesr
Z.I n2, B.P. 256, 97457 Saint Pierre, IIe de la
Reunion, France
99.0
Société Africaine d’Impression Industrielle SA (i)
Senegal
Manufacture and distribution of cigarettes in
Senegal
route de Bel Air - Km 2200, Dakar, Senegal
99.8
Société des Cigarettes Gabonaises SA (i)
Gabon
In liquidation
2381 bld Léon MBA, BP 2175, Libreville, Gabon
87.8
Société Industrielle et Agricole du Tabac Tropical SA (i)
Congo
Manufacture and distribution of cigarettes in Congo
Avenue de la Pointe Hollandaise, Mpila, BP 50,
Brazzaville, Congo
89.7
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IMPERIAL BRANDS PLC FINANCIALS continued
NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued
SUBSIDIARIES: INCORPORATED OVERSEAS, PARTLY OWNED CONTINUED
Name
Country of incorporation
Principal activity and registered address
Percentage owned
Société Ivoirienne des Tabacs SA (i) (iii)
Cote D'Ivoire
Manufacture and distribution of cigarettes in
Côte d’Ivoire
Cocody-Nord, Quartier Gendarmerie, TF 5937, 01
B.P. 724 Abidjan
74.9
Société Marocaine des Tabacs SA
Morocco
Manufacture and distribution of cigarettes in
Morocco
87 Rue Hamed El Figuigui , Casablanca, 20500,
Morocco
99.9
SOCTAM SA (i)
Madagascar
Manufacture and distribution of cigarettes in Mali
15 Rue Geoges V, Mahajanga, Madagascar
50.5
SOTCHADIS S.A.S.
Chad
Non-trading
502 Rue 1039, BP 852, N'Djamena, Chad
95.0
Speedlink Worldwide Express B.V.
The Netherlands
Courier express sector
Wijkermeerstraat 31, 2131 HB, Hoofddorp, The
Netherlands
50.0
Transportes El Mosca Murcia, S.A.U.
Spain
Freight forwarding company
Carretera Madrid-Cartagena, KM. 376.30500,
Molina de Segura (Murcia), Spain
50.0
Transportes El Mosca, S.A.U.
Spain
Freight forwarding company
Carretera Madrid-Cartagena, KM. 376.30500,
Molina de Segura (Murcia), Spain
50.0
ASSOCIATES: INCORPORATED OVERSEAS
Name
Country of incorporation
Principal activity and registered address
Percentage owned
Alcome S.A.S.
France
Waste management
88 avenue des Ternes, Paris, 75017, France
24.0
Azur Finances SA
Cameroon
Holding investments in subsidiary companies
B.P 1105, Douala, Cameroon
20.0
Compañia Española de Tabaco en Rama SA (Cetarsa) (i)
Spain
Production and sale of raw tobacco
Avenida de las Angustias, 20, 10300 Navalmoral
de la Mata, Cáceres, Spain
20.8
Distribuidora de Ediciones SADE, S.A.
Spain
Distribution of published materials and other
products in Spain
Calle B, esquina calle 4, s/n. Sector B, Polígono
Industrial Zona Franca, 08040 Barcelona, Spain
35.0
Distribuidora de Publicaciones del Sur, S.A.
Spain
Distribution of published materials and other products
Polígono Industrial Pineda, Carretera de Cádiz a Dos
Hermanas, Km 547, Nave D. 41014 Sevilla, Spain
25.0
Distribución de Publicaciones Siglo XXI, Guadalajara
Spain
Distribution of published materials and other
products in Spain
Francisco Medina y Mendoza, 2, 19171 Cabanillas
del Campo, Guadalajara, Spain
40.0
Entreprises des Tabacs en Guinée (i)
Guinée Conakry
Dormant
B.P 3391, Conakry, Guinea
34.0
Lao Tabacco Limited
Laos
Manufacture and distribution of cigarettes in Laos
KM 8, Thadeua Road, P O Box 181, Vientiane, Lao
People's Democratic Republic
43.7
Logista Libros S.L.
Spain
Distribution of books
Avda. Castilla La Mancha, 2 - Naves 3-4 del
Polígono Industrial La Quinta, Cabanillas del
Campo, Guadalajara, Spain
25.0
Promotion et Distribution a Madagascar (i)
Madagascar
Distribution of cigarettes in Madagascar
Tour ZITAL Ankorondrano, Antananarivo,
Madagascar
33.4
SITABAC S.A.
Cameroon
Manufacture and distribution of tobacco
products in Cameroon
113 Rue Kitchener, 1067 Bonanjo, Douala, Cameroon
34.5
Sociedad Anonima Distribuidora De Ediciones
Spain
Publications distribution
Calle B, esquina calle 4, s/n. Sector B, Polígono
Industrial Zona Franca, 08040 Barcelona, Spain
35.0
Société Internationale des Tabacs Malgaches (i)
Madagascar
Leaf processing
BP 270, 401 Mahajanga, Madagascar
47.9
Société Nationale des Tabacs et Allumettes du Mali S.A. (i)
Mali
Manufacture and distribution of cigarettes in Mali
Route Sotuba - Z.I., BP 59, Bamako, Mali
28.0
SPAK-EKO a.s.
Slovak Republik
Recycling of tobacco o products in Slovak
Republik Vajnorská 100/B 831 04 Bratislava
25.0
JOINT VENTURES: INCORPORATED OVERSEAS CONTINUED
Name
Country of incorporation
Principal activity and registered address
Percentage owned
Global Horizon Ventures Limited
Hong Kong
Sales and marketing of cigarettes in Asia
Room 3907-08, 39th Floor, Hopewell Centre, 183
Queens Road East, Wanchai, Hong Kong
50.0
Intertab S.A. (i)
Switzerland
Holding investments in subsidiary companies
Société Fiduciaire Suisse-Coopers & Lybrand
S.A., Route de la Glâne 107, Villars-sur-Glâne,
1752, Switzerland
50.0
West Tobacco Pte Ltd (i)
Singapore
Dormant
1 Harbourfront Avenue #14-07, Keppel Bay
Tower, 098632 Singapore
50.0
PARTNERSHIPS
The Group also owns the following partnerships
Name
Country
Principal activity, registered address and principal place of business
Fabrica de Tabacos La Flor de Copan S de R.L. de CV
Honduras
Holding investments in subsidiary companies
Registered address and principal place of business: Apartado Postal 209,
Colonia Mejia-García, Santa Rosa de Copán, Honduras
Imperial Tobacco (Efka) GmbH & Co. KG
Germany
Manufacture of tubs in Germany
Registered address and principal place of business: Behrinstrasse 122 A,,
Hamburg, 22763, Germany
Imperial Tobacco Kazakhstan LLP (i)
Kazakhstan
Marketing and distribution of tobacco products in Kazakhstan
Registered address and principal place of business: 3rd Floor, Prime
Business Park, 100/2 Nursultan Nazarbayev Avenue, Medeuskiy District,
Almaty, 050000, Kazakhstan
ITG Brands Holdpartner LP
United States of America
Marketing and sale of tobacco products in United States of America
Registered address and principal place of business: 628 Green Valley Road,
Suite 500, Greensboro, NC 27408, USA
The subsidiaries listed were held throughout the year and the consolidated Group financial statements include all the subsidiary
undertakings identified. All dormant UK entities have taken the exemption available to not have an audit of their financial statements.
Unless otherwise stated the entities are unlisted, have one type of ordinary share capital and a reporting period ending on 30 September
each year.
(i) December year end
(ii) March year end
(iii) Listed entity
(iv) Holding of one type of ordinary share only (where more than one type of share is authorised/in issue). Only applicable to partly owned
entities. Percentage ownership is shown in the tables above.
(v) Holding of two types of ordinary share (where more than one type of ordinary share is authorised/in issue). Only applicable to 100%
owned subsidiaries.
(vi) Holding of preference shares only
(vii) Holding of ordinary and preference shares
(viii) Holding of ordinary and redeemable shares
(ix) Holding of ordinary and deferred shares
(x) Holding of two types of ordinary share and redeemable shares
The percentage of issued share capital held by the immediate parent and the effective voting rights of the Group are the same except for
Imperial Tobacco Italy S.r.l. where the entire share capital, and therefore 100% of the voting rights, are held by a number of Group
companies.
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229
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
FINANCIAL CALENDAR AND DIVIDENDS
Half year results are expected to be announced in May 2025
and the Full year results in November 2025.
The Annual General Meeting of the Company will be held on
Wednesday 29 January 2025 at 9.30am at the Bristol Marriott
Royal Hotel, College Green, Bristol BS1 5TA. The Notice of
Meeting and explanatory notes about the resolutions to be
proposed are set out in the circular enclosed with this Report.
Dividends are generally paid at the end of March, June,
September and December. Payment of the 2024 final dividend,
if approved, will be on 31 March 2025 to shareholders on the
Register of Members at the close of business on 21 February
2025. The associated ex-dividend date will be 20 February 2025.
SHARE DEALING SERVICE
Our Registrar offers Shareview Dealing, a service which allows
you to buy or sell Imperial Brands PLC ordinary shares if you
are a UK resident. You can deal on the internet or by phone.
Log on to www.shareview.co.uk/dealing or call them on
03456 037 037 between 8am and 4.30pm Monday to Friday
for more information about this service. If you wish to sell
your Imperial Brands PLC ordinary shares, you will need
your shareholder reference number, which you can find on
your share certificate.
INDIVIDUAL SAVINGS ACCOUNT
Investors in Imperial Brands PLC ordinary shares may take
advantage of a low-cost Individual Savings Account (ISA)
and Investment Account where they can hold their Imperial
Brands PLC ordinary shares electronically. The ISA and
Investment Account are operated by Equiniti Financial
Services Limited.
For further information please go to www.shareview.co.uk/
dealing or call Equiniti on 0345 0700 720.
DIVIDEND REINVESTMENT PLAN
Imperial Brands PLC has set up a dividend reinvestment plan
(DRIP) to enable shareholders to use their cash dividend to buy
further Imperial Brands PLC ordinary shares in the market.
Further information can be obtained from Equiniti on 0371 384
2037 (+44 371 384 2037 if calling from outside the UK) or online
at www.shareview.co.uk.
AMERICAN DEPOSITARY RECEIPT FACILITY
Imperial Brands PLC ordinary shares are traded on the OTCQX
International Premier platform in the form of American
Depositary Shares (ADSs) using the symbol ‘IMBBY’. The ADS
facility is administered by J.P. Morgan Chase, N.A. and enquiries
should be directed to them at the address shown opposite.
WEBSITE
Information on Imperial Brands PLC is available on our
website: www.imperialbrandsplc.com.
Equiniti also offers a range of shareholder information online.
You can access information on your holdings, indicative share
prices and dividend details and find practical help on
transferring shares or updating your details at:
www.shareview.co.uk.
REGISTERED OFFICE
121 Winterstoke Road
Bristol BS3 2LL
+44 (0)117 963 6636
Incorporated and domiciled in England and Wales No: 3236483
REGISTRAR
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
+44 (0)371 384 2037*
+44 (0)371 384 2255* text phone for shareholders
with hearing difficulties
*
Lines are open 8.30am to 5.30pm, Monday to Friday excluding public holidays in
England and Wales.
AMERICAN DEPOSITARY RECEIPT FACILITY
EQ Shareowner Services
P.O. Box 64504
St. Paul, MN 55164-0504
Toll-free number inside USA:
+1-800-990-1135*
From outside the USA:
+1 651-453-2128*
Online:
Visit: www.shareowneronline.com,
then scroll down to ‘Contact Us’ information.
For more contacts visit:
https://adr.com/contact/jpmorgan
*
Lines are open Monday to Friday 7am to 7pm (Central Time US).
CORPORATE BROKERS
Morgan Stanley & Co. International Plc
20 Bank Street
Canary Wharf
London E14 4AD
+44 (0)20 7425 8000
Barclays Bank PLC
1 Churchill Place
Canary Wharf
London E14 5HP
+44 (0)20 7623 2323
AUDITOR
Ernst & Young LLP
1 More London Place
London SE1 2AF
Certain statements in this report constitute or may constitute forward-looking statements. Any statement in this report 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 report. 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 report 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 report should be construed as a profit forecast or profit estimate and no statement in this report 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 report 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 report is shown or into whose hands it may come, and any
such responsibility or liability is expressly disclaimed.
CAUTIONARY STATEMENT
Imperial Brands PLC | Annual Report and Accounts 2024
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Park works to the EMAS standard and its Environmental Management System is certified to ISO 14001.
This publication has been manufactured using 100% offshore wind electricity sourced from UK wind.
100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and, on average
99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy.
This document is printed on Max Ultrawhite, both papers are made of material from well-managed, FSC®-certified
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(ECF) process.
Designed and produced by Black Sun Global.
NOTES
Imperial Brands PLC | Annual Report and Accounts 2024
232
Registered Office
Imperial Brands PLC
121 Winterstoke Road
Bristol BS3 2LL
UK
www.imperialbrandsplc.com
A digital version of this Annual Report
is available online: www.imperialbrandsplc.com