TIDM94JK
RNS Number : 7480C
Imperial Brands Finance PLC
14 June 2023
Company Number: 03214426
IMPERIAL BRANDS FINANCE PLC
Interim Financial Statements 2023
INTERIM MANAGEMENT REPORT
For the six months ended 31 March 2023
The Directors present their Interim Management Report together
with the condensed unaudited Interim Financial Statements of
Imperial Brands Finance PLC ("the Company") for the six months
ended 31 March 2023.
Business review and performance
The principal activity of the Company is to provide treasury
services to Imperial Brands PLC and its subsidiaries ("the Group").
There have been no changes in the composition of the Company in the
interim period.
The performance of the Company is dependent on external
borrowings and intragroup loans payable and receivable and interest
thereon, together with fair value gains and losses on derivative
financial instruments.
The profit for the six months ended 31 March 2023 was GBP277
million (2022: loss of GBP81 million) and is stated after a release
of GBP73 million (2022: charge of GBP168 million) arising on a
decrease in the expected credit loss provision against the carrying
value of certain loans made to entities within the Imperial Brands
Group. The expected loss provision arises due to the assessment of
credit risk associated with the future repayment of the loans. The
decision to exit operations in Russia during the 2022 fiscal year
has had an impact on the recoverability of one other intragroup
loan. The release of the provision is not tax allowable and
therefore there is no associated tax credit. Total shareholders'
funds as at 31 March 2023 were GBP2,561 million (2022: GBP2,232
million).
The directors do not recommend a dividend for the current
period. There were no aggregate dividends on the ordinary shares
recognised as a charge to shareholders' funds during the six months
ended 31 March 2023 (2022: GBPnil).
Principal risks and uncertainties
The Company is a wholly owned indirect subsidiary of Imperial
Brands PLC, which is the ultimate parent company within the Group,
and the Directors of the Group manage operations at a Group level.
The Company, as the main financing and financial risk management
company for the Group, undertakes transactions to manage the
Group's financial risks, together with its financing and liquidity
requirements.
The principal risks and uncertainties of the Company are
discussed in note 20 of the Company's Annual Report and Accounts
for the year ended 30 September 2022, which does not form part of
this report, but is available at www.imperialbrandsplc.com. These
risks and uncertainties remain materially unchanged as at 31 March
2023.
LIBOR
Following the announcement of the discontinuation of GBP LIBOR
at the end of 2021 and USD LIBOR discontinuation in 2023, the
Company amended its bank facility agreement on 28 September 2021 to
stop referencing GBP and USD LIBOR and instead reference the daily
risk free rates of SONIA and SOFR respectively. In the first half
of the previous fiscal year all GBP LIBOR derivatives were changed
to reference SONIA instead of GBP LIBOR. All USD LIBOR derivatives
were changed to reference SOFR instead of USD LIBOR by May 2023.
There are no changes pending for EUR derivatives.
Outlook
The business activity is expected to continue at levels similar
to the current level. The Company will continue to manage the
overall liquidity and financial risk management requirements of the
Group as they change over time. The Company will manage the Group's
financing requirement in combination with other Group entities
where it is beneficial to the Group as a whole.
Going concern
The Directors are satisfied that the Company has adequate
resources to meet its operational needs for the foreseeable future
and accordingly they continue to adopt the going concern basis in
preparing these Interim Financial Statements.
Directors' responsibility statement
The Board of Directors comprising L J Paravicini, M E Slade and
D M Tillekeratne, confirms that:
-- the condensed Interim Financial Statements have been prepared
in accordance with applicable accounting standards and give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the Company as required by Rule 4.2.4 of the
Disclosure Transparency Rules of the United Kingdom's Financial
Conduct Authority ("the DTRs"); and
-- the Interim Management Report includes a fair review of the
information required by Rule 4.2.7 of the DTRs, namely an
indication of important events that have occurred during the six
months ended 31 March 2023 and their impact on the condensed set of
Interim Financial Statements, and a description of the principal
risks and uncertainties for the remaining six months of the
year.
By order of the Board
M E Slade D M Tillekeratne
Director Director
1 June 2023 1 June 2023
INTERIM FINANCIAL STATEMENTS
For the six months ended 31 March 2023
Income Statement
Unaudited Unaudited Audited
Year ended 30
(In GBP million) Notes 6 months ended 31 March 2023 6 months ended 31 March 2022 September 2022
------------------------------ ----- ---------------------------- ---------------------------- ---------------
Other operating income - - 1
Administrative expenses (1) (1) (3)
Impairment gain/(loss) 73 (168) (245)
============================== ===== ============================ ============================ ===============
Operating profit/(loss) 72 (169) (247)
Investment income 2 1,516 1,040 2,888
Finance costs 3 (1,254) (932) (2,618)
============================== ===== ============================ ============================ ===============
Profit/(loss) before taxation 334 (61) 23
Tax on profit 4 (57) (20) (52)
============================== ===== ============================ ============================ ===============
Profit/(loss) for the period 277 (81) (29)
============================== ===== ============================ ============================ ===============
All activities derive from continuing operations.
The Company has no other comprehensive income other than that
included above and, therefore, no separate Statement of
Comprehensive Income has been presented.
Balance Sheet
Unaudited Unaudited Audited
(GBP million) Notes 31 March 2023 31 March 2022 30 September 2022
--------------------------------- ----- ------------- ------------- -------------------
Non-current assets
Other receivables 7 - 44 44
Derivative financial instruments 6 694 179 985
================================= ===== ============= ============= ===================
694 223 1,029
================================= ===== ============= ============= ===================
Current assets
Other receivables 7 29,988 28,446 28,846
Cash and cash equivalents 28 23 1,161
Derivative financial instruments 6 72 93 54
================================= ===== ============= ============= ===================
30,088 28,562 30,061
================================= ===== ============= ============= ===================
Total assets 30,782 28,785 31,090
================================= ===== ============= ============= ===================
Current liabilities
Borrowings (1,851) (1,669) (985)
Derivative financial instruments 6 (579) (276) (54)
Trade and other payables (16,584) (16,040) (17,704)
(19,014) (17,985) (18,743)
================================= ===== ============= ============= ===================
Non-current liabilities
Borrowings (6,977) (7,139) (8,110)
Derivative financial instruments 6 (832) (592) (1,071)
(1,398) (837) (882))
(9,207) (8,568) (10,063)
================================= ===== ============= ============= ===================
Total liabilities (28,221) (26,553) (28,806)
================================= ===== ============= ============= ===================
Net assets 2,561 2,232 2,284
================================= ===== ============= ============= ===================
Equity
Share capital 2,100 2,100 2,100
Retained earnings 461 132 184
Total equity 2,561 2,232 2,284
================================= ===== ============= ============= ===================
Statement of Changes in Equity (unaudited)
Share Retained Total
GBP million capital earnings equity
--------------------------- --------- --------- -------
At 1 October 2022 2,100 184 2,284
=============================== ========= ========= =======
Profit for the period - 277 277
Total comprehensive income - 277 277
At 31 March 2023 2,100 461 2,561
=============================== ========= ========= =======
Unaudited
Share Retained Total
capital earnings equity
At 1 October 2021 2,100 213 2,313
=============================== ========= ========= =======
Loss for the period - (81) (81)
Total comprehensive loss - (81) (81)
At 31 March 2022 2,100 132 2,232
=============================== ========= ========= =======
NOTES TO THE INTERIM FINANCIAL STATEMENTS
For the six months ended 31 March 2023
1. Accounting Policies
These condensed Interim Financial Statements have been prepared
on the going concern basis and in accordance with the United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including the Companies
Act 2006 and FRS 101.
Basis of Preparation
The condensed Interim Financial Statements comprise the
unaudited results for the six months ended 31 March 2023 and 31
March 2022, together with the audited results for the year ended 30
September 2022.
The information shown for the year ended 30 September 2022 does
not constitute statutory accounts within the meaning of section 434
of the Companies Act 2006, and is an abridged version of the
Company's Financial Statements for that year. The Auditors' Report
on those Financial Statements was unqualified and did not contain
any statements under section 498 of the Companies Act 2006. The
Financial Statements for the year ended 30 September 2022 were
approved by the Board of Directors on 1 December 2022 and filed
with the Registrar of Companies.
This condensed set of Interim Financial Statements for the six
months ended 31 March 2023 has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority and FRS 104 'Interim Financial Reporting' ("FRS 104") as
adopted by the Financial Reporting Council ("FRC") using the
recognition and measurement requirements of FRS 100 'Application of
Financial Reporting Requirements' ("FRS 100") and FRS 101 'Reduced
Disclosure Framework' ("FRS 101"). The condensed set of Interim
Financial Statements for the six months ended 31 March 2023 should
be read in conjunction with the Annual Report and Financial
Statements for the year ended 30 September 2022.
The Company has taken advantage of the following disclosure
exemptions under FRS 101 on the basis that the disclosures are
available within the consolidated financial statements of the
ultimate parent company, which is Imperial Brands PLC:
a) the requirement in paragraph 38 of IAS 1 Presentation of
Financial Statements to present comparative information in respect
of paragraph 79(a)(iv) of IAS 1 Presentation of Financial
Statements.
b) the requirements of paragraphs 10(d) and 10(f) of IAS 1 Presentation of Financial Statements.
c) the requirements of IAS 7 Statement of Cash Flows
d) the requirements of paragraph 17 of IAS 24 Related Party Disclosures.
e) the requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between two or
more members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member.
The Imperial Brands PLC consolidated financial statements may be
found in via the investor relations section of the Imperial Brands
PLC website at www.imperialbrandsplc.com/investors .
The Interim Financial Statements have been prepared on an
amortised cost or fair value basis as described in the accounting
policies on derivative financial instruments below
The Company is a wholly owned indirect subsidiary of Imperial
Brands PLC and is included in the consolidated Financial Statements
of Imperial Brands PLC. Consequently, the Company has taken
advantage of the exemption conferred by FRS 101 paragraph 8(h) and
not presented a cash flow statement.
2. Investment income
Unaudited Unaudited Audited
6 months ended 31 March 6 months ended 31 March Year ended 30 September
(In GBP million) 2023 2022 2022
---------------------------- ---------------------------- ---------------------------- ----------------------------
Interest receivable from
Group undertakings 656 252 487
Interest on bank deposits
and other loan receivables 4 - 3
Exchange gains on monetary
assets and liabilities 491 100 -
Fair value gains on
external derivative
financial instruments 365 688 1,483
Fair value gains on
intragroup derivative
financial instruments - - 915
1,516 1,040 2,888
============================ ============================ ============================ ============================
3. Finance costs
Unaudited Unaudited Audited
6 months ended 31 March 6 months ended 31 March Year ended 30 September
(In GBP million) 2023 2022 2022
---------------------------- ---------------------------- ---------------------------- ----------------------------
Interest payable to Group
undertakings 282 55 125
Interest on bank loans and
other loan payables 181 148 297
Exchange losses on monetary
assets and liabilities - - 983
Fair value losses on
external derivative
financial instruments 273 616 1,213
Fair value losses on
intragroup derivative
financial instruments 518 113 -
1,254 932 2,618
============================ ============================ ============================ ============================
4. Tax on profit
Analysis of charge in the period:
Unaudited Unaudited Audited
6 months ended 31 March 6 months ended 31 March Year ended 30 September
(In GBP million) 2023 2022 2022
---------------------------- ---------------------------- ---------------------------- ----------------------------
UK Corporation tax on
profits for the period 57 20 51
Withholding tax - - 1
Double taxation relief - - (1)
Adjustments in respect of
prior years - - 1
============================ ============================ ============================ ============================
Current tax 57 20 52
============================ ============================ ============================ ============================
Total taxation 57 20 52
============================ ============================ ============================ ============================
5. Fair value of financial assets and liabilities
There are no material differences between the carrying value of
the Company's financial assets and liabilities and their estimated
fair value, with the exception of bonds. The fair value of bonds is
estimated to be GBP7,869 million (2022: GBP7,963 million) and has
been determined by reference to market prices at the balance sheet
date. The carrying value of bonds is GBP8,234 million (2022:
GBP7,899 million). The fair value of all other borrowings is
considered to be equal to their carrying amount.
6. Derivative financial instruments
Unaudited Unaudited Audited
6 months
ended 31
(In GBP million) 6 months ended 31 March 2023 March 2022 Year ended 30 September 2022
------------------------------------------ ----------------------------- ------------ -----------------------------
Assets
Interest rate swaps 604 190 686
Foreign exchange contracts 10 21 31
Intragroup forward foreign currency - 35 -
contracts
Cross currency swaps 152 26 322
========================================== ============================= ============ =============================
Total carrying value of derivative
financial assets 766 272 1,039
========================================== ============================= ============ =============================
Liabilities
Interest rate swaps (621) (480) (782)
Foreign exchange contracts (29) (16) (13)
Intragroup forward foreign currency
contracts (414) (227) -
Cross currency swaps (347) (179) (342)
Total carrying value of derivative
financial liabilities before collateral (1,411) (902) (1,137)
========================================== ============================= ============ =============================
Collateral - 34 12
========================================== ============================= ============ =============================
Total carrying value of derivative
financial liabilities (1,411) (868) (1,125)
========================================== ============================= ============ =============================
Total carrying value of derivative
financial instruments (645) (596) (86)
========================================== ============================= ============ =============================
Analysed as:
Interest rate swaps (17) (290) (96)
Foreign exchange contracts (19) 5 18
Intragroup forward foreign currency
contracts (414) (192) -
Cross currency swaps (195) (153) (20)
Collateral - 34 12
========================================== ============================= ============ =============================
Total carrying value of derivative
financial instruments (645) (596) (86)
========================================== ============================= ============ =============================
The Company's derivative financial instruments are held at fair
value. Fair values are determined based on observable market data
such as yield curves and foreign exchange rates to calculate the
present value of future cash flows associated with each derivative
at the balance sheet date, and are consistent with those applied
for the year ended 30 September 2022.
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 through Bloomberg and
valuations are validated by reference to counterparty valuations
where appropriate. Some of the Company'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 GBP10 million (2022: GBP17
million) and would have been a GBP20 million (2022: GBP33 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.
7. Other receivables
Unaudited Unaudited Audited
6 months ended 31 March 2023 6 months ended 31 March 2022 Year ended 30 September
2022
(In GBP million) Current Non-Current Current Non-current Current Non-Current
--------------------- ------------ ------------------ ------------ ------------------ ---------- ---------------
Amounts owed by
Group undertakings 29,980 - 28,442 44 28,840 44
Other receivables
and prepayments 8 - 4 - 6 -
===================== ============ ================== ============ ================== ========== ===============
29,988 - 28,442 44 28,846 44
===================== ============ ================== ============ ================== ========== ===============
Amounts owed by Group undertakings are unsecured, both interest
bearing and non-interest bearing and can be either repayable on a
future date to be mutually agreed between the Company and the
counterparty borrower or have fixed repayment dates. At 31 March
2023 GBP26,738 million (2022: GBP25,322 million) of the amounts
owed by Group undertakings is repayable on a mutually agreed future
date (treated as a current receivable) and GBP3,242 million (2022:
GBP3,164 million) were term loans. There were GBP29,954 million
(2022: GBP27,847 million) of interest bearing loans and GBP26
million (2022: GBP639 million) of non-interest bearing loans. Where
loans were subject to interest the rates charged varied from 0.131%
to 13.750% (2022: 0.125% to 20.000%).
The Directors have assessed the extent to which amounts owed by
the Group companies are impaired. For those balances that are
neither overdue nor impaired the Directors have concluded that the
expected credit losses (ECL) that are possible from default events
over the next twelve months are immaterial and consequently no
allowance for impairment has been recognised. For those balances
assessed to be impaired, an expected credit loss adjustment of
GBP535 million (2022: GBP660 million) has been recognised to
reflect the credit risk inherent within a number of the current
intragroup loans receivable, as follows:
31 March 2023
------------- -------------- ------------
Gross amount ECL allowance Net balance
Group undertaking loan receivable balances that are not impaired 29,740 - 29,740
Group undertaking loan receivable balances that are impaired 775 (535) 240
============= ============== ============
30,515 (535) 29.980
================================================================== ============= ============== ============
31 March 2022
------------- ------------------ ------------
Gross amount ECL allowance Net balance
Group undertaking loan receivable balances that are not impaired 28,207 - 28,207
Group undertaking loan receivable balances that are impaired 939 (660) 279
============= ================== ============
29,146 (660) 28,486
================================================================== ============= ================== ============
30 September 2022
------------- ------------------ ------------
Gross amount ECL allowance Net balance
Group undertaking loan receivable balances that are not impaired 28,586 - 28,586
Group undertaking loan receivable balances that are impaired 906 (608) 298
============= ================== ============
29,492 (608) 28,884
================================================================== ============= ================== ============
The released provision in the period was GBP73 million (2022:
charge of GBP168 million).
8. Related party transactions
The Company has taken advantage of the Group dispensation
permitted under FRS 101 for 100% owned Group subsidiaries, not to
disclose intragroup transactions undertaken during the period.
During the period the Company charged interest and other
expenses to Compañía de Distribución Integral Logista S.A.U. to the
value of EUR5 million (2022: EUR1 million). At 31 March 2023, the
Company had an outstanding balance receivable due from Compañía de
Distribucion Integral Logista SAU totalling EUR515 million (2022:
EUR442 million).
During the period the Company was charged interest to the value
of EUR19 million by Logista France SAS (2022: EUR5 million). At 31
March 2023, the Company had an outstanding balance payable to
Logista France SAS totalling EUR1,349 million (2022: EUR1,419
million).
During the period the Company was charged interest to the value
of EUR15 million by Logista Italia SpA (2022: EUR4 million). At 31
March 2023, the Company had an outstanding balance payable to
Logista Italia SpA totalling EUR1,057 million (2022: EUR1,124
million).
During the period the Company provided a temporary loan facility
of GBP320 million to the Imperial Tobacco Pension Fund. GBP200
million had been drawn down during the first half of October 2022
to support ongoing liquidity requirements within the Fund's
Liability Driven Investment holdings during a period of volatility
in the UK Government Bond market. The GBP200 million drawn down has
been repaid by 31 March 2023. The Company charged interest to the
value of GBP2 million.
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IR EZLFFXQLFBBX
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