Preliminary Results 2013 Imperial Tobacco Group PLC 5 November 2013 1
Disclaimer Certain statements in this document constitute or may constitute forward-looking statements. Any statement in this document 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. These 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 some of which are identified on pages 52 to 55 of our 2012 Annual Report and Accounts. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this document. 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 docment 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 document should be construed as a profit forecast or profit estimate and no statement in this document 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 document 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 document is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. 2
FY13 Overview transition on track Significant progress with strategic transition in tough year H2: improved results in USA and Russia Established Growth & Returns Markets strategic clarity; effective resource allocation Prioritised brand portfolio to drive quality growth Growth Brands share +30bps Specialist Brands revenue +5% Fontem: IP acquisition; evapour launches in 2014 Delivered 30m from cost optimisation programme % change is in constant currency terms 3
FY13 Summary Results robust performance in tough environment Growth Brands outperforming 1 EPS +6% DPS +10%; pay-out ratio increased to 55% Strong cash conversion: 86% FY13 FY12 Growth Brands volume (SE bn) 129 132-2% Tobacco net revenue ( m) 7,007 7,005-1% Adjusted operating profit ( m) 3,180 3,161 +1% Adjusted EPS (p) 210.7 201.0 +6% DPS (p) 116.4 105.6 +10% Cash conversion (%) 86 71 +1500bps RoIC (%) 15.1 15.0 +10bps Change is on a constant currency basis ; 1 ex China 4
FY14 Outlook important transition year; building on successes Strengthening our portfolio and footprint Backing growth with increased investment in: Growth Brands Growth Markets Fontem Ventures Building resilience: advancing cost optimisation programme implementing stock optimisation programme Stronger portfolio; stronger footprint; stronger platform for growth 5
Strategic Transition realising our growth potential 6
Prioritised Portfolio; Realigned Markets maximising growth opportunities Tobacco net revenue * by brand Tobacco net revenue * by market 49% 39% 32% 42% 12% 26% Growth Specialist Portfolio * FY13 tobacco net revenue 7,007m Growth Markets Returns Markets North Returns Markets South 7
Key Metrics driving quality growth Growth Brands: quality growth Volume (SE bn) Market share (%) Net revenue ( m) % of Group SE volumes % of Tobacco net revenue Specialist Brands: value growth Net revenue ( m) % of Tobacco net revenue Growth Markets: share, revenue & quality Market share (%) Tobacco net revenue ( m) Adjusted operating profit Growth Brands % Tobacco net revenue Growth Brand volumes (bn) Returns Markets: profitability & quality Market share (%) Net revenue per 000 SE ( ) Adjusted operating profit Growth Brands % of Tobacco net revenue 8
Strategic Transition prioritised brands: Growth & Specialist Growth Brands Specialist Brands 9
Growth Brands focus for high quality growth This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 10
Growth Brands driving higher quality FY13 FY12 Volume (SE bn) 129 132-2% Market share (%) 5.4 5.1 +30bps Net revenue ( m) 2,729 2,647 +2% % of Group SE volumes 41 39 +200bps % of Tobacco net revenue 39 38 +100bps Outperforming market trends; growing share; driving quality growth 7 of 10 brands growing share JPS: strong performance Davidoff, Gauloises: good in-market results West: gains in various markets incl. Iraq, Kazakhstan, Taiwan and Turkey % change is in constant currency terms; market share is ex-china 11
Specialist Brands satisfying consumer occasions across total tobacco This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 12
Specialist Brands unique total tobacco platform driving growth FY13 FY12 Net revenue ( m) 866 817 5% % of Tobacco net revenue 12 12 - Excellent results: net revenue +5% Strong revenue growth from Style and Gitanes Underpinned world leadership in fine cut tobacco and rolling papers Premium Cigar growth in Growth Markets Backwoods: strong performance Skruf: another successful year % change is in constant currency terms 13
Fontem Ventures IP acquisition adds to growth potential Non-Tobacco focus Current focus on evapour launches in 2014 Acquisition of IP from Dragonite leading evapour know-how e-cigarette pioneer joins Fontem driving technological advancement 14
Focused Market Investment strategic role drives market classification From geographic proximity To strategic role Western Europe Central Europe Growth Eastern Europe USA Africa Middle East Asia-Pacific Returns Returns Markets North Returns Markets South 15
Growth and Returns Markets effective resource allocation Growth Markets Scale existing presence for long term growth Large profit and/or volume pools Significant share growth potential Leverage Growth Brands Prioritised long-term investment Returns Markets Footprint strength driving sales and high returns Strong established presence Build on strong positions Manage market share Reduce portfolio complexity Major Markets Italy Taiwan Iraq Turkey Russia USA Saudi Arabia Major Markets Algeria Morocco Australia Netherlands France Spain Germany UK 16
Germany and Italy same continent; different strategy Germany Italy Clarity of Purpose Hold share; drive profit Leading player: 25% stick equivalent market share Drive scale 3% stick equivalent market share Effective Resource Allocation Medium term investment horizon Leverage broader portfolio Invest for long term Focus on smaller portfolio Collaboration Collaborate with like markets e.g. Australia and Poland Collaborate with like markets e.g. Russia and Turkey 17
Growth Markets driving quality growth Focus on share, revenue and quality Share up ex Russia Strong quality results Good progress in broad spread of markets FY13 FY12 Market share (%) 5.8 5.9-10bps Market share ex Russia (%) 5.0 4.9 +10bps Tobacco net revenue ( m) 2,254 2,192 +2% Adjusted operating profit 668 633 +7% Growth Brands % Tobacco net revenue 37 36 - Growth Brand volumes (bn) 53 54-2% % change is in constant currency terms; market share excludes China. 18
Growth Markets good progress across our markets Italy: JPS building momentum Turkey: Davidoff; West and route to market strategy driving growth Kazakhstan: Davidoff & West share and volume gains Excellent progress in other Growth Markets This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 19
USA strategic transition delivering Highly attractive market Re-engineered business model What did we do? state by state resource allocation sales force re-organisation pricing strategy implemented key account activation Result +20bps cigarette share in Focus States +20bps cigarette share in key accounts Backwoods driving gains in mass market cigar significantly improved H2 performance 20
Russia improved H2 performance Challenging operating environment excise increases; regulatory changes What did we do? invested ahead of regulatory changes driving growth in high and value-for-money price segments growth in modern formats: Davidoff B&W; Style; West Compact Maxim line extensions: 25 s; queen size; Premium Line Result Davidoff volumes +6%; Style volumes +2% increased Maxim share in Q4 significantly improved H2 performance 21
Returns Markets Returns Markets 4.8bn Returns Markets North 2.9bn Returns Markets South 1.8bn Australia Main Markets Poland Algeria Main Markets France Netherlands UK Central Africa Morocco Germany Ukraine Central Europe Spain Figures are tobacco net revenue 22
Returns Markets driving quality in difficult markets Balancing share, revenue and profit Higher quality strong growth in net revenue per 000 SE higher contribution from Growth Brands FY13 FY12 Market share (%) 27.3 27.7-40bps Net revenue per 000 SE ( ) 23.4 21.9 +6% Adjusted operating profit 2,335 2,356-1% Growth Brands % of Tobacco net revenue 40 38 +200bps % change is in constant currency terms 23
Returns Markets North strong performance in key markets FY13 FY12 Market share (%) 25.5 26.0-50bps Net revenue per 000 SE ( ) 27.0 24.4 +10% Adjusted operating profit 1,543 1,502 +3% Growth Brands % of Tobacco Net Revenue 44 42 +200bps Good results: adjusted operating profit +3% Excellent results in Germany Increased share in UK Good results in Australia driven by JPS % change is in constant currency terms 24
Returns Markets South focused on improving delivery FY13 FY12 Market share (%) 29.9 30.3-40bps Net revenue per 000 SE ( ) 19.3 18.8 - Adjusted operating profit 792 854-8% Growth Brands % of Tobacco net revenue 34 32 +200bps Performance impacted by weak markets in France, Morocco and Spain Excellent results in Algeria Good progress in other markets including Austria, Hungary, Portugal and Senegal % change is in constant currency terms 25
Logistics robust performance FY13 FY12 Distribution fees ( m) 850 872-5% Adjusted operating profit ( m) 176 176-2% Margin (%) 20.7 20.2 +50bps Weak tobacco industry volumes impacting France, Italy and Spain Robust performance Adjusted operating profits +2% excluding impact of Italian VAT timing Focus on costs: switch to variable cost model margins +50bps Expanding non-tobacco business % change is in constant currency terms 26
Operational Transition building a stronger business 2014: important transition year Improved market resource allocation investment step up in Growth Markets Portfolio priorities: investment; SKU reductions; migrations Portfolio agenda key to cost optimisation complexity reduction improved factory performance capacity optimisation operating model Global procurement benefits Stock optimisation programme 27
FY14 Outlook important transition year; building on successes Strengthening our portfolio and footprint Backing growth with increased investment in: Growth Brands Growth Markets Fontem Ventures Building resilience: advancing cost optimisation programme implementing stock optimisation programme Stronger portfolio; stronger footprint; stronger platform for growth 28
Group Results 6% constant currency EPS growth FY12 Foreign Exchange Constant Currency Growth FY13 Constant Currency Tobacco net revenue 7,005 86 (84) 7,007 - -1% Tobacco operating profit 2,989 (17) 31 3,003 - +1% Logistics operating profit 176 4 (4) 176 - -2% Operating margin % 42.7 (0.2) 0.4 42.9 Operating profit 3,161 (13) 32 3,180 +1% +1% Interest (535) (8) 11 (532) +1% +2% Tax rate % 23 22 EPS (p) 201.0 (1.6) 11.3 210.7 +5% +6% RoIC (%) 15.0 15.1 +10bps All numbers on an adjusted basis. 29
Growth Markets strong profit delivery FY13 FY12 Net revenue ( m) 2,254 2,192 +2% Adjusted operating profit ( m) 668 633 +7% Margin (%) 29.6 28.9 +70bps +2% revenue growth; +7% adjusted operating profit growth Strong profit growth in Russia, Taiwan and Turkey Increased profits in USA Iraq impacted by trade stock movements; Italy by market size decline % change is in constant currency terms 30
Returns Markets robust North mitigating weaker South FY13 FY12 Net revenue ( m) 4,753 4,813-2% Adjusted operating profit ( m) 2,335 2,356-1% Margin (%) 49.1 49.0 +10bps Difficult conditions in a number of markets Robust result Margins maintained % change is in constant currency terms 31
Returns Markets North & South addressing weakness in key South Markets North FY13 FY12 Net revenue ( m) 2,929 2,924-1% Adjusted operating profit ( m) 1,543 1,502 +3% Margin (%) 52.7 51.4 +130bps Good results in Germany and Australia Stable in other key markets South FY13 FY12 Net revenue ( m) 1,824 1,889-5% Adjusted operating profit ( m) 792 854-8% Margin (%) 43.4 45.2-180bps Difficult conditions in three key markets: France, Morocco, Spain Building on gains in cigarette and fine cut tobacco in numerous markets % change is in constant currency terms 32
Cost Optimisation aligned with strategic priorities Product Cost Overheads 300m pa savings by September 2018 30m in 2013 Incremental c 60m in 2014 Incremental c 210m 2015-2018 33
Group Results Spanish impairment 0.6bn impairment; conservative view of Spanish tobacco market Non-cash; accounting requirement Financing and cost of debt Average all-in cost of net debt 5.1% (FY12: 5.5%) Net interest charge 532m Adjusted tax rate 22% sustainable 34
FY13 Adjusted Net Debt 3.4bn 1.6bn 0.3bn 1.2bn 0.2bn 0.1bn 0.3bn 8.8bn 9.1bn Opening net debt EBITDA Working capital Net capex Tax and interest Restructurring Dividends & share buy-back FX & other Closing net debt Opening adjusted net debt is as at 1 October 2012. Adjusted debt figures exclude accrued interest, fair value of derivatives providing commercial cash flow hedges and finance lease liabilities. 35
Maximising Shareholder Returns 9.5bn returned since Hanson de-merger High Margin Profits 1,565m Sales Strong Cash Flow 113m Reinvest Maximising Shareholder Returns 1997 2013 Share buy-back in year Dividends paid in year FY97 shows the interim and final dividend for FY97 to reflect a full year. The final dividend for FY97 was 74m and paid in FY98. 36
Preliminary Results 2013 Imperial Tobacco Group PLC 5 November 2013 37
Appendices 38
Financial 39
Income Statement m FY13 FY12 Revenue 28,269 28,574 Adjusted operating profit 3,180 3,161 Acquisition accounting adjustments - 10 Amortisation and impairment of acquired intangibles (952) (1,552) Restructuring costs Net finance costs * (270) (101) (697) (437) Profit before tax 1,261 1,081 Tax (300) (382) Profit after tax 961 699 Minority interests (24) (21) Basic EPS 96.2p 68.1p Adjusted EPS 210.7p 201.0p * Including fair value gains and losses on derivatives and post-employment benefits net financing costs 40
Reconciliation: Reported to Adjusted Reported FY13 Amortisation of acquired intangibles Impairment of acquired intangibles Net fair value and exchange gains on certain instruments Post employment net financing Restructuring costs Adjusted FY13 Operating profit 1,958 372 580 - - 270 3,180 Finance costs (697) - - 156 9 - (532) Profit before tax 1,261 372 580 156 9 270 2,648 Tax (300) (72) (107) (9) (5) (79) (572) Profit after tax 961 300 473 147 4 191 2,076 Minority interest (24) - - - - - (24) Earnings attributable 937 300 473 147 4 191 2,052 Basic EPS 96.2p 30.8p 48.6p 15.1p 0.4p 19.6p 210.7p Results are adjusted and presented on our usual basis * Net fair value and exchange gains on financial instruments providing commercial hedges 41
Tobacco Net Revenue m Actual 1 FY13 Foreign Exchange Constant Currency 2 FY12 % Change Constant Currency Growth Markets 2,254 (26) 2,228 2,192 2 Returns Markets North 2,929 (23) 2,906 2,924-1 Returns Markets South 1,824 (37) 1,787 1,889-5 Total Returns Markets 4,753 (60) 4,693 4,813-2 Total Tobacco 7,007 (86) 6,921 7,005-1 1 Based on average exchange rates for twelve months ended 30 September 2013 2 Assumes that average exchange rates in FY13 were the same as in FY12 42
Tobacco Operating Profit m Actual 1 FY13 Foreign Exchange Constant Currency 2 FY12 % Change Constant Currency Growth Markets 668 10 678 633 7 Returns Markets North 1,543 11 1,554 1,502 3 Returns Markets South 792 (4) 788 854-8 Total Returns Markets 2,335 7 2,342 2,356-1 Total Tobacco 3,003 17 3,020 2,989 1 1 Based on average exchange rates for twelve months ended 30 September 2013 2 Assumes that average exchange rates in FY13 were the same as in FY12 Results are adjusted and presented on our usual basis 43
Logistics m Actual 1 FY13 Foreign Exchange Constant Currency 2 FY12 % Change Constant Currency Distribution fees 850 (18) 832 872-5 Operating profit 176 (4) 172 176-2 Distribution margin % 20.7 20.7 20.2 1 Based on average exchange rates for twelve months ended 30 September 2013 2 Assumes that average exchange rates in FY13 were the same as in FY12 Results are adjusted and presented on our usual basis 44
Foreign Currencies Average Closing 1 = FY13 FY12 FY13 FY12 Euro 1.190 1.216 1.196 1.253 US dollar 1.561 1.577 1.615 1.620 45
Balance Sheet m FY13 FY12 Non-current assets: tangible 2,648 2,917 intangible 17,382 17,609 Current assets: inventories 3,296 3,132 other 5,092 3,981 Current liabilities (11,082) (9,142) Non-current liabilities (11,688) (12,413) Net assets 5,648 6,084 46
Cash Flow m FY13 FY12 Cash flows from operating activities pre tax 3,038 2,561 Tax paid (686) (442) Cash flows from operating activities 2,352 2,119 Net capex (includes software) (291) (303) Net acquisitions (businesses and trademarks) (34) - Employee Share Ownership Trust - 8 Share buy backs (500) (528) Dividends paid (inc. minority interests) (1,084) (1,002) Net interest paid (513) (500) Net cash flow (70) (206) Opening net debt (8,965) (9,441) Closing net debt before non-cash movements (9,035) (9,647) Non-cash movements Exchange movement (237) 351 Interest accretion and derivative fair value adjustments (246) 331 Closing net debt after non-cash adjustments (9,518) (8,965) 47
Cash Conversion m FY13 FY12 Net cash flow from operating activities 2,352 2,119 Tax 686 442 Net capex (291) (303) Cash flow post capex pre interest and tax 2,747 2,258 Adjusted operating profit 3,180 3,161 Cash conversion 86% 71% Working capital (outflow) (82) (505) 48
Net Finance Costs m FY13 FY12 Net finance costs 697 437 Adjusted for: - expected return on retirement benefit assets 168 168 - interest on retirement benefit liabilities (168) (187) - unwind of discount on redundancy and long term provisions (9) (8) - net fair value and exchange gains on certain instruments * (156) 125 Adjusted net finance costs 532 535 * Net fair value and exchange gains on financial instruments providing commercial hedges 49
Net Debt Reconciliation m Reported FY13 Accrued interest Fair value of derivatives Finance lease creditors Adjusted FY13 Opening net debt (8,965) 287 (94) 20 (8,752) Free cash flow 1,548 (20) 1,528 Share buy backs (500) (500) Dividends (1,084) (1,084) Acquisitions (34) (34) Accretion of interest (34) 34 - Change in fair values (212) 193 (19) Exchange movements (237) (237) Closing net debt (9,518) 321 99 - (9,098) 50
Volumes 51
Total Tobacco SE Volumes Billion stick equivalents FY13 FY12 Growth Markets 113.5 121.4 Returns Markets North 108.6 119.7 Returns Markets South 94.7 100.3 Total Returns Markets 203.3 220.1 Total Group 316.8 341.4 SE is stick equivalents; Total Tobacco includes cigar, snus and other tobacco products; 2012 tobacco volumes are reported on this revised basis 52
Financing 53
Committed Bank Facilities 30 September 2013 Description Maturity date Amount m equiv. Margin EUR Committed 2 Year Revolving Credit Facility Nov-14 300m 251m 0.700% EUR Committed 2 Year Revolving Credit Facility 1 Nov-15 1,185m 991m 0.530% Committed 5 Year Revolving Credit Facility Dec-15 2,483m 1.000% USD tranche $632m 391m GBP tranche 600m 600m EUR tranche 1,785m 1,492m Total Facilities 3,725m 1 Comprises 5 linked bilateral facilities each of EUR 237m; the margin shown is the average of the five facilities. 54 54
Bond Issues 30 September 2013 Amount Issuer Coupon Issue Date Maturity Date m equiv. Margin 500m Altadis Finance BV 5.125% Oct-03 Oct-13 418m 0.8% 1,200m Imperial Tobacco Finance PLC 4.375% Nov-06 Nov-13 1,003m 0.6% 750m Imperial Tobacco Finance PLC 7.250% Sep-08 Sep-14 627m 2.7% 500m Altadis Emisiones Financieras SAU 4.000% Dec-05 Dec-15 418m 1.1% 1,500m Imperial Tobacco Finance PLC 8.375% Feb-09 Feb-16 1,254m 5.0% 450m Imperial Tobacco Finance PLC 5.500% Nov-06 Nov-16 560m * 0.6% * $1,250m Imperial Tobacco Finance PLC 2.050% Feb-13 Feb-18 774m 1.1% 850m Imperial Tobacco Finance PLC 4.500% Jul-11 Jul-18 711m 1.7% 200m Imperial Tobacco Finance PLC 6.250% Dec-03 Dec-18 245m * 1.1% * 500m Imperial Tobacco Finance PLC 7.750% Jun-09 Jun-19 500m 3.7% 750m Imperial Tobacco Finance PLC 5.000% Dec-11 Dec-19 627m 2.6% 1,000m Imperial Tobacco Finance PLC 9.000% Feb-09 Feb-22 997m* 4.8% * $1,000m Imperial Tobacco Finance PLC 3.500% Feb-13 Feb-23 619m 1.1% 600m Imperial Tobacco Finance PLC 8.125% Sep-08 Mar-24 600m 3.1% 500m Imperial Tobacco Finance PLC 5.500% Sep-11 Sep-26 500m 2.7% Total/Weighted Average Margin 9,853m * 2.5% * * Including the effect of cross currency swaps. 55 55
Core Financing maturity profile at 30 September 2013 16,000 m equivalent 14,000 12,000 10,000 8,000 6,000 ECP Bank Facilities Bond Issues 1 4,000 2,000 - Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Sep-25 Sep-26 Facilities in place as at 30 September c. 14.7bn 8% ECP, 25% bank facilities, 67% bond issues Headroom as at 30 September c. 4.7bn 2 1 Including the effect of cross currency swaps. 2 Including central cash of c. 1bn held at the balance sheet date. 56
Main Market Classifications 57
Main Market Classifications Growth Markets Returns Markets North Returns Markets South Cambodia Australia Algeria China Azerbaijan Austria Iraq Belux Czech Republic Italy Germany France Japan Ireland Hungary Russia Netherlands Morocco Saudi Arabia New Zealand Portugal Taiwan Poland Slovenia Turkey UK Spain USA Ukraine Tunisia Vietnam * Slovenia and Kosovo in Returns Markets South 58
Former Disclosure 59
Tobacco Net Revenue m Actual 1 FY13 Foreign Exchange Constant Currency 2 FY12 % Change Constant Currency UK 915-915 936-2 Germany 907 (19) 888 861 3 Spain 435 (9) 426 470-9 Rest of EU 1,515 (35) 1,480 1,534-4 Total EU 3,772 (63) 3,709 3,801-2 Americas 653 (6) 647 660-2 Rest of World 2,582 (17) 2,565 2,544 1 Total Non-EU 3,235 (23) 3,212 3,204 - Total 7,007 (86) 6,921 7,005-1 1 Based on average exchange rates for twelve months ended 30 September 2013 2 assumes that average exchange rates in FY13 were the same as in FY12 FY13 reported USA cigar net revenues 399m (FY12: 393m). 60
Tobacco Operating Profit m Actual 1 FY13 Foreign Exchange Constant Currency 2 FY12 % Change Constant Currency UK 623 6 629 627 - Germany 475 (4) 471 448 5 Spain 178 0 178 202-12 Rest of EU 625 (2) 623 626 - Total EU 1,901 0 1,901 1,903 - Americas 219 (1) 218 214 2 Rest of World 883 18 901 872 3 Total Non-EU 1,102 17 1,119 1,086 3 Total 3,003 17 3,020 2,989 1 1 Based on average exchange rates for twelve months ended 30 September 2013 2 assumes that average exchange rates in FY13 were the same as in FY12 Results are adjusted and presented on our usual basis 61
Total Tobacco SE Volumes Billion stick equivalents FY13 FY12 UK (exc PMI 1 ) 22.2 25.5 Germany 32.8 32.5 Spain 20.1 22.6 Rest of European Union 70.0 76.0 Total EU 145.1 156.6 Americas 11.4 12.1 Asia-Pacific 24.4 23.0 Eastern Europe 60.7 72.7 Africa & Middle East 69.9 71.5 Duty Free 5.3 5.5 Total Rest of the World 160.3 172.7 Total Non-EU 171.7 184.8 Total Group 316.8 341.4 SE is stick equivalents; Total Tobacco includes cigar, snus and other tobacco products. (1) 2.6bn cigarettes of PMI brands (FY12: 2.7bn) 62
Cigarette Volumes Billion stick equivalents FY13 FY12 UK (exc PMI 1 ) 15.7 18.7 Germany 22.4 22.6 Spain 15.2 18.7 Rest of European Union 47.2 53.4 Total EU 100.5 113.4 Americas 9.2 10.3 Asia-Pacific 22.4 21.0 Eastern Europe 60.3 72.4 Africa & Middle East 69.5 71.0 Duty Free 4.2 4.4 Total Rest of the World 156.4 168.8 Total Non-EU 165.6 179.1 Total Group 266.1 292.5 (1) 2.6bn cigarettes of PMI brands (FY12: 2.7bn) 63
Fine Cut Tobacco Volumes Billion stick equivalents FY13 FY12 UK 6.3 6.6 Germany 9.9 9.4 Spain 4.3 3.3 Rest of European Union 21.4 21.3 Total EU 41.9 40.6 Americas 0.5 0.5 Asia-Pacific 1.9 1.9 Eastern Europe 0.3 0.2 Africa & Middle East 0.2 0.2 Duty Free 0.7 0.7 Total Rest of the World 3.1 3.0 Total Non-EU 3.6 3.5 Total Group 45.5 44.1 64
Returns & Growth Markets Historical Data 65
Historical Data Reporting Basis To support the change in reporting basis, additional detail of historical information is available on the Imperial Tobacco website using the following URL: http://www.imperial-tobacco.com/historical_data_new_structure Key metrics are provided for 2011, 2012 and 2013 both full year and half year. 66
Historical Data growth markets HY11 FY11 HY12 FY12 HY13 FY13 Volumes (SE bn) 58.7 122.9 55.6 121.4 52.5 113.5 Tobacco net revenue ( m) 980 2,090 1,000 2,192 988 2,254 Adjusted operating profit (AOP) ( m) 262 584 258 633 225 668 Volumes - Growth Brands (SE bn) 23.4 48.5 25.2 54.2 25.8 53.5 Growth brands % of net revenue 34.3% 34.4% 36.0% 35.9% 36.8% 36.7% 67
Historical Data returns markets HY11 FY11 HY12 FY12 HY13 FY13 Returns Markets North Volumes (SE bn) 60.8 127.9 56.8 119.7 52.1 108.6 Returns Markets South Volumes (SE bn) 49.1 100.4 48.9 100.3 47.6 94.7 Total Returns Markets Volumes (SE bn) 109.9 228.3 105.7 220.0 99.7 203.3 Returns Markets North Tobacco net revenue ( m) 1,365 2,892 1,427 2,924 1,406 2,929 Returns Markets South Tobacco net revenue ( m) 944 1,928 961 1,889 890 1,824 Total Returns Markets Tobacco net revenue ( m) 2,309 4,820 2,388 4,813 2,296 4,753 Returns Markets North Tobacco net revenue / '000 ( ) 22.5 22.6 25.1 24.4 27.0 27.0 Returns Markets South Tobacco net revenue / '000 ( ) 19.2 19.2 19.7 18.8 18.7 19.3 Total Returns Markets Tobacco net revenue / '000 ( ) 20.9 21.1 22.6 21.9 23.0 23.4 68
Historical Data returns markets HY11 FY11 HY12 FY12 HY13 FY13 Returns Markets North adjusted operating profit ( m) 701 1,466 751 1,502 755 1,543 Returns Markets South adjusted operating profit ( m) 446 873 447 854 379 792 Returns Markets Total adjusted operating profit ( m) 1,147 2,339 1,198 2,356 1,134 2,335 Growth brands as % of net revenue Returns North 41.0% 41.5% 41.2% 42.4% 43.2% 43.7% Growth brands as % of net revenue Returns South 28.2% 28.9% 31.2% 31.8% 32.9% 33.5% Growth brands as % of net revenue total Returns Markets 36.2% 36.9% 37.2% 38.1% 39.3% 40.0% 69
Historical Data growth and specialist brands HY11 FY11 HY12 FY12 HY13 FY13 Growth Brands Volume (SE bn) 60.5 125.3 62.1 131.9 62.2 128.8 Growth Brands Volume as % of group 35.9% 35.7% 38.5% 38.6% 40.9% 40.7% Growth Brands Tobacco net revenue ( m) 1,176 2,509 1,259 2,647 1,274 2,729 Growth Brands Tobacco net revenue as % of group 35.8% 36.3% 37.2% 37.8% 38.8% 38.9% Specialist Brands Tobacco net revenue ( m) 364 752 390 817 396 866 Specialist Brands Tobacco net revenue as % of group 11.1% 10.9% 11.5% 11.7% 12.1% 12.4% 70
Basis of Results Presentation Use of Adjusted Measures Management believes that non-gaap or adjusted measures provide a useful comparison of business performance and reflect the way in which the business is controlled. Accordingly, adjusted measures of operating profit, net finance costs, profit before tax, taxation, attributable earnings and earnings per share exclude, where applicable, acquisition accounting adjustments, amortisation and impairment of acquired intangibles, restructuring costs, post-employment benefits net financing cost, fair value gains and losses on derivative financial instruments in respect of commercially effective hedges, exchange gains and losses on borrowings in respect of commercially effective hedges, and related taxation effects and significant one-off tax provision charges or credits arising from the resolution of prior year tax matters. Reconciliations between adjusted and reported measures are included in our published financial statements. Adjusted measures are not defined terms under IFRS and may not be comparable with similarly titled measures reported by other companies. Imperial Tobacco also uses the following non-gaap measures in presenting its results: Net Revenue Net revenue comprises the Tobacco business revenue less associated duty and similar items less revenue from the sale of peripheral and non-tobacco related products. Management considers this an important measure in assessing the performance of Tobacco operations. Distribution Fees Distribution fees comprises the Logistics segment revenue less the cost of distributed products. Management considers this an important measure in assessing the performance of Logistics operations. Adjusted Net Debt Management monitors the Group's borrowing levels using adjusted net debt which excludes interest accruals, the fair value of derivative financial instruments providing commercial cash flow hedges and finance lease liabilities. 71
Contacts Investor Relations department Tom Corran Director of Investor Communications tom.corran@uk.imptob.com John Nelson-Smith Investor Relations Manager john.nelson-smith@uk.imptob.com Tel: +44 (0) 117 933 7510 Tel: +44 (0) 117 933 7032 Jo Brewin Investor Relations Manager jo.brewin@uk.imptob.com Grant Edmunds Investor Relations Manager grant.edmunds@uk.imptob.com Tel: +44 (0) 117 933 7549 Tel: +44 (0) 117 933 7117 72