Imperial Tobacco Group PLC
Annual Report and Accounts 2014

A Stronger
Business

Alison Cooper
Chief Executive

Oliver Tant
Chief Financial Officer

Disclaimer: These videos supplement, but do not form part of, the Annual Report and Accounts

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"In 2014, my first year as Chairman, we created further value for our shareholders and continued to build the quality and sustainability of our business. Our strategic focus on maximising sales, cost and cash opportunities enabled us to achieve our targets and further transition the business to strengthen our future growth prospects."

Mark Williamson, CA (SA)
Chairman

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Who We Are

We’re an international fast-moving consumer goods company with a strong track record of creating value for shareholders.

Our core business is built around a tobacco portfolio that offers consumers comprehensive brand choice, and we’re also creating new consumer experiences through our non-tobacco subsidiary Fontem Ventures.

We’re proud of our success and excited about the future; the strength of our brands, our geographic diversity and the talents of our dynamic people are a winning combination for generating high-quality growth in the years ahead.

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Brands

Our Growth Brands and Specialist Brands highlight the quality in our portfolio and have significant potential for future growth.

Markets

The strategic role that each market plays in our success story defines how it is managed, with markets prioritising either Growth or Returns.

People

Our values express what we stand for and capture the individual and collective behaviours we expect from everyone who works for us.

PerformanceHighlights
Key PerformanceIndicators

Performance Highlights

Dividends Per Share

+10%
128.1p

Adjusted Earnings Per Share¹

+2%
203.4p

Tobacco Net Revenue¹

+2%¹
£6.6bn

Adjusted Operating Profit¹

+0%
£3bn

Cash Conversion Rate

+5%
91%

Adjusted Net Debt Reduction

-11%
£1bn

Growth Brand Volumes

+7%²
£131bn

                            Changes in our adjusted results are presented on a constant currency basis.
Underlying change. See explanation in the Performance Measures table below.

Performance Measures

Measure	Explanation	Where used
Reported (GAAP)	Complies with International Financial Reporting Standards and the relevant legislation.	Throughout the report
Adjusted (Non-GAAP)	Non-GAAP measures provide a useful comparison of performance from one period to the next. These measures are defined in the Accounting Policies on page 77.	Throughout the report
Constant currency basis	Removes the effect of exchange rate movements on the translation of the results of our overseas operations.	Throughout the report
Underlying change	Removes the impact of our stock optimisation programme in order to reflect management’s estimate of the underlying performance by adjusting for the one-off fall in sales arising from the reduction in excess stock held in distribution channels.	Throughout the report but only for Growth Brand volumes, tobacco net revenue and adjusted earnings per share.

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How WeCreate Value
How WeSupport Growth

How We Create Value

Click below to find out about our Strategy and Business Model

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StrongerBrands
StrongerMarkets

Stronger Brands

We’re optimising our portfolio to focus on our Growth and Specialist Brands, which generate more than half our tobacco net revenue. Portfolio Brands either add to our revenue generation or will be migrated into Growth Brands.

Growth Brands

Our Growth Brands have broad appeal and several have been developed into total tobacco offerings, providing consumers with both cigarette and fine cut tobacco smoking experiences. We manage our Growth Brands to drive quality sustainable growth and they account for 45 per cent of our total volumes and 42 per cent of our tobacco net revenue.

Specialist Brands

Our Specialist Brands are enjoyed by specific consumer groups and represent a dynamic range of cigarette, fine cut tobacco, paper, cigar and smokeless tobacco brands. These brands have a track record of generating strong returns and account for 12 per cent of our tobacco net revenue.