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Name | Symbol | Market | Type |
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Imp.br.fin.26 | LSE:94JK | London | Medium Term Loan |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 0 | - |
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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June 14, 2023 11:30 ET (15:30 GMT)
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