Imperial Tobacco Group PLC: Preliminary Results For The 12 Months Ended 30 September 2003.Business Editors BRISTOL Bristol, cities, United States Bristol. 1 Industrial city (1990 pop. 60,640), Hartford co., central Conn., on the Pequabuck River; settled 1727, inc. 1785. Its clock-making industry dates from 1790. , United Kingdom--(BUSINESS WIRE)--Nov. 17, 2003 Imperial Tobacco Group PLC: HIGHLIGHTS - Strong profit delivery: - Adjusted(1) operating profit of Pounds Sterling 1,135m - up 44% - Adjusted(1) pre-tax profit of Pounds Sterling 898m - up 40% - Adjusted(1) operating margin up to 35.5% from proforma 29% at time of Reemtsma acquisition - Rapid and successful integration of Reemtsma: Synergies of some Pounds Sterling 150m realised in 2003, exceeding initial estimates of Pounds Sterling 140m Synergy delivery for 2004 around Pounds Sterling 210m, against initial Pounds Sterling 170m target - Adjusted(1) earnings per share of 90.0p - up 32% - Full year dividend of 42.0p - up 27% - UK: Reinforced number one position with cigarette market share up to 44% - the highest for 20 years - Germany: Growth in overall market share to 21.4%, driven by leadership in other tobacco products sector - Rest of Western Europe: Good domestic trading performances with improved margins across the region: Spain: market share increased to 4.2% Greece: highest-ever market share, up to 6.9%, driven by the continuing strong performance of Davidoff - Rest of the World: Continues to be strong volume generator for the Group with improving profitability: Central and Eastern Europe: positive volume progress, with West up 18% - Significant long-term development opportunities: China: 10-year commercial agreement signed with Yuxi Hongta Group for the production and distribution of West cigarettes in China Turkey: construction of factory for the production and distribution of cigarettes in Turkey - Well positioned for future growth: Enhanced international platform and strong brand and product portfolio (1) Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profit, operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and earnings per share are before amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. and exceptional items Summarising today's announcement, Gareth Davis, Chief Executive, said: "Organic growth in our key markets, coupled with the first full year contribution from Reemtsma and synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. benefits, has delivered another excellent set of results. We continue to focus on delivering value to our shareholders and this is reflected in the 32 per cent increase in earnings per share and the 27 per cent increase in the full year dividend. "The rapid and successful integration of Reemtsma since acquisition in May 2002 has already realised some Pounds Sterling 150 million in cost savings in 2003, indicating a full year benefit of around Pounds Sterling 210 million in 2004, exceeding our initial forecasts. "I am delighted to confirm today that we have made tangible progress in the Chinese market through the signing of a 10-year commercial agreement with the Yuxi Hongta Group for the production and distribution of West cigarettes in China. Production is due to begin before the end of the year, and although volumes will be modest initially, in a market of 1.7 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. cigarettes there are significant long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth opportunities for the Group. "In Turkey we are building a cigarette factory which we expect to be fully operational by early 2005. The Turkish market is the seventh largest in the world at over 100 billion cigarettes and represents another growth opportunity. "This has been another very successful year for Imperial Tobacco, building on our enhanced international platform, strong brand portfolio and efficient cost base. I believe we have never been in a better position to continue our proven track record of driving sustained profitable growth and delivering value to our shareholders." High-resolution photographs are available to the media free of charge at: www.newscast newscast Radio or television broadcast of news events. News gathering and broadcasting by the radio networks began in the mid-1930s and increased significantly during World War II. The television newscast began in 1948 with 15-minute programs that resembled movie newsreels. .co.uk +44 (0)20 7608 1000 Imperial Tobacco's 2003 Preliminary Results are available on our website: www.imperial-tobacco.com.
FINANCIAL HIGHLIGHTS
2003 2002
Adjusted operating
profit (1) Pounds Sterling 1,135m Up 44% Pounds Sterling 789m
($1,886m)
Adjusted pre-tax
profit (1) Pounds Sterling 898m Up 40% Pounds Sterling 642m
($1,492m)
Adjusted profit after
tax (1) Pounds Sterling 655m Up 41% Pounds Sterling 465m
($1,089m)
Adjusted earnings
per share (1) 90.0p Up 32% 68.4p
(149.6c)
Dividend per share 42.0p Up 27% 33.0p
(69.8c)
Turnover Pounds Sterling 11,412m Up 38% Pounds Sterling
($18,967m) 8,296m
Operating profit Pounds Sterling 881m Up 46% Pounds Sterling 603m
($1,464m)
Pre-tax profit Pounds Sterling 656m Up 55% Pounds Sterling 423m
($1,090m)
Profit after tax Pounds Sterling 424m Up 50% Pounds Sterling 283m
($705m)
Basic earnings per share 58.1p Up 42% 41.0p
(96.6c)
Diluted earnings per share 57.9p Up 42% 40.8p
(96.2c)
(1) Adjusted to exclude the effect of amortisation and exceptional items. Management believes that reporting results before amortisation and exceptional charges (adjusted operating profit, adjusted profit before tax and adjusted earnings per share) provides a better comparison of underlying business performance for the year. The exchange rate of US $1.662 to the Pounds Sterling 1, the pound sterling noon buying rate on 30 September 2003, has been used to translate this statement prepared under UK GAAP UK GAAP United Kingdom Generally Accepted Accounting Principles . CHAIRMAN'S STATEMENT In a year of transformation for Imperial Tobacco, following the step change in the scale and potential of the business resulting from the acquisition of Reemtsma in 2002, I am very pleased to be reporting yet another excellent set of results. Our track record of organic growth and strategic acquisitions has taken us from a strong UK base to become the world's fourth largest international tobacco company with our products sold in over 130 countries. We have increased and internationalised our cigarette portfolio, we are the world's leading manufacturer of roll your own tobacco and rolling papers, and we have seen our volumes grow from 42 billion cigarette equivalents in 1997 to over 220 billion cigarette equivalents today. Our performance in 2003 maintains an unbroken track record of strong earnings and dividend growth, and clearly demonstrates our consistent ability to create sustainable shareholder value. 2003 PERFORMANCE In the first full year of the enlarged business, adjusted operating profit before amortisation and exceptional items was up 44 per cent on 2002 to over Pounds Sterling 1.1 billion, with turnover excluding duty also up 44 per cent to Pounds Sterling 3.2 billion. Operating profit, after amortisation and exceptional items, was up 46 per cent to Pounds Sterling 881 million (2002: Pounds Sterling 603 million). These results reflect organic growth trends across many of our key markets, together with the delivery of some Pounds Sterling 150 million synergies generated following the Reemtsma acquisition, and a full year's contribution from that business. The adjusted profit on ordinary activities before tax was up 40 per cent to Pounds Sterling 898 million (2002: Pounds Sterling 642 million), after charging Pounds Sterling 237 million net interest (2002: Pounds Sterling 147 million). The interest charge includes the full year effect of financing the Reemtsma acquisition. This performance has delivered basic earnings per share of 58.1 pence pence n. Chiefly British A plural of penny. pence Noun a plural of penny USAGE: Since the decimalization of British currency and the introduction of the abbreviation p, (2002: 41.0 pence) and adjusted earnings per share of 90.0 pence, an increase of 32 per cent on 2002. DIVIDEND Your Directors are recommending a final dividend of 30.0 pence per share, making a total dividend for the year of 42.0 pence. This represents an increase of 9.0 pence per share, or 27 per cent on the total 2002 dividend. The dividend will be paid on 20 February 2004 to shareholders on the register at the close of business on 23 January 2004. CONSISTENT STRATEGY DELIVERING CONTINUED GROWTH Imperial Tobacco's strategy remains to create sustainable shareholder value by growing its international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , both organically and through acquisitions, while continuing to strengthen its position in the core markets of the UK and Germany. The consistent application of this strategy has delivered compound annual growth in adjusted earnings per share of 18 per cent and in dividends per share Dividends per share Dividend paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term. of 15 per cent since Listing in 1996. We are in an excellent position to continue this successful strategy. We have enhanced our international potential by strengthening our positions in existing markets and developing new markets, giving us more opportunity to exploit our comprehensive international portfolio of tobacco products. While focused on profitable sales growth, we remain committed to generating cost savings across all aspects of the business. In addition, we continue to evaluate potential acquisitions which meet our rigorous strategic and financial criteria. SENIOR MANAGEMENT Recognising the transformation in the scale of the business, I am delighted to welcome David Cresswell, as Manufacturing Director, Frank Rogerson, as Corporate Affairs Director and Bruce Davidson Perhaps you mean:
reorganized organized - formed into a structured or coherent whole into seven areas of operation: Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). , Central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. , Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. , Africa and the Middle East, Asia Pacific, Australasia and Global Duty Free/Travel Retail. Further strengthening the management overview of the strategic direction and operations of the Group, the senior management steering The process whereby builders, brokers, and rental property managers induce purchasers or lessees of real property to buy land or rent premises in neighborhoods composed of persons of the same race. group, the Chief Executive's Committee, was expanded in June to include Alison Cooper, Director of Finance and Planning and Kathryn Brown, Group Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. Director, who join the Executive Directors on the Committee. Ludger Staby resigned from his position as a Non-Executive Director A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. of the Company and from the Supervisory Board Supervisory board The board of directors that represents stakeholders in the governance of the corporation. of Reemtsma. The Board also accepted the resignation of Manfred Haussler, Sales and Marketing Director, from the PLC Board and as Speaker of the Vorstand, Reemtsma Germany's Board of Directors. CORPORATE RESPONSIBILITY The Board takes its obligations as a responsible corporate citizen seriously and is committed to high standards of corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. ensuring this is reflected across all aspects of the business. Governments around the world are pursuing in varying degrees the further regulation of tobacco products. We continue to manage these challenges and seek to engage with governments to find workable, practical solutions to changing regulations. In particular, in the UK, we were pleased to sign a Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. with HM Customs & Excise A tax imposed on the performance of an act, the engaging in an occupation, or the enjoyment of a privilege. A tax on the manufacture, sale, or use of goods or on the carrying on of an occupation or activity, or a tax on the transfer of property. in July 2003, formalising jointly developed protocols to combat the smuggling smuggling, illegal transport across state or national boundaries of goods or persons liable to customs or to prohibition. Smuggling has been carried on in nearly all nations and has occasionally been adopted as an instrument of national policy, as by Great Britain of tobacco products. We have also supplied information to the Office of Fair Trading The Office of Fair Trading or OFT is a non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator. in relation to certain of its enquiries into the operations of the UK tobacco supply chain. Investigations by the German authorities into Reemtsma trading practices, which relate to a period prior to acquisition, are ongoing. We continue to co-operate fully with the authorities in their investigations, which in some instances could last several years. The operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. section reviews our progress in meeting the expectations of a wide range of stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. and a more detailed review of our activities will be published on our website in December 2003: www.imperial-tobacco.com. OUTLOOK It has been a year of transformation and strong profit delivery, following the acquisition of Reemtsma in May 2002. The two businesses have proved to be an excellent fit, providing a much stronger platform for future growth and enhanced profitability. This inherent growth potential continues to be realised with synergies of some Pounds Sterling 150 million delivered in 2003, rising to a full year delivery of around Pounds Sterling 210 million in 2004, ahead of the Pounds Sterling 170 million forecast at the time of the acquisition. The search to improve profitability throughout the business continues and the ongoing review of manufacturing capacity together with other initiatives will generate further cost savings on an ongoing basis. These cost savings will not only support margin improvements, but will release funds for investment in brands and markets, driving forward the sustained profit development of the business. As we move into the next phase of our development, we are seeing the transfer of skills, experience and best practice across the Group. It is testimony to the strength and commitment of all our employees that, in a year of such significant change, we have delivered yet another strong set of results. While external regulatory, economic and political pressures will continue, I believe we have never been better placed to continue to create long-term value for our shareholders. Derek Bonham Bonham can refer to:
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