DR

CH IV
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20
DS LE BY
23
ET NG A
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INTRODUCTION AND CONTENTS

WE ARE TRANSFORMING INTO

A CONSUMER-LED
CHALLENGER BUSINESS
New capabilities, a performance culture and more effective
ways of working are enabling Imperial to deliver a stronger
operational performance and enhanced financial returns.

STRATEGIC REPORT GOVERNANCE SUPPLEMENTARY

At a Glance 2 Governance at a Glance 112
INFORMATION
Alternative Performance 235
Our Consumer Focus 4 Chair’s Introduction 114
Measures
Our Investment Case 6 Board Leadership 116
Glossary 244
Chair’s Statement 8 Section 172 126
Chief Executive’s Statement 10 Board Statements 128
Our Distinct Approach 14 People and 129 IMPERIAL BRANDS PLC
Our Strategy in Action 16 Governance Committee FINANCIALS
KPIs 30 Audit Committee 134 Imperial Brands PLC 247
Remuneration Report 142 Balance Sheet
Stakeholder Engagement 32
Directors’ Report 164 Imperial Brands PLC Statement of 247
Non-Financial and Sustainability 37
Changes in Equity
Information Statement
FINANCIALS Notes to the Financial Statements 248
ESG Review 38
Independent Auditor’s Report 169 of Imperial Brands PLC
TCFD 70
Market Review 82 Consolidated Income Statement 178
Operating Review 84 Consolidated Statement 178 SHAREHOLDER
Group Financial Review 92 of Comprehensive Income INFORMATION
Principal Risks and Uncertainties 100 Consolidated Balance Sheet 179 Shareholder Information 263
Consolidated Statement 180
of Changes in Equity
Consolidated Cash 181
Flow Statement For more information see
Notes to the Consolidated 182 www.imperialbrandsplc.com
Financial Statements

MEET OUR PEOPLE

Hind, Brand Manager, Morocco Cover Jennifer and Wen-Hsiang, Production 21 Chih-Min and Chang-Wei, Production 61
Sarah Jean, Regulatory Toxicology Cover Operator and Production Team Leader, Shift Leaders, Taiwan
Coordinator, Germany Taiwan Marina, Machinist, Spain 62
Mandjou, Insights & Intelligence Cover Sara, Trade Marketing Analyst, Portugal 21 Iryna, Production Operator, Ukraine 64
Analyst, Morocco Rafael, Process Engineer, Dominican 24 Reka, People & Culture Operations 67
Miguel, Market Manager, Portugal 1 Republic Specialist, Germany
Hind, Communications Manager, 3 Matthew, Retail Development 24 Emmanuel, Product Characterisation 69
Morocco Representative, UK Specialist, UK
Elio, End-to-end Planner, Poland 7 Christoph, OHS&E Coordinator, Germany 27 Rogelio and Carmen, Tobacco 76
Andrea, Electronics Development 14 Assia, Accountant, Morocco 27 Operations Leader and People &
Manager, UK Zineb, Production Operator, Morocco 28 Culture Clerk, Dominican Republic
Thomas, Sales & Marketing Manager, 16 Omar, Production Operator, Morocco 29 Adam, Sales Representative, US 83
Ivory Coast Ana, People & Culture Business 33 Jamal, Sales Representative, US 87
Angelina, Production Engineer, 16 Partner, Portugal Said, Factory Storekeeper, Morocco 91
Germany Mykola, Factory Storekeeper, Ukraine 35 Henry, Reporting Specialist, Germany 115
Mirko, Area Sales Manager, Germany 19 Andreas, Lab Technician, Germany Alanah, Supply Chain Manager,
44 126
Lea, Sales Representative, US 19 Mikaela, Machine Operator, Sweden Dominican Republic
48
Adery, Regional Sales Manager, Taiwan 20 Peikerr, Retail Development Executive, 52
Taiwan
Performance measures used throughout the report
Reported (GAAP)
Complies with UK-adopted International Accounting Standards and the
relevant legislation.

Adjusted (Non-GAAP)
Non-GAAP measures provide a useful comparison of performance from
one period to the next. The basis of our adjusted measures is explained
in the accounting policies accompanying our financial statements and
the APM section within Supplementary Information.

Constant currency basis

Removes the effect of exchange rate movements on the translation of
the results of our overseas operations. We translate current year results
at prior year foreign exchange rates. See page 94 for more details.

Market share
Market share data is presented as a 12-month moving average
weighted across the markets in which we operate.

Stick equivalent
Stick equivalent volumes reflect our combined cigarette,
fine cut tobacco, cigar and snus volumes.

www.imperialbrandsplc.com 1
IMPERIAL BRANDS AT A GLANCE

TE N
GY
Three years into our strategy, we have built a

O
consistent track record of delivery against our
key objectives. At the same time we are making

RA G
progress on bringing to life our purpose: forging
a path to a healthier future for moments of

ST IN
relaxation and pleasure.

R ER
U IV
O L
DE
OUR FOCUSED STRATEGY OUR PASSION FOR BRANDS

STRATEGIC PILLARS International brands

Pages 18-23

NG VALUE
DRIVI
M OU R BROAD
ER
FRO
PORTFOLIO
T
IO ON

Y
BU TE
AR USI
RK RIT
OUR SING

ILD D NG
GE NESS
B
S
ET

ING
U
PR
FOC

A
MA

Local jewels
P
CON
THE

T
ED
R A IC I E N
THE

NS
IFI
SU
CE

PL

TIO
ME E
BU

PE FF
N T ES

A
R

O DE

T
SI
SI N
R

O
F
N

A
PER
FO R M A NCE
S

-B A
SED CULTU RE
AND
C A P A BI LI TIE S

CRITICAL ENABLERS
Pages 24-29

Next generation products (NGP)

Markets we
operate in:

c.120
Vapour Heated tobacco Modern oral

2 Imperial Brands | Annual Report and Accounts 2023

ACCELERATING DELIVERY ON OUR STRATEGIC PRIORITIES

Operational improvements, enhanced capital returns to shareholders

and progress on environmental, social and governance priorities

Aggregate market share of our five NGP net revenue growth at FY24 share repurchase announced
priority combustible markets constant currency
£1.1bn
+10bps +26.4% (2023: £1.0bn)
(2022: +35bps) (2022: +10.8%)

Tobacco & NGP net revenue Dividend per share (pence) Absolute CO2 equivalent emissions
(£ billion) Scope 1 and Scope 2 market-based
146.82p (tonnes)
£8.0bn
99,985t
2022: 141.17p
2022: £7.7bn*
2022: 175,766t
146.82p

288,172t
8.0bn

141.17p
7.7bn*

139.08p
7.6bn

175,766t

99,985t

21 22 23 21 22 23 17* 22 23

2023 Tobacco & NGP net revenue growth 2023 DPS growth +4.0% Our target is to be Net Zero in our direct
at constant currency +1.4% operations by 2030
* Excluding Russia * 2017 is the baseline year

www.imperialbrandsplc.com 3
OUR CONSUMER FOCUS

Our portfolio of brands and products is

designed to meet the diverse and evolving
expectations of adult consumers in
markets worldwide. We responsibly serve
those who choose to smoke and, at the
same time, we continue to develop
potentially less harmful products which
also satisfy consumer needs.

M H
ER
T
SU I
N TW
CO R
E TA
TH E S
W

“I use Pulze and iD heat sticks

every day, and on different
occasions, like when I am
waiting for the bus, having a
beer, or during a break from
work. Sometimes I vape too, for
the flavours. I used to smoke
regular cigarettes, but I haven’t
for more than five years now.” “I started vaping to stop smoking,
as I was worried about the effect
Karolina,
Czech Republic on my health and the odours. I
love the wide variety of flavours
that are available with blu 2.0,
the ease of use, its affordability,
and the battery life. For me,
these are all advantages.”

Salvador,
Spain

4 Imperial Brands | Annual Report and Accounts 2023

“I switched to Davidoff about “A Backwoods with my crew is
10 years ago. It’s a longer always in the mix. A Backwoods
cigarette and I like its quality moment is when you are with
and taste and the less lingering friends, and when you need to
smells that other brands have. unwind. The ritual is familiar and
As an engineer, I know that like nothing else. If Backwoods
machines built in Germany can continue to deliver on high
are renowned for their quality and freshness, I will
craftsmanship and I think always be a consumer.”
this is true for Davidoff too.”
Mark,
Chien-Hung, USA
Taiwan

“I smoke Golden Virginia as it’s

tastier than other tobacco I’ve
used, and easier to roll. I’ve tried
other brands but always come
back to this one. Golden Virginia
is part of my daily routine now.
I’ve tried vaping but I don’t think
I would change anytime soon.”

Mark,
UK

“Winston has always been my

go-to brand; I enjoy the taste.
Smoking is part of my daily
routine – in the morning with
my coffee, after a meal. There
is nothing like sitting on the
porch after a long day at work
and taking a moment to wind
down and relax with Winston.”

Amy,
USA

www.imperialbrandsplc.com 5
 OUR INVESTMENT CASE

AL T
By building a more consumer-focused
challenger business and following a

RI ES
disciplined capital allocation framework

?
we are continuing to invest behind our

PE NV
strategy, while maintaining a strong,
efficient balance sheet and delivering
enhanced shareholder returns.
IM I
IN HY
W

REVITALISED BUILDING A SUSTAINABLE SELF-HELP INITIATIVES

TOBACCO BUSINESS NEXT GENERATION DELIVERING OPERATIONAL
The tobacco value creation model PRODUCT BUSINESS IMPROVEMENT
remains resilient, with affordability and Next generation products have growth We have identified multiple initiatives
strong brand loyalty supporting potential as they are still a relatively to deliver operational improvements
sustainable pricing. By focusing on our nascent category in the majority of that will enhance our decision-making
top-five combustible markets that markets. We seek to build a sustainable and drive efficiencies. For example,
generate c.70% of operating profit, and NGP business through a consumer we are adopting new ways of working
through selective investment in brand focus, a partnership approach to with our enabling functions using a
equity and our sales force, we have innovation and disciplined execution. global business service model and
stabilised market share, after years of As a challenger, our role is to offer implementing a new ERP system to
sharp declines. This, combined with a consumers a choice where they have replace our 60 legacy systems.
more disciplined focus on our broader already expressed an NGP preference
market portfolio, is driving improved and where we can leverage our existing
combustible returns. customer relationships.

Aggregate priority market NGP net revenue (£ million) Annual cost savings from
share vs prior year (%) restructuring programme

23

22
10bps

35bps
23

22 £208m
£265m
£150m
21 -2bps 21 £188m

COMBINED, THESE ARE GENERATING

A STRONG FINANCIAL OUTLOOK
Improving tobacco and NGP net The business is highly cash generative
revenue trajectory, with a compound with low capital intensity, a working
annual growth rate of 1% to 2%. capital focus and disciplined capital
expenditure producing adjusted
Improving profitability through operating cash conversion of typically
operational leverage, better geographic 90% to 100%.
mix from continued stabilisation of
priority market shares, reduced losses Free cash flow generated in FY23

£2.4bn
from our investment in NGP and
restructuring cost savings driving a
mid-single-digit compound annual
growth rate for Group adjusted
operating profit.

6 Imperial Brands | Annual Report and Accounts 2023

ENHANCING OUR CAPITAL RETURNS

We have a clear capital allocation 3. PROGRESSIVE

framework alongside our strategy: DIVIDEND GROWTH
We have committed to grow
1. INVEST IN STRATEGY our dividend every year, taking
Since our strategy is largely organic into account the underlying
and we work with innovation partners, business performance.
our capital expenditure needs are
relatively light. Any M&A is likely 4. RETURN SURPLUS CAPITAL
to be small. TO SHAREHOLDERS
Having reached our leverage target,
2. MAINTAIN LEVERAGE we have committed to an ongoing
We are committed to an investment share buyback programme, with
grade credit rating and will maintain £1.1 billion committed in FY24.
our leverage at the lower end of the
range 2.0-2.5 times adjusted net debt/
Capital returned to shareholders
EBITDA range.
in FY23

£2.3bn
Further information on our strategy
can be found on pages 16 to 29.

www.imperialbrandsplc.com 7
CHAIR’S STATEMENT

G
IN
RM
FO
SU R NS

S
FO A

ES
TR

CC

Dear Shareholders improvements in data, simplification of throughout this report. Consumers tell
processes, and the development of a us they value local brands with strong
The transformation of Imperial into a performance-based culture. heritage and global brands with
consumer-focused challenger business distinctive personalities – traditional
is now translating into a stronger and All of this enabled the business to
areas of strength for Imperial, which we
more consistent operational deliver an improved performance in
are now further developing. Many
performance and enhanced both combustible and next generation
consumers also tell us they have yet to
shareholder returns. Despite a difficult products (NGP) during the 2023 fiscal
find a perfect potentially reduced-harm
macroeconomic and geopolitical year. Furthermore, we are providing
replacement for cigarettes. This means
environment, with inflationary shareholders with consistent,
we are seeing a growing diversity of
headwinds, shifting consumer growing returns through a progressive
behaviour with consumers using
preferences and regulatory challenges, dividend policy and an ongoing share
different products for different
we continue to methodically deliver on buyback programme.
moments in their day.
our external commitments. I would like to thank the 25,000 people
Therefore, we see a future for this
One of my highlights of the past year who work at Imperial, as well as our
industry where multiple nicotine
was attending our capital markets many valued business partners, for
categories and a diverse ecosystem of
event in New York in June, where their individual contributions to our
businesses will coexist and evolve.
management showcased our new growing collective success.
Innovation, and responsible
consumer capabilities in insights, competition and regulation, will be the
innovation and marketing. What CONSUMER INSIGHTS ARE motors which drive us to a healthier
impressed me was both the best-in- DRIVING OUR TRANSFORMATION future. Thanks to our focused
class quality of the work by our new Everything we do starts with investments in transformation,
global centres of expertise and the deep consumers – and their diverse voices Imperial is now well placed to make a
collaboration with local markets. We can be heard on pages 4-5 and positive contribution to this wider
are making progress in other industry transition.
transformation priorities:

8 Imperial Brands | Annual Report and Accounts 2023

ADVOCATING FOR HARM ENHANCING BOARD CAPABILITIES EFFECTIVELY ALLOCATING
REDUCTION In March, we welcomed Andrew CAPITAL
Public health bodies agree it is the Gilchrist as a Non-Executive Director The combination of our strong cash
smoke created by the burning of and as a member of the Audit and flows and relatively low capital
tobacco leaf which contains most of the People and Governance Committees. intensity means we generate surplus
harmful chemicals responsible for Andrew, who was Chief Financial capital. The Board believes the
smoking-related disease. Yet, many Officer of Reynolds American Inc, disciplined allocation of capital is a key
consumers, policymakers and medical brings to our Board two decades of value lever alongside the delivery of the
professionals continue to believe that operational and financial experience in Group’s strategy. We have clearly
nicotine is the principal cause of the tobacco sector. At February’s defined our capital allocation priorities,
ill-health. We will continue to campaign Annual General Meeting (AGM), we said which start with investment to support
to build a greater understanding of the farewell to Simon Langelier, who after our strategic delivery. While the
positive role that potentially less serving nearly six years on the Board investment needs of the business are
harmful products can play in helping had decided to step down. I would like relatively modest, we approved a small
adult smokers. to thank Simon again for his significant acquisition to facilitate our launch of
contribution to the Board and we wish modern oral in the United States. We
All of Imperial’s products are designed
him well in his future endeavours. have also strengthened our balance
for and marketed to adult smokers and
sheet to reach our target leverage and
existing nicotine consumers. We are We continue to hold valuable
underpin our commitment to
actively engaging to support the educational sessions to ensure that
investment grade status.
development of stronger, more Board members are well able to provide
enforceable regulation which balances appropriate challenge and support for Our objective is to support the long-
the need to make an attractive range of management. Topics covered over the term sustainable cash flows of the
NGP available to adult smokers while past year have included tax and excise, business to enable us to maintain our
driving out irresponsible products and patents and intellectual property, and progressive dividend policy and
preventing youth access. regulatory policy. ongoing share buyback. The Board is
See the Governance section, starting recommending an annual dividend
However, we are concerned with new
on page 112, for more information. increase of 4.0%, to 146.82 pence per
policy proposals in some markets,
share. We have also committed to a
which see prohibition as the solution.
£1.1 billion share buyback to be
Outlawing legal products can inevitably BROADENING STAKEHOLDER completed in FY24, an increase
lead to unintended consequences, ENGAGEMENT of 10% on FY23.
in particular, the proliferation of illicit
Building on the programmes of
trade and the growth of black-market
previous years, the Board held meetings MOVING CLOSER TO A
products outside the regulated
in Germany and Morocco, during which HEALTHIER FUTURE
framework.
we had the opportunity to meet with
Looking ahead, we expect the
While engaging to create regulatory employees and consumers. I continue
continuing benefits of our
environments that enable successful to have regular interactions with our
transformation to enable a further
tobacco harm reduction, we will also largest investors, and over the past year
acceleration of our financial
support the freedoms of our legal adult we consulted with them on our
performance during the final two years
consumers who choose to continue refreshed Remuneration Policy, which
of our five-year strategy. We look
to smoke. will be brought to the 2024 AGM for
forward to building on our growing
approval. Having carefully considered
operational track record to deliver
DELIVERING ON OUR PRIORITIES the existing approach and alternative
sustainable shareholder returns and
FOR PEOPLE AND PLANET remuneration structures, the Board
play a positive, distinctive role in
concluded that the current structure,
Alongside our progress on harm this industry’s transition to a
with a small number of refinements,
reduction, we are delivering on our healthier future.
remains appropriate for the Company
other key environmental, social and
at this time.
governance priorities (ESG). In 2022 we
refreshed our approach to ESG, which
internally we call “People and Planet”,
and over the past year we have Thérèse Esperdy
continued to enhance our governance Chair
and disclosures, and work towards our
key commitments. Among these is our
goal to be a fully Net Zero company by
2040, and since our baseline year of
2017 we have reduced carbon emissions
by 65% within the business. In
November 2022, the Board approved a
new diversity, equity and inclusion
strategy, which defines our processes,
practices and long-term measures for
“The transformation of Imperial
success. In particular, we now have a
clear goal to increase the proportion of into a consumer-focused
women in senior management to 35% challenger business is now
by 2027. translating into enhanced
For more on People and Planet see shareholder returns.”
pages 38-69.

www.imperialbrandsplc.com 9
CHIEF EXECUTIVE’S STATEMENT

SE
RP NG
O
I
PU M
H R
IT FO
W R
PE

Three years into our strategy, I am During FY23 and FY24, through a developing a performance-based
pleased with the consistent track combination of dividends and our culture. Taken together, these are the
record we are building and excited by ongoing share buyback programme, we critical enablers for strategic success
the growing opportunities ahead. Our expect to make cumulative capital and the focus for our investments over
focus has been to develop Imperial into returns of £4.7 billion. This is the the past three years.
a strong, consumer-centric challenger equivalent of c.30% of Imperial’s market
In a sector where consumer behaviour
business, capable of growth, year in and value as at 30 September 2023.
is becoming increasingly diverse,
year out. Since the launch of our
Meanwhile, we are continuing to make strong insights, innovation capabilities
strategy in early 2021, we have been
focused investments in consumer and brand building are more and more
creating the team and the capabilities
capabilities, data, processes and crucial. In June, I joined our consumer
to enable the revival of our combustible
systems, and our culture to ensure we team at a capital markets event in New
business and the successful reboot of
can grasp future opportunities across York City. Their presentations included
our next generation products (NGP).
all segments. While I am pleased with our new research in consumer demand
This approach is leading to clear our progress so far, I believe that the full spaces, our emerging partnership
operational progress, despite a benefits of Imperial’s transformation approach to innovation, and our activity
challenging macro-economic will continue to emerge in the next few to refresh both our international and
environment. In our five priority years and beyond. local brands. Since then, we have
combustible markets, which account continued to improve our ways of
for around 70% of our operating profit, BUILDING OUR CHALLENGER working to ensure that our centres of
we have stabilised the share declines CAPABILITIES expertise work as effectively as
and exceeded our expectations with a possible with our teams in the markets.
Imperial is the fourth largest – and
43 basis point growth in aggregate
smallest – of the global businesses in For more on our investments in our
share since September 2020. Over the consumer capabilities see pages
our sector. To outperform consistently,
same period, NGP net revenue has 24-25.
we need to do things differently to our
grown by 41% at actual exchange rates,
larger rivals – to act as the industry’s
underpinned by market launches and Today’s Imperial was assembled
challenger. Being a challenger is about
new products in all three categories. through a series of global acquisitions
being close to the consumer, having
during the past quarter century. A clear
We have also delivered a material robust data and processes to enable
demonstration of our transformation
step-up in shareholder returns. fast, well-informed decisions, and
journey is how we are replacing more

10 Imperial Brands | Annual Report and Accounts 2023

than 60 legacy systems with a single, consumer purchasing power. consolidate momentum in our current
unified platform. In parallel, we are also As anticipated, we delivered strong markets. This means investing only in
creating an end-to-end supply chain tobacco price mix for the year markets where NGP categories account
system – from leaf to store. These at 10.4% which more than offset for a material proportion of the overall
investments will make a significant volume declines. nicotine market and where we have a
contribution to future operational strong route to market. In the US, we
During 2023, market share in our
improvements, by giving our people welcomed the unanimous federal court
five priority markets increased by
more robust, actionable data, and decision in August to vacate an earlier
10 basis points.
automating low-value processes, Marketing Denial Order issued by the
freeing up time to focus on meeting In our largest market, the United States, Food and Drug Administration against
consumer needs. While these our challenger approach supported a our myblu pod-based vapour portfolio.
programmes will each take several share increase of 65 basis points for the In 2024, we will launch our new modern
years to complete, pilot markets and year. Our flagship cigarette brands oral range under the brand “Zone”. This
factories are currently adopting the Winston and Kool were stable in their follows the acquisition of a range of US
new systems and ways of working. segments thanks to distinctive brand pouches from TJP Labs in June.
See pages 28-29 for
positioning and focused sales For more on our approach to
more information. execution, and we continued to investment in next generation
increase share in the deep discount products, see pages 22-23.
We continue to build a distinctive, segment. In mass market cigars we
performance-based challenger culture, faced a decline in net revenue against a
PURPOSE, PEOPLE AND PLANET
which internally we call “Connections”. strong comparator period. As expected,
Having introduced our new behaviours this headwind, which we reported at A consumer-centric, challenger
in 2021, during 2022 all colleagues went the half year, has eased during the approach to NGP is how we will
through training to help them better second half. contribute to the broader industry-wide
understand how to deploy these commitment to reduce harm. As the
We continue to refine our approach smallest of the international
behaviours in their everyday working
in Germany with investment in businesses, we know we cannot deliver
lives. Over the past year, we moved to
building brand equity and in our sales a healthier future on our own. But, by
the next phase of this culture change
force effectiveness. getting close to our consumers,
journey by inviting 300 of our senior
leaders to spend seven working days on In the UK and Spain our strategy has innovating fast and working with
a coaching programme to help them been focused on investment in local partners, we can drive responsible
nurture high-performing teams (see jewel brands, while in Australia competition and help accelerate the
pages 26-27). We also launched a new our approach to revenue growth transition to potentially reduced-harm
long-term diversity, equity and management underpinned our clear products. This distinctive way of
inclusion strategy designed to ensure brand offerings at each of the key working is most clearly seen in our new
that everyone in Imperial can feel that price points. Sense Hubs in Liverpool and Hamburg,
they belong (see pages 67-69). which bring together consumers, our
See pages 18-19 for more on our
Another important focus this year has priority markets.
been to support our colleagues in OUR BEHAVIOURS
To improve focus on our medium-sized
markets dealing with exceptional
and smaller markets, we have created
challenges. These include Laos and
the new AAACE region which includes
Morocco, which have been affected
Africa, Asia, Australasia and Central &
by natural disasters and, of course,
Eastern Europe. Strong tobacco pricing
in Ukraine.
across the region offset volume
Our 2023 employee experience survey declines, while Central & Eastern
was completed by 91% of eligible Europe benefited from NGP growth.
colleagues around the world, and we See pages 20-21 for
maintained our above-benchmark more information.
engagement score of 74%.
In NGP, we now have credible
IMPROVED, MORE CONSISTENT consumer propositions across all
PERFORMANCE categories – vape, heated tobacco and
modern oral. During 2023 we
Our focused investments in the critical
accelerated the roll-out of new products
enablers of our strategy are driving
in Europe, with the pod-based vape blu
improved business performance. In the
2.0 now available in nine markets, the
period, excluding Russia we delivered
blu bar disposable in 11 markets, and
growth in tobacco and NGP net revenue
Pulze 2.0, our heated tobacco device, in
of 1.4% and in Group adjusted operating
seven markets. We have also expanded
profit of 3.9%, at constant currency.
the flavour range of Zone X pouches in
Reported revenue was down 0.2% due to
Europe. In the Europe region, NGP net
lower excise partially offset by higher
revenue grew by 40% year on year on a
Logista revenues. Operating profit grew
constant currency basis. We are
26.8% as charges relating to our exit
pleased with the progress and feel that
from Russia were not repeated. For more information,
we now have a full product platform for see pages 26-27.
Once again, these achievements have the NGP category. We will continue to
been delivered against an inflationary be disciplined and will now aim to
backdrop which has squeezed

www.imperialbrandsplc.com 11
CHIEF EXECUTIVE’S STATEMENT continued

own product developers and third-party EMBRACING CHANGE Our earnings per share growth will
partners in a single collaborative space. Since joining Imperial in June 2020, I benefit additionally from the continued
have visited a total of 35 markets and reduction in the number of shares as a
Consumer health is a key element of
nine factories and had conversations result of our ongoing share buyback
our broader environmental, social and
both face to face and virtually with programme, although this will be offset
governance (ESG) framework, which
many hundreds of colleagues. During slightly by increased adjusted finance
internally we refer to as our People and
this past three years, I have seen how and tax costs.
Planet agenda. We are making material
progress in our other priority areas. We our people have embraced change, At current rates, foreign exchange
are committed to becoming a fully Net balancing the need for near-term translation is expected to be a 0-1%
Zero carbon emission company by 2040 delivery with supporting our long-term headwind to net revenue, adjusted
and, driven by an overall reduction in transformation. I have seen too a operating profit and earnings per share.
energy consumption, we have reduced growing spirit of collaboration,
accountability and inclusivity, as we We look forward to building on our
our Scope 1 and Scope 2 market-based
integrate new hires with strong global growing operational track record to
carbon emissions by 65% since our
consumer experience and our deliver shareholder returns through an
baseline year 2017. We are also on
colleagues with deep local and sector ongoing buyback and progressive
course to meet our commitment to
expertise. Above all else it is the power dividend, and to play a positive,
eliminate landfill waste in our
of our people which gives me distinctive role in this industry’s
operations by 2025. For more
confidence in our ability to continue transition to a healthier future.
information on People and Planet see
to deliver over our five-year strategy
pages 38-69.
period and beyond.
ALLOCATING CAPITAL WITH
DISCIPLINE OUTLOOK
Capital allocation is a key value lever Our five-year strategy is continuing to
Stefan Bomhard
for the business. Focus and discipline drive the operational and cultural
Chief Executive Officer
are the key principles behind our four changes which, despite challenging
capital allocation priorities: macro-economic headwinds, are
strengthening our financial delivery.
• Invest behind the strategy to deliver This underpins our confidence in
the growth initiatives. delivering against the final two years of
• Deleverage to support a strong and our plan with a further improvement in
efficient balance sheet with a target adjusted operating profit growth to
leverage towards the lower end of our support a mid-single-digit constant
adjusted net debt to EBITDA range of currency compound annual growth rate
2-2.5 times. over FY23-FY25, in line with our
• A progressive dividend policy medium-term guidance.
with dividend growing annually,
In the coming year, we expect to deliver
taking into account underlying
low single-digit constant currency
business performance.
tobacco and NGP net revenue growth
• Return surplus capital to shareholders
and to grow our constant currency
while maintaining our target leverage.
adjusted operating profit close to the
Having reached our target leverage, in middle of our mid-single-digit range.
October 2022 we began returning
Performance will be weighted to the
surplus capital to shareholders via a
second half of the year driven by the
share buyback. We completed an initial
phasing of investments in NGP and the
buyback of £1 billion during FY23, and
phasing of our pricing in FY23. As a
we have announced the next £1.1 billion
result, first half operating profit is
tranche for FY24. As a result, we expect
expected to grow at low single digits, at
in total our returns to shareholders will
constant currency.
exceed £2.4 billion in the coming
fiscal year.
Given the highly cash generative
nature of the business and our current
valuation, we remain committed to a
progressive dividend policy and an
ongoing buyback programme, which
will meaningfully reduce the capital
base and generate significant
shareholder returns.
For our investment case,
see pages 6-7.

12 Imperial Brands | Annual Report and Accounts 2023

 A C
LEADERSHIP

CO U
FO

N ED
SU
S
M EA
ER M
1

T
-
4

1. Stefan Bomhard
Chief Executive Officer

2. Lukas Paravicini
Chief Financial Officer
7
3. Alison Clarke
Chief People and Culture Officer

4. Anindya (Andy) Dasgupta

9
Chief Consumer Officer

5. Javier Huerta
Chief Supply Chain Officer

6. Murray McGowan
Chief Strategy and Development
Officer
10
7. Paola Pocci
President, Africa, Asia, Australasia
and Central & Eastern Europe UNRIVALLED FMCG EXPERIENCE
Region Our Executive Leadership Team has a strong
8. Kim Reed blend of experience from across leading
President and CEO, Americas global consumer companies and deep
Region tobacco and local market knowledge.

9. Sean Roberts
Chief Legal and Corporate Affairs
Officer
For more information see
10. Aleš Struminský www.imperialbrandsplc.com
President, Europe Region

www.imperialbrandsplc.com 13
 OUR DISTINCT APPROACH

OUR CHALLENGER CONSUMER CENTRICITY

APPROACH We put the consumer at the

S
centre of our business with
We take a different,

EL ES
strong consumer insight
challenger approach to guiding all our decision-
making (see pages 24-25).
running our business,
OD IN
differentiating ourselves
from our global peers
M S
BU

OUR ASSETS

OUR COLLEAGUES OUR OPERATIONS

Our colleagues are our most important We have a network of 30 manufacturing
asset. We have 25,000 committed and sites that source and process tobacco
passionate employees who want to raw materials to provide high-quality
make a difference. products at lowest cost.

OUR BRANDS OUR INDUSTRY KNOWLEDGE

Our portfolio of 160 brands provides Our deep knowledge of the tobacco and
enjoyment and pleasure for millions of nicotine industry, including our
adult consumers every day. consumer insights, helps us to operate
responsibly in all our markets.
OUR RELATIONSHIPS
We have solid, trusted partnerships with OUR FINANCIAL STRENGTH
stakeholders, including customers and We are able to raise prices to more than
suppliers across c.120 markets. offset volume declines to deliver high
margins and strong cash flows to invest
and drive returns.

WHAT WE DO

ADULT CONSUMER INSIGHTS SCIENCE & REGULATION MARKETING & INNOVATION

We start with the consumer – and We use our know-how and smaller size Our marketing and innovation teams
everything we do is based around a to be agile in how we respond to add value by using consumer insights
deep understanding of adult smokers regulatory changes. This is supported to develop a portfolio of combustible
and nicotine consumers. Our insights by our science and corporate affairs tobacco and potentially reduced-
research is led by our Global Consumer teams, who understand the regulatory harm products to engage and excite
Office and we unlock value by ensuring environment in all our markets and adult consumers. We use sales and
we offer our consumers the right ensure we operate responsibly and marketing communications and
product choices to meet their needs. provide high-quality products innovation to differentiate our brands
These insights provide competitive compliant with local standards. and meet evolving consumer needs,
advantage, and inform our product while at the same time ensuring our
offerings in both combustible tobacco products do not appeal to youth.
and NGP and underpin how we
communicate with adult consumers.

14 Imperial Brands | Annual Report and Accounts 2023

LOCAL AND FOCUS PARTNERSHIPS
INTERNATIONAL BRANDS We focus our investment on clear Our partnership approach to innovation
Our differentiated brand portfolio performance drivers in our five priority enables us to compete in multiple NGP
means we offer consumers heritage combustible markets and drive value categories with an agile response to
brands with local provenance and from our broader market portfolio changing market dynamics and fast
international brands that resonate with product development.
We are building our NGP business in
distinct global tribes.
markets where consumers have
already expressed their preferences
and where we already have
established distribution.

STAKEHOLDER VALUE

OUR CONSUMERS GOVERNMENTS

Millions of adults worldwide choose to AND REGULATORS
enjoy our tobacco and next generation Approaches to legislation vary
products. Meeting their expectations of significantly across geographies. We
quality and understanding their evolving support reasonable regulation of
requirements are vital for the long-term tobacco and nicotine products and look
sustainable growth of our business. to have constructive engagement with
policymakers and regulators.

OUR COLLEAGUES OUR INVESTORS

It is essential we create a supportive, Our investors provide capital to the
safe and rewarding work environment business and monitor management’s
to enable them to deliver our goals and allocation of that capital within
develop their careers. the business.

OUR CUSTOMERS OUR SUPPLIERS

We work closely with distributors, We maintain strong relationships with
wholesalers and retailers to ensure our our tobacco, non-tobacco materials
products are available to adult consumers (NTM) and NGP suppliers to help ensure
in a diverse range of outlets worldwide. sustainable supply and business
They play a crucial role in our continuity, underpinned by fair
business model. contract and payment terms.

SUSTAINABLE SOURCING EFFICIENT MANUFACTURING STRONG RETAIL PARTNERSHIPS

Our leaf purchasing teams work with a Our manufacturing teams employ the We sell our products to our customers.
diverse and complex supply chain from latest production methods, working to Our sales and marketing teams have
smallholder farmers to multinational the highest quality and product built strong partnerships with them
companies to procure high-quality leaf manufacturing standards. Our scale through sales force coverage, retailer
and nicotine for our products. and knowledge are competitive incentivisation and point-of-sale
Our procurement teams add value by strengths, enabling us to supply quality advertising, where appropriate. We
responsibly meeting all our sourcing products at lowest cost. Where understand their needs and help them
needs including leaf, nicotine and appropriate, for example with NGP to navigate the changing regulatory
non-tobacco materials such as devices, we use third-party environment. Our goal is to deliver
papers, filters and packaging, as well as manufacturers with the technical mutually attractive commercial
the power and water we use to run our expertise to deliver high-quality arrangements that support growth and
factories. Their decisions are guided by products. We also use third-party value creation for our retailer,
our ESG commitments. logistics companies to distribute wholesaler and distributor customers.
our products.

www.imperialbrandsplc.com 15
OUR STRATEGY IN ACTION

The choices we make are guided by

our strategy, purpose and vision as
well as our approach to managing our
environmental, social and governance
(ESG) priorities.

Y
N EG
IO AT
CT R
A ST
IN R
OU

16 Imperial Brands | Annual Report and Accounts 2023

OUR PURPOSE Forging a path to a healthier future for moments
of relaxation and pleasure.

OUR VISION To build a strong challenger business powered

by responsibility, focus and choice.

NG VALUE
STRATEGIC DRIVI
PILLARS M OU R BROAD
ER
FRO R TFOLIO
Pages 18-23 PO
T

IO ON
Y

BU ETE
AR USI
RK RIT
OUR SING

ILD D NG
G
B
S
ET

ING
U
PR
FOC

NE

A
MA

SS
P
CRITICAL ENABLERS
CON
THE

T
ED
Pages 24-29

R A IC I E N
THE

NS
IFI
SU
CE

PL

TIO
ME E
BU

PE FF
N T ES

M
A
R

E
T

SI
SI N
R

D
F

N
A
PER
FO R M A NCE

O
S

-B A
SED CULTU RE
AND
C A P A BI LI TIE S

OUR Start with the Consumer Be Authentic, Inclusive to all

BEHAVIOURS Collaborate with Purpose Build our Future
Pages 26-27 Take Accountability with Confidence

HOW WE MEASURE To measure our performance we have 10 financial and four non-financial
OUR PERFORMANCE key performance indicators. We also measure the performance of several
Pages 30-31 other indicators. Financial performance is reported on pages 92 to 99,
and non-financial performance is reported on pages 38 to 81.

OUR APPROACH TO ESG HEALTHIER FUTURES

Pages 38-69

Consumer health Climate change Packaging and waste

POSITIVE CONTRIBUTION
TO SOCIETY

Farmer livelihoods & welfare Sustainable & responsible sourcing

SAFE & INCLUSIVE WORKPLACE

Employee health, Diversity, equity Human

safety & wellbeing & inclusion rights

www.imperialbrandsplc.com 17
OUR STRATEGY IN ACTION continued

STRATEGIC PILLARS

Y
KE RIO N
IT
AR P O
TS R
M R US
OU C
FO

Focused investment in our most material combustible

opportunities has driven stabilisation of our aggregate
market share.

As a challenger business, we need to 1. Increase participation in premium

PRIORITY MARKET SHARES channel our investment and energies segments: In the US, focused
towards the most material opportunities. investment in our flagship brands
12-month share
This means a consistent laser-focus on Winston and Kool has led to
our five largest combustible markets, stabilisation of our share of the
USA which make up around 70% of our premium segment after years
+65bps operating profits. These are the United of decline.
States, Germany, the United Kingdom,
2. Rejuvenate local jewels: In Spain, our
Germany Spain and Australia. Each market has
refresh of Nobel in 2022, including new
attractive features. The US and Germany
-80bps packaging and line extensions,
are both markets where cigarettes
supported the brand gaining 30bps
continue to be relatively affordable,
in FY23. In the UK, the rejuvenation
UK creating opportunity for long-term growth.
of local brands Embassy and Regal
-50bps Together these two markets account for led to share growth of these brands.
around 50% of our operating profit. In 3. Optimise the value segment: It is
Spain the UK and Spain, we enjoy strong important that we are able to offer
market positions supported by iconic consumers high-quality choices
+10bps
local jewel brands, which are proving – whatever their price points. Across
increasingly popular with consumers our markets, we have been investing
Australia seeking distinctive propositions with in more rigorous approaches to
+10bps strong heritage. In Australia, a market portfolio management. In Australia,
heavily restricted by regulation, we the introduction of Lambert & Butler
have opportunities to capitalise on our in the fifth price tier underpinned a
In each of these markets Imperial enjoys a
top-three market position, with established status as the second largest player and refresh of our pricing strategy across
brands and strong customer relationships. optimise value creation. our brand portfolio enabling share
Growth in aggregate market share +10bps
and value growth in FY23.
Each market has tightly defined
priorities in marketing, distribution 4. Maximise the potential of fine cut
and portfolio management, which are tobacco: In Germany, where high
subject to monthly reviews. Our inflation is driving downtrading,
strategy, launched in early 2021, the launch of our Paramount brand
defined six operational levers to grew our share of the sub-value fine
improve combustible performance cut segment.
across the five markets, and three
years on we continue to make progress
on each.

18 Imperial Brands | Annual Report and Accounts 2023

 Priority markets
account for

c.70%
of operating profit

5. Drive performance in under-

penetrated channels: In the US our
larger sales force has enabled us to
increase coverage of smaller
convenience stores and gas stations.
6. Maximise value creation through key
accounts: In the US a focus on joint
business plans with our key accounts
underpinned out-performance of our
cigarette portfolio.

Consistent progress across these six

areas of focus means that, after years of
sharp declines in market share, we
have now reported three years of
stable-to-growing aggregate market
share for our priority markets. At Group
level, we manage these five markets as
a portfolio and therefore in any
reporting period we would not expect
all five to increase share. What matters
is maintaining stable or growing share
in aggregate over the long term.

www.imperialbrandsplc.com 19
 OUR STRATEGY IN ACTION continued

E
U

T
STRATEGIC PILLARS

FO ER R AL

KE
RT AD OU V

O AR
PO O M G

LI M
BR O IN
FR IV
DR

In a similar way to how we have

We have identified a clear focused our investment in our five
role for each of our priority markets, we have brought an
diverse markets. equally rigorous approach to creating
value and identifying future growth
opportunities across our broader
portfolio. We have created new
structures and processes designed to
help the teams in all our markets
maximise their contribution to the
success of the Group.
In particular, over the past year we have
created a new regional structure with
the formation of the AAACE region,
covering Africa, Asia, Australasia and
Central & Eastern Europe. Led by Paola
Pocci this unit is being developed as a
centre of expertise for our medium-
sized and smaller markets, many of
which have attractive margins and the
potential to become platforms for future
growth in combustible tobacco and
next generation products.

20 Imperial Brands | Annual Report and Accounts 2023

In aggregate, some of these market Kuwait. Here the country benefited
clusters, such as Africa which accounts from reopened borders and we
for about 10% of Group tobacco profit, exercised strong pricing discipline and
have the potential to make a significant a more focused go-to-market approach
contribution to overall Group success. to drive revenue growth there.
Within each portfolio, every market is Our global duty free business performed
assigned a specific role and a distinct well during the year as travel plans
set of priorities. returned to pre-pandemic levels in
Under the new regional structure, most locations, apart from Asia where
groups of markets are now being run travelling is expected to recover to
more effectively as portfolios with pre-pandemic levels over time. Our
insights, expertise and services performance was enhanced as we
being pooled. increased our share of market in major
airports, mainly in Europe and the
Greater consumer engagement in each Middle East.
market has guided our investment in
wider consumer choice. Brand In line with our approach as a focused
innovations have supported brand challenger, we have been ready to
equity building and underpin exit markets where we believe we lack
sustainable price increases. the right to win. In 2022 we exited
Japan, a large market for tobacco but
We have also shared best practice one where after a decade of investment,
across our wider markets. Disciplined the business remained small and
go-to-market strategies used to good unprofitable. Also in 2022, following
effect elsewhere in the Group have the invasion of Ukraine we decided
been repeated across our wider to exit Russia and subsequently,
markets, where appropriate. In our we have closed our operations in
African markets strong price increases several central Asian markets,
were combined with revenue growth which had previously been reliant
management measures and tools on our Russian supply chain.
developed together with our Global
Consumer Office team. Focus, discipline and our new
consumer approach and revenue
We use our unique portfolio of local growth management frameworks are
jewel and international brands to meet enabling us to continue to drive value
local consumer preferences. For from our broader market portfolio.
instance, in the Middle East
international brand Davidoff resonates
well with consumers, particularly in

www.imperialbrandsplc.com 21
OUR STRATEGY IN ACTION continued

P
NG
IN G
STRATEGIC PILLARS

LE IN
A D
SC IL
BU

NGP as percentage of Imperial’s overall net revenue in FY23 saw a step-up in

European markets our next generation
Italy 38%
product operations.
For our potentially reduced-harm
Greece 34%
business this has been an important
Austria 26% year, with product innovation and
targeted market launches translating
Portugal 24%
into accelerated revenue growth.
Norway 23% Following the introduction of new
Sweden
propositions in vape, heated tobacco
21%
and oral nicotine, we now have credible
France 9% offerings in all three major categories.

Spain 7% And consumers can now buy our NGP

in more than 20 European markets, as
UK 6% well as the United States.
Czech Republic 6% This operational acceleration has
translated into revenue growth of 26.4%
Finland 6%
globally, and 40.4% in Europe where we
Canaries 5% have been focusing our investment.

Hungary 4%

Poland 3%

FO RMATION IN ACTION
Germany 2% TRANS
Europe 7%

Next generation products (NGP)

2020 2021
NGP reboot: Investment aligned
disciplined market behind new strategy;
exits and under- Pulze 1.1 trials begin in
performing Greece and Czech
investments cut Republic
Vapour Heated tobacco Modern oral

NGP net revenue growth

at constant currency -27% -4%
22 Imperial Brands | Annual Report and Accounts 2023
The step-up during FY23 follows a trialled in selected French cities. This
comprehensive reboot of our approach helped to validate our propositions with MAIN NGP MARKETS
to NGP in line with the strategy we consumers.
launched in January 2021. Vapour
Then over the past year, having
We operate as a challenger both in studied consumer feedback and made
our choice of markets and in the way alterations to devices, flavours and France UK Spain
we innovate. brand propositions, we began to scale
up. Our blu 2.0 device is now available
This means we focus only on markets
in nine markets and our disposable blu
where an NGP category has already
bar is available in 11 markets, while our
become a material proportion of overall Canaries Germany Greece
heated tobacco offerings, which include
nicotine consumption, and where we
an upgraded Pulze 2.0 device, are up
have strong existing routes to market.
and running in seven markets.
In innovation, reflecting our agility and
In oral nicotine, with our Zone X and
our smaller size compared to other Italy Portugal Czech Rep
Skruf brands, we have focused on
global players, we have developed a
selected markets, mainly in the Nordic
partnership approach.
region, where this category is preferred
This is exemplified by our three new by consumers. Here we have been
innovation centres. Our Sense Hubs in innovating with a range of new flavours USA Belgium Ireland
Liverpool and Hamburg bring together and brand propositions. During 2024 we
our own development teams with will launch a range of oral nicotine
third-party partners and our consumers. pouches in the US.
Our Shenzhen site enables us to get
Already, in some European markets
closer to our supply chain partners.
where our combustible presence had Heated tobacco
Our new way of working has halved historically been smaller, NGP has
the time from initial concept to grown to become a significant Czech Italy Greece
market launch and increased our proportion of overall net revenue
capacity to work simultaneously on (see chart on opposite page).
multiple projects.
Our challenge next is to build a larger
This is particularly important because NGP presence in our major European Hungary Portugal Bulgaria
of the need for us to take a multi- markets, where we can leverage the
category approach, reflecting the way strength of our sales forces and broader
different markets are evolving different business infrastructure.
NGP preferences because of local
FY24 will be a year of consolidation as
culture and regulatory environments. Poland
we continue to innovate, build brand
During FY21 and FY22, we first equity and develop the markets we
refocused the business, by withdrawing have already entered.
from several markets, such as heated
The strength of our competitors and the
tobacco in Japan, which did not fit our
accelerating pace of regulatory change Modern oral
challenger criteria.
mean that we cannot expect to make
Then we began a test-and-learn process progress in all markets in all years. Sweden Estonia Norway
introducing new products in pilot
However, as more consumers make
markets, closely studying reaction from
potentially healthier choices, we see a
consumers and customers, before
future where NGP becomes a larger
scaling up.
proportion of nicotine consumption Denmark Austria Iceland
For example, in heated tobacco, we over time and where Imperial secures
introduced the Pulze and iD proposition its fair share of this growing market.
to Greece and the Czech Republic, while
blu 2.0, our latest pod-based vape, was

2022 2023 For more information

on consumer health
blu 2.0 trialled in four Pulze 2.0, blu 2.0 and see pages 44-47.
French cities and blu bar launched in
roll-out of new Zone X multiple markets
flavours

+11% +26%
www.imperialbrandsplc.com 23
OUR STRATEGY IN ACTION continued

BU N E E
NE E O T
CRITICAL ENABLERS

E CE M TH
SI R R A
SS F
TH E SU G
TH N TIN

T
CO T

We’re investing to support

PU

a more rigorous approach

to consumer insight,
innovation and marketing.
A critical enabler for our strategy is to
place the consumer at the centre of the
business. Our refreshed focus on
starting with the consumer is a key
element of our challenger mindset. The
tobacco and nicotine environment has
undergone transformative change
recently. Consumer tastes are
becoming more eclectic – choice
matters more. The pace of innovation is
accelerating and there is now a broad
NGP ecosystem where partnering is
important to success.
We’re building a holistic approach to
understanding our consumers by
8,600 developing a multi-disciplinary
community to design and develop
consumer
products. This means investing in
interviews
capabilities, data and insights to ensure
that the voice of the consumer shapes
and influences our decision-making and
becomes part of the fabric of our culture.
Since the creation in 2021 of our Global
Consumer Office (GCO) we have
successfully attracted talent from a
range of blue-chip consumer goods
firms who are bringing best practice to
the team and combining it with our

24 Imperial Brands | Annual Report and Accounts 2023

 existing deep knowledge in tobacco putting technology to work in the centres in Liverpool, Hamburg and
and local markets. The GCO team, consumer space. Having piloted the Shenzhen, which will accelerate the
collaborating closely with the wider tracker in 2022, we launched the feedback loop by giving us the ability to
business, is supporting our vision by revamped dashboard this year to test and learn from consumers as
listening carefully to smokers and next strengthen our ability to compare brand we innovate.
generation product users, and we are funnels and understand switching and
challenging on behalf of these other brand dynamics. A CHALLENGER APPROACH TO NGP
consumers to provide them with Collaboration between the NGP team and
more choice. UNLOCKING OUR PORTFOLIO our insights, innovation and marketing
In June 2023, we hosted our “Start with We are embracing our role as a teams has enabled us to leverage
the Consumer” capital markets day in challenger, by taking control of our consumer insights from combustibles,
New York to demonstrate our progress portfolio. Imperial is transitioning from and develop a holistic view of consumer
on consumer centricity. The event a business which only prioritised global behaviour and preferences. This financial
provided insight into how we are brands to one that also embraces its year has been a breakout year for NGP
putting the consumer at the centre of portfolio of local jewels, widening launches: we have successfully rolled out
the business with presentations on consumers’ choice with brands our blu 2.0, blu bar and Pulze 2.0 devices.
insights, marketing, innovation and reflecting their national identity or There has been a noticeable increase in
NGP. The full slides and transcript are their global tribe. We are a business the pace of innovation.
available on our website, with a clear portfolio strategy where
Our market roll-out strategy is clearly
www.imperialbrandsplc.com each brand has a clear role and targets
defined. We will only enter markets
a specific consumer and price, tying
where the category has already been
ENHANCING OUR into the new Dimensions framework
created and we have an existing route
CONSUMER INSIGHTS developed by the insights team.
to market. Product development in
We have refreshed our consumer We have reinvested in our brands, vapour and heated tobacco has been
insights and how we analyse new increasing investment in marketing as an complemented by new flavour roll-outs
opportunities now follows a consistent overall percentage of net revenue. This is in our oral nicotine products in Europe.
global approach applied across markets delivering results, as demonstrated by the In June 2023, we completed the
and categories. At the centre of this success of brands such as Nobel in Spain, acquisition of a US oral nicotine
new approach is our investment in one together with Winston and Kool in the US. product range from TJP Labs, and we
of Imperial’s largest ever pieces of are excited about launching our new
consumer research. A NEW APPROACH TO INNOVATION brand, Zone, in 2024.

We used an approach called demand Our innovation capabilities have been Looking ahead, we will optimise the
spaces, a type of analysis which is well reoriented to provide consistent and organisational design to make sure the
established in other consumer sectors coherent consumer experiences across consumer centre of excellence is
but is still quite new in tobacco and combustibles and NGP. A new and working in tandem with the markets to
nicotine. This method, which internally differentiated approach to innovation continue to deliver maximum benefit
we call “Dimensions”, breaks down the has been developed. It is one that is for the business and our consumers.
lives of our consumers into individual consumer led and involves close
moments when they enjoy our collaboration across functions. We are
products, for example, morning or now delivering NGP in a more
evening, in the home or out and about, sustainable way, and at pace. In
alone or with friends. We interviewed improving our agility, we can respond to
“The Global Consumer
8,600 consumers across eight countries, the needs of consumers more quickly.
collecting in-depth information on
Office is supporting
We have created and embraced a
15,800 different consumption our vision by listening
partner ecosystem, and these partners
occasions. By analysing these different are working with us on our innovation carefully to smokers
moments of consumption we are better agenda across flavour, device, digital, and next generation
able to differentiate our offerings to the sensory and packaging. We are building product users.”
same consumer. deep partnerships that allow us to be
In addition, we have created new data unencumbered by ownership of an
and analytics tools and made these entire value chain in a sector where
available across the organisation. technologies and products are evolving
This is a clear example of how we are quickly. We are operating innovation

October 2022 First half of 2023 Throughout 2023

Launch of Nobel First launches of blu 2.0, Increased flavour
Super Slims in Spain blu bar and Pulze 2.0 roll-out across the
OND portfolio

ON
A CTI
N IN
TIO
MA
OR March 2023
NSF February 2023
TRA Davidoff Double Q4 2023
New JPS campaign Crushball launched Premium non-menthol variant
launched in Germany in the Middle East of Kool launched in the US

www.imperialbrandsplc.com 25
 OUR STRATEGY IN ACTION continued

E NG
CRITICAL ENABLERS

UR MI
LT R
O
CU F
R NS
OU A
TR

During 2022, our focus was on designed to help each of them become
supporting colleagues to become better coaches and unlock the full
familiar with these behaviours. potential of their teams. Examples of
Every employee received training in our people’s response to the programme
understanding how best to live our are on the opposite page.
behaviours in their working lives, with
As part of our broader culture change
Over the past three years, as part of leaders going through an immersive
agenda, during 2021 and 2022, we built
Imperial’s transformation into a strong five-day programme, which we
the foundations of a new, more rigorous
challenger business, we have been called Connections.
approach to diversity, equity and
developing a performance culture We also rebranded our global office and inclusion (DEI). This included the
which is more collaborative, factory estate, and stepped up our establishment of Employee Resource
accountable and inclusive. internal communications with new Groups covering gender, ethnicity,
This has been a highly structured, global, regional and functional events disability and LGBTQ+, and the
multi-year programme and, while we enabling broad-ranging dialogues and recruitment of a new central team.
know there is considerable work still the sharing of best practice. During 2023, we agreed a set of
to do, we are pleased with our progress long-term DEI ambitions. These are
Over the past year, we have continued
so far. covered in more detail on pages 67-69.
to develop this new culture. Our
The process of cultural change began in behaviours are now embedded in the The positive impact of these activities
2021 when, in support of our newly way we manage performance, with is evidenced in our most recent global
launched strategy, we unveiled a new leaders paid bonuses based not just on employee experience survey, where we
purpose, vision and five behaviours. what they achieve but also how they saw a 91% response rate and
deliver those achievements. maintained our above-benchmark
These behaviours, which have been the engagement score of 74%. Among our
foundation of all subsequent activity, Also during 2023, we have made a
Global Business Leaders – roughly our
are: Start with the Consumer; significant investment in the coaching
top 500 people – we saw engagement
Collaborate with Purpose; Take and development skills of our senior
improve by 10 percentage points to 84%.
Accountability with Confidence; managers. Three hundred leaders,
Be Authentic and Inclusive to all; including the full Executive Leadership We will continue to embed our new
and Build our Future. Team, have completed a bespoke culture through rigorous performance
course, called Connected Leadership, management and further coaching to
support our leaders.

TRANSF
ORMATION IN ACTION

Jan 2021 Oct 2021 Nov 2021 Feb 2022

Strategy launch: New purpose, vision & Immersive Connections Launch of Connected
Culture is identified as behaviours unveiled at sessions start. All colleagues Performance. New
a key enabler for first-ever all-colleague receive training in how to performance management
improved performance conference bring to life our behaviours in process embeds behaviours
their daily working lives into objective setting
and bonuses

26 Imperial Brands | Annual Report and Accounts 2023

 2023 employee
engagement

74%

WHAT LEADERS ARE SAYING AND WHAT TEAMS ARE SAYING

ABOUT OUR CONNECTED ABOUT THEIR LEADERS…
LEADERSHIP PROGRAMME…
“My leader is making me
“In 15 years here, this is the first think differently, when I
time ever I have seen such make a commitment, it feels
investment from the more personal.”
leadership in us.”
“I can see a positive 360 change
“This is the only time learning in leading – asking more
had made me a better leader questions, making us think
on a day-to-day basis.” more, solve our own problems
“I’ve had more difficult and not tell us.”
conversations now re people’s “My leader is pausing and
performance than ever before listening more – I noticed it.”
– caring and challenging.”

Nov 2022 Dec 2022 Jan 2023 Oct 2023

Long-term diversity, equity Second all-employee Connected Leadership Record 91% response
and inclusion ambitions conference highlights how coaching courses begin. rate for global employee
approved by the Board. This colleagues have adopted During 2023, 300 leaders experience survey. We
is followed by the launch of new behaviours. devoted seven working maintain benchmark-
the “I Belong” campaign to Contributions from days to building skills in beating 74%
build awareness and buy-in markets across all regions developing and supporting engagement score
for self-declaration data show how culture change their teams to improve
gathering (see pages 67-69 is translating into performance and
for more details) operational progress unlock potential

www.imperialbrandsplc.com 27
 OUR STRATEGY IN ACTION continued

T
CRITICAL ENABLERS

NS N
AT FI D
IO IE
ER EF FIE
C
I
OP D L
AN MP
SI

We are improving our global significant structural changes, the

processes and digital introduction of new capabilities, and
investment in our digital backbone.
strategies.
In addition to restructuring our regions
Imperial emerged as the world’s fourth in FY21 to allow a greater focus on our
largest tobacco business through bold largest market, the United States, this
acquisitions over the past two decades. year we created a new region to include
These transactions have given the Africa, Asia, Australasia and Central &
Company significant positions in some Eastern Europe (AAACE).
of the world’s most attractive markets
and a strong stable of local and This change reflects our more rigorous
international brands. approach to how we manage our
broader portfolio of small and medium-
Our strategy, launched in 2021, sized markets, some of which have the
identified a need to better integrate this potential to become engines of future
portfolio of businesses to create growth for the Group. We have also
simpler, more efficient operations, rationalised the number of clusters and
enabling us to better capture future defined clearer operating models for
opportunities. Three years on, our our large, medium-sized and smaller
transformation is well underway with markets. These changes are supported
by a rigorous monthly performance
review process.
Our drive to create value from our
broader markets is covered in more
detail on pages 20-21.

RMATION IN ACTIO
TRANSFO N

2021
New performance
management approach
introduced
Market clusters reduced
from 13 to 10

28 Imperial Brands | Annual Report and Accounts 2023

In our two largest markets, the United In our business partnering functions – make us a more connected organisation
States and Germany, we have invested including Finance, Procurement, IT by replacing local legacy systems and
in our sales teams, and, where and People & Culture – we created provide a new technology backbone. This
applicable, have supported them with Global Business Services (GBS) to deliver is a once-in-a-generation opportunity to
training and new sales technology to more strategic support to our sales, enhance the speed, integrity and
support faster decision-making. In marketing and manufacturing teams, availability of business information,
order to derisk our investments, we are and to provide the flexibility to adapt improving our decision making and
deliberately using technologies which and respond to changes in the market. agility. Alongside this, the programme
have already been proven by our peers In creating GBS, we streamlined our will simplify and standardise core
in the consumer goods sector. global processes to ensure that our processes across our finance, supply
resources are better allocated towards chain and commercial operations.
Our focus on our top five priority
the customer and consumer-facing A strong programme team has been
markets is covered in more detail on
pages 18-19.
areas of the business – with a particular mobilised, combining external expertise
focus on our five priority markets. in similar transformations and
We have been introducing new ways of Across this year, we have seen over 300 experience from within Imperial, together
working to ensure strong collaboration roles move to the GBS, with the opening with best-in-class delivery partners and
between our central functions and of a new office in Krakow, Poland, for specialists that can help us accelerate the
market teams, and to develop high- specialists in areas including Finance, delivery. During this financial year we
quality business partnering. A major IT, Data and Procurement. have made significant progress, having
focus this year has been embedding our completed the global design phase, and
Our Global Supply Chain has also been
new Global Consumer Office to work we are now implementing the model in
transforming. Here, the focus has been
closely with our regions, supporting the first market and factory, which are
on building a fully integrated supply
consumer insight, revenue growth set to go live in the second half of the
chain with centralised planning,
management, and brand and portfolio next financial year.
resourcing and demand forecasting
management. An example of how we capabilities based in our Warsaw hub. The initial change programme, outlined
have achieved this is the creation of our This team, collaborating closely with our in our 2021 strategy, is now complete.
central business intelligence function factories and people in the markets, However, the work to develop a simpler
focusing on market and business offers a range of skill sets, experiences and more efficient organisation
performance. The architecture of this and backgrounds – from packaging continues, as we seek to create a
function was co-created by both central solutions to end-to-end planning. working environment where our people
and market teams in a collaborative The new hub is designed as a space for can be more fulfilled and effective,
process with the resulting new insights more agile decision-making and enabling improved operational and
centre of expertise enabling local professional excellence. financial outcomes.
execution with central support.
These changes are all being supported
Our drive towards greater consumer
centricity is covered in more detail
by significant digital improvements.
on pages 24-25. Our investment in an all-new Enterprise
Resource Planning (ERP) system will

2022 2023
Changes to business Embedding consumer
support functions capabilities
Investment in new ERP 300 roles moved to new
system announced Global Business Services unit

www.imperialbrandsplc.com 29
 KPIs

IN E
We use key performance indicators to assess

RM R
G
the progress we are making in delivering our

O EA
purpose, vision and strategy.
RF W
FINANCIAL KPIs1
PE W

Aggregate priority market NGP net revenue (£m) R

share vs prior year (%) R
HO

23 10bps 23 £265m

22 35bps 22 £208m

21 -2bps 21 £188m

Performance Performance
Our “focus on our priority markets” has NGP revenue grew by 26.4% on a constant
enabled us to stabilise the market share currency basis in the year. This growth in our
loss we experienced for a number of years NGP revenue reflects our strategic priority to
and led to the second year of an increase in “build a targeted NGP business” and the step
aggregate priority market share vs prior year. up in investment during the period. This
Gains in the US, Spain and Australia offset metric is used as a bonus performance
declines in the UK and Germany. criterion for Executive Directors.

Tobacco & NGP Tobacco & NGP adjusted Adjusted earnings

net revenue (£bn) operating margin (%) per share (pence) R

23 £8.0bn 23 44.7% 23 278.8p

22 £7.7bn* 22 44.4%* 22 264.8p*

21 £7.6bn 21 43.5% 21 246.5p

Performance Performance Performance

Tobacco & NGP net revenue grew by 3.6% at Margins improved 30 basis points at actual Adjusted earnings per share increased 5.3% at
actual exchange rates and increased by 1.4% rates and 70 basis points at constant actual exchange rates and increased 4.3% on
on a constant currency basis excluding currency excluding Russia from the prior a constant currency basis excluding Russia
Russia from the prior year. Including Russia, year. Including Russia, margins grew 90 in the prior year. Including Russia, adjusted
tobacco & NGP net revenue grew by 0.7% at basis points at constant currency. The earnings per share grew 4.2% on a constant
constant currency. Tobacco net revenue was improvement is a result of the operational currency basis. Reported earnings per share
up 0.7% at constant currency excluding gearing impact of higher sales on lower grew 52.1%. This movement is explained in
Russia, reflecting progress made in the two volumes and the benefit of cost savings from the Group Financial Review.
combustible strategic priorities of: “focus on our 2021 strategic restructuring programme. * Excluding Russia.
our priority markets” and “driving value from * Excluding Russia.
our broader portfolio”.
* Excluding Russia.

Dividend per share (pence) Adjusted operating cash Adjusted net debt to EBITDA
conversion rate (%) R (multiple) R

23 146.82p 23 92% 23 1.9x

22 141.17p 22 102% 22 2.0x

21 139.08p 21 83% 21 2.2x

Performance Performance Performance

The dividend grew 4.0% reflecting 2023 adjusting cash conversion of 92% was Adjusted net debt to EBITDA reduced 0.1x to
our progressive dividend policy and in line lower than the prior year due to working 1.9x in FY23, close to our capital allocation
with our capital allocation policy. capital outflow. target of 2.0x to 2.5x. Adjusted net debt
reduced by £0.1 billion, after £2.3 billion of
returns to shareholders via dividend and
share buyback. EBITDA increased year-on-
year, reflecting the growth in adjusted
operating profit during the financial year.
1. Definitions for financial KPIs can be found in Supplementary Information.

30 Imperial Brands | Annual Report and Accounts 2023

 NON-FINANCIAL KPIs1
More non-financial performance indicators can be found in the ESG Review
on pages 38, 48, 52 and 64 and in our Reporting Criteria document available on
our website.

Return on invested capital Energy consumption (GWh) R Absolute Scope 1 and 2 market-based
(%) R C02 equivalent emissions (tonnes) R

23 18.5% 23 650 23 81,089 18,896

22 17.7% 22 712 22 91,007 84,759

21 16.5% 17 875 17 114,270 173,902

Performance Performance Scope 1 Scope 2 market-based

Return on invested capital improved in We set a target to reduce our absolute energy Total value is total Scope 1 and Scope
the year by 80bps to 18.5% driven by an consumption by 25% by 2030 versus a 2017 2 market-based absolute CO2e emissions
increase in adjusted operating profit that baseline. We are pleased to report that in
more than offset the increase in average FY23 we exceeded this target with a 27% Performance
annual capital. reduction compared to the baseline. We will We have seen a 65% decrease in our total
now set a new target for energy reduction Scope 1 and Scope 2 market-based emissions
moving forward. from our 2017 baseline year. This has been
driven by our increased use of electricity
Our 2023 relative energy consumption is purchased from traceable renewable sources.
81,128 KWh/£m net revenue. Our target is to be at Net Zero in our direct
operations by 2030. We have also set a Scope
3 target to be Net Zero by 2040.

Total shareholder return R Waste (tonnes) Lost time accident frequency rate
(per 200,000 hours)
215
195 23 35,744 23 0.30

175
22 41,969 22 0.24
155
135 17 49,141 19 0.40
115
95 Performance Performance
75 Our target is to reduce waste by 20% by 2030. We have seen a 25% increase in our lost time
2020 2021 2022 2023 We have exceeded this target with a 27% accident rate compared to last year. The
— Imperial Brands total return reduction in waste compared to the 2017 number of LTAs stayed the same as last year
baseline year. We will set a new target for while the number of hours worked has
Performance waste reduction moving forward. reduced, leading to the 25% increase in
We have delivered total shareholder returns LTA rate.
of 56% over the prior three-year period. During FY23 we continued to increase the
Delivery in line with our guidance supports use of leading indicators to better manage
growing investor confidence in our risk throughout our operations..
management team’s ability to implement
our strategy.

To monitor the progress of our cultural change programme, we conduct an annual

employee experience survey. In FY23, our employee engagement score was 74%, the
same level as the prior year and above the global benchmark. Participation in the
DRIVI
NG VALUE survey was 91%. Additionally, we have developed an internal bespoke index with
FRO
M OUR BROADER
PORTFOLIO
T
which to monitor the outcome of our leadership talent development programmes.
IO ON

Y
BU ETE
AR USI
RK RIT
OUR SING

ILD D NG
G
B
S
ET

ING
U
PR
FOC

NE

A
MA

SS
P
CON
THE

T
ED
R A IC I E N
THE

NS
IFI
SU
CE

PL

TIO
ME E

1. Definitions for non-financial KPIs can be found in the ESG Review on pages 38 to 69 and in the Reporting
BU

PE EFF
N T ES

A
R

T
SI
SI N
R

O
D

F
Criteria document available on our https://www.imperialbrandsplc.com/healthier-futures/our-performance.
N

A
PER
FO R M A NCE
O
S

BAS
AND
ED CULTURE 2. 2023 non-financial data has been independently assured by Ernst & Young LLP (EY) under the limited
C A P A BI LI TIE S
assurance requirements of the ISAE 3000 standard. EY’s Assurance Opinion is available on our website.
Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
See https://www.imperialbrandsplc.com/healthier-futures/our-performance for more information.
3. Our 2023 environmental data follows the reporting period Q4 financial year 2022 to Q3 financial year 2023.
R KPIs used as bonus and LTIP performance This is to allow for data collection, validation and external assurance. Our reporting scope and definitions are
criteria for Executive Directors. detailed in the Reporting Criteria document published on our website.
See Remuneration Report on pages 4. Our health and safety data is for the full 2023 financial year. Our reporting scope and definitions are detailed in
142 to 163 for more information the Reporting Criteria document published on our website.

www.imperialbrandsplc.com 31
 STAKEHOLDER ENGAGEMENT

RS UR
Building and maintaining
trust with our stakeholders

DE O
underpins the success and
reputation of Imperial Brands.

OL ITH
Through stakeholder

G collaboration we aim to
AK ST IN develop the Company,
minimise our environmental
EH W impact, make a positive social
ST U D

contribution and uphold high

TR IL

standards of governance.
BU

Further information on how the

Board has considered stakeholders
when making key decisions is given
on the following pages and also in
the Governance Report on pages 126
to 128.

CONSUMERS
Our strategy starts with our • Our CEO and CFO also met separately • Our focus groups have shown us
consumers. Millions of adults with consumers during the year. that listening to these needs and
worldwide choose to enjoy our • A tour of our Langenhagen factory responding to them allows us to
during the Board visit to Germany remain relevant and underpins
tobacco and next generation
provided Board members with further consumer loyalty to brands.
products. The better we
insight and understanding of the full
understand the preferences of life-cycle of the products our How we monitor the effectiveness of
our consumers, the better we consumers enjoy. our engagement
are able to serve them. This • We hold regular consumer focus
helps us grow our business, How we engage with this stakeholder groups to assess the impact of our
• Consumer roundtables and focus brand refreshes and marketing
and it helps us identify and campaigns on consumers.
groups are held to understand
capitalise on opportunities as consumers’ specific requirements • We believe market share changes
a challenger business. and preferences. across products, channels and
• Feedback from these focus groups is geographies reflect the effectiveness
How the Board considers used in our decision-making for of our engagement with consumers.
this stakeholder investments in brand refreshes • Regular data-led updates from the
• The Board participated in a number and marketing. Global Consumer Office provide the
of consumer immersion events over • The Global Consumer Office, headed Executive with evidence and an
the course of the year, in Germany by the Chief Consumer Officer, leads opportunity to challenge
and Morocco. These afforded Board consumer-listening initiatives across assumptions when making decisions
members the opportunity to get the Group. related to our product portfolio.
closer to the consumer by hearing
directly from them about their What matters to this stakeholder
behaviours, likes and dislikes. Board • Our focus groups informed us that
members were also able to discuss adult consumers want a choice of
matters important to both brands and quality products at the
combustible and nicotine product right price points.
consumers, including the dynamic • Feedback has also shown us that
between local and international consumer preferences such as
brands. The Board also heard about cigarette pack formats, flavours and
the different buying habits of filters, as well as the choice of
consumers and the impact of the potentially less harmful NGP,
rising cost of living. evolve over time.

32 Imperial Brands | Annual Report and Accounts 2023

This section of the Annual Report
provides insight into how stakeholder
engagement is taken into consideration
by the Board and the Executive
Leadership Team (ELT) in their
decision-making processes. It goes on
to describe how we monitor the
effectiveness of our engagement.
The Board’s decision-making process
is brought to life in our Section 172(1)
statement on pages 126 to 128 which
is incorporated into this Strategic
Report by reference and references
specific recent examples.

COLLEAGUES
Our colleagues are Imperial’s • The Board receives regular feedback What matters to this stakeholder
most important asset and are from our employees through updates • Our colleagues want to see continued
at the People and Governance progress on equality and diversity
critical to the success of the
Committee. These include the results and to feel included. They want to see
business. It is essential we that issues of authenticity and
of our employee experience (“Have
create a supportive, safe and Your Say”) surveys, which prove inclusion around gender, ethnicity,
rewarding work environment to invaluable in helping to understand LGBTQ+ and disability are taken
enable them to deliver our goals what works well and what we may seriously throughout the Company.
and develop their careers. need to change, as well as pulse • They want to see that responsibility
We believe that a diverse and surveys, which gather the views of and accountability are underpinned
engaged workforce is imperative colleagues on particular topics, for by a fair assessment of contribution.
example the progress of our • Colleagues want to see senior
for business success.
“Connections” workshops and the management lead the new
work of our employee resource behaviours by example to create an
How the Board considers groups (ERGs). environment where innovative
this stakeholder approaches are encouraged and we
• Collective responsibility for workforce How we engage with this stakeholder learn from our failures.
engagement has been embedded into • “Connections”, our purpose, vision and
• Health, safety and wellbeing continue
the Board’s governance framework in behaviours programme, continued,
to be a priority in the workplace (see
the remit of the People and ensuring all new and existing
pages 64 to 66).
Governance Committee. colleagues experience training to
• The Board held three “Meet the Board” enhance their understanding of these How we monitor the effectiveness of
events with groups of colleagues behaviours, and what they mean for our engagement
during the year. These events gave them in their role. • We review the results of our annual
the Board the opportunity to hear • We continued to hold CEO and workforce engagement “Have Your
colleagues’ perspectives as part of leadership town hall meetings, Say” survey.
our overall engagement strategy. in person and virtually, providing • We review the results of our interim
This engagement allows the Board to opportunities for colleagues to give pulse surveys.
incorporate colleagues’ views into its feedback directly to the ELT.
• The ESG Committee, chaired by the
decision making. • Feedback from our four ERGs, CEO, receives feedback from the
• The Board also engages with a broad focusing on gender, ethnicity, ERGs. In addition, as each ERG is
cross-section of employees by way of LGBTQ+ and disability, has helped us sponsored by a member of the ELT
dinners with teams, informal drinks to understand how better to co-create and co-chaired by members of senior
and site visits, including a tour of our strategies and policies for including management, feedback from
Langenhagen factory during the under-represented groups. colleagues on how the Company is
Board visit to Germany. • We use various channels including progressing in relation to inclusivity
our intranet and IB News to ensure concerns is given to the ELT via
regular internal communication these sponsors.
with colleagues. • Feedback is obtained during the
Board listening sessions.
• We collate feedback from exit
interviews to find out why employees
choose to leave us.

www.imperialbrandsplc.com 33
STAKEHOLDER ENGAGEMENT continued

CUSTOMERS
Where it is difficult to engage How we engage with this stakeholder
• Support and guidance through
directly with consumers, • Our market cluster leadership teams
industry changes, e.g. initiatives to
engage with our customers to
engaging with retailers provides help customers manage their
understand how to improve the
useful insights into our effectiveness of their sales forces.
business through regulatory change
consumers’ behaviour and such as display bans or
• We work closely with our distributors plain packaging.
preferences. This helps us grow to understand how we can best
• Trade programmes that reward
our business, even where there manage our relationships, and have a
customer business growth.
are regulatory headwinds, and dedicated team to support distributor
identify opportunities to be a sales and build best practice in How we monitor the effectiveness of
successful challenger. We work distributor management across our engagement
the Company. • We monitor our performance relative
closely with distributors,
• We use key account management to other FMCG companies through
wholesalers and retailers to
practices to engage with our largest the Advantage Survey and other
ensure our products are customers to better understand benchmarking surveys. Feedback
available to adult consumers in a their needs and to create strong from these surveys is reviewed and
diverse range of outlets. These commercial partnerships to help our taken into account in our engagement
stakeholders play a crucial role businesses create value together. plans and in setting priorities.
in our business model. • We hold management roundtable
What matters to this stakeholder
events with regional customers to
• A diverse portfolio of quality products
How the Board considers hear first-hand how Imperial is
that appeal to consumers.
this stakeholder performing relative to peers.
• Consistent communication on the
• The Board has participated in store • A quarterly pulse report provides
launch pipeline and investment
visits in Germany and Morocco over performance feedback which is used
behind relevant brands in their region.
the course of the year. These visits to highlight areas for improvement.
• Ease of ordering and a strong supply
provide the opportunity to talk • We have KPIs to monitor progress
chain to maintain high levels of
directly to retailers. against operational initiatives.
on-shelf availability.
• Our CEO meets with customers
• Support to protect against illicit trade
regularly throughout the year.
and underage sales.

GOVERNMENTS AND REGULATORS

Approaches to the regulation of regulatory risks and our corporate What matters to this stakeholder
tobacco and nicotine vary affairs strategy to manage these risks. • Tobacco excise revenues and public
health spending on smoking-related
significantly across geographies. • Management provides updates to the
Board as part of the regional business health issues.
We support reasonable regulation
reviews, including, where relevant, any • Assessment of reduced harm
of tobacco and nicotine products from NGP.
updates on the regulatory landscape.
and look to have constructive • Compliance with local laws
engagement with policy makers How we engage with this stakeholder and regulations.
and regulators. • While the Board welcomes
• Confidence that our business is
constructive engagement with
operating legally and responsibly in
regulators, management is primarily
How the Board considers each government or regulator’s region.
responsible for understanding and
this stakeholder • Collaboration with law enforcement
ensuring compliance with applicable
• Our corporate strategy includes a agencies countering illicit trade and
laws and regulations.
commitment to building an NGP preventing youth access to tobacco
portfolio of potentially reduced • We monitor changing regulations in
and nicotine products.
harm products. our markets and assess the impact on
our existing portfolio and innovations. How we monitor the effectiveness of
• The Board approves our Modern
Slavery Statement annually. • We assess regulatory impact on our engagement
product design and marketing support • We monitor the approval of
• Regular updates on regulatory
around brand launches. the listing of our products in
matters are provided to the Board.
• This monitoring allows the Board various markets.
• Our Chief Legal & Corporate Affairs
to take relevant legislation and • We review proposed new regulation
Officer presents to the Board
regulation into account when making and the Company’s ability to be
regularly on the Group’s key
its decisions. involved in the development of
reasonable and rational regulation.
• We monitor feedback from regulators.

34 Imperial Brands | Annual Report and Accounts 2023

 INVESTORS
Our investors provide capital to How we engage with this stakeholder How we monitor the effectiveness of
the business and monitor • Our Annual and Interim results our engagement
presentations inform investors how • Our CEO, CFO and Chair engage
management’s allocation of that
the business is performing. with investors to gather feedback
capital within the business. on how we are performing against
• We maintain a programme of active
dialogue with our key financial our strategy.
How the Board considers stakeholders, including institutional • Topics discussed during the year
this stakeholder shareholders, potential investors, included development of our NGP
• Our CEO, CFO and Chair have regular holders of our bonds and sell-side business, sustainability of the
meetings with our major investors to research analysts. tobacco value model, capital
update them on our performance, • Our CEO, CFO and senior allocation considerations and ESG.
hear their views directly and consult management present at various • The Board receives an investor
with them. conferences throughout the year, relations update at every Board
• The Board receives a report at every including the Consumer Analyst meeting, which sets out the
meeting on investor engagement, as Group of New York (CAGNY) latest investor views, share
well as a feedback report following Conference in February 2023. register movements and recent
all investor events. • Our CEO led our “Start with the market developments.
• Investor perception is assessed Consumer” capital markets event in • Investor perception is assessed on an
on an ongoing basis through New York in June 2023, showcasing ongoing basis through feedback on
feedback on meetings, events and how we have built our consumer- meetings, our events and our
conference presentations. facing capabilities and how they are conference presentations. When
• Our AGM provides an opportunity for supporting our operational and appropriate, this feedback is shared
the Board to meet with investors. strategic delivery. with the Board in the IR Board Report.
• Sue Clark, Chair of our Remuneration
Committee, engaged with investors What matters to this stakeholder
in July 2023 and subsequently about • Confidence in the Board that it has
our new Remuneration Policy, which appropriate oversight of the
is to be approved at our forthcoming. management team.
AGM. Further details of the Policy • Trust in the management team
can be found in the Directors’ to have a strategy and operational
Remuneration Report on pages plan to optimise value creation and
142 to 163. ensure the long-term sustainability
of returns, and to deliver on
that strategy.
• The setting of realistic expectations
combined with transparent reporting
of performance against KPIs, both
financial and non-financial,
including ESG metrics.
• Disciplined capital allocation.

www.imperialbrandsplc.com 35
STAKEHOLDER ENGAGEMENT continued

SUPPLIERS
We maintain strong How the Board considers What matters to this stakeholder
relationships with our tobacco, this stakeholder • Our support with Leaf Partnership
• The Board approves our Modern Projects focusing on having an
non-tobacco materials (NTM)
Slavery Statement annually. impact on important issues in the
and NGP suppliers to help countries from which we source our
• Suppliers within our supply chain are
ensure sustainable supply and included as part of the Board’s ESG tobacco, including Malawi,
business continuity, ensuring considerations. Mozambique, Indonesia, India, the
fair contract and payment • Factory and site visits help the Board Philippines, Dominican Republic,
terms. We are conscious of the understand the complexities of our Honduras and Turkey.
key dependencies in our supplier global supply chain. • We set and abide by fair contract and
relationships, especially those payment terms.
How we engage with this stakeholder
partners we are relying on to • Our Supplier Qualification How we monitor the effectiveness of
support delivery against our Programme is a screening process our engagement
strategic objectives. We are for all new NTM and NGP suppliers, • We operate a vendor rating system
working to increase the requiring completion of a self- for our key NTM suppliers, and carry
resilience of these relationships, assessment on business conduct, out annual business reviews.
including by building out our environmental management, • The STP supports the sustainable
business continuity capability at and labour practices such as supply of quality tobacco leaf. It is a
discrimination, child and forced framework to improve labour
Group level, and deepening our labour, freedom of association, standards, raise standards of living
understanding of critical remuneration, working hours, and and address environmental
dependencies. health and safety. challenges by sharing good
Working in partnership with our • All our leaf suppliers are expected to agricultural practices.
suppliers ensures we have the participate in the Sustainable • The annual STP assessment is part of
right resources in place to Tobacco Programme (STP). our formal supplier relationship
respond with agility to global • Through our Leaf Partnership management. It forms part of the
challenges, and supports Projects we support communities in suppliers’ ratings that we determine
tobacco-growing countries identified along with quality, cost and value.
our growth.
as having the most need. • We carry out online engagement and
• Our Supplier Code of Conduct helps performance reviews.
ensure we engage suppliers that offer
resilience in our supply chain and
security in our technology platforms.

36 Imperial Brands | Annual Report and Accounts 2023

NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT

NON-FINANCIAL AND The following table constitutes our

Non-Financial and Sustainability
SUSTAINABILITY Information Statement in compliance with
Sections 414CA and 414CB of the Companies
INFORMATION Act 2006. The information listed is
incorporated by cross-reference. Additional
STATEMENT Non-Financial Information is also available
on our website.

Reporting Policies Further information Page

requirement

Environmental • Environmental Policy Environmental targets 31, 48, 52, 61, 75, 78, 80
matters* • Filter Policy International management 49, 70 to 81
• Sustainable Tobacco Programme systems
• Biodiversity Statement
Climate and energy 31, 48 to 51, 70 to 81

Reducing waste 52 to 54

Sustainable tobacco supply 55 to 61

Employees* • Code of Conduct Diverse and engaged workforce 67 to 69

• Group-wide Employment Policy Workplace health and safety 31, 64 to 66
• Fairness at Work Policy
International management 54, 68
• Speaking Up Policy
systems
• Occupational Health, Safety and
Environmental Policy and framework Lost time accident (LTA) rate 31

Respect for • Human Rights Policy Diverse and engaged workforce 67 to 69

human rights* • Code of Conduct Workplace health and safety 31, 64 to 66
• Supplier Code of Conduct
Human rights 62 to 63
• Health Protection and
Wellbeing Policy International management 63
• Fairness at Work Policy systems
• Speaking Up policy
Social matters* • International Marketing Standards Human rights 62 to 63
• Policy on taxation Youth access prevention 47
• Community Contributions and
Volunteering Policy Farmer livelihoods and welfare 55 to 58

• Information Security Policy Charitable and political donations 164

Anti-corruption • Code of Conduct How we manage risk 100
and anti-bribery* • Fraud Risk Management Policy Governance, risk management 100 to 111, 140
• Speaking Up Policy and internal control
• Supplier Code of Conduct
Description of Principal risks and uncertainties 102 to 109
principal risks and
impact of Governance, risk management
business activity and internal control 100 to 111, 140

Description of the Business model - 14 to 15

business model Our Distinct Approach

Non-financial key Key performance indicators 30 to 31

performance
indicators Sustainability
performance indicators 40, 50, 51, 54

Climate-related TCFD Report 70

Financial Disclosures

* Further information on our policies, due diligence and outcomes in these areas is contained throughout the Strategic Report..

www.imperialbrandsplc.com 37
 ESG REVIEW

S
ES
GR
O
PR
D
LI
SO

Tony Dunnage
Global ESG Director

We are now into the third This allowed us to define which issues
Purpose: Forging a path to a were most material to our business.
healthier future for moments of
year of our five-year strategy In addition to desk research and
relaxation and pleasure. to transform Imperial into interviews, using an objective and
a business better able to consistent methodology on large
Vision: To build a strong
amounts of information makes the
challenger business powered by deliver sustainable growth data-driven insights fully traceable and
responsibility, focus and choice.
year in, year out. better suited for auditing purposes,
including reasonable assurance.
Our commitment to environmental,
social and governance (ESG) issues is Results from the double materiality
OUR ESG HIGHLIGHTS integral to our business strategy and assessment show that consumer health
underpins our purpose and vision. remains as our top priority as we
Reduced our Scope 1 and Our purpose expresses our ambition to continue to strengthen our next
Scope 2 market-based build a “healthier future”, and this generation products (NGP) to make a
emissions by applies not only to our consumers but more meaningful contribution to harm
also to our communities and planet. reduction by offering adult smokers a

65%
since 2017
Our vision states that our pursuit of
commercial success will be “powered
range of potentially less harmful
products. The assessment confirmed
by responsibility”. our eight focus areas, as detailed on
page 40, remain priorities. We will
Double materiality assessment check the validity of our material ESG
Reduced absolute waste across
In 2023 we continued to build on the priorities on an annual basis.
our operations by
strong foundations of our ESG strategy

27%
since 2017
established in 2022. Following on
from the materiality assessment we
conducted in 2021 where we considered
ESG REPORTING FRAMEWORK
Our Reporting Criteria document
provides further information on
the views of consumers, customers,
ESG-related KPIs.
employees, investors and shareholders
Scored to establish our priority ESG issues, in We report ESG-related information in

92%
on 2022 ShareAction Workforce
2023 we conducted our first double
materiality assessment.
Double materiality identifies both how
accordance with the core options of the
Global Reporting Initiative (GRI)
Standards and against the Sustainable
Disclosure Initiative Accounting Standards Board (SASB)
a company's operations impact people
framework for tobacco. Details can be
and the environment and how
found in our 2023 GRI and SASB Index.
sustainability matters impact the
company itself. We used an Artificial To note: Logista remains out of scope
Intelligence tool through an external for all Imperial ESG-related KPIs.
provider, Datamaran, to process
However, the steps Logista is taking
thousands of data points from to address climate change impacts on
corporate reports, mandatory and its business are detailed in our TCFD
voluntary regulations, and online news. disclosures on page 70.

38 Imperial Brands | Annual Report and Accounts 2023

We have grouped our most material ESG: People and Planet “As we enter the third year of our
ESG issues into three broad categories: Performance Summary 2023
ESG ambition, we remain very
Healthier Futures, Positive Contribution
to Society, and Safe & Inclusive
Further information on our People encouraged by the progress
and Planet agenda is available on our
Workplace. Each of our eight focus website in our 2023 ESG: People and
made to date and we are
areas is also aligned to at least one of Planet Performance Summary. determined to maintain this level
the United Nations’ Sustainable
As part of our approach to continually of performance. We believe the
Development Goals (UN SDGs) and
more detail is provided under each improve our ESG performance we take governance structure we have
ESG issue. a data-led approach. Sources include put in place, coupled with our
our online non-financial reporting
Governance continues to be a key focus
employee engagement efforts,
system, which compiles monthly
and in FY23 we have built upon the ESG information on energy consumption, positions us in good stead to
Governance framework introduced in water usage, as well as safety data. This continue to remain on track to
FY22. More detail is provided on page is to drive more robust performance deliver against our ambitions.”
41. Executive Leadership Team (ELT) and transparency in our ESG reporting.
sponsors have been appointed for each
In 2023 we have integrated ESG Tony Dunnage
of our eight ESG priorities, to be
metrics for consumer health and
accountable for performance, challenge climate into our FY23 executive
strategy development, and drive remuneration. In FY24 ESG metrics
integration and visibility from the will continue to be part of executive
top down. remuneration. See pages 142-163 for
more information.
Internally, we refer to ESG as our
“People and Planet” agenda. To further We keep abreast of developing and new
embed our ESG strategy across the ESG-related regulations. The Corporate
business and to inspire employee Sustainability Reporting Directive
engagement we developed our Triple (CSRD) was formally adopted by the EU
in November 2022. To meet the NET ZERO SYMPOSIUM
Zero campaign. Triple Zero refers to our
aspirations and targets for zero injury, requirements of the CSRD, the European Lukas Paravicini, Chief Financial
zero carbon and zero waste. Through Financial Reporting Advisory Group Officer, is the ELT sponsor of the
this ambitious message, we aim to (EFRAG) has developed the European climate change pillar of our
harness employee engagement and Sustainability Reporting Standards ESG strategy.
deepen their understanding of the (ESRS). Earlier this year we asked a third
On 22 March 2023 we held a Net
required collective effort to achieve party to conduct a gap analysis of our
Zero Symposium in our London
these ambitions. current ESG reporting against the
hub. The event, opened by Lucas
requirements of the CSRD. The aim was
In FY23 we held Triple Zero events in the discussed how collective
to identify the areas we need to focus on
US and Turkey, bringing together factory responsibility, partnerships and
to ensure we comply with the reporting
managers, regional directors and subject action will lead to the impact
requirements which will come into force
matter experts from across our necessary to keep us on track to
in 2025 for companies and entities in
operations to ensure we adopt a deliver our Net Zero ambition. We
scope. The CSRD drives in-scope
consistent approach across the business brought together topic experts and
companies to bring non-financial
to meet our targets, as well as develop practitioners from across our Global
reporting on par with financial reporting,
plans in support of our aspirations. The Supply Chain, Procurement,
with assurance of non-financial data
progress in both employee Finance, Corporate and Legal
becoming mandatory.
understanding and likely actions will be Affairs as well as valued partners
measured through our annual employee In FY24 we will establish a CSRD from insurers, advisers, and leaf
experience survey. working group to ensure we remain suppliers to review the progress and
on track to disclose in line with to debate how we could go further,
the requirements. faster, building upon the positive
progress we have made to date.

OUR JOURNEY TO DATE

2021 2022 Sept 2023 Looking forward into FY24

• New business • ESG Board and executive Internal “People ESG priorities • Continuous monitoring
strategy launched governance agreed and Planet” integrated into by the working groups
• Purpose, vision and • New ESG agenda launched executive and ESG Committee
behaviours unveiled strategy developed remuneration • Continuous sponsorship
• ESG materiality • ESG strategy signed off by metrics (introduced and engagement across
study completed ESG Committee and Board for FY23) the organisation

www.imperialbrandsplc.com 39
ESG REVIEW continued

HEALTHIER FUTURES

Consumer health Climate change Packaging and waste

We are committed to We are committed to We are committed to
strengthening our next reducing our impact on the minimising waste associated
generation products (NGP) and climate throughout our value with our products, packaging
making a more meaningful chain. Focusing on both and production processes.
contribution to harm reduction by mitigation and adaptation.
offering adult smokers a range of
potentially less harmful products.

NGP net revenue has Reduced our Scope 1 Reduced absolute

increased by and Scope 2 market- waste across our

41% based emissions by operations by

between FY21 and FY23 65% 27%

since 2017 since 2017

POSITIVE CONTRIBUTION TO SOCIETY

Farmer livelihoods & welfare Sustainable & responsible sourcing

We are committed to engaging with our suppliers We are committed to sourcing products and
to support and develop farming communities and services in a compliant, sustainable and socially
promote sustainable agriculture. conscious manner. We will work with our suppliers
to ensure continuous improvements.

155,000 We have been recognised by CDP as

a supplier engagement leader
people in our leaf supply chain benefiting from our
Leaf Partnership Projects aimed at improving access for a 4th consecutive year
to clean water

SAFE & INCLUSIVE WORKPLACE

Employee health, Diversity, equity & inclusion Human rights

safety & wellbeing We are committed to creating We are committed to raising
We are committed to achieving a truly diverse and inclusive awareness and improving
world-class occupational organisation renowned for processes in our supply chains,
health, safety and wellbeing celebrating difference, recognising the importance,
for all our employees. enabling our people to feel that influence and role we have in
they belong and be their promoting and protecting
authentic selves. We will human rights.
respect, recognise and value
the diversity of our consumers
and reflect the communities in
which we operate.

Reduced lost time Scored All factories report against

accidents by
92% 21
44% on 2022 ShareAction modern slavery leading
since 2019 Workforce indicators monthly
Disclosure Initiative
(absolute numbers)

Our ESG strategy remains aligned

with the United Nations
Sustainable Development Goals.

40 Imperial Brands | Annual Report and Accounts 2023

POWERED BY
RESPONSIBILITY

“Imperial’s ESG strategy

is underpinned by
strong corporate and
regulatory governance”.
Andrew Gilchrist
Emily Carey, at the Board
Company Secretary immersion session.

We are committed to To ensure the Board has full oversight Legal, Governance, Corporate Affairs,
of all relevant ESG issues, we have Supply Chain and Procurement,
conducting our operations established a cross-functional ESG Communications, Group Science and
responsibly and respecting Committee, chaired by the CEO of ESG attend meetings as required.
our people, our communities Imperial Brands. The Committee meets
Our comprehensive governance
at least three times per year. Permanent
and our planet. members of the Committee include all
structure enables appropriate levels of
focus, cross-collaboration, risk
Our ESG responsibilities are fulfilled the Executive Leadership Team (ELT),
management and escalation pathways
through a robust governance making it an executive committee. The
covering every ESG area of focus.
framework, upholding high standards purpose of the ESG Committee is to
of corporate governance, transparency provide oversight, advice and direction The Board will review our ESG
and ethics. We continuously review on the implementation of our People performance on a quarterly basis. The
and improve our risk management and Planet agenda and the Company’s ESG Committee reports to the Board for
processes and disclosure practices to progress on its ESG commitments and ESG-related opportunities, and potential
ensure we meet evolving standards objectives, as well as ensuring adequate material ESG-related risks are reported
and practices. resources to deliver these. Senior to the Group Risk Committee.
managers representing functions
including Investor Relations, Group

ESG Governance structure

The Board of Directors was updated

Board of Directors
on ESG-related matters throughout
Opportunity the year.

Risk
ESG Committee Group Risk Committee

Environmental Social Strategy Group ESG Other relevant

Strategy Group Group Function Functions

Operational Working Groups

www.imperialbrandsplc.com 41
ESG REVIEW continued

Our CEO, Stefan

and independent
Board Director,
Diane during a store
visit in Germany.

The cross-functional Environmental We have a broad range of policies to Governance education training
and Social Strategy Groups report to the support our approach to risk for employees
ESG Committee and are in turn fed into management and good governance. Mandatory governance education
by a range of ESG topic-specific Our key policies relating to each of our modules on a variety of topics are rolled
operational working groups which are eight ESG focus areas are listed under out to employees with online access,
noted in each of the ESG focus areas. the ESG topic area. Our Code of based on role and location. For
This activity is facilitated by the ESG Conduct, translated into 27 languages, employees who do not have access to
team. This strengthened governance is embedded throughout Imperial our online systems, we work with
approach enables cross-functional Brands and enables our responsible markets to provide accessible local-
collaboration and avoids duplication approach. It is aligned with the policies, language versions of courses for
of efforts. internal controls and risk management face-to-face training. All employees
processes that underpin our strategy. who are assigned courses are required
Achieving our ESG targets requires a
The Code of Conduct sets out the to complete these modules. One of our
strong commitment from the top of our
responsible behaviours we expect from key e-learning courses is on our Code
organisation. ELT sponsors have been
employees in their dealings with of Conduct.
appointed for each of our eight ESG
colleagues, customers, consumers, Part 1 of this course introduces our
priorities, to be accountable for
suppliers, agents, intermediaries, Code of Conduct, reviews our Company
performance, challenge strategy
advisers, governments and competitors. values, explains why we have a Code
development, and drive integration and
All employees and business partners and emphasises how we all have a
visibility from the top down. This is
are expected to act with integrity and in responsibility to follow the Code.
intended to inspire engagement
accordance with the standards of Part 2 of the Code of Conduct course
throughout the business. We believe
behaviour set out in the Code. We explains the responsibilities each of us
this executive level sponsorship puts us
expect our suppliers to conduct their has, regardless of our role, seniority or
in a stronger position to deliver against
business in an ethical and responsible location, to act in ways that promote a
our goals. Our executive sponsors will
manner and to comply with all culture of mutual trust and respect.
work with management teams to
applicable laws and regulations. We also have an e-learning course
integrate our ESG targets into our
on modern slavery, now available in
business strategy, monitor progress Our Supplier Code of Conduct, refreshed
15 languages. This course provides
regularly, report transparently, and lead in 2023, sets out the behaviours we
a short overview of modern slavery
by example. Their commitment and expect our suppliers to demonstrate.
and explains how employees can
role-modelling will foster a culture The Supplier Code of Conduct is
raise concerns.
of responsibility throughout embedded into our Procurement Policy
the organisation. and processes, which govern how we
Further information on our approach
select and contract with our suppliers.
to risk and opportunity management Our refreshed Supplier Code of Conduct
is available on pages 100-111. will be made available in a wide variety
of languages.

For further information on our policies,

visit www.imperialbrandsplc.com/
healthier-futures/governance/policies

42 Imperial Brands | Annual Report and Accounts 2023

Speaking Up Allegations were also received of INDEPENDENT ASSURANCE
Our Speaking Up platform is available misuse and/or theft of Company We appointed Ernst & Young LLP to
both to our employees and to other property. These claims were not provide limited independent assurance
stakeholders, including suppliers and material in value and were determined over selected ESG content within the
farmers. The platform offers a wide to be unfounded. Annual Report for the period ended
range of reporting routes and supports 30 September 2023. The assurance
Reports made through our Speaking Up
anonymous reporting and feedback. engagement was planned and
platform were determined to be
The Speaking Up Policy is made without merit. A number of alleged performed in accordance with the
available both internally and on the frauds were also investigated through International Standard for Assurance
Group website. Issues raised included the Group’s fraud reporting process. Engagements (ISAE) 3000 Revised,
allegations of mistreatment of Some of these allegations were found Assurance Engagements Other Than
employees, claims of unfair treatment to be valid in whole or part. None were Audits or Reviews of Historical
or wrongful termination and claims of material value. Financial Information.
relating to pay and employment These procedures were designed to
All reports made to our Speaking Up
conditions. Where grievances were conclude on the accuracy and
platform were investigated by
determined to have merit (in part or completeness of selected ESG
appropriate senior management,
whole), appropriate corrective actions indicators, which are indicated in the
including from our People and Culture
were implemented. None of these report with an A.
teams, Group Finance, Group Security,
claims were determined to be systemic.
and Group Legal. At all times, protection An unqualified opinion was issued and
of the individual making the report was is available on our website along with
a key consideration. further details of the scope, respective
responsibilities, work performed,
limitations and conclusions.

INVESTOR BENCHMARKS
Our ESG management and performance
is evaluated by a wide range of external
rating agencies.
We believe it is important for rating In 2022, CDP awarded us an A rating for our
We are pleased to note that MSCI has
agencies to work together with Climate Change submission for a fourth
upgraded our rating from an ‘A’ to an
companies, investors and other consecutive year. We await the results of
‘AA’. Its latest report dated August 2023
stakeholders to improve consistency our 2023 submissions to CDP for Climate,
states: “Imperial Brands continues to
and transparency in producing robust Water and Forests. We continue to
lead global peers on corporate
ESG data and ratings. participate in the CDP Supply Chain
governance practices. The company
Programme, which gathers information
has responsible marketing policies and
from our key suppliers on how they are
enforcement mechanisms such as
managing their climate risks and
regular audits and employee training.
opportunities. We were pleased to be
However, like industry peers, the
recognised as a Supplier Engagement
company continues to face scrutiny
In its August 2023 updated report, Leader by CDP in 2022 for a fourth
over its supply chain labour practices.”
Sustainalytics states that: Imperial is at consecutive year.
high risk of experiencing material
financial impacts from ESG factors,
has medium exposure and strong
management of material ESG issues.
The company is noted for its strong Moody’s Analytics gave us an overall We have also participated in the investor-
corporate governance performance, ESG score of 42/100 and a Company backed Workforce Disclosure Initiative
which is reducing its overall risk. Reporting Rate of 82% in their last (WDI) since 2019. This benchmark is
Imperial’s overall ESG Risk exposure is update in October 2021. currently based on a disclosure score, and
medium and is moderately above
performance scores have not been
subindustry average.
allocated. We received a 92% disclosure
score for our 2022 submission and have
submitted our 2023 disclosures to the WDI.
We are proud to have been recognised
for a third consecutive year as a
Climate Leader by the Financial Times
in its ranking of actions taken by
European businesses.

www.imperialbrandsplc.com 43
ESG REVIEW continued

HEALTHIER FUTURES

CONSUMER
HEALTH

NGP net
revenue has
increased by

41%
between FY21
and FY23

We are committed to strengthening our next generation

products (NGP) to make a more meaningful contribution
to harm reduction, by offering adult smokers a range of
potentially less harmful products.

Behaviours Link to SDGs Governance

• Consumer Health
SDG 3: We are Working Group
committed to tobacco • Product Stewardship and
harm reduction Health Group (PSHG)

Key Policies
• International
Marketing Standards
• NGP Policy Positions

ELT sponsor
• Andy Dasgupta,
Chief Consumer Officer
• Sean Roberts, Chief Legal and
Corporate Affairs Officer

OUR PLAN

2023 2024
• Consumer Health Working Group created. • New NGP innovations planned
• Three innovation hubs in Liverpool, across multiple markets.
Hamburg and Shenzhen.
• Acquisition of range of US oral nicotine
pouches from TJP Labs.
• Launch of blu bar, our disposable vape.

44 Imperial Brands | Annual Report and Accounts 2023

As a responsible manufacturer, we A consumer-centric, challenger Imperial has accelerated
understand and maintain a detailed approach to next generation products innovation in potentially
knowledge of our products and monitor (NGP) supports Imperial’s specific harm-reduced products.
the relevant scientific developments contribution to this broader industry- Since the launch of our current Group
and literature relating to our products wide commitment to reduce potential strategy in January 2021, we have been
and respond accordingly. The Product harms. As the smallest of the investing in consumer insights,
Stewardship and Health Group (the international businesses, we are innovation capabilities and third-party
PSHG) is responsible for formally humble about what we can achieve on partnerships to accelerate our NGP
advising the Board, via the Chief our own. But, by engaging with our operations. This way of working is most
Executive, on all consumer consumers, innovating fast and clearly seen in our new innovation
safeguarding issues. working with business partners, we centres. Our Sense Hubs in Liverpool
believe we can drive responsible and Hamburg, opened in 2023, bring
To oversee a more holistic approach to competition and help accelerate the together consumers, our own product
consumer health, in FY23 we set up the transition to potentially reduced- developers and third-party partners
Consumer Health Working Group which harm products. in a single collaborative space. Our
brings together internal stakeholders
Shenzhen site enables us to get closer
from across the business including the NGP have the potential to make to our supply chain partners.
ESG team, Group Science & Regulatory a significant contribution to
Affairs, Investor Relations, Group harm reduction. These focused investments have led to a
Communications, Corporate and Legal Both our own – and independent – step change in the pace of development of
Affairs, Product Innovation and the scientific evidence suggests all nicotine new products across multiple categories
Global Consumer Office. This group is products which do not involve the – all designed to appeal to existing adult
responsible for overseeing the actions burning of tobacco are potentially less smoker and nicotine consumers.
taken and the progress made related to harmful to consumers, compared to • Pulze 2.0, our latest heated tobacco
consumer health. continuing to smoke cigarettes. innovation, is now available in
Making a positive impact on While public health bodies have seven markets.
consumer health through our NGP concluded that nicotine is addictive, • blu 2.0, the evolution of our myblu
continues to be a priority. they also agree that it is the smoke pod-based vape, is available in
Globally, more than a billion adults still created by the burning of tobacco leaf nine markets.
smoke. Along with others in our that contains most, and in the highest • blu bar, our new disposable vape, is
industry, we acknowledge society’s levels, of the 100-plus harmful already established in 11 markets.
concerns about the health risks of chemicals responsible for smoking- • Three new variants of Zone X, our
smoking, and we have a duty to help to related disease. Advances in science tobacco-free oral nicotine pouches, in
potentially improve public health by and technology enable our NGP to select established European markets.
reducing smoking-related harm. This deliver nicotine to consumers without
the need to burn tobacco. In the US we are poised to launch a new
ambition aligns with SDG 3.4 which
range of oral nicotine products following
aims to: “reduce mortality from To aid understanding of the harm the acquisition of TJP Labs’ range of US
non-communicable diseases and reduction potential of each NGP relative nicotine pouches in June 2023.
promote mental health”. to cigarettes, we have developed an
illustrative representation of the
current scientific evidence – the Our NGP net revenue has
relative risk scale illustrated above. increased by 41% between
FY21 and FY23*

* FY23 NGP net revenue was £265 million and has

been independently assured by Ernst & Young LLP
(EY) under the limited assurance requirements of
the ISAE 3000 standard. EY’s Assurance Opinion
is available on our website.

www.imperialbrandsplc.com 45
ESG REVIEW continued

Supporting consumer choice – We interviewed c.8,600 consumers Substantiation of reduced risk - our
consumer behaviour is becoming across eight countries, collecting innovation is underpinned by a
more diverse. in-depth information on c.15,800 rigorous scientific framework.
The tobacco industry has made different consumption occasions. Our Our Group Science function, partnering
significant progress in tobacco harm research highlighted how, moment by closely with our consumer teams,
reduction. However, even in Europe, the moment, there are wide variations in ensures each of our NGP is substantiated
region where NGP has made most how consumers behave. against our Scientific Assessment
progress, cigarettes still represent 91% We learned that, in some markets, NGP Framework. This is designed to:
of the total market. are already the dominant category for 1. Reassure our consumers by ensuring
Analysing the global and regional certain moments or occasions – the all our products are manufactured to
figures, we are seeing growing diversity moments, for example, when people a high and consistent standard.
in consumer behaviour market by meet with friends outside the home. 2. Evidence that our NGP are
market. For instance, in three examples Equally, however, we learned that there potentially reduced-risk compared
of neighbouring countries in Europe: are certain moments – which account to continuing to smoke, and that
France is a significant vaping market, for a high proportion of nicotine they are compelling to try and
while Italy is the largest heated tobacco consumption – where NGP have made satisfying when used by adult
market in Europe and in Austria oral few inroads. These are typically smokers and existing NGP users (the
nicotine is the dominant NGP category. moments when people are on their own “off-ramp” on the graphic below).
at home, for example taking a break
Furthermore, we are seeing similar 3. Support the conclusion through a
between tasks.
diversity of consumer behaviour when wide range of measures that our
we analyse nicotine use by individual These trends suggest that there will be NGP are unattractive to unintended
occasions – or “moments.” Over the no one-size-fits-all solution in tobacco populations, including never-
past two years, Imperial has conducted harm reduction – and there is room for smokers and the under-age.
a major piece of consumer research, a wide range of businesses, including Furthermore, current internal
using an approach called “demand Imperial, to carve out distinctive roles research indicates that alternative
spaces”. This method breaks down the catering for specific consumer needs. nicotine products may be competing
lives of our consumers into individual with combustible cigarettes rather
moments when they enjoy our than promoting smoking thereby
products: for instance, in the morning potentially preventing “on-ramp” to
or evening; in the home or out and potential cigarette smoking.
about; and alone or with friends.

For further information please visit

Imperial Brands Science website:
THE HARM REDUCTION EQUATION www.imperialbrandsscience.com

46 Imperial Brands | Annual Report and Accounts 2023

 While we seek to provide strong, imperative that children should not
SCIENTIFIC ASSESSMENT responsible competition in the NGP have access to nicotine products.
OF NGP segment, we also recognise we are part
Europe has been the key area of focus
of an industry-wide transformation.
One example of our structured for Imperial in NGP over the past two
Therefore, we are committed to playing
approach to scientifically years – and in this region we are
our part in furthering the broader
assessing our NGP through our campaigning for:
scientific debate on tobacco harm
Scientific Assessment
reduction. We have published 30 1. Regulatory codes for NGP naming,
Framework is the research we
peer-reviewed Imperial-authored packaging and marketing.
have conducted into our heated
papers and presented 29 scientific 2. Retailer licensing regimes which
tobacco system, Pulze and iD.
research posters at conferences over provide stronger deterrents against
After proving that Pulze does the last five years. under-age sales.
indeed heat, and not burn, 3. The extension of the excise system
tobacco, we analysed its aerosol Unintended use of NGP - we are
to the vape category to provide
and demonstrated significant committed to discouraging additional enforcement tools against
reductions in the harmful and unintended use. rogue manufacturers and retailers.
potentially harmful constituents Imperial is proud of its long track
compared to cigarette smoke. record in minimising consumption of The implementation of measures like
We then confirmed these its products by unintended users, these will, we believe, help to prevent
findings translated to reduced including young people. youth access, and enable responsible
cell toxicity across a series of NGP manufacturers to continue
Our blu vape brand was launched in
laboratory tests, with reductions advancing tobacco harm reduction by
2009 and acquired by Imperial in 2015,
of between 90-98% compared to offering adult smokers increasingly
and the average age of blu consumers
cigarette smoke. attractive, potentially less harmful
in the UK – the brand’s largest market
alternatives to cigarettes.
Clinical trials have also been – is closely aligned to the average age
conducted to confirm Pulze and of cigarette smokers.
iD delivered nicotine effectively
Across all markets, blu’s marketing
to adult smokers, while also
proposition targets mature consumers
reducing their desire to smoke.
making a broader lifestyle shift.
Simultaneously, we published MARKETING PRINCIPLES
behavioural research to show Similarly, the Pulze heated tobacco 1. We only engage with adult
Pulze appealed to its intended proposition, with its long battery life, is consumers of tobacco and
audience – adult smokers – but specifically designed to encourage nicotine products.
was not attractive to never- smokers to stay within the heated 2. Our marketing is honest
smokers, including young adults. tobacco category. and transparent.
We are committed to marketing and 3. We give our consumers the
advertising our products responsibly information they need to
This activity also supports our within the laws, codes of practice and make informed choices.
dialogues with regulators and policy voluntary agreements of those 4. We do not encourage people to
makers as we seek approval for new countries where we operate. Our start smoking or non-smokers
NGP products and secure support for commitment to responsible marketing to use recreational nicotine
the broader principles of tobacco and sale of our NGP and combustible products, and never
harm reduction. tobacco products is summarised by our discourage consumers of our
Marketing Principles and underpinned products from quitting.
To confirm the tobacco harm reduction by a strict Group-wide International 5. We comply with the local laws,
potential of our heated tobacco Marketing Standard for Next codes of practice and
products in market, we have recently Generation Products. voluntary agreements which
conducted a behavioural study on Pulze
In some markets, irresponsible product govern the advertising,
2.0 in the Czech Republic, where we
design, marketing and sales, combined promotion and sale of
tracked adult smoking participants to
with inadequate and inconsistently our products.
understand how they use our products
over time to potentially help cut down enforced regulation, have created
– or perhaps even entirely replace – growing public unease about youth
cigarette smoking. Initial findings access to nicotine products. We share
from the draft report are positive, these concerns. That is why we are
suggesting the system’s potential engaging with policymakers to develop
to help adult smokers either stop regulatory frameworks which better
smoking or substantially reduce their balance adult smokers’ needs for an
cigarette consumption. attractive range of potentially harm-
reduced alternatives with the

www.imperialbrandsplc.com 47
ESG REVIEW continued

HEALTHIER FUTURES

CLIMATE
CHANGE

Reduced our Scope 1

and Scope 2 market-
based emissions by

65%
since 2017

We are committed to reducing our impact on the climate

throughout our value chain, focusing on both mitigation
and adaptation.

Behaviours Link to SDGs Governance

• Environmental Compliance
Working Group
• Climate Change
Engineering Forum

Key policies
• SDG 13: Take urgent action to • Environmental Policy
combat climate change and
• Biodiversity Statement
its impacts
• SDG 7: Ensure access to ELT sponsor
affordable, reliable, sustainable • Lukas Paravicini,
and modern energy for all Chief Financial Officer

OUR PLAN
(from a 2017 baseline year) 2030 2040
• 100% of energy sourced for our • Our value chain will be Net Zero
2025
operations will be from renewable emissions (absolute Scope 1, 2 and 3
• 100% of our purchased grid
sources. GHG emissions).
electricity will come from traceable
renewable sources. • Be Net Zero in our direct operations
(Scope 1 and 2 GHG emissions).
• Reduce absolute Scope 1 and 2 GHG
emissions by more than 50%. • Reduce our total carbon footprint
(absolute Scope 1, 2 and 3 GHG
emissions) by 50%.
• Reduce absolute Scope 3 emissions
by 50%.
• Reduce energy consumption by 25%
• Reduce water consumption across
our operations by 30%.

48 Imperial Brands | Annual Report and Accounts 2023

 SDG 7.2: By 2030, increase as necessary to reflect changes in the
STRONG TRACK RECORD substantially the share of renewable cost of emissions.
OF PERFORMANCE energy in the global energy mix. Nearly 90% of our carbon footprint is in
In support of this target, we aim to have
From our 2017 baseline year our value chain, accounted for in our
100% of our purchased grid electricity
we have: Scope 3 emissions. We are working
from traceable renewable sources by
with our suppliers and other partners to
2025 and we aim to source 100% of all
Reduced our absolute Scope 1 better understand our Scope 3
our energy from renewable sources
and Scope 2 market-based emissions. We do this largely through
by 2030.
carbon emissions (CO2e the internationally recognised CDP
tonnes) by We know that climate change Supply Chain Programme, and further
represents a potential long-term risk integration with our sustainable
65% across the whole of our value chain and
to society in general. Disruption in
sourcing pillar. In the past year we have
re-baselined our entire Scope 3
Reduced our absolute energy climate and energy has the potential to inventory and recalculated all 15 Scope
consumption (GWh) by impact our business from challenges as 3 categories for 2022. For further

26% diverse as crop failure, asset destruction details see the Sustainable and
and interruption in distribution. We Responsible Sourcing section on
recognise the importance of disclosing page 60.
Reduced absolute water how we are managing climate-related
consumption in our operations risks and opportunities and we have
(m3) by reported on our approach for several

32% years now, both within our TCFD

section on pages 70-81 and through our
CDP disclosures which are available on
the CDP website.
In FY23 we reviewed the membership
The specific SDG 13 and 7 targets of our Environmental Compliance
we are supporting: Working Group and the Climate Change
SDG 13.1: Strengthen resilience and Engineering Forum to ensure these WE HAVE MAPPED A FIVE-
adaptive capacity to climate-related groups bring together subject matter STEP APPROACH TOWARDS
hazards and natural disasters in experts and engineers from across our NET ZERO:
all countries. operations to discuss initiatives and
In support of this target, we monitor approve projects to achieve our Net 1 Undertake
climate-related risks and put in place Zero ambition. These groups also energy-efficiency
intervention or mitigation measures provide a platform to exchange initiatives
where necessary. Our targets on knowledge and best practice to help
climate change also represent potential drive consistent performance across
business opportunities. We expect to our operations.
see cost and environmental benefits 2 Switch to 100%
Further details on our carbon transition renewable grid
flow from our energy-saving and
plan can be found in our 2023 ESG electricity
efficiency programmes.
Performance Summary and in our
In line with the recommendations of TCFD section on page 70. Our Net Zero
the Task Force on Climate-related commitment is part of our Triple Zero
Financial Disclosures (TCFD), we have 3 Transition all
campaign and all our operations continue
explored the impact that climate other energy
to develop local carbon transition plans
change is likely to have on our value to ensure they are taking the correct
types to
chain in terms of both risk and steps and actions to contribute to this renewable
opportunities. This includes the steps Net Zero commitment. sources
Logista is taking as well.
We also established an internal carbon 4 Achieve Net
Please see page 70 for details. pricing mechanism to account for the Zero in our
cost of greenhouse gas emissions operations
resulting from our operations. The price
SDG 13.3: Improve education,
will be reviewed annually and adjusted
awareness raising and human and
institutional capacity on climate 5 Become climate
change mitigation, adaptation, impact positive, which
reduction and early warning. means saving more
In support of this target, we want our greenhouse gas
global workforce to have a common emissions than we
understanding of the topic of climate are generating
change. In FY23 we published a training
on climate change for our employees. Our actions to cut emissions and
The training focuses on the general mitigate climate risks have earned us a More detailed information is
topic of climate change as well as provided in our 2023 ESG
position on the CDP’s “A List” for
Imperial Brands’ specific measures and Performance Summary.
climate change for a fourth consecutive
targets that mitigate the risks of climate year. Our 2022 CDP scorecard is
change, enhance opportunities and available on our website.
create responsible business behaviours.

www.imperialbrandsplc.com 49
ESG REVIEW continued

CLIMATE CHANGE PERFORMANCE

Performance Unit 2017 2021 2022 2023 Commentary

indicator (base year)

Operations with % 92 78 83 82 We have updated the scope of this indicator to ensure we are
ISO 14001 addressing largest manufacturing sites. For further details
certification see our 2023 Reporting Criteria document.

Absolute energy GWh 875 729 712 650A We set a target to reduce our absolute energy consumption by
consumption1 25% by 2030 versus a 2017 baseline. We are pleased to report
that in FY23 we exceeded this target with a 26% reduction
Relative energy KWh/£m 112,801 95,740 91,364 81,128A compared to the baseline. We will now set a new target for
consumption1 net energy reduction moving forward.
revenue
Electricity from % 8 6 52 96A We aim to purchase Renewable Energy Certificates (RECs)
purchased from within the same market boundary as electricity is
renewable being consumed.
sources1 In markets where RECs are not available within the
same market boundary, we purchase from a nearby
geographical location.
We are regularly reviewing this with the intention to purchase
from within the same market boundary once a source
becomes available.

Energy from % 5 4 23 41A The proportion of energy from renewable sources has
renewable increased by 36% since our 2017 baseline year. This is
sources mainly driven by the use of renewable electricity with our
RECs scheme.
We have set a target to use 100% renewable energy by 2030.

Absolute Scope 1 Tonnes 114,270 92,900 91,007 81,089A Our Scope 1 emissions arise from stationary fuel combustion
CO2e emissions1 at our sites, refrigerant gases and mobile fuel combustion in
our fleet of Company sales vehicles.
We have seen an 11% decrease in Scope 1 emissions since last
year and a 29% reduction from our 2017 baseline year.

Absolute Scope 2 Tonnes 161,360 133,292 131,236 114,059A Our Scope 2 location-based emissions comprise the indirect
CO2e location- emissions resulting from the use of purchased electricity, heat
based emissions1 and steam at our sites.
We have seen a 13% decrease in Scope 2 location-based
emissions since last year and a 29% reduction from our 2017
baseline year.

Absolute Scope 2 Tonnes 173,902 – 84,759 18,896A We report Scope 2 location-based and market-based
CO2e market- emissions according to the GHG Protocol Scope 2 Guidance
based emissions1 (2015) and CDP guidance.
We have seen a 78% reduction in Scope 2 market-based
emissions compared to last year and an 89% decrease
compared to the 2017 baseline year.
This significant reduction in Scope 2 market-based emissions
reflects the increase in our use of electricity purchased from
traceable renewable sources.

Total absolute Tonnes 275,630 226,192 222,243 195,148A We have seen a 29% decrease in our total Scope 1 and 2
Scope 1 and 2 location-based emissions from our 2017 baseline.
location-based Our target is to be at Net Zero in our direct operations by 2030.
CO2e missions1 We have also set a Scope 3 target to be Net Zero by 2040.

Relative Scope 1 Tonnes/£m 35.5 29.7 28.5 24.4A

and 2 location- net
based CO2e revenue
emissions1
Total absolute Tonnes 288,172 – 175,766 99,985A We have seen a 65% decrease in our total Scope 1 and Scope
Scope 1 and 2 market-based emissions from our 2017 baseline year. This
2 market-based has been driven by our increased use of electricity purchased
CO2e emissions from traceable renewable sources.

Relative Scope 1 Tonnes/£m 37.15 - 22.55 12.48A

and 2 market- net
based CO2e revenue
emissions1

A. Select 2023 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard. EY’s Assurance Opinion
is available on our website. Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
1. Our 2023 environmental data covers the reporting period Q4 2022 to Q3 2023. This is to allow for data collection, validation and external assurance. We use the industry
leading Greenhouse Gases (GHG) Protocol standard to inform our reporting of Scope 1 and 2 emissions.

50 Imperial Brands | Annual Report and Accounts 2023

Performance Unit 2017 2021 2022 2023 Commentary
indicator (base year)

Total Scope 3 Tonnes 981,638 – – 822,880 In FY23 we recalculated our Scope 3 baseline of 2017 and
CO2e emissions calculated our 2022 Scope 3 emissions across all categories. This
recalculation follows the latest methodology outlined in our
Reporting Criteria document, and in accordance with the Global
Greenhouse Gas Protocol.
The resulting data shows a 16% decrease in our total Scope 3
emissions compared to the baseline year.
We have a clear methodology for further improving our data
capture for Scope 3, by transitioning to a more market-based
approach with our partner suppliers and updating using the most
recent emissions factors.
Based on our recalculation, we have set a more ambitious target to
reduce our Scope 3 emissions by 50% by 2030.

Scope 3 CO2e Tonnes 16,003 1,837 5,901 18,879A Business travel is travel undertaken for work or business purposes.
emissions: The main driver for the increase in emissions in FY23 is business
Business travel1 travel mileage which increased by approximately 100% compared
to the previous year .

Key suppliers by % – 20 25 33 We aim for 50% of our suppliers by spend within the Purchased
spend with Goods and Services category to have science-based targets by
science-based 2024. Of the suppliers in scope, 33% had science-based targets at
targets the end of FY23.
We are engaging with our key suppliers directly and via the CDP
Supply Chain Programme to achieve this target.

Logista absolute Tonnes 38,554 45,557 47,099 Logista is managed remotely due to commercial sensitivities and
Scope 1 and 2 is responsible for its own data. Logista has provided independently
CO2e emissions assured data from 2022 for absolute Scope 1, 2 and 3 emissions.
Data for 2023 is still undergoing independent assurance.
Logista absolute Tonnes 193,611 194,634 189,709
The increase in Scope 1 and 2 emissions seen in 2022 is due to an
Scope 3 CO2e increase in transport activity under operational control. The
emissions decrease in Scope 3 emissions is attributed to some divestment
activity and some emissions reduction initiatives implemented
by Logista.
Logista’s 2022 relative Scope 1 and 2 emissions comprise 23 tonnes
(2021: 22 tonnes) of CO2e per £million of 2022 distribution fees
(our non-GAAP revenue measure for Logista). Further information
on the scope of Logista’s GHG reporting is available at
www.grupologista.com.

Absolute water m3 1,468,626 1,109,178 1,056,982 999,214A We set a target to reduce our absolute water consumption by 30%
consumption1 by 2030 versus a 2017 baseline. We are pleased to report that in
FY23 we exceeded this target with a 32% reduction compared to
Relative water m3/£m 189 146 136 125A the baseline. We will now set a new target for water consumption
consumption net moving forward.
revenue

SCOPE 1 AND 2 EMISSIONS – UK AND GLOBAL1,2,3

2023 2022

Performance Units UK and Global UK and Global

indicator offshore (Excluding UK offshore (Excluding UK
area and offshore area and offshore
area) area)

Scope 1 emissions tCO2e 1,841 79,248 1,751 87,500

Relative Scope 1 emissions tCO2e / £m net revenue 0.2 9.9 0.2 11.2

Scope 2 location-based emissions tCO2e 872 113,187 903 130,298

Relative Scope 2 location-based emissions tCO2e / £m net revenue 0.1 14.1 0.1 16.7

Scope 2 market-based emissions tCO2e 0 18,896 310 84,209

Relative Scope 2 market-based emissions tCO2e / £m net revenue 0 2.4 0.04 10.8

Total Gross Scope 1 and Scope 2 location-based emissions tCO2e 2,713 192,436 2,654 217,798

Relative Scope 1 and Scope 2 location-based tCO2e / £m net revenue 0.3 24.0 0.3 27.9

Total Gross Scope 1 and Scope 2 market-based emissions tCO2e 1,841 98,145 2,061 171,710

Relative Scope 1 and Scope 2 market-based tCO2e / £m net revenue 0.2 12.3 0.3 22.0

Energy consumption kWh 13,233,516 637,059,838 12,421,624 691,831,110

1. We have provided reporting in compliance with UK Streamlined Energy and Carbon Reporting (SECR) regulations (being the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008, as amended by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and the SECR under the
Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018).
2. For details on the methodology used for SECR calculations, please see our Reporting Criteria document available on our website.
3. Energy efficiency measures taken in FY23 are reported in our 2023 CDP Climate Change disclosures available on the CDP website.

www.imperialbrandsplc.com 51
ESG REVIEW continued

HEALTHIER FUTURES

PACKAGING
AND WASTE

Reduced absolute
waste by

27%
since 2017

We are committed to minimising waste

associated with our products, packaging
and production processes.

Behaviours Link to SDGs Governance

• Combustible Product
SDG 12: Ensure Strategy Group
sustainable
• Product Sustainability Forum
consumption and
production patterns Key policies
• Environmental Policy
• Filter Policy
• NGP Policies

ELT sponsors
• Javier Huerta, Chief Supply
Chain Officer
• Aleš Struminský, President,
Europe Region
OUR PLAN
(from a 2017 baseline year)

2025 2030
• Our operations will send zero waste • We aim to reduce waste generated
to landfill. within our operations by 20%.
• 100% of our packaging will be • We aim to have a greater than 80%
reusable, recyclable, or compostable average packaging recycling
in the EU and UK. recovery score in the EU and UK.
• 100% of all wood fibre in our
packaging will be sustainably
sourced.

52 Imperial Brands | Annual Report and Accounts 2023

We recognise the important role we In FY23 we continued to use the ACKNOWLEDGING
must play in protecting the natural Combustible Product Strategy Group THE CHALLENGE
environment and we actively work to and the Product Sustainability Forum to
minimise our environmental impacts. discuss existing and upcoming
Certain resources are finite and, as environmental legislation and policies
such, this presents us opportunities to and the potential impact they will have Consumer and product waste
explore solutions that support our on the business, new product-related We take our responsibilities in product
business sustainability and protect sustainability innovations and development and environmental
the environment. performance against our ESG targets impact seriously. With the NGP
and goals. These working groups business growing, we are faced with
The specific SDG 12 targets we are
include representatives from Corporate additional waste and recyclability
supporting:
and Legal Affairs, ESG, Product challenges. We continue to improve the
SDG 12.2: By 2030, achieve the Realisation, Global Supply Chain and sustainability and recyclability of NGP
sustainable management and efficient local market representatives to ensure materials and packaging. We are keen
use of natural resources. we have cross-collaboration and to understand consumer behaviour and
In support of this target, we aim to have involve the correct subject matter needs related to product waste.
100% of all wood fibre in our packaging experts in our decision-making process.
Our consumer research provides
from recycled materials or responsibly We continue to prepare for upcoming insights into what consumers value
managed forests by 2025. regulation such as the EU Packaging most. While they do not want to see
and Packaging Waste Directive. These compromise on the quality of the
SDG 12.5: By 2030, substantially
efforts include re-engineering our product, they do:
reduce waste generation through
packaging for recyclability and
prevention, reduction, recycling • Value waste reduction. They would
removing what is not needed. We aim
and reuse. like more information on how to
to use resources efficiently, source
In support of this target, we aim to recycle products, and they would like
them from sustainably managed
ensure that all our operations will send to see brands reduce the amount of
sources and to introduce recycled
zero waste to landfill by 2025. We also packaging used and remove
materials where possible.
aim to have 100% of our packaging in unnecessary plastic.
the EU and UK to be reusable, recyclable To gain further insights, we have • Seek clarity on how we source
or compostable by 2025. conducted recycling assessments on materials which go into our products
our packaging for products sold in the as well as the proportions sourced
SDG 12.6: Encourage companies, EU and UK. These assessments have from recycled materials.
especially large and transnational been conducted by an external institute
companies, to adopt sustainable • Value human rights and expect us to
and have allowed us to identify
practices and to integrate commit to ethical work practices. See
non-recyclable packaging on which to
sustainability information into pages 62-63 for our approach to
focus our improvement efforts. To date,
their reporting cycle. human rights.
96% of our packaging formats assessed
In support of this target, we are are now considered recyclable. In FY24, we will continue to implement
committed to providing detailed ESG a consumer-led, regulatory compliant
disclosures within our Annual Report In FY24 we will focus on reducing
packaging strategy, and report on
and Accounts and on our corporate further unnecessary packaging and to
our progress.
website. We are committed to make more of our packaging recyclable.
partnering with our suppliers directly The next step of our zero waste to Cigarette butts
and through the CDP Supply Chain landfill programme will be to Consumer acceptance and emissions
Programme to collaborate with them to concentrate on waste reduction at regulation have meant that we are yet
reduce our environmental impact source, and to further improve our to find an adequate alternative
across the whole of our value chain. internal recycling. substitute for the traditional cigarette
We have made further disclosures on filter. We do not make any product or
Our operations our efforts to address plastic waste in marketing claims on biodegradability
We are committed to compliance with our 2023 CDP Water Security and/or compostability of filters. We
all relevant environmental legislation submission which is available on the
believe that the most effective
CDP website.
applicable to our operations. Reducing approach to combating littering and
our environmental impact supports For further information on our ecotoxicity resulting from the littering
efficiency and cost optimisation. As policies visit www.imperialbrandsplc. of used filters (cigarette butts) is
part of our role in protecting the natural com/healthier-futures/governance/
through partnership of key
policies
environment, we seek to minimise stakeholders, such as tobacco
overall waste, eliminate waste to companies, government, environmental
landfill and make all our packaging in bodies, businesses and local
the EU and UK reusable, recyclable communities, educating consumers on
or compostable. the importance of the proper disposal of
used filters. We recognise the
importance of this issue and continue
to search for alternative materials for
filters which contain single-use
plastics. We participate in different
Extended Producer Responsibility
(EPR) schemes in a number of
locations, both on a voluntary basis and
to fulfil regulatory requirements.

www.imperialbrandsplc.com 53
ESG REVIEW continued

NGP waste Heated tobacco products: For our Oral nicotine delivery: The
Vaping products: To support our Pulze 2.0 product packaging we have sustainability aims are focused on
consumers with the responsible achieved a 92% reduction in use of recyclability improvements, exploring
disposal of our blu products, several plastic compared to the packaging for more sustainable materials for cans/
markets have introduced “take-back” Pulze 1.1. refilling options and potential returns
schemes for vaping devices and pods. schemes are being investigated across
We continue to focus on packaging
In those markets, we have provided our footprint.
improvements with further solutions
incentives to consumers to return
under development.
their empty pods, which enhances
the commercial offering of blu in
addition to achieving our
environmental objectives.

PACKAGING AND WASTE PERFORMANCE

Performance Unit 2017 2021 2022 2023 Commentary

indicator (base year)

Absolute waste1 Tonnes 49,141 41,714 41,969 35,744A Our target is to reduce waste by 20% by 2030.
6.34 5.48 5.39 4.47A We have exceeded this target with a 27%
Relative waste 1 Tonnes/£m
reduction in waste compared to the 2017
net revenue
baseline year.
We will set a new target for waste reduction
moving forward.
All waste sent to Tonnes 7,200 10,619 8,544 4,442A Our target is to achieve zero non-hazardous
landfill1 waste sent to landfill by 2025.
0.93 1.40 1.10 0.56A We have seen a 38% decrease in waste sent to
Relative waste Tonnes/£m
landfill since the 2017 baseline year. This
to landfill1 net revenue
decrease has been driven by our zero waste to
landfill initiatives across our operations.
Landfill % 88 83 85 91A A key element of our environmental approach
avoidance rate1 is to minimise the waste sent to landfill by
reusing waste, recycling, composting and
incineration (with energy recovery).
Recyclability % – – 95 96 We aim to have 100% of our packaging material
score in the EU and the UK to be reusable, recyclable
or compostable by 2025.
A third party assesses the materials for us and
we are on track to achieve this target.
Sustainable % – – – 97 We aim to have 100% of all wood fibre in our
sourcing packaging2 from sustainable sources by 2025.
We are on track to achieve this target.

A. Select 2023 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard. EY’s Assurance Opinion
is available on our website.
Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
1. Our 2023 environmental data covers the reporting period Q4 2022 to Q3 2023. This is to allow for data collection, validation and external assurance.
To note: Absolute waste does not include reused waste.
2. This excludes products from ITG Brands.

54 Imperial Brands | Annual Report and Accounts 2023

POSITIVE CONTRIBUTION TO SOCIETY

FARMER
LIVELIHOODS
AND WELFARE

155,000
people in our leaf supply
chain benefiting from Leaf
Partnership Projects aimed
at improving access to
clean water

We are committed to engaging with our leaf suppliers to

support and develop farming communities and promote
sustainable agriculture.

Behaviours Link to SDGs Governance

• Leaf Compliance Working
Group (LCWG)
• Sustainable Tobacco
Programme (STP) Guidance

Key policies
• Human Rights Policy
• Child Labour Policy
• Biodiversity Statement

ELT sponsors
• Javier Huerta,
Chief Supply Chain Officer
• Kim Reed,
President and CEO,
Americas Region

OUR PLAN
2025 2030
• Support suppliers to provide access • Support suppliers to improve access
to 100% sustainable wood use. to basic needs for 180,000 farmers
and their families.

www.imperialbrandsplc.com 55
ESG REVIEW continued

SUSTAINABLE AGRICULTURE those created through the Sustainable The STP is an industry-wide initiative
Sustainable agriculture impacts our Tobacco Programme (STP). aimed at enhancing agricultural
people and our planet, providing food supply chain due diligence and
We have a strong governance
security, establishing livelihoods and accelerating the positive social and
structure in place for our tobacco leaf
supporting environmental environmental impact in tobacco-
supply chain. This is overseen by our
stewardship. Imperial works hard to growing communities. The STP is
Leaf Compliance Working Group
support leaf suppliers’ farmers and independently managed and provides
(LCWG) and part of their
their families. This includes us with visibility over our leaf supply
responsibility is to maintain effective
improving farmer access to basic chain in two ways: first, by
governance and response to ESG
needs, a decent standard of living empowering our suppliers to report
risks within the tobacco leaf supply
and income diversification, on the actions they are taking to
chain. Our Leaf Compliance and
enabling them to continue to grow address any risks identified, and how
Response (CARE) Programme
tobacco sustainably. they are having a positive impact on
includes our Leaf CARE tool which is
the ground; and second, by validating
We purchase approximately 97% of an in-house IT platform to record
these actions both remotely and in
our tobacco through both global and potential ESG-related issues arising
the field. This informs our strategy to
niche suppliers from more than 30 in the supply chain and to track the
support our suppliers in taking
countries worldwide, and only 3% associated due diligence processes
effective action. All our tobacco leaf
from our own directly contracted suppliers have established to respond
suppliers are expected to participate
farms. Therefore, we work to these potential reported issues.
in the STP. In 2023 (based on the
collaboratively with our partners to The majority of the data in the Leaf
2022 tobacco leaf crop year),
enhance standards in our leaf supply CARE tool is sourced from the STP. A
93% of our suppliers reported on
chain both directly with our suppliers third party reviews and substantiates
their due diligence.
and through partnerships, such as that information in the STP, before it
is uploaded to our Leaf CARE tool.

During the past year we participated in In our direct operations in Madagascar,

six independent Supply Chain Impact we have launched interventions SUPPLY CHAIN IMPACT
Assessments (SCIA) conducted in the targeted at improving awareness ASSESSMENT IN INDONESIA
field. The objective of these amongst rights holders. In our
A supply chain impact
assessments was to identify risks experience, the biggest influencers in
assessment was conducted in
within the leaf supply chain and help preventing child labour are mothers
Indonesia in partnership with
focus suppliers to develop prioritised and the children themselves – so we
other tobacco manufacturers and
action plans. Where appropriate, we have rolled out posters in schools and
included 14 tobacco merchants in
jointly commissioned these community sessions with groups of
total. A total of 231 rights holders
assessments with key stakeholders. parents. Through these interventions
were engaged with from
we have reached 22 schools and just
We commissioned our own similar tobacco-growing communities to
under 1,000 participants in awareness-
Human Rights Impact Assessment help identify salient risks. These
raising sessions in the last year. In our
(HRIA) within our direct supply chain in included the risk of unsafe use of
operations in Laos, several projects are
Madagascar. Based on rights holder pesticides and inconsistent
being trialled, including summer sports,
interviews and community personal protective equipment
film, and arts clubs. We are collecting
engagement, prioritised risks were (PPE) standards, poor waste
feedback from the communities on
identified including fair treatment, collection and the potential of
these interventions to ensure they
working hours and children working on children working on family
remain targeted and effective. This
family farms. These risks were farms. Therefore, in addition to
participatory approach allows us to spot
investigated to further our leaf suppliers developing
potential improvements and support
understanding of root causes and individual action plans, local
our long-term aim of addressing the
effective solutions. As well as tobacco companies joined
risk of child labour.
implementing corrective action plans, a together to form an industry
thorough preventative action plan was Our Leaf Partnership Programme forum to work collectively on
also developed to address all findings complements the work our leaf some of these non-competitive
regardless of priority level. We have suppliers are already doing, amplifying issues. We have closely followed
worked intensively on the preventative their impact in tobacco-growing the development of these action
action plan, which included improving communities, by directly funding plans and forums over the last
management and monitoring systems, specific projects. These projects range year and will continue to stay
the launch of an operational grievance from enhancing farmers’ businesses to informed through dialogue with
mechanism, and pilot projects to supporting communities increase our suppliers on their progress.
improve attendance at schools within access to basic needs, such as
the community. We are also in the childcare, education, clean drinking
process of supporting the development water, sanitation and hygiene.
of workers’ committees.
In FY23, Imperial provided financial
support for projects in 11 countries, with
more than 100,000 beneficiaries.

56 Imperial Brands | Annual Report and Accounts 2023

 increase micro-fauna. We also support
ENGAGING SUPPLIERS and engage with suppliers in the The Sustainable Tobacco
planting of indigenous trees to Programme (STP)
We aim to purchase from and
encourage and grow local biodiversity The Human and Labour Rights section
engage leaf suppliers who
by supporting insect and bird life. of the STP is a critical element for the
support their farmers to achieve a
decent standard of living by: respect of human rights and is aligned
In FY23 we published our
with the relevant ILO core conventions
Biodiversity Statement.
1. Continuing to enhance due and the principles and guidance
diligence in our leaf supply contained within other external
Water
chain, co-ordinated through frameworks such as the UN Guiding
In FY22 Imperial committed to
our Leaf Compliance and Principles on Business and
supporting suppliers to improve access
Reporting e-tool (CARE) Human Rights.
to basic needs for 180,000 farmers and
programme.
their families by 2030. This includes
2. Continuing to set high access to clean water, sanitation and
expectations for suppliers who hygiene (WASH).
contract with farmers.
155,000 people in our leaf supply chain
3. Increasing our support for
benefiting from our Leaf Partnership
projects that have a direct
Projects aimed at improving access to
impact within the tobacco
clean water Our Leaf Partnership Projects
communities in our
supply chain. Encouraging a water stewardship We work directly with our leaf suppliers
approach to managing water in our to fund projects in tobacco-growing
suppliers’ catchment areas and directly communities to help tackle some of the
Forestry supporting their projects through our root causes of child labour.
Many of our suppliers’ contracted Leaf Partnership are key areas of
farmers use wood in tobacco importance for Imperial.
production, either as a fuel in the curing
Between 2021 and 2023 our investment
of tobacco or for constructing barns
in water, sanitation and hygiene
required for the curing of tobacco.
projects in countries of most need,
Imperial has committed to supporting including Mozambique, India, the
suppliers and their farmers access Dominican Republic, Guatemala, Brazil Eliminating Child Labour in Tobacco
sustainable wood by 2025. The ambition and Honduras, equates to around Growing Foundation (ECLT)
is for 100% of the wood harvested to be US$ 2.78 million. We actively support the ECLT and its
matched by managed planting. aims to tackle the root causes of child
ACKNOWLEDGING labour by improving access to
In 2023, Imperial continued to create
partnerships in those remaining
THE CHALLENGE education and providing alternatives to
countries that are working towards childhood working. It also has an
wood sustainability and directly funded advocacy role, raising awareness with
commercial forestry programmes. This governments and communities to
builds on the forestry programme Child labour galvanise positive action.
Imperial directly funded with suppliers Like other industries which rely on See ECLT website for more
in Africa between 2015 and 2019. agricultural products, the risk of child information.
labour is highest in the cultivation part
Through the tobacco leaf we purchase,
of our supply chain. Addressing issues
Imperial also financially supports
such as child labour requires a
national forestry programmes, such as
multi-stakeholder response; no single
the Tobacco Afforestation Programme
entity can address issues in isolation.
in Tanzania. Planting trees sustainably
In collaboration with key stakeholders
that farmers can access decreases the
including the industry, suppliers and
pressures on the indigenous woodland
NGOs operating in these communities,
that is being harvested for use in
we seek to address child labour through
tobacco production. There are also
three main avenues:
economic benefits for farmers in labour
saving, reduced cost of wood 1. The Sustainable Tobacco
and transport. Programme (STP)
2. Our Leaf Partnership Projects
Biodiversity 3. The Eliminating Child Labour in
The responsible husbandry and Tobacco Growing Foundation (ECLT)
restoration of natural habitats, soils,
and water are integral to sustainable
agriculture. Our suppliers are
encouraged to protect and enhance
biodiversity in their growing areas. This
includes topic areas covered by the STP,
such as: the mapping of sensitive areas,
responsible soil management and
integrated pest management (IPM) to
reduce the use of pesticides and

www.imperialbrandsplc.com 57
ESG REVIEW continued

Performance indicator 2021 2022 2023 Commentary

Percentage of 88 94 89 Complementary crops are grown alongside or in rotation with

suppliers’ directly tobacco. These crops are grown for household consumption, sale or
contracted as rotational crops to enrich and conserve the soil. Due to the
farmers growing ever-changing nature of our suppliers’ farmer base, those that grow
complementary crops1 complementary crops change. In the next year, we aim to
restructure this KPI to have an even more meaningful impact in our
leaf supply chain.
Percentage of 97 98 99 Suppliers aim to provide all their directly contracted farmers with
suppliers’ directly access to initiatives to improve agricultural productivity, including
contracted farmers technical support, improved efficiencies and improved
with access to infrastructure. These efforts have resulted in an increase of 1% for
initiatives to improve suppliers’ directly contracted farmers with access to initiatives to
agricultural improve agricultural activity over the last reporting year.
productivity1 In the next year, we aim to restructure this KPI to have an even
more meaningful impact in our leaf supply chain.
Suppliers 96 93 With a change in our leaf supplier base, the total suppliers
participating participating in the STP reduced. We have already initiated
in the STP discussions with suppliers who do not yet respond to the STP to
encourage their participation in the next cycle.
Tobacco farming 130,000 84,000 101,410 Imperial continues to fund projects aimed at addressing key
community members livelihood and welfare issues in tobacco communities. This number
benefiting from new represents the number of new beneficiaries from 2023 projects.
Imperial Leaf
Partnership Projects
Purchase from leaf – – 80% As part of our ESG journey and restructuring over FY22, this is a
suppliers who are new KPI.
committed to support We require our leaf suppliers to be committed to supporting their
their farmers access a farmers access a decent standard of living by having clear written
decent standard of commitments and/or policies in place to support the commitment.
living by 2040
Percentage of – – 96%A Imperial has committed to supporting suppliers and their farmers
sustainable wood used access sustainable wood for use as tobacco curing fuel by 2025. The
as curing fuel ambition is for 100% of the wood harvested to be matched by
managed planting.

Improve access to basic needs for 180,000 farmers and their families by 2030
Childcare and – – 36,000 Imperial continues to fund projects aimed at addressing key
education project livelihood and welfare issues in tobacco communities. This number
beneficiaries represents the total number of cumulative active beneficiaries as of
the end of FY23.
Clean water project – – 155,000 Imperial continues to fund projects aimed at addressing key
beneficiaries livelihood and welfare issues in tobacco communities. This number
represents the total number of cumulative active beneficiaries as of
the end of FY23.
Sanitation and – – 33,000 Imperial continues to fund projects aimed at addressing key
hygiene project livelihood and welfare issues in tobacco communities. This number
beneficiaries represents the total number of cumulative active beneficiaries as of
the end of FY23. Sanitation and hygiene projects, which mainly
focus on infrastructure improvement and development, were
impacted by cyclone Freddy in a number of African countries.

1. Data is from strategic suppliers in prioritised countries in most need of support, as outlined by a sustainability index compiled
using Maplecroft risk indexes.
A. Data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000
standard. EY’s Assurance Opinion is available on our website.

58 Imperial Brands | Annual Report and Accounts 2023

 Javier Huerta, Chief
Supply Chain Officer, and
Vinay Advani, Head of Leaf
POSITIVE CONTRIBUTION TO SOCIETY
Procurement & Sustainability,
during a visit to a tobacco farm

SUSTAINABLE
AND RESPONSIBLE
SOURCING

We have been
recognised by
CDP as a supplier

engagement
leader
for a fourth
consecutive year

We are committed to sourcing products and

services in a compliant, sustainable and socially
conscious manner. We will work with our
suppliers to ensure continuous improvements.

Behaviours Link to SDGs Governance

• Sustainable and Responsible
SDG 12: We aim to Sourcing Working Group
ensure sustainable
consumption and Key policies
production patterns • Supplier Code of Conduct
• Code of Conduct
• Global Procurement Policy
• Human Rights Policy

ELT sponsor
• Javier Huerta,
Chief Supply Chain Officer

OUR PLAN
To source products and services from • Using Sedex as the third-party 2024
a diverse supply base that matches provider to undertake ethical • 50% of our suppliers by spend
our ESG values and ambitions. trading assessment of our partner within the Purchased Goods and
suppliers. This will give us further Services category will have science-
Delivered in 2023 visibility of our supply chain and based targets by 2024.
• Launched refreshed Supplier Code enable us to better manage • Roll out ethical trading risk
of Conduct which has an increased ESG risks. assessment to key strategic
focus on business integrity, human
• Building capability. We appointed a suppliers.
rights, diversity, equity and
new Head of Procurement Capability
inclusion and the environment. 2025
and ESG Lead for Procurement.
• Confirm longer-term ESG metrics
for our value chain.

www.imperialbrandsplc.com 59
ESG REVIEW continued

Ensuring continuity in our supply chain • Business Integrity: Our suppliers are
2023 performance highlights has a direct impact on our business expected to conduct their business in
today, as well as the potential to impact an ethical and responsible manner
In 2023 business sustainability in the future. It and comply with all applicable laws

33%
is important that the standards we and regulations.
expect in terms of quality, labour • Human Rights & Diversity, Equity and
practices, human rights and Inclusion: Our suppliers are expected
of our suppliers by spend within environmental concern are adhered to to provide a fair and safe workplace,
Purchased Goods and Services by our suppliers. and demonstrate respect for human
had set science-based targets.
We establish a relationship of trust and rights, diversity, equity and inclusion.
We are engaging with our key integrity with our suppliers. We expect • Environmental Sustainability: Our
suppliers directly and via the them to conduct their business in suppliers are expected to adopt
CDP Supply Chain Programme an ethical and responsible manner policies and practices that protect the
to achieve this target. and comply with all applicable laws planet and reduce negative impacts
and regulations. on the environment.

We have refreshed our Our Supplier Code of Conduct, aligned We expect all our suppliers – new and
to our Code of Conduct, sets out the existing – to adhere to our updated
Supplier Code behaviours we expect our suppliers version of the Code. But where possible
of Conduct, to demonstrate. We launched our we want suppliers to go beyond the
expectations outlined in this Code.
refreshed Supplier Code of Conduct in
dividing topics into the following Together we must make a positive
September 2023.
sections for clarity: Business social and environmental impact.
Integrity, Human Rights, We have thousands of suppliers who
Diversity, Equity and Inclusion, connect with every part of our business The new Code can be found on our
and the Environment. – from leaf to consumer. They work website and a link is included in our
This is published on our alongside and within our business and purchase order T&Cs, contracts and
corporate website. are fundamental to our success. Our tendering documents. The existing
new Code sets out our expectations for Code will be “phased out” as the new
Using Sedex to obtain ethical our suppliers and reflects our Code is communicated to new suppliers
trading risk assessment of our commitment to be a socially and existing suppliers as and when
partner suppliers. responsible, compliant and sustainable Procurement teams engage with them,
business. It also provides the minimum prioritising our key partners.
standards of behaviour we expect from While suppliers may be managed
our partners, in the following areas: globally, regionally or locally, the
ambition is that all suppliers meet the
same standard to enable Imperial to
meet its commitments to stakeholders,
employers and communities.

Supply chain due diligence

All our suppliers are required to sign-up
Our procurement strategy to our Supplier Code of Conduct. We
covers all third-party spend have regular meetings throughout the
among all five of our supply Using Sedex for suppliers’ year with all our centrally managed
ethical trading suppliers where any ESG-related
chain categories:
risk assessments concerns can be raised. We will cease
1. Tobacco leaf
We have chosen to use Sedex to our relationship with a supplier if
2. Non-tobacco materials (NTM)
gain supply chain visibility, they continually fail to demonstrate
3. Next generation products how they are managing their
(NGP) assess supply chain risks and
support legislation compliance. ESG responsibilities.
4. Indirect goods and services
We expect our partner suppliers We are using Sedex to encourage our
5. Logistics
to be registered with Sedex (or partner suppliers to undertake an
equivalent) and have in the first ethical trading self-assessment. This
instance completed a self- not only allows us to identify risks
assessment questionnaire across within our supply chain, but also target
the following categories: Labour, areas of focus to improve on with
Health & Safety, Environment, our partners.
and Business Ethics. Thanks to
Tobacco leaf supply due diligence is
the insights provided through the covered in the Farmer Livelihoods
Sedex platform and the and Welfare section on pages 55-58.
completion of further in-depth
targeted SMETA audits (Sedex
Members Ethical Trade Audits)
where appropriate, we intend to
work with our partner suppliers
to drive improvements and
mitigate risks through our
supply chain.

60 Imperial Brands | Annual Report and Accounts 2023

Our Supplier Qualification Programme
is the first screening process for all new
Scope 3 Greenhouse Gases (GHG) emissions 822,880 tCO2e calculated for
non-tobacco material (NTM) and NGP 2023
suppliers. This involves suppliers
completing a self-assessment which

Scope 2: 2%
Em
pl
Us
includes questions on business

oy
e

Sc o
ee
of
conduct, environmental management so

co
ld

pe
m
pr

m
and labour practices including od

ut

1: 9
In
ve uc

in
discrimination, child and forced labour, st

g
Do ts

%
m

1.3
wn en 1.4

8%
str 4%
freedom of association, remuneration, &d
eam t s2
. 7
working hours and health and safety. ist tran 7%
rib sp
uti ort
on a
Once on board, our Global Quality team EOL 3.0 tion
t r 4%
perform their own reviews which may sold
pro
e atm
e
duc nt of
include the supplier being asked to ts 3
.28
%
provide evidence for their management
of ESG issues, including how the
supplier communicates their own Code Fuel or energy act
ivities 6.17%
of Conduct and grievance policies
across their operations, and how they ation
port Pur
& se chased
m T rans 3%
rea rvice g
conduct audits and act on findings. Upst tribution
7.3 s 64 oods
.52%
& dis %
Our logistics and indirect suppliers of 33
s 8.
d
goods and services, including facilities oo
lG
management, do not undergo the i ta
p
Ca
Supplier Qualification Programme.
Where we have run a tender process,
we request the supplier provides copies
of policies relevant to the services that

Sco
89%
they supply, which may include those

pe
addressing the labour practices, forced

3:
labour and child labour (in the case of
service outsourcing or goods
manufacture). We review the policies as
part of the selection process.
Scope 3 GHG emissions and Services (PG&S) which makes up
In FY23, we continued our membership 65% of our total Scope 3 emissions.
In FY23 we recalculated our Scope 3
of the CDP Supply Chain Programme
baseline of 2017 and calculated our 2022 We will continue to focus our efforts on
and invited suppliers to complete the
Scope 3 emissions across all categories. the PG&S category and have set the
questionnaires for CDP Climate, Water
This recalculation follows the latest following target: We aim for 50% of our
Security and Forests as applicable.
methodology outlined in our Reporting suppliers by spend within the
We have been recognised as a Supplier Criteria document, and in accordance Purchased Goods and Services category
Engagement Leader by CDP for a fourth with the global Greenhouse Gas to have science-based targets by 2024.
successive year. All companies making (GHG) Protocol.
climate change disclosures to CDP Based on our recalculation, we have
See our Reporting Criteria document
receive a Supplier Engagement Rating now set a more ambitious target to
available on our website for details.
(SER), in addition to their climate reduce our Scope 3 emissions by 50% by
change score, rating them on how 2030.
effectively they engage their suppliers We have a clear methodology for
on climate issues. further improving our data capture for
Scope 3, by transitioning to a more
market-based approach with our
partner suppliers and updating using
the most recent emissions factors.
During the recalculation we re-assessed
the Scope 3 categories relevant to us
and have determined that our most
material category is Purchased Goods

www.imperialbrandsplc.com 61
ESG REVIEW continued

SAFE & INCLUSIVE WORKPLACE

HUMAN
RIGHTS
All factories
report against

21
modern slavery
leading indicators Governance
• Human Rights Compliance
Working Group
• Leaf Compliance Working Group

Key policies
• Health, Safety and Wellbeing
We are committed to raising awareness and improving
Policy
processes in our supply chains, and we recognise the • Code of Conduct
importance, influence and role we have in promoting and • Supplier Code of Conduct
protecting human rights. • Human Rights Policy
• Speaking Up Policy
• Fairness at Work Policy

Behaviours Link to SDGs ELT sponsors

• Javier Huerta,
SDG 8: We are Chief Supply Chain Officer
committed to decent • Paola Pocci,
work for all and to President, Africa, Asia,
sustainable Australasia and Central &
economic growth. Eastern Europe Region

OUR PLAN

Continue to strengthen our due • Launched new digital human 2025

diligence process in alignment with rights learning programme for • Consistently maintain compliance
international frameworks, including employees globally. with our 21 modern slavery
the United Nations Guiding Principles leading indicators across all
2024
on Business and Human Rights, and manufacturing sites.
• Continue to strengthen employee
legislation to ensure we are equipped access to Speak Up channels. • We aim for all relevant employees
to identify, prevent and mitigate to understand and access
• Ongoing due diligence engagement
potential human rights risks. We have independent Speak Up channels
via our Human Rights Compliance
legal duties to protect and support and remediation processes.
Working Group.
our employees. • Continuous monitoring of all our
• Continue to monitor human
priority locations against increasing
2023 rights leading indicators in our
due diligence requirements.
• Three international modern operations and report on number
slavery audits conducted by of audits completed.
ESG team, following a risk-based • Align our internal due diligence
approach while maintaining process to the European Corporate
a geographical balance. Sustainability Due Diligence
• Created a Modern Slavery Toolkit Directive and other relevant
and an escalation process to ensure European and national laws.
all employees equipped with
necessary knowledge.

62 Imperial Brands | Annual Report and Accounts 2023

Our human rights ambitions in the Dominican Republic, Spain and exposed to in our operations. This
• Continue to strengthen our due Madagascar. These audits enabled us to digital training focuses on explaining
diligence processes in line with identify and act on potentially weaker what human rights are, our
international frameworks areas of our due diligence activity and commitment and role in respecting
and legislation. share best practices with other factories and promoting human rights, how to
• Provide further access to our facing similar challenges. Over the last recognise the main signs of modern
independent Speaking Up service. two years, we have audited six of our slavery and, finally, how to report
• Assessing salient human rights top eight priority locations. potential instances of human
issues in our priority locations. rights violations, both internally
All our factories report their compliance
and externally.
• Training and communications against our 21 modern slavery
initiatives to increase awareness indicators on a monthly basis. This During September, we partnered with
of human rights. ensures that our sites are both Hope for Justice to host a series of
managing the risk of modern slavery informative sessions aimed at raising
The key human rights issues that and continually improving transparency awareness about modern slavery.
are particularly relevant to our through reporting. At Group level, we These sessions were conducted in
direct operations monitor compliance of each site against English, French and Spanish and
• The potential for modern slavery – our leading indicators and facilitate the covered four continents.
which includes forced labour, transfer of best practice.
In 2024, we will reinforce our efforts to
domestic servitude and
Similarly, as part of our due diligence, reduce the risk of modern slavery and
human trafficking.
we closely monitored the latest labour exploitation in our operations.
• Ongoing commitment towards fair
developments regarding upcoming To achieve this goal, we will closely
wages and decent work, gender
legislation, such as the European monitor the performance of our
equity, non-discrimination and
directives covering corporate 21 modern slavery leading indicators
non-harassment, freedom of
sustainability reporting and corporate and provide support for the
association and collective bargaining.
sustainability due diligence. Our aim is implementation of action plans in
Alongside prioritising employee health, to be fully prepared for when these manufacturing sites that are not yet
safety and wellbeing, as well as regulations come into effect to avoid fully compliant. We will also introduce
diversity, equity and inclusion, we any potential disruptions in our these indicators to a selection of
believe that respecting and promoting value chain. markets and clusters to expand the
human rights is essential to creating a scope of our due diligence efforts.
Through collaboration with supply
safe and inclusive workplace. Additionally, we will conduct three
chain experts, we have improved our
modern slavery audits based on our
Human rights topics within our value remediation approach. This included
chain are covered in the Farmer risk assessment approach and continue
improving how to identify which
Livelihoods & Welfare and to provide human rights-related
human rights issues would require
Sustainable & Responsible Sourcing training and raise awareness through
sections, pages 55-61.
escalation and to whom, collecting
regular communication activities.
evidence, and evaluating the success of
In compliance with the UK Modern our actions.
Slavery Act, every year since 2016, We take allegations relating
Imperial Brands has submitted its In FY23, we re-assessed our salient
to human rights extremely
Modern Slavery Statement, where we issues, confirming that we are focusing
seriously and are committed
outline our commitments for the on the correct areas, which are: child
to investigating any potential
upcoming year. You can read our labour, modern slavery, occupational
human rights issues within
2022 Modern Slavery Statement on our health, safety and wellbeing; fair wages
our supply chain and
website. As part of these commitments, and decent work; non-discrimination
direct operations.
together with Slave-Free Alliance, of and harassment and gender equity; and
which Imperial Brands is a founding freedom of association and collective
member, we developed a modern bargaining. To develop their content,
slavery toolkit to help our colleagues to we collaborated with internal subject
enhance their knowledge about modern matter experts and aligned our efforts
slavery, identify its key indicators and with the most relevant frameworks and
characteristics, respond appropriately international standards, like the United
to potential victims, and to escalate and Nations (UN) Guiding Principles on
report any concerns. Business and Human Rights, and the
UN Sustainable Development Goals.
Strengthening our
due diligence processes In early 2023, we launched a new digital
learning programme on human rights
As in previous years, in 2023, Group for our employees worldwide. We
Internal Audit assessed modern slavery believe that improving broader
controls and processes as part of our employee understanding of human
wider internal factory audits in six rights will further improve our ability to
cases: Tarnowo Factory, Radom identify potential abuses we may be
Factory, Wilrijk Factory, Congo Factory,
Madagascar Factory and
Skopje Factory.
The ESG team also conducted three
international modern slavery audits,
which followed a risk-based approach

www.imperialbrandsplc.com 63
ESG REVIEW continued

SAFE & INCLUSIVE WORKPLACE

EMPLOYEE
HEALTH, SAFETY
& WELLBEING

Reduced lost
time accidents by

44%
since 2019

(absolute numbers)

We are committed to achieving world-class occupational

health, safety & wellbeing for all our employees.

Behaviours Link to SDGs Governance

• Health and Safety Compliance
Working Group
• Wellbeing Working Group

Key policies
• Health, Safety and
• SDG 3: Good health and
Wellbeing Policy
wellbeing.
• Health and Safety Framework
• SDG 8: Decent work and
• Human Rights Policy
economic growth.
ELT sponsors
• Javier Huerta,
Chief Supply Chain Officer
• Aleš Struminský,
President, Europe Region
• Paola Pocci,
OUR PLAN President, Africa, Asia,
Australasia and Central &
(From a 2019 base year)
Eastern Europe Region
2024 2025
• Kim Reed,
• Further roll out of behavioural • 75% of fleet vehicles fitted
President and CEO,
science in safety with an in-vehicle monitoring
Americas Region
leadership training. system (IVMS).
• Design Behavioural Based Safety • 60% reduction in fleet
Programme Foundations. collision rate.
• Launch Group standards for safety • 100% compliance with the
leadership routines. Health and Safety
• Zero Injury Aspiration campaign Framework.
focus on awareness and education. 2030
• Implementation of Wellbeing • 75% reduction in lost time
Framework and Guidance. accident rate (LTA).

64 Imperial Brands | Annual Report and Accounts 2023

Commitment In FY23, 45 leaders in our Global Supply Wellbeing
The health, safety and wellbeing of our Chain function were trained on a
The wellbeing of our employees is of
employees continues to be of the Behavioural Science Course for
paramount importance. This was
utmost importance to us. We want to Leadership in Safety, accredited by the
confirmed as an ESG priority in 2022,
continue to create a working Institution of Occupational Safety and
following the refresh of our ESG
environment where wellbeing and Health (IOSH). Additionally, 239 leaders
strategy and the outcome of a
safety are absolute priorities, creating a in Europe took part in training on
materiality assessment.
culture of care. impactful safety conversations. We
want to prevent accidents occurring Currently, our employee wellbeing
This includes setting granular long- support is managed locally and
and therefore we need to be able to
term targets alongside a broader Zero includes resilience training, employee
better spot and assess risk.
Injury aspiration which is part of our assistance programmes, health checks
internal Triple Zero campaign. These We trained 3,086 employees from our
and awareness programmes, flexible
objectives can be achieved when all European manufacturing operations on
working, family-friendly policies and
colleagues take personal responsibility. dynamic risk assessment, and we are
facilities, and workplace celebrations
We want to develop a Safety Culture of going to roll out the training for
and social events.
Care and in FY23 we reviewed and remaining regions in FY24.
updated our Health, Safety and While larger sites have in-house
We initiated our Zero Injury Aspiration
Wellbeing Policy to ensure safety occupational health professionals,
campaign to educate employees on
responsibilities were clear across all others rely on third-party healthcare
various health and safety risks and
levels of the business, to link our Zero service providers. Our goal is for a
preventative measures. The campaign
Injury aspiration to this policy and to consistent wellbeing approach across
includes regular safety One Minute
include wellbeing responsibilities and the organisation, reflecting our
Lessons, Health & Safety Newsletters
guidance for all employees. commitment to mental health and
and a Safety Spotlight initiative, to
wellbeing, as outlined in our new
To support continuous improvement, promote safety and best practices for a
Wellbeing Strategy detailed below.
we have developed a range of leading consistent safety culture.
indicators to help us measure Our Group-wide Wellbeing
We are improving our processes for
compliance and identify improvement Strategy development
determining the root causes of
opportunities. We use these leading We have set an ambition to provide
incidents, to aid in a more targeted
indicators to manage our key health appropriate and prompt support to our
approach in addressing and educating
and safety risks, such as working at employees, ensuring their wellbeing
our people. In FY24 we will launch
height, operating machinery and at work and reducing the likelihood
updated Incident Reporting and
driving safely, to measure compliance of psychological harm due to
Investigation Standards, alongside an
against our Health and Safety workplace factors.
app, for our people to report incidents
framework which is based on a Plan Do
which will be linked to a dashboard for In FY23 we developed a wellbeing
Check Act (PDCA) model. This approach
better monitoring. framework to achieve this, co-created
ensures we focus resources in the
priority areas and can effectively In FY23, our vehicle collision rate through an inclusive approach
manage risk across all areas of reduced by 21% through increased considering the needs of our people
the business. leadership engagement and local from responses to key questions in our
educational campaigns, which employee experience survey and via
In April 2023, we marked the World Day employee wellbeing focus groups.
promoted safe driving practices.
for Safety and Health at Work by
publishing our new Health, Safety and Eight of our sites achieved higher levels This framework provides a clear
Wellbeing Policy. Through the active of compliance with the Drive Safe structure and guiding principles for
participation of senior leadership and leading indicators, reaching a global all wellbeing initiatives across the
the ELT sponsors for the Health, Safety compliance score of 92%. These organisation. It also allows for flexibility,
and Wellbeing pillar, we communicated indicators set clear expectations and enabling individual regions and
the Policy and plans across the encourage continuous improvement in functions to adapt practices to suit their
business through various channels road and driver safety. specific needs and cultural differences.
and toolkits. We also benchmarked activities in
Implementing in-vehicle monitoring
We also reviewed and updated our systems (IVMS) in five additional wellbeing. By staying informed about
Health & Safety Framework which is markets proved effective. Notably, Italy industry trends and best practices,
based on the PDCA model to provide and Taiwan saw a 62% and 51% we were able to learn from successful
more focused guidance to our reduction in collision rates, respectively, initiatives implemented elsewhere
employees to ensure consistency in thanks to the captured data pinpointing and apply relevant strategies to our
approach and good governance across risk-increasing behaviours and own organisation.
the business, translated into a variety of enabling targeted training. We internally benchmarked 50 Imperial
local languages. locations, finding areas for improvement
Our commitment remains steadfast as
To build foundations for a Group-wide we strive to achieve our FY25 target of a and wellbeing enhancement.
behavioural safety programme, which 60% reduction in the vehicle collision
we plan to pilot in FY24. rate. We will continue enhancing our
vehicle safety initiatives to maintain
momentum and ensure the wellbeing
of our drivers and communities.

www.imperialbrandsplc.com 65
ESG REVIEW continued

To capture diverse perspectives, we In May 2023, together with our We will continue to develop our
established a Wellbeing Working Group, Disability Employee Resource Group approach and strategy for wellbeing
which included representatives from (ERG), we held two events focused on in FY24.
different functions and regions. This the importance of our wellbeing,
approach ensured that all areas of the specifically targeting anxiety and fear.
business were involved during the An external anxiety specialist delivered Our Wellbeing Plan:
wellbeing strategy development and the session and our people were • Develop KPIs to measure
that the final plan resonated with encouraged to share their experiences our performance.
various stakeholders. with anxiety in and outside the • Foster a mentally healthy
workplace, promoting openness and culture by incorporating
Looking ahead, we plan to establish
reducing mental health stigma. these principles into
clear metrics and leading indicators for
People Leader training.
measuring performance in wellbeing. In FY23, 47 employees from nine
• Run regular initiatives to raise
By tracking the impact of our factories received mental health
awareness of mental health
initiatives, we will be able to assess training. As Wellbeing Champions,
issues at work.
their effectiveness and identify areas they can now better identify the signs
for improvement. This data-driven of stress, anxiety and depression in • Enable local sites to design
approach ensures that our Wellbeing themselves and others, how to practise and implement initiatives
strategy remains relevant, impactful active listening, and to offer support addressing local wellbeing
and continually evolving to meet the through local networks. needs.
needs of our people.

HEALTH AND SAFETY PERFORMANCE

Performance indicator Unit 2019 (base 2021 2022 2023 Commentary

year)

Employee fatalities1 Number 2 1 0 0 Health and safety remain a priority for all our employees.
Contractor Number 0 0 0 1 Regretfully, a contractor fatality occurred in April 2023, at the
fatalities1 external premises of the Skopje Factory, North Macedonia. The
impacted person was an employee of the Government-owned
contractor who was performing a routine waste collection activity.
Members of the Number 1 0 0 0 Road safety remains a priority across all our operations.
public fatalities
involving Imperial
Brands vehicles1
Lost time accidents Number 101 65 57 57 There has been no change in the number of lost time accidents
(LTAs)1,2 compared to last year. However there has been a 44% decrease in
lost time accidents since the 2019 base year.
LTA rate1,2 LTAs per 0.40 0.27 0.24 0.30A We have seen an 25% increase in our lost time accident rate
200,000 compared to last year. The number of LTAs stayed the same as
hours last year whilst the number of hours worked has reduced, leading
worked to the 25% increase in LTA rate.
During FY23 we continued to increase the use of leading
indicators to better manage risk throughout our operations.
Total number Number 850 573 522 420 We have seen a 20% decrease in total accidents compared
of accidents1,2 to last year.
Accident rate1,2 Total 3.39 2.36 2.24 2.24 The total number of accidents compared to last year decreased,
accidents however the number of hours worked has also decreased which
per 200,000 has resulted in the accident rate remaining the same as last year.
hours
worked
Fleet collision rate Accidents 5.03 3.95 2.8 2.29A There has been a 18% decrease in our vehicle accident rate
per million compared to last year. Road safety remains a key priority for us.
kilometres We adopt global standards for road safety and use our Drive Safe
campaign to promote awareness and influence behaviour.
Fleet vehicles fitted % – – 57.3 46.9 Evidence shows that in-vehicle monitoring systems typically
with an in-vehicle lead to fuel reduction and improved safety performance and we
monitoring system will continue to test and extend coverage.
(IVMS) The reduction in percentage is due to an increase in fleet size in
markets without IVMS, and the closure of a market that had fleet
vehicles with IVMS installed.
Compliance with % – – 87 93 We aim to be at 100% compliance with our framework standards
the Health and by 2025.
Safety Framework
(Manufacturing)
Compliance with the % – – 93 94 We aim to be at 100% compliance with our framework standards
Health and Safety by 2025.
Framework (Sales)
ISO 45001 % 79 74 71 72 Of the factories in scope, 72% have certification for the
certification international standard for health and safety at work.

A. Select 2023 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard. EY’s Assurance Opinion
is available on our website. Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
1. Our health and safety data is for the full 2023 financial year.
2. Accidents reported do not include commuting to or from work, or those sustained by third parties such as distributors.

66 Imperial Brands | Annual Report and Accounts 2023

SAFE & INCLUSIVE WORKPLACE

DIVERSITY,
EQUITY &
INCLUSION
Scored

92%
on 2022 ShareAction
Workforce
Disclosure
Initiative

We are committed to creating a diverse and inclusive

organisation renowned for celebrating difference, enabling our
people to feel they belong and be their authentic selves.
We will respect, recognise and value the diversity of our
consumers and reflect the communities in which we operate.

Behaviours Link to SDGs Governance

• People and Culture
SDG 5: We aim to Leadership Team
achieve gender
• Employee Resource
equality and a
Groups (ERGs)
more inclusive
organisation. Key policies
• Code of Conduct
• Fairness at Work Policy
• Human Rights Policy
• Supplier Code of Conduct

ELT sponsors
OUR PLAN
• Murray McGowan,
2021 2023 Chief Strategy and
• Employee Resource Groups (ERGs) • Workplace and Workforce pillars Development Officer
set up. have been the focus. • Alison Clarke, Chief People and
• Goals set with each Executive Culture Officer
Nov 2022 Leadership Team member,
• Board approved a five-year measuring progress on
ambition for DEI. a quarterly basis.
• Launched a self-declaration
campaign called “I Belong”.

2027
• Target set to increase
representation of women in senior
management from 28.2% in 2022 to
35% by 2027.

www.imperialbrandsplc.com 67
ESG REVIEW continued

We have implemented targeted

“We are committed to creating
candidate attraction campaigns and,
a truly diverse and inclusive in FY24, will introduce digital tools to
organisation renowned for support the removal of gender-specific
celebrating difference, language from our recruitment
processes and provide
enabling our people to feel that
inclusive recruitment training
they belong and can be their for hiring managers.
authentic selves, best enabling
We have broadened the scope of our
the performance of every annual Global Talent Review to
colleague – benefiting our increase visibility of talent deeper into
consumers, our business and the organisation, identifying diverse
our people”. individuals we can support and develop
to realise their full career potential.
Alison Clarke, We launched a self-declaration
Chief People and Culture Officer campaign called “I Belong” in July 2023,
to access employee data for areas such
as ethnicity, disability and LGBTQ+ .
Robust data in these areas will inform
future goals and actions.
For the Marketplace pillar we are
assessing our status and the systems
needed to measure diversity of
Creating a more diverse and inclusive One priority goal for our Workplace suppliers as part of our supplier
organisation is an integral element of pillar is to improve the inclusivity of management system. We will
our cultural transformation. our processes, policies and practices. accelerate work in this area during the
We use assessments validated by next two fiscal years.
We define diversity as everything that
independent expert organisations
makes us unique; inclusion as every While the full achievement of our DEI
including the Business Disability
individual feeling they belong; and Ambition will take time, we now have
Forum, Stonewall and the Centre for
equity as giving fair treatment and the right plans in plans to accelerate
Global Inclusion. We have assessed
opportunity to all. our progress.
ourselves against criteria set out by
At the centre of our efforts have been these organisations and have a clear
our global Employee Resource Groups view of our baseline against
(ERGs) which were set up in 2021. Our benchmarks on which to improve. Global Employee Resource
ERGs continue to grow their Groups
In addition, we measure employee
membership, inform our DEI priorities, • Gender ERG
inclusion through four DEI-related
and raise awareness across the • Ethnicity ERG
questions in our annual global
organisation on key diversity topics. • LGBTQ+ ERG
employee experience survey. Our
In November 2022, the Board approved commitment is to move towards • Disability ERG
a five-year DEI Ambition and Strategy. high-performing benchmarks,
externally validated by our employee
We have defined three strategic pillars,
experience provider.
each with clear KPIs.
In support of developing an inclusive
-Our Workplace focuses on our
culture, we are creating further
environment, policies, practices and
interactive training programmes for all
behaviours.
employees, to continue to raise
-Our Workforce focuses on awareness and understanding of DEI
representation – the makeup of and create strong allyship. An ally is
our people. someone who is proactive in supporting
the inclusion and causes of an under
-Our Marketplace focuses on how we
represented group whilst not being a
operate with consumers and ensuring
member of that demographic. This
products and services are sourced from
programme will provide awareness and
a diverse supplier base.
understanding of allyship and the skills
Our Workplace and Workforce pillars and actions required to be an effective
have been our focus during 2023. Our ally. The training programmes will be
approach has been to set both global implemented in the next financial year.
and local goals, mindful of local
Our goals for our workforce have
legislation and culture.
initially focused on gender since this is
where we have robust data. We have set
a global goal to increase representation
of women in senior management from
28.2% in 2022 to 35% by end of 2027.

68 Imperial Brands | Annual Report and Accounts 2023

DIVERSITY, EQUITY AND INCLUSION PERFORMANCE1

Performance indicator Unit 2021 2022 2023 Commentary

Female employees in % 40 40 39A Female representation has remained broadly consistent

the workforce2 across the last three years.
FY23: 6,672 women, 10,412 men, 66 not declared.
Female senior % – 29 31A We are committed to increasing representation of
management3 women in senior management (Global Grades 3, 4, 5)
and have set a goal of reaching 35% women at this level
by the end of FY27.
FY23: 186 women, 420 men, 2 not declared.
Female Executive % 33 30 30A Female representation on the ELT as at 30 September
Leadership Team 2023 (end of FY23) was 30%. There has been no change
(ELT) members in the composition of the ELT in FY23.
FY23: 3 women, 7 men.
Female PLC % 22 40 40A Female representation on the Board has remained
Board members at 40%. We are proud to have met the 40% target set by
the FTSE Women Leaders Review three years ahead
of schedule.
FY23: 4 women, 6 men.
Ethnic minority % 10 20 20A On 30 September 2023 (end of FY23), 20% of the
background on Board members identified as being from an ethnic
our Board minority background.
FTSE Women Leaders % 21.4 24.3 26.7A The FTSE Women Leaders Review is the successor to
Review Combined the Hampton-Alexander Review. It is the UK’s
Executive Leadership independent, voluntary initiative aimed at increasing
Team & Direct Reports the representation of women on FTSE 350 boards and
leadership teams. The reporting date is 30 October 2023.
Employee turnover rate4 % 10 30 16 Following a spike in FY22 due to divestiture and
business transformation, turnover reduced significantly
in FY23.

A. Select 2023 data has been independently assured by Ernst & Young LLP (EY) under the limited assurance requirements of the ISAE 3000 standard. EY’s Assurance Opinion
is available on our website.
Our reporting scope and definitions are detailed in the Reporting Criteria document published on our website.
1. We recognise the need to gain more comprehensive employee demographic data in order to understand the diversity of our employee base and drive inclusion.
This will form a key part of our new DEI strategy and will help us measure (where appropriate) ethnic minority, disability, LGBTQ+ and other key DEI dimensions.
2. Based on employees recorded in Imperial Brands Group Human Resources Information Systems, excluding Logista, contractors and casual labour.
3. The proportion of senior management employees (Global Grades 3, 4, 5) recorded as female across Imperial Brands Group, excluding Logista.
4. This reflects all employees excluding those employed by ITG Brands and Logista.

www.imperialbrandsplc.com 69
TCFD

96%
electricity from
purchased
renewable sources

TASK FORCE ON CLIMATE-RELATED

FINANCIAL DISCLOSURES (TCFD)
physical risk due to the increased tracking and incorporating the
We are now in the frequency and intensity of storms, management of the effects of climate
second year of mandatory floods and droughts. change into its strategies. Imperial
reporting against the TCFD In 2022 we conducted the first phase of
Brands’ scenario analysis was
conducted with a different
recommendations. In 2021 a quantified climate scenario analysis
methodology to Logista’s as we
with 4°C and 1.5°C pathways (RCP 8.5
we made our first voluntary separate our business to maintain
and RCP 2.6), aligned with the
disclosure in line with the recommendations of TCFD. This work
commercial sensitivity. With the
support of Logista management, we
recommendations, and in was conducted in collaboration with a
have reviewed Logista’s disclosures
third-party supplier and a cross
2022 we published our first and incorporated them into our report.
functional group of subject matter
detailed disclosures. In 2023, experts from our ESG, Risk, Finance and We have provided updated climate-
we have continued to Governance teams. related disclosures in the report
below in accordance with the TCFD
improve our climate-related The scenario analysis takes into
framework’s four primary components:
disclosures, recognising consideration climate-related physical
governance, strategy, risk management,
and transition risks as well as
the benefits of this for opportunities for the period until 2050.
and metrics and targets.
both our stakeholders and Overall, 44 operational sites and nine
our business. leaf sourcing regions, covering 31
countries, were identified for a “deep
For more information on our
dive” risk and opportunity assessment.
climate change strategy, Lukas Paravicini,
Key sites and sourcing regions were
please see page 48. Chief Financial Officer
chosen due to their strategic and
We recognise the importance of financial importance to Imperial Brands
disclosing climate-related risks and and we used the third-party Climate IQ
opportunities. We have reported on our tool for our analysis. This tool combines
approach to managing and mitigating climate science, macro-economic and
climate-related risks for several years, financial information.
within both our sustainability reporting In 2023, we began the second phase of
and CDP disclosures. We consider the scenario analyses by taking a
climate-related risks and opportunities thorough analysis into the local sites
in our business strategy and financial identified as potentially at risk in Phase
planning, considering exposure to these 1, by reviewing their mitigation plans,
risks can occur over a range of time future plans, and helping them identify
horizons depending on the type of risk. local level opportunities. We have also
In the short term, some of our locations used this opportunity to provide further
and some of the areas from where we information on how our Spanish
source our tobacco leaf are at higher subsidiary, Logista, is governing,

70 Imperial Brands | Annual Report and Accounts 2023

COMPLIANCE STATEMENT elsewhere within the Annual Report and supplement on the use of scenario
In accordance with the LSE Listing Rule explain the reasons for only partially analysis, TCFD Guidance on Metrics,
9.8.6(8)R, the index below sets out complying with some of the TCFD Targets, and Transition Plans, and the
whether Imperial has made disclosures recommended disclosures. We will TCFD Guidance for All Sectors, as well
fully or partially consistent with the continue to expand on the partially as considering the updated guidance on
TCFD recommendations and compliant disclosures in FY24. Implementing the Recommendations of
recommended disclosures, and the Task Force on Climate-related
In assessing compliance with LSE
summarises where the relevant Financial Disclosures published in
Listing Rule 9.8.6(8) R, we took into
disclosures are made. October 2021.
consideration the documents referred to
In the table below, we include cross- in the guidance notes to the Listing
references to disclosures made Rules including the TCFD technical

TCFD Pillar TCFD recommended Cross-reference Compliance Next steps, other comments or
disclosures statement explanation of partial compliance

Governance a. Board oversight Page 72 Compliant We will continue to evolve our governance of Climate
Change, and reflect it in these disclosures.
b. Management’s role Page 73 Compliant We will continue to evolve our governance of Climate
Change, and reflect it in these disclosures.
Strategy a. Climate-related risks and Page 75 Compliant We will continue to evolve by including comments on
opportunities specific risk areas, particularly in regard to mitigations
in place.
b. Impact on the Page 74 Compliant We will continue to evolve in line with our strategy,
organisation’s strategy including mitigation and transition plans.
c. Resilience of the Page 76 Compliant Based on the 2022 scenario analysis we completed an
organisation’s strategy internal analysis of our owned operational sites located
in higher physical risk areas as well as an analysis of
our leaf sourcing regions. We have detailed local action
plans as well as business continuity plans (BCPs) in
place to mitigate the risk for each location. We have also
incorporated Logista in our disclosures.
a. Risk identification and Page 77 Compliant We have put in place local action plans for sites and leaf
Risk assessment process sourcing regions identified with a higher physical risk.
management We will continue to monitor these regions and evolve
our BCPs as the need arises.
b. Risk management Page 78 Compliant Climate risk management is integrated into our Group
process Risk Management framework and we will continue to
monitor this risk and evolve our processes accordingly.
c. Integration into overall Page 78 Compliant We will continue to evolve in line with our Group risk
risk management management evolution.
Metrics and a. Climate-related metrics Page 80 Partially We are developing our understanding of how to link our
targets in line with strategy and compliant analysis to specific actions within our strategy.
risk management process
With the updated analysis, we have gained greater
understanding of how we can utilise our climate
change strategy in order to manage risks and
realise opportunities, particularly those related to
cost avoidance.
In the future, we aim to include metrics on climate-
related opportunities.
b. Scope 1, 2 (and 3) Page 80 Partially We report our Scope 1, 2 and 3 emissions in accordance
GHG metrics and the compliant with the GHG protocol, and its related risks. We will
related risk continue to explore industry-specific ratios to achieve
full compliance.
c. Climate-related Page 80 Partially We are developing our understanding of how to link our
targets and performance compliant analysis to specific actions within our strategy.
against targets
With the updated analysis, we have gained greater
understanding of how we can utilise our climate
change strategy in order to manage risks and
realise opportunities, particularly those related to
cost avoidance.
We aim to incorporate anticipated regulatory
requirements in the future.

www.imperialbrandsplc.com 71
TCFD continued

GOVERNANCE
We have integrated ESG oversight and management, including
climate change, at all levels of the business, as illustrated below.

OUR CLIMATE-RELATED GOVERNANCE Oversight: the Board of

RISK MANAGEMENT STRUCTURE Directors has oversight
of our climate-related
risks and opportunities.

The Audit Committee

is a Board-level
Board of Directors committee.

Audit Committee Chaired

by Non-Executive Director
Second line
of defence Risk Group Risk There are two ELT-level committees
ESG Committee
Committee responsible for overseeing the climate-
Chaired by CEO
Chaired by CEO related risk management approach: the
ESG Committee, and the Group Risk
Committee. Both report to the Board,
and provide “top-down” insights on
climate-related risks.

Planet Strategy Global Risk & Internal

Group Internal Audit
Group Control
First line
of defence Environment
Compliance Working Group Internal Audit forms
Group our third line of defence.
Third line
For more information
of defence
Individual sites/ please see page 100 on
specific working risk management.
groups

The second line of defence is held either at The first line of defence is assigned
ELT level or functional leadership level either to members of the Planet Strategy
(Planet Strategy Group, see page 73) Group, or to members of the groups
depending on the materiality of the risk. feeding into it, depending on who is
We integrate climate risk and opportunity managing the topic operationally.
into business functions and, as such,
multiple functional meetings report into
ELT-level committees on climate risks
and opportunities.

BOARD OVERSIGHT updated on climate-related risks and expenditure, through reporting from the
opportunities three times, following the ESG Committee, as well as Board-level
The Board of Directors’ main duty is to
ESG Committee meetings in March 2023, consideration and oversight of
safeguard our Company’s long-term
June 2023 and September 2023. The (i) enterprise risk appetite, assessment
prosperity. The Board considers
Board has been updated on performance and management; (ii) longer-term
climate-related matters through our
against our climate-related targets as strategy; and (iii) the annual budget plan.
ESG strategy and performance, which
well as our climate transition plan
includes management of climate risk We have two Non-Executive Directors
which includes financial risk and
and opportunity. It has endorsed all (NEDs) with specific experience in
opportunity, in order to oversee and
climate-related targets including the climate-related matters. Diane de Saint
monitor progress. In addition, it is kept
investments needed to implement Victor, appointed to the Board in
up to date on climate-related risks,
programmes to reduce carbon emissions November 2021, has been associated
opportunities and performance via the
and meet our climate action goals. with a variety of companies playing a
monthly CEO report, and informed of
major role in addressing climate
To ensure the Board has appropriate significant climate-related risks and
change. This includes serving as an
oversight of climate-related risks and opportunities, as required.
executive committee member at one of
opportunities, it endorsed the formation
The Board considers business plans, the world leaders in technology
of a cross-functional ESG Committee
including expenditure on climate-related solutions that help industries in
which is chaired by the CEO and reports
matters, such as climate-related capital reducing their energy consumption.
to the Board. In FY23 the Board was

72 Imperial Brands | Annual Report and Accounts 2023

Alan Johnson, another of our NEDs, People and Culture Officer, and is the least three times a year and reviews the
served from January 2021 to November secretariat of the ESG Committee. The output of the “bottom-up” risk
2022 as the president and chair of the Senior Corporate FP&A Manager reports assessment process twice a year, which
Board at the International Federation of into the Director of Corporate Financial includes climate-related risks. The
Accountants (IFAC). This organisation Planning & Analysis and is responsible Group Risk Committee is an executive-
campaigned successfully to establish for the long-term financial planning level committee chaired by the CEO, as
the International Sustainability and alignment of climate-related risks is the ESG Committee.
Standards Board (ISSB), which was and opportunities. Please see page 100 for the
established at COP26 in November 2021. In March 2023 we held a Net Zero governance structure.
IFAC is now supporting the new ISSB Symposium in our London office which
and working with regulators across the The ESG Committee and Group Risk
was opened by the CFO and hosted by
world on the assurance of climate- Committee are informed by a matrix of
our Global ESG Director. As well as the
related disclosures. supporting functions and working
formal presentations, the event brought
groups. The Planet Strategy Group
together topic experts and practitioners
MANAGEMENT’S ROLE consists of leaders from across the
from across our Global Supply Chain,
business, providing coverage of our
In 2023 we have further integrated Procurement, Finance, Corporate and
eight material ESG topics including
climate governance across our Legal Affairs as well as valued partners
climate change. The Planet Strategy
functions, which enables us to bring from insurers, advisers, and leaf
Group meets on a regular basis and
together experts and decision-makers suppliers to review progress and to
directly influences the Company’s
across the organisation. debate how we could go further, faster,
detailed ESG strategy. Climate-related
to decarbonise, building upon the
Climate change is a central topic of the issues in the business are assessed and
positive progress we have made to date.
ESG strategy and is fully covered by the managed through the Planet Strategy
ESG Committee. The Committee is The Group Risk Committee oversees Group. The group is chaired by the
informed about the performance and the risk management approach and Global ESG Director and provides
progress of the strategy on a quarterly reporting. It provides reporting to the oversight of ESG risks and
basis by the ESG team, and other ELT and the Board regarding its opportunities across the business.
internal subject matter experts. The assessment of risks to the Group and
Committee consists of all members of the effectiveness of the risk
the ELT as well as additional senior management activities to mitigate
management from across the business. those risks. The Group Risk Committee
provides “top-down” insights to the risk
The Chief Financial Officer (CFO) is the assessment process as well as
executive level sponsor of the climate considering emerging risks and themes
change priority in our ESG Strategy. identified in the risk assessment
The ESG team is led by the Global ESG process. The Risk Committee meets at
Director, who reports to the Chief

THE BOARD & MANAGEMENT’S ROLE AT LOGISTA

The Sustainability Policy 4/2023 outlines the responsibilities within Logista for the management of sustainability, including
climate-related risks and opportunities. This structure can also be used to explain the relationship between Imperial Brands
and Logista as regards ESG, including climate-related matters:
The Board of Directors approved Five employees of Imperial Brands sit The Imperial Brands Global ESG
the sustainability policy. This body on the Logista Board, the Chief team, responsible for managing
is ultimately responsible for Strategy and Development Officer, the climate risk and opportunity and the
supervising the observance of the Corporate Development Director, the Group-level TCFD report, have
Policy, through the Audit, Control Group Finance Director, the Director prepared this disclosure with the
and Sustainability Committee. of Strategy for Global Supply Chain teams responsible for the
The Board of Directors takes into and the Senior Investor Relations management of climate risk
consideration sustainability issues Manager, all of whom have regard to within Logista.
with regard to the determination of Imperials’ climate change strategy.
the risk control and management The Director of Strategy for Global
policy, and the supervision of Supply Chain is also a topic owner for
the internal information and Climate Change for Imperial. Any
control systems. climate related risks raised to the
board of Logista are reported to the
overarching Imperial Board through
these representatives, following the
structure set out above.
There also close links between the investor relations team at Logista and those at Imperial Brands.

www.imperialbrandsplc.com 73
TCFD continued

STRATEGY from an external stakeholder

Following an updated materiality perspective. Our ESG strategy, which
assessment in April 2023, climate includes climate change as a priority
change remains one of our most topic area, is integral to the delivery of
important ESG focus areas both from our business strategy and to the
an internal business perspective and sustainability of our business as well as
our approach to this TCFD report.

OUR APPROACH
2022 2023
PHASE 1 SCENARIO ANALYSIS PHASE 2 SCENARIO ANALYSIS
Our process of the assessment of climate-related risks and In the second phase of the scenario analysis, conducted in
opportunities can be described in two phases. Phase 1 is 2023, we took a deeper dive into the local sites identified as
based on the initial scenario analysis conducted in potentially at risk in Phase 1, including leaf sourcing
collaboration with a third-party supplier in 2022. In this regions. We reviewed their existing mitigation and their
first phase, we conducted a quantified climate scenario mitigation and adaptation plans and helped them identify
analysis with 4°C and 1.5°C pathways (RCP 8.5 and RCP 2.6), local-level opportunities for continuous improvement in
aligned with the recommendations of TCFD and the Paris climate-related risk management. This enabled us to update
Agreement, utilising a third-party modelling tool. the scenario analysis by taking into consideration existing
and planned local risk mitigation and adaptation strategies.

Key outputs Key outputs

The scenario analysis took into consideration climate- The insights gained from this activity have been used to
related physical and transition risks as well as enhance the 2022 disclosures. As an example, as a result
opportunities in the short, medium and long term for the of local knowledge and risk mitigation already actioned,
period 2022-2050. In line with requirements all analyses the financial risk associated with climate impacts
have been considered at least until 2050, with certain identified in Phase 1 at our site in Spain has been
risk types estimated beyond to reflect the increasing neutralised in our 2023 analysis.
likelihood of climate issues arising over a longer term.
The Phase 2 analysis also includes an additional
Imperial Brands’ risk time horizon for climate-related physical risk assessment for our factory “La Romana” in
risks covers 10 years, as recommended by CDP1, and is the Dominican Republic. La Romana is one of our key
presented in the table on page 75. In order to more strategic sites but was not included in Phase 1 of the
closely align to this time horizon, we conducted a more analysis due to the sale of our Premium Cigar business,
in-depth analysis covering the next 10 years, split into and the change in ownership in 2022.
short (1-3), medium (3-5) and long (5-10) risk horizons.
Imperial Brands’ financial planning period covers three
years and is therefore included in the short-term period.

Maximum financial impact risk-basis, have produced action plans RCP 8.5) aligned with the
The table on page 75 sets out the different to address the risks. recommendations of the TCFD and
types of risks and opportunities aligned recommended disclosures. The scenario
The MFI calculation does not include
to Imperial Brands’ risk framework, and analysis takes into consideration
inflation, nor does it take into account
the associated maximum financial climate-related physical and
the impacts of future government
impact (MFI). MFI is defined as the transitional risks, as well as
policies. Risks and opportunities have
accumulated maximum impact quantum opportunities in the short (0-3 years),
been prioritised based on the findings
over 10 years between the 1.5°C and 4°C medium (3-5 years) and long term (more
of the scenario analyses.
scenarios. The MFI relates to the gross than 5 years). The Logista analysis
risk and assumes no mitigation or Our approach assumes IPCC and IEA WEO STEPS2
adaptation activities by Imperial. The In 2023, we integrated Logista further scenarios, which are taken into account
dots represent the degree of significance into our disclosures. Imperial Brands’ for the risk and opportunity analysis.
of the risk in each of the 1.5°C and 4°C scenario analysis covers both physical The separate methodology used means
scenarios compared to the total of the and transition risk for Imperial Brands that the numbers cannot be integrated
Company asset base. These scenarios are PLC. In 2023, we reviewed Logista’s wholly into Imperial Brands’ analyses,
integrated into our financial models for approach, undertaken separately with which are summarised on the next
goodwill, and going concern, more details different methodology, and with the page, but are reflected in the text.
on this can be found in page 200 (Note 11). support of Logista management,
In 2023, we undertook an in-depth look have incorporated their findings
into this report. 1. A not-for-profit charity previously known as the
at the highest MFIs, and worked Carbon Disclosure Project https://www.cdp.net/en
collaboratively with sites to consider the Logista quantified the scenario analysis 2. International Panel on Climate Change,
and International Energy Agency World
local mitigations already in place. In with 2oC, and 4oC pathways (RCP 4.5 and Energy Outlook
addition, these sites, selected on a

74 Imperial Brands | Annual Report and Accounts 2023

CLIMATE-RELATED RISKS AND OPPORTUNITIES
Maximum Scenario
financial Timeframe materiality
impact (MFI)
calculated Net
over Zero
Type of timeframe Short Medium Long by
risk4 (£m) (0-2y) (3-5y) (6-10y) 1.5°C 4°C 2040 Mitigation through strategy
Physical risks associated with climate change
Chronic Impact of physical hazards Product 15 The Group takes out insurance
(e.g. riverine flooding) on key supply for the coverage of this risk
assets could lead to a decrease within direct operations, and
in asset value. maintains business
contingency plans.

Chronic drought risk2 could lead Product nq* The Group takes out insurance
to a decrease in revenues due to supply for the coverage of this risk
supply chain disruption and its within direct operations, and
effects on production capacity. maintains business
contingency plans.

Changes in tobacco crop yield2 Product 34 Expected to be partially offset

resulting from climate change supply by an increase in potential yield
could lead to a decrease in for the growing of tobacco due
revenues due to agricultural to changes in temperatures,
supply chain disruption and its and the flexibility of the leaf
effects on production capacity. sourcing supply chain, allowing
for location selection on a
yearly basis.

Acute Increased frequency and severity Product 54 The Group maintains supply
of extreme weather events supply chain contingency plans and
could lead to a decrease in insurance cover for the
revenues due to supply chain coverage of this risk within
disruption and its effects on the supply chain. The number
production capacity. has been updated to include
La Romana assessment which
represents the majority of this
specific MFI.

More severe hurricane risk2 Product nq* The Group maintains supply
could lead to a decrease in supply chain contingency plans and
revenues due to supply chain insurance cover for the
disruption and its effects on coverage of this risk within
production capacity. the supply chain.
Transition risks associated with transitioning to a low-carbon economy
Policy & Increased costs could result from Delivery 9 It is expected that we will
legal emerging regulations such as of ESG mitigate this through our Net
carbon taxation1 and the carbon strategy Zero strategy, aiming to be Net
pricing mechanism, predicted to Zero in our direct operations
begin in 2024. by 2030. In FY23 the impact of
carbon pricing has been
reassessed to incorporate the
improved ability of the global
economy to adapt to transition,
e.g. through a higher share of
renewable energy.

Market Materials costs in NTM and Product 268 It is expected that mitigation
tobacco leaf could increase due to Supply will be possible through
increases in the operating costs partnership with key suppliers
of suppliers and raw materials. to drive change in the supply
This could reduce access to chain before a financial
capital. A key impact is expected impact occurs.
to be from the introduction of
carbon taxation through our
supply chain, predicted to begin
in 2024.
Climate-related opportunities
Energy Energy supply costs3 could Delivery 36 The Group is prioritising early
sourcing decrease due to resource of ESG action to limit costs and
efficiency and the use of zero strategy mitigate impact, reflected in
emission sources of energy in our the step change in renewable
direct operations. electricity reporting in our
performance summary.

1. Assuming no decarbonisation measures are taken by Imperial Brands Mild change5 <0.2%
2. Impact has been quantified non-financially
3. Cost avoidance from energy transition Moderate change5 0.2%-1%
4. In accordance with Imperial Brands’ risk assessment Significant change5 >1%
5. % of asset value

*Nq= not quantifiable. These risks have not been quantified due to the complexity in calculating financial impact and lack of tool capability. Further assessment is required in
these areas to develop a link to financial impact, including an assessment of materiality when taking into account mitigation and action plans in place.

www.imperialbrandsplc.com 75
TCFD continued

We ensured the range of impacts of climate change, we do not

consider this an asset or supply risk for
potential hazards, from most leaf sourcing locations.
physical impact to changes
In 2022, we reported that the most
in local or global policy material physical risks were associated
within transition, were with a risk of flooding to our site in
Spain. Based on local assessment of this
covered while defining the
site in 2023 we were able to fully
assessment’s scope. mitigate the risk of flooding at site-level.
Following these analyses, This is mainly driven by local
governmental action as well as by an
we believe we are now able
assessment by our global insurers, FM
to consider the range of Global, who undertook an in-depth
different possible options in analysis of the local flood risk to confirm
our findings. FM Global is the Group’s
our operational planning.
property damage and business
For those identified as most likely, or interruption insurer, providing insurance
most material, we are addressing the to more than 1,000 Imperial Brands sites
risks directly with action plans to around the world. They are a location-
minimise future risk. We believe our specific insurer which means they
regular reviews and updates of these assess the risk presented at each site
analyses to reflect evolving maturities and assign a premium rate per site.
will help us assess all the possible risks LA ROMANA – CASE STUDY
Other physical climate risks, though not
for impact, to ensure we are able to Our La Romana factory in the
considered material at Group level, are
perform and maintain operations. Dominican Republic manufactures
being monitored locally as part of
machine-made cigars. It was
Physical risk Business Continuity Plans (BCPs). This
identified in Phase 2 of our climate
The scenario analysis has considered confirms that our current approach,
scenario analysis as the site most
the physical risk from coastal where climate risks are integrated into
exposed to physical climate risk.
inundation, soil subsidence, surface local business plans, and do not form a
This is primarily driven by the risk of
water flooding, riverine flooding, separate material risk at Group level, will
surface water flooding. To mitigate
extreme wind, forest fire and water continue to be most appropriate.
the risk and prevent local damage
stress to our direct operations and our the site has put local action plans
Transition risk
tobacco purchasing regions. The in place.
As indicated in the table, increased
analysis predicts that storms are likely
materials cost represents the biggest The action plans address business
to increase in severity at a rate of 5% but
absolute risk as a result of climate interruptions such as local grid
despite this it is not likely to result in a
change, however, the accumulated value power and water supply
significant financial impact at Group
over the next 10 years is still likely to be interruptions as well as fires,
level over the next decade. As shown in
less than 2% of our NTM and tobacco leaf and include the following:
the table on page 75, the work completed
spend if no further mitigating action
demonstrates that the business is • Emergency generators to provide
is taken.
relatively unaffected in both climate power at all buildings.
scenarios in the short term for physical This result confirms that our suppliers’ • Osmosis filtered water storage
risk, both chronic and acute. cost base is also likely to increase if they tanks at all facilities supporting
are not already taking steps towards two large 10,000 and 15,000 gallon
In the 4°C scenario, the probability of
becoming Net Zero. The analysis potable water tanks.
physical risks in the medium and long
indicates that the increase in material
term increases compared to the 1.5°C • A large 130,000 gallon tank
costs is mostly represented by NTM and
scenario, but financial impact can still be dedicated for firewater with
tobacco leaf. Our updated scenario
considered insignificant overall. In our independent water pump. It
analysis considers an overall reduced
updated analyses, when viewed by supplies firewater to hoses inside
global carbon pricing compared to the
location in the third-party model, our each building via a dedicated
2022 scenario analysis. This is due to the
leased factory in the Dominican supply line.
improved ability of the global economy
Republic is affected most by physical
to adapt to transition leading to a Additionally, La Romana has built on
risks. The physical risks identified are
smaller degree of sacrifice needed to its business continuity plan, which
mainly as a result of surface water
decarbonise. This results in a reduced incorporates the following topics:
flooding. Imperial Brands will conduct
estimated impact on the costs of
further on-site analysis to confirm the • Reliance on a 12-week stock of
materials due to lower carbon pricing
presence and severity of the surface finished goods at our warehouse
impacts on production.
water risk and to identify potential outside the Dominican Republic.
mitigation. Physical risks in other Our climate ambitions include targets • Short-term relocation of
locations were considered immaterial. In for reduction of Scope 3 emissions, and production capacity to equivalent
total, we assessed our sites for nine we are working with key suppliers to manufacturing facilities across
physical risk types, including soil reduce these. For more information, Imperial Brands.
movement, coastal inundation and please refer to the section on Metrics • New production machinery
drought. We are not vertically integrated, and Targets on page 80. We anticipate allowing rapid production
so our tobacco supply chain remains that material costs can be significantly normalisation in case of an
flexible. While our procurement function reduced by meeting our long-term ESG emergency event.
includes support for farmers from the strategy, particularly as we begin to

76 Imperial Brands | Annual Report and Accounts 2023

collaborate with partners on Scope 3 calculation based on the MFI resulting Our analysis shows us that in either
emissions. As disclosed to CDP in 2022 from the 1.5oC scenario. Additionally, we scenario, our strategic approach should
and 2023, we are beginning to develop a intend to allocate capital spend for use have a positive effect in managing costs.
decarbonisation transition plan, detailed in decarbonisation projects based on a However, we will continue to monitor
in the ESG performance summary on carbon pricing mechanism in FY24. the impact that carbon prices could have
our website, which will be expanded to on our cost base and consider the
Currently, given the risks identified
include policy, energy, technology and business’s ability to manage or pass
relate to future operational costs we
other routes to consider as part of our through some or all the costs. If new
have no committed liabilities with third
Net Zero strategy. climate-related risks and opportunities
parties associated with climate impact
are identified, we are committed to
Distribution business risks which need to be accounted for.
aligning our strategy accordingly and
The inherent physical risk identified For other financial statement areas that integrating the respective costs into our
with the highest potential impact for cover a period beyond the financial profit and loss.
Logista is “heavy precipitation (rain, hail, planning of three years and beyond
snow or ice)” due to its strategic and Following our updated analyses, we
Imperial Brands’ climate-related risk
financial impact affecting key currently have confidence that our
time horizon of 10 years, we have
businesses. The value of this risk climate change strategy is effectively
considered the MFI of the material
following implementation of the managing our climate-related risks and
climate-related risks for the relevant
mitigation actions is insignificant at opportunities, demonstrated by the
period of those specific areas. For
both Logista and Imperial Brands level1. progress in both physical and transition
example: assessing goodwill and
Emerging regulation and technology risks. We will continue to develop our
intangible assets impairment
were highlighted as the most impactful carbon transition plan, bringing more
assessment (Note 11) and recoverability
transition risks, however, these are not clarity to the details underpinning our
of deferred tax assets (Note 22). We also
determined to have a material financial Net Zero Strategy.
included the Directors’ assessment of
impact or impact on the business, climate change impact in the going Assumptions
strategy or financial planning. concern (page 111) and viability and These physical and transition analyses
associated disclosures. assume that no action is taken to
Impact of risks in financial reporting
Imperial Brands’ long-term financial decarbonise in the supply chain or
Climate-related opportunities
planning covers a three year period. within our operations. The work also
By successfully implementing our Net
Based on the outcomes of this report, does not take into account inflation,
Zero strategy, we can maximise the
increased physical risks and transition consider the impacts of future
benefits of the green energy transition
risks associated with climate change are government policies or subsidies, or
and avoid carbon costs across the period
not significant1 over this time period. We currently existing mitigation. Material
in the 1.5°C climate scenario. We have a
do not expect the risk associated with costs include the costs of physical risk
decarbonisation glidepath and transition
climate change to be material to the materialising in the supply chain.
plan mapping our emissions to achieve
Group, with the largest risk expected to Net Zero which we expand on in Metrics RISK MANAGEMENT
not exceed £10 million for 2024 (and and Targets on page 80, in our ESG We integrate climate-related risks and
£43 million over the three-year period). Review from page 38, and in our ESG opportunities in our business strategy
This is related to increased operating performance summary on our website. and financial planning. We have
costs of NTM and tobacco leaf, with the
assessed both the physical (climatic)
and transitional (technological) risks

Carbon cost is anticipated to increase

Potential carbon cost of Scope 1 emissions in the 1.50C scenario
from 2024 across our global operations,
primarily as a result of regulation. ‘000 GBP
Especially when viewed in the 1.5oC
6,000
scenario, the total cost estimated for
Scope 1 emissions between 2024-2029 5,000
for our operations without mitigation
through our Net Zero Strategy is 4,000
£21 million.
3,000
We are able to turn this into an
opportunity by realising our Net Zero
2,000
strategy, which should result in
considerable future cost avoidance: 1,000
implementation of our Net Zero
Strategy could limit cost increases to 0
£9 million. 2024 2025 2026 2027 2028 2029

The potential cumulative benefit, Excluding Net Zero Strategy

excluding cost of investment, to realise Net Zero milestones and targets
our Net Zero Strategy is up to
£190 million by 2050.

1. Significance is determined as greater than 1% of net revenue.

www.imperialbrandsplc.com 77
TCFD continued

that may impact our business, and have The ESG team, led by the Global ESG
integrated them into our risk framework. Director, are subject matter experts and CASE STUDY:
In assigning significance of climate- are part of the second line of defence.
Our Manisa factory, the Philippine
related risks, we refer to the MFI stated They develop appropriate policy, process
Bobbin Corporation (PBC) and FM
on page 75. Having considered the and control structures and analyse the
Global identified an elevated risk of
analyses we find greater value in impacts of the risks upon the business in
riverine flooding. FM’s assessment
ensuring that climate-related risks and line with the Board’s risk appetite. The
identified that the flood exposure at
opportunities are included within our second line of defence provides support
this location is the highest 100-year
principal risks, rather than focusing on to the first line of defence in the design
(high frequency) flood exposure
climate change as a principal risk in and implementation of local mitigations.
across Imperial’s locations globally.
itself. This assessment by each risk
The ESG team is key in assessing They estimated that in a flood event
owner ensures that we appropriately
climate-related risks and opportunities waters could rise one metre,
determine true materiality, and integrate
that occur at a local and global level resulting in damage to about 30%
ownership of the associated climate-
related to the achievement of our of the site and up to six months’
related risks into the wider business.
climate targets. interruption to business. The most
With the support of subject matter
recent loss expectancy estimate was
experts, risk owners review the potential Our third line of defence consists of
US$ 24.1 million for the 100-year
cause and likelihood of any risk Group Internal Audit who provide
flood event.
materialising. As a business we are independent assurance over the
accustomed to managing risk across a effectiveness of the design and This finding supported PBC’s
variety of topic areas, including operation of the risk management intention to investigate the
emerging regulatory requirements framework. On an intermittent basis, installation of a flood wall which FM
related to climate change, and we apply we also commission a third party to have confirmed would all but
the same process for all risk areas. perform its own analyses to validate eliminate this exposure. Completion
risks identified by the business. of this additional protective measure
For further information on how we
manage risk, please refer to the risk would also be key to achieving FM’s
For this TCFD report we also add a fourth
section on page 100. highest risk category, a Highly
line of defence, by seeking assurance
Protected Risk.
against the listing rule by a third party.
The Group’s formal approach to risk
management includes an update to the Due to the long-term nature of climate-
Board on a twice-yearly basis on the related risks, and in order to formulate
results of the Group risk assessment, this TCFD report, a cross functional
including the Group’s principal risks. project team considered actions relating
The Group risk management framework to these analyses covering and beyond
specifies accountability for the the standard risk timeframe we typically
identification, assessment and consider for risk and financial planning.
mitigation of risks throughout the In accordance with the Listing Rules,
business and is based on the “three lines we have taken into account the period
of defence” model. The first line of 2022-2050. This allows us to build on
defence is our people in operational the risks and materiality developed in
roles, who identify potential risks and the third-party analyses, and integrate
opportunities at an operational level. them into our wider Group risk
management framework.

OUR PLAN
(from a 2017 baseline year) 2023 2024

Intend to fully assure our

Recalculation of Scope 31 Scope 31 emissions for category 1
calculations Purchased Goods and Services
and applied for approval by the SBTi in 2024
for our new targets in line with the
As explained in the climate change
1.5°C Paris Agreement
section, page 48, we are currently
on track vs Our Plan. We continue Scope 1 & 2 emissions reduction of 50%
of our suppliers by spend
to develop our Scope 3 tracking
and reporting. 65% will set science-based targets
within our Purchased Goods and
1. Our Scope 3 emissions include the following included climate metrics in executive
Services category
categories: Purchased Goods and Services, remuneration for the first time
Capital goods, Fuel and Energy-related Activities,
Upstream Transportation and Distribution, Achieved a reduction in energy
Waste Generated in Operations, Business Travel, Continue to develop our
consumption of
Employee Commuting, Downstream Transportation decarbonisation plans for sites
and Distribution, Use of Sold Products, End of Life
Treatment of Sold Products, Investments. 26%
78 Imperial Brands | Annual Report and Accounts 2023
Physical risk management For all of our sites we also mitigate the the future, Imperial Brands aims to
Our insurer, FM Global, conducts an risk of disruption to supply of product by conduct climate scenario analysis on a
annual programme of 50 to 60 site visits having local BCPs in place which regular basis.
concentrating on assessing the perils includes a list of other Imperial sites
insured by FM Global but particularly fire which can take over the manufacture of Distribution business risk
and natural catastrophe risks. Where product from the high-risk site if management
gaps are identified, FM Global provide required. The cost implications of this Our global insurance provider, FM
recommendations prioritised according are factored into the BCP. Actions to Global, also acts for Logista, operating in
to loss expectancy. manage risks are prioritised based on the same way as disclosed in the section
the calculated MFI and the ease/cost of above. Additionally, Logista states its
Local flood maps are consulted where methods for managing climate-related
the risk mitigation strategy.
possible in addition to FM Global’s own risk with its sustainability policy.
global flood mapping to determine Transition risk management These include the Sustainability
possible flood levels. These levels are The transition risks identified in our Committee which is responsible for
then compared with the elevations on climate scenario analysis are embedded the preparation and co-ordination of
site and possible loss scenarios are in the risk framework and are the sustainability strategy plans in
developed for both 100-year and communicated with the affected sites co-ordination with Logista’s Business
500-year return events. Similarly, with and functions; action plans are being and Corporate Directorates.
wind exposures, sites in known high implemented accordingly, particularly
wind zones receive a more thorough The progress of implementation and the
for the primary risks: carbon taxation for
wind evaluation looking at the resilience achievement of the climate-related
our operations, and material costs
of the building envelope in terms of objectives set and the associated climate
associated with our products and
uplift pressures on roof systems, debris KPIs are reported at least twice a year to
packaging, identified on page 75.
impact to building walls and impact of the Sustainability Committee.
high winds on other items such as dock Our non-vertically integrated leaf supply
The Corporate Finance Directorate is
doors. FM Global offers practical chain as well as holding c.12 months of
responsible for implementing
recommendations to improve resilience leaf stock supports us in mitigating
mechanisms to ensure the integrity of
both through physical improvements climate-related supply chain
the financial and non-financial
and human element procedures such as interruption and risk of shortages.
information of the Company and its
emergency response planning. Physical and transition risk within our subsidiaries, as well as control of the risk
As examples of the work done to date, in supply chain and direct operations associated with the financial and
the last five years Imperial has related to climate change are considered non-financial risks.
completed over 30 FM Global natural within our principal risks. This helps us
hazard recommendations. Completed manage and monitor climate risks for
recommendations include improving core business decisions.
emergency response plans for flood and Please also see our 2023 risk matrix on
wind events at various sites, securing page 102 where we demonstrate
roof mounted equipment at the Tampa climate-related and regulatory risk to be
FL warehouse, and improving roof of high importance to the Group. We
flashing and roof coverings at the integrate our management of these into
Cayey factory. our responsible business functions. In

2030

from a 2017 baseline year

100%
of the energy sourced for our
2025 operations from renewable sources, 2040
transitioning away from non-
Our value chain will be
100% renewable sources completely
Net Zero
of our purchased grid electricity
will come from traceable
renewable sources
Be Net Zero emissions
In our direct operations (Scope 1 and (absolute Scope 1, 2 and 3 GHG
2 GHG emissions) emissions)
Reduce absolute Scope 1 and 2
GHG emissions by more than

50% Reduce
• Our absolute Scope 3 GHG
emissions by 50%
• Energy consumption by 25%
For more information on all our ESG
targets, including waste, please refer
to page 38 or our ESG Performance
Summary on our website.

www.imperialbrandsplc.com 79
TCFD continued

METRICS AND TARGETS with reductions required to limit climate In FY23, we have focused on driving
Climate change is our second most warming to 2°C, approved by the Science site-level risk and opportunity planning
material ESG topic, after consumer Based Targets initiative (SBTi). In FY21, on a risk-based approach. These views
health. As such, we have long monitored we set our sights higher and joined the have been used to enhance our
the risks identified for climate change Business Ambition for 1.5°C Race to Zero disclosures, and form the basis of our
and put in place intervention or initiative, a campaign led by the SBTi. In continued strategy development. Sites
mitigation measures where necessary. FY23, we applied for approval by the have been asked to develop local action
Our targets on climate change represent SBTi for our new targets in line with the and decarbonisation plans, to manage
multiple business opportunities: there 1.5°C Paris Agreement. In FY23, we can risk and realise opportunity more
are cost and environmental benefits to report a reduction in energy comprehensively. We also understand
energy savings, and to efficiency consumption of 26%, achieving our 2030 that our decarbonisation targets rely on
programmes, today and in the future. energy consumption reduction target. cultural changes within the business, for
For more details on how this
example in evaluating energy sourcing
We are focused on alignment to the UN’s commitment impacts our Climate options, or when looking to drive change
Sustainable Development Goals, and in Change pillar, please see ‘Our plan’ as within our value chain.
particular support the goals outlined in well as our previous year’s
goal 7.2, improve energy composition, performance on page 48. The analyses indicate that our most
and 7.3, reduce energy consumption. As material risks are within transition,
such, we have had Scope 1, 2 and 3
For more information on all our ESG specifically carbon pricing internally,
targets, including waste and water, and carbon pricing externally, realised in
targets in place since 2019, consistent please see page 38. our rising material costs.

Description Target Opportunity

Carbon pricing In line with our 2025 goal: to source 100% of In order to further support our Net Zero
Our carbon pricing risk relates to the our purchased grid electricity from strategy, we have developed an internal
likely increase of carbon taxation on traceable renewable sources, we have carbon budget to incentivise low-carbon
emissions within our operations. To continued to prioritise decarbonising our transition projects to improve energy
drive our emissions down, we have electric supply, reaching 96% renewable efficiency and renewable energy transition.
joined Business Ambition for 1.5°C, a grid electricity in 2023. Reflection of this The internal carbon budget is based on our
campaign led by the SBTi. This means performance in our updated analyses internal carbon pricing, which we intend to
we are committed to reaching indicated an increased opportunity for cost launch in FY24. This initiative pilots an
science-based Net-Zero emissions by avoidance of £190 million by 2050, approach to more closely link funding with
2040. To achieve this, we have reset assuming we meet our 2030 decarbonisation solutions, and includes an
our science-based targets for carbon, decarbonisation targets. assessment of climate opportunities.
increasing our ambition in line with
The updated analysis completed within
1.5ºC global warming limits and
We are on track to decarbonise our direct FY23 demonstrated the extent to which our
currently wait for approval by the SBTi.
operations by 2030. In FY23 we can report decarbonisation strategy protects against
an emissions reduction of 65% vs our 2017 future costs. The potential cumulative risk
baseline. We continue to develop goals for mitigation, excluding any cost of investment,
the different areas of our Scope 1 and is up to £450 million to 2050 when compared
Scope 2 emissions. Our development of with taking no decarbonisation measures in
local decarbonisation plans for key sites a 1.5°C scenario.
and sales fleets continues to drive tangible
action and progress against this goal.
Materials costs In 2023 we have recalculated our Scope 3 There is an opportunity to further assess the
The materials cost relates to the calculations and we intend to fully assure resilience of our supply chain to help bring
likely impact of carbon taxation on our Purchased Goods and Services Scope 3 focus to the business to achieve our Net
emissions, and the impact of physical emissions in 2024. Zero target. Achievement of the Scope 3
risks within our value chain. To drive decarbonisation target will be important to
down emissions within our value limit exposure to rising material costs,
Our target to achieve Net Zero in our entire
chain, we have an SBTi approved which are strongly linked to carbon pricing
value chain by 2040 is also supported by an
supplier engagement target: 50% of our within the supply chain. Our first step
emission reduction target of Scope 3 of 50%
suppliers by spend within Purchased towards this has been the enhancement of
by 2030. We have strengthened our climate
Goods and Services (PGS) will set the environment-related section in our
dialogue with suppliers within all
science-based targets by 2024. This Supplier Code of Conduct, which sets out the
procurement areas and are aiming to
target helps us reduce our Scope 3 minimum requirements of doing business
continue to do so. This approach benefits
emissions and thus is fully aligned with us and our request to have suppliers
us in various ways such as risk
with our 2040 Net Zero ambition. In our join us to decarbonise.
management, reduction of Scope 3
ESG Review we report that 33% of
emissions as well as creating opportunities
suppliers by spend have achieved this
such as of cost avoidance (page 77). The
target. In pursuit of this target, we have
re-calculation of our Scope 3 baseline and
identified our partner suppliers
our Scope 3 emissions for 2023 provided
contributing 50% by spend of our
greater clarity of data to drive decisions
Scope 3 category: Purchased Goods
going forwards.
and Services, and will engage with
them in 2024.

80 Imperial Brands | Annual Report and Accounts 2023

Carbon transition plan for Logista • feasibility and effectiveness of our
our operations Logista is included in Imperial Brands’ Net strategies, plans and actions to achieve
Our methodology for calculating Scope 1, 2 Zero Target, as it is included within two our metrics and targets, which may
and 3 emissions is compliant with the GHG categories of our Scope 3: investments and depend on various internal and external
Protocol and we disclose our environmental downstream transportation. factors, such as our operational
performance in CDP. Further details around performance, financial resources,
Logista has set an annual emissions
our methodology can be found in our innovation capabilities, organisational
reduction target of 2.1%. Over 95% of
Reporting Criteria document. The scope culture, governance and stakeholder
Logista’s Scope 1, 2 and 3 are included in
of targets set includes companies, engagement, as well as the co-operation
this target.
entities or groups over which we have and alignment of our partners, suppliers,
operational control. To reinforce this, Logista has implemented customers, regulators and peers; and
remuneration relating to performance • potential changes in our business
In the 1.5 C scenario it is likely carbon taxes
o
against its climate change goals. For environment, operations, portfolio and
will rise for those using energy sourced
example: maintaining its CDP performance priorities, which may result from
non-renewably. As such, the energy
and increasing the distance travelled by factors such as market conditions,
transition represents an opportunity for
low emissions vehicles by 15%. regulatory requirements, competitive
cost avoidance for those who have already
pressures, technological
transitioned to renewable energy. In the Logista is performing an ongoing project to
developments, customer needs,
analysis, which assumes Imperial Brands design an ESG strategic plan, including
strategic opportunities, and/or
achieves its Net Zero targets, this is climate-related risks and opportunities. As
unforeseen events, and which may
assessed as £21 million (£11 million) by 2030 a result of this project, new targets and
require us to adjust, revise or update
in the 1.5oC scenario and within the range metrics are expected.
our metrics and targets accordingly.
£80 million to £260 million (£20 million to For more information on our 2023
£55 million) across the period to 2050 in performance, and further information on Accordingly, undue reliance should not
both climate scenarios. The analysis our current ambitions related to climate be placed on these statements, or this
doesn’t include costs to achieve our Net and ESG, please refer to pages 48-51, for Annual Report more broadly.
Zero targets, such as capex. the Scope 3 accounting, our Company
website and our ESG: People and
In 2023, we also included climate metrics in
executive remuneration for the first time.
Five percent of the bonus opportunity is
Performance Summary 2023.

This section contains climate-related

5%
split equally between performance on metrics and targets that reflect our of our executive bonus is awarded
energy consumption and emissions current expectations, assumptions for climate performance
reduction. Both of these are set to be in line and best estimates available at the
with our decarbonisation plan. relevant time.

In 2024, we will continue to develop our The data underlying these and market
decarbonisation plans for sites, building out practice in relation to such disclosures are
initiatives to support each site-specific likely to evolve over time, owing to several
decarbonisation. In a risk-based approach, factors including, but not limited to, the:
we will also include management of • evolving nature and impact of climate
physical climate risks in this, ensuring that change and related policies, regulations,
our sites most at risk of the physical effects standards, classification frameworks and
of climate change include mitigation market developments;
activities in their decarbonisation plan.
• accuracy and completeness of the data,
For metrics relating to our ESG strategy, methodologies and assumptions
including waste and water, please see our underlying our metrics and targets,
ESG section, pages 38-69.
which may vary depending on the scope,
boundary, definition and measurement
There are three recommended disclosures
of the relevant indicators and activities,
in the Metrics and Targets section that we
as well as the availability and quality of
consider ourselves partially compliant with:
external sources and benchmarks;
(a) including climate-related opportunity
metrics; (b) as regards industry-specific
GHG ratios; and (c) accounting for
avoided GHG emissions on the entire
product lifecycle.
Our reasons for this are because there are
transitional challenges in obtaining the
relevant data and there is no generally
accepted industry-specific data, though
we continue to monitor developments in
this area.
We aim to expand our disclosures by
including climate-related opportunity
metrics in 2024, and providing accepted
industry-specific GHG efficiency ratios,
once applicable practices are available.

www.imperialbrandsplc.com 81
MARKET REVIEW

These market developments are not

without their challenges. The greater

T N NG
number of nicotine product categories

NG
introduces supply chain complexity –
which Imperial mitigates using a strong
supplier partnership model. It also

KE HA DI
introduces regulatory complexity,

GI
which can be harder to mitigate.
AR C N However, where regulators allow, the
advent of next generation nicotine
products also provides much greater
M A PO
consumer choice. With that greater
consumer choice, opportunities are
unlocked for a challenger business
with a strong understanding of
TO S

consumer needs.
For example, many consumers also tell
RE

us they have yet to find a perfect

potentially reduced-harm replacement
for cigarettes. This means we are
seeing a growing diversity of behaviour
with consumers using different
products for different moments in their
day. Our strategy prepares us for a
market where multiple nicotine
categories coexist. Thanks to our
focused investments in transformation,
Imperial is now well placed to make a
positive contribution to this wider
market transition.
As the highly regulated OUR MARKET
Differing regional and market
global market for tobacco The combustible tobacco market still
approaches to harm reduction
represents US$ 880 billion, and
transforms into a more cigarettes are the largest category, with
Regional and market regulators have
diverse policies towards tobacco harm
sophisticated and complex more than 5,200 billion consumed each
reduction. Public health bodies agree it
market for nicotine across year. However, the development and
is the smoke created by the burning of
consumer adoption of next generation
multiple categories, Imperial products (NGP) over the past decade
tobacco leaf that contains most of the
harmful chemicals responsible for
is leveraging its challenger has added complexity, and strong
smoking-related disease. This is not
mindset to deliver for regional nuance to the overall nicotine
always reflected in policy. Some
market and its regulation.
consumer needs and governments, such as the UK, New
We are a consumer-focused business. Zealand, and Canada, accept that not all
consumer health.
Despite the well-known health risks of nicotine products are equally harmful
smoking, more than 19% of the world’s and that public health benefits can be
adult population still choose to smoke. realised at a population level if existing
Our consumers tell us they value our smokers transition to potentially less
products for the moments of relaxation harmful products, so long as such
and pleasure they provide. Many of products do not attract users who
these consumers now also tell us that would not otherwise have chosen to
they are looking for potentially less consume nicotine. Other governments
harmful alternatives to traditional do not recognise the benefits of NGP.
combustible products. Our strategy is to This is often due to focusing only on
understand the needs of these adult concern about a youth access "on-
consumers, and both to invest in ramp" which is important but which
priority combustible markets, while should not detract from the much
also building a targeted NGP business. larger – and scientifically substantiated
– value of the "off-ramp" that NGP
can provide to many millions of
existing smokers.

82 Imperial Brands | Annual Report and Accounts 2023

While jurisdictions that have November to share ideas for While we are supportive of reasonable
implemented tobacco harm reduction accelerating the spread of some of the excise rates on all products, we believe
policies have seen positive public most extreme regulatory proposals for NGP which offer potential harm
health results, the approach has not yet tobacco: such as Canada's health reduction should be subject to excise
captured the support of all regulators, warnings printed on individual sticks, rates at significantly lower levels to
and is not embraced by the WHO. This or New Zealand's generational tobacco combustible products. We believe
is unfortunate. Where policies have ban, a proposal that has also been put increased affordability will help
been adopted to limit the development forward in the UK. A plan to prohibit all encourage smoker transition.
of the nicotine market to potentially but "very low nicotine" cigarettes,
less harmful alternatives, such as proposed but not yet implemented in Illicit trade
aggressive excise duty or complete New Zealand and in the US (where it is The prevalence of the illicit trade in
bans, we have seen negative less likely in the short to medium term), tobacco products means that we face
consequences for both population-level will also capture the attention of global competition from a criminal supply
public health, and the growth of an public health departments. chain. Illicit tobacco deprives the
illicit trade in NGP. At the extreme end responsible industry of revenue,
Of course, combustible tobacco is also deprives governments of vital excise
is the difference between New Zealand,
heavily taxed, contributing globally and deprives consumers of the security
where the legalisation of vape
more than US$ 200 billion to of enjoying rigorously tested, high-
coincided with a steep fall in youth
governments each year, and often seen quality products. The illicit trade is a
smoking rates, and Australia,
as a non-controversial source of urgent complex phenomenon, driven by
where there has never been a legal
additional government funding. Given economic, practical and political
domestic market for NGP, yet a black
the current economic climate, we factors. Fighting illicit products
market thrives.
anticipate inflationary pressures are requires a co-ordinated approach from
The traditional cigarette market has likely to affect the purchasing power of government and industry. Imperial
always had national and regional some consumers. This may mean that continues to work with enforcement
variation in consumer preferences on drastic excise rises in the next year agencies to reduce this scourge, and to
dimensions such as product strength, give a higher than usual boost to the encourage a rational regulatory
product dimensions, flavourings and illicit trade – to the extent to which framework for potentially reduced-
blend. Some of these differences have overall revenues could decline when harm products that will prevent other
been deeply embedded in culture, from rates are increased (the effect of categories of nicotine products being
the Indonesia kretek to the mid-century passing the peak of the Laffer curve). targeted by criminal organisations.
French Gauloises Brunes. Yet the
Imperial Brands supports reasonable
regional differences in NGP
and rational regulation of tobacco and
consumption are more significant, as
nicotine products, in some cases going
they span product category types and
beyond requirements established in
are driven not only by consumer
law. Most notably, our products are for
preferences, but also by regulation,
adult nicotine consumers only. More
public health messaging and excise.
information on our measures to prevent
Regulation and excise underage access can be found on
The traditional tobacco market remains page 47.
heavily regulated. Such regulation
continues to evolve and remains a
significant influence on how we
manufacture, advertise and sell our
products, and how our consumers buy
and enjoy them. Regulation varies
widely across regions and markets.
Nationally, countries such as New
Zealand and Australia have unveiled
comprehensive programmes of new
regulation, while other countries such
as the US and Greece have further
developed product-by-product approval
pathways for the marketing of tobacco
and nicotine products. At a regional
level, the EU is re-examining its
Tobacco Products Directive, its Tobacco
Advertising Directive and its Tobacco
Excise Directive. Globally, the 10th
Conference of Parties (COP10) to the
Framework Convention on Tobacco
Control (FCTC) is to meet in Panama in

www.imperialbrandsplc.com 83
OPERATING REVIEW

ON E
GI OP
RE R
EU

Aleš Struminský
President, Europe Region

AT A GLANCE HEADLINES
OPERATING REVIEW • Strong financial performance driven
To provide a greater focus on Tobacco volume by strong pricing action early in the
“driving value from our broader year which offset volume declines
market portfolio”, which is one of
our strategic pillars, we have
-8.2% • Leveraging our local jewel brand
strategy to drive operational and
transferred the management of financial performance
our Central and Eastern Europe
Tobacco & NGP net revenue*
• Positive NGP net revenue
cluster from our Europe region to
the Africa, Asia and Australasia +4.8% performance with growth across all
categories driven by product
(AAA) region. Under the innovation and new market launches
leadership of Paola Pocci, we Tobacco net revenue* • Successful launch and roll-out of
have been enhancing our
capabilities and expertise in
managing our smaller markets,
+2.8% all-new vapour device blu 2.0 and
disposable blu bar
• New and improved Pulze 2.0 offering
many of which have attractive NGP net revenue*
consumer choice across four markets
margins and the potential to
become platforms for future
growth in combustible tobacco
+40.4% • Adjusted operating profit growth
reflects strong combustible
performance and increased
and NGP. The AAA region will Adjusted operating profit* investments behind NGP
now be known as AAACE. The
affected markets are Poland,
Czech Republic, Ukraine,
+2.0% Our results in Europe are driven by
strong combustible pricing, which
Slovakia, Hungary, Azerbaijan, * Change at constant currency. helped mitigate inflationary headwinds
Armenia, Georgia, Moldova, and support increased investment in
Croatia and Slovenia. The NGP launches. Tobacco volumes were
Americas region is unaffected by impacted by macro conditions and
this change. continued pressure on consumer
spending. As expected, the volume
trajectory improved in the second half
of the year. Net revenue benefited from
an acceleration in NGP revenue growth
(year on year up 45.1% in the second
half of the year at constant currency) as
our innovation pipeline supported new
product and market launches alongside
growth in existing markets.

84 Imperial Brands | Annual Report and Accounts 2023

 Full year result Change
Constant
2023 *2022 Actual currency
Tobacco volume bn SE 89.9 97.9 -8.2% –
Tobacco & NGP net revenue £m 3,240 3,039 +6.6% +4.8%
Tobacco net revenue £m 3,020 2,883 +4.8% +2.8%
NGP net revenue £m 220 156 +41.0% +40.4%
Adjusted operating profit £m 1,482 1,447 +2.4% +2.0%
* 2022 figures restated for the transfer of the Central & Eastern Europe cluster from Europe to AAACE.

Strategic initiatives in our priority jewel brand, Nobel, benefited from new We delivered a step-up in new product
markets supported our combustible format launches and we refined our and flavour launches following our “test
tobacco performance. In the UK, after focus on the key sales channels, for and learn” validation with consumers
two years of market share growth, we example vending machines. and market pilots in FY22. Our new
raised prices early in the period, consumer-led partnership model on
Tobacco volumes declined 8.2% with
causing our market share to decline as NGP product innovation delivered a
consumer buying patterns impacted by
we balanced market share with value range of new products in all three
cost-of-living pressures. The elevated
creation. As anticipated, we categories: Pulze 2.0 in heated tobacco
excise regimes in markets such as the
experienced some market share (four markets); blu 2.0 (10 markets)
UK and France have contributed to
recovery during the second half of the and blu bar (nine markets) in vapour;
continuing pressure on volumes.
year. We remain confident that our and ZoneX (three markets) and
However, volume declines moderated
strategic initiatives in the UK, such as Skruf Modern (Norway) in modern
in the second half of the year in the UK.
our local jewel brands, Richmond oral nicotine.
Tobacco net revenue was up 2.8% at
Embassy and Regal Signature, have
constant currency, reflecting strong Tobacco and NGP adjusted operating
continued to gain traction. Our work to
price mix of 11.0%, which more than profit for the year increased 2.0% at
arrest the long-term share declines in
offset the volume declines. constant currency, mainly reflecting
Germany continues with a refinement
the strong tobacco performance
in our investment in brand equity Our NGP portfolio has delivered
together with increased investment in
building initiatives. In Spain, we strong net revenue growth, which was
our NGP product and market launches.
achieved strong price increases while up 40.4% at constant currency with
also gaining market share as our local growth across all three categories.

Priority market Performance

Tobacco share
Germany Tobacco market size declined 1.9% in the year with some downtrading, together with
• 18.2% (-80bps) a category shift from cigarettes to fine cut tobacco. Our market share declined
• 13% of Group net revenue although we continue to refine our investment initiatives with the aim of stabilising
our share over time. As anticipated, it is taking time to address our share performance
after more than a decade of underinvestment and share losses. We remain confident
the investment behind these strategic initiatives will enhance our brand equity and
improve our sales force effectiveness. Our brand portfolio remains well positioned
across the key price segments to appeal to a range of consumer needs, which
includes the launch of Paramount to meet consumer needs in the value segment.
We expanded our vapour offer with the launch of blu 2.0 and blu bar during the year.
UK Tobacco market size declined 16.9%, driven by the COVID-19 unwind, inflationary
• 41.1% (-50 bps) excise increases and manufacturer price increases in the period. We increased prices
• 8% of Group net revenue in November and again in March to pass on the excise increases. As anticipated, and
after two years of share gains, these price increases caused us to lose share.
However, we recovered some of the market share lost in H1 as we sought to optimise
the balance between managing share and value creation. Our strategic investments
continue to gain traction with our local jewel brand variants of Richmond, Embassy
and Regal Signature performing well – and as we focused on supporting our key
account customers. We grew our NGP contribution in vaping, launching both blu 2.0
and blu bar in the period, supported by innovation of our flavours in both platforms.
Spain Tobacco market size declined 2.6% year on year. We were able to increase prices for
• 28.4% (+10 bps) the second year in a row, following several years of stable pricing, while also
• 5% of Group net revenue continuing to deliver share gains. Our market share increase was driven by
investments in innovation and brand extensions, such as limited-edition packs and
big pack launches for West. We continued to focus on our portfolio of local jewel
brands with the launch of new, high-quality packs for brands such as Nobel. We also
benefited from refocusing our sales force on channels, where we have been under-
represented historically. The launches of blu 2.0 and blu bar have been well received
by consumers and the trade and the blu brand is the joint market-leading brand by
retail sales value as at August 2023.

www.imperialbrandsplc.com 85
OPERATING REVIEW continued

S
A
ON IC
GI R
RE ME
A

Kim Reed
President and CEO,
Americas Region

AT A GLANCE HEADLINES We delivered a strong combustible

• Cigarette share growth up 65 basis market share performance in the US
points to 10.7% with gains across all while achieving strong pricing across
Tobacco volume
three of our focus price segments our cigarette portfolio. This was offset

-5.5% • Investment in strategic

initiatives continues to drive
by a decline in our mass market cigar
volumes due to a temporary wholesaler
operational improvements destock after they increased inventories
Tobacco & NGP net revenue* ahead of Hurricane Ian in September
• Net revenue decline reflects adverse

-4.7%
2022. This contributed to adverse
product mix in mass market
product mix which has weighed on our
cigars partially offset by strong
net revenue performance.
cigarette pricing
Tobacco net revenue* • Mass market cigar performance Tobacco volumes declined against an

-4.5% temporarily affected by wholesaler

inventory movements and market
industry volume decline of 8.4% in
cigarettes and a 5.4% fall in industry
share pressure mass market cigar volumes. Market
NGP net revenue* volumes continue to be impacted by
• NGP net revenue declined as we

-21.4% prioritised investment in Europe

pending resolution of the FDA’s
macro-economic pressure on consumer
disposable income. Our cigarette
Marketing Denial Orders for myblu, outperformance reflects the
Adjusted operating profit* which was vacated in August 2023 improvement in our cigarette market
share of 65 basis points to 10.7% – our
+1.9% • Adjusted operating profit growth
reflects strong cigarette pricing and fifth consecutive year of market share
growth. Our cigarette volumes also
cost initiatives to mitigate the
* Change at constant currency.
reduction in volumes

Full year result Change

Constant
2023 2022 Actual currency
Tobacco volume bn SE 20.7 21.9 -5.5% –
Tobacco & NGP net revenue £m 2,812 2,826 -0.5% -4.7%
Tobacco net revenue £m 2,778 2,784 -0.2% -4.5%
NGP net revenue £m 34 42 -19.0% -21.4%
Adjusted operating profit £m 1,257 1,179 +6.6% +1.9%

86 Imperial Brands | Annual Report and Accounts 2023

reflect a slight increase in wholesaler brand investment behind KOOL 29 August 2023 by United States Court
inventories in the period, which continues to support share growth in of Appeals for the District of Columbia
increased our shipment volumes by the premium value segment. We Circuit to vacate the FDA’s Marketing
c. 0.2%. continue to improve our sales execution Denial Order for our myblu pod-based
with our increased sales force, setting vapour portfolio. Our products have
Our market share performance was
our “perfect store” concept as the remained in the market throughout the
driven by three factors: first, the
standard to achieve across all stores appeals process. We also completed the
continued benefit from our investment
and working with our key account acquisition of a range of nicotine
in sales execution and brand building;
customers on joint business planning. pouches to facilitate our entry into the
second, the way we have positioned
US modern oral market. We plan to
our brand portfolio to meet the needs As anticipated our mass market cigar
launch this range of 14 product variants
of consumers, particularly as they portfolio improved into the second half
under a new brand, which will leverage
continue to trade down; and third, to a of the year, driven by product
the Company’s existing US sales force.
much smaller extent, the annualisation innovation. Over the year, however,
of the benefit from our agile response to volumes came under pressure driven Adjusted operating profit grew 1.9% at
capture share arising from KT&G’s exit by a temporary wholesaler destock, constant currency, reflecting the strong
in December 2021. We gained or held market share losses and overall market cigarette pricing and cost initiatives
share in the three price segments, size declines. The destock followed a to mitigate the reduction in volumes,
where we are focused. wholesaler inventory build last as well as a year-on-year benefit
September ahead of Hurricane Ian, (c. £30 million) from ongoing non-
On a constant currency basis, tobacco
which affected Southwest Florida participating manufacturers’
net revenue declined by 4.5%, as strong
where our Tampa cigar warehouse is settlements relating to prior year
pricing of around +10% was more than
located. Wholesaler inventories have disputes under the Master Settlement
offset by volumes down -5.5% and
now normalised. The overall category Agreement. Although we expect further
adverse mix of around -9%. The adverse
decreased as consumer buying patterns settlements over time, we do not
mix was driven by the performance of
changed post COVID. Pressure on anticipate this level of benefit to be
mass market cigars, which accounted
consumer spending drove some repeated in the coming financial year.
for around -5% of decline. This reflects
downtrading, leading to market share
the relatively high value, low volume
losses in our premium Backwoods
nature of the category – the revenue
offering. We believe the outlook for this
per stick for cigars is around 2.5 times
category remains positive and we
that for cigarettes. Adverse cigarette
continue to have a strong brand
mix accounted for the remaining
presence with Backwoods, a premium
around -4% adverse mix driven by
quality iconic heritage brand.
our market share performance in the
deep discount segment and the Our NGP net revenue declines
successful capture of the KT&G share improved into the second half of the
following their exit from the market year on a constant currency basis,
in December 2021. declining 21.4% over the full year. The
uncertainty caused by the FDA’s
Our cigarette share performance partly
Marketing Denial Orders (MDOs) issued
reflects our progress in building brand
in April 2022 for our myblu products
equity and strengthening our sales
eased into the period end as we
force capabilities. For example, our
welcomed the unanimous decision on

www.imperialbrandsplc.com 87
 OPERATING REVIEW continued

ER NT LA IA
EU L A
ST CE RA AS

RO &
N RA SI

PE
EA D T A,
AN US IC
A FR
A

Paola Pocci
President, Africa, Asia,
Australasia and Central &
Eastern Europe

AT A GLANCE HEADLINES The region delivered a strong

• Strong financial delivery with pricing operational and financial performance
discipline and strategic initiatives which offset the impact of our decision
Tobacco volume**
offsetting exit from Russia in 2022 to exit the Russian market in April

-6.3% • Region now includes our Central &

Eastern Europe cluster; comparator
2022. The contribution from Russia in
the prior period is outlined in the table
figures have been restated on the opposite page.
Tobacco & NGP net revenue*,**
• Positive contribution across all Our results benefited from a strong
+5.3% market clusters with improved
consumer insight driving
focus on pricing discipline across the
region, which offset inflationary
local initiatives pressures on input costs, our improved
Tobacco net revenue*,** • Strong tobacco price mix across consumer insight and revenue growth

+5.3% region offset inflationary

input pressures
management tools provided by our
Global Consumer Office. Additionally,
• Market share growth in we maintained a disciplined and
NGP net revenue* targeted approach to our investment in
Australia driven by active brand

+10.0% portfolio management

• NGP net revenue growth with launch
sales execution and marketing in line
with our strategy to revitalise our
of Pulze 2.0 in Czech Republic, Poland priority markets and to drive value from
Adjusted operating profit*,** and Hungary our broader market portfolio.

+6.2% • Adjusted operating profit delivery

driven by strong tobacco
The region includes one priority
market, Australia, where we continued
performance offset by increased to innovate our product offer enabling
* Change at constant currency.
** Excluding Russia in prior year.
NGP investment us to deliver an improvement in market

88 Imperial Brands | Annual Report and Accounts 2023

 Full year result Change Change
Constant Excluding
2023 2022 Actual currency Russia at cc
Tobacco volume bn SE 87.4 101.1 -13.6% – -6.3%
Tobacco & NGP net revenue £m 1,960 1,928 +1.7% +2.3% +5.3%
Tobacco net revenue £m 1,949 1,918 +1.6% +2.2% +5.3%
NGP net revenue £m 11 10 +10.0% +10.0% +10.0%
Adjusted operating profit £m 844 815 +3.6% +5.5% +6.2%
* 2022 figures restated for the transfer of the Central & Eastern Europe cluster from Europe to AAA (now known as AAACE). The change excluding Russia removes the FY22
contribution from Russia of 7.8 bn SE volumes, £56 million of net revenue and £5 million of adjusted operating profit. There was £0 million of NGP net revenue in Russia.

share against a highly competitive consumer spending was affected by the European markets, which more than
market backdrop with record levels of rising cost of living and there was an offset volume declines to support
illicit trade. We refined our approach to increase in illicit trade in some financial delivery.
revenue growth management to countries. Our renewed consumer focus
Tobacco volumes declined 13.6%
optimise value creation across our underpins the management of our local
primarily driven by our exit from
portfolio with a clear brand offering at jewel brands, such as Fine in Ivory
Russia. Excluding Russia, volumes
each of the key price points. This has Coast and Hamilton in Burkina Faso,
declined 6.3%. However, strong price
supported our decisions on pricing and and our international brands, such as
mix (+11.7% ex Russia) more than offset
product innovation, for example line News in Madagascar. With a wide
volume declines to grow tobacco net
extensions of our Lambert & Butler variety of consumer preferences across
revenue by 5.3% ex Russia on a constant
brand in the lowest pricing segment these markets, this insight enables
currency basis.
enabled us to adopt a clearer pricing us to prioritise how we utilise the
strategy for Parker & Simpson in the diverse brand portfolios for each NGP net revenue grew 10.0% in the
value segment. We also reshaped how country to meet the differing adult period reflecting product and market
we support our customers to drive consumer demands. launches during the year. Following our
improved availability while enhancing successful trial of our upgraded Pulze
In the Middle East, markets such as
our financial performance. 2.0 device, which validated our
Kuwait benefited from borders
consumer proposition, we launched our
As we look to drive value from our reopening and we exercised strong
new heated tobacco device in Czech
wider market portfolio, we transferred pricing discipline combined with a
Republic and two additional markets of
the management of our Central & more rigorous go-to-market approach.
Hungary and Poland. This was
Eastern European markets from Europe Our global brand Davidoff resonates
supported by an expansion in our iD
to this region. Given their similar with local consumers and performed
stick offering with new flavour and
characteristics, these markets now well in Kuwait. Davidoff also has strong
limited edition crushball launches.
benefit from being under this regional brand loyalty in Taiwan, though
leadership team which has enhanced volumes here were impacted by lengthy Adjusted operating profit grew 5.5% at
capabilities and expertise to manage local COVID-related travel restrictions constant currency driven by a strong
our portfolio of smaller markets to and the competitive dynamic which tobacco performance in Australia,
unlock value and become platforms for made pricing gains tougher. Africa and the Middle East. These
future growth. more than offset increased NGP
Pricing was stronger across the
investment to fund new product and
In our African markets, pricing gains majority of our Central & Eastern
market launches. Excluding Russia,
more than offset weaker volumes as
adjusted operating profit grew 6.2%
at constant currency.

Priority market Performance

Tobacco share
Australia Market size declined 15.6% with the pressure on consumer affordability as well as
• 32.1% (+10 bps) record levels of illicit trade. However, we grew share, revenue and profit in Australia
• 4% of Group net revenue as we continue to actively manage our portfolio of brands, applying revenue growth
management techniques to optimise the value creation while managing our overall
market share delivery. Our performance benefited from innovation with line
extensions in Lambert & Butler in the fifth price segment, which created a clearer
price segment architecture for our portfolio. This enabled us to deliver strong pricing
with Parker & Simpson. We also launched JPS Evolve for both cigarettes and fine cut.

www.imperialbrandsplc.com 89
OPERATING REVIEW continued

N
O
TI
BU
RI
ST
DI

AT A GLANCE HEADLINES February 2022. The acquisitions are in

• Gross profit includes contributions line with Logista’s strategy to
from recent acquisitions accelerate growth in European
Gross profit*
• Acquisitions support strategy to non-tobacco-related businesses, which

+36.4% accelerate growth in European

non-tobacco-related businesses
now comprise over 50% of economic
sales. Following the 60% acquisition of
• Better than expected adjusted Transportes El Mosca (a Spanish-based
operating profit includes strong international transportation company)
Adjusted operating in October 2022, Logista increased its
contribution from profit on inventory
profit excluding eliminations*,** stake in the business to 73.3% in August
vs prior year
2023. This is in accordance with the
+17.3% Distribution consists of our 50.01% stake
in Logista. Logista is a Spanish-listed
original deal which enabled Logista to
increase the stake in Transportes El
distributor of tobacco and other Mosca to 100% over the three years
Adjusted operating margin
convenience products as well as from the date of the original deal.
excluding eliminations*,**
providing services such as freight, Logista is now the second largest
-339bps parcel and pharmaceutical logistics. It
operates an end-to-end distribution
temperature-controlled transportation
company in Spain, with both maritime
model that covers the full value chain and road transportation assets. Carbó
Adjusting operating profit from collection to point of sale, and Collbatallé, acquired in October 2022,
including eliminations*,** covers over 200,000 points of sale brings specialisation in frozen and

+17.0%
across Southern Europe. refrigerated transportation in the food
The results include the incremental sector in Spain and Speedlink, acquired
financial contribution from the in February 2022, a Dutch express,
* Change at constant currency.
acquisitions of Herinvemol S.L., trading courier company, expands the B2B
** Eliminations relate to sales of tobacco and
NGP product to Logista that are still held in as ‘Transportes El Mosca’, (73.3%) and parcel business.
their inventory.
Carbó Collbatallé S.L. (100%), which Gross profit – Gross profit at
were not in the prior year period, and £1,466 million was 36.4% higher on a
Speedlink Worldwide Express B.V. constant currency basis with strong
(70%), which was included from underlying performance across the

90 Imperial Brands | Annual Report and Accounts 2023

 Full year result Change
Constant
2023 2022 Actual currency
Distribution gross profit* £m 1,466 1,046 +40.2% +36.4%
Adjusted operating profit £m 306 254 +20.5% +17.3%
Adjusted operating profit margin % 20.9 24.3 -341bps -339bps
Eliminations £m (2) (1) -100.0% -100.0%
Adjusted operating profit (inc. eliminations) £m 304 253 +20.2% +17.0%
* Distribution gross profit is Distribution revenue less the cost of distributing products. This was previously referred to as Distribution net revenue.

three key regions (Iberia, France and the prior year. This was offset by the Logista was c.£1.8 billion, with
Italy), further enhanced by the positive performance in convenience movements in the cash position during
contribution from acquisitions. product distribution, driven by the the 12-month period varying from a
growth in disposable vaping products. high of c.£2.3 billion to a low of
In Iberia, growth in gross profit was c.£0.9 billion, primarily due to the
driven in part by tobacco and related Operating profit – Adjusted operating
timing of excise duty payments. At
products, with the former benefiting profit margin reduced by 339 basis
30 September 2023, the loan position
from manufacturer price increases in points at constant currency as the
was c.£2.0 billion compared to
Spain which also led to a higher profit acquired businesses diluted Logista’s
c.£2.1 billion at 30 September 2022.
on inventory than in the prior year. The strong pre-acquisition margins. After
transport services recorded a strong eliminations, the adjusted operating
growth year on year, partly as a result profit contribution to the Group
of the integration of the new increased 17.0% on a constant currency
acquisitions. In the long-distance basis, driven by the acquired businesses
segment, Logista Freight recorded and a strong contribution from profit on
single digit growth including the inventory in Spain and France
integration of Transportes El Mosca following manufacturers’ price
(100% consolidated with 73.3% stake). In increases in the period. Restructuring
the industrial parcel segment, Logista charges of €14 million were included in
Parcel continued to benefit from adjusted operating profit. This is in line
improving demand for its services and with our policy on adjusting items
has started to integrate with the Carbó where restructuring charges are now
Collbatallé network. Growth in the not recognised as an adjusting item
parcel delivery business benefited from after FY22.
the acquisition of Speedlink (70%) and Cash – In line with the rest of Imperial
from single digit growth in Nacex Brands, we continue to benefit from an
business. Pharmaceutical distribution inter-company cash pooling
continues to expand both its customer arrangement with Logista, which
base and product offering. further enhances the Group’s liquidity.
In Italy, gross profit was supported by On a 12-month basis, the daily average
good performance in tobacco and NGP cash balance loaned to the Group by
volumes together with strong growth in
convenience products, driven by
disposable vaping products. In July
2023, Logista announced the
acquisition of Gramma Farmaceutici, a
pharmaceutical distribution company
in Italy, representing the first stage of
our expansion into the pharma
segment in Italy.
In France, gross profit was impacted by
tobacco volume declines, following the
excise tax increase mid-year with
subsequent price increases by the
tobacco manufacturers, which led to a
profit on inventory much higher than in

www.imperialbrandsplc.com 91
 GROUP FINANCIAL REVIEW

G
IN
S AT
RN ER
TU EL
RE CC
A

Lukas Paravicini
Chief Financial Officer

SUMMARY FINANCIAL INFORMATION This year’s financial results reflect

the improving returns from our first
year of the growth phase of our
Volumes* Tobacco & NGP net revenue*
five-year strategy.

-7.1% +1.4% On a constant currency basis, tobacco &

NGP net revenue grew 1.4% excluding
led by declines in market size, offset by at constant currency, driven by robust
market share gains tobacco price mix and NGP growth Russia, reflecting strong tobacco price
mix and NGP growth. Group adjusted
Reported operating profit Adjusted operating profit* operating profit rose 3.9%, on a constant
currency basis. Including Russia,
+26.8% +3.9% tobacco and NGP net revenue grew 0.7%
and Group adjusted operating profit
reflecting impact of exit from Russia in at constant currency, driven by tobacco
rose 3.8% on a constant currency basis.
prior year pricing and Logista, offset by increased
NGP losses Reported revenue declined -0.2%
reflecting lower excise partially offset
Reported basic EPS Adjusted EPS* by higher Logista revenues. Reported
operating profit increased 26.8%
252.4p 278.8p primarily driven by non-recurrence of
exit charges related to the Russian
an increase of 52.1% an increase of 4.3% on a constant
currency basis asset disposal (£399 million) in the
comparator period.
Adjusted operating Adjusted net debt/EBITDA Cash generation remains a key focus
cash conversion and has supported the delivery of
1.9x £2.4 billion of free cash flow, with 92%
92% 2022: 2.0x adjusted operating cash conversion.
The strong cash generation has enabled
2022: 102%
us to invest behind our strategy, return
* Excluding Russia. £2.3 billion to shareholders via dividend
and share buyback and to reduce
reported net debt by £0.1 billion to
£8.4 billion with adjusted net debt/
EBITDA in line with expectations,
reducing by 0.1x to 1.9x in FY23.

92 Imperial Brands | Annual Report and Accounts 2023

On a reported basis, cash flow reduced We have announced a further share we are also increasing our dividend per
year on year due to the £1.0 billion buyback of up to £1.1 billion of shares share of 4.0% for FY23.
share repurchase. during FY24. This is a 10% increase on
We anticipate our growth phase will
last year’s £1.0 billion buyback, where we
The strong free cash flow generation continue for the remainder of our
repurchased 52,107,043 shares, or 5.5%
enables us to invest behind the five-year strategy as the business
of our share capital in FY23. In support
strategy, a strengthened balance sheet capitalises on the gains and
of our progressive dividend policy,
and return capital to shareholders. investments we have previously made.

SUMMARY INCOME STATEMENT

Reported Adjusted
£ million (unless otherwise indicated) 2023 2022 2023 2022
Revenue/net revenue/gross profit*
Tobacco & NGP revenue/net revenue 21,656 22,795 8,012 7,793
Distribution revenue/gross profit 10,819 9,756 1,466 1,046
Operating profit
Tobacco & NGP 3,106 2,472 3,583 3,441
Distribution 298 212 306 254
Eliminations (2) (1) (2) (1)
Group operating profit 3,402 2,683 3,887 3,694
Net finance costs (298) (117) (410) (326)
Share of profit/(losses) of investments accounted for using the equity method 7 (15) 7 9
Profit before tax 3,111 2,551 3,484 3,377
Tax (655) (886) (781) (755)
Profit for the year 2,456 1,665 2,703 2,622
Earnings per ordinary share (pence) 252.4 165.9 278.8 265.2
Dividend per share (pence) 146.82 141.17 146.82 141.17
* Reported revenue includes duty, similar items, distribution and sale of peripheral products, which are excluded from net revenue; net revenue comprises reported revenue
less duty and similar items, excluding sale of peripheral products and distribution revenue. Distribution gross profit is Distribution revenue less the cost of distributing
products. This was previously referred to as Distribution net revenue.

Impact of Russia exit Alternative performance measures Reconciliations between reported and
On 20 April 2022, we announced the (APM) adjusted measures are included in the
transfer of our Russian business to local When managing the performance of our Supplementary Information.
investors. This has affected the business we focus on non-GAAP Percentage growth figures for adjusted
year-on-year performance comparison measures, which we refer to as adjusted results are given on a constant
in these results. We provide below the measures. We believe they provide a currency basis, where the effects of
contribution from our Russian business useful comparison of underlying exchange rate movements on the
in FY22 for key metrics in order to performance from one period to the translation of the results of our
facilitate comparison between the two next, as GAAP measures can include overseas operations are removed.
periods; we have also provided one-off, non-recurring items and While we believe that adjusted
year-on-year comparisons including recurring items that relate to earlier performance measures can provide
and excluding Russia. acquisitions. These adjusted measures helpful information which supplements
FY22 Russia contribution Russia are supplementary to, and should not be reported measures, we are also aware of
Tobacco volume bn SE 7.8 regarded as a substitute for, GAAP the need to ensure that an appropriate
measures, which we refer to as reported balance is maintained between the two
Tobacco & NGP net
revenue £m 56 measures. The basis of our adjusted sets of reporting metrics, with adjusted
measures is explained in the accounting disclosures not being given greater
Tobacco net revenue £m 56
policies accompanying our financial prominence than GAAP measures. This
NGP net revenue £m –
statements and the APM section within year, we have included adjusted
Adjusted operating profit £m 5 the Supplementary Information. performance measures to exclude our
exit from Russia in April 2022.

www.imperialbrandsplc.com 93
GROUP FINANCIAL REVIEW continued

GROUP RESULTS – ADJUSTED CONSTANT CURRENCY ANALYSIS

Full year Full year
ended 30 Constant ended 30 Constant cc change
£ million September Foreign currency September currency excluding
(unless otherwise indicated) 2022 exchange movement 2023 Change change Russia*
Tobacco & NGP net revenue
Europe 3,039 56 145 3,240 6.6% 4.8% 4.8%
Americas 2,826 120 (134) 2,812 (0.5)% (4.7)% (4.7)%
Africa, Asia, Australasia and Central & Eastern Europe 1,928 (12) 44 1,960 1.7% 2.3% 5.3%
Tobacco & NGP net revenue 7,793 164 55 8,012 2.8% 0.7% 1.4%
Tobacco & NGP adjusted operating profit
Europe 1,447 6 29 1,482 2.4% 2.0% 2.0%
Americas 1,179 56 22 1,257 6.6% 1.9% 1.9%
Africa, Asia, Australasia and Central & Eastern Europe 815 (16) 45 844 3.6% 5.5% 6.2%
Tobacco & NGP adjusted operating profit 3,441 46 96 3,583 4.1% 2.8% 2.9%
Distribution
Gross profit 1,046 40 380 1466 40.2% 36.4% 36.4%
Adjusted operating profit including eliminations 253 8 43 304 20.2% 17.0% 17.0%
Group adjusted results
Adjusted operating profit 3,694 54 139 3,887 5.2% 3.8% 3.9%
Adjusted net finance costs (326) (22) (62) (410) 25.8% 19.1% 19.1%
Adjusted eps (pence) 265.2 2.5p 11.1p 278.8 5.1% 4.2% 4.3%
* Constant currency movement excluding Russia.

Volumes, Tobacco & NGP net revenue Adjusted operating profit

bn SE (actual FX rate), £m (actual FX rate), £m
7.8%

24.5%

21.7% 38.1%
44.1% 40.4%
45.4%

35.1%
32.4%
10.5%

Europe 89.9bn SE Europe£3,240m Europe£1,482m

Americas 20.7bn SE Americas£2,812m Americas£1,257m
AAACE 87.4bn SE AAACE£1,960m AAACE£844m
Distribution£304m

94 Imperial Brands | Annual Report and Accounts 2023

SALES PERFORMANCE • Reported revenue declined -0.2% • Aggregate market share growth in
reflecting lower excise due to volume our top-five priority markets of
declines partially offset by higher +10bps (FY22: +35bps).
Logista revenues. • Tobacco price mix was strong at
Reported revenue +7.9% due to positive pricing.
• Tobacco & NGP net revenue grew

-0.2% +1.4% at constant currency excluding

Russia, comprising +0.7% from
Including our exit from Russia, price
mix was up +10.4%.
tobacco and +26.4% from NGP; • NGP net revenue increased +26.4% at
including Russia, net revenue grew constant currency, led by product
Tobacco & NGP net revenue* by +0.7%. and market launches in Europe and
• Tobacco volume was down -7.1%, AAACE, offsetting continued declines
+1.4% reflecting declines across Europe,
Americas and AAACE as a result of
in the USA.
• Translation FX was favourable at
pressure on consumer spending; +2.1% due to average sterling
* excluding Russia, at constant currency. including Russia, tobacco volumes weakening against the dollar
were down -10.4%. and euro.

1.4% 2.1% 3.5%

£7,793m £(56)m £7,737m £(538)m £594m £55m £7,848m £164m £8,012m

FY22 Tobacco Russia FY22 Tobacco Tobacco Tobacco NGP FY23 Constant Translational FX FY23 Tobacco &
& NGP net & NGP net revenue volume price/mix net revenue currency tobacco & NGP net revenue
revenue (ex-Russia) NGP net revenue

OPERATING PROFIT • Reported Group operating profit of • Tobacco adjusted operating profit
£3,402m increased by +26.8% primarily increased by +4.1% at constant
driven by non-recurrence of exit currency and excluding Russia,
charges related to the Russian asset reflecting strong pricing offsetting
Reported operating profit volume declines. Including Russia,
disposal (£399m) in FY22.

+26.8%
tobacco adjusted operating profit rose
• Adjusted Group operating profit
+3.9% at constant currency.
increased +3.9% at constant currency
and excluding Russia, driven by Logista • NGP losses increased +48.3% at
performance and strong tobacco constant currency as we increased
pricing offsetting tobacco volume investment behind product and
Group adjusted operating profit*
declines and increased NGP losses. market launches.

+3.9% Including Russia, Group adjusted

operating profit increased +3.8%.
• Translation FX of +1.5% reflects
average sterling weakening against
the dollar and euro.
* excluding Russia, at constant currency.

3.9% 1.5% 5.4%

£3,694m £(5)m £3,689m £143m £(42)m £43m £3,833m £54m £3,887m

FY22 adjusted Russia FY22 AOP Tobacco NGP losses Logista and elims FY23 adjusted Translation FX FY23 adjusted
operating profit (ex-Russia) performance operating profit at operating profit
constant currency

www.imperialbrandsplc.com 95
GROUP FINANCIAL REVIEW continued

EARNINGS PER SHARE • Reported EPS increased +52.1% to growth at Logista. Including Russia,
252.4 pence driven by higher reported adjusted EPS grew +4.2%.
operating profit and a reduction in
tax charge relating to favourable
Reported EPS
FX movements.

+52.1% • Adjusted EPS was 278.8 pence, up

+4.3% at constant currency and
excluding Russia, due to increased
adjusted operating profit and a lower
Adjusted EPS* share count as a result of the share
buyback programme, offset by higher
+4.3% finance costs and minority interest
costs, the latter reflecting higher

* excluding Russia, at constant currency.

4.3% 0.9% 5.2%

265.2p (0.4)p 264.8p 15.1p (6.6)p (1.9)p (2.0)p 7.0p 276.3p 2.5p 278.8p

FY22 Russia FY22 Operating Interest Minorities & Tax Number of FY23 Translation FY23
Adjusted EPS Adjusted EPS profit JV shares Adjusted FX Adjusted EPS
ex-Russia constant
currency EPS

SUMMARY CASH FLOW STATEMENT

Reported Adjusted
£ million (unless otherwise indicated) 2023 2022 2023 2022
Group operating profit 3,402 2,683 3,887 3,694
Depreciation, amortisation and impairments 632 660 270 244
EBITDA 4,034 3,343 4,157 3,938
Loss on disposal of subsidiary 1 428 – –
Profit on disposal of assets (39) – – –
Other non-cash movements 70 56 7 (20)
Operating cash flows before movement in working capital 4,066 3,827 4,164 3,918
Working capital (347) 40 (347) 40
Tax cash flow (590) (681) (590) (681)
Cash flows from operating activities 3,129 3,186 3,227 3,277
Net capital expenditure (254) (177) (254) (177)
Restructuring – – (98) (91)
Cash interest (407) (358) (407) (358)
Minority interest dividends (104) (89) (104) (89)
Free cash flow 2,364 2,562 2,364 2,562
(Acquisitions)/disposals (183) 14 (183) 14
Shareholder dividends (1,312) (1,320) (1,312) (1,320)
Share buyback (1,006) – (1,006) –
Purchase of ESOT shares – (1) – (1)
Net cash (outflow)/inflow (137) 1,255 (137) 1,255

96 Imperial Brands | Annual Report and Accounts 2023

CASH FLOW within an expected range of Adjusted operating cash conversion was
£300 million to £350 million. The 92% (2022: 102%) on a 12-month basis.
Cash flows from operating activities
increased capital expenditure is
were £3,129 million
supporting projects to drive simplified
(2022: £3,186 million).
and efficient operations in line with our
As anticipated, capital expenditure of strategic plan.
£254 million was also higher than the
prior year (2022: £177 million) and is
anticipated to increase in 2024 to

£ million (unless otherwise indicated) 2023 2022

Adjusted operating profit 3,887 3,694

Cash flow from operating activities post capital expenditure pre interest and tax 3,563 3,781
Adjusted operating cash conversion 92% 102%

Free cash flow of £2,364 million Restructuring cash costs were £61 million (2022: £56 million) and other
(2022: £2,562 million) was below the £98 million (2022: £91 million). restructuring costs of £3 million.
prior year primarily due to the lower We have cash spend from our three Together, the total cash spend for all
cash flows from operating activities, previous restructuring programmes: three restructuring programmes is
the increase in capital expenditure and Cost Optimisation Programme I anticipated to be £1,558 million, of
increased interest costs due to the of £24 million (2022: £11 million), which £1,346 million has been spent to
higher cost of debt. Cost Optimisation Programme II of date. The remaining cash spend is
£10 million (2022: £19 million) and the ongoing, although is not expected to be
2021 Strategic Review Programme of in excess of the existing provisions.

£ million 2023 2022

Restructuring cash cost 98 91
Cumulative to date 1,346 1,248
Anticipated total 1,558 1,558

The net cash outflow of £137 million launched in the US and that we announced a further share buyback of
(2022: £1,255 million inflow) reduced announced in June and Logista’s up to £1.1 billion of shares during FY24.
year on year, reflecting the share acquisition of Transportes El Mosca
buyback programme and higher (73.3%) and Carbó Collbatallé S.L. (100%),
acquisition costs compared to the prior all of which completed in the period.
year. Acquisition costs were The £1.0 billion share buyback
£183 million (2022: £14 million income) announced in October 2022 also
and relate to Imperial’s acquisition of a completed in the period. We have
range of nicotine pouches to be

RETURN ON INVESTED CAPITAL £64 million in average annual capital

Return on invested capital (ROIC) to drive an improvement in returns.
increased by 80 basis points, driven by Our FY23 invested capital has reduced
an increase in net adjusting operating compared to the prior year mainly due
profit after tax. ROIC was 18.5% to the translational FX impact on
(2022: 17.7%). intangible assets.
Adjusted operating profit increased by
£193 million. This offset the increase of

£ million 2023 2022

Reported operating profit 3,402 2,683
Adjusting items (APM section within Supplementary Information) 485 1,011
Adjusted operating profit 3,887 3,694
Equivalent tax charge (871) (827)
Net adjusted operating profit after tax 3,016 2,867

Working capital (2,567) (2,823)

Intangible assets 16,944 17,777
Property, plant and equipment 1,617 1,659
Invested capital 15,994 16,613
Average annual invested capital 16,304 16,240
Return on invested capital 18.5% 17.7%

www.imperialbrandsplc.com 97
GROUP FINANCIAL REVIEW continued

ADJUSTED NET DEBT/EBITDA Reported net debt reduced by

Adjusted net debt reduced £28 million £54 million to £8,438 million
to £8,026 million (2022: £8,054 million) (2022: £8,492 million). Excluding
in the year, as continued strong cash accrued interest, lease liabilities and the
generation supported additional return fair value of interest rate derivatives
of capital to shareholders via a share providing commercial hedges of
buyback. Adjusted net debt/EBITDA interest risk, Group adjusted net debt
reduced to 1.9x from 2.0x, in line with was £8,026 million
previous guidance. (2022: £8,054 million).

£ million 2023 2022

Reported net debt (8,438) (8,492)
Accrued interest 125 105
Lease liabilities 349 248
Fair value of interest rate derivatives (62) 85
Adjusted net debt (8,026) (8,054)
Adjusted EBITDA 4157 3938
Adjusted net debt/EBITDA 1.9x 2.0x

RECONCILIATION BETWEEN REPORTED AND ADJUSTED PERFORMANCE MEASURES

Operating profit Net finance (costs)/income Earnings per share (pence)
£ million unless otherwise indicated 2023 2022 2023 2022 2023 2022
Reported 3,402 2,683 (298) (117) 252.4 165.9
Russia, Ukraine and associated markets 4 399 – – 0.4 42.2
Amortisation & impairment of acquired intangibles 347 349 – – 38.0 35.4
Restructuring costs – 197 – – – 15.6
Fair value adjustment and impairment of other financial assets 36 37 – – 3.4 3.9
Loss on disposal of subsidiaries 1 29 – – 0.1 2.2
Acquisition and disposal costs – 5 – – – 0.5
Excise tax provision – (9) – – – (1.0)
Charges related to legal provisions 85 – – – 6.4 –
Structural changes to defined benefit pension schemes 12 4 – – 1.0 0.4
Brand impairment in equity accounted joint venture – – – – – 2.5
Net fair value and exchange movements on financial instruments – – (149) (201) (25.8) (1.9)
Post-employment benefits net financing income – – (13) (8) (1.4) (0.8)
Tax settlement interest costs – – 50 – 5.2 –
Recognition of deferred tax assets – – – – (23.0) –
Provision for state aid recoverable – – – – – 10.7
Uncertain tax positions – – – – 22.4 (6.7)
Deferred tax on unremitted earnings – – – – – (2.7)
Tax on unrecognised losses – – – – – 0.8
Adjustments above attributable to non-controlling interests – – – – (0.3) (1.8)
Adjusted 3,887 3,694 (410) (326) 278.8 265.2

Adjusting items We have not treated restructuring costs Reported net finance costs were
The main reconciling items of the as adjusting items in the FY23 results. £298 million (2022: £117 million),
Group’s reported to adjusted operating Restructuring charges of £197 million in incorporating the impact of net fair
profit are shown above. the prior year relate to the 2021 value and foreign exchange gains on
Strategic Review Programme which is financial instruments of £149 million
In the period to 30 September 2023
now complete. There will be ongoing (2022: £201 million), post-employment
adjusting items relate mainly to
cash spend from past restructuring benefits net financing income of
amortisation of acquired intangibles of
programmes. £11 million (2022: £8 million) and tax
£347 million (2022: £349 million) and
settlement interest costs of £50 million
fair value movements on derivative During the period factory footprint
(2022: nil). The net fair value gains of
financial instruments £(149) million rationalisation costs were supported by
£139 million on financial instruments
(2022: £(201) million). profit on sale of former operational
are primarily due to positive valuation
sites and have not been included in
Adjusting items in the prior period movement of the Group’s interest rate
adjusted items.
included net charges associated with derivatives reflecting increasing
Russia, Ukraine and associated markets Finance costs market interest rate expectations in
which are significantly reduced in the Adjusted net finance costs were higher the year.
current year to £4 million at £410 million (2022: £326 million),
(2022: £399 million). reflecting higher interest rates in all
major currencies during the year.

98 Imperial Brands | Annual Report and Accounts 2023

Our all-in cost of debt increased to 4.3% Dividend payments The annual dividend represents a
(2022: 3.5%) due to the refinancing of The Group paid two interim dividends payout ratio of 52.7% with respect to
naturally maturing cheaper debt at of 21.59 pence per share in June and basic earnings per share.
higher rates and the impact of rising September 2023. The third interim dividend will be paid
interest rates on the proportion of our
The Board has approved a further on 29 December 2023 to shareholders
debt that was not hedged.
interim dividend of 51.82 pence per registered on 24 November 2023.
Our interest cover decreased to 10.1x share and will propose a final dividend Subject to AGM approval, the proposed
(2022: 12.1x) reflecting the increased of 51.82 pence per share bringing the final dividend will be paid on 28 March
adjusted net finance costs. total dividend for the year to 146.82 2024 to shareholders registered on
pence. This represents a 4.0% increase 16 February 2024.
Given the rising interest environment,
we expect upward pressure on finance to the amount of 141.17 pence per share
costs going forward although we have paid in the prior year and is in line with
hedging in place for 80% of our the Group’s progressive dividend policy.
expected debt in FY24.
Dividend payments Amount (pence) Ex-date Record dates Payment date

Taxation First interim 21.59 25-May-23 26-May-23 30-Jun-23

Our adjusted effective tax rate is 22.4% Second interim 21.59 17-Aug-23 18-Aug-23 29-Sep-23
(2022: 22.4%) and the reported effective Third interim 51.82 23-Nov-23 24-Nov-23 29-Dec-23
tax rate is 21.1% (2022: 34.7%). The Final 51.82 15-Feb-24 16-Feb-24 28-Mar-24
adjusted effective tax rate is in line with
the prior year and our previously issued
guidance for year ended 30 September Funding/liquidity The Group remains fully compliant with
2023. The adjusted tax rate is lower During the year, we repaid the all our banking covenants and remains
than the reported rate due to limited tax remaining $354 million balance of our committed to retaining our investment
relief arising on foreign exchange gains February 2023 $1.0 billion bond and our grade ratings.
that arise on consolidation, the €750 million bond in August 2023. We
recognition of deferred tax assets for issued bonds of €950 million in the year
intangibles in the Group’s Dutch with a coupon of 5.25%, maturing in
business and an increase in uncertain February 2031. In September 2023, we
tax positions in the Group’s French and swapped our remaining US dollar bonds Lukas Paravicini
German businesses. to euro, therefore closing adjusted net Chief Financial Officer
debt was materially all euro. As at
We expect our adjusted effective tax 30 September 2023, the Group had
rate for the year ended 30 September committed financing in place of around
2024 to be around 23%. £12.9 billion, which comprised 28% bank
The effective tax rate is sensitive to the facilities and 72% raised from capital
geographic mix of profits, reflecting a markets. During the year the maturity
combination of higher rates in certain date of €3,125 million of the Group’s
markets such as the USA and lower existing syndicated multicurrency
rates in other markets such as the UK. facility was extended to 30 September
The rate is also sensitive to future 2026. Two further tranches of
legislative changes affecting €184 million each were not extended
international businesses such as and therefore maintain their maturity
changes arising from the OECD’s dates of 30 September 2025 and
(Organisation for Economic 30 March 2026, respectively. The Group
Cooperation and Development) Base also put in place an additional
Erosion and Profits Shifting (BEPS) £550 million of committed bilateral
work. Whilst we seek to mitigate the bank facilities with maturity dates in
impact of these changes, we anticipate September 2024.
there will be further upward pressure
on the adjusted and reported tax rate in
the medium term.
Our Group tax strategy is publicly
available and can be found in
the Governance section of our
corporate website.

Exchange rates
Foreign exchange had a positive impact
on Group adjusted operating profit and
adjusted earnings per share at constant
currency (1.5% and 0.9%, respectively).
Sterling weakened against the US dollar
(4.3%) and weakened against the euro
(2.7%). Other major currencies remained
broadly flat compared to the prior year.

www.imperialbrandsplc.com 99
PRINCIPAL RISKS AND UNCERTAINTIES

MANAGING that additional risks will not arise, or

that other known risks not mentioned
most likely causes ensures a timely,
measured and appropriate response.

RISK
increase in materiality.
The Group, along with all other
businesses, has continued to be
RISK APPETITE impacted by inflationary pressures.
The Board is responsible for setting the This has resulted in increased
Group’s risk appetite and has completed commodity and energy prices as well
its annual exercise to ensure this is as sustained economic pressures on
The principal risks faced by aligned to, and supports, delivery of the consumer spending.
the Group and Imperial’s Group strategy.
risk management approach The resultant risk management RISK MANAGEMENT FRAMEWORK
are described in the approach supports the achievement of The framework is designed to ensure
objectives and the Board’s wider accountability for the identification,
following pages.
responsibility for risk management assessment and mitigation of risks
Risks represent the various potential through clear communication of the throughout the business, supported by
outcomes that are managed whilst expected outcomes of key controls and appropriate capabilities.
implementing the Group’s strategy. related monitoring.
The success of the risk management
Imperial defines a risk as the exposure
approach relies upon the effectiveness
to the consequences of uncertainty. RISK LANDSCAPE of the control frameworks in place to
Risk is anything that could disrupt the
The Group operates in highly competitive manage risks and seize opportunities
achievement of the Group’s strategy
multinational markets and faces general that arise.
and objectives.
commercial risks associated with a
large fast-moving consumer goods Imperial’s approach to governance, risk
The Board and management have
(FMCG) business. management and internal control
reviewed the risk landscape (current
follows the “three lines model”, which
and emerging) and related profiling, with
Imperial constantly assesses and enables the business to achieve its
risk mitigations and impacts assessed.
evaluates the risks posed by the strategic objectives while remaining
Many of these risks are external and changing environments in which the aligned to the Board’s risk appetite.
cannot be fully mitigated, and while the Group operates, whether geopolitical,
Group continues to monitor its risk socioeconomic or technological. The
landscape, there can be no guarantee consideration of potential impacts and

RISK CAUSES This creates a more dynamic feedback EMERGING RISKS

As a Group we face a number of issues between “bottom-up”, “top-down” and As part of the risk assessment performed
which we treat as causes of current cross-functional perspectives, ensuring by the Group Risk Committee and the
risks rather than evaluating them as the broadest consideration of impacts Board, emerging risk topics have been
risks in themselves. By adopting this and mitigations. discussed and considered.
approach we ensure consideration of
impacts and required mitigations Geopolitical risk Mass generative AI availability
across the business, and increase the The Group is exposed to geopolitical A risk being considered is that of
effectiveness and accountability for and economic conditions of the widely available, generative artificial
assessments on a “bottom-up” basis, countries and regions in which it intelligence rapidly surpassing our
enabling local and Group initiatives to operates, which could impact its organisational ability to understand
be developed to optimise our responses. largest markets and may affect and respond to associated risks or
continuity of supply. capitalise on its opportunities. The
Climate risk Any adverse geopolitical or economic Group continues to assess this
The impacts of climate risk on developments in, or affecting, the emerging risk to identify opportunities
the business have been evaluated Group’s key countries and regions, and develop mitigations.
across the Group in relation to their including, but not limited to, increased
impact on existing risks. Key impacts Regulatory change
international trade tensions or the
exist within our manufacturing Due to the highly regulated nature of
outbreak of conflict could impact the
footprint and wider supply chain, with the industry the Group operates in, new
Group and its operations.
short- and long-term consideration of regulatory change risks are
possible vulnerabilities and required The identification and effective continuously emerging.
mitigations to ensure resilience. mitigation of geopolitical risks has
The Group considers any emerging
become an increasingly important
regulatory change risks beyond the
Inflation factor within the Group’s operational
general three-year risk horizon, so that
The impact of inflationary pressures continuity planning for our internal
mitigations can be developed to
on both the business and consumers resilience and the resilience of our
manage the impacts of future changes.
has been assessed as part of wider supply chain, key customers and
risk assessments. service providers. This consistent and Further regulatory changes are being
complete assessment better informs considered in the UK, with a generational
Group actions. smoking ban and further restrictions on
EVP products proposed. The Group is
assessing this emerging risk and
developing appropriate mitigations.

100 Imperial Brands | Annual Report and Accounts 2023

Who is involved? What activities are completed? How do we confirm risks are managed?
Assessment and evaluation of risks

Board • Oversight of the Group’s internal control systems, • Oversees risk management approach
risk management process and framework and reporting
• Provides operational and strategic risk • Reviews results of semi-annual risk
perspectives, ensuring these are considered in assessment, including the Group’s
Group strategy principal risks
• Sets the Group’s risk appetite annually • Discusses and agrees risk appetite for the
• Reviews the Group’s principal risks and Group’s principal risks
considers emerging risks and themes identified
in six-monthly risk assessment process

Audit • Obtains and reviews scope, quality and results • Oversees risk management approach
Committee of assurance provided by internal and and reporting
external audit • Regularly reviews results of assurance activities
• Reviews results of six-monthly risk assessment
“Top-down”

and provides assurance over the operation of the

risk management framework

ELT • High-impact risks identified in “bottom-up” • Reviews results of assurance activities

assessments are consolidated for review by ELT to ensure effective closure of any
• Considers emerging risks and themes identified observations raised
in risk assessment process
• Regularly reviews results of Group Controls
Matrix (GCM) internal control testing

Risk • Provides “top-down” insights to risk • Meets throughout the year to oversee risk
Committee assessment process management approach and reporting
• Considers emerging risks and themes identified • Reviews results of assurance activities to
in risk assessment process ensure the effectiveness of risk mitigations
• Provides input into development of risk
management activities

Third Line • Group Internal Audit performs risk-based, • Provides the Board with independent
challenging audits and provides insights and assurance over the effectiveness of
recommendations to the Audit Committee the design and operation of the
and management Risk Management Framework
• Provides audit reports and reporting to
management and the Audit Committee

Second Line • Evaluation of functional risk registers by subject • Define and implement policy and risk
matter experts, in line with Board risk appetite, management activities aligned to risk appetite
including review of first line risk assessments • Provide support to business in design and
• Review and agreement of functional risk implementation of local mitigations
registers by functional leadership teams, with • Monitor effectiveness of mitigations through
minimum six-monthly formal update Key Risk Indicators/Key Performance
“Bottom-up”

• Formal completion of legal and regulatory Indicators and assurance activities

disclosures (e.g. ESG-related, TCFD, Human • Review results of GCM testing and identify
Rights, Group Science regulatory certifications) common themes
• Review results of assurance activities to
ensure effective closure of observations raised

First Line • Local ownership and accountability for • Leadership accountability for risk assessment
completion and continued update of risk register, and mitigation effectiveness
with minimum six-monthly formal update • Regional leadership team oversight and input
• Local leadership team input to review and • Dedicated Global Business Services (GBS)
formally agree risk assessment outcomes Compliance function responsible for
• Approach includes requirement to assess facilitating compliance activities in selected
effectiveness of related risk mitigations on an First Line operations
ongoing basis • Management certification of compliance with
• Completion of regular key control testing across Group policies, GCM financial control
the business – Group Controls Matrix (GCM) compliance, laws and regulations and
communicates key requirements and notification of fraud on a six-monthly basis
required testing

The mitigation and management of identified risks is vital to the success of the Group. The Group’s risk management and internal
control framework and related reporting are further discussed in the Audit Committee report on page 134.

www.imperialbrandsplc.com 101
PRINCIPAL RISKS AND UNCERTAINTIES continued

The following section Not all of these principal risks are The risks reported are those currently
within Imperial’s direct control, and considered by the Board to have the
highlights the principal the list cannot be considered to be most likely impact on achievement of
risks the Group faces and exhaustive, as other risks and the Group’s objectives.
identifies the mitigations uncertainties may emerge in a
This year the previously reported tax
changing business environment.
that are in place to manage legislation risk is no longer considered
An illustration of the primary impact as a principal risk to the Group, and is
them, with all risks reported
each risk might have on relevant not included below. The People and
on a mitigated basis. strategy elements and the change in Organisation risk has been replaced by
profile of the risk compared to the ‘Effective management of
previous year is included. organisational transformation’.
Changes have been made to the way in
which some of the remaining principal
risks have been described.

Principal risk Change in year

PRICING, EXCISE OR OTHER PRODUCT TAX • Pricing pressures resulting from sustained inflationary impact on
OUTCOMES NOT IN LINE WITH BUSINESS consumer spend, triggered by unprecedented increases in prices
PLAN ASSUMPTIONS OR EXPECTATIONS for fuel, food and other commodities
• Continued development of EU Excise Directive, which may
Risk profile:
include tax across next generation product (NGP) categories,
Strategic impacts: with new rates to apply from FY27

Focusing on our priority markets

Driving value from our broader portfolio

Failure to achieve planned pricing strategy could impact

achievement of objectives and targets. Failure to identify or
manage increases, or proposed increases, in excise or other
product-related taxes, or changes in tax structures, could
impact achievement of objectives

MANAGEMENT OF POTENTIAL ADVERSE • The FDA is expected to release final product standards that would
REGULATORY CHANGE AND RESPONSE TO ban menthol cigarettes and characterising flavours in cigars in
REGULATORY CHANGE the US by the end of 2023, though implementation is unlikely
before FY25, if at all. Legislative proposals restricting flavours at
Risk profile: state and local levels remain of concern. A separate regulatory
Strategic impact: proposal to implement a maximum nicotine level in cigarettes
is unlikely to be implemented within the Group’s three-year
Focusing on our priority markets risk horizon
Building a targeted NGP business • Generational smoking ban and further restrictions on EVP
products proposed in the UK. The proposed generational smoking
Regulatory change aimed at further de-normalising the ban would have a gradual impact from 2027 onwards
sale, marketing and consumption of tobacco and nicotine • Wider alignment between Tobacco and NGP regulation could
products adversely impacts the Group’s products, markets, arise in the EU under reforms to EU Tobacco Products Directive
manufacturing processes, customers and/or consumers (EUTPD) and other legislation, and globally as a result of decisions
made at the WHO Conference of Parties
• Single use plastics Extended Producer Responsibility legislation
introduced in the EU and the UK with expected financial impact
from FY24
• Disposable vapes face political pressure in Europe
• Australia’s National Tobacco Strategy seeks to further standardise
product, pack and marketing by 2025
• New Zealand’s law prohibiting all but ”very low nicotine”
cigarettes will be implemented in 2025 and combines with other
generational and retail restrictions
• Heated tobacco characterising flavour ban in Europe

102 Imperial Brands | Annual Report and Accounts 2023

 RISK ASSESSMENT PRINCIPLES insights from a wide collection of regulatory change) ensuring timely
• Risk assessments are aligned with second line experts – enabling a evaluation of the effectiveness of
the business planning cycle and richer, more balanced perspective on current and future mitigations
strategic objectives, focusing not only current and emerging risks • Specific risk topics are presented to
on the identification and assessment • Current and emerging risks are the Board, Audit Committee and ELT
of risks, but most importantly on the considered on an ongoing basis during the year. These discussions
effectiveness of the mitigations across the business, with a general provide further detail from first and
in place three-year horizon (though longer second line management on their
• Imperial adopts a dynamic approach where applicable, e.g. climate risk). risk management responsibilities
which facilitates and collates views This horizon ensures appropriate
from functional risk owners and a focus and includes consideration of
broad spectrum of other relevant changes in the causes of existing
stakeholders, providing end-to-end risks (e.g. specific proposed

Impact Mitigation Opportunity

• In markets where consumers are • Subject matter experts assess global excise • The development of the Group
increasingly price-conscious, high price risks and model price elasticity to ensure the strategy includes analysis of
increases impact product demand and business plan and strategy are developed and planned and potential changes
volumes sold aligned to consumer insights in product taxation to identify
• Pricing pressures may result from • The Group’s Revenue Growth Management and ensure investment
significant pressures on consumer function is responsible for the identification opportunities across our range
disposable income, as well as increases and management of strategic commercial of products
in taxation further increasing product opportunities arising from excise change • Tailored product portfolio
price. This could result in downtrading to • Tools in use to better model and predict offerings at a local level, within
lower price products/categories or an impacts of excise, inflation and other and across categories, allow for
increase in the attractiveness of illicit consumer pressures any relative commercial
product, impacting sales volumes • Pricing strategies regularly reviewed by advantage from excise
• Counterfeit and illicit trade thrive in regional leadership teams mechanisms to be realised
high-excise environments, reducing the • Engagement with authorities providing • Opportunity for use of
size of the legitimate tobacco market, informed input and evidence about the technology and artificial
increasing risks to consumers from unintended consequences of disproportionate intelligence-enabled tools to
non-compliant product, and financing changes in product taxation, supported by the analyse, simulate and better
organised crime Group’s Regulatory and Anti-Illicit Trade teams predict price and promotion
• Inferior, unregulated counterfeit product moves across our categories
could result in damage to brands
• Regulatory change can restrict product • A reviewed set of Group public policy • While stringent regulation
specification (e.g. menthol or other positions is in place to align with proves a burden on all firms,
flavour ban), consumer interaction, and regulatory developments the burden is less on those that
product supply, and place restrictions on • Engagement with regulatory authorities operate from an existing high
consumers’ ability to enjoy our products • Subject matter experts employed to assess baseline of responsibility and
(potentially impacting sales volumes and the impacts of proposed regulatory change have advanced compliance
market size), and to access potentially and Group-wide impacts systems
reduced-risk nicotine products • Regulation can benefit
• Project teams in place to manage the
• Compliance with increasingly complex impacts of regulatory change, ensuring consumers and responsible
regulatory requirements increases the required compliance is achieved and market players through
risk of both additional cost to the Group opportunities identified preventing less responsible
and inadvertent non-compliance, which companies from discrediting
• Legal action can be taken to defend
could result in investigation, regulatory product categories
against or prevent regulatory change where
censure, financial penalty and • Some global regulators have
this impacts legal freedoms
reputational damage adopted a policy of tobacco
• Where interpretation of regulation is harm reduction, which
required, judgements made can lead to recognises the reduced risk
dispute or investigation by regulators that non-combustible nicotine
and result in possible related financial products offer adult smokers in
costs or reputational damage even where comparison to cigarettes and
no fault is proven other traditional combustible
products

www.imperialbrandsplc.com 103
PRINCIPAL RISKS AND UNCERTAINTIES continued

Principal risk Change in year

PRODUCT SUPPLY FAILS TO MEET MARKET • Continued global cost inflation, notably in leaf, non-tobacco
DEMANDS materials and conversion costs, has impacted, and will continue
to impact, the cost of goods. The Russian invasion of Ukraine has
Risk profile: continued to impact energy prices in Europe
Strategic impact: • Pressures on the Group’s logistics supply chain have eased due to
the relaxation of regional COVID-19 lockdown restrictions
Focusing on our priority markets
Building a targeted NGP business • Geopolitical tensions have continued to increase, with the
potential to impact global supply chains if there are any adverse
Failure to ensure timely supply of products demanded by developments in, or affecting, the Group’s key countries
markets which meet quality, regulatory and cost and regions
requirements. Availability issues could result in loss of • Continuing frequency of adverse weather globally due to climate
sales and could be caused by production, planning or change potentially impacting supply chains, notably cigar
logistical issues, or failure to be able to produce/develop operations in our Caribbean factories and Philippines
formats aligned to consumer needs

MAJOR INCIDENT RESULTING FROM CYBER OR • The Group continues to operate in an external environment with
SIMILAR TECHNOLOGY RISK heightened geopolitical risk, including in a number of the Group’s
markets and regions, which highlights the continued risk of
Risk profile: corporate cyber-attacks, notably ransomware
Strategic impact: • Increasing trend in security incidents reported within our
extended supply chain, emphasising the importance of our
Simplified and efficient operations
commitment to third-party security controls
Cyber-attack or other technology incident results in a major
system outage or loss, theft or corruption of sensitive data.
The criticality of Group systems, notably those which are
Track-and-Trace related, continues to increase, with key
reliance on system availability both internally and through
the supply chain

PRODUCT PORTFOLIO AND INTERACTIONS • Continued emergence and growth of new low-price tiers across
WITH CONSUMERS NOT ALIGNED TO many markets
CONSUMER PREFERENCES • Continuation of downtrading trend in which consumers become
increasingly value-driven due to inflationary pressures on
Risk profile:
disposable income and increasing taxes on tobacco products
Strategic impact: • Evolving consumer preferences in NGP categories, including a
Consumer at the centre of the business shift towards disposable vapes
Building a targeted NGP business

Product portfolio not aligned to consumer needs or

demands, and/or product development not sufficiently agile
to respond to changes in preferences. Brand strength is not
sufficient to attract or retain customers

104 Imperial Brands | Annual Report and Accounts 2023

Impact Mitigation Opportunity

• Loss of key manufacturing site or • Robust demand planning process and supply • Operations continue to supply
capacity could impact the Group’s ability chain management aligned to changing quality, compliant products
to meet short-term production demands market environment whilst improving agility and
• Failure to supply markets could result in • Material stocks (leaf and non-tobacco) scalability, catering for demand
loss of short-term sales volume, with maintained in line with assessed supply shifts and opportunities to
potential loss of consumer loyalty continuity risks, and aligned to sales contain underlying costs whilst
possibly impacting longer-term volumes forecast requirements maintaining standards and
• Failure to manage cost inflation could • Production capacity planning includes agreed actions of a responsible
result in increased cost of goods continuity measures in the event of machine manufacturer
• Severe weather episodes could impact failure or site issue
raw material supply, manufacturing sites • Supplier agreements, standards and practices
and warehousing, potentially affecting or include requirement to comply with Group
increasing the cost of short-term supply policies and Code of Conduct
to markets • Ongoing supplier reviews include quality, ESG
• A lack of availability of raw materials and continuity-related scope
could impact short-term supply to • Learnings from disruptive crisis events to
markets date incorporated into strategic and
• Product quality issues could impact operational processes and plans
customer satisfaction, potentially
damaging brand equity and future sales
• Loss of critical systems could impact • Enterprise Security Office set up to • Continued modernisation of
product supply to distributors or retailers continually improve approach the Group’s IT environment
• Failure to protect personal data could • Cyber risk assessment completed, and alongside the Group’s security
result in regulatory breach and related actions implemented to protect business awareness and culture
censure, financial penalty and • Vulnerability scanning in place to ensure programme provide
reputational damage ongoing vulnerability identification opportunity to further mitigate
• Cyber breach could result in loss of cyber risk exposure
• External penetration testing completed on an
sensitive corporate data, impacting ongoing basis
achievement of strategy, reputational • Ongoing investment in security
damage, significant cost to the Group or monitoring tools
lost competitive advantage
• Modernisation of critical site network
security controls (e.g. firewalls)
• Crisis management scenario planning and
response activities in place and tested
• If the Group’s product portfolio fails to • Wide portfolio across all combustible • Facilitates the development of
meet consumer preferences, then value tiers products and/or relevant route
reduced demand will result in lower • NGP launches across categories, including a to market and pricing
sales volumes and reduced brand equity disposable device strategies that meet and drive
• Failure to identify changes in consumer • Continued investment in advertising and consumer demand
trends could result in lost opportunities, promotional spend • Speed and quality of innovation
notably in our NGP categories where • Global Consumer Office accountability for enables the drumbeat of
innovations are more prevalent product/brand strategy and initiatives consumer activation that
• Failure to ensure effective ensures both brand relevance
• Innovations and go-to-market plans
implementation of market or retail and continued brand loyalty
are validated against consumer needs
initiatives could result in lost and preferences • Management of “local hero”
opportunities, wasted investments and brands in markets offers ability
• Excise strategies, marketing guidelines and
potential loss of share to realise local opportunities
product standards developed to support our
• Failure to act upon consumer insights and strengthen consumer
consumers and our business
could prevent opportunities from being loyalties
• Consumer panels used to gather
seized and impact growth • Portfolio strategy workshops in
consumer insights
• Failure to identify intellectual property priority markets to ensure clear
• Brand monitoring, including equity tracking
(IP) constraints in the innovation of new brand roles, with brand
• Innovation processes develop consumer strategies and initiatives in
products could impact development and/
products based upon robust analysis, testing place to seize opportunities
or launch, limiting the ability to respond
and scientific support
to competitor offerings
• Formalised and consistent Insights approach
• Consumer Insights Centre of Expertise
established
• Data sources controlled to ensure consistency
and robustness of information and insights
• Intellectual property risks managed by Group
experts and external legal support

www.imperialbrandsplc.com 105
PRINCIPAL RISKS AND UNCERTAINTIES continued

Principal risk Change in year

CHANGES IN MARKET ENVIRONMENT • Continued growth in illicit trade due to widening gap between
duty paid and non-duty paid prices as a result of excise impacts,
Risk profile: notably in Europe and Australia where excise levels are very high
Strategic impact: • Rapid development and proliferation of new NGP categories such
as disposable vapes
Focusing on our priority markets
Driving value from our broader portfolio • Continued economic pressure on consumers due to inflationary
pressures and economic uncertainty across our market footprint
Failure to obtain or effectively respond to commercial
insights and learnings, resulting in loss of market share or
inability to capitalise on commercial opportunities

DEVELOPMENT OF A SUSTAINABLE HARM- • Decision in August 2023 by United States Court of Appeals for the
REDUCTION CATEGORY District of Columbia Circuit to vacate the FDA’s Marketing Denial
Order for our myblu pod-based vapour portfolio
Risk profile:
• Continued competitor activity in the NGP market with growth in
Strategic impact: category size through new product developments, product launches
and marketing initiatives
Building a targeted NGP business
• Significant shift towards disposables in vape
Failure to develop a portfolio of commercially sustainable, • Increasing regulation of NGP, with potential further flavour bans,
science-based, potentially reduced harm products, that disposables bans and plain packaging being considered
meet consumer needs, could impact the Group’s ability to
seize market opportunities and deliver its ESG agenda

DELIVERY OF ESG STRATEGY NOT ALIGNED TO • Continued focus on ESG-related matters from investors and
STAKEHOLDER EXPECTATIONS external stakeholders
• New reporting requirements announced, such as the EU
Risk profile:
Corporate Sustainability Reporting Directive which will cover all
Strategic impact: pillars of environmental, social and governance. In-scope
subsidiaries of the Group will be required to comply with this
Focusing on our priority markets
Simplified and efficient operations by 2025
• Upcoming EU Corporate Sustainability Due Diligence Directive
Failure to deliver on the Group’s ESG strategy to external will introduce further requirements from FY25 to conduct due
expectations. The pace of change in external requirements diligence throughout our global value chain
and expectations remains significant, with greater focus on • As with all multinationals, the Group continues to face increasing
integrity and assurance of reporting, and comparison climatic impacts across its global footprint
cross-industry and between sector peers • In 2023, a double materiality assessment was performed and
confirmed that the eight focus areas of our ESG strategy remain
priorities for our stakeholders

106 Imperial Brands | Annual Report and Accounts 2023

Impact Mitigation Opportunity

• Failure to respond to changes in market • Formalised and consistent Insights approach • Provides opportunity to align
environment could make the Group’s • Market impacts analysed as part of market Group portfolio and product
products less attractive to consumers, size calculations developments to consumer
resulting in reduced sales • Empty Pack Survey collection reporting trends and changing
• Economic pressure on consumers could completed to provide trend analysis of market environments
result in reduced spend on tobacco illicit impacts • Robust data analysis increases
products and alternatives, reducing • Excise and price monitoring provides confidence in achievability of
market size insights into possible changes in illicit expected outcomes and
• Increases in illicit trade impact the impacts through widening disparity between optimisation of investment
size of the legitimate market, impacting the price of legitimate and illicit product choices
sales volumes • Industry trade groups and joint operations • Monitoring of illicit impacts
with enforcement agencies and product flows provides
opportunity for engagement
with, and support to, regulators
to reduce the illegal trade in
tobacco products
• Failure to accurately predict or identify • Test-and-learn approach followed across • Improved ability to meet
current and emerging consumer trends categories and markets to ensure feedback and consumer needs and robust
could result in lost opportunities and learnings captured and responded to consumer validation are key
lower volumes should products have • Successful launches of new and updated drivers of commercial success
reduced relevance to consumers heated tobacco, oral nicotine and vape • The Group’s experience in
• Failure to align NGP portfolio to products in selected markets, including combustibles and NGP provides
consumer needs and expectations could launch of blu bar it with a strong base to
result in failure to achieve NGP ambition • Acquisition of US range of nicotine pouches meet the needs of the
• Failure to develop NGP categories could from TJP Labs to facilitate entry into the US wider changing nicotine
impact achievement of key ESG priorities modern oral market market dynamic
• Failure to develop a sustainable • Dynamic consumer and market analysis
commercial model for all NGP categories integral to product development and
could result in failure to achieve go-to-market model
NGP ambition • Development of consumer-centric
products bringing alive the Group’s agile
“fast-follower” strategy
• Consolidated NGP category management
approach enabling holistic view
of opportunities and informed
investment strategy
• Engagement with regulatory authorities
• Intellectual property risks managed by
subject matter experts within the Group and
external legal support
• Failure to meet expectations, or to ensure • ESG strategy, agenda and communications, • Positive ESG strategies and
at least parity with industry peers, may including ongoing development and communications can increase
impact the Group’s reputation as a materiality assessment, aligned to strategic the attractiveness of the
sustainable business and adversely goals and targets organisation to new joiners,
affect stakeholder sentiment • ESG Committee with executive representation and increase the engagement
• Failure to comply with key ESG-related in place to provide oversight of existing employees
regulation, including environmental and • Investor and stakeholder presentations • Sustainability is a growing
human rights legislation, would result in ensure alignment with expectations and factor in customer and
a material impact to the Group, including, transparency on progress of Group actions consumer choices across
but not limited to, financial penalties • Human Rights Compliance Working Group FMCG sectors
• Reputational damage may result from meets regularly, specialist human rights • Sustainability initiatives can
allegations, even where no wrongdoing capabilities recruited, Human Rights Policy in reduce long-term financial
has occurred place and Modern Slavery Audits conducted costs through greater
• Employee engagement or attractiveness by the ESG function efficiency and reduced waste
of the Group as an employer may be • TCFD disclosures and related actions facilitate • Investor and wider stakeholder
adversely affected as a result of any robust reporting and control frameworks sentiment is more positive
perception that the Group is acting in an • Responsibility and accountability for toward companies with
inappropriate manner identification and mitigation of ESG-related successful and proven ESG
risks understood and continues to be strategies and initiatives
embedded across the business
• Investments in the NGP business to offer
adult smokers potentially reduced harm
products continue

www.imperialbrandsplc.com 107
PRINCIPAL RISKS AND UNCERTAINTIES continued

Principal risk Change in year

ADVERSE JUDGMENT OR IMPACT IN • Increasing external trend of ESG-related litigation risks with
LITIGATION CASE external focus on human rights issues in international supply
chains, greenwashing claims and shareholder activist claims
Risk profile:
Strategic impact:
Simplified and efficient operations

As with other corporates, litigation and other claims are

pending against the Group. The interpretation of the law
and the related judgments made in relation to these laws
can lead to dispute or investigation and possible financial
costs or reputational damage

EFFECTIVE MANAGEMENT OF ORGANISATIONAL • Significant transformation activity across the Group, including
TRANSFORMATION both ongoing and new programmes

Risk profile:
Strategic impact:
Performance-based culture and capabilities
Simplified and efficient operations

Risk of ineffective design, implementation and benefit

realisation of organisational transformation. Failure to
attract, retain or develop employees with the required
knowledge and experience may impact the Group’s ability
to achieve its strategic objectives

108 Imperial Brands | Annual Report and Accounts 2023

Impact Mitigation Opportunity

• Failure to comply with regulations could • Internal and external lawyers employed,
result in investigation and the specialising in the defence of product liability
enforcement of financial penalties or claims and other litigation. To date, no
regulatory censure tobacco litigation claim brought against the
• Investigation or allegations of Group has been successful and/or resulted in
wrongdoing can result in significant the recovery of damages or settlement monies
management time being required, • Advice is provided to mitigate the causes of
potentially reducing focus on other litigation, along with guidance on defence
operational matters strategies to direct and manage litigation
• If any claim against the Group was to be risk and monitor potential claims around
successful, it might result in a significant the Group
liability for damages and could lead to • The Group’s Code of Conduct and core
further claims behaviours articulate the way employees are
• Regardless of the outcome, the costs of expected to act, with compliance certified by
defending such claims can be substantial management across the business
and may not be fully recoverable • The Group’s policies and standards mandate
• The reputational damage arising from that employees must comply with legislation
investigations or allegations of non- relevant to both a UK-listed company and
compliance could have a greater impact local law
with external stakeholders than the • In the event of an investigation (which may
penalties or actions related to the or may not result in actions), the Group
matter itself co-operates fully with the relevant authority
and will continue to do so

• If organisational transformation is not • Transformation Centre of Expertise working • Improved efficiency/

effectively managed, this could result in in conjunction with Independent Quality effectiveness of decision-making
disruption to delivery of business Assurance and Internal Audit to support across the business given
objectives or higher cost of successful delivery versus agreed milestones improved data availability and
implementation than forecast and to identify/address key programme more streamlined ways
• High demand for local resources interdependencies and risks of working
to support transformation • Capability requirements evaluated on an
programmes could result in impacts ongoing basis, with required actions
on employee engagement developed and actioned locally and at Group
level to address short and medium-term
requirements
• Global Talent Acquisition function
established, and annual Talent Review
performed
• Skills and Capability Framework launched
• Change capability embedded into major
change programmes and standardised
approach to change management
being developed
• Specialist Organisation Design and
Effectiveness expertise recruited

www.imperialbrandsplc.com 109
PRINCIPAL RISKS AND UNCERTAINTIES continued

LIQUIDITY AND GOING this scenario the Group would • First, the Board considered the period
CONCERN STATEMENT implement a number of mitigating over which it has a reasonable
actions including revoking the expectation that the Group will
The Group’s policy is to ensure that we
uncommitted dividend, pausing the continue to operate and meet its
always have sufficient capital markets
share buyback and reducing liabilities, considering current debt
funding and committed bank facilities
discretionary spend such as facilities and debt headroom; and
in place to meet foreseeable peak
capital expenditure. • Second, it considered the potential
borrowing requirements.
Based on its review of future cash flows impact of severe but plausible
The Group recognises uncertainty of scenarios over this period, including:
covering the period through to
the external environment. During the
November 2024, and having assessed • assessing scenarios for each
period of the COVID-19 pandemic as
the principal risks facing the Group, the individual principal risk, for
well as during the ongoing period of
Board is of the opinion that the Group example commercial issues and
political uncertainty with regard to
as a whole and Imperial Brands PLC the impact of regulatory
Ukraine and Russia, the Group
have adequate resources to meet their challenges; and
effectively managed operations across
operational needs from the date of this • assessing scenarios that involve
the world, and has proved it has an
report through to 30 November 2024 more than one principal risk
established mechanism to operate
and concludes that it is appropriate to including multi-risk scenarios.
efficiently despite uncertainty. The
prepare the financial statements on a
Directors consider that a one-off
going concern basis. Findings
discrete event with immediate cash
outflow is of greatest concern to the Viability review period
short-term liquidity of the Group. VIABILITY STATEMENT Whilst the Board has no reason to
The Board has reviewed the long-term believe the Group will not be viable over
The Directors have assessed the
prospects of the Group to assess its a longer period, the period over which
emerging and principal risks of the
viability. This review, which is based on the Board considers it possible to form
business, including stress testing a
the business plan which was completed a reasonable expectation as to the
range of different scenarios that may
in July 2023, incorporated the activities Group’s longer-term viability, based on
affect the business. These included
and key risks of the Group together the risk and sensitivity analysis
scenarios which examined the
with the factors likely to affect the undertaken, is the three-year period to
implications of:
Group’s future development, September 2026. This reflects the
• A one-off discrete event resulting in performance, financial position, cash period used for the Group’s business
immediate cash outflow such as flows, liquidity position and borrowing plans and has been selected because,
unexpected duty and tax payments; facilities as described in the ‘Managing together with the planning process set
and/or other legal and regulatory risk’ section of this report on pages 100 out above, it gives management and
risks materialising of c.£500 million. to 101. the Board sufficient, realistic visibility
• A rapid and lasting deterioration to on the future in the context of the
In addition, we describe in notes 20 to
the Group’s profitability because industry environment.
21 on pages 210 to 220 the Group’s
markets become closed to tobacco objectives, policies and processes for The Group’s annual corporate planning
products or there are sustained managing its capital, its financial risk processes include completion of a
failures to our tobacco manufacturing management objectives, details of its strategic review, preparation of a
and supply chains. These assumed a financial instruments and hedging three-year business plan and a periodic
permanent reduction in profitability activities and its exposures to market, re-forecast of current-year business
of 15% from 1 October 2023. credit and liquidity risk. performance and likely landing. The
The scenario planning also considered plans and projections prepared as part
mitigation actions including reductions Assessment of these corporate planning processes
to capital expenditure, dividend To report on the long-term viability of consider the Group’s cash flows,
payments and share buyback the Group, the Board reviewed the committed funding, forecast future
programme. There are additional overall funding capacity and headroom funding requirements, banking
actions that were not modelled but available to withstand severe events covenants and other key financial
could be taken including other cost and conducted a robust assessment of ratios, including those relevant to
mitigations such as staff redundancies, the emerging and principal risks facing maintaining our investment grade
working capital management, the Group, including those that would ratings. These projections represent the
retrenchment of leases and discussions threaten its business model, future Directors’ best estimate of the expected
with lenders about capital structure. performance, solvency or liquidity. The future financial prospects of the
assessment assumes that any bank business, based on all currently
Under the reverse stress test scenario, debt maturing in the next three years available information.
after considering mitigation actions can be refinanced at commercially
including reductions of capital acceptable terms or via our current
expenditure, dividend payments and standby facility. The Board believes
share buyback programme, we have that three years is an appropriate time
modelled that a 38% EBITDA reduction horizon given the current business
would lead the Group to have sufficient portfolio and limited visibility beyond
headroom until April 2024. The Group three years. This assessment also
believes this reverse stress test included reviewing and understanding
scenario to be remote given the both the impact and the mitigation
relatively small impact on our trading factors in respect of each of those risks.
performance and bad debt levels during The viability assessment has two parts:
the COVID-19 pandemic, as well as the
current political situation in Ukraine. In

110 Imperial Brands | Annual Report and Accounts 2023

The use of the strategic plan enables a high level of confidence in assessing viability, even in extreme adverse events, due to a
number of mitigating factors such as:
• Flexibility of cash outflow with respect to the ability to manage dividend returns to investors, capital expenditure projects
planned to take place within the three-year horizon, return of surplus capital to investors via share buyback, plus promotional
marketing programmes.
• The Group has mature business relationships and operates globally within well established markets.
• The Group’s operations are highly cash generative, and the Group has access to the external debt markets to raise
further funding.

RISK IMPACT REVIEW

For each of our principal risks, plausible risk impact scenarios have been assessed together with a multiple risk scenario. The
following table summarises the key scenarios that were considered, both individually and in aggregate:

Risk scenarios modelled Level of severity reviewed Link to principal risk

The consequences of The maximum quantifiable impact of all • Pricing, excise or other product tax outcomes not in
adverse operating and envisaged business risks, including the line with business plan assumptions or expectations
commercial pressures, impact of a loss of market size and share • Management of potential adverse regulatory change
involving volume and lack of pricing. and response to regulatory change
reduction and/or falls in • Product supply fails to meet market demands
The value of these combined risks totals
margin, driven by
£1.3 billion over the three-year period • Major incident resulting from cyber or similar
unforeseen reductions in
under review. technology risk
the size of the legitimate
• Product portfolio and interactions with consumers not
tobacco market or other A further worst-case scenario has also
aligned to consumer preferences
changes in the level of been considered, modelling 15%
consumer demand for reduction on remaining EBITDA after • Changes in market environment
our products. consideration of the isolated business • Development of a sustainable harm-reduction category
risks. The value of this EBITDA modelled • Delivery of ESG strategy not aligned to stakeholder
totals £1.9 billion over the three-year expectations
period under review. • Effective management of organisational
transformation
The possible costs Failure to successfully defend existing • Adverse judgment or impact in litigation case
associated with legal and and reasonably foreseeable future legal • Delivery of ESG strategy not aligned to
other regulatory and regulatory challenges, at the stakeholder expectations
challenges, including expected financial exposure.
competition enquiries and
The value of these combined risks is
tax audits.
c.£0.1 billion.

None of the scenarios reviewed, either individually or in aggregate, would cause Imperial Brands to cease to be viable.
Climate-related risks have been assessed as causes of a number of our underlying risks which are included within the scenario
modelling, including, but not limited to, the failure to supply product due to weather-related impacts on individual factories, the
cost of complying with environmental legislation, and the impact that climate change has upon the supply of raw materials
(notably leaf).
In FY23, we also conducted a quantified climate scenario analysis with 4°C and 1.5°C pathways aligned with the recommendations
of TCFD (Task Force on Climate-related Financial Disclosures) and Paris Agreement. The scenario analysis takes into
consideration climate-related physical and transition risk in the short, medium and long term (up to 2050). The Group does not
consider climate change to be a risk from a viability perspective. The Group holds c.12 months of leaf stock therefore any shortage
or incremental cost caused by a natural event would only impact part of the period under review. Any incremental cost would
have an EBITDA impact lower than that modelled as part of the scenario testing.

CONCLUSION
On the basis of this robust assessment of the emerging and principal risks facing the Group, and on the assumption that they are
managed or mitigated in the ways disclosed, the Board’s review of the business plan and other matters considered and reviewed
during the year, and the results of the sensitivity analysis undertaken and described above, the Board has a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to September 2026.

The Strategic Report was approved by the Board and signed on its behalf.
By order of the Board.

Emily Carey
Company Secretary

13 November 2023 www.imperialbrandsplc.com 111

GOVERNANCE AT A GLANCE

CE
STRUCTURE AND CONTENT OF THE
GOVERNANCE REPORT
Governance at a Glance 112

N
Chair’s Introduction 114
Board Leadership 116

A
Section 172 126
Board Statements 128
N People and Governance Committee
Audit Committee
129
134
ER
Remuneration Report 142
Directors’ Report 164
Directors’ statement 168
V
GO

GOVERNANCE
The Board confirms that the Group complied with the principles and all relevant
provisions of the UK Corporate Governance Code 2018 (the ”Code”) for the period
under review. The Code is publicly available at www.frc.org.uk.
Board and Committee membership as at 30 September 2023
Board Audit Remuneration People &
Committee Committee Governance Board nationality
Committee

Non-Executive Directors British*

Thérèse Esperdy (Chair) 1 1

American
Sue Clark (SID) 1

Diane de Saint Victor

German
Ngozi Edozien
Andrew Gilchrist2 French
Alan Johnson
Bob Kunze-Concewitz Italian*
Jon Stanton 1

Swiss

Executive Directors
Nigerian
Stefan Bomhard (CEO)
Lukas Paravicini (CFO) Austrian
1. Denotes Chair
2. Andrew Gilchrist appointed to the Board on 1 March 2023. * Alan Johnson has dual British-Italian
nationality.

Board and Executive Management Gender Diversity as at 30 September 2023

Number of Percentage Number of senior positions Number in Percentage of
board of the board on the board (CEO, CFO, SID executive executive
members and Chair) management management

Men 6 60 2 7 64
Women 4 40 2 4 36
Prefer not to say 0 0 0 0 0

Board and Executive Management Ethnic Diversity as at 30 September 2023

Number of board Percentage of Number of senior Number in Percentage of
members the board positions on the board executive executive
(CEO, CFO, SID and Chair) management management

White British or other White (including

minority-white groups) 8 80 4 9 82
Mixed/Multiple Ethnic Groups 0 0 0 0 0
Asian/Asian British 0 0 0 1 9
Black/African/Caribbean/Black British 2 20 0 1 9
Other ethnic group, including Arab 0 0 0 0 0
Not specified/prefer not to say 0 0 0 0 0

112 Imperial Brands | Annual Report and Accounts 2023

Non-Executive Director skills matrix
Fast-moving Innovation Global Finance and People and Legal and Environment, Technology
consumer and product business risk organisational regulatory sustainability and digital
goods (FMCG) development leadership transformation affairs and
governance

Thérèse Esperdy
Sue Clark
Diane de Saint
Victor
Ngozi Edozien
Andrew Gilchrist
Alan Johnson
Bob Kunze-
Concewitz
Jon Stanton

Non-Executive Director tenure

As at 30 September 2023
< 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5-6 years 6-7 years 7-8 years 8-9 years 9+ years

Thérèse Esperdy
Sue Clark
Diane de Saint
Victor
Ngozi Edozien
Andrew Gilchrist
Alan Johnson
Bob Kunze-
Concewitz
Jon Stanton

1. BOARD LEADERSHIP AND 3. COMPOSITION, SUCCESSION 5. REMUNERATION

COMPANY PURPOSE AND EVALUATION The Company has remuneration
The Company is led by an effective Appointments are subject to a formal, policies and practices designed to
and determined Board, focused on rigorous and transparent procedure. support its strategy and promote
the long-term sustainable success of Succession plans, designed to promote long-term sustainable success.
the Company, generating value for diversity, including gender, social and Executive remuneration is aligned to
shareholders and other stakeholders, ethnic backgrounds and cognitive and the Company’s purpose and vision,
and contributing to wider society. personal strengths, are in place for and is clearly linked to the delivery
the Board and senior management. of the Company’s long-term strategy.
Read more on pages 17 and 116
to 125. An evaluation of the Board and its Read more on pages 142 to 163.
Committees is undertaken annually, in
line with the Code.
2. DIVISION OF
RESPONSIBILITIES Read more on pages 129 to 133.

The Chair and the Chief Executive

Officer have clearly defined and 4. AUDIT, RISK MANAGEMENT
separate responsibilities, and there AND INTERNAL CONTROL
is an appropriate combination of Formal, transparent policies and
Executive and independent procedures are in place to ensure the
Non-Executive Directors. independence and effectiveness of the
Read more on page 120. internal and external audit functions
and the integrity of financial and
narrative statements, and to manage
and mitigate risks.
Read more on pages 134 to 141.

www.imperialbrandsplc.com 113
 GOVERNANCE CHAIR’S INTRODUCTION

TE E O HE
RA AS T
GY F
ST H OR
R P F
OU X DY
NE A
T
RE

DEAR SHAREHOLDER refreshed Executive Leadership Team us as a Non-Executive Director on

I am pleased to introduce the (ELT) which I believe has contributed to 1 March 2023 and the Board has already
Governance section of this year’s an open and productive working benefited from his insight and
Annual Report. relationship. This has enabled us to knowledge in its discussions.
constructively challenge, scrutinise and
We have continued to enhance the
The year in review support as the ELT delivers the strategy
capability amongst our Directors,
The Group has maintained momentum and reacts to external, market and
aiming to have the necessary skills,
in its delivery against the strategic plan. regulatory changes.
experience and diversity to deliver the
We are in the third year of our five-year Throughout this period the Board has strategy and strong performance.
strategy and have seen further continued to fulfil its core role to I believe the company and our
improvements in Imperial’s operational oversee the Company’s governance shareholders are well-served by the
and financial performance, despite the framework, risk and change strong mix of geographic, operational,
challenging macro-economic management, financial controls functional, gender and ethnic diversity
headwinds over the year. and culture. of the Board.
The Board’s confidence in the sustained
strategic progress of the Group is Board succession Diversity
reflected by the recent announcement In February 2023, Simon Langelier Imperial continues to make progress on
of a further buyback of up to £1.1 retired as a Non-Executive Director. diversity, equity and inclusion (DEI). We
billion-worth of shares from October I would like to thank Simon for his remain committed to having a Board
2023 to the end of September 2024. advice and support to the Company that is diverse in all respects.
We successfully completed our first over the past six years. Throughout the year and up to the date
£1 billion share buyback programme in of this report our Board has met the UK
Recognising Simon’s skills and
September 2023. Listing Rule targets regarding the
experience, we looked to make a new
representation of women and ethnic
The Board has been engaged this year, NED appointment that provided
minorities at Board level.
completing deep dive reviews of our additional strength in finance and deep
Tier 1 markets and visiting key regional experience in the tobacco sector. I am
clusters. We have spent time with our delighted that Andrew Gilchrist joined

114 Imperial Brands | Annual Report and Accounts 2023

I am pleased that across the wider Board effectiveness
workforce we continue to progress This year we engaged an independent
against our five-year DEI strategy effectiveness review of the Board and
and ambitions, reflected in the strong its Committees. This enabled us to
results in this year’s employee receive an objective view of the
engagement survey. performance of the Board and reflect
Read about our Board’s diversity and on our progress since the previous
its skills and experience on pages 116 external review in 2021 and the
to 119. organisational change programme
which has been underway during
Stakeholders that time.
The Group’s success is dependent upon
The review highlighted the cohesion
the Board taking decisions for the benefit
and diversity of the boardroom, strong
of its shareholders whilst having regard to
levels of trust and transparency and the
all our stakeholders.
support and challenge of the Board as it
The Board’s focus during the year has has overseen cultural change and
been to oversee the continuing transformation within the business.
transformation of our business, the Going forward the review has proposed
delivery of our strategy and responding to areas of focus as we aim to maintain
the challenges of the macro environment. and enhance our effectiveness.
The Board aims to ensure that Imperial Details of this year’s evaluation, and
can have sustainable, long-term success the progress made against last year’s
and we remain mindful of the impact of actions can be found on page 133.
decisions made on the Group’s various
stakeholders in line with S172 of the AGM
Companies Act 2006. The 2024 Annual General Meeting will
be held on 31 January 2024. Further
Throughout the year the Board has
details can be found in the Notice of
continued with the workforce
Annual General Meeting sent to
engagement programme, including
shareholders and made available on the
“Meet the Board” sessions, informal
Company’s website.
events, site visits and engagement on
executive remuneration. The Board has
Closing thoughts
received updates on the views and
I am mindful of the many individuals
feedback of institutional investors and
who have contributed to Imperial’s
has had interaction with consumers to
continued progress over the year.
gauge views on our brands and products.
I would like to thank Stefan and his
We remain committed to understanding
team for their leadership and their
the views of all of Imperial’s stakeholders
achievement in delivering Imperial’s
to inform the decisions that we make.
strategy and transformation; all my
Further information on our stakeholder fellow Board members for creating an
engagement can be found on pages 32 open and constructive environment
to 36 and in our Section 172 statement which allows for debate and different
on pages 126 to 128.
views to be expressed; and finally
Imperial’s employees who have worked
Culture tirelessly to make the Company what it
The Board recognises the importance of is today.
culture for the successful delivery of our
strategy. During the year we reflected on
our culture change and people strategies
which aim to create an inclusive and
strong performance culture across
Imperial. We received regular updates on Thérèse Esperdy
our transformation programme and the Chair
workstreams focused on talent, diversity
and inclusion.

www.imperialbrandsplc.com 115
 GOVERNANCE BOARD LEADERSHIP

BOARD OF DIRECTORS

RD
D
BO N
A
A
SE D
E
ER L
V IL
DI SK
A

Stefan Bomhard
Chief Executive Officer
Tenure
Appointed in July 2020

Thérèse Esperdy Nationality

Chair P R German
Tenure
Appointed to the Board in July 2016 and Biography
became Senior Independent Director in Stefan joined Imperial from Inchcape
May 2019 before being appointed Chair in plc, a global distribution and retail
January 2020. leader in the premium and luxury
automotive sectors, where he delivered
Nationality successful transformational change
American during a five-year tenure as chief
executive.
Biography
Prior to Inchcape, Stefan was president
Thérèse has significant international
of Bacardi Limited’s European region
investment banking experience having
and was also responsible for Bacardi’s
held a number of roles at JP Morgan
Global commercial organisation and
including global chair of JP Morgan’s
Global Travel Retail. Previous roles have
Financial Institutions Group, co-head of
included chief commercial officer of
Asia-Pacific Corporate & Investment
Cadbury plc and chief operating officer
Banking, global head of Debt Capital
of Unilever Food Solutions Europe. This
Markets, and head of US Debt Capital
followed senior management and sales
Markets. She began her career at Lehman
and marketing positions at Diageo
Brothers and joined Chase Securities in
(Burger King) and Procter & Gamble.
1997 prior to the firm’s merger with
JP Morgan in 2000. Skills and experience
Stefan brings extensive experience of
Skills and experience
consumer companies and retail
Thérèse has enjoyed a distinguished and
Find out more at transformation from a career in a
lengthy career in banking and
www.imperialbrandsplc.com/how-we-are- variety of leading multinational and
international business. She is an
transforming/our-leadership-team brand-driven businesses. His in-depth
experienced leader and board member of
knowledge of marketing and a long
multinational companies, bringing insight
career in brand-building and challenger
Committee membership and understanding of shareholder views
businesses makes him uniquely placed
P People and Governance Committee
and the highest standards of corporate
to lead Imperial and deliver its strategy.
governance. Thérèse continues to play a
A Audit Committee
pivotal role facilitating constructive Outside interests
R Remuneration Committee challenge and oversight within the Board. Non-executive director of Compass
Committee Chair Group plc.
Outside interests
Senior independent director of National
Grid plc (due to retire on 31 December 2023)
and non-executive director of Moody’s
Corporation.

116 Imperial Brands | Annual Report and Accounts 2023

 Sue Clark
Senior Independent Director A P R

Tenure
Appointed Non-Executive Director in
December 2018, Chair of the
Lukas Paravicini Remuneration Committee in February Diane de Saint Victor
Chief Financial Officer 2019 and Senior Independent Director Non-Executive Director P R

Appointment in January 2020. Appointment

Appointed May 2021. Appointed November 2021.
Nationality
Nationality British Nationality
Swiss French
Biography
Biography Sue has strong international business Biography
Lukas has a proven track record in credentials with over 20 years’ Diane has strong legal, regulatory, M&A,
multinational consumer goods executive committee and board-level business alliance and ESG experience,
companies around the world. He joined experience in the FMCG, regulated having held a number of general
Imperial from agricultural commodities transport and utility sectors. Sue held counsel, company secretary and other
and brokerage group ED&F Man the role of managing director of key roles in an international career. She
Holdings, where he was chief financial SABMiller Europe and was an executive spent 13 years on the executive
officer. He has also held senior committee member of SABMiller plc. committee, as general counsel &
positions at Fonterra, a New Zealand She joined SABMiller in 2003 as company secretary, of ABB, the global
and Australia listed co-operative and corporate affairs director and was part technology company. Prior to joining
the world’s largest dairy exporter, with of the executive team that built the ABB, she served as a senior vice
sales in 130 countries. He was chief business into a top-five FTSE company. president and general counsel of Airbus
financial officer from 2013-2017 and Group and as vice president and
chief operating officer, Global Skills and experience general counsel at SCA Hygiene
Consumer and Foodservice Business Sue has had a long career in senior Products. Diane spent a decade working
from 2017-2018. Prior to that, he spent executive and non-executive roles at Honeywell, ultimately holding the
22 years with Nestlé in various senior across international corporates, notably post of vice president and general
finance and general management roles. in the areas of regulatory affairs and counsel international. She started her
government relations. This invaluable career with various legal and
Skills and experience perspective has particularly informed government relations positions at GE.
Lukas brings a breadth of financial, IT the Board’s discussions on strategy and
and operational expertise from his ESG. Sue’s experience gives her a deep Previous non-executive director
extensive career in consumer understanding of shareholder views positions include Barclays plc, Altran,
companies, allowing him to provide and strong corporate governance, Natixis and Transocean.
insight to the Board on financial and making her ideally suited in the roles of
Skills and experience
commercial issues. His wide-ranging Senior Independent Director and Chair
Diane brings over 30 years’ experience
experience allows him to manage a of the Remuneration Committee.
of broad international legal, governance
broad portfolio as CFO, including the
Outside interests and regulatory expertise gained from
implementation of global shared
Non-executive director of Britvic plc a range of senior executive and
services in complex multinational
(where she chairs the remuneration non-executive positions in multinational
organisations, technology
committee), non-executive director of organisations, as well as experience of
transformation and cybersecurity.
Mondi plc and senior independent transforming organisations in sectors
Outside interests director of easyJet plc. undergoing change.
Member of The 100 Group of finance
Outside interests
directors of the FTSE 100.
Non-executive director of WNS
(Holdings) Limited and non-executive
director of C&A AG.

www.imperialbrandsplc.com 117
GOVERNANCE BOARD LEADERSHIP continued

Andrew Gilchrist
Non-Executive Director A P

Tenure
Appointed March 2023.
Ngozi Edozien
Nationality
Non-Executive Director A P
Alan Johnson CMG
American
Tenure Non-Executive Director A P

Appointed November 2021. Biography Tenure

Andrew has a proven track record of Appointed in January 2021.
Nationality business development, strategic
Nigerian planning and business integration Nationality
following two decades of operational British and Italian
Biography
and financial experience in the tobacco
Ngozi has over 35 years’ experience in Biography
sector. He was Chief Financial Officer
finance/private equity, general Alan has a strong financial background in
of Reynolds American Inc until its
management and strategy/business consumer goods and retail, having held a
acquisition by British American
development functions with number of senior finance positions at Unilever
Tobacco (BAT) in 2017. Prior to this,
multinational companies in Europe, the in Africa, Europe and Latin America during a
Andrew held a range of leadership
US and Africa. She joined McKinsey & 30+ year career, including chief audit
positions at Reynolds, including Chief
Company in 1992, leaving in 1999 to join executive and chief financial officer of the
Information Officer, Chief Commercial
Pfizer Inc. as vice president, Pfizer Global Global Foods Division. He was previously chief
Officer and Business Development
Pharmaceuticals (PGP) Strategic Planning financial officer and then a non-executive
Director. Earlier in his career, he
and Business Development, a position director of Jerónimo Martins SGPS, S.A., a food
worked for BAT in marketing and
she held until her appointment in retailer with operations in Portugal, Poland,
planning roles.
January 2005 as the regional director, and Colombia, until April 2016, and retains a
PGP East, Central and Anglophone West Skills and experience role as the independent chairman of the
Africa. She served as head of West Africa Andrew has a proven track record in company’s internal control committee.
for Actis LLP from 2009 until 2014 finance and business transformation
allowing her to leverage previous Previous non-executive director positions
within our industry. His commercial
experience in corporate finance at include non-executive director of the UK
and financial experience as chief
JP Morgan. Department for International Development
financial officer of Reynolds American
(DFID) where he chaired the audit & risk
Previous non-executive director positions has given him a breadth of knowledge
assurance committee, president and chair
include PZ Cussons and Vlisco plc. into financial, treasury and strategic
of the board of the International Federation
matters which has benefited the work
of Accountants and chair of the audit
Skills and experience of the Audit Committee as well as
committee of the International Valuation
Ngozi’s 35-year career across finance, the Board.
Standards Council.
strategy, transformation and business
development allows her to bring Outside interests
Skills and experience
profound insight into regulated, None.
Alan has outstanding financial and
customer-focused FMCG businesses, an international experience across consumer
area of strategic importance to Imperial goods and retail markets, with exceptional
Brands. Her expertise in innovation and accounting and regulatory insight gained
strategic change has proved valuable as from his chairmanship of the International
the Board oversees the Company’s Federation of Accountants. His skills and
transformation programme. experience bring strength and robustness to
discussions at the Audit Committee and Board.
Outside interests
Non-executive director of Guinness Outside interests
Nigeria (a listed subsidiary of Diageo) and Non-executive director of DS Smith plc and
non-executive director of Bank of Africa of William Grant & Sons Ltd, inaugural chair
– BMCE Group. of the Stakeholder Advisory Council to the
Audit and Ethics Standards Setting Boards
and Chair of the Good Governance Academy.
118 Imperial Brands | Annual Report and Accounts 2023
Bob Kunze-Concewitz Emily Carey
Non-Executive Director P R
Company Secretary
Tenure Tenure
Appointed November 2020. Appointed May 2023.
Jon Stanton
Nationality Nationality
Non-Executive Director A P R
Austrian British
Tenure
Biography Appointed May 2019. Biography
Bob is an experienced marketing Emily, a chartered accountant and
professional and has held a number of Nationality
company secretary, has enjoyed a
senior roles at leading FMCG British
25-year career in finance, regulatory
companies. He was appointed chief affairs, compliance, governance and
Biography
executive officer of Campari Group, a company secretarial matters, with
Jon has a wide range of international
major player in the global spirits significant experience in the oil
leadership experience, encompassing
industry, in May 2007 having joined the and gas and sports betting and
transformation, M&A and all aspects of
business in 2005 as group marketing gaming industries.
finance, principally in the B2B sector.
director. Bob previously held positions
of increasing responsibility and global In 2016 he was appointed chief Prior to joining Imperial, Emily held a
reach at Procter & Gamble, including executive of The Weir Group plc, one of number of roles of increasing seniority
global prestige products corporate the world’s leading engineering including 14 years at BP plc and three
marketing director. businesses, having previously been years at Entain plc where she was
CFO from 2010. Prior to that he spent 22 Group Company Secretary.
Skills and experience years at Ernst & Young, LLP, the last
Bob brings invaluable perspective from nine years of which were as a partner
a lifetime career in the global fast- in its London office, where he led global
moving consumer goods sector. His board-level relationships. Jon is a
long-serving role as the CEO of a listed Chartered Accountant and a member of
company, his proven experience of the Institute of Chartered Accountants
leveraging brand and marketing in England and Wales.
strategies across complex international
markets and his tireless focus on the Skills and experience
consumer has given the Board great Jon has a unique and broad skill set
knowledge and experience to draw driven by a long and prestigious career
upon in its work. as the CEO of a listed international
company and as an accountancy
Outside interests partner. This financial experience,
Chief executive officer of Campari business knowledge and leadership of a
Group (due to retire end April 2024), multinational make him a huge asset to
non-executive director of Luigi Lavazza the Board and the Audit Committee
S.p.A. and both a fellow at the Elis which he chairs.
Institute in Rome and vice chairman
of Altagamma, the Italian luxury Outside interests
goods association. Chief Executive of The Weir Group plc. Simon Langelier also served as a
Non-Executive Director during
the year, standing down from the
Board on 1 February 2023.

www.imperialbrandsplc.com 119
GOVERNANCE BOARD LEADERSHIP continued

THE ROLE AND PURPOSE OF THE BOARD AND ITS COMMITTEES

GOVERNANCE FRAMEWORK To ensure Directors are kept up to date As part of the governance framework,
The Board is responsible for the on developments and to enhance the the Board has adopted a schedule of
governance of the Company, overall effectiveness of the Board, the matters on which it must take the final
undertaking its duties within a Board Chair and Committee chairs decision. These include approving the
framework of clear authorities and communicate regularly with the Group’s strategy, business plans,
governance structures, with effective Chief Executive Officer and the Chief dividend, major financial
controls that enable risk to be assessed Financial Officer. Where appropriate announcements, and acquisitions
and managed effectively. the Board convenes virtually outside and disposals exceeding
of scheduled meetings to consider defined thresholds.
The Board sets the tone for the Group time-sensitive matters.
from the top and delegates specific Each member of the Board has access,
tasks to its Committees. Each of these The Board is responsible to collectively and individually, to the
Committees has specific written terms shareholders and stakeholders for Company Secretary and is also entitled
of reference issued by the Board, approving the strategy of the Group, for to obtain independent professional
adopted by the respective Committee overseeing the performance of the advice at the Company’s expense,
and published on our website. Group and evaluating and monitoring should they decide it is necessary in
All Committee chairs report on the the management of risk in a manner order to fulfil their responsibilities
proceedings of their Committee at the that is most likely to promote the as Directors.
next meeting of the Board, and make Company’s long-term success.
recommendations to the Board where
appropriate. Minutes of Committee
meetings are circulated to all
Board members.

BOARD ROLES AND COMPOSITION

While the Board shares collective responsibility for its activities, some roles have been
defined in greater depth below.
Chair Senior Independent Director Non-Executive Directors
Leads the Board and is responsible for Supports the Chair on governance Provide constructive challenge and
its effectiveness and promoting the issues and acts as an intermediary for monitor performance. Assess the delivery
highest standards of corporate other Directors, and when required, of the strategy within the risk and
governance. Oversees stakeholder with shareholders. Leads Non- governance framework agreed by the
engagement and ensuring the Board as Executive Directors in evaluating the Board. Review the integrity of the Group’s
a whole determines the Group’s performance of the Chair. financial information, ESG issues and
strategy and objectives. succession planning of executive
management and set Directors’
remuneration.
Chief Executive Officer Chief Financial Officer Company Secretary
Delegated responsibility for overall Provides financial leadership and Advises the Board on corporate
performance and day-to-day supports the development and governance matters and compliance with
management of the Group, together implementation of the Group’s strategy. Board procedures and corporate
with implementation of the governance requirements.
Group’s strategy.

120 Imperial Brands | Annual Report and Accounts 2023

 BOARD COMMITTEES
The Board delegates certain matters, listed below, to Board Committees, consisting of members of the Board. For further details,
see the table of Board and Committee membership at 30 September 2023 on page 112.
Audit Committee Remuneration Committee
Assists the Board in fulfilling its corporate governance Sets and implements our Remuneration Policy aimed at
responsibilities. This includes oversight of the Group’s external aligning the interests of Executive Directors and senior
audit, internal control systems, risk management framework management with those of our stakeholders, ensuring our
and processes, and the Group Internal Audit department. The ability to attract and retain high-performing executives whilst
Committee’s responsibilities also include ensuring the incentivising the delivery of our strategic objectives and
integrity of the Group’s financial statements and related sustained returns for investors.
announcements.
This Committee is chaired by Sue Clark.
This Committee is chaired by Jon Stanton. See page 142.
See page 134.

People and Governance Committee Ad hoc committees

Reviews and evaluates the composition and succession plans Ad hoc committees may be established to review and approve
of the Board and its Committees, to maintain an appropriate specific matters or projects.
balance of skills, knowledge, experience and diversity. Retains
oversight of the development plans for Executive Leadership
Team (ELT) members together with the Company’s wider
organisational structure, its diversity, equity and inclusion
agenda, and its talent management processes. Oversees
workforce engagement and culture. Reviews and develops the
Board’s corporate governance framework, including the Board
performance evaluation process.
This Committee is chaired by Thérèse Esperdy.
See page 129.

Executive Leadership Team

The Board delegates responsibility for developing and implementing strategy, and for the day-to-day running of the business, to
Stefan Bomhard, Chief Executive Officer, who is assisted in his role by the Executive Leadership Team (ELT) comprising the
members listed on page 13.
The ELT is responsible for overseeing the operational execution and delivery of our strategic and financial plans, as approved by
the Board. This includes: business performance management; transformation and cultural change initiatives; talent, capability and
succession; major investments, divestment and capital expenditure proposals; business development considerations; ESG
initiatives; and risk assessment and management.
For further details, see page 13.

www.imperialbrandsplc.com 121
GOVERNANCE BOARD LEADERSHIP continued

OTHER NON-BOARD COMMITTEES

The Board delegates certain matters, as follows, to management committees consisting of senior executives:
Treasury Committee Risk Committee
(reporting to the Audit Committee) (reporting to the Board and Audit Committee)
This Committee reviews and approves material banking This Committee oversees and manages enterprise-wide risk by
and treasury matters, providing second line of defence ensuring that the Group Risk Register remains relevant on an
oversight of treasury-related risks. ongoing basis, reflecting the Group’s risk appetite against those
identified risks, and providing perspectives on the risks raised
This Committee is chaired by the Chief Financial Officer.
whilst also establishing the most effective presentation of risks
for ELT and Board review.
In addition, the Committee oversees and, where necessary, directs
the effective design and operation of the Group’s governance, risk
management and internal control framework.
This Committee is chaired by the Chief Executive Officer.
ESG Steering Committee Group Pensions Committee
(reporting to the People and Governance Committee, the (reporting to the Audit Committee and the Remuneration Committee)
Audit Committee and the Remuneration Committee as well
This Committee provides oversight on both risk and reward
as the Board)
elements of the Group’s pension arrangements.
This Committee defines the Company’s strategy relating to
The Committee’s objectives include tackling the risks inherent
ESG and to provide oversight of its ESG programme, which
in the Group’s defined benefit pension schemes as well as
is designed to assist in promoting the long-term sustainable
reward matters.
success of the Company.
This Committee is chaired by the Chief Financial Officer.
This Committee is chaired by the Chief Executive Officer.

Board meeting attendance

Name/Meeting 1 2 3 4 5 6 7
11/22 01/23 03/23 05/23 06/23 08/23 09/23

Non-Executive Directors
Thérèse Esperdy (Chair)
Sue Clark (SID)
Diane de Saint Victor
Ngozi Edozien
Alan Johnson
Bob Kunze-Concewitz
Andrew Gilchrist1 n/a n/a
Simon Langelier2 n/a n/a n/a n/a n/a
Jon Stanton

Executive Directors
Stefan Bomhard (CEO)
Lukas Paravicini (CFO)
Notes:
1. Appointed 1 March 2023.
2. Retired 1 February 2023 following the conclusion of the 2023 Annual General Meeting.

122 Imperial Brands | Annual Report and Accounts 2023

AREAS OF BOARD FOCUS
Strategy Performance
The Board’s agenda is structured along
four key focus areas: strategy, In this third year of Imperial’s five-year The Board reviewed financial,
performance, people and governance. strategy, the Board monitored strategic operational and safety performance
progress and engaged with during the year, including full-year
Within these four areas, the Board management on changes in the delivery against plan and options for
considered the following during 2023: external environment, the “Must Win shareholder distributions.
Battles” in our market categories and
Imperial’s principal and emerging risks
how to adapt to dynamic changes
and the effectiveness of the Group’s
in NGP.
system of internal control and risk
See pages 16 to 23 for an overview of management were reviewed over
our strategic pillars. the period.
See pages 84 to 99 for the Operating
and Financial Reviews.
Stakeholders: employees, consumers, Stakeholders: employees, consumers,
suppliers, customers, investors, suppliers, customers, investors,
regulators regulators
S172(1) factors: a, b, c, d, e, f S172(1) factors: a, b, c, d, e, f
See page 126 for definitions of S172
factors.

People Governance

Advised by the People and Governance Under the leadership of the Chair
Committee, the Board reviewed key and the People and Governance
people priorities, including the Board’s Committee, an externally-facilitated
composition and independence and evaluation of the Board was conducted
progress against the Group’s diversity, in 2023.
equity and inclusion (DEI) strategy.
The last externally facilitated Board
Board members engaged directly with review took place in 2021. In light of
the workforce through various events the strategic and operational progress
in the UK and overseas to allow the of the Group and the new senior
employee voice to be heard and to leadership and organisation in place, it
inform Board discussions and decisions. was considered that a specialist board
evaluation provider would be best
Andrew Gilchrist’s appointment to the
placed to provide an objective view on
Board was announced in February
the progress made by the Board over
2023, with the appointment taking
this period.
effect from 1 March 2023.
For further information on the Board
For further information, please see
evaluation, please see page 133.
the People and Governance
Committee report at pages 129 to 133.

Stakeholders: employees, investors, Stakeholders: employees, investors

regulators
S172(1) factors: a, b, c, d, e, f S172(1) factors: a, b, c, d, e, f

BOARD IN ACTION:
Langenhagen factory visit,
Germany
As part of its review of our European
cluster, the Board visited one of our
largest factories in Langenhagen.
Topics discussed included energy-
saving activities, the apprenticeship
programmes and how the factory is
adapting to deliver new products
alongside our existing ones.

www.imperialbrandsplc.com 123
GOVERNANCE BOARD LEADERSHIP continued

BOARD IN ACTION:
Market review: Africa, Asia, Australasia and Central &
Eastern Europe (AAACE)
As part of its programme of deep dive reviews of Imperial’s
markets, the Board visited Morocco in June to better
understand the dynamics, performance and strategy for
the region.
A structured ”listening agenda” was developed for the visit to
enable stakeholder voices to be heard directly by the Board:
Consumers: a consumer immersion event was held whereby
Board members met with a cross-section of consumers to gain
insight on local consumer preferences, choices and moments
with Imperial’s brands.
Retailers: visits to a variety of stores in Casablanca allowed
Directors to better understand our direct and trade
commercial channel stakeholders and how we can work
together effectively.
People: an informal employee event was held, where Directors
could meet a cross-section of our local workforce in small
groups and without a set agenda in order that they could hear
directly from employees across our global organisation.
Local leadership: the Board heard from regional, cluster and
market leaders about key aspects of our business, including
regional and country business reviews.

BOARD ACTIVITIES 2022/23

The topics covered by the Board in its meetings during the financial year are detailed below:
Meeting Focus area Discussion points/Decisions made

November 2022 • FY22 Performance • Approval of the full year announcement, the year-end results presentation
(London, UK) • GCO and the Annual Report and Accounts.
• Global Consumer Office (GCO) review, including an update on US NGP Plans,
disposables and innovation pipeline.
January 2023 • Performance • Q1 performance and strategic progress update.
(Bristol, UK) • Strategic progress • Global Supply Chain review, including performance, KPIs and strategy.
• Global Supply Chain • NGP update, including potential M&A and partnership opportunities.
• NGP • Annual General Meeting preparation.
• AGM
March 2023 • Europe regional review • Update on European landscape and Imperial Brands’ performance.
(Hamburg, • Cluster review • Background to key European strategic priorities.
Germany) • German market • Brand overview within combustibles sector.
engagement • NGP acceleration.
• Risk • Risk assessment update.
May 2023 • Performance • Half year performance and announcement, with an update and assessment
(London, UK) • US regional review on strategic progress.
• Digital Transformation • Update on US market environment, performance and initiatives.
• Future strategic • Consumer deep dive on US brands.
planning • Overview of Unify programme, including ambition, achievements to date and
key milestones.
June 2023 • AAACE regional review • Update on Africa, Asia, Australasia and Central & Eastern Europe (AAACE)
(Casablanca, region, including landscape, renewed vision and strategy.
Morocco) • Overview of performance by region within AAACE cluster.
• Consumer interaction and store visits.
August 2023 • Performance • Q3 update, including operational and financial performance, inflation
(virtual, via • Corporate Affairs management and IR feedback following a US investor event.
Teams) • Corporate affairs update, including engagement on electronic vapour
products (“vape”) and the status of single use plastics schemes in Europe.
September 2023 • Performance • Performance and strategic progress update.
(London, UK) • Business plan • Discussion and approval of the FY24 business plan, including strategic
• Capital allocation context within overall delivery of five-year plan, adaptation to changes in the
• Risk NGP category and the continued transformation of Imperial’s operating model.
• Consideration of options for capital allocation in FY24.
• Board risk assessment, including risk appetite.

124 Imperial Brands | Annual Report and Accounts 2023

Engagement with investors Engagement with colleagues
We value the support of our equity and debt investors and how The People and Governance Committee has embraced its
our engagement with these important stakeholders can wider role as the workforce champion. Our “Meet the Board”
influence our ability to access capital. Our aim is to provide listening sessions continue to provide an integrated listening
balanced, clear and transparent communications enabling experience between our colleagues and NEDs that is authentic
investors to understand how we see our prospects and the and inclusive, enabling the Board to gain insights from a
market environments in which we operate. Over the course of representative cross-section of our global employee
2023, we held around 650 meetings with debt and equity population. These open and honest sessions have been
investors, and research analysts through the following: positively received, and are considered by colleagues to be
helpful in connecting to the strategy and the enablers for
• results presentations and trading updates;
delivering it.
• CEO and CFO participation at investment banking conferences;
• investor roadshows in the UK, North America and Asia with Specific engagement:
private client brokers and wealth managers and with debt March 2023 • “Meet the Board” session
investors in support of Eurobond issue; Germany • Office drinks
• an investor seminar in New York, USA, “Start with the • Dinner with local management
Consumer”, to showcase how we have built our consumer- • Factory tour
facing capabilities;
May 2023 • Dinner with cross-business talent
• our AGM, providing an opportunity for the Board to meet UK
with shareholders, particularly our retail investors;
June 2023 • “Meet the Board” session
• shareholder engagement on our proposed executive
Morocco • Employee reception
Remuneration Policy; and • Dinner with local and regional
• ad hoc meetings to maintain an ongoing dialogue with management
existing holders and to meet prospective investors.
September • “Meet the Board” session
Imperial’s Chair continued her engagement with the Group’s 2023 • Round table session - Reward focus
largest shareholders through in-person and virtual meetings. UK • Dinner with Global Business Leaders

The Board is kept informed of investor engagement Read more on how the Board considers all our stakeholders,
throughout the year, through the IR Board Report which is and how the Directors fulfil their duties under Section 172 of
presented at every Board meeting. Investor perception is the Companies Act 2006, in our S172(1) statement and
assessed on an on-going basis through feedback on meetings, accompanying information on pages 126 to 128.
our events and our conference presentations. When appropriate,
this feedback is shared with the Board in the IR Board Report.

INVESTOR ENGAGEMENT DURING FY23

October February June

Results Conferences Conferences
• Pre-close trading update • Consumer Analyst Group of New • Paris
York (CAGNY)
Roadshows
November Engagement • Asia
• AGM • Private Client/Wealth
Results
Management
• FY Results
Engagement
Roadshows April • In-person ”Start with the
• UK Consumer” Seminar, NYC
Results
• North America
• Pre-close trading update
• Private Client/Wealth
Management
May July - August
December Results Engagement
Roadshows • HY Results • Consultation on proposed new
• Private Client/Wealth Remuneration Policy
Roadshows
Management • UK
Conferences • North America September
• Virtual • Private Client/Wealth Conferences
Management • Boston
January Conferences
• London
Engagement
• Chair roadshow • Virtual

www.imperialbrandsplc.com 125
GOVERNANCE SECTION 172

STATEMENT ON SECTION 172

OF THE COMPANIES ACT 2006

Effective engagement In taking into account the various The Board recognises its responsibility
interests of all relevant stakeholders to give due regard to the following
with a wide range of when making decisions, the Board matters in arriving at its decisions:
stakeholders, including recognises it is not always possible to
achieve each stakeholder’s preferred Section 172(1) factors
consumers, colleagues,
outcome. Which stakeholder groups’ a The likely consequences of any
governments and regulators, interests are considered depends on decision in the long term
our customers, suppliers, the decision at hand. The Board b The interests of the Company’s
and investors is key to the endeavours to balance the different employees
priorities and interests of our
successful delivery of our stakeholders in a way compatible with
c The need to foster business
relationships with suppliers, customers
strategy and vision in the the long-term, sustainable success of and others
long term. the business and which aligns with our
d The impact of the Company’s
purpose, vision and behaviours.
operations on the community and
During the year, the Directors acted in a
Examples of key decisions taken by the the environment
way they considered, in good faith,
most likely to promote the Company’s Board during the year and how stakeholder e The desirability of the Company
long-term success for the benefit of its views and inputs, as well as Section maintaining a reputation for high
172(1) factors, have been considered in standards of business conduct
members as a whole, paying due regard
to the matters set out in Section 172(1) its decision-making are shown on the f The need to act fairly as between
of the Companies Act 2006. following pages, which together form members of the Company
our Section 172(1) statement.

Examples of decisions taken by the Board

and how stakeholder views and inputs, as
well as s. 172(1) factors , have been considered
in its decision-making are shown on the
following pages.

Key stakeholders

Consumers

Customers

Governments
and regulators

Colleagues

Suppliers

Investors

126 Imperial Brands | Annual Report and Accounts 2023

BOARD DECISION-MAKING AND
STAKEHOLDER CONSIDERATIONS
Board meetings provide the
opportunity for the Directors The broad skillset and knowledge base of Board members
to discharge their duties promotes and enhances the diversity of thinking during
Board discussions.
under Section 172,
The Board meeting calendar is planned by the Chair,
considering stakeholders as
Company Secretary and Chief Executive, with input from
part of their deliberations other key parties, such as the CFO, as required.
and decision-making. The Board receives detailed papers in good time ahead of
meetings to enable the time in meetings to be devoted to
discussion, debate and challenge following any presentation
that may also take place. As part of this process, relevant
stakeholder interests are identified in the Board papers.
The Board is responsible for setting the strategic direction
of the Company, as outlined on page 123, and ensuring
stakeholders are treated fairly as part of this is firmly
embedded in the culture of the Company. Decisions are
properly recorded in meeting minutes.
Decisions are cascaded as appropriate and stakeholders
engaged where necessary. Updates are provided to the
Board to allow it to review and monitor impact,
effectiveness and the fulfilment of its duties.

Examples of S172 in practice.

CAPITAL ALLOCATION – S172(1) CONSIDERATIONS AT A GLANCE

SHARE BUYBACK DECISION Surplus capital returns to shareholders within
Likely long-term
a b e f five-year strategic plan but leaving sensible headroom
consequences of
the decision for incremental investment (for example, in NGP)
over and above the business plan and to allow for
downside risk.
During the year the Board
announced an ongoing, multi-year Interests of Increased confidence and demonstration of
share buyback programme. This our colleagues strategic delivery.
decision was underpinned by
Maintaining a Improved performance and confidence in our ability to
improving performance and
reputation for high continue to generate strong cash flows in the coming
confidence in being able to continue
standards of years supports growing shareholder returns through a
generating strong cash flows to
business conduct progressive dividend.
support growing shareholder returns
in the years to come. Need to act fairly The Board acted fairly when considering key
between members stakeholders in its decision-making. Once decisions
were made, clear and transparent reporting on our
plans and progress was undertaken.

www.imperialbrandsplc.com 127
GOVERNANCE SECTION 172 continued

Going concern basis

ACQUISITION OF US NICOTINE TJP Labs, a Canada-based Having assessed the principal risks
POUCHES: manufacturer, will continue to facing the Group, including the global
a b c e manufacture the oral nicotine economic environment, as well as
f
pouches under contract for realisation of other key risks, including
ITG Brands. climate change and the impact of the
share buyback, the Board is of the
The transaction, for an initial
On 23 June 2023, the Board opinion that the Group as a whole and
consideration of £65 million with an
announced the acquisition of a Imperial Brands PLC have adequate
additional deferred sum based on
range of nicotine pouches from TJP resources to meet operational needs
sales volumes over five years, was
Labs in order to facilitate its entry from the date of this Report through to
consistent with Imperial’s capital
into the US modern oral market. November 2024 and, therefore, concludes
allocation policy to invest in the
The transaction enables ITG Brands, that it is appropriate to prepare the
business strategy through small
Imperial’s US operation, to offer legal financial statements on a going concern
bolt-on transactions. The Company
adult American consumers a diverse basis. The reduction in the period from
continues to be committed to an
range of 14 product variants in a the prior year, increased following the
ongoing multi-year share buyback
pouch which performs strongly in outbreak of the coronavirus to provide
(see above).
consumer testing. assurance to the market around
Imperial already markets modern corporate liquidity risk, was noted and
Following further consumer testing,
oral products in selected European determined to be both appropriate and in
ITG Brands will relaunch this range
markets under the Zone X and line with statutory requirements.
in 2024 under a new brand, which
Skruf brands.
will be supported by the company’s Read more on page 110.
existing US sales force.
Principal risks and uncertainties
S172(1) CONSIDERATIONS AT A GLANCE The processes and related reporting
Likely long-term Facilitates entry in the US Modern Oral Nicotine described in the Principal Risks and
consequences of category, underpinned by our strategic priority to Uncertainties section on pages 100 to 111
the decision build a targeted NGP business. enables the Audit Committee to review
and monitor the effectiveness of our risk
Interests of our Builds on our extensive brand development, management and internal control
colleagues marketing and sales execution capabilities in the US. systems and confirm their effectiveness
Fostering business The transaction is aligned to our focused, challenger to the Board, in accordance with the
relationships with approach in next generation products, enabling us to recommendations of the Code.
suppliers, customers offer our legal adult consumers a wider range of Read more on pages 100 to 111.
and others product options.
Maintaining a A clearly differentiated product within the US market Fair, balanced and understandable
reputation for high which tested strongly with consumers. The Directors confirm that they consider,
standards of taken as a whole, this Annual Report and
business conduct Financial Statements are fair, balanced
and understandable and provide the
Need to act fairly The Board acted fairly when considering information necessary for shareholders
between members stakeholders in its decision-making. Once decisions to assess the Company’s position,
were made, clear and transparent reporting was performance, business model and strategy.
undertaken internally and externally.
Read more on page 139.

Modern slavery statement

GOVERNANCE BOARD Viability statement In compliance with the UK Modern
On the basis of a robust assessment of Slavery Act, every year since 2016,
STATEMENTS
the emerging and principal risks facing Imperial Brands submits its Modern
Section 172 of the Companies the Group, and the assumption that Slavery Statement, where we outline our
Act 2006 they are managed or mitigated in the commitments for the upcoming year.
The Board seeks to consider the ways disclosed on pages 100 to 111, the You can read our 2022 Modern Slavery
interests of all relevant stakeholders Board’s review of the business plan and Statement on our website. As part of these
when making decisions. Our formal other matters considered and reviewed commitments, together with Slave-Free
statement is disclosed on page 126. during the year, and the results of the Alliance, of which Imperial Brands is a
Throughout this Annual Report we have sensitivity analysis undertaken, the founding member, we developed a
included information on how the Board Board has a reasonable expectation modern slavery toolkit to help our
operates and considers the interests of that the Company will be able to colleagues to enhance their knowledge
stakeholders when making its decisions. continue in operation and meet its about modern slavery, identify its key
liabilities as they fall due over the indicators and characteristics, respond
Read more on pages 126 to 128.
period to September 2026. appropriately to potential victims, and to
escalate and report any concerns. In 2023,
Read more on page 110.
we created a Modern Slavery Local
Champions Community to ensure our
local champions had all the support they
needed, and we updated our Modern
Slavery Manufacturing Standard.
Read more on page 62 and 63.

128 Imperial Brands | Annual Report and Accounts 2023

GOVERNANCE PEOPLE AND GOVERNANCE COMMITTEE

PEOPLE AND GOVERNANCE

COMMITTEE
PEOPLE AND GOVERNANCE In March we appointed Andrew Gilchrist
COMMITTEE CHAIR’S OVERVIEW to the Board as a Non-Executive Director
and a member of the Committee.
Dear shareholder Andrew brings deep experience of our
I am pleased to introduce the People industry as well as finance and planning
and Governance Committee report for from his career at Reynolds American.
the year.
Looking forward, we intend to continue
During the year the Committee has to focus on succession – both for the
continued its focus on executive Board and executive management –
succession planning, embedding recent and the identification and development
appointments to the Executive of a strong leadership cohort to address
Leadership Team and assessing the the opportunities presented by
Group’s senior management. We our strategy.
continued to oversee the development
of a structured framework for talent
management, reflecting on the skillsets
and experience to support the
implementation of the Group’s strategy Thérèse Esperdy
and respond to the challenges facing Chair of the People and Governance
the business. Committee

Role of the People and Governance Committee

The People and Governance Committee leads the process for appointments to
Thérèse Esperdy the Board and executive leadership and reviews employee engagement and
Committee Chair wider culture change activities to ensure they are consistent with the Group’s
purpose, strategy and values. The Committee seeks to ensure that the
composition and structure of the Board remains effective by monitoring the
balance of skills, knowledge, experience and diversity amongst Directors in
support of the strategy. It is also responsible for the social and governance
components of the Company’s ESG agenda.

KEY RESPONSIBILITIES as a whole, so that it is effective

• Overseeing the development of a and able to operate in the best
STRUCTURE AND CONTENT diverse pipeline for succession, interests of shareholders.
OF THE PEOPLE AND taking into account the challenges • Ensuring there is a formal,
GOVERNANCE COMMITTEE and opportunities facing the rigorous and transparent
REPORT Group, its strategic priorities and procedure for appointments to
the skills and experience needed the Board.
People and Governance
Committee Chair’s for the future. • Reviewing and developing the
overview 129 • Monitoring employee engagement Board’s corporate governance
through formal and informal framework and monitoring its
Role of the People and
means to ensure workforce views compliance with corporate
Governance Committee 129
are understood by the Board. governance standards and
About the People and practices while ensuring that it
Governance Committee 130 • Reviewing workforce practices
and policies, including those remains appropriate to the size,
People and Governance complexity and strategy of
which impact talent and
Committee activities the Group.
capability and diversity and
in 2022/23 130
inclusion, and ensure these are Biographical details of the current
Board diversity 130 members of the Committee are set
consistent with Imperial’s
Senior management purpose, strategy and values. out on pages 116 to 119.
gender balance 131
• Assisting the Board in ensuring its The Committee’s terms of
Board appointments and composition is regularly reviewed reference can be found on our
independence 131 and refreshed, taking into account website, www.imperialbrandsplc.
Board evaluation 133 the length of service of the Board com/healthier-futures/
governance/board-committees.

www.imperialbrandsplc.com 129
GOVERNANCE PEOPLE AND GOVERNANCE COMMITTEE continued

surveys, updates on the Group’s culture

ABOUT THE PEOPLE AND GOVERNANCE COMMITTEE strategy, people agenda and the
diversity, equity and inclusion strategy.

Membership and attendance: During the year the Board held two
“Meet the Board” sessions in Germany
1 2 3 4 and Morocco, and further participated in
Name/Meeting 11/22 01/23 05/23 09/23
dinners and office visits. These sessions
Thérèse Esperdy (Chair) included small groups to allow for
Sue Clark (SID) different voices to be heard and with no
Diane de Saint Victor set agenda to enable open discussion.
Ngozi Edozien Participants in these sessions represented
a broad cross-section of our workforce.
Andrew Gilchrist1 n/a n/a
Alan Johnson Diversity
Bob Kunze-Concewitz The Committee continued to appraise
Simon Langelier2 n/a n/a appointments to the Board from the
Jon Stanton perspective of its commitment to
diversity, particularly with respect to
1. Appointed 1 March 2023.
gender and ethnicity, in its composition
2. Retired from the Board at the conclusion of the Annual General Meeting on 1 February 2023.
Note: n/a signifies not eligible to attend and succession plans. The proportion of
women on the Board at 30 September
2023 remained at 40%.
Other regular attendees
• Company Secretary, The People and Governance The proportion of women in our
as Secretary to the People and Committee consists entirely of Executive Leadership Team was 30% for
Governance Committee independent NEDs, as defined in the the year.
• Chief Executive Officer UK Corporate Governance Code 2018 Further information on gender
(the Code). The Board Chair is the balance amongst the Group’s senior
• Chief Financial Officer
Chair of the Committee, and was management can be found on page 69
• Chief People and Culture Officer of the Strategic Report.
independent, as defined by the Code,
• Other senior executives
upon appointment. The Board currently has two Directors
as appropriate
who identify as being from an ethnic
minority background, meeting the
Parker Review’s current recommendation
PEOPLE AND GOVERNANCE Read more about the skills and
of at least one Director. Two members
experience of our Board on pages 116
COMMITTEE ACTIVITIES 2022/23 of our Executive Leadership Team
to 119.
Succession planning identify as being from an ethnic
minority background.
Executive Employee engagement
The Committee reviewed the Group’s The successful delivery of Imperial’s During the year, the Committee
talent model, its development cultural transformation forms a key reviewed progress against Imperial’s
initiatives and approach to succession part of the Group’s strategy. During this diversity, equity and inclusion ambition
across a band of management grades. critical phase of organisational and five year strategy. Areas
It discussed the pipeline of potential transformation, the Board has considered by the review included:
executive leaders over the short and determined that all NEDs should have
• Actions to attract and hire
longer term, as well as the work responsibility for workforce
diverse talent.
underway to identify the development engagement. The Board considers this
needs of future leaders within arrangement to be effective because it • Global and local gender goals.
the organisation. allows every Board member to • Benchmarked measures of
participate rather than channelling employee inclusion.
Non-Executive engagement through a single Director • Employee data informing priorities
To assist in succession planning for and insights are heard collectively. and enabling the setting of goals in
Non-Executive Director appointments other areas of representation, with
and Committee membership, the Imperial’s programme for employee
priority focus on ethnicity.
Committee considered the skills, engagement forms part of the remit of
• The completion of external
experience and tenure of current the People and Governance Committee.
assessments to identify priority areas
Non-Executive Directors and reflected The Committee reviews the
for policy and practice improvement.
on how this skillset enabled the Board mechanism for workforce engagement
to execute the Group’s strategy, fulfil on an annual basis and considers the See pages 67 to 69 for more
effectiveness of this approach as part of information about our DEI agenda.
the tasks and activities of its
Committees and meet future business the Committee evaluation.
and regulatory challenges. The workforce engagement programme
The Committee assessed the includes a number of Board-led
appointment of Andrew Gilchrist activities, including individual and
as a Non-Executive Director and collective site visits and structured
recommended that he join listening sessions to facilitate two-way
the Audit and People and dialogue between employees and Board
Governance Committees. members. These are complemented by
insights from employee engagement

130 Imperial Brands | Annual Report and Accounts 2023

Board gender balance as at Board appointments commitment required, independence
30 September 2023 The Committee utilised an external and potential conflicts of interest.
search consultant to undertake a During the year, the Board approved the
review of candidates for potential appointments of Ngozi Edozien as a
60%
appointment to the Board. Andrew non-executive director of Bank of
Gilchrist was interviewed by the Africa and Alan Johnson as inaugural
40%
Committee, the Chief Executive and chair of the Stakeholder Advisory
Chief Financial Officer and the Council to the Audit and Ethics
Committee concluded that Andrew Standards Setting Boards.
would be an excellent addition to the
In accordance with the Code and
Board as a Non-Executive Director, with
subject to the agreement of the Board,
valuable financial and sector knowledge,
Executive Directors are permitted to
and therefore recommended Andrew’s
Male 60% accept one external non-executive
appointment to the Board. Andrew
Female 40% board appointment and to retain any
Gilchrist was appointed to the Board on
fees received from such appointment.
1 March 2023.
Board ethnicity as at During the financial year, Stefan
30 September 2023 Bomhard was a non-executive director
Independence
of Compass Group PLC.
All Directors have a statutory duty to
exercise independent judgement.
20% Reappointment of Directors
Non-Executive Director (NED)
In accordance with the Code and the
independence has a pivotal role in
Company’s Articles of Association,
bringing constructive challenge and
all Directors offer themselves to
independent oversight to effective
shareholders for re-election annually,
Board discussion and decision-making.
80%
except those who are retiring
In accordance with the provisions of immediately after the Annual General
the UK Corporate Governance Code, Meeting. Each Director may be
the Chair was considered independent removed at any time by the Board or
Non-ethnic minority background 80%
at the time she was appointed to the shareholders.
Ethnic minority background 20% the Board and to that role, and the
Board considers all other NEDs to Director induction, training
Senior management1 and direct be independent. and development
reports gender balance as at The Chair is assisted by the Company
30 September 2023 Conflicts of interest Secretary in providing all new Directors
Each Director has a statutory duty to with a comprehensive induction
disclose actual or potential conflicts of programme on joining the Board. The
38%
interest. The Company’s Articles of induction programme provides new
Association allow the Board to Directors with an understanding of
authorise potential conflicts of interest their duties as Directors, the Group, its
that may arise and to impose such businesses and the markets and
limits or conditions as it thinks fit. regulatory environments in which it
62% This authorisation process informs the operates. This includes meeting with
People and Governance Committee’s senior management and an overview of
assessment of a Non-Executive the Group’s governance practices.
Director’s independence when Non-Executive Directors will have
Male 62%
proposing that Director for re-election further content tailored to the Board
Female 38%
at the AGM. Committees that they join. Feedback is
1. Senior management as defined by the Code. sought from the Director each time a
Time commitment and programme is completed and shared
outside appointments with the Committee to ensure that our
Each NED must be able to devote induction process is continually
sufficient time to the role in order to updated and improved.
discharge their responsibilities
Andrew Gilchrist joined the Board in
effectively. NED external time
March 2023 and received a tailored
commitments are regularly reviewed to
induction following his appointment.
ensure that they are able to allocate
This included one-to-one meetings
appropriate time to Imperial.
with our Executive Leadership Team,
The Committee is satisfied that the business and functional leaders and our
Chair and each of the NEDs dedicates internal and external auditors.
sufficient time to fulfil their
The Chair has overall responsibility for
Imperial duties.
ensuring that Directors receive suitable
NEDs are required to consult with the training to enable them to carry out
Chair and Company Secretary before their duties. Training is provided
accepting any other role which may through deep dive sessions
impact their ability to commit (“Neducation”), written content and
appropriate time to Imperial. Approval presentations , as well as meetings with
of any new outside appointment for an Group employees and external advisers.
existing NED will consider the time Directors undertake visits to different

www.imperialbrandsplc.com 131
GOVERNANCE PEOPLE AND GOVERNANCE COMMITTEE continued

Imperial sites around the world, The feedback confirmed that the
where they meet with colleagues, Committee was operating effectively,
management, suppliers and consumers. having quality interaction and in-depth
You can read more about our discussion with the executive that has
stakeholder engagement in more demonstrated progress in the
detail on pages 32 to 36. organisation’s cultural transformation
alongside evolving talent management
During the year the Board received
and succession planning programmes.
training on corporate policy positions
Areas of focus for 2024 include
and intellectual property rights and
rebalancing agenda time towards
licensing in NGP.
traditional nomination committee
The Directors have access to activities, including succession
independent professional advice at the planning for the Board.
Group’s expense, as well as the advice
and services of the Company Secretary,
who advises the Board on regulatory
and corporate governance matters.

Review of the People and

Governance Committee
For its 2023 evaluation, the Board
initiated an external review using the
firm Independent Board Evaluation
(IBE), covering the Board and its
Committees. The Committee evaluation
was undertaken through meeting
observation, together with a review of
meeting materials and one-to-one
interviews with Committee members
and the Chief People and Culture Officer.

132 Imperial Brands | Annual Report and Accounts 2023

BOARD EVALUATION
An evaluation of the Board, its Committees, the Chair and individual Directors is undertaken on an annual basis, assessing the quality
of decision making and discussion by the Board and each Committee and reflecting on the performance of each individual Director.

Actions from the 2022 Board review

The outcomes and actions agreed following last year’s review were a focus for the Board throughout the year. Progress against
these key actions include:
2022 Action Actions taken during the year

NGP • Reviewed and developed M&A opportunities within NGP.

Prioritising the Board’s focus on NGP • Held discussions over the year on scientific, regulatory and consumer
developments within NGP – both as standalone items and as part of the
CEO’s regular report to the Board.
• Organised a deep dive on NGP intellectual property and licensing.
Talent and culture • Reviewed the talent and capability programme across a spectrum of senior
Building the talent pool, mapping the cultural management levels, including internal progression and new hires.
transformation within the organisation and • Considered the progress in embedding Imperial’s organisational culture
monitoring the progress of Diversity, Equity & programme, including the development of a Senior People leadership skills
Inclusion initiatives. programme (“Connected Leadership”).
• Used KPIs to track the Group’s five-year diversity, equity and inclusion strategy.
Strategic planning • Received regular updates on market and competitor developments.
Consider the medium to long-term strategic • Held two deep dives on the approach and planning for the next five-year
direction of the Group. strategic plan.

The process below was followed for this external review:

Planning Briefing Evaluation Reporting Review Actions

People and IBE reflects on IBE defines the IBE benchmarks Final evaluation Board and
Governance feedback from scope of the against best reports discussed Committees
Committee 2021 review to review, attends practice standards by the Board and agree actions to
agrees evaluation inform thinking Board and of corporate its Committees, take forward.
provider, on key focus Committee governance and with Chair giving
Actions then
following detailed areas for the meetings and other boards. individual
implemented
consideration. evaluation. interviews Discusses draft feedback to each
and monitored
individual reports with Chair, Director and the
IBE discusses over the year.
directors and Committee Chairs SID facilitating
evaluation
non-Board and Senior the Board’s
process
contributors. Independent feedback to
with Chair.
Director (SID). the Chair.

2023 BOARD REVIEW agreed to implement actions across the and topics to explore strategic ideas
In 2023, the Board initiated an external following areas: before they are fully developed, find
evaluation by the firm Independent ways to introduce different styles of
Board agenda and focus discussion and allow Board members
Board Evaluation (IBE). IBE externally
The Board’s focus during 2022-23, has to bring their experience to the
facilitated Imperial Brands’ Board
been on the three areas referred to decision-making process.
evaluation in 2021 but beyond this there
above, together with ESG and specific
is no connection between IBE and
projects. As Imperial begins to develop Strategy
either Imperial Brands or its Directors.
the next strategic plan,their focus will While delivery of the current strategic
The evaluation supported the view that shift towards more time on long-term plan has gone well to date, the Board is
the Board was performing effectively, strategy, NGP and risk. We will ensure mindful that the market, regulatory and
noting the progress made since the increased co-ordination across the geopolitical landscape remains dynamic
previous review in 2021. The cohesion Board and its Committees to ensure and the parameters for a future strategy
and diversity of the boardroom, strong that strategic and operational priorities will be different to those of the current
levels of trust and transparency and the dovetail and agendas are linked. plan. The format of formal and informal
support and challenge of the Board as it Board time will be re-examined to agree
has overseen cultural change and Adding value and optimising challenge optimal methods for engaging the Board
transformation within the business With the Board having satisfied one of on the development of the next five
were identified as areas of strength in the key recommendations of the 2021 years of the strategy, including
the review. review, namely rebuilding trust and encouraging strategic debates on
solidifying its culture both within the diverse options.
Recommendations were made with the boardroom and with executive
aim of helping the Board achieve management, there is now opportunity
optimal effectiveness. The Board to review Board meeting structure

www.imperialbrandsplc.com 133
GOVERNANCE AUDIT COMMITTEE

AUDIT COMMITTEE The Audit Committee has closely

AUDIT CHAIR’S OVERVIEW scrutinised a number of areas when

assessing critical judgements and

COMMITTEE
Dear shareholder estimates made by management
I am pleased to present the report to and ensuring support for a robust
shareholders of the Audit Committee financial close.
for the year ended 30 September 2023,
which sets out how it has discharged As a Committee, we continue to focus
its duties in accordance with the UK on ensuring the Annual Report is fair,
Corporate Governance Code 2018 (the balanced and understandable, with
Code) and details the key matters an emphasis on transparency of
considered and findings during the underlying performance drivers,
year. The Audit Committee has and confirming both that adjusting
exercised the authority delegated to it items are in accordance with the
by the Board to provide assurance for agreed framework and that disclosures
the integrity of the Group’s financial are enhanced where necessary to help
statements, to oversee the Group’s users understand the accounts. This
external and internal audit and to included ensuring that an appropriate
review the Group’s internal control balance within both the Half Year
and compliance frameworks. Report and the Annual Report of
reported and adjusted results
I would like to express my thanks to was presented. Additional Alternative
Simon Langelier, who stepped down Performance Measures were adopted in
from the Board and Audit Committee the year to enable a greater explanation
during the year, for his most respected of the impact of the Company’s Russia
input during his tenure; a warm exit; it is anticipated that these will only
welcome goes to Andrew Gilchrist who be used in respect of this financial year.
joined the Audit Committee this year,
providing extremely valuable sector Both external and internal auditors
and geographical insights to our continue to present feedback on
discussions in addition to his key financial risks and controls and to
financial expertise. provide objective and appropriate
challenge to management in addressing
The Committee has spent time during these areas. Both took advantage of
the year monitoring Imperial’s risk regular private meetings with myself
Jon Stanton management, control and financial and the full Audit Committee
Committee Chair governance framework, including a throughout the year. These processes
step-up in our approach to Enterprise continue to enable the Audit Committee
Risk Management and the to report to the Board on how it
enhancement of the surrounding discharged its responsibilities and to
framework. These are critical as we make recommendations to the Board,
enter the fourth year of our five-year all of which were accepted. The
strategy and, as a business, look beyond Committee was also subject to an
that. The Group’s strategic ambitions external evaluation during the year,
remain on track and the Committee further details of which you can find
continues its focus to provide the Board below, but I was pleased with the
with the necessary assurance in its findings and will work with members to
delivery of that strategy. consider areas for improvement
The Committee also received updates identified as part of the process.
from the Treasury and Tax functions The following pages provide an
STRUCTURE AND CONTENT during the year, both of which have insight into the range of activities and
OF THE AUDIT COMMITTEE strengthened the governance deliberations of the Audit Committee
REPORT underpinning their activities, which during the financial year, supported
Audit Committee Chair’s has been critical as they play their part by a fuller list of key matters considered
overview 134 in the wider ongoing Finance by the Audit Committee set out on page
Role of the Audit Transformation. We also monitored and 137 to 139.
Committee 135 received updates on the developments
About the Audit proposed by what was the Department
Committee 135 for Business, Energy and Industrial
Audit Committee’s Strategy (BEIS) as part of its ‘Restoring
activities in 2022/23 136 Trust in Audit and Corporate Governance’
agenda, and the subsequent withdrawal
Key matters considered 137 Jon Stanton
of draft new reporting regulations.
Governance, risk Chair of the Audit Committee
We will continue to monitor the
management and
proposed wider reforms, as well
internal control 140
as the forthcoming Code changes.
Internal audit 140
See also the Committee’s focus in
External audit 140
2023 on page 136.
Directors’ statement 141

134 Imperial Brands | Annual Report and Accounts 2023

 GOVERNANCE
Role of the Audit Committee The Audit Committee consists entirely
The Audit Committee assists the Board in fulfilling its corporate governance of independent Non-Executive
responsibilities relating to financial and narrative reporting and controls. Directors as defined by the Code.
This includes oversight of the Group’s internal control systems, risk The Audit Committee chair, and both
management process and framework, the Group Internal Audit department Alan Johnson and, following his
and the external audit. appointment in March 2023, Andrew
It also involves ensuring the integrity of the Group’s financial statements and Gilchrist meet the Code’s standard of
related announcements. having recent and relevant financial
experience. The Board is satisfied that
the Committee as a whole has the
required competence relevant to the
KEY RESPONSIBILITIES certification exercise and
sector in which the Company operates,
In line with the authority delegated subsequent internal audit testing.
supported by the FMCG experience of
by the Board, the Audit Committee: • Reviews the adequacy and Sue Clark, Ngozi Edozien, Andrew
security of the Company’s Gilchrist and Alan Johnson.
• Reviews and challenges the procedures for detecting fraud,
critical management judgements and its systems and controls for Biographical details of the current
and estimates which underpin the preventing bribery. members of the Audit Committee are
financial statements, drawing on set out on pages 116 to 119. Members of
• Scrutinises the independence,
the views of the external auditor the Audit Committee are appointed by
approach, objectivity, effectiveness,
in making an informed the Board following recommendation
compliance and remuneration of
assessment, particularly in by the People and Governance
the external auditor.
relation to each of the key matters Committee. Simon Langelier stepped
• Assesses the going concern
detailed on pages 137 to 139. down as a Director of the Company and,
status and medium-term viability
• Maintains appropriate oversight therefore, as a member of the Audit
of the Group.
over the work and effectiveness Committee in February 2023; Andrew
• Assists the Board in confirming
of Group Internal Audit, including Gilchrist joined the Committee on
that, taken as a whole, the
confirming it is appropriately his appointment to the Board in
Annual Report is fair, balanced
resourced, reviewing its audit March 2023.
and understandable, and provides
findings and monitoring
the information necessary for The Audit Committee’s terms of
management’s responses.
shareholders to assess the reference state it must meet at least
• Monitors and evaluates the three times a year. The quorum for
Company’s position, performance,
effectiveness of Imperial’s risk meetings is two.
business model and strategy
management and internal control
(see page 139).
systems, including obtaining At each meeting, both the Director of
assurance that controls are The terms of reference of the Group Internal Audit and EY had the
Audit Committee can be found opportunity to meet with the Audit
operating effectively and are
on our website.
evidenced as such through, Committee without management present.
for example, the internal self- The Audit Committee is authorised to
seek external legal advice and other
independent professional advice as
ABOUT THE AUDIT COMMITTEE
it sees fit.

Membership* and attendance AUDIT COMMITTEE REPORT

1 2 3 4 Focus in 2023
Name/Meeting 11/22 02/23 05/23 09/23 • Oversight of continuous
Jon Stanton (Chair) improvement agenda of risk
Sue Clark (SID) management, internal control and
assurance taking into account
Ngozi Edozien
BEIS proposals.
Andrew Gilchrist 1 n/a n/a
• Supporting the Finance
Alan Johnson
Transformation being led by the CFO
Simon Langelier2 n/a n/a to enhance capabilities, prioritise
* Only members are entitled to attend. controls and governance and support
1. Appointed 1 March 2023 the broader culture change being led
2. Retired 1 February 2023
Note: n/a signifies not eligible to attend
by our CEO.
• Reviewing and challenging critical
judgements, estimates and
Other regular attendees during FY23
disclosures, including adjusted
• Board Chair • Group Financial Controller performance measures, particularly
• Chief Executive Officer • Global Tax Director as they relate to the ongoing
• Chief Financial Officer • Director of Group Internal Audit execution of our new strategy, and an
• Group Finance Director • Representatives from EY, our uncertain macro environment.
• Company Secretary external auditor
• Deputy Company Secretary, as
Secretary to the Audit Committee

www.imperialbrandsplc.com 135
GOVERNANCE AUDIT COMMITTEE continued

• Ensuring reporting and disclosures better support delivery of Imperial’s The Audit Committee evaluation was
are fair, balanced and strategy to enable a more consistent, undertaken through meeting
understandable, and adequately effective and transparent approach to observation, together with a review of
reflect developments in our risk and to drive future value. meeting materials and one-to-one
ESG commitments and FRC Regulatory developments will continue interviews with Committee members
disclosure guidelines. to be in focus with the outcome of and the external audit lead partner.
• Assessment and approval of the BEIS proposals to be taken into
There is a high level of confidence
alternative performance measures to consideration, and the enactment
in the Audit Committee, which
facilitate the presentation of results of the FRC’s Standard for Audit
feedback confirms is well-chaired.
following the Company’s Russia exit. Committees. We will, as always,
The composition facilitates challenge,
• Oversight of the external auditor and challenge ourselves to ensure
evaluation and debate and draws well
implementation of ongoing our overall reporting continues
on members’ experience, facilitating
enhancements to derive value from to improve, remains appropriate and
good cross-Committee governance. The
the external audit whilst also takes full account of regulatory and
main areas to focus on for the Audit
enhancing audit quality. other developments.
Committee were the continued evolution
• Supporting the Group Internal of the Group’s risk management and
Review of the Audit Committee
Audit strategy. internal controls programme; and
An externally facilitated evaluation
of the Board and Committees was non-financial/ESG reporting.
Looking ahead to 2024
undertaken in 2023, as reported
For the coming year, the Committee
elsewhere in the Annual Report,
will continue to support and monitor
conducted by Independent Board
the Finance team’s transformation
Evaluation (IBE). IBE has no other link
programme and the development of the
with the Company or its Directors.
Group’s risk management framework to

AUDIT COMMITTEE’S ACTIVITIES 2022/23

A summary of the topics covered by the Audit Committee in its meetings during the financial year is provided below:

Topic Matters discussed and decisions taken

Financial • Finance update, including climate change impact modelling

results and • Finance Transformation update
audit • FY22 Results overview and accounting estimates and judgements update and recommendations to
the Board
• Review of HY23 Results, including going concern and accounting estimates and judgements
• Financial controls self-certification and FY22 attestations update
• Confirmed audit/non-audit service fees
• Update on alternative performance measures (APMs)
• FY23 audit plan and update
• External audit effectiveness review, including FY22 learnings to improve ways of working
• Restructuring Policy review
• Recommended reappointment of external auditor to the Board
• Considered audit and non-audit service fees
Corporate • Recommended preliminary announcement and Annual Report and Accounts to Board, including the Audit
reporting Committee report and risk management disclosure
• Recommended half year reporting to the Board, including interim dividends
• Recommended final dividend to the Board
Internal Audit • Group Internal Audit update, including FY24 plan and approval of Charter
• Group Internal Audit annual review
• Group Internal Audit updates, including strategy roll-out update
• Engaged senior management for deep dives where issues required greater scrutiny
Functional and • Group Treasury update, including risk management
business • Tax review including strategy confirmation
reviews • Logista review
Governance, • Internal controls and risk management update, allowing confirmation of internal controls and
risk and control risk Code compliance
• Enterprise risk management framework update
• Risk and controls assurance – US
• Governance, Risk and Control Operating Model update.
• FRC and BEIS updates
• Reviewed independence of Audit Committee members.
• Committee evaluation
• Update on FY23 Audit Committee planner
• Private discussions with external auditor, Group Internal Audit and CFO

136 Imperial Brands | Annual Report and Accounts 2023

KEY MATTERS CONSIDERED
The Audit Committee considered the appropriateness of the following areas of significant judgement, complexity or estimation in
connection with the financial statements:

Focus area and

why it is significant How we as an Audit Committee addressed this area Outcomes

Use of alternative performance During the year the conclusions of a detailed Three additional APMs were introduced
measures review and scrutiny of the proposed use of at the half year to better enable the
Non-GAAP or alternative APMs in FY23 were presented to the Audit presentation of Group results excluding
performance measures (APMs) Committee. The Committee also reviewed and Russia and it is anticipated that these
provide an appropriate and useful approved changes to the APMs proposed by will be discontinued after FY23. The
assessment of business performance management to provide greater clarity on the separation of “NGP Adjusted Operating
and reflect the way the business is nature and amount of all adjusting items. Profit” as a standalone metric, being a
managed. They are also used in derivative of the previously combined
determining annual and long- Tobacco and NGP Operating Profit APM,
term incentives for remuneration, was approved for the full year, to better
and are widely used by our investors. reflect the growing importance of
There is a risk that their this market.
inappropriate use could distort
the performance of the business. No restructuring costs associated with the 2021
No action required.
strategic review were recognised in FY23, as
previously agreed by the Committee.
Production changes at the Company’s Kyiv Its treatment in this way was
factory were considered as an adjusting item consistent with that of sector peers
and discussed by the Audit Committee. and considered appropriate.
The Audit Committee discussed with
management and EY the fair value adjustment
Approved.
and impairment of other financial assets.
Segmental reporting The Group changed its internal management The FY23 full year figures are presented
The accounting standard IFRS 8 reporting structuring with effect from 1 October on the same revised basis, also including
Operating Segments requires 2022. The change involved the movement of the a restatement of the comparatives, and
alignment of external reporting Central and Eastern Europe cluster from the were similarly reviewed.
segments with the internal Europe division to Africa, Asia Australasia
management information provided (AAA) division The AAA division was
to the Chief Operating Decision subsequently renamed the AAACE division.
Maker within an organisation. The Audit Committee reviewed the resultant
changes to the external reported operating
segments presented on the new basis at the
Half Year, together with a restatement of the
prior year comparative figures.

www.imperialbrandsplc.com 137
GOVERNANCE AUDIT COMMITTEE continued

Focus area and

why it is significant How we as an Audit Committee addressed this area Outcomes

Goodwill and intangible asset At both the half year and the full year, the Audit Following these reviews it was
impairment reviews Committee reviewed cash forecasts for the concluded that there is significant
Cash Generating Unit Groupings (CGUGs) that headroom from the discounted cash
(See note 11 to the financial are used to support the Group’s goodwill and flows for each CGUG above the
statements for further information) intangible assets balances. Within this review valuation of the goodwill allocated
Goodwill and intangible assets form a the potential impacts of climate change were to it.
major part of the Group’s balance sheet, considered.
The Audit Committee concluded that
and their current valuations must be
In addition, CGUGs were reviewed in connection there was no requirement to impair
supported by future prospects.
with the Group reorganisation of the Central goodwill and intangibles and that the
and Eastern Europe cluster into the newly disclosure of sensitivities was
constituted AAACE division. appropriate and on this basis the
Committee approved the note
The Audit Committee also considered detailed
disclosure in the financial
reporting from, and held discussions with, the
statements.
external auditor.
Taxation The Audit Committee received a detailed update The Audit Committee continued to
from management at each Committee meeting consider the appropriateness of
(See notes 7 and 22 to the financial on the status of ongoing inquiries and tax audits items treated as adjusting and
statements for further information) with local authorities; the Group’s effective tax concluded that the items satisfied tax
The Group is subject to taxation in a rate for the current year; and the level of adjusting item criteria on the basis of
number of international jurisdictions, provision for known and potential liabilities, materiality and nature.
requiring significant management including the third-party counsel received in
The Audit Committee reviewed the
judgement in relation to effective developing estimates. In addition, the Audit
status of each material tax
tax rates, tax compliance and the Committee discussed material positions
judgement, including a range of
reasonableness of tax provisions, with the external auditor in support of
possible outcomes, noted that
which could materially affect the developing an independent perspective
independent third-party support had
Group’s reported results. on the positions presented.
been obtained for each judgement
The Group is subject to periodic The Audit Committee received specific progress and agreed that the level of tax
challenges by local tax authorities reports on French tax litigation, German tax provisions and disclosures
on a range of matters and there are authority audit into debt and equity allocation was appropriate.
uncertain tax positions in relation to branches, the recognition and recoverability
mainly to two principal matters: of deferred tax in connection with the Group’s
German branch capital structure; and Dutch business and the conclusion of the
a French tax authority challenge in transfer pricing audits, including settlement on
respect of an intra-Group disposal UK, German and French transfer pricing audits,
and financing. and in light of these considered the
reasonableness of provisions and
reporting disclosures.
Litigation matters and competition The Audit Committee considered reports from The Audit Committee concluded that
investigations the Group’s external lawyers which confirmed risks in respect of these actual
that the Group continues to have meritorious and threatened legal proceedings and
The Group is exposed to litigation
defences to a number of actual and threatened litigation matters otherwise covered
matters arising from claimants seeking
legal proceedings. in this report, along with any
remedies from the Company or its
competition authority proceedings,
subsidiary companies. A small number
are appropriately disclosed or
of claims alleging smoking-related
provided for in the Group’s Annual
health effects remain, as well as
Report and Accounts.
NGP-related product litigation in the US
only. A claim arising from specific US
legislation (Helms Burton) remains
ongoing, one element of the US state
settlement agreements remains
unresolved, employment related claims
arising from a number of legacy
disputes is ongoing and the Group
faces one ESG related claim (see notes
24 and 29). The Group is in the process
of appealing three decisions by
national Competition Authorities in
the EU.

138 Imperial Brands | Annual Report and Accounts 2023

Focus area and
why it is significant How we as an Audit Committee addressed this area Outcomes

Going concern and viability Management performed a comprehensive Together, these points allowed the Audit
statement series of stress tests to confirm that the going Committee to form an opinion as to the ability of
concern basis and viability statement remain the Group to remain a going concern from the
In the context of
appropriate. These tests are described in the date of this Annual Report through to November
global economic
going concern statement on page 110. The tests 2024 and make its recommendation to the Board.
uncertainty, characterised
involved the stress testing of the resilience of The Audit Committee noted that this 12-month
by Ukraine and other
the Group to certain changes in trading period was a reduction from the prior year, which
conflicts and, amongst
conditions that may come about as a result of had increased following the outbreak of the
other things, the ongoing
the global economic environment, as well as coronavirus to provide assurance to the market
cost-of-living crisis, the
realisation of other key risks, including climate around corporate liquidity risk. The Committee
Directors are required to
change and the impact of the share buyback. determined this was appropriate given the Group’s
consider whether it is
cash flow resilience and strong access to funding
appropriate to prepare the The Audit Committee reviewed these tests on
markets when required, and also noted that it was
financial statements on a operating cash flows, the ongoing resilience of
in line with statutory requirements.
going concern basis and demand and supply, the financial impact of the
explain how they have disposal of the business in Russia and the The Audit Committee also considered
assessed the prospects impact of the war in Ukraine on the business. management’s view of the Group’s ability to remain
of the Company over a The Audit Committee noted the Group’s ability viable, for the agreed three-year period, following
longer period. to raise funds, with significant oversubscription the forecast realisation of a number of key risks,
to the Group’s debt financing offers, even in including the possible impacts of climate change,
challenging markets. and concluded that it is appropriate to sign off the
Group’s viability statement.

Revenue recognition Discussions were held with management and The Audit Committee is satisfied that the Group’s
the external auditor which satisfied the Audit policy was operating effectively. No breaches
There is a risk that
Committee that the Group’s criteria for revenue were found during the year.
revenue could be
recognition continued to be appropriate and
overstated through the
that the central monitoring of trade weight at
inclusion of sales which
period ends ensured any material breaches
are not in compliance
to the Group’s revenue recognition policy
with the Group’s revenue
would be both detected and reported to the
recognition policy.
Audit Committee and, where applicable,
disclosed externally.

Fair, balanced and The Audit Committee received a report from After consideration of the Annual Report against
understandable management summarising the processes that these criteria the Audit Committee recommended
had been undertaken to ensure that the Group’s to the Board, which accepted the recommendation,
The Board is required
external reporting is fair, balanced and that taken as a whole the Annual Report is fair,
to state that the Group’s
understandable. This included, but was not balanced and understandable and provides the
external reporting is
limited to, the following: (i) a full document information necessary for shareholders to assess
fair, balanced and
review by the Disclosure Committee, including the Company’s position, performance, business
understandable. The Audit
ensuring no undue reporting of good news and model and strategy.
Committee is requested by
material information is given due prominence;
the Board to provide
(ii) engagement of a cross-functional group of
advice to support
internal and external subject matter experts
the assertion.
and content owners in the preparation and
review of materials, including the ELT, Group
Corporate Communications, Group Finance,
Group Internal Audit, Group Legal, Investor
Relations, ESG team and Company Secretariat;
(iii) input and advice from appropriate external
advisers, including the Company’s brokers, legal
advisers, and external audit challenge and
scrutiny; (iv) regular research to identify
emerging practice and guidance from relevant
regulatory bodies; and (v) regular meetings
involving the key contributors to the document,
during which specific consideration was given to
the fair, balanced and understandable assertion.
During the year the Audit Committee has
continued its review of the use of APMs,
including ensuring the appropriate balance of
reported and adjusted measures in the
Annual Report.

www.imperialbrandsplc.com 139
GOVERNANCE AUDIT COMMITTEE continued

INTERNAL AUDIT
GOVERNANCE, RISK MONITORING THE Group Internal Audit (GIA) is
MANAGEMENT AND EFFECTIVENESS OF RISK responsible for providing objective
INTERNAL CONTROL MANAGEMENT assurance on the adequacy and
Assessing and managing the risks The Audit Committee is responsible effectiveness of the risk management
faced by the Group is fundamental to for approving the risk management and internal controls framework.
achieving our strategic objectives, approach on behalf of the Board, and
During the year GIA performed a
safeguarding our stakeholders’ for oversight of its ongoing effectiveness.
risk-based audit programme aligned to
interests and protecting the Group
The Board and Audit Committee the Group’s strategic priorities,
from reputational or legal challenges.
received regular updates throughout resulting in relevant recommendations
This is reflected in our risk
the year on the continued development and insights to further strengthen the
management framework, which
of the Group’s internal control systems, Group’s control framework.
ensures significant risks are
risk management process and
identified, managed and monitored. The Audit Committee reviewed key
framework, as well as on the results
reports from GIA at each Audit
The Board has responsibility for the of risk assessments and internal
Committee meeting to monitor the
oversight of the Group’s internal control effectiveness assessments.
effectiveness of the control framework
control systems, risk management
The Board and Audit Committee have and considered the effectiveness and
process and framework. The Board
been informed of, and looked at, all results of the audits undertaken by GIA,
delegates to the Audit Committee the
significant whistleblowing reports and monitored management responses
detailed risk assessment review and
and reported frauds in the year, and to the audit matters raised.
assurance over the operation of the
are comfortable that none of these
risk management framework. The Audit Committee also met
gave rise to evidence of systemic
independently with the Director
The Group’s risk management non-compliance with relevant laws
of Internal Audit to discuss
approach is described in the Principal and regulations.
additional insights.
Risks and Uncertainties section on
The Audit Committee receives
pages 100 to 111 and is designed to The Audit Committee reviews the
presentations from the Executive on
manage, rather than eliminate, the effectiveness of GIA routinely through
their respective functions. This direct
significant risks the Group may face. post-audit surveys and KPI reporting,
dialogue with the Audit Committee
Consequently, our internal controls and monitors progress on GIA’s own
provides further assurance to the
can only provide reasonable, and not strategic priorities through
Audit Committee regarding the
absolute, assurance over our updates provided.
effective management of significant
principal risks.
risks to the Group. The Audit Committee also reviewed
During the year the Board considered and approved the FY24 GIA plan,
Reporting provided to the Audit
the Group’s “bottom-up” risk including the scope, risk coverage and
Committee enables the review and
assessment, which included resourcing model to deliver it.
monitoring of the effectiveness of our
consideration of both current and
risk management and internal
emerging risks and issues as EXTERNAL AUDIT
control systems. The Audit
discussed in the Principal Risks and The Audit Committee is responsible for
Committee has considered and
Uncertainties section on pages 100 oversight of EY as the Group’s external
confirmed to the Board that this is in
to 111. auditor, agreeing its audit strategy and
accordance with the
recommendations of the Code and related work plan, as well as approving
the FRC Guidance on Risk its fees. At the Committee’s February
Management, Internal Control and 2023 meeting, EY set out its external
Related Financial and Business audit plan for the year, which continued
Reporting and that such systems to build on its previous experience, EY’s
were in place throughout the year continued focus on audit quality and the
and up to the date of the approval of feedback it received from management,
the financial statements. the Board and the Audit Committee. EY
provided the Audit Committee with an
overview of its evolving audit strategy,
tailored to the Group, including its audit
risk assessment, Group audit
materiality and scope, and the key
areas of its proposed audit approach.
The Audit Committee considered the
external auditor’s feedback,
management letter and half year
review. EY also provided feedback to
relevant Group and local management
in a number of debrief sessions and
audit close meetings.
The Audit Engagement Letter detailing
the provision of statutory audit and half
year review services in respect of FY23
was considered and approved in the
prior year.

140 Imperial Brands | Annual Report and Accounts 2023

The Audit Committee has had regular services, audit-related services and be tendered will likely be in 2029, as
private meetings with EY and is non-audit work. The Audit Committee required by regulation. The Audit
satisfied that EY has been given full also considered reports by both Committee continues to review the
access and complete transparency by management and EY, which did not independence and the quality of the
management throughout the year. raise any concerns in respect of EY’s external audit to assess whether a
independence, and confirmed that tender should be undertaken in
Independence of our external auditor EY maintains appropriate internal advance of the regulatory requirement.
As part of the continual requirement to safeguards to ensure its independence The Company is in compliance with the
ensure the independence and objectivity and objectivity. The outcome of these requirements of the Statutory Audit
of EY as our external auditor, the Audit reviews was that performance of the Services for Large Companies Market
Committee maintains and regularly relevant non-audit work by EY was in Investigation (Mandatory Use of
reviews our Auditor Independence compliance with the policy and was the Competitive Tender Processes and
Policy. This policy, which provides clear most cost-effective way of conducting Audit Committee Responsibilities)
definitions of services that the external our business. No conflicts of interest Order 2014.
auditor may and may not provide as were found to exist between such audit
determined by the FRC’s Revised The Audit Committee recommended to
and non-audit work. The Audit
Ethical Standard published in the Board that EY should be reappointed
Committee therefore confirmed that
December 2019, can be found on our as external auditor at the next AGM.
the Company and Group continue to
website at www.imperialbrandsplc.com. receive an independent audit service. Statement of auditors’
Our Auditor Independence Policy responsibilities
Audit fees
requires that the Group Audit Partner EY is responsible for forming an
In the current year audit fees were
rotates after a maximum of five years. independent opinion on the financial
£9.3 million (2022: £8.2 million)
Marcus Butler, our signing Audit statements of the Group as a whole and
(see note 4).
Partner, has just completed his fourth on the financial statements of Imperial
year. The policy states that EY may Audit quality Brands PLC as presented by the
only provide non-audit services where The Board and Audit Committee place Directors. In addition, it also reports on
those services do not conflict with its great importance on ensuring that the other elements of the Annual Report as
independence. It also establishes a Group receives a high-standard and required by legislation or regulation
formal authorisation process, including effective external audit and any and reports its opinion to members.
tendering for individual non-audit recommendation to re-appoint the Further details of EY’s opinions start on
services expected to generate fees in auditor is based on continuing page 169.
excess of £100,000, and prior approval satisfactory performance. The key tool
by the Audit Committee for allowable Statement in relation to disclosure
in assessing the performance of our
non-audit work that EY may perform. external auditor is an audit
of information to auditors
Guidelines for the recruitment of Each of the Directors in office at the
effectiveness questionnaire. The
employees or former employees of EY, date of approval of this Annual Report
questionnaire covers audit scope,
and for the recruitment of our confirms that:
planning, quality and delivery,
employees by EY, are contained in challenge and communication, and • so far as they are aware, there is no
the policy. independence, and is completed by relevant audit information (that is,
During the year EY undertook limited members of the Audit Committee, information needed by EY in
non-audit work, all of which was Logista’s Audit Committee and senior connection with preparing its report)
required by law for the auditor to managers and finance executives from of which EY is unaware; and
undertake and/or assurance or across the Group. Responses indicated • each has taken all the steps that they
attestation-related. This non-audit that EY had delivered a high-quality ought to have taken as a Director in
work was awarded to EY due to its and effective audit, with no pervasive order to make themselves aware
knowledge of the Group and it being Group-wide concerns identified. Based of any relevant audit information
deemed best placed to provide on its consideration of the responses, and to establish EY is aware of
effectively the services required. In the together with its own ongoing that information.
current year, non-audit fees were 5% assessment, for example through the
(2022: 7%) of total audit fees (see note 4). quality of EY’s reports to the Audit
EY did not undertake any advisory or Committee and the Committee’s
consultancy work for the Group. interaction with the Group Audit
Following the auditor independence Partner, the Audit Committee remains
reviews during the year, the Audit satisfied with the efficiency and
Committee concluded that the level of effectiveness of the audit.
non-audit fees is appropriate in the The Audit Committee noted that the
light of the above activities and the FRC Audit Quality review team did not
Audit Committee does not believe that select our FY22 accounts for review.
the objectivity of the external audit has The Committee also noted that the FRC
been impaired as a result of this rated the majority of audits carried out
non-audit work. by EY as requiring no or only limited
To ensure compliance with the Auditor improvements.
Independence Policy, during the year
the Audit Committee carried out four Audit tender
auditor independence reviews, The external audit was last tendered in
including consideration of the 2019. EY was awarded the audit in
remuneration received by EY for audit February 2019, with a 1 October 2019
start date. The next time the audit will

www.imperialbrandsplc.com 141
GOVERNANCE REMUNERATION REPORT

ANNUAL STATEMENT FROM

REMUNERATION COMMITTEE CHAIR

Membership and meeting attendance

Members 11/22 03/23 05/23 09/23

Sue Clark (Chair)

Thérèse Esperdy
Diane de Saint Victor
Bob Kunze-Concewitz
Jon Stanton

Focus in 2023
• Triennial review of the Directors’ Remuneration Policy
• Extensive two-phase investor consultation on Directors’ Remuneration
Policy
• Ensuring remuneration continues to support the Group’s strategy as we
move into the improving delivery phase
• Attraction and retention of high-performing individuals in a competitive
global market place
• Further development and incorporation of ESG strategy into incentive plans
• Review of wider workforce reward considerations in light of ongoing
economic volatility

Looking ahead to 2024

Sue Clark • Ensure remuneration continues to support ongoing delivery of the
Committee Chair Company’s strategic goals
• Review wider workforce reward strategy to ensure alignment with strategy,
purpose and values
• Retention and incentivisation of our international Executive Leadership Team

DEAR SHAREHOLDER improving shareholder returns through

KEY SECTIONS OF THIS On behalf of the Board, I am pleased to a growing dividend and our ongoing
REPORT ARE AS FOLLOWS: present the Directors’ Remuneration share buyback programme.
Annual Statement 142 Report for the financial year ended
30 September 2023, which includes: DIRECTORS’ REMUNERATION
Remuneration at a glance 146
POLICY
Directors’ Remuneration 147 • The updated Directors’ Remuneration
Policy, to be submitted for During the year the Committee
Policy
shareholder approval at the AGM on undertook a comprehensive review of
Pay arrangements for FY24 153 the current Policy which included an
31 January 2024; and
Annual Report on 154 extensive, two-phase investor
• The annual Directors’ Remuneration
Remuneration engagement process covering over 60%
Report, showing how the current
Remuneration earned for 154 of our issued share capital, as well as
Policy has been implemented during
FY23 the Investment Association,
FY23 and how, subject to approval,
Institutional Shareholder Services and
Determination of 2023 155 the new Policy will be implemented
Glass Lewis. The Policy was last
Annual Bonus for FY24.
approved by shareholders at the 2021
Executive share ownership 157 FY23 was the third year of the five-year AGM with a vote of over 95%.
and Directors’ interests strategy launched in 2021, where we
In reviewing the Policy, the Committee
Comparison with 159 moved from the initial foundation
sought to ensure continued alignment
employees’ remuneration building phase to a period of improving
with the five-year strategy and the
financial delivery. Despite ongoing
CEO pay ratio 160 ability to retain and incentivise a world-
macroeconomic challenges, the
Remuneration Committee 162 class international Executive
Company delivered resilient
membership and duties Leadership Team. The Committee was
performance underpinned by targeted
satisfied that the existing framework
investments in capabilities and people,

142 Imperial Brands | Annual Report and Accounts 2023

remains broadly fit for purpose, having reflecting the long-term nature of our (97.54%) in 2023. During the year, our
made a number of best practice ambitions in this area and with an programme of engagement consisted of
changes in 2021 including aligning increased weighting from 5% to 10%. two phases: an initial consultation in
executive pensions with the wider • A review of the TSR comparator March to invite general views on a
workforce; introducing post-cessation group to ensure that the group range of executive remuneration
shareholding requirements; and constituents remain relevant in topics and our wider strategy, which
strengthening our malus and terms of financial size, capitalisation helped formulate our initial proposals.
clawback provisions. and correlation, and have an In July, we wrote back to investors
appropriate business and summarising our proposals and held
No material changes are being made to
geographical mix. Further details of a number of open and constructive
the Policy at this time, but instead some
the updated TSR comparator group discussions, leading to refinements
refinements to the framework and
can be found on page 153. in the final approach.
implementation of our incentive
structures are proposed, as described We are committed to reducing our We received a wide range of views and
below. The Committee will continue to impact on the climate throughout our the majority of investor feedback was
monitor its effectiveness and if value chain, focusing on both positive. Some investors did raise a
material revisions are required before mitigation and adaptation, with a series clear preference for the retention of
the end of the three-year life of the of ambitious intermediate objectives in ROIC within the LTIP, to ensure a
Policy (e.g. following the end of our place to reduce our carbon footprint, as continued focus on capital discipline
current five-year strategic plan), we set out on page 48. Alongside consumer and making investments which will
would consult with shareholders health, climate was identified as a key generate long-term value for investors.
as appropriate. priority in our ESG materiality As a result of the feedback received
assessment, based on the views of from investors, we have retained ROIC
Performance metrics in consumers, customers, employees and with a reduced weighting of 15% and
incentive plans stakeholders. Further details on included cumulative free cash flow
The Committee proposes to make some proposed weightings for the Annual with an equal weighting of 15%. We also
refinements to performance metrics for Bonus and LTIP for FY24 are set out in heard a range of differing views on the
FY24, to ensure that incentives act as a full on page 153. appropriate weighting and metric for
driver of progress in the second phase our climate measure. On balance, we
of our strategy, delivering stronger and Operation of Annual Bonus deferral decided to retain the proposed climate
more consistent performance in both A key principle of our remuneration weighting of 10% under the LTIP, for the
conventional tobacco and next framework is to ensure strong reasons outlined above.
generation products (NGP), as well as alignment between executive and
our commitment to ambitious long- shareholder interests through WORKFORCE ENGAGEMENT
term sustainability goals. encouraging share ownership, as DURING THE YEAR
reflected in a range of features
The key changes to performance The Committee was directly involved in
including bonus deferral, holding
metrics, which formed a significant the Board’s work during the year on
periods and shareholding requirements
part of our discussions with workforce engagement which is
of 300% of gross base salary. Bonus
shareholders, are as follows: described in detail on page 130. Our
deferral and shareholding requirements
“Meet the Board” sessions are a valuable
• Introduction of a new free cash flow also apply to all of our Executive
way of having open conversations with
metric in the LTIP, aligned to our key Leadership Team below Board level.
colleagues about a wide range of
strategic pillar of supporting strong
Following our Policy review, we are matters, which have included the role
and sustainable cash generation.
proposing to introduce flexibility of the Board in decision-making, our
Strong cash generation is a critical
under the Policy for the Committee strategy, the ESG agenda, our purpose,
enabler of our four capital allocation
to reduce the level of bonus deferral, vision and culture, and diversity, equity
priorities, which are listed in full on
but only where the minimum Executive and inclusion. We have specifically
page 12; and include investment
Director shareholding has been met. explored the topic of reward, hearing
behind the strategy to deliver growth
Any reduction in deferral would be participant’s views on the alignment of
initiatives and return surplus capital
to a level no lower than 25%. In our executive reward and reward for the
to shareholders while maintaining
view this is a balanced approach wider workforce at Imperial Brands. We
our target leverage. Cumulative free
which continues to meet our high also discussed a range of reward topics
cash flow will operate alongside ROIC
expectations around building covering ESG, strategy, performance
in the LTIP (with an equal weighting
significant shareholdings, while fairly metrics, policy, corporate governance,
of 15% each), to ensure continued
recognising the international nature benchmarking and reward alignment
focus on capital discipline.
of our management team and the throughout all levels of the Company.
• Increased weighting on NGP under
global talent market in which we I have been encouraged by the level
the Annual Bonus from 5% to 10%, to
operate, where the combination of openness, engagement and
reflect accelerated activity across
of features described above is interest shown by our colleagues,
NGP categories and our focus on
relatively uncommon. and would like to thank them for
consumer health. We recognise that
their valued contribution.
consumer health is both a key pillar
SHAREHOLDER ENGAGEMENT
of our strategy and our most
DURING THE YEAR SUPPORTING OUR COLLEAGUES
important ESG priority. NGP will
continue to be measured by reference We were very grateful for the time While in recent months we have seen a
to revenue from our heated tobacco, shareholders spent with us in helping slowing down in the volatility of the
vapes and oral nicotine products. shape our proposed Policy and for the macroeconomic environment across
• A move of our existing climate metric strong support we received for the the globe, the Committee has continued
from the Annual Bonus to the LTIP, Directors’ Remuneration Report to monitor the impact of the still very
challenging environment on our

www.imperialbrandsplc.com 143
GOVERNANCE REMUNERATION REPORT continued

workforce. In FY22, we introduced a Strong performance was achieved The LTIP award due to vest in February
number of targeted actions which across both ESG measures of consumer 2024 will vest in part, resulting in 85% of
supported our colleagues and we have health (NGP net revenue) and climate the total award vesting. No discretion
continued to monitor and, where change (reduction in energy was applied by the Committee in
appropriate, take action in FY23 in consumption and Scope 1 & 2 CO2 respect of the vesting outcome.
locations where significant economic emissions). NGP net revenue growth
challenges continue to exist. accelerated during the year, with strong IMPLEMENTATION FOR FY24
growth in all categories across Europe, The Committee reviews remuneration
Annual salary budgets continue to be
and delivery of £227 million NGP net trends and plans for the wider
determined with a focus on markets
revenue (excluding US and at internal workforce each year and this provides
where wage inflation lagged price
exchange rates). An 8.8% reduction in important and relevant context for the
inflation by a significant margin,
energy consumption and significant decisions it makes regarding the
recognising the disproportionate
reductions in CO2 emissions were Executive Directors and the Executive
impact for those on lower incomes.
delivered following a concerted focus Leadership Team.
Across the countries we operate in,
on energy conservation and
salary increases typically range from In reviewing salaries this year, the
energy efficiency.
4% to 8% (excluding higher increases Committee has been mindful of the
made in countries experiencing The market share, NGP revenue and ongoing global inflationary pressures
hyperinflation), with average increases climate targets were met in full, while that have been impacting many of our
in the UK at 5% for FY24. the adjusted operating profit and cash people across the Group.
conversion targets were achieved
The Committee will continue to The annual salary review is effective
in part.
monitor and review workforce pay from 1 October 2023. As mentioned
and policies over the coming year, The Executive Directors performed earlier, salary increases awarded to
to ensure we support our colleagues. extremely well against their strategic employees typically ranged from 4% to
objectives which as far as possible have 8% across the markets we operate in
REMUNERATION OUTCOMES been set as specific and quantifiable. (excluding higher increases made in
FOR FY23 For Stefan Bomhard, this included the countries experiencing hyperinflation).
launch of blu 2.0 into eight, Pulze into Our budgeted average increase for the
The FY23 Annual Bonus was based
five and blu bar into eleven markets, UK workforce is 5% for FY24.
on stretching financial measures
the planned entry into modern oral
with 40% based on adjusted operating
nicotine in the US and upper quartile In setting the salary for the Executive
profit, 20% on adjusted operating cash
global colleague engagement scores Directors, the Committee took into
conversion and 20% on market share.
during a period of significant change consideration global inflationary
ESG (consumer health and climate)
and transformation. Lukas Paravicini’s pressures, the approach taken for
and strategic objectives formed the
objectives included the setting up of colleagues, performance and
remaining 20% of the bonus at 10%
Finance and IT GBS operations, the contribution, and the impact on
weightings for each.
UNIFY programme progressing to time total remuneration.
Adjusted operating profit performance and budget and material increases in Stefan was appointed on 1 July 2020
with growth of 3.8% at constant Finance, IT and Transformation and has provided exceptional
currency was delivered through strong colleague engagement scores. Further leadership over the first three years of
market share growth and tobacco details are shown on page 155 and 156. our transformation strategy. After
pricing. A third consecutive year of
In aggregate, as a percentage of careful consideration, the Committee
market share growth of +10bps against
maximum, Stefan received a bonus of decided to award a salary increase of
FY22 was achieved with performance
71.6% and Lukas received a bonus of 4.5% to Stefan and of 4% to Lukas. The
mainly driven by the US, Spain and
70.6%. 50% of the bonus will be deferred increases awarded reflect the strong
Australia. Cash generation remained
in Imperial Brands shares over three performance and contribution from
a key focus and has supported the
years. The Committee believes this both our Executive Directors during the
delivery of a 92% adjusted operating
outcome reflects fairly the performance year. In taking these decisions, the
cash conversion outcome and this
of the business during the year. Committee considered the comparison
strong cash generation has enabled
No discretion has been applied by with wider workforce increases, noting
the business to return £2.3 billion to
the Committee. that the increases were, again, below
shareholders via dividends and
the average increase for the UK
share buyback.
workforce. Stefan’s new salary is
£1,400,036 pa and Lukas’ new salary
is £789,568 pa.

144 Imperial Brands | Annual Report and Accounts 2023

FY24 is an important year, where we consumer health (10% weighting) and CONCLUSION
continue to drive our “accelerating individual/strategic objectives (20% On behalf of the Committee I would
returns” phase of our strategy. The weighting). The financial targets will be once again like to thank our
Committee considered carefully the aligned with the guidance provided at shareholders and wider stakeholders
measures and targets for FY24 across our Capital Markets Day and in our for their engagement during the year.
both the Annual Bonus and LTIP, and latest trading statements. We believe the proposed new Policy,
has sought to ensure a set of metrics and plan for implementation from
The FY24 LTIP will be granted in
that balance key financial metrics, FY24, best supports the next phase of
February 2024. The measures for the
continued growth in NGP and our strategy and the continued
FY24 award will be: organic adjusted
commitment to our long-term retention and incentivisation of our
EPS growth at constant currency
sustainability goals, to ensure that we international Executive Leadership
(weighting 40%), relative TSR
continue to drive and reward the Team. Should you have any questions
(weighting 20%), return on invested
behaviours that will deliver on the or feedback, please get in touch with
capital (weighting 15%), the newly
long-term strategy. However, the me at [email protected].
introduced cumulative free cash flow
Committee also recognises that we We hope that you will support the
measure (weighting 15%), and ESG
continue to operate in an uncertain and Remuneration Policy and Annual
climate which has moved from the
challenging macroeconomic and Remuneration Report at our AGM.
Annual Bonus (weighting 10%). The
geopolitical environment.
targets are detailed on page 153.
The Annual Bonus performance
metrics for FY24 will be: organic CHAIR FEES
adjusted operating profit at constant The Committee reviewed and approved
currency (40% weighting), market a 4% fee increase for the Company Sue Clark
share growth (15% weighting), cash Chair. Thérèse Esperdy’s fee will be Chair of the Remuneration Committee
conversion (15% weighting), ESG/NGP £664,280 pa from 1 October 2023.

Meetings held in FY23

In FY23, the Committee met on four occasions and the table below summarises the matters discussed:

Nov-22 Mar-23 May-23 Sep-23

Approval of FY22 Bonus out-turn

Approval of 2020-2022 LTIP out-turn
Review of Executive Directors’ remuneration dashboard
Approval of DRR
Review of CEO pay ratio
Approval of FY23 Annual Bonus targets and weightings
Approval of 2023-2025 LTIP targets and weightings
Approval of vesting of Share Matching Scheme and Bonus Matching Plan for
senior management and FY23 grant
Approval of operation of Discretionary Share plan and Sharesave for FY23
Approval of FY23 LTIP grant
Review and approval of Directors’ Remuneration Policy,
including investor consultation
Discussion on workforce remuneration
Review of forecast for Annual Bonus out-turn
Review of forecast for LTIP out-turn
Discussion of FY24 Annual Bonus plan
Discussion of 2024-2026 LTIP plan
Approval of base salaries for Executive Leadership Team and Chair’s fee
Review of the Committee’s terms of reference

www.imperialbrandsplc.com 145
GOVERNANCE REMUNERATION REPORT continued

REMUNERATION AT A GLANCE

OUR EXECUTIVE PAY OUR APPROACH TO REWARDING EXECUTIVE DIRECTORS IN 2024

PRINCIPLES
Our strategic priorities
• To attract and retain the very
best global talent
• To reward executives well for NG VALUE
DRIVI
maximising shareholder OUR BROADE
O M R
returns sustainably and FR
PORTFOLIO
delivering long-term quality T

IO ON
Y

BU TE
AR USI
growth that benefits all our

RK RIT
OUR SING

ILD D NG
GE NESS
B
S
stakeholders

ET

ING
U
PR
FOC
• To motivate executives to

A
MA
consistently perform to the

P
best of their ability
• To reinforce the behaviours
Measuring performance1

CON
that support our values

THE

T
ED
R A IC I E N
Annual Bonus: LTIP:
THE

NS
IFI
SU
• To align executive reward with

CE
• Adjusted operating profit (40%) • Adjusted EPS growth (40%)

PL

TIO
ME E
the experience of our
BU

PE FF
N T ES

M
A

O DE
• Adjusted operating cash
O T • Return on invested capital (15%)

SI
shareholders through SI N
R
F

N
A
encouraging share ownership conversion (15%) PER • CECumulative free cash flow (15%)
FORMAN
S
and an “ownership” mindset • Market share growth (15%) BASE • RRelative
E TSR (20%)
D CULTU
• To balance restraint with fair • Strategic/individual (20%) AND CAPABIL•TIEClimate
S change (10%)
reward for contribution, in the • Consumer health – NGP (10%)
way we reward executives, as
we do for the wider workforce 1. Further details of the above performance measures can be found on page 153.

EXECUTIVE DIRECTORS’ VARIABLE REMUNERATION OUTCOMES FOR 2023

Maximum Out-turn
% as a % of
of bonus/ maximum
LTIP bonus/ LTIP % of weighting achieved

Annual Adjusted operating profit growth at constant currency 40% 26.8% 67%
Bonus
Adjusted operating cash conversion 20% 4.8% 24%

Weighted market share growth 20% 20% 100%

ESG – Climate change, consumer health 10% 10% 100%

Strategic/individual – Stefan Bomhard 10% 10% 100%

Strategic/individual – Lukas Paravicini 10% 9% 90%

Total Stefan Bomhard 100% 71.6% 71.6%

Lukas Paravicini 100% 70.6% 70.6%

Long-Term Adjusted EPS growth at constant currency 40% 25% 62%

Incentive
Plan Net debt/EBITDA 20% 20% 100%

Return on invested capital (ROIC) 20% 20% 100%

Relative TSR 20% 20% 100%

Total 100% 85% 85%

TOTAL SINGLE FIGURE IN 2023 Stefan Lukas

(£,000) Bomhard Paravicini

Stefan Bomhard 18% 22% 60% Base salary 1,340 752

Benefits and pension 204 109
Lukas Paravicini 21% 27% 52%
Total fixed pay 1,544 861
Fixed pay Annual Bonus LTIP Annual Bonus 1,919 1,062
LTIP 5,138 2,099
Total remuneration 8,601 4,022

146 Imperial Brands | Annual Report and Accounts 2023

DIRECTORS’ REMUNERATION POLICY
This section of the report sets out the Remuneration Policy for Executive Directors and Non-Executive Directors, which
shareholders will be asked to approve at the 2024 AGM on 31 January 2024, and if approved, will take effect from this date. Until
this time, the Remuneration Policy approved by shareholders on 3 February 2021 will continue to apply.
Over the last 18 months, the Committee has undertaken a comprehensive review of remuneration arrangements, with a particular
focus on alignment to Imperial’s strategy and purpose. A stakeholder consultation process was carried out and input was received
from Remuneration Committee members, the Chair of the Board, other Non-Executive Directors, and the independent external
adviser to the Committee, Deloitte. The Committee also considered input from the Executive Leadership Team and wider
colleagues while ensuring that conflicts of interest were suitably mitigated. The Committee undertook a detailed consultation
process with shareholders in developing the Policy and thanks them for their valuable input.
The Remuneration Committee concluded that the current Policy remains broadly fit for purpose, and therefore only minor
changes to that Policy are proposed.
Bonus deferral – One change to the proposed Policy relates to the operation of bonus deferral. Half of any annual bonus earned
will continue to be deferred into an award of shares which vest after a minimum of three years, with the other half paid in cash, up
until the minimum shareholding guideline of 300% of gross base salary has been met. Once the minimum shareholding guideline
has been met, the Committee may determine that a lower portion of an Annual Bonus is deferred into an award over shares which
vest after a minimum of three years, subject to a minimum deferral of 25%, with the remaining award paid in cash.
The Remuneration Committee intends that the new Policy will operate for three years. If, however, changes are needed over the
three-year life of the Policy, a new Policy would be proposed out of cycle at the 2025 or 2026 AGM or if felt more appropriate at a
separate General Meeting.

Element & purpose Operation & opportunity

Salary Operation
Attract and retain high- Reviewed, but not necessarily increased, annually by the Committee taking into account
performing individuals, Company performance as well as each Executive Director’s performance together with changes
reflecting market value of in role and responsibility.
the role and the Executive
Salary increases, if any, are generally effective from 1 October.
Director’s skills, experience
and performance. The Remuneration Committee considers pay data for UK listed companies closest to the Company
by FTSE ranking (and excluding those in the financial services sector) and other relevant
international comparators of similar size and sector. In determining individual remuneration, the
primary factors taken into account are individual performance, the scale of the challenges
intrinsic to that individual’s role, changes in role, their ability and experience. The Remuneration
Committee also considers general increases for the wider workforce, with a focus on increases in
the country in which the Executive Director is based.
Maximum opportunity
To avoid setting expectations of Executive Directors and other employees, there is no maximum
salary or maximum increase in salary under the Policy.
Pension Operation
Provision of market- Pension provision for Executive Directors is provided in line with other employees. Executive
competitive pension aligned Directors are offered membership of the defined contribution plan, and have the option to receive
to workforce. a cash supplement in lieu of, or a combination thereof.
The Remuneration Committee may amend the form of any Executive Director’s pension
arrangements in response to changes in pensions’ legislation or similar developments, so long
as any amendment does not increase the cost to the Company of an Executive Director’s
pension provision.
Maximum opportunity
The maximum pension contribution or allowance for Executive Directors will be aligned with the
workforce (currently 14% of salary).
Benefits Operation
Competitive benefits taking Benefits include provision of a company car (or cash allowance in lieu), health insurance,
into account market value of life insurance and income protection insurance which are provided directly or through the
role and benefits across Company’s pension scheme. Other benefits, including expatriate or relocation arrangements, may
the workforce. also be provided on the basis that they are also offered more widely across the Company or are
necessary in order to be competitive locally.
Reasonable business-related expenses will be reimbursed.
Where appropriate, benefits may include any tax payable thereon.
Maximum opportunity
While there is no maximum level of benefits prescribed, they are generally set an appropriate level
reflecting market-competitive data. The value may vary depending on the cost of providing
such provisions.

www.imperialbrandsplc.com 147
GOVERNANCE REMUNERATION REPORT continued

Element & purpose Operation & opportunity

Annual Bonus plan Operation

Incentivise delivery of The Annual Bonus will be subject to the relevant performance measures set by the
Group strategic objectives Remuneration Committee usually at the start of each year to reflect the Group’s KPIs at that
and enhance performance. time. The measures may be a balance of financial and non-financial, but with the expectation
that the majority of the Annual Bonus will be subject to quantifiable financial measures.
Performance at threshold normally results in zero payment. Payments rise to 100% of the
maximum opportunity for levels of performance between the threshold and maximum targets.
Half of any Annual Bonus earned is deferred into an award over shares which vests
after a minimum of three years, with the other half paid in cash, up until the minimum
shareholding guideline of 300% of gross base salary has been met, as determined by the
Remuneration Committee.
Once the minimum shareholding guideline has been met, the Remuneration Committee may
determine that a lower portion of any Annual Bonus is deferred into an award over shares
which vest after a minimum of three years, subject to a minimum deferral of 25% with the
remaining award paid in cash.
These awards are forfeitable if the Executive Director resigns voluntarily or is dismissed
for cause.
Dividend roll-up may apply to any element of an Annual Bonus deferred into an award over
shares. Any such dividend roll-up may be paid in additional shares (or, exceptionally, cash), and
may assume dividend reinvestment.
Malus and clawback provisions are in place. The deferred shares are not subject to
performance conditions.
Maximum opportunity
200% of base salary.
Long-Term Incentive Plan Operation
Incentivise long-term Group Awards normally have a performance period of three financial years.
performance in line with the
Performance measures may include financial, non-financial or value creation (e.g. TSR)
Group’s strategic objectives.
conditions as determined by the Remuneration Committee normally before each grant to align
Align Executive Directors’ with the strategic priorities of the business at that time. In normal circumstances, at least 70%
interests with those of the LTIP award will be subject to financial and/or value creation measures.
of shareholders.
Malus and clawback provisions are in place.
Executive Directors are ordinarily required to retain the net-of-tax number of vested LTIP award
shares for a period of two years after vesting.
Maximum opportunity
Chief Executive Officer: 350% of base salary.
Other Executive Directors: 250% of base salary.
LTIP awards may include additional shares (or, exceptionally, cash) equivalent to the value of
the dividend roll-up, and which may assume dividend reinvestment.
All-employee arrangements Operation
Provision of market- Executive Directors may participate in any all-employee arrangements established and
competitive arrangements operated by the Company, on the same basis as other Group employees.
aligned to workforce.
The Company currently operates a Sharesave Plan for the benefit of its worldwide employees,
and in which Executive Directors are eligible to participate.
Maximum opportunity
In accordance with the limits applicable to the relevant all-employee arrangements.
Shareholding guideline Operation
Align Executive Directors’ Executive Directors are expected to build a holding in the Company’s shares to a minimum
interests with long-term value broadly equivalent to 300% of gross base salary. Executive Directors are required to
interests of shareholders. continue to hold shares after cessation of employment. The requirement is to hold shares to the
value of the shareholding guideline (i.e. 300% of salary or the existing shareholding if lower at
the time of cessation) for a period of one year after cessation, with the requirement reducing to
half the shareholding guideline for the second year after cessation.
Progress towards the shareholding guidelines is monitored on an annual basis and the
Remuneration Committee will consider any necessary sanctions required for non-compliance.
Maximum opportunity
No maximum holding but requirement to build to a minimum value broadly equivalent to 300%
of gross base salary.

148 Imperial Brands | Annual Report and Accounts 2023

REMUNERATION COMMITTEE DISCRETIONS RELATING TO VARIABLE PAY SCHEMES
The Remuneration Committee operates each of the Company’s incentive plans for which it has responsibility according to their
respective rules and, where relevant, in accordance with the Listing Rules. The Remuneration Committee has discretion,
consistent with market practice and the framework of this Policy, in respect of:
• participants;
• the timing of grant of an award and/or payment;
• the size of an award (subject to the maxima set out in our Policy);
• the performance measures and targets;
• the determination of vesting and confirmation that the calculation of performance is made in an appropriate manner, with due
consideration of shareholder experience, Company performance and whether and, if so, how adjustments should be made
(subject to the provision that any adjustments to targets set should result in the revised target being no less challenging than
the original target);
• the adjustment up or down including to zero of the number of shares that vest taking into account a number of factors,
including personal or corporate performance and circumstances that were unforeseen at the date of grant;
• discretion required when dealing with a change of control (including, as appropriate, the testing of any performance conditions
on the occurrence of such events, the application of time pro-rating and the “roll-over” of awards) and any adjustments required
in special circumstances (e.g. rights issues, corporate restructuring events and special dividends);
• determination of a good/bad leaver status for plan purposes based on the rules of the plan and the appropriate treatment
chosen, including the timing of vesting of awards held by good leavers, the application of time pro-rating and any additional
conditions applying to good leavers’ awards;
• whether, and on what basis, dividend roll-up may apply to any award;
• whether recoupment (or “malus” and/or “clawback”) shall apply to awards and, if so, the amount that shall be subject to
recoupment and the method by which it will be applied;
• the method by which awards will be settled in shares (e.g. newly-issued, treasury or market-purchased shares) or (exceptionally)
in cash;
• the method by which any post-vesting holding period and post-cessation holding period shall apply and the extent to which it
may be disapplied in exceptional circumstances (e.g. ill-health); and
• amendments to the terms of the incentive plans, subject to any requirements to obtain shareholder approval for such amendments.
In relation to the Annual Bonus and LTIP awards, the Remuneration Committee retains the ability to adjust the targets set if events
occur which cause it to determine that the conditions are no longer appropriate. Adjustments to LTIP award targets may be made
if an amendment is required so that the conditions achieve their original purpose and are not materially less difficult to satisfy
than was intended. Adjustment may also be made for any changes to accounting policy or accounting standards over the
performance period. Any use of discretion beyond the normal operation of the plan would be justified in the Annual Report on
Remuneration and, if appropriate, be subject to consultation with the Company’s major shareholders. The use of discretion in
relation to the Company’s Sharesave Plan is as permitted under HMRC rules.
Financial targets are normally set based on sliding scales that take account of internal planning and external market expectations
for the Group. Sliding scales may incorporate multiple reference points (e.g. threshold, target, maximum). In relation to strategic
(including NGP) or ESG targets, the structure of the targets may vary based on the nature of the target set. Targets and underpins
may be set which provide for Committee judgement in assessing the extent to which they have been met.
All discretions available under share plan rules will be available under this Policy, except where explicitly limited under
this Policy.

MALUS AND CLAWBACK

The Remuneration Committee believes that it is appropriate for all variable pay awards made by the Company to be subject to
provisions that allow it to recover any value delivered (or which would otherwise be delivered) in connection with any variable
award, including Annual Bonus and LTIP awards, in exceptional circumstances and where it believes that the value of those
variable pay awards is no longer appropriate.
Malus provisions apply before payment and clawback provisions are in place for a period of three years following payment of the
Annual Bonus (or vesting of any element of Annual Bonus deferred into an award over shares) or vesting of any LTIP award.
The malus and clawback provisions can be used in the following circumstances:
• There has been a material misstatement of financial results;
• There has been an error of calculation in the grant or vesting of any award;
• The award holder has committed fraud or misconduct; and
• The award holder has (by act or omission) contributed to:
• serious reputational damage to the Group;
• an instance of corporate failure (e.g. the appointment of a liquidator);
• a material failure of risk management; or
• a material downturn of operational, financial or business performance.

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GOVERNANCE REMUNERATION REPORT continued

PAYMENTS FROM EXISTING AWARDS AND AMENDMENTS TO THE POLICY

Subject to the achievement of applicable performance measures, Executive Directors are eligible to receive payment, and existing
awards may vest, in accordance with the terms of any such award made prior to the approval and implementation of the 2024
Remuneration Policy detailed in this report. Any employee appointed to the Board as an Executive Director will remain eligible to
receive payments, and existing awards may vest, in accordance with the terms of any such payment or award under any of the
Group’s share plans or incentive arrangements made prior to such appointment.
The Committee may make minor amendments to the Policy to aid its operation or implementation without seeking shareholder
approvals (e.g. for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation)
provided that any such change is not to the material advantage of the Director.

PERFORMANCE MEASURE SELECTION

The measures used under the variable reward elements are reviewed annually to ensure they support the Group’s strategy.
Performance targets are set to be stretching yet achievable, taking into account the Group’s strategic priorities and the economic
environment at the time. Further information on the measures and targets for 2024 can be found on pages 153.

DIFFERENCES IN REMUNERATION POLICY FOR EXECUTIVE DIRECTORS AND THE POLICY FOR
OTHER EMPLOYEES
The Remuneration Policy for Executive Directors is designed having regard to the remuneration policy for employees across the
Group. The structure of the Remuneration Policy for Executive Directors and other senior employees is closely aligned. The key
differentiator is the increased emphasis on long-term performance in respect of Executive Directors, with a greater percentage of
their total remuneration being performance related. This includes mandatory three-year deferral of a portion of bonus (typically
50%) and an additional two-year holding period on vested LTIPs, neither of which apply to managers. There are also variations in
the performance metrics which the Remuneration Committee believes are necessary to reflect the different levels of
responsibility.
The Company’s approach to annual salary reviews is consistent across the Group, with consideration given to Company
performance, the scope of the role, level of experience, responsibility, individual performance and pay levels in
comparable companies.
All managers are eligible to participate in an Annual Bonus plan with similar metrics to those used for the Executive Directors.
Senior managers are eligible to participate in the LTIP (c.500 individuals). Where possible, all employees are encouraged to become
shareholders by participating in our Sharesave Plan on the same terms as Executive Directors. Approximately 40% of eligible
employees have taken the opportunity to participate in the Sharesave Plan. Certain managers (c.200 individuals) are eligible to
participate in the legacy Share Matching Scheme although this is closed to new participants. Executive Directors may not
participate in the Share Matching Scheme.
Retirement benefit, typically in the form of a pension, is provided based on local market practice. Other benefits provided reflect
local market practice and legislation.

TOTAL REMUNERATION BY PERFORMANCE SCENARIO FOR 2023/2024 FINANCIAL YEAR

Stefan Bomhard Lukas Paravicini

£’000 £’000
14,000 6,000
£5,444
£11,762
12,000 18%
5,000
21% £4,457
10,000 £9,312 44% 36%
4,000
53% 42%
8,000 £3,036
£6,232 3,000
39%
6,000
47% 29%
35%
2,000
4,000 30% 24% 31%
£904
£1,612 27% 1,000
2,000
100% 26% 17% 13% 100% 30% 21% 17%
0 0
Minimum Target Maximum Max + share Minimum Target Maximum Max + share
price growth 50% price growth 50%
Fixed pay Annual bonus LTIP Share price growth

150 Imperial Brands | Annual Report and Accounts 2023

EXECUTIVE DIRECTORS’ SERVICE AGREEMENTS AND LOSS OF OFFICE PAYMENTS
The Company’s policy is that Executive Directors’ service agreements normally continue until their agreed retirement date or such
other date as the parties agree, are terminable on no more than one year’s notice and contain no liquidated damages provisions
nor any other entitlement to the payment of a predetermined amount on termination of employment in any circumstances. The
Company may make payments in lieu of accrued holiday, and in some limited cases career counselling may be provided after the
cessation of employment for a defined period and a contribution may be made towards an individual’s legal fees. The
Remuneration Committee has the authority to enter into settlement agreements with Executive Directors and to pay
compensation to settle potential legal claims where considered in the best interests of all parties. Under the terms of our Articles
of Association, all Executive Directors are subject to annual re-election by shareholders and copies of their service agreements are
available for viewing at the Company’s registered office during normal business hours and both prior to and at the AGM.
Executive Directors’ service agreements contain provisions for payment in lieu of notice in respect of base salary, pension
contributions and a percentage of base salary in respect of other benefits, but these are at the Remuneration Committee’s sole
discretion. The Company is unequivocally against rewards for failure. The circumstances of any termination (including
performance) and an individual’s duty and opportunity to mitigate losses would be taken into account in every case; our policy is
to stop or reduce compensatory payments to former Executive Directors to the extent that they receive remuneration from other
employment during the compensation period and so any such payments would be paid monthly in arrears.
For Executive Directors leaving employment for specified “good leaver” reasons (including death, ill health, disability, the business
or company in which they are employed ceasing to be part of the Group) or in other circumstances and where the Remuneration
Committee permits, Annual Bonus awards will be based on performance, adjusted for time served, and paid at the same time as for
other employees. The Remuneration Committee has discretion to treat any Executive Director leaving for a reason other than the
specified reasons above to be permitted to retain their Annual Bonuses, to adjust the timing and pro-rating to take account of any
prevailing exceptional circumstances.
Any element of an Annual Bonus award which is deferred into shares will ordinarily be forfeited by an Executive Director if such
Executive Director leaves employment prior to the end of the applicable vesting period due to their voluntary resignation or
dismissal for “cause” (for example, dismissal for gross misconduct or bringing the Company into disrepute). An Executive Director
who leaves employment for any other reason will be entitled to retain their deferred bonus awards, which will normally vest at the
normal vesting date.
Under the rules of the LTIP, outstanding awards remain capable of vesting in accordance with their terms if a participant leaves
for the specified “good leaver” reasons as detailed above, or in any other circumstances where permitted by the Remuneration
Committee. In these circumstances awards vest as the Remuneration Committee determines, having regard to the time the award
has been held and the achievement of the performance criteria. Awards will normally vest at the normal vesting date. If the
termination of employment is not for one of the specified good leaver reasons and the Remuneration Committee does not exercise
its discretion to allow an award to vest, awards lapse entirely.

EXECUTIVE DIRECTORS’ SERVICE AGREEMENTS

Executive Director Date of contract Expiry date Compensation on termination following a change of
control

Stefan Bomhard 31 January 2020 Terminable on 12 months’ notice No provisions

Lukas Paravicini 11 April 2021 Terminable on 12 months’ notice No provisions

1. Service agreement dated 31 January 2020 with a start date of 1 July 2020.
2. Service agreement dated 11 April 2021 with a start date of 1 May 2021.

Copies of Executive Directors’ service agreements are available to view at the Company’s registered office.

RECRUITMENT OF EXECUTIVE DIRECTORS

The remuneration package for any new Executive Director is set in accordance with the terms of the approved Remuneration
Policy in force at the time of appointment. Base salary will be set at an appropriate level, taking into account the experience of the
individual being appointed and the nature of the role. This may include setting the initial base salary below market but with an
expectation that subsequent increases will bring this into line with the desired market rate, in line with their development in the
role. The pension provision offered will be no more than that offered to the wider workforce at the time of appointment. Depending
on the timing of such an appointment within the financial year, it may be necessary for the Remuneration Committee to use
alternative performance measures for the first performance period.
The Remuneration Committee may offer additional cash and/or share-based elements when it considers these to be in the best
interests of the Company and, therefore, shareholders, to buy out remuneration or contractual entitlements which the individual
would forfeit at their current employer. Buyout awards will be based solely on remuneration lost when leaving the former
employer and would reflect the delivery mechanism (i.e. cash, shares or options), time horizons and performance requirements
attaching to that remuneration where possible. Shareholders will be informed of any such awards at the time of appointment.
Ordinarily, any such buyout awards would be delivered as “recruitment awards” under the LTIP rules but the Remuneration
Committee may need to avail itself of the current Listing Rule 9.4.2 R, if required, in order to facilitate the recruitment of the
relevant individual. The Remuneration Committee confirms that this provision would only be used to compensate for
remuneration lost.
In the case of an internal appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out
according to its terms on grant. In addition, any other ongoing remuneration obligations existing prior to appointment may continue.
For external and internal appointments, the Remuneration Committee may agree that the Company will meet certain relocation
expenses, as appropriate and within the limits set by the Remuneration Committee.

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GOVERNANCE REMUNERATION REPORT continued

CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE COMPANY

We did not consult with employees as part of the process of developing the new Policy. However, in addition to the employee
engagement detailed on pages 33 and 130 we have shared our gender pay report and the CEO pay ratio with employees. As part of
our employee experience survey, we also received feedback on what employees value in terms of their reward package and where
we can improve at the local level.
The Remuneration Committee ensures that it is fully briefed on pay practices across the Company generally, including internal
relativities and participation in all-employee share plans. The Remuneration Committee usually reviews external market data
annually and this is the primary source of remuneration comparison.

CONSIDERATION OF SHAREHOLDER VIEWS

The Remuneration Committee understands that shareholders have diverse views in respect of remuneration, and therefore
engages with the Company’s largest shareholders to ensure it understands the range of views which exist on remuneration issues.
When any material changes are proposed to be made to the Remuneration Policy, the Remuneration Committee Chair will inform
and, where appropriate, consult with major shareholders in advance, and will offer a meeting to discuss these.
The Remuneration Committee actively engaged with shareholders prior to proposing the new Remuneration Policy at its 2024
AGM. As set out in the Chair statement on page 143, in March we undertook an initial consultation with shareholders which helped
formulate the proposals that were sent to shareholders, in July, who together own approximately 61% of the Company. Open and
constructive meetings were held with the shareholders who wanted to discuss the proposals, which led to refinements in the final
approach. We also corresponded with the Investment Association, ISS and Glass Lewis.
The Remuneration Committee also seeks ongoing advice from its external advisers on wider shareholder views, to ensure that it is
kept up to date with any changes in market practice and shareholder sentiment.
Following the extensive consultation undertaken and in consideration of the feedback received, the Remuneration Committee is
proposing limited changes to its existing Policy as it strongly believes that this is the best approach to support the Group’s
strategic aims, motivate management and provide the tools to attract high calibre new talent to the Company and is therefore in
the best interests of shareholders and other stakeholders.

POLICY IN RESPECT OF EXTERNAL BOARD APPOINTMENTS

The Remuneration Committee recognises that external non-executive directorships are beneficial for both the Executive Director
concerned and the Company. Each serving Executive Director is restricted to one external non-executive directorship in a listed
company and may not serve as the chair of a FTSE 100 company. At the discretion of the Board, Executive Directors are permitted
to retain fees received in respect of any such non-executive directorship.

POLICY FOR THE CHAIR AND NON-EXECUTIVE DIRECTORS

Strategic purpose Key features

Fees Operation
Attract and retain high performing Reviewed, but not necessarily increased, annually by the Board.
individuals.
Fee increases, if applicable, are normally effective from 1 October.
The Board considers best practice and fee data at comparator companies of
similar scale.
Additional fees may be payable for acting as the Senior Independent Director, as Chair
and/or a member of a Committee or for other additional responsibilities. An allowance
may be paid when regular intercontinental travel is required.
Higher fees may be paid to a Non-Executive Director should they be required to assume
executive duties on a temporary basis.
No eligibility for Annual Bonus, retirement benefits or to participate in the Group’s
employee share plans.
Maximum opportunity
No prescribed maximum annual increase.
Aggregate annual fees limited by Articles of Association (currently £2.0 million).
Benefits Operation
Reimbursement of business-related Reimbursement of travel to the Company’s registered office is recognised as a
expenses. taxable benefit.
To the extent that any other reasonable business related expenses are recognised as a
taxable benefit, these will be reimbursed at cost (including any tax thereon).
Reasonable benefits may be provided from time to time on a case-by-case basis.
Maximum opportunity
Grossed-up costs.

The Chair and Non-Executive Directors are encouraged to establish a holding in Imperial Brands shares of the equivalent of one
year’s base fee.

152 Imperial Brands | Annual Report and Accounts 2023

CHAIR AND NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
The Chair and Non-Executive Directors do not have service agreements, but the terms of their appointment, including the time
commitment expected, are recorded in letters of appointment which are available for viewing at the Company’s registered office
during normal business hours and both prior to and at the AGM.
In line with the Board’s annual review policy, the Chair’s and Non-Executive Directors’ terms of appointment were reviewed and
confirmed by the Board on 31 January 2023. There are no provisions regarding notice periods in their letters of appointment which
state that the Chair and Non-Executive Directors will only receive payment until the date their appointment ends and, therefore,
no compensation is payable on termination. Under the terms of the Company’s Articles of Association, all Non-Executive Directors
are subject to annual re-election by shareholders.

PAY ARRANGEMENTS FOR FY24

The table below summarises how we intend to apply the main areas of our Directors’ Remuneration Policy for FY24.

Element Implementation

Salary Base salary as at Oct 23 base Base salary as

Oct 22 increase% at Oct 23
Attract and retain high-performing individuals,
reflecting market value of the role and the Executive Stefan Bomhard £1,339,747 4.5% £1,400,036
Director’s skills, experience and performance. Lukas Paravicini £759,2001 4% £789,568
1. Lukas Paravicini’s base salary was effective from 1 January 2023.
Increases for the workforce typically ranged from 4% to 8%, with average
increases for the UK workforce at 5%.
Annual Bonus No change to maximum opportunity
Maximum opportunity is 200% of base salary.
Measures and weightings:
50% deferred into an award of shares for three years, Adjusted operating profit growth at constant currency 40%
which is forfeitable if the Executive Director resigns Adjusted operating cash conversion 15%
voluntarily or is dismissed for cause. Malus and
Market share growth 15%
clawback provisions will apply.
ESG /NGP – consumer health (NGP revenue) 10%
Where the minimum shareholding guideline of 300% Strategic/individual 20%
of gross base salary has been met, the Remuneration
Committee may determine that a lower deferral Underlying targets are commercially sensitive and will be fully disclosed
percentage be applied subject to a minimum deferral in next year’s Annual Report.
percentage of 25%.
LTIP No change to maximum opportunity.
Maximum award size: CEO: 350% of base salary, CFO
Measures, weightings and targets:
250% of base salary.
Performance measure Weighting Cut in Target Max
Awards have a performance period of three financial Adjusted EPS growth at constant
years starting at the beginning of the financial year currency excluding share buybacks1 (40%) 3.9% 4.8% 5.8%
in which the award is made. Return on invested capital (ROIC) (15%) 19.1% 21.1% 21.9%
Malus and clawback provisions are in place. Cumulative free cash flow (CFCF) (15%) £5.9b £6.7b £7.5b
Executive Directors are ordinarily required to retain Relative TSR against a group of FMCG upper
companies2 (20%) median N/A quartile
the net-of-tax number of vested LTIP award shares
for a period of two years after vesting. Scope 1 & 2 CO2 emissions
Climate reduction (5%) 70% 72% 75%
Should the Company be acquired the performance change Energy consumption
period would end on the date of acquisition. Any reduction (5%) 4.5% 6.0% 7.5%
outstanding awards would vest on a time-prorated Cut in would deliver a 25% pay out of maximum.
basis subject to the achievement of the applicable
performance criteria.
Chair and Non-Executive Directors’ fees With effect from 1 October 2023:
Attract and retain high-performing individuals.
Chair’s fee will increase by 4% from £638,729 to £664,280 pa.
NED base fee will increase by 4% from £83,945 to £87,305 pa.
Senior Independent Director and chairs of the Remuneration and Audit
Committees’ fees will increase by approximately 3.6% from £27,500
to £28,500 pa.
Committee membership fees will remain at £5,500 pa.
Shareholding requirement 300% of base salary. Requirement to hold shares after cessation of
Align Executive Directors’ interests with long-term employment to the value of the shareholding guideline (i.e. 300% or the
interests of shareholders. existing shareholding if lower at the time) for a period of one year, with the
requirement reducing to half the shareholding guideline for the second year.
1. The EPS growth target has been set at a moderately lower level than the previous year, primarily due to tax legislation changes.
2. The TSR comparator group comprises the following companies: Altria Group, Anheuser Busch InBev, British American Tobacco, Carlsberg B, Constellation Brands, Diageo,
Heineken, Japan Tobacco, Kimberly-Clark, Kirin Holdings, L’Oreal, Monster Beverage, Pernod Ricard, PepsiCo, Philip Morris International, Procter & Gamble, Reckitt,
The Coca-Cola Company, Unicharm, and Unilever.

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GOVERNANCE REMUNERATION REPORT continued

ANNUAL REPORT ON REMUNERATION

The Annual Report on Remuneration has been split into the following sections.
1. The remuneration earned by our Directors for the financial year ended 30 September 2023
2. Details of share awards granted, share interests held and historical CEO total single figure versus shareholder returns
3. How Directors’ remuneration compares with employee pay including the CEO pay ratio, our relative spend on pay and
current dilution
4. Remuneration Committee membership and work undertaken during the year, details of advice received and consideration of
shareholders’ views

1. REMUNERATION EARNED BY OUR DIRECTORS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
Single Total Figure of Remuneration for each Director (Audited)
Annual
Salary Benefits Pension Total fixed bonus LTIP Other Total
Executive Directors Year £’000 £’0001 £’0002 pay £’0003 £’0004 £’0005 variable pay Total pay
2023 1,340 16 188 1,544 1,919 5,138 – 7,057 8,601
Stefan Bomhard 2022 1,301 17 182 1,500 2,185 1,747 – 3,932 5,432
2023 752 4 105 861 1,062 2,099 – 3,161 4,022
Lukas Paravicini 2022 730 15 102 847 1,205 – 566 1,771 2,618

Total 2023 2,092 20 293 2,405 2,981 7,237 – 10,218 12,623

Total 2022 2,031 32 284 2,347 3,390 1,747 566 5,703 8,050
Notes
1. Stefan Bomhard received an annual car allowance of £15,000. Lukas Paravicini received a car allowance for October and November 2022 before moving to a company car
from December 2022; Stefan Bomhard received private medical insurance and Lukas Paravicini received health cash plan.
2. Each individual received a cash supplement of 14% of salary in lieu of membership of the pension fund.
3. Annual Bonus for the year ended 30 September 2023. Half of the gross value is deferred into an award over shares for three years; no further performance conditions apply.
4. LTIP represents the value of the FY21-23 LTIP awards whose performance period ended 30 September 2023. As these awards do not vest until February 2024 they are
based on a share price of £17.74, being the three-month average to 30 September 2023, and an estimate of dividend roll-up based on announced dividend payable on
31 December 2023. Of the FY21-23 LTIP value shown, £640k and £155k relates to share price appreciation for Stefan Bomhard and Lukas Paravicini respectively. The LTIP
value for FY22 has been restated to reflect the actual vesting value as at the vesting date 15 February 2023.
5. For Lukas Paravicini “Other” represents the buyout of a guaranteed bonus he would have received from his previous employer.

Fees £’000 Taxable benefits1 Total

Non-Executive Directors 2023 2022 2023 20222 2023 2022
Thérèse Esperdy 639 620 50 41 689 661
Sue Clark3 144 141 2 4 146 145
Diane de Saint Victor4 89 77 3 5 92 82
Ngozi Edozien4,5 101 87 - 30 101 117
Andrew Gilchrist5,6 59 – - – 59 –
Alan Johnson 89 87 3 5 92 92
Bob Kunze-Concewitz 89 87 3 5 92 92
Simon Langelier7 30 87 3 6 33 93
Jon Stanton8 117 114 1 2 118 116
Total 1,357 1,300 65 98 1,422 1,398
Notes
1. Benefits in kind for Non-Executive Directors relate to the reimbursement of travelling expenses to meetings held at the Company’s registered office.
2. Taxable benefit figures for 2022 have been restated to include tax gross-up.
3. Includes payments in respect of Senior Independent Director of £27,500 and Chair of the Remuneration Committee fees of £27,500 respectively pa.
4. Diane de Saint Victor and Ngozi Edozien were appointed to the Board on 15 November 2021.
5. Ngozi Edozien’s amount includes a payment of £12,000 (full year) and Andrew Gilchrist’s amount includes a payment of £7,000 (March to September) in respect of a
non-European travel allowance in recognition of the extra time commitment required for travel.
6. Andrew Gilchrist was appointed to the Board on 1 March 2023.
7. Simon Langelier stepped down from the Board on 1 February 2023.
8. Includes payment in respect of chair of the Audit Committee fees of £27,500 pa.

154 Imperial Brands | Annual Report and Accounts 2023

The aggregate remuneration of all Executive and Non-Executive Directors under salary, fees, benefits, cash supplements in lieu of
pensions, Annual Bonus and LTIP was £14,045k (2022 restated: £9,448k).
No Director is eligible to participate in the defined benefit pension fund. Each Director eligible for membership of the defined
contribution pension fund has opted to receive a cash supplement in lieu and therefore, no pension disclosure is required.

Determination of 2023 Annual Bonus (Audited)

The 2023 Annual Bonus was based on a scorecard of measures. Details of the measures, their weightings, targets and extent of
achievement are set out in the table below.
Measure Weighting Cut in Target Max Achievement Pay-out
Adjusted operating profit at constant currency 40% 0% 3.5% 5.2% 3.8% 26.8%
Adjusted operating cash conversion 20% 90% 95% 100% 92% 4.8%
Weighted market share 20% -3bps +1bps +5bps +10bps 20%
Climate change – energy consumption 2.5% 0.5% 2.0% 3.5% 8.8% 2.5%
Climate change – CO2 emissions 2.5% 57% 60% 63% 65% 2.5%
Consumer health – NGP net revenue (£m)1 5% 181 200 221 227m 5%
Strategic/individual – Stefan Bomhard 10% – – – 100% 10%
Strategic/individual – Lukas Paravicini 10% – – – 90% 9%

Total bonus Stefan Bomhard 100% 71.6% of max

Total bonus Lukas Paravicini 100% 70.6% of max
1. Excluding US and at internal exchange rates.
The Committee set the following strategic goals for the Executive Directors:
Strategic/individual Performance assessment highlighting key achievements
measures and targets

Stefan • Build a targeted • Significant percentage of NGP markets (Heated Tobacco and vaping) achieved their launch
Bomhard NGP business (5%) objectives, exceeding target set. Overall results exceeded targets in business plan.
• Achieved target to launch blu 2.0 into eight markets.
• blu bar launched into eleven markets.
• Pulze launched into five markets, exceeding target.
• Completed assessment of options and recommendation for progression on US NGP.
• Board agreed recommendation to enter MOND in US and acquisition made and completed
in May 23 with FY24 launch planned.
• Completion of follow up from ELT strategic review on potential future growth options
for Group.
• Lead • Conducted five Global Business Leaders events, exceeding target. High engagement with
transformation average participant feedback of 4.3 out of 5.
program (5%) • Maintained FY22 global pulse survey results around role modelling of new behaviours by
senior leaders (all employees). Results upper quartile against global benchmark on
leadership measure. Global engagement score sustained at 74% exceeding global
benchmark by 1%.
• Continued development of ELT including dedicated sessions for new team members
supporting team integration.
• DEI programme KPIs defined and deployed in business. Meaningful progress on gender and
ethnic diversity. Female representation increased by 12% at ELT-1 level and tracking ahead
of gender goal target glidepath at 29.8%.
• Business case for Novo FY23 delivered.
• Operating model transformation key projects (GBS & Digital Core Transformation) primarily
on time and within budget.
Total payout as a % of maximum bonus: 71.6%

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GOVERNANCE REMUNERATION REPORT continued

Strategic/individual Performance assessment highlighting key achievements

measures and targets

Lukas • Continued Company• Completed Finance Transformation in Group and top 5 markets. Set up a 100+ strong GBS,
Paravicini transformation (5%) by transferring activities in line with blueprint and by assessing, appointing and training
the retained organisation.
• In line with Group’s multi-function GBS strategy, fully transferred IT Operations (100+ FTE)
under the remit of the newly created GBS IT.
• GM and Cluster Lead survey in March showed transformation impact well received and
further improvement in results on survey rerun in September.
• Finance, IT and Transformation employee engagement increased to 72% (+8pp vs FY22).
Material increases in key Inclusion metric (81%, +9pp vs FY22) and Wellbeing (72%, +6pp vs
FY22) scores.
• Overall engagement supported by personal people leadership score improving by 5pp
to 79%.
• Explore phase of UNIFY programme completed on time and within budget. Prepared itself
for the Deploy phase for early adopters UK/I and Radom factory.
• UNIFY deploy phase accompanied by a strong business transformation, communication
and change management plan. Programme is well established and well supported in the
organisation at large.
• Drive shareholder • Global IT and UNIFY capes managed within allocated budget.
value (5%) • Funding provided proactively, taking advantage of market opportunities to deliver
€950million of new debt financing with 8 years’ maturity.
• Active debt holder engagement increased throughout the year, leveraging in full the best
practices acquired over time in Investors Relations.
Total payout as a % of maximum bonus: 70.6%

Individual Annual Bonus payments:

Total Annual Bonus £’000
Executive Directors Maximum Actual1
Stefan Bomhard £2,679 £1,919
Lukas Paravicini £1,504 £1,062
Notes
1. Half of the bonus will be deferred into an award over shares.

Long-Term Incentive Plan awards vesting (Audited)

Performance awards vesting in February 2024 are based on performance measured over the three-year period ended
30 September 2023.
Cut-in Target (60% Maximum Actual Percentage of
Measure Weighting (25% vesting) vesting) (100% vesting) performance award vesting
Adjusted EPS growth at constant currency (average annual
growth) 40% 2.00% 3.31% 4.80% 3.4% 25%
Adjusted net debt / EBITDA (for FY23) 20% 2.00 1.91 1.80 1.77 20%
Return on invested capital (ROIC) (average annual) 20% 16.60% 17.00% 17.50% 17.56% 20%
Upper
Relative TSR (return over three financial years) 20% Median n/a quartile 2/25 20%
Achievement 85%

Adjusted EPS excludes the impact of share buybacks and associated financing costs.
The methodology agreed for net debt/EBITDA out-turn included an adjustment for share buybacks to ensure that the measure is
not negatively impacted by cash returned to shareholders. The targets for the adjusted net debt/EBITDA for FY23 assumed a share
buyback in FY23 of £400 million. The out-turn was adjusted to reflect the actual share buyback undertaken in FY23 of £1 billion.
The TSR measure compared the Company’s performance against the following companies: Altria Group, Anheuser-Busch InBev,
Beiersdorf, British American Tobacco, Brown-Forman, Carlsberg, Clorox, Constellation Brands, Diageo, Heineken, Henkel, Japan
Tobacco, Kimberly-Clark, Kirin Holdings, L’Oréal, Monster Beverage, Pernod Ricard, PepsiCo, Philip Morris International, Procter &
Gamble, Reckitt Benckiser Group, Unicharm and Unilever PLC.
Vested awards granted for FY21 onwards are subject to a two-year holding period.

Recruitment Award vesting during the year ended 30 September 2023

No awards to report.

Payments for loss of office and payments to former Directors (Audited)

No payments to report.

156 Imperial Brands | Annual Report and Accounts 2023

2. DETAILS OF SHARE AWARDS GRANTED, SHARE INTERESTS HELD AND HISTORICAL CEO TOTAL SINGLE
FIGURE VERSUS SHAREHOLDER RETURNS
Performance awards granted during the year (Audited)
When determining the Directors’ awards, the Committee took into account the prevailing share price performance over the year
and the number of shares awarded as a result.
Amount
Date of grant Share price1 Number of nil-cost options Face value of base salary End of performance period
Stefan Bomhard 15 February 2023 £20.22 231,904 £4,689,099 350% 30 September 2025
Lukas Paravicini 15 February 2023 £20.22 90,257 £1,824,997 250% 30 September 2025
1. Valued using the closing share price the trading day prior to grant.

The targets for the above performance awards are as follows:

Minimum performance (25% vesting) Maximum performance (100% vesting)
Measure Weight Target Target
Adjusted EPS growth at constant currency 40% 4.4% 6.3% or higher
Return on invested capital (ROIC) (average
annual) 20% 20.2% 21.0% or higher
Relative TSR 40% Median Upper quartile

Adjusted EPS excludes the impact of share buybacks and associated financing costs.
The TSR comparator group comprises the following companies: Altria Group, Anheuser Busch InBev, British American Tobacco,
Brown-Forman, Carlsberg B, Carnival, Clorox, Constellation Brands, Diageo, Heineken, Henkel, Japan Tobacco, Kimberly-Clark,
Kirin Holdings, L’Oreal, Monster Beverage, Pernod Ricard, PepsiCo, Philip Morris International, Procter & Gamble, Reckitt,
Unicharm, and Unilever.
Each measure operates independently and is capable of vesting regardless of the Company’s performance in respect of the other
metrics. The Committee retains discretion to adjust up or down including to zero the number of shares that vest taking into
account a number of factors including personal or corporate performance and circumstances that were unforeseen at the date
of grant.

SHARE INTERESTS AND INCENTIVES (AUDITED)

Shares held at earlier of Dividends
30 September 2023 reinvested post Conditional awards and options held at earlier of
and leaving date year end 30 September 2023 and leaving date
Awards Awards Options
unvested and unvested and unvested and Options
Shares held at Subject to subject to subject to subject to exercised
30 September Owned a holding Owned performance continued continued Vested but not during the
2022 outright period outright conditions employment employment exercised year
Executive Directors
Stefan Bomhard 33,349 19,164 61,901 1,030 755,169 105,460 687 – 85,079
Lukas Paravicini – – – – 305,800 40,789 – – –

Non-Executive
Directors
Thérèse Esperdy1 37,787 61,729 – – – – – – –
Sue Clark 6,506 8,040 – 21 – – – – –
Diane de Saint Victor 252 625 – 3 – – – – –
Ngozi Edozien2 252 621 – 4 – – – – –
Andrew Gilchrist3 – 3,238 – – – – – – –
Alan Johnson 586 984 – 8 – – – – –
Bob Kunze-Concewitz 50,630 50,974 – – – – – – –
Simon Langelier4 26,101 26,168 – - – – – – –
Jon Stanton 2,820 3,260 – 19 – – – – –
1. Thérèse Esperdy shares are in the form of American Depositary Receipts.
2. Ngozi Edozien’s share amount of 625 includes 353 American Depositary Receipts.
3. Andrew Gilchrist was appointed to the Board on 1 March 2023 and his shares are in the form of American Depositary Receipts.
4. Simon Langelier stepped down from the Board on 1 February 2023.
5. There have been no changes in Director share figures reported in the table above, between 30 September 2023 and the date this report was signed, other than the dividend
reinvestment post year end figures included in the table.

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GOVERNANCE REMUNERATION REPORT continued

Our middle market share price at the close of business on 29 September 2023, being the last trading day of the financial year, was
£16.67 and the range of the middle market price during the year was £16.40 to £21.85.
Full details of the Directors’ share interests are available for inspection in the Register of Directors’ Interests at our
registered office.

EXECUTIVE SHAREHOLDINGS (AUDITED)

Value of Value of
Shares held at Increase in shares held at shares held at Shareholding Current
Shares held at end of shares held start of year3 end of year4 Difference in required shareholding Requirement
start of year1 year1,2 during year £’000 £’000 value £’000 (% salary) (% salary/fees) met5, 6
Executive Directors
Stefan Bomhard5 33,349 134,955 101,606 619 2,250 1,631 300 168 Yes
Lukas Paravicini6 - 21,618 21,618 – 360 360 300 47 Yes

1. Shares held is inclusive of shares owned outright, those vested but subject to a holding period awarded, including shares awarded under the Deferred Share Bonus Plan
being the deferred element of the bonus.
2. Or date of leaving if earlier.
3. Based on a share price of £18.55, being the closing price on 30 September 2022.
4. Based on a share price of £16.67, being the closing price on 30 September 2023.
5. Stefan Bomhard joined the Board on 1 July 2020 and has five years to build to his shareholding requirement.
6. Lukas Paravicini joined the Board on 1 May 2021 and has five years to build to his shareholding requirement.

REVIEW OF PAST PERFORMANCE

The chart below shows the value of £100 invested in the Company on 1 October 2013 compared with the value of £100 invested in
the FTSE 100 Index for each of our financial year-ends to 30 September 2023. We have chosen the FTSE 100 Index as it provides the
most appropriate and widely recognised index for benchmarking our corporate performance over a 10-year period.

Total shareholder return performance

Index value

200

150

100

50
30-Sep-13 30-Sep-15 30-Sep-17 30-Sep-19 30-Sep-21 30-Sep-23

Imperial Brands FTSE 100 Return Index

158 Imperial Brands | Annual Report and Accounts 2023

CHANGE IN CHIEF EXECUTIVE OFFICER REMUNERATION
2023 2022 2021 2020 2020 2020 2020 2019 2018 2017 2016 2015 2014
Stefan Stefan Stefan Stefan Joerg Dominic Alison Alison Alison Alison Alison Alison Alison
Bomhard Bomhard Bomhard Bomhard Biebernick Brisby Cooper Cooper Cooper Cooper Cooper Cooper Cooper
Total remuneration
£’000 8,601 5,432 3,421 1,104 963 943 448 2,137 3,935 4,657 5,404 3,637 2,686
Annual Bonus as a
percentage of
maximum 71.6 84 64.1 401 401 401 401 312 87 60 72 80 69
Shares vesting as a
percentage
of maximum 85 19.83 30.84 nil nil nil nil nil 20 44.4 45.7 15.8 5.8
1. 48.4% was the formulaic out-turn; however, the Remuneration Committee accepted the CEO’s recommendation and used its discretion to reduce this to 40%.
2. 51% was the formulaic out-turn; however, the Remuneration Committee used its discretion and reduced this to 31%.
3. Relates to vesting of Long-Term Incentive Plan (excluding Recruitment Award).
4. Relates to vesting of Recruitment Award based on performance criteria of former employer.

3. HOW DIRECTORS’ REMUNERATION COMPARES WITH EMPLOYEES’ REMUNERATION

There is a strong alignment between how we approach pay for our Executive Directors and the wider workforce, with a focus on
performance-related pay and similar performance metrics in our Annual Bonus and LTIP. Our reward packages are designed
to attract, incentivise and retain the best talent, driven by market practice, skills and experience.
Executive Directors UK employees

Increase in line with or below wider workforce Salary Average increase of 5% for FY24
Mix of financial/strategic measures, with 50% of Annual Bonus Mix of financial/strategic measures 100% paid
bonus deferred into award over shares in cash
Performance metrics measured over three years, LTIP Performance metrics measured over three years
with two-year holding period after vesting No holding period
14% cash or contributions into Company’s Pension The majority of UK employees receive a
pension fund contribution of 14% of salary
£250 per month and three-year savings period Sharesave £250 per month and three-year savings period

Consideration of colleagues’ views

Our colleagues are at the core of our business, and during the year the Board continued its “Meet the Board” sessions and
workforce engagement which gave us an opportunity to hear feedback from colleagues on a variety of topics including our
strategy, ESG, culture, and diversity, equity and inclusion. We also explored the topic of remuneration, giving participants the
opportunity to discuss how the Committee aligns executive reward with the approach to pay for all employees, and to understand
their views on reward at Imperial Brands. The level of engagement was extremely high with a constructive discussion covering:
• Performance metric selection across Annual Bonus and LTIP, and how the metrics selected align with strategy and purpose.
• Total remuneration package and how this aligns for employees throughout all levels of the Company.
• UK Corporate Governance Code and how the decisions taken by the Company are influenced by the UK regulatory environment.
• The role of external benchmarking in remuneration decisions for executives, as well as at other levels of the Company, and the
comparator groups that are considered.
• Alignment of ESG priorities to strategy and remuneration.

The Board continues its commitment to listening to colleagues and appreciates the opportunity to understand what is important
to them, and how their priorities evolve with each year of our “Meet the Board” programme. These views are considered in
decision-making and actions taken in the year.
We look forward to continuing our “Meet the Board” listening sessions on reward in FY24 to ensure that we stay close to the
evolving priorities of our diverse workforce.

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GOVERNANCE REMUNERATION REPORT continued

PERCENTAGE CHANGE IN BOARD REMUNERATION

The table below shows the percentage change in the salary, benefits and Annual Bonus for the Directors, between FY23 and FY22,
as well as the disclosures for FY22, FY21 and FY20.
Year-on-year change in pay for Directors compared with UK employees
2023 2022 2021 2020
Annual Bonus Benefits Annual Benefits Annual Annual
Salary (%) Benefits (%) (%) Salary (%) (%) Bonus (%) Salary (%) (%) Bonus (%) Salary (%) Benefits (%) Bonus (%)
Executive
Director
Stefan Bomhard
(from 1 Jul 20) 3.0 (5.9) (12.2) 2.5 0.0 34.3 58.62 183.32 540.62 – – –
Lukas Paravicini
(from 1 May 21) 3.0 (73.3) (11.9) 140.12 150.02 241.42 – – – – – –

Non-Executive
Directors
Thérèse Esperdy 3.1 22.0 - 2.5 – – 24.7 (100) – 353.32 -41.3 –
Sue Clark 2.1 (50.0) - 2.2 – – 7.0 (100) – 55.4 -50.0 –
Alan Johnson
(from 1 Jan 21) 2.3 (40.0) - – – – – – – – – –
Andrew Gilchrist
(from 1 Mar 23) – – – – – – – – – – – –
Bob Kunze-
Concewitz
(from 1 Nov 20) 2.3 (40.0) - 11.52 – – – – – – – –
Jon Stanton 2.6 (50.0) - 1.8 – – 17.9 (100) – 187.92 0.0 –
Ngozi Edozien
(from 15 Nov 21) 16.12 (100.0) - – – – – – – – – –
Diane de Saint
Victor (from
15 Nov 21) 15.62 (40.0) - – – – – – – – – –
All UK employees 6.6 5.9 4.1 2.7 7.3 2.9 0.0 2.4 7.9 6.69 -5.72 32.44
1. A year on year comparison is not possible in the year that a Director joins the Board.
2. Increase reflects first full year.

CEO PAY RATIO

The table below shows the multiple of our CEO’s pay ratio to median, lower quartile and upper quartile pay in the UK. The calculations
are based on methodology Option A as defined by the regulations and by calculating the pay and benefits of all UK employees on a
full-time equivalent basis. Option A was chosen as it is the most robust approach. The CEO pay ratio is based on comparing the
CEO’s pay to that of Imperial Brands’ UK-based employee population, a large proportion of whom are in sales roles. The Committee
anticipates that the ratios are likely to be volatile over time, largely driven by the CEO’s incentive outcomes which are dependent
on Group-wide results.
The pay levels shown for the percentiles reflect remuneration for the 12 months to 30 September 2023.
Financial year Calculation methodology P25 (lower quartile) x:1 P50 (median) x:1 P75 (upper quartile) x:1
2023 A 151.3 112.1 69.5
20221 A 98.0 75.8 49.6
2021 A 60.7 48.4 31.1
2020 A 50.2 38.7 24.4
2019 A 53.0 36.5 22.0
Stefan Bomhard P25 (lower quartile) P50 (median) P75 (upper quartile)
Total remuneration £8,600,605 151.3 112.1 69.5
Base salary £1,339,747 31.6 24.9 16.7
1. 2022 CEO pay ratios have been updated to reflect the value of the updated 2022 CEO single figure which incorporates long-term incentives based on actual vesting, rather
than the estimate used for the 2022 disclosure.

The CEO total remuneration pay ratio has increased across all percentiles, due to an increase in CEO total remuneration driven by
incentive out-turns and strong share price performance. The CEO base salary ratio has remained static, confirming that the
variance is driven by performance-related variable pay.
The salary component for FY23 at each quartile is £42,376 (P25), £53,849 (P50) and £80,078 (P75). The equivalent total pay numbers
are £56,840 (P25), £76,735 (P50) and £123,667 (P75).
The Committee is satisfied that the overall picture presented by the 2023 pay ratios is consistent with the reward policies for our
UK employees. The Committee takes into account these ratios when making decisions around the Executive Director pay
packages, and Imperial Brands takes seriously the need to ensure competitive pay packages across the organisation.

160 Imperial Brands | Annual Report and Accounts 2023

RELATIVE IMPORTANCE OF SPEND ON PAY
The table below shows the expenditure and percentage change in overall spend on employee remuneration, dividends and
share buybacks.
Percentage
£ million unless otherwise stated 2023 2022 change
Executive Directors’ total remuneration1,2 13 8 62.5
Overall expenditure on pay2 882 642 37.4
Dividend paid in the year 1,312 1,320 (0.6)
Share buybacks in the year3 1,006 – n/a
1. Executive Directors’ total remuneration is based on the total single figure for all Executive Directors and is included to provide a comparison between Executive Director
and overall employee pay.
2. Excludes employer’s social security costs.
3. In FY23, expenditure includes £1 billion of share buybacks and £6 million of fees and stamp duty. There were no share buybacks in FY22.

EMPLOYEE BENEFIT TRUSTS

Our policy remains to satisfy options and awards under our employee share plans either from market-purchased ordinary shares
or ordinary shares held in treasury, distributed through our employee benefit trusts: the Imperial Tobacco Group PLC Employee
and Executive Benefit Trust (the Executive Trust) and the Imperial Tobacco Group PLC 2001 Employee Benefit Trust (the 2001
Trust) (together the Employee Benefit Trusts).
As at 30 September 2023, we held 70,289,137 ordinary shares in treasury which can be used to satisfy options and awards under our
employee share plans either directly or by gifting them to the Employee Benefit Trusts.
Options and awards may also be satisfied by the issue of new ordinary shares.
Details of the ordinary shares held by the Employee Benefit Trusts are as follows:

Ordinary shares
Balance at Acquired Distributed Balance at under award at
01/10/2022 during year during year 30/09/2023 30/09/2023 Surplus/(shortfall)
Executive Trust 1,504,333 0 (111,230) 1,393,103 2,326,963 (933,860)
2001 Trust 2,157,457 0 (1,981,156) 176,301 6,370,306 (6,194,005)

SHARE PLAN FLOW RATES

The rules of each of the Company’s share plans contain provisions limiting the grant of options and awards to shares representing
no more than 10% of the issued share capital of the Company over a period of 10 years (or, in the case of options and awards
granted under the LTIP and Deferred Share Bonus Plan, 5% of issued share capital over the same 10-year period). As at
30 September 2023, an aggregate total of 1% of the Company’s issued share capital (including shares held in treasury) is subject to
options and awards under our executive and all-employee share plans.

SUMMARY OF OPTIONS AND AWARDS GRANTED

Cumulative options and awards granted as a percentage of Options and awards granted during the year as a percentage
Limit on awards issued share capital (including those held in treasury) of issued share capital (including those held in treasury)
10% in 10 years 2.8 0.4
5% in 5 years 1.9 0.4
5% in 10 years (executive plans) 2.3 0.3

EXTERNAL BOARD DIRECTORSHIPS

The Committee recognises that external non-executive directorships are beneficial for both the Executive Director concerned and
the Company. Each serving Executive Director is restricted to one external non-executive directorship in a listed company and
may not serve as the chair of a FTSE 100 company. At the discretion of the Board, Executive Directors are permitted to retain fees
received in respect of any such non-executive directorship.
Stefan Bomhard is a non-executive director of Compass Group PLC and was permitted to retain the £94,000 fee received from this
position in the financial year.

www.imperialbrandsplc.com 161
GOVERNANCE REMUNERATION REPORT continued

4. REMUNERATION COMMITTEE MEMBERSHIP AND DUTIES

The Board is ultimately accountable for executive remuneration, but has delegated this responsibility to the Committee,
at least three of whose members are independent Non-Executive Directors. The Chair, who is a member of the Committee,
was independent on appointment. We consider this independence fundamental in ensuring that Executive Directors’ and senior
management’s remuneration is set by those who have no personal financial interest, other than as shareholders, in the
matters discussed. To reinforce this independence, a standing item at each Committee meeting allows the members to meet
without any Executive Director or other manager being present.
Biographical details of the current members of the Remuneration Committee are set out at pages 116 to 119. Members of the
Committee are appointed by the Board following recommendation by the People and Governance Committee (formerly known as
the Succession and Nominations Committee).
The Committee must meet at least twice a year. A quorum for meeting is two.
The Committee considers its key responsibility as being to support the Company’s strategy and its short and long-term
sustainable success. This is ensured by the adherence to our Executive Pay Principles set out on pages 146 to 148 and to the
Directors’ Remuneration Policy which together set the right conditions for high-calibre executives to deliver and, further, to
provide long-term benefits to all stakeholders. It also determines the specific remuneration package, including service agreements
and pension arrangements, for the Chair, each Executive Director and our Executive Leadership Team. When setting the policy for
Executive Director remuneration, the Committee reviews workforce remuneration and related policies to ensure the alignment of
incentives and rewards across the Group.
The Committee’s other responsibilities include:
• Maintaining a competitive Remuneration Policy appropriate to the business environment of the countries in which we operate,
thereby ensuring we can attract, retain and motivate high-calibre individuals throughout the business;
• Aligning Executive Directors’ and senior management’s remuneration with the interests of long-term shareholders and other
stakeholders whilst ensuring that remuneration is fair but not excessive and reflects the contribution made;
• Setting measures and targets for the performance-related elements of variable pay;
• Oversight of our overall policy for employee remuneration, employment conditions and our employee share plans; and
• Ensuring appropriate independent advisers are appointed to provide advice and guidance to the Committee.
The Committee’s terms of reference are reviewed annually and were last reviewed in September 2023. They are available on our
website www.imperialbrandsplc.com
When carrying out its duties the Committee considers the Remuneration Policy and practices in the context of provision 40 of the
UK Corporate Governance Code, as follows:
Clarity – The Remuneration Policy sets out clearly each element of remuneration limits in terms of quantum and the discretions
the Committee can apply. The DRR sets out the arrangements clearly and transparently. Questions on the remuneration
arrangements can be raised at the AGM and through our “Meet the Board” programme.
Simplicity – The remuneration structure for our Executive Directors consists of fixed pay (base salary, pension and benefits),
Annual Bonus and a Long-Term Incentive Plan. Our remuneration structures throughout the organisation are simple in nature and
understood by employees.
Risk – A number of features within the Remuneration Policy exist to manage different kinds of risks; these include:
• Malus and clawback provisions operating across all discretionary incentive plans;
• Deferral of remuneration and holding periods;
• Remuneration Committee discretion to override formulaic out-turns to ensure incentive pay-outs reflect underlying business
performance and shareholder experience;
• Limits on awards specified within the policy and plan rules; and
• Regular interaction with the Audit Committee.

Predictability – The Committee regularly reviews the performance of in-flight awards so it understands the likely outcomes.
Proportionality – The Committee is against rewarding poor performance and, therefore, a significant portion of remuneration is
performance-based and dependent on delivering the Company’s strategy. Performance targets are based on a combination of
measures to ensure there is no undue focus on a single measure.
Alignment – There is a clear progression of remuneration throughout the workforce with performance measures supporting the
key performance indicators and the long-term sustainability of the business. The Committee reviews the Remuneration Policy,
taking into account the feedback received from shareholders and the impact on the wider workforce.

162 Imperial Brands | Annual Report and Accounts 2023

Remuneration Committee meetings 2022/23
The Remuneration Committee met for four scheduled meetings during the year. Details of the main activities covered in the
meetings are set out in the Chair’s statement at the beginning of the DRR on page 145.
Other regular attendees include the CEO, Company Secretary, Chief People and Culture Officer, Global Reward Director and the
Committee’s principal adviser. None of the individuals were involved in any decisions relating to their own remuneration.

Remuneration Committee evaluation 2022/23

For its FY23 evaluation, the Board initiated an external review using the firm Independent Board Evaluation (IBE), covering the
Board and its Committees. The Remuneration Committee evaluation was undertaken through meeting observation, together with
a review of meeting materials and one-to-one interviews with Committee members and the independent remuneration advisors
to the Committee.
The review concluded that the Committee was operating effectively, with a strong chair, cohesive membership and good
participation. The understanding of the UK market and the ability of the Committee to test its thinking prior to reaching
conclusions were positively noted.
Further information on the Board evaluation is on page 133.

Advice provided to the Remuneration Committee

Deloitte LLP was appointed as the independent adviser to the Committee throughout FY23. Deloitte was paid fees of £267,760 for
its services during the year.
Deloitte is a member of the Remuneration Consultants Group and complies with its Code of Conduct which sets out guidelines
to ensure that its advice is independent and free of undue influence. Deloitte LLP provided other advisory services including
corporate tax and employee mobility advice, and technology consulting services.
The Committee is satisfied that advice received by Deloitte during the year was independent and objective and that all individuals
who provided remuneration advice to the Committee have no connections with Imperial Brands that may impair their
independence.

Other companies which provided advice to the Remuneration Committee are as follows:
Alithos Limited undertook total shareholder return (TSR) calculations and provided advice on all TSR-related matters. During the
year it was paid £19,500 and provided no other services to the Company. Willis Towers Watson provided market pay data and was
paid £36,000 for these services. Willis Towers Watson also provided actuarial and wider reward-related services to the Company.
Both advisers were appointed by the Committee, which remains satisfied that the provision of those other services in no way
compromises their independence. They are all paid on the basis of actual work performed rather than on a fixed fee basis.

VOTING ON THE REMUNERATION REPORT AT THE 2023 AGM

At the 2023 AGM there was a vote to approve the Directors’ Remuneration Report. We received a strong vote in favour of our
Directors’ Remuneration Policy at our 2021 AGM.
Votes for
including Total votes cast Total votes
discretionary Percentage Votes Percentage excluding votes Votes cast including votes
Resolution votes for against against withheld withheld1 withheld
Directors’ Remuneration
Report (2023 AGM) 709,307,449 97.54 17,905,513 2.46 727,212,962 955,342 728,168,304
Directors’ Remuneration
Policy (2021 AGM) 706,375,474 95.28 34,958,557 4.72 741,334,031 1,374,300 742,708,331
1. Votes withheld are not included in the final figures as they are not recognised as a vote in law.

The strong support received for the Directors’ Remuneration Report followed engagement with our largest shareholders during
2021, 2022 and 2023. The input we received from shareholders was extremely helpful. Following the AGM, we continued to engage
with our largest shareholders, taking their feedback on our plans for the Directors’ Remuneration Policy and our FY24 incentives.
At the 2024 AGM, shareholders will be invited to vote on the 2023 Directors’ Remuneration Report (advisory vote) and 2024
Directors’ Remuneration Policy (binding vote).

Sue Clark
Chair of the Remuneration Committee

www.imperialbrandsplc.com 163
GOVERNANCE DIRECTORS’ REPORT

DIRECTORS’
REPORT
The Directors present their report and CHARITABLE AND At its AGM on 1 February 2023,
audited financial statements for the year POLITICAL DONATIONS the Company obtained shareholder
ended 30 September 2023. This Directors’ As part of our responsible approach, authorisation for the buyback of up
Report, together with our Strategic Report, we continued to support a number to 94,200,000 shares (the “2023 Buyback
forms the management report required of communities in which we operate Authority”), renewing and replacing a
under the Disclosure Guidance and by allocating a central budget. This budget similar authority granted at the AGM held
Transparency Rules (DGTR). The Company largely funds our support of the Eliminating on 2 February 2022. 52,107,043 ordinary
has chosen, in accordance with Section Child Labour in Tobacco Growing (ECLT) shares with a nominal value of 10 pence
414 C(11) of the Companies Act 2006, to Foundation and our support of Hope for each were purchased in FY23, of which
include certain matters in the Strategic Justice. In addition, a number of our 33,432,389 were purchased under the 2023
Report that would otherwise be required to subsidiaries donate to charitable and Buyback Authority. The aggregate amount
be disclosed in the Directors’ Report. The community endeavours from local budgets. of consideration paid by Imperial in FY23
Strategic Report can be found on pages 2 to was £1,000 million. The 2023 Buyback
111 and includes an indication of future All charitable donations and partnership Authority will expire at the earlier of the
likely developments of the Company, investments are subject to the close of business on 31 March 2024 and the
details of important Company events and requirements of our Code of Conduct. end of the AGM of the Company to be held
the Company’s business model and No political donations were made to UK or in 2024.
strategy. The Corporate Governance non-UK political parties, organisations or On 5 October 2023, we announced the
information on pages 112 to 141 and the candidates during the year (2022: nil). commencement of a further £1.1 billion
Directors’ Responsibilities Statement on
share buyback programme which is
page 168 are incorporated into the Directors’ POWERS OF DIRECTORS AND expected to be completed by 30 September
Report by reference. The Directors’ Report, SHARE CAPITAL 2024. As at close of business on
including the information incorporated by
The business of Imperial is managed by the 10 November 2023, a total of 54.1 million
reference, fulfils the requirements of the
Board which may exercise all the powers further shares could still be repurchased
Corporate Governance Statement for the
of the Company, subject to the provisions under the 2023 AGM Authority before
purposes of the DGTR.
of the Articles of Association and the it expires.
Specifically, the following disclosures and Companies Act 2006. Authority is sought
The Board continues to regard the ability
those referred to under “Other information” from shareholders at each Annual General
to repurchase issued shares in suitable
on page 167 have been included elsewhere Meeting to grant the Directors powers,
circumstances as an important part
in the Annual Report and are incorporated in line with institutional shareholder
of Imperial’s financial management.
into the Directors’ Report by reference: guidelines and relevant legislation, in
A resolution will be proposed at the
relation to the issue and buyback by the
Disclosure Page
2024 AGM to renew the authority for the
Company of its shares.
Company to purchase its own shares,
Future developments in
the business 6 Details of our share capital are shown up to specified limits and in line with
in note 25 to the financial statements. institutional shareholder guidelines, for a
Disclosure of greenhouse gas
emissions, energy consumption All shares other than those held in treasury further year. The proposal will be described
and energy efficiency action 50 are freely transferable and rank pari passu in more detail in the 2024 Notice of AGM.
for voting and dividend rights. For all recent share buyback programmes,
Going concern statement 110
Imperial has entered into irrevocable,
Viability statement 110 As at 30 September 2023 we held 70,289,137
non-discretionary arrangements with a
Statement of Directors’ shares in treasury, which represented
broker in order to reduce the issued share
responsibilities 168 approximately 7.26% of the Company’s
capital of the Company.
Disclosure of information to issued share capital and had an aggregate
the auditor 141 nominal value of £7,028,914. INSURANCE AND INDEMNITIES
Financial risk management 210 Imperial maintains directors’ and officers’
We have not cancelled these shares but
Shareholder information 263 hold them in a treasury shares reserve liability insurance which provides
within our profit and loss account reserve, appropriate cover for legal action brought
EQUAL OPPORTUNITIES and they represent a deduction from equity against its Directors and Officers. The
We regard equality and fairness as shareholders’ funds. Company has also granted indemnities to
a fundamental right of all our people. each of its Directors to the extent permitted
We aim to create a work environment that Repurchases of own shares by law. Qualifying third-party indemnity
allows equal opportunities so people are On 6 October 2022, we announced a arrangements for the benefit of Directors, in
employed fairly, safely and in compliance commitment to return surplus capital to a form and scope which comply with the
with applicable employment laws and shareholders though regular annual share requirements of the UK Companies Act
regulation. We respect each person for who buybacks if circumstances were right and 2006, were in force throughout the year and
they are and what they can contribute in line with our five-year strategy to deliver up to the date of this Annual Report.
and provide the same opportunity for sustainable growth and enhanced
career development and promotion shareholder returns, expected to be in the
regardless of disability, physical or mental region of £1 billion in the financial year
health, age, race, origin, gender, sexual ending 30 September 2023. This programme
orientation, political views, religion, marital completed on 11 September 2023.
status or any other legally protected status.

164 Imperial Brands | Annual Report and Accounts 2023

INTEREST IN VOTING RIGHTS Number of ordinary shares Percentage of issued share
at the date of notification capital at the date of
As at 30 September 2023, the Company Disclosure (millions) notification
has been notified in accordance with Spring Mountain Investments Ltd 56 6.022
Chapter 5 of the Disclosure Guidance BlackRock 53 5.621
and Transparency Rules (DGTRs) of the
Capital Group Companies Inc 48 5.091
following interests in our shares. The
FIL Limited 47 4.981
Company has not been notified of any
changes to these interests since the 1. Direct holding.
year-end and up to 13 November 2023, 2. Indirect holding.

being a date not more than one month Information provided to the Company under the DGTRs is publicly available via the regulatory information services, and
prior to the date of the AGM Notice on our website at https://www.imperialbrandsplc.com/creating-shareholder-value/stock-exchange-announcements.
of Meeting.

RESULTS AND DIVIDENDS 2023 2022

Ordinary shares £ million £ million
We include a review of our operational
Interim paid – June 2023
and financial performance on pages 84
21.59p per share 196 202
to 99.
Interim paid – September 2023
The profit attributable to equity holders 21.59p per share 195 202
of the Company for the financial year Declared interim – December 2023
was £2,328 million, as shown in our 51.82p per share 466 464
Consolidated Income Statement. Proposed final – March 2024
Note 3 to the financial statements 51.82p per share 465 457
gives an analysis of revenue and Total ordinary dividends
operating profit. 146.82p per share
(2022: 141.17p) 1,322 1,325
An analysis of net assets is provided
in the Consolidated Balance Sheet
and the related notes to the
financial statements.
We pay quarterly dividends. The first
and second dividends for financial year
2023 were paid on 30 June 2023 and
30 September 2023 respectively.
The third dividend will be paid on
29 December 2023 and, subject to AGM
approval, the final dividend will be paid
on 28 March 2024 to our shareholders
on the Register of Members at the close
of business on 16 February 2024. The
associated ex-dividend date will be
15 February 2024.
Following a review by the Audit
Committee at its meeting in November
2023, which confirmed the accounts
showed distributable reserves sufficient
to support the expected third interim
and final dividends and the interim
dividends in financial year 2024, the
Directors have declared and propose
dividends as follows:

www.imperialbrandsplc.com 165
GOVERNANCE DIRECTORS’ REPORT continued

PENSION FUND make available to Imperial Brands of the Company; or (ii) such number of
The Group Pensions Committee Finance PLC and Imperial Tobacco shares in the capital of the Company
provides global oversight on both risk Germany Finance GmbH (now carrying more than 50% of the voting
and reward elements of the Group’s Reemtsma Cigarettenfabriken GmbH) rights normally exercisable at a general
pension arrangements. committed credit facilities of meeting of the Company; and (b) as a
€3,493 million for a period of up to result of the change of control, there is
The Committee’s objectives include three years with bi-annual six-month either: (i) a reduction to a non-
tackling the risks inherent in the auto-extensions; investment grade rating or withdrawal
Group’s defined benefit pension of the investment grade rating of the
• a credit facility agreement dated
schemes as well as reward matters. notes which is not raised again,
September 2023 under which a
The Group has three main pension certain bank makes available to reinstated to or replaced by an
arrangements, the largest being the Imperial Brands Finance PLC investment grade rating during the
Imperial Tobacco Pension Fund, which committed credit facilities of change of control period specified in
is not controlled by the Board but by £250 million until September 2024; the final terms; or (ii) to the extent that
a trustee company. Its board consists of • a credit facility agreement dated the notes are not rated at the time of
five Directors nominated by the September 2023 under which a certain the change of control, the Issuer fails to
Company, one Director nominated by bank makes available to Imperial obtain an investment grade credit
employee members and two Directors Brands Finance PLC committed credit rating of the notes within the change of
nominated by current and deferred facilities of £200 million until control period as a result of the change
pensioners. This trustee company September 2024; and of control.
is responsible for the assets of • a credit facility agreement dated The bonds Imperial Brands Finance
the pension fund, which are held September 2023 under which a PLC issued in such manner are
separately from those of the Group certain bank makes available to as follows:
and are managed by independent Imperial Brands Finance PLC
fund managers. The pension • 15 September 2008 £600 million
committed credit facilities of
fund assets can only be used in 8.125% guaranteed notes due 2024;
£100 million until September 2024.
accordance with the fund’s rules • 26 September 2011 £500 million 5.5%
and for no other purpose. In addition, three deeds of counter- guaranteed notes due 2026;
indemnity each dated April 2023 made • 28 February 2014 €650 million 3.375%
ARTICLES on substantially the same terms under guaranteed notes due 2026;
which certain insurance companies
The Company’s Articles of Association • 28 February 2014 £500 million 4.875%
(the Sureties) have made available to
do not contain any entrenchment guaranteed notes due 2032;
the Company, Imperial Brands Finance
provisions and, therefore, may be • 27 January 2017 €500 million 1.375%
PLC and Imperial Tobacco Limited a
altered or added to, or completely guaranteed notes due 2025; and
surety bond, in each case issued on a
new Articles may be adopted, by special standalone basis but in aggregate • 12 February 2019 €750 million 2.125%
resolution, subject to the provisions forming an amount of £120 million, guaranteed notes due 2027.
of the Companies Act 2006. until December 2028. The bonds Imperial Brands Finance
If any person or group of associated Netherlands B.V. issued in such
SIGNIFICANT AGREEMENTS
persons (as defined within each manner are as follows:
The agreements summarised below are
agreement) acquires the right to • 18 March 2021 €1,000 million 1.750%
those which we consider to be
exercise more than 50% of the votes guaranteed notes due 2033;
significant to the Group as a whole and
exercisable at a general meeting of the
which contain provisions that take • 15 February 2023 €600 million 5.250%
Company, the Sureties may demand
effect, or give the other party or parties guaranteed notes due 2031; and
that Imperial Tobacco Limited, amongst
a specific right to alter or terminate • 12 September 2023 €350 million
other things, pay a sum to a cash
them if we are subject to a change of 5.250% guaranteed notes due 2031.
collateral account equal to but not
control following a takeover bid.
exceeding the aggregate amount Imperial Brands Finance PLC has also
The Group has four credit facility outstanding under each guarantee. issued bonds in the USA under the
agreements that provide that, unless provisions of Section 144a and
Imperial Brands Finance PLC and
the lenders (as defined within each Regulation S respectively of the US
Imperial Brands Finance Netherlands
agreement) otherwise agree, if any Securities Act (1933). The Company acts
B.V. have issued bonds under Euro
person or group of associated persons as guarantor.
Medium Term Notes (EMTN) Debt
and/or any connected persons acquires
Issuance Programmes. The Company The final terms of this series of notes
the right to exercise more than 50% of
acts as guarantor. contain change of control provisions
the votes exercisable at a general
under which the holder of each note
meeting of the Company, the respective The final terms of these series of notes
will, subject to any earlier exercise by
borrowers (as defined within each contain change of control provisions
the Issuer, have the option to require
agreement) must repay any under which the holder of each note
the Issuer to redeem or, at the Issuer’s
outstanding utilisation owed by them will, subject to any earlier exercise by
option, purchase that note at 101% of its
under the facility agreement and the the Issuer, have the option to require
nominal value if: (a) (i) any person (as
total commitments under that facility the Issuer to redeem or, at the Issuer’s
such term is used in the US Securities
agreement will be cancelled. option, purchase that note at its
Exchange Act of 1934 (the Exchange
nominal value if: (a) any person, or
The four credit agreements are: Act)) becomes the beneficial owner
persons acting in concert or on behalf
of more than 50% of the Company’s
• a credit facilities agreement dated of any such person(s), becomes
voting stock; or (ii) there is a transfer
March 2020 under which certain interested in: (i) more than 50% of the
(other than by merger, consolidation,
banks and/or financial institutions issued or allotted ordinary share capital
amalgamation or other combination)

166 Imperial Brands | Annual Report and Accounts 2023

of all or substantially all of the LISTING RULE 9.8.4
Company’s assets and those of its For the purposes of LR 9.8.4R, the information required to be disclosed by LR 9.8.4R
subsidiaries to any person (as such can be found on the pages set out below:
term is used in the Exchange Act); or
Section Information Page
(iii) a majority of the members of the
Company’s Board of Directors is not (1) Interest capitalised n/a
continuing in such capacity; and (b) as
a result of the change of control, there (2) Publication of unaudited financial information n/a
is a reduction to a non-investment (4) Details of long-term incentive schemes 146, 148, to
grade rating or withdrawal of the 150, 153, 154,
investment grade rating of the notes 156, 157, 159
which is not raised again, reinstated to and 226 to 229
or replaced by an investment grade (5) Waiver of emoluments by a Director n/a
rating during the change of control
period specified in the final terms. (6) Waiver of future emoluments by a Director n/a

The bonds issued in such manner are (7) Non pre-emptive issues of equity for cash n/a
as follows: (8) Non pre-emptive issue by major subsidiary undertakings n/a
• 21 July 2015 $1,500 million 4.25% (9) Listed subsidiary n/a
guaranteed notes due 2025;
(10) Contracts of significance 166
• 26 July 2019 $1,000 million 3.125%
guaranteed notes due 2024; (11) Provision of services by a controlling shareholder n/a
• 26 July 2019 $750 million 3.5%
(12) Shareholder waivers of dividends See above
guaranteed notes due 2026;
• 26 July 2019 $1,000 million 3.875% (13) Shareholder waivers of future dividends See above
guaranteed notes due 2029; and (14) Agreements with controlling shareholders n/a
• 27 July 2022 $1,000 million 6.125%
guaranteed notes due 2027. OTHER INFORMATION
In accordance with the Companies Act 2006, the following items have been included
WAIVER OF DIVIDENDS in other sections of this Annual Report:
In respect of LR 9.8.4R (12) and (13) the
• a fair review of the business, as required by the Companies Act 2006, is included in
trustee of the Imperial Tobacco Group
the Strategic Report;
PLC Employee and Executive Benefit
• the information in our Governance Report, including information on our Directors,
Trust and the Imperial Tobacco Group
is included in this Directors’ Report by reference;
PLC 2001 Employee Benefit Trust
agrees to waive dividends payable • future developments in the business are included in the investment case
on the Group’s shares it holds commencing on page 6;
for satisfying awards under various • information relating to our people, including colleague engagement, is included in
Imperial Brands PLC share plans. the Stakeholder Engagement section on page 33, our People and Planet agenda on
In accordance with Section 726 of the page 39, Safe and Inclusive workplace on pages 64 to 66 and on pages 123 and 125
Act no dividends can be paid to the in our Governance Report;
Company in respect of the shares it • our principal risks are detailed on pages 102 to 109;
holds in treasury. • information relating to our sustainability approach that supports our
environmental, social and governance agenda is included on pages 38 to 69;
2023 ANNUAL GENERAL • responsibilities to a broader stakeholder group, including consumers and
MEETING VOTE customers, are included on pages 32 to 36, and 126 to 128;
At the Annual General Meeting in 2023, • information on our greenhouse gas emissions is included on page 50; and
the Company received strong support • the Directors of the Company are listed on pages 116 to 119.
for all its resolutions.
Our report under the Streamlined Energy and Carbon Reporting requirements can be
POST-YEAR-END EVENTS found on page 51.
Share Buybacks The Strategic Report and this Directors’ Report were approved and signed by order of
As noted above, on 5 October 2023 the the Board.
Company announced a further share
buyback programme of up to £1.1 billion
of shares in the period from 6 October
2023 to the end of September 2024.
Emily Carey
2024 ANNUAL GENERAL MEETING Company Secretary
This year’s AGM will be held at the
Bristol Marriott Royal Hotel on 13 November 2023
31 January 2024 at 9.30am. Imperial Brands PLC
Incorporated and domiciled in England and Wales No: 3236483
Details of the resolutions to be put to
the meeting can be found in the Notice
of Annual General Meeting sent to
shareholders and made available on the
Company’s website.

www.imperialbrandsplc.com 167
GOVERNANCE DIRECTORS’ REPORT continued

STATEMENT OF In preparing the Parent Company Each of the Directors in office as at the
DIRECTORS’ financial statements, the Directors are date of this report, whose names and
required to: functions are listed on pages 116 to 119,
RESPONSIBILITIES confirms that, to the best of
The Directors are responsible for • select suitable accounting policies
their knowledge:
preparing the Annual Report and Group and then apply them consistently;
and Parent Company financial • make judgements and accounting • the Group and Parent Company
statements in accordance with estimates that are reasonable financial statements, which have
applicable law and regulations. and prudent; been prepared in accordance with
• state whether applicable United UK-adopted International Accounting
Company law requires the Directors to Standards and UK GAAP FRS 101
Kingdom Accounting Standards have
prepare financial statements for each respectively, give a true and fair view
been followed, subject to any material
financial year. Under that law, the of the assets, liabilities, financial
departures disclosed and explained
Directors are required to prepare the position and profit of the Group and
in the financial statements; and
Group financial statements in Parent Company on a consolidated
• prepare the financial statements
accordance with UK–adopted and individual basis; and
on the going concern basis unless
International Accounting Standards. • the Strategic Report and the
it is inappropriate to presume that
In addition, the Directors have elected Directors’ Report contained in the
the Parent Company will continue
to prepare the Parent Company Annual Report and Accounts include
in business.
financial statements in accordance a fair review of the development and
with United Kingdom Generally The Directors are responsible for performance of the business and
Accepted Accounting Practice keeping adequate accounting records position of the Group and Parent
(United Kingdom Accounting Standards that are sufficient to show and explain Company, together with a description
and applicable law), including FRS 101 the Group and Parent Company’s of the principal risks and
“Reduced Disclosure Framework”. transactions and disclose with uncertainties that they face.
Under company law the Directors must reasonable accuracy at any time the
not approve the financial statements financial position of the Group and The Directors consider that the Annual
unless they are satisfied that they Parent Company on a consolidated and Report and Accounts, taken as a whole,
give a true and fair view of the state individual basis, and to enable them to are fair, balanced and understandable
of affairs of the Group and Parent ensure that the Group financial and provide the information necessary
Company and of the profit or loss statements comply with the Companies for shareholders to assess the Group
of the Group and Parent Company for Act 2006. They are also responsible for and the Parent Company’s position
that period. safeguarding the assets of the Parent and performance, business model
Company and its subsidiaries and and strategy.
In preparing the Group financial
hence for taking reasonable steps for The Directors’ responsibilities in
statements, International Accounting
the prevention and detection of fraud relation to the disclosure of information
Standard 1 requires that Directors:
and other irregularities. to auditors is disclosed in the Audit
• properly select and consistently Committee report on page 141.
Under applicable law and regulations,
apply suitable accounting policies;
the Directors are also responsible for This Statement of Directors’
• present information, including
preparing a Strategic Report, Directors’ Responsibilities was approved by the
accounting policies, in a manner that
Report, Remuneration Report and Board and signed on its behalf.
provides relevant, reliable, comparable
Corporate Governance Statement that
and understandable information; The Strategic Report and the Directors’
comply with the law and
• provide additional disclosures when those regulations. Report were approved by the Board and
compliance with the specific signed on its behalf.
requirements in IFRS are insufficient The Directors are responsible for the
maintenance and integrity of the By order of the Board.
to enable users to understand the
impact of particular transactions, Parent Company’s website. Legislation
other events and conditions on the in the United Kingdom governing the
entity’s financial position and preparation and dissemination of
financial performance; financial statements may differ from
Emily Carey
• state whether the Group financial legislation in other jurisdictions.
Company Secretary
statements have been prepared in
accordance with UK-adopted 13 November 2023
International Accounting Standards, Imperial Brands PLC
subject to any material departures Incorporated and domiciled in England
disclosed and explained in the and Wales
financial statements; and No. 3236483
• prepare the Group financial
statements on the going concern
basis unless it is inappropriate to
presume that the Group will continue
in business.

168 Imperial Brands | Annual Report and Accounts 2023

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMPERIAL BRANDS PLC

Opinion
In our opinion:

• Imperial Brands PLC’s (“Imperial Brands”) consolidated financial statements and parent company financial statements (the “financial
statements”) give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2023 and of the
group’s profit for the year then ended;
• the consolidated financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice and in accordance with section 408 of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Imperial Brands PLC (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended
30 September 2023 which comprise:
Group Parent company
Consolidated balance sheet at 30 September 2023 Balance sheet at 30 September 2023
Consolidated income statement for the year then ended Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year then ended Related notes I to IX to the financial statements including
a summary of significant accounting policies
Consolidated statement of changes in equity for the year then ended
Consolidated cash flow statement for the year then ended
Related notes 1 to 34 to the financial statements, including a summary of
significant accounting policies and the supplementary information on
pages 235 to 246

The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK
adopted international accounting standards, The financial reporting framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We are independent of the group and parent in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting the audit.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to continue
to adopt the going concern basis of accounting included:

• confirming our understanding of the directors’ going concern assessment process, including the controls over the review and approval of
the business plan and cash flow forecasts covering the period through to 30 November 2024;
• assessing the appropriateness of the duration of the going concern assessment period to 30 November 2024 and considering the
existence of any significant events or conditions beyond this period based on our procedures on the group’s business plan, cash flow
forecasts and from knowledge arising from other areas of the audit;
• verifying inputs against the board-approved business plan, cash flow forecasts and debt facility terms, and reconciling the opening
liquidity position to the year end position as at 30 September 2023;
• reviewing borrowing facilities to confirm both their availability to the group and the forecast debt repayments through the going concern
assessment period and to validate that there are only two financial covenants in relation to the revolving credit facility;
• evaluating management’s historical forecasting accuracy and the consistency of the going concern assessment with information
obtained from other areas of the audit, such as our audit procedures on the business plan and cash flow forecasts which underpin
management’s goodwill impairment assessments;
• testing the assessment, including forecast liquidity under base and downside scenarios, for clerical accuracy;
• assessing whether assumptions made, including those relating to current economic challenges, were reasonable and in the case of
downside scenarios, appropriately severe, in light of the group’s relevant principal risks and uncertainties and our own independent
assessment of those risks;
• assessing management’s considerations related to material climate change impacts in the going concern period;

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMPERIAL BRANDS PLC continued

• evaluating the amount and timing of identified mitigating actions available to respond to a severe but plausible downside scenario, and
whether those actions are feasible and within the group’s control;
• performing independent stress testing on management’s assumptions including applying incremental adverse cash flow sensitivities.
Our sensitivities included the impact of certain severe but plausible scenarios identified in other areas of our audit, including litigation
and tax, materialising within the going concern period; and,
• performing reverse stress testing on management’s base case scenario to understand how severe conditions would have to be to breach
liquidity or financial covenants and whether the reduction in EBITDA that result in breaches to liquidity or financial covenants has no
more than a remote possibility of occurring;
• assessing the appropriateness of the going concern disclosure on page 182.

Our key observations

• The directors’ assessment forecasts that the group will maintain sufficient liquidity throughout the going concern assessment period in
the base case scenario and will not breach banking covenants. Management considered a severe but plausible downside scenario
corresponding to a 15% permanent reduction in EBITDA, which would result in a minimum level of headroom of £0.5bn in April 2024.
Under the reverse stress test scenario, which includes a permanent reduction in EBITDA of 38%, liquidity is eroded in April 2024. This
scenario is not considered plausible. We have not identified any climate-related risks that would materially impact the group’s forecasts
to 30 November 2024.
• Controllable mitigating actions available to management over the going concern assessment period, including reductions to non-
declared dividend payments and uncommitted share buybacks, are sufficient to ensure liquidity in both management’s plausible
downside scenario and the audit team’s additional downside sensitivities.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for the period to
30 November 2024.

In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to
continue as a going concern.

Overview of our audit approach

Audit scope • We performed an audit of the complete financial information of 5 components and audit procedures on specific
balances for a further 13 components.
• The components where we performed full or specific audit procedures accounted for 84% of Profit before tax on
an absolute basis, 81% of Revenue and 93% of Total assets.

Key audit matters • Revenue recognition, including management override of controls

• Management override of controls or errors related to KPIs impacting executive remuneration
• Uncertain tax positions
• Litigation

Materiality • Overall group materiality of £156m which represents 5% of profit before tax.

An overview of the scope of the parent company and group audits

Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
company within the group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into
account the level of revenue, assets and profit before tax, risk profile (including country risk, management’s assessment of control
effectiveness, internal audit findings and the extent of changes in the business environment) and other known factors when assessing the
level of work to be performed at each component.

In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, of the 394 reporting components of the group, we selected 18 (2022: 19) components
covering entities within Australia, the Dominican Republic, Germany, Morocco, Poland, Spain, the UK and the USA., which represent the
principal business units within the group.

Of the 18 components selected, we performed an audit of the complete financial information of 5 components (“full scope components”)
which were selected based on their size or risk characteristics. For the remaining 13 components (“specific scope components”), we
performed audit procedures on specific accounts within that component that we considered had the potential for the greatest impact on
the significant accounts in the group financial statements either because of the size of these accounts or their risk profile.

170 Imperial Brands | Annual Report and Accounts 2023

The audit scope of specific scope components may not have included testing of all significant accounts of the component but will have
contributed to the coverage of significant accounts tested for the group. We increased our coverage of the total group cash balance as at
30 September 2023 by performing specified procedures over cash balances by obtaining bank confirmation letters for 22 additional
business units in order to reduce the unaudited cash balance below our performance materiality. Of the remaining components that
together represent 16% of the group’s Profit before tax on an absolute basis, none are individually greater than 2% of the group’s Profit before
tax. For these components, we performed other procedures, including analytical review, testing of consolidation journals, intercompany
eliminations and foreign currency translation recalculations to respond to any potential risks of material misstatement to the group
financial statements.

The table below illustrates the coverage obtained from the work performed by our audit teams.
2023 2022
% of group % of group
PBT (on PBT (on
absolute % of group % of group absolute % of group % of group
Reporting components Number basis) 1 Revenue Assets Number basis) 1 Revenue Assets
Full scope 5 70% 63% 79% 5 73% 60% 70%
Specific scope 13 14% 18% 13% 14 18% 23% 19%
Specified procedures 22 0% 0% 1% 18 0% 0% 1%
Full, specific, and specified
procedures coverage 40 84% 81% 93% 37 91% 83% 90%
Remaining components 354 16% 19% 7% 357 9% 17% 10%
Total reporting components 394 100% 100% 100% 394 100% 100% 100%
1. Coverage of profit before tax measured on an absolute basis for each component (components with a loss would be added to both the numerator and denominator).

Changes from the prior year

The approach to audit scoping is similar to the prior year audit. Our scoping changes from the prior year arise due to a change in either the
risk assigned to the components or the contribution by the component. As a result, certain components in France and Belgium have moved
from specific scope to review scope, considering within remaining components above, reflecting lowered audit risk and reduced
contribution in comparison to the prior year.

Involvement with component teams

In establishing our overall approach to the group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating under
our instruction. Of the 5 full scope components, audit procedures were performed on one of these directly by the primary audit team and
four by component audit teams. For the 13 specific scope components, where the work was performed by component auditors, we
determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for
our opinion on the group as a whole.

Imperial Brands has centralised processes and controls in relation to certain accounts managed by its Finance Shared Services (“FSS”)
centres in Manila and Krakow. Members of the group engagement team provided direct oversight, review, and coordination of the EY FSS
audit teams. The EY FSS audit teams performed centralised testing for certain accounts covered at the Imperial Brands’ FSS locations,
including revenue and receivables and purchases and payables. In establishing our overall approach to the group audit, we determined the
work that needed to be undertaken at each of the locations by the group engagement team or by auditors from local EY teams.

The group audit team continued to follow a programme of planned visits that has been designed to ensure that the Senior Statutory Auditor,
and other group Partners, visit all full scope and other key locations. During the current year’s audit cycle, visits were undertaken by the
primary audit team to the component teams in Germany, Morocco, Spain and the USA. These visits involved discussing the audit approach
with the component team and any issues arising from their work, meeting with local management, and reviewing relevant audit working
papers on risk areas. The primary team interacted regularly with the component teams, where appropriate, during various stages of the
audit, reviewed relevant working papers and were responsible for the scope and direction of the audit process. At critical periods of the
audit, we increased the use of online collaboration tools to facilitate team meetings, information sharing and the evaluation, review and
oversight of component teams. We requested more detailed deliverables from component teams, and we utilised fully the interactive
capability of EY Canvas, our global audit workflow tool, to review remotely the relevant underlying work performed. For the UK
components, communication has been maintained throughout the audit with the Senior Statutory Auditor covering the same areas
described above applicable to all non-UK component teams. This, together with the additional procedures performed at group level, gave us
appropriate evidence for our opinion on the group financial statements.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMPERIAL BRANDS PLC continued

Climate change
There has been increasing interest from stakeholders as to how climate change will impact Imperial Brands. The group has determined
that the most significant future impacts from climate change on their operations will be from:

• an increase in material costs due to increases in operating costs of suppliers and raw materials;
• increased costs from emerging regulation such as carbon taxation;
• changes in the tobacco crop yield that may lead to agricultural supply chain disruption; and,
• other impacts that may cause supply chain disruption or affect production capacity, namely:

• increased frequency and severity of extreme weather events

• physical hazards such as flooding
• chronic drought risk; and
• more severe hurricane risk.

These are explained on pages 70 to 81 in the required Task Force for Climate related Financial Disclosures, which form part of the “Other
information,” rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of
considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.

In planning and performing our audit we assessed the potential impacts of climate change on the group’s business and any consequential
material impact on its financial statements.

As explained in note 2, Accounting estimates and judgements, governmental and societal responses to climate change risks are still
developing, and are interdependent upon each other, and consequently financial statements cannot capture all possible future outcomes
as these are not yet known. The degree of certainty of these changes may also mean that they cannot be taken into account when
determining asset and liability valuations and the timing of future cash flows under the requirements of UK adopted international
accounting standards.

Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s
assessment of the impact of physical and transition climate risk, and ensuring that the effects of material climate risks disclosed on
page 75 have been appropriately reflected in asset values and associated disclosures where values are determined through modelling
future cash flows, being goodwill and intangible assets impairment assessment (note 11) and the recoverability of deferred tax assets
(note 22). We also challenged the Directors’ considerations of climate change in their assessment and disclosure of going concern (note 1)
and viability.

Whilst the group have stated their commitment to the aspirations of the Paris Agreement to achieve net zero emissions by 2040, the group
are currently unable to determine the full future economic impact on their business model, operational plans and customers to achieve this
and therefore as set out above the potential impacts are not fully incorporated in these financial statements.

Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a
key audit matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Revenue recognition, including management We have reviewed Imperial's Code of Conduct, Speaking-up, and Fraud risk
override of controls (2023: £32,475m, 2022: management policies in order to evaluate the 'tone at the top’.
£32,551m)
We obtained an understanding of the revenue process and understood how Imperial’s
Tobacco revenue is an area of focus for revenue recognition policies are applied. We also assessed the processes and key controls
stakeholders interested in the performance of over rebate accounting, by walking through the process from identification to recording.
the company against an industry backdrop of
declining global sales volumes. We reviewed the group revenue recognition policies, as documented in the group
Accounting Manual, for compliance with IFRS 15 ‘Revenue from contracts with customers’.
Most of the group’s sales arrangements require
little judgement to be exercised, with revenue We discussed and reviewed key contractual arrangements with management and
being recognised on the delivery of goods. obtained relevant documentation, including those in respect of rebate arrangements.
However, there is a risk that management may As part of our overall revenue recognition testing, for Tobacco & NGP components with
override controls to intentionally misstate revenue in scope, we used data analytics techniques. This included testing the
revenue transactions by recording fictitious occurrence of revenue by analysing the correlation of journal entries posted to revenue
manual journals to revenue (e.g. by with journals posted to accounts receivables and then subsequently as cash receipts.
inappropriate rebate accounting). We validated cash receipt postings by tracing to bank statements on a sample basis.

172 Imperial Brands | Annual Report and Accounts 2023

Risk Our response to the risk
There is also a risk of error relating to the This provided us with a high level of assurance over £15.9 billion (71%) of Tobacco & NGP
accounting for non-routine transactions. Due to revenue recognised by the group.
the size of the revenue balance, even errors
representing a relatively small proportion could For the Distribution component, we performed a combination of tests of controls and
lead to material misstatement of profit. substantive tests of detail to obtain assurance over £9.0 billion (83%) of Distribution
revenue recognised by the group.
In addition, the impact of promotional activity
around period ends leading to trade loading can We performed detailed, disaggregated, analytical review to identify unusual trends and
have a material impact on performance in the inventory positions at all full and specific scope locations. Our procedures focused on
following period. This anticipated impact, if variances in receivable days and customers rebates/discounts at period ends, which
material, should be described in the front half of could represent inventory being ‘pushed’ into the channel.
the annual report to provide investors with a fair We reviewed external factors for indicators of trade pull factors with a focus on full
and balanced understanding of the drivers of scope and high-risk markets.
business performance.
We made inquiries outside of finance to identify instances of late or unusual requests
Refer to the audit committee report (page 139); for shipments or extensions of credit terms.
accounting policies (note 1); accounting
estimates and judgements (note 2); and On a sample basis, we obtained third party confirmations of trade terms from customers to
segmental information (note 3) of the assess for indicators of trade loading, where relevant, such as unusual sales patterns,
consolidated financial statements. rebates/discounts or increased receivable days at period-ends. We performed appropriate
alternative procedures where confirmations were requested and not received, including
reviewing contracts and recalculating rebates, validating the inputs of management’s
calculations, and tracing rebate provision amounts to post year end settlements.

Our remaining procedures, applicable to all full and specific scope components
included the following:

• Cut-off testing for a sample of revenue transactions near the period end to check that
they were recognised in the appropriate period;
• Targeted manual journal entry testing in response to the risk of fraud; and,
• Review of disclosures against the requirements of IFRS 15

The audit procedures performed to address this risk were performed by component and
shared service centre teams and reviewed by the group team.

Key observations communicated to the Audit Committee

Based on the procedures performed, including those in respect of manual adjustments to revenue, we did not identify any evidence of
material misstatement in the revenue recognised during the year.

Management override of controls or In respect of our focus on reported margins, we have:

errors related to KPIs impacting
executive remuneration • Inquired of divisional finance leadership to identify any unusual and/or new
arrangements/projects entered into during the current financial year that would be
Manipulation of KPIs impacting remuneration – expected to have an impact upon operating profit margins.
there is a risk that management could override • Used data analytical techniques to identify and investigate unusual trends in
controls in order to manipulate KPIs which have margins in order to identify any unusual movements throughout the year and in
a bearing on remuneration. In the current year comparison to prior year.
we have identified the following items as areas
of focus: In respect of our focus on the classification of adjusting items, we have:

• Manipulation of reported margins to • Challenged the timing of recognition of one-off costs and whether the classification
overstate operating profits; of any costs as adjusting is in line with group policy and disclosed appropriately.
• Incorrect classification of items as adjusting • Evaluated the classification of one-off adjustments for indicators of management
costs in order to manipulate the bias, in particular whether both income and expense items are treated consistently.
adjusted operating profit metric; In respect of our focus on working capital metrics, we have:
• Errors relating to working capital metrics,
particularly focused on inappropriate cash • Performed cut-off testing at year end on working capital balances to a lower testing
cut-off to manipulate working capital and threshold. Namely, on trade receivables, inventory and trade payables to ensure that
therefore the adjusted operating cash working capital metrics are not recorded pre year end and then reversed post year
conversion metric; end to manipulate the adjusted operating cash conversion metric.
• Incorrect reporting of ESG metrics on which • Performed detailed, disaggregated analytical review to identify unusual trends and
aspects of executive remuneration are based. positions in key significant accounts such as cash, trade receivables, trade payables
and inventory to identify potential manipulation of these balances that would
influence working capital balances.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMPERIAL BRANDS PLC continued

Risk Our response to the risk

Refer to the audit committee report (page 137); • Made inquires outside of finance, for example with Sales, to identify any unusual and
accounting policies (note 1); accounting new arrangements entered into during the last quarter of Imperial’s financial year to
estimates and judgements (note 2) of the assess if these are being manipulated to flatter working capital.
consolidated financial statements; and the
supplementary information. In respect of our focus on ESG metrics linked to executive remuneration, we have:

• Conducted in-person and remote site visits to understand local level ESG
performance and data collection processes;
• Obtained an understanding of the process for collecting, collating and reporting the
ESG metrics during the reporting period;
• Performed analytical review procedures to understand the appropriateness of
the data.
• Performed testing, on a sample basis, against underlying source information to check
the accuracy and completeness of the data and the appropriate application of the
ESG criteria.

We reviewed the annual report disclosures, including Imperial’s management rationale

for treating as adjusting, whether equal prominence had been given with statutory
measures and the transparency of the reconciliation of statutory measures to APM’s.

Key observations communicated to the Audit Committee

We did not identify any unusual trends in reported margin that would indicate manipulation.

We consider that items identified as being adjusted are appropriate and in line with the revised group accounting policy.

Following our procedures performed over working capital metrics, we consider these balances are materially correct.

We did not identify any issues with regards the completeness, accuracy or appropriateness of data used in the application of ESG criteria
related to executive remuneration.

Uncertain tax positions (Provision for uncertain We challenged management’s judgements using tax specialists, both domestic and
tax positions – 2023: £189m, 2022: £148m) overseas, to provide technical support regarding developments in the period and to
consider whether the amounts provided reflected an appropriate best estimate of the
The global nature of the group’s operations expected economic outflow.
results in complexities in the payment of, and
accounting for, tax. The group audit team, including tax specialists, evaluated the tax consequences of the
transactions undertaken in the period. We confirmed that the tax figures appropriately
Management applies judgement in assessing reflect the transactions and there are no additional material risks for which an
tax exposures in each jurisdiction, many of uncertain tax position (UTP) should be recorded.
which require interpretation of local tax laws.
We challenged whether the tax exposures identified were complete. Our work included
Given this judgement, there is a risk that tax inquiring with management regarding the current status of discussions with tax
provisions are misstated. authorities, the impact of legislative developments and the review of transfer
Refer to the audit committee report (page 138); pricing policies.
accounting policies (note 1); accounting We assessed whether the group’s disclosures, detailing the year end status of material
estimates and judgements (note 2); and tax open tax inquiries, adequately disclose relevant facts and circumstances and potential
disclosure (note 7) of the consolidated liabilities of the group.
financial statements.
The audit procedures were designed and led by the group audit team, with support from
component teams whose work was reviewed by the group audit team.

Key observations communicated to the Audit Committee

Based on our assessment of tax risks and the latest status of tax audits, we conclude that the group’s approach to judgements for uncertain
tax positions is balanced and that the amounts provided are reasonable. We consider the group’s tax disclosures are also appropriate.

Litigation We evaluated the processes and controls over litigation operated by management at
group, by walking through the process from identification of potential litigation to the
There are a number of ongoing legal cases in evaluation of probability of outcome and the quantification and recording of a provision
different jurisdictions relating to competition, or disclosure of a contingent liability.
product liability, intellectual property and
commercial litigation. Significant judgements are We inspected Imperial’s litigation log and communications to the Executive Leadership
involved in determining the likelihood of a Team and met with group Finance and group General Legal Counsel to discuss the
probable outflow occurring from legal cases, developments in significant cases.
together with the estimate of the likely financial
cost. The group’s assessment includes evaluating

174 Imperial Brands | Annual Report and Accounts 2023

Risk Our response to the risk
the relevant law, historical and pending court We requested, received and read letters received directly from management’s
rulings with the support of legal counsel. external legal counsel that evaluated the current status of legal proceedings and
independently quantified the estimate of any economic outflow arising from
Given the judgements and the significance of settlement of the litigation.
the amounts involved, there is a risk that legal
provisions are misstated or that contingent We evaluated whether any of the fines levied, ongoing litigation cases, whistleblower
liabilities are inadequately disclosed. reports or reported frauds in the year gave rise to evidence that there had been
instances of non-compliance with the relevant laws and regulations.
Specifically, our audit risk relates to legal cases
for which the financial cost to the business We assessed whether the group’s disclosures detailing contingent liabilities and
could be material if the potential exposures financial commitments adequately disclose relevant facts and circumstances and
were to be realised, and any cases which could potential liabilities of the group.
indicate non-compliance with the legal and
regulatory frameworks with which the group is The audit procedures were designed and led by the group audit team, with support from
required to comply. component teams whose work was reviewed by the group audit team.

Refer to the audit committee report (page 138);

accounting policies (note 1); accounting
estimates and judgements (note 2), and
contingent liabilities (note 29) of the
consolidated financial statements.

Key observations communicated to the Audit Committee

Having met with internal Legal Counsel and received responses from external lawyers, we consider that where an economic outflow is
probable management have appropriately recorded a provision. For those cases which we consider meet the criteria of a contingent liability
we concluded that sufficient disclosure exists in the annual report to allow users to understand the range of exposures facing the company,
where that is possible.

In the prior year, our auditor’s report included a key audit matter in We determined materiality for the parent company to be £210
relation to the measurement and classification of adjusting items. million (2022: £309 million), which is 2% (2022: 2%) of net assets. In
This year, the key audit matter has been expanded to focus on performing our procedures, materiality was capped at the group
management override of controls or errors related to KPIs allocated materiality of £35 million (2022: £30 million).
impacting executive remuneration. We remain focussed on the
manipulation of adjusted measures, working capital balances that Performance materiality
impact the adjusted operating cash conversion metric, and the The application of materiality at the individual account or balance
appropriateness of the classification of items as adjusting. In the level. It is set at an amount to reduce to an appropriately low level
current year we added focus on reported margins and specific ESG the probability that the aggregate of uncorrected and undetected
metrics which are also linked to executive remuneration. misstatements exceeds materiality.

Both in the current year and prior year, our auditor’s report On the basis of our risk assessments, together with our
includes key audit matters in relation to revenue recognition assessment of the group’s overall control environment, our
including management override, uncertain tax positions and judgement was that performance materiality was 75% (2022: 75%)
litigation. The risk associated with these matters remained of our planning materiality, namely £117 million (2022: £95 million).
consistent with the prior year.
Audit work at component locations for the purpose of obtaining
Our application of materiality audit coverage over significant financial statement accounts is
We apply the concept of materiality in planning and performing undertaken based on a percentage of total performance
the audit, in evaluating the effect of identified misstatements on materiality. The performance materiality set for each component
the audit and in forming our audit opinion. is based on the relative scale and risk of the component to the
group as a whole and our assessment of the risk of misstatement
Materiality at that component. In the current year, the range of performance
The magnitude of an omission or misstatement that, individually materiality allocated to components was £23 million to £35 million
or in the aggregate, could reasonably be expected to influence the (2022: £19 million to £30 million).
economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and extent Reporting threshold
of our audit procedures. An amount below which identified misstatements are considered
as being clearly trivial.
We determined materiality for the group to be £156 million (2022:
£126 million), which is 5% of Profit before tax (2022: 5% of Profit We agreed with the Audit Committee that we would report to them
before tax). We believe that Profit before tax provides the most all uncorrected audit differences in excess of £8 million (2022:
relevant performance measure to the stakeholders of the group. £6 million), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IMPERIAL BRANDS PLC continued

We evaluate any uncorrected misstatements against both the Corporate Governance Statement
quantitative measures of materiality discussed above and in light We have reviewed the directors’ statement in relation to going
of other relevant qualitative considerations in forming our opinion. concern, longer-term viability and that part of the Corporate
Governance Statement relating to the group and company’s
Other information compliance with the provisions of the UK Corporate Governance
The other information comprises the information included in the Code specified for our review by the Listing Rules.
annual report set out on pages 1 to 168, other than the financial
statements and our auditor’s report thereon. The directors are Based on the work undertaken as part of our audit, we have
responsible for the other information contained within the concluded that each of the following elements of the Corporate
annual report. Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated • Directors’ statement with regards to the appropriateness of
in this report, we do not express any form of assurance adopting the going concern basis of accounting and any
conclusion thereon. material uncertainties identified set out on page 128;
• Directors’ explanation as to its assessment of the company’s
Our responsibility is to read the other information and, in doing so, prospects, the period this assessment covers and why the period
consider whether the other information is materially inconsistent is appropriate set out on page 110 to 111;
with the financial statements or our knowledge obtained in the • Director’s statement on whether it has a reasonable expectation
course of the audit, or otherwise appears to be materially that the group will be able to continue in operation and meets its
misstated. If we identify such material inconsistencies or apparent liabilities set out on page 111;
material misstatements, we are required to determine whether • Directors’ statement on fair, balanced and understandable set
this gives rise to a material misstatement in the financial out on page 128;
statements themselves. If, based on the work we have performed, • Board’s confirmation that it has carried out a robust assessment
we conclude that there is a material misstatement of the other of the emerging and principal risks set out on page 128;
information, we are required to report that fact. • The section of the annual report that describes the review of
We have nothing to report in this regard. effectiveness of risk management and internal control systems
set out on page 100 to 101; and;
Opinions on other matters prescribed by the • The section describing the work of the audit committee set out
Companies Act 2006 on page 135 to 136.
In our opinion, the part of the directors’ remuneration report to be
audited has been properly prepared in accordance with the
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement
Companies Act 2006.
set out on page 168, the directors are responsible for the
In our opinion, based on the work undertaken in the course of preparation of the financial statements and for being satisfied that
the audit: they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
• the information given in the strategic report and the directors’ financial statements that are free from material misstatement,
report for the financial year for which the financial statements whether due to fraud or error.
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared In preparing the financial statements, the directors are responsible
in accordance with applicable legal requirements. for assessing the group and parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to
Matters on which we are required to report by exception going concern and using the going concern basis of accounting
In the light of the knowledge and understanding of the group and unless the directors either intend to liquidate the group or the
the parent company and its environment obtained in the course of parent company or to cease operations, or have no realistic
the audit, we have not identified material misstatements in the alternative but to do so.
strategic report or the directors’ report.
Auditor’s responsibilities for the audit of the
We have nothing to report in respect of the following matters in financial statements
relation to which the Companies Act 2006 requires us to report to Our objectives are to obtain reasonable assurance about whether
you if, in our opinion: the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
• adequate accounting records have not been kept by the parent
auditor’s report that includes our opinion. Reasonable assurance is
company, or returns adequate for our audit have not been
a high level of assurance, but is not a guarantee that an audit
received from branches not visited by us; or
conducted in accordance with ISAs (UK) will always detect a
• the parent company financial statements and the part of the
material misstatement when it exists. Misstatements can arise
Directors’ Remuneration Report to be audited are not in
from fraud or error and are considered material if, individually or
agreement with the accounting records and returns; or
in the aggregate, they could reasonably be expected to influence
• certain disclosures of directors’ remuneration specified by law
the economic decisions of users taken on the basis of these
are not made; or
financial statements.
• we have not received all the information and explanations we
require for our audit

176 Imperial Brands | Annual Report and Accounts 2023

Explanation as to what extent the audit was considered challenged the assumptions and judgements made by
capable of detecting irregularities, including fraud management in respect of significant one-off transactions in
Irregularities, including fraud, are instances of non-compliance the financial year and significant accounting estimates as
with laws and regulations. We design procedures in line with our referred to in the key audit matters section above. At a
responsibilities, outlined above, to detect irregularities, including component level, our full and specific scope component audit
fraud. The risk of not detecting a material misstatement due to team’s procedures included inquiries of component
fraud is higher than the risk of not detecting one resulting from management; journal entry testing; and focused testing,
error, as fraud may involve deliberate concealment by, for including in respect of the key audit matter of revenue
example, forgery or intentional misrepresentations, or through recognition. We also leveraged our data analytics platform in
collusion. The extent to which our procedures are capable of performing our work on the order to cash and purchase to pay
detecting irregularities, including fraud is detailed below. and inventory processes to assist in identifying higher risk
transactions for testing.
However, the primary responsibility for the prevention and • Where we identified potential non-compliance with laws and
detection of fraud rests with both those charged with governance regulations, we developed an appropriate audit response and
of the company and management. communicated directly with components impacted. Our
procedures involved: understanding the process and controls to
• We obtained an understanding of the legal and regulatory
identify non-compliance, inquiring of internal and external legal
frameworks that are applicable to the group and determined
counsel, performing an analysis of press reporting on these
that the most significant are frameworks which are directly
matters, understanding the fact patterns in each case and
relevant to specific assertions in the financial statements and
documenting the positions taken by management, and using
are those that relate to the reporting framework (UK adopted
specialists to support us in concluding on the matters identified.
international accounting standards, the Companies Act 2006
and the UK Corporate Governance Code) and the relevant tax A further description of our responsibilities for the audit of the
laws and regulations in the jurisdictions in which the group financial statements is located on the
operates. In addition, we concluded that there are certain
significant laws and regulations which may have an effect on Financial Reporting Council’s website at
the determination of the amounts and disclosures in the https://www.frc.org.uk/auditorsresponsibilities. This description
financial statements being the Listing Rules of the UK Listing forms part of our auditor’s report.
Authority, and those laws and regulations relating to health and
safety, employee matters and country-specific regulations on
Other matters we are required to address
tobacco control. • Following the recommendation from the audit committee, we
• We understood how the group is complying with those signed an engagement letter on 15 January 2020 which was
frameworks by making inquiries of management, internal audit, subsequently replaced on 23 August 2022. We were appointed by
those responsible for legal and compliance procedures and the the shareholders at the AGM on 5 February 2020 to audit the
company secretary. We corroborated our inquiries through our financial statements for the year ending 30 September 2020 and
review of board minutes, papers provided to the Audit subsequent financial periods.
Committee and attendance at meetings of the Audit Committee, The period of total uninterrupted engagement including
as well as consideration of the results of our audit procedures previous renewals and reappointments is four years, covering
across the group. the years ending 2020 to 2023.
• We assessed the susceptibility of the group’s financial
statements to material misstatement, including how fraud • The audit opinion is consistent with the additional report to the
might occur by meeting with management from various parts of audit committee.
the business to understand where it considered there was
susceptibility to fraud and assessing whistleblowing incidences Use of our report
for those with a potential financial reporting impact. Where This report is made solely to the company’s members, as a body, in
necessary, our procedures included our forensic investigation accordance with Chapter 3 of Part 16 of the Companies Act 2006.
specialists. We also considered performance targets and their Our audit work has been undertaken so that we might state to the
influence on efforts made by management to manage earnings company’s members those matters we are required to state to
or influence the perceptions of analysts. We considered the them in an auditor’s report and for no other purpose. To the fullest
programmes and controls that the group has established to extent permitted by law, we do not accept or assume responsibility
address risks identified, or that otherwise prevent, deter and to anyone other than the company and the company’s members
detect fraud; and how senior management monitors those as a body, for our audit work, for this report, or for the opinions we
programs and controls. Where the risk was considered to be have formed.
higher, we performed audit procedures to address each
identified fraud risk. These procedures included testing manual
journals and were designed to provide reasonable assurance
that the financial statements were free from fraud or error.
• Based on this understanding we designed our audit procedures Marcus Butler (Senior statutory auditor)
to identify non-compliance with such laws and regulations. For and on behalf of Ernst & Young LLP, Statutory Auditor
Our procedures involved inquiries of group management, those
London
charged with governance and legal counsel, as well as journal
13 November 2023
entry testing, with a focus on manual consolidation journals and
journals indicating significant or unusual transactions based on
our understanding of the business. Through our testing we

www.imperialbrandsplc.com 177
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

for the year ended 30 September 2023

£ million unless otherwise indicated Notes 2023 2022

Revenue 3 32,475 32,551
Duty and similar items (14,398) (15,644)
Other cost of sales (11,397) (10,869)
Cost of sales (25,795) (26,513)
Gross profit 6,680 6,038
Distribution, advertising and selling costs (2,338) (2,021)
Administrative and other expenses (940) (1,334)
Operating profit 3,402 2,683
Investment income 907 1,600
Finance costs (1,205) (1,717)
Net finance costs (298) (117)
Share of profit/(loss) of investments accounted for using the equity method 14 7 (15)
Profit before tax 4 3,111 2,551
Tax 7 (655) (886)
Profit for the year 2,456 1,665
Attributable to:
Owners of the parent 2,328 1,570
Non-controlling interests 128 95
Earnings per ordinary share (pence)
• Basic 9 252.4 165.9
• Diluted 9 250.8 164.7

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2023
£ million Notes 2023 2022
Profit for the year 2,456 1,665
Other comprehensive income
Exchange movements (508) 841
Exchange movements recycled to profit and loss upon disposal of subsidiaries – 190
Hyperinflation adjustment in the year 1 5 11
Current tax on hedge of net investments and quasi-equity loans (115) 148
Items that may be reclassified to profit and loss (618) 1,190
Net actuarial (losses)/gains on retirement benefits 23 (376) 76
Current tax relating to net actuarial losses on retirement benefits – 10
Deferred tax relating to net actuarial losses/(gains) on retirement benefits 135 (52)
Items that will not be reclassified to profit and loss (241) 34
Other comprehensive (expense)/income for the year, net of tax (859) 1,224
Total comprehensive income for the year 1,597 2,889
Attributable to:
Owners of the parent 1,484 2,778
Non-controlling interests 113 111
Total comprehensive income for the year 1,597 2,889

178 Imperial Brands | Annual Report and Accounts 2023

CONSOLIDATED BALANCE SHEET
at 30 September 2023

£ million Notes 2023 2022

Non-current assets
Intangible assets 11 16,944 17,777
Property, plant and equipment 12 1,617 1,659
Right of use assets 13 326 228
Investments accounted for using the equity method 14 55 56
Retirement benefit assets 23 414 826
Trade and other receivables 16 63 67
Derivative financial instruments 20/21 824 985
Deferred tax assets 22 653 439
20,896 22,037
Current assets
Inventories 15 4,522 4,140
Trade and other receivables 16 2,490 2,543
Current tax assets 7 112 334
Cash and cash equivalents 17 1,345 1,850
Derivative financial instruments 20/21 126 54
8,595 8,921
Total assets 29,491 30,958
Current liabilities
Borrowings 19 (1,499) (1,011)
Derivative financial instruments 20/21 (174) (54)
Lease liabilities 13 (81) (58)
Trade and other payables 18 (9,579) (9,506)
Current tax liabilities 7 (418) (307)
Provisions 24 (148) (203)
(11,899) (11,139)
Non-current liabilities
Borrowings 19 (7,882) (8,996)
Derivative financial instruments 20/21 (829) (1,072)
Lease liabilities 13 (268) (190)
Trade and other payables 18 (27) (10)
Deferred tax liabilities 22 (871) (961)
Retirement benefit liabilities 23 (807) (894)
Provisions 24 (266) (223)
(10,950) (12,346)
Total liabilities (22,849) (23,485)
Net assets 6,642 7,473
Equity
Share capital 25 97 103
Share premium and capital redemption 5,843 5,837
Retained earnings (674) (443)
Exchange translation reserve 755 1,363
Equity attributable to owners of the parent 6,021 6,860
Non-controlling interests 621 613
Total equity 6,642 7,473

The financial statements on pages 178 to 262 were approved by the Board of Directors on 13 November 2023 and signed on its behalf by:

Lukas Paravicini
Director

www.imperialbrandsplc.com 179
CONSOLIDATED FINANCIAL STATEMENTS continued

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2023

Equity
Share attributable
premium Exchange to owners Non-
Share and capital Retained translation of the controlling Total
£ million capital redemption earnings reserve parent interests equity
At 1 October 2022 103 5,837 (443) 1,363 6,860 613 7,473
Profit for the year – – 2,328 – 2,328 128 2,456
Exchange movements on retranslation of net assets – – – (942) (942) (15) (957)
Exchange movements on net investment hedges – – – 427 427 – 427
Exchange movements on quasi-equity loans – – – 22 22 – 22
Hyperinflation adjustment in the year – – 5 – 5 – 5
Current tax on hedge of net investments and quasi-equity loans – – – (115) (115) – (115)
Net actuarial losses on retirement benefits – – (376) – (376) – (376)
Deferred tax relating to net actuarial losses on retirement benefits – – 135 – 135 – 135
Other comprehensive expense – – (236) (608) (844) (15) (859)
Total comprehensive income/(expense) – – 2,092 (608) 1,484 113 1,597
Transactions with owners
Costs of employees’ services compensated by share schemes – – 41 – 41 – 41
Repurchase of shares (6) 6 (1,006) – (1,006) – (1,006)
Changes in non-controlling interests – – 1 – 1 (1) –
Deferred tax on share-based payments – – 1 – 1 – 1
Registration of put/call option – – (48) – (48) – (48)
Dividends paid – – (1,312) – (1,312) (104) (1,416)
At 30 September 2023 97 5,843 (674) 755 6,021 621 6,642

At 30 September 2021 103 5,837 (788) 200 5,352 588 5,940

Hyperinflation restatement to 1 October 2021 – – 22 – 22 – 22
At 1 October 2021 103 5,837 (766) 200 5,374 588 5,962
Profit for the year – – 1,570 – 1,570 95 1,665
Exchange movements on retranslation of net assets – – – 1,518 1,518 16 1,534
Exchange movements on net investment hedges – – – (649) (649) – (649)
Exchange movements on quasi-equity loans – – – (44) (44) – (44)
Exchange movements recycled to profit and loss upon disposal
of subsidiaries – – – 190 190 – 190
Hyperinflation adjustment in the year – – 11 – 11 – 11
Current tax on hedge of net investments and quasi-equity loans – – – 148 148 – 148
Net actuarial gains on retirement benefits – – 76 – 76 – 76
Current tax relating to net actuarial gains on retirement benefits – – 10 – 10 – 10
Deferred tax relating to net actuarial gains on retirement benefits – – (52) – (52) – (52)
Other comprehensive income – – 45 1,163 1,208 16 1,224
Total comprehensive income – – 1,615 1,163 2,778 111 2,889
Transactions with owners
Costs of employees’ services compensated by share schemes – – 29 – 29 – 29
Changes in non-controlling interests – – (3) – (3) 3 –
Deferred tax on share-based payments – – 2 – 2 – 2
Dividends paid – – (1,320) – (1,320) (89) (1,409)
At 30 September 2022 103 5,837 (443) 1,363 6,860 613 7,473

180 Imperial Brands | Annual Report and Accounts 2023

CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2023

£ million 2023 2022

Cash flows from operating activities
Operating profit 3,402 2,683
Dividends received from investments accounted for using the equity method 7 7
Depreciation, amortisation and impairment 632 660
Profit on disposal of non-current assets (39) –
Loss on disposal of subsidiaries 1 428
Post-employment benefits (29) (56)
Costs of employees’ services compensated by share schemes 31 29
Other non-cash items 40 37
Movement in provisions 21 39
Operating cash flows before movement in working capital 4,066 3,827
Increase in inventories (551) (195)
Decrease in trade and other receivables 46 89
Increase in trade and other payables 158 146
Movement in working capital (347) 40
Tax paid (590) (681)
Net cash flows generated from operating activities 3,129 3,186
Cash flows from investing activities
Interest received 10 8
Proceeds from the sale of non-current assets 71 53
Proceeds from sale of subsidiaries, net of cash disposed of (note 10) – 27
Purchase of non-current assets (325) (230)
Purchase of brands and operations (note 10/11) (183) (13)
Net cash used in investing activities (427) (155)
Cash flows from financing activities
Interest paid (417) (366)
Purchase of shares by Employee Share Ownership Trusts – (1)
Lease liabilities paid (92) (68)
Increase in borrowings 1,462 1,710
Repayment of borrowings (1,518) (2,476)
Cash flows relating to derivative financial instruments (64) 94
Repurchase of shares (1,006) –
Dividends paid to non-controlling interests (104) (89)
Dividends paid to owners of the parent (1,312) (1,320)
Net cash used in financing activities (3,051) (2,516)
Net (decrease)/increase in cash and cash equivalents (349) 515
Cash and cash equivalents at start of year 1,850 1,287
Effect of foreign exchange rates on cash and cash equivalents (156) 48
Cash and cash equivalents at end of year 1,345 1,850

www.imperialbrandsplc.com 181
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES Under the reverse stress test scenario, after considering mitigation
Basis of preparation actions including reductions of capital expenditure, dividend
The consolidated financial statements comprise the results of the payments and share buyback programme, we have modelled that
Company, a public company limited by shares, incorporated in a 38% EBITDA reduction would lead the Group to have sufficient
England and Wales, and its subsidiary undertakings, together with headroom until April 2024. The Group believes this reverse stress
the Group’s share of the results of its associates and joint test scenario to be remote given the relatively small impact on our
arrangements. The Company’s registered number is 3236483 and trading performance and bad debt levels during the COVID-19
its registered address is 121 Winterstoke Road, Bristol, BS3 2LL. pandemic, as well as the current political situation in Ukraine.
In this scenario Group would implement a number of mitigating
The consolidated financial statements have been prepared in actions including revoking the uncommitted dividend, pausing the
accordance with UK-adopted International Accounting Standards share buyback and reducing discretionary spend such as capex.
(“UK-adopted IAS”).
Based on its review of future cash flows covering the period
The financial statements have been prepared under the historical through to November 2024, and having assessed the principal
cost convention except where fair value measurement is required risks facing the Group, the Board is of the opinion that the Group as
under IFRS as described below in the accounting policies on a whole and Imperial Brands PLC have adequate resources to meet
financial instruments, and on a going concern basis. their operational needs from the date of this report through to
30 November 2024 and concludes that it is appropriate to prepare
The consolidated financial statements are presented in pounds the financial statements on a going concern basis.
sterling, the presentation currency of the Group, and the functional
currency of the Company. All values are rounded to the nearest Imperial Brands PLC (the Company) provides guarantees to a
one million (£1 million) except where otherwise indicated. number of subsidiaries under section 479A of the Companies Act
2006, whereby the subsidiaries, incorporated in the UK and Ireland,
Alternative performance measures are exempt from the requirements of the Act relating to the audit
Information on Alternative Performance Measures (APMs) is of individual accounts for the financial year ending 30 September
presented within the Supplementary Information section of 2023. See note VIII Guarantees of the Imperial Brands PLC financial
this document. statements for further details.
Basis for going concern The principal accounting policies, which have been applied
The Group’s policy is to ensure that we always have sufficient consistently other than where new policies (detailed below) have
capital markets funding and committed bank facilities in place to been adopted, are set out below.
meet foreseeable peak borrowing requirements.
Basis of consolidation
The Group recognises uncertainty of the external environment. Subsidiaries are those entities controlled by the Group. Control exists
During the period of the COVID-19 pandemic as well as during when the Group is exposed to, or has the rights to, variable returns
ongoing period of political uncertainty with regard to Ukraine and from its involvement with the entity and has the ability to affect
Russia, the Group effectively managed operations across the those returns through its power over the entity. The financial
world, and has proved it has an established mechanism to operate statements of subsidiaries are included in the consolidated financial
efficiently despite uncertainty. The Directors consider that a one- statements from the date that control commences until the date that
off discrete event with immediate cash outflow is of greatest control ceases. Where necessary, accounting policies of subsidiaries
concern to the short-term liquidity of the Group. are changed to ensure consistency with the policies adopted by
the Group.
The Directors have assessed the emerging and principal risks of
the business, including stress testing a range of different scenarios The acquisition method of accounting is used to account for the
that may affect the business. These included scenarios which purchase of subsidiaries. The excess of the value transferred to
examined the implications of: the seller in return for control of the acquired business together
with the fair value of any previously held equity interest in that
• A one-off discrete event resulting in immediate cash outflow
business over the Group’s share of the fair value of the identifiable
such as unexpected duty and tax payments, and/or other legal
net assets is recorded as goodwill.
and regulatory risks materialising, of c.£500m.
• A rapid and lasting deterioration to the Group’s profitability Intragroup transactions, balances and unrealised gains on
because markets become closed to tobacco products or there are transactions between Group companies are eliminated.
sustained failures to our tobacco manufacturing and supply Unrealised losses are also eliminated unless costs cannot
chains. These assumed a permanent reduction in profitability of be recovered.
15 per cent from 1 October 2023.

The scenario planning also considered mitigation actions

including reductions to capital expenditure, dividend payments
and share buyback programme. There are additional actions that
were not modelled but could be taken including other cost
mitigations such as staff redundancies, working capital
management, retrenchment of leases, and discussions with
lenders about capital structure.

182 Imperial Brands | Annual Report and Accounts 2023

Joint ventures Hyperinflation
The Group applies IFRS 11 to all joint arrangements. Under IFRS 11 The Turkish economy was designated hyperinflationary from
investments in joint arrangements are classified as either joint April 2022. The Group has applied IAS 29 Financial Reporting in
operations or joint ventures depending on the contractual rights Hyperinflationary Economies to its Turkish operations with effect
and obligations of each investor. The Group has assessed the from 1 October 2021. In accordance with IAS 21 The Effects of
nature of its joint arrangements and determined them to be joint Changes in Foreign Exchange Rates, the comparative figures
ventures. The financial statements of joint ventures are included for the year ended 30 September 2022 have not been modified.
in the Group financial statements using the equity accounting The adjustments required by IAS 29 are set out below.
method, with the Group’s share of net assets included as a single
line item entitled "Investments accounted for using the equity • Adjustment of historical cost non-monetary assets and
method". In the same way, the Group’s share of earnings is liabilities from their date of initial recognition to the balance
presented in the consolidated income statement below operating sheet date (1 October 2021) to reflect the changes in purchasing
profit entitled "Share of profit of investments accounted for using power of the currency caused by inflation, as measured by the
the equity method". official Consumer Price Index (CPI) published by the Turkish
Statistical Institute (TurkStat).
Foreign currency • Adjustment of the components of the income statement
Items included in the financial statements of each Group company and cash flow statement for the inflation index since their
are measured using the currency of the primary economic generation, with a balancing entry in the income statement and
environment in which the company operates (the functional a reconciling item in the cash flow statement, respectively.
currency). • Adjustment of the income statement to reflect the impact of
inflation on holding monetary assets and liabilities in local
The income and cash flow statements of Group companies using currency and where necessary.
non-sterling functional currencies are translated to sterling • The financial statements of the Group’s Turkish operations have
(the Group’s presentational currency) at average rates of exchange been translated into sterling at the closing exchange rate at
in each period. Assets and liabilities of these companies are 30 September 2023.
translated at rates of exchange ruling at the balance sheet date. • The impact of adjustments to non-monetary assets recognising
The differences between retained profits and losses translated at inflation from the adoption date to the closing balance sheet
average and closing rates are taken to reserves, as are differences date, on translation into sterling at the closing balance sheet
arising on the retranslation of the net assets at the beginning of rate has been recognised within other comprehensive income.
the year.
The TurkStat CPI index was 1,691.04 at 30 September 2023
Transactions in currencies other than a company’s functional (1,046.89 at 30 September 2022 and 570.66 at 30 September 2021).
currency are initially recorded at the exchange rate ruling at the The inflation index for the year is therefore 1.6153 (2022: 1.8345).
date of the transaction. Foreign exchange gains and losses The Turkish economy has been designated hyperinflationary
resulting from the settlement of such transactions and from the since April 2022, but the impact on the Group’s results
translation at exchange rates ruling at the balance sheet date of remains immaterial.
monetary assets and liabilities denominated in foreign currencies
are recognised in the consolidated income statement with Revenue recognition
exchange differences arising on trading transactions being For the Tobacco & Next Generation Products (Tobacco & NGP)
reported in operating profit, and those arising on financing business, revenue comprises the invoiced value for the sale of
transactions being reported in net finance costs unless as a result goods net of sales taxes, rebates and discounts. Revenue is based
of net investment hedging they are reported in other on the completion of performance obligations that constitute the
comprehensive income. delivery of goods. The performance obligation is recognised as
complete at the point in time when a Group company has
The Group designates as net investment hedges certain external delivered products to the customer, the customer has accepted the
borrowings and derivatives up to the value of the net assets of products and collectability of the related receivables is reasonably
Group companies that use non-sterling functional currencies after assured. The distribution business also recognises revenue
deducting permanent intercompany loans. Gains or losses on associated with logistics services, recognised on the basis of the
these hedges that are regarded as highly effective are transferred invoiced value for the provision of these services net of sales taxes,
to other comprehensive income, where they offset gains or losses rebates and discounts. The performance obligations associated
on translation of the net investments that are recorded in equity, with distribution services, which include fees for distributing
in the exchange translation reserve. certain third-party products, are linked to the successful
The Group’s financial results are principally exposed to euro and distribution of products for customers.
US dollar exchange rates, which are detailed in the table below. The Group recognises income arising from the licensing of
2023 2022 intellectual property, occurring in the ordinary course of business,
Closing Average Closing Average which is treated as revenue. Licensing revenue will be recognised
Foreign exchange rate versus GBP rate rate rate rate over the period of the licence. The licences granted are distinct
Euro 1.1545 1.1487 1.1325 1.1807 from other promises in the contract.
US dollar 1.2214 1.2264 1.1040 1.2813

www.imperialbrandsplc.com 183
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

For the Distribution business, revenue comprises the invoiced Uncertain tax positions are assessed and measured on an issue
value for the sale of goods and services net of sales taxes, rebates by issue basis within the jurisdictions where we operate using
and discounts when goods have been delivered or distribution management’s estimate of the most likely outcome. Where
services have been provided. The Distribution business only management determines that a greater than 50% probability exists
recognises commission revenue on purchase and sale that the tax authorities would accept the position taken in the tax
transactions in which it acts as a commission agent. Distribution return, amounts are recognised in the consolidated financial
and marketing commissions are included in revenue. Revenue is statements on that basis. Where the amount of tax payable or
recognised on products on consignment when these are sold by recoverable is uncertain, the Group recognises a liability or asset
the consignee. based on either: management’s judgement of the most likely
outcome; or, when there is a wide range of possible outcomes, a
Payments are made to both direct and indirect customers for rebates, probability weighted average approach. The Group recognises
discounts and other promotional activities. Direct customers are interest on late paid taxes as part of financing costs. The Group
those to which the Group supplies goods or services. Indirect recognises penalties, if applicable, as part of administrative and
customers are other entities within the supply chain to the end other expenses.
consumer. Rebates and discounts are deducted from revenue.
Where the contract with customers has an entitlement to variable Deferred tax is provided in full on temporary differences between
consideration due to the existence of retrospective rebates and the carrying amount of assets and liabilities in the financial
discounts, revenue is estimated based on the amount of statements and the tax base, except if it arises from the initial
consideration expected to be received. This estimation is a recognition of an asset or liability in a transaction, other than a
determination of the most likely amount to be received using business combination, that at the time of the transaction affects
all known factors including historic experience. Typically there neither accounting nor taxable profit or loss. Deferred tax is
is a high degree of certainty over the amount of retrospective provided on temporary differences arising on investments in
rebates/discounts paid due to relatively low year-on-year subsidiaries, except where the timing of the reversal of the
variations in the volume and pattern of product sales. As the temporary difference is controlled by the Group and it is probable
provision of distribution services typically involves product that the temporary difference will not reverse in the foreseeable
delivery tasks undertaken in a short period of time, revenue and future. Deferred tax assets are recognised only to the extent that it
any associated rebates and discounts relating to these services is probable that future taxable profits will be available against
do not normally span an accounting year end. which the assets can be realised. Deferred tax is determined using
the tax rates that have been enacted or substantively enacted at
Payments for promotional activities will also be deducted from the balance sheet date, and are expected to apply when the
revenue where the payments relate to goods or service that are deferred tax liability is settled or the deferred tax asset is realised.
closely related to or indistinct from associated sales of goods or
services to that customer. The calculated costs are accrued and Dividends
accounted for as incurred and matched as a deduction from the Final dividends are recognised as a liability in the period in which
associated revenues (i.e. excluded from revenues reported in the the dividends are approved by shareholders, whereas interim
Group’s consolidated income statement). dividends are recognised in the period in which the dividends
are paid.
Duty and similar items
Duty and similar items includes duty and levies having the Intangible assets – goodwill
characteristics of duty. In countries where duty is a production tax, Goodwill represents the excess of value transferred to the seller in
duty is included in revenue and in cost of sales in the consolidated return for control of the acquired business together with the fair
income statement. Duty is regarded as a sales tax and excluded value of any previously held equity interest in that business over
from revenue where: the Group’s share of the fair value of the identifiable net assets.

• duty becomes payable to the tax authority when the goods Goodwill is tested at least annually for impairment and carried at
are sold; cost less accumulated impairment losses. Any impairment is
• there is an obligation to change the sales price when a change recognised immediately in the consolidated income statement
in the rate of duty is imposed; and and cannot be subsequently reversed. If any negative goodwill
• there is a requirement to identify the duty separately on sales arises this is recognised immediately in the income statement.
information such as invoices. For the purpose of impairment testing, goodwill is allocated to
groups of cash-generating units that are expected to benefit from
Payments made in the USA under the Master Settlement
the business combination in which the goodwill arose.
Agreement are recognised in other cost of sales, for further
disclosure see note 29 contingent liabilities. Intangible assets – other
Other intangible assets are initially recognised in the consolidated
Taxes balance sheet at historical cost unless they are acquired as part of
Current tax is the expected tax payable on the taxable income for a business combination, in which case they are initially
the year, using tax rates enacted or substantively enacted at the
recognised at fair value. They are shown in the balance sheet at
balance sheet date, and any adjustments to tax payable in respect historical cost less accumulated amortisation and impairment.
of previous years. The Group does not operate a revaluation model and therefore
assets are not subject to ongoing revaluations.

184 Imperial Brands | Annual Report and Accounts 2023

These assets consist mainly of acquired trademarks, intellectual Cash and cash equivalents include cash in hand and deposits held
property, product development, concessions and rights, acquired on call, together with other short-term highly liquid investments.
customer relationships and computer software. The Davidoff
cigarette trademark is considered by the Directors to have an The Group transacts derivative financial instruments to manage
indefinite life based on the fact that it is an established the underlying exposure to foreign exchange and interest rate
international brand with global potential. Trademarks with risks. The Group does not transact derivative financial
indefinite lives are not amortised but are reviewed annually for instruments for trading purposes. Derivative financial instruments
impairment. The carrying value of Davidoff is subject to an annual are initially recorded at fair value plus any directly attributable
impairment review under the requirements of IAS 36 as the Group transaction costs. Derivative financial assets and liabilities are
does not currently foresee a limit to the period over which the included in the consolidated balance sheet at fair value, and
asset is expected to generate net cash inflows. The most recent include accrued interest receivable and payable where relevant.
assessment indicates that the carrying value is not impaired. However, as the Group has decided (as permitted under IFRS 9) not
to cash flow or fair value hedge account for its derivative financial
Intellectual property (including trademarks), product development, instruments, changes in fair values are recognised in the
supply agreements (including customer relationships) and consolidated income statement in the period in which they arise
computer software are amortised over their estimated useful lives unless the derivative qualifies and has been designated as a net
as follows: investment hedging instrument in which case the changes in fair
values, attributable to foreign exchange, are recognised in other
Intellectual property comprehensive income.
Intellectual property 5 – 30 years straight line
Collateral transferred under the terms and conditions of collateral
Supply agreements 3 – 15 years straight line appendix documents in respect of certain derivatives are netted
Software 3 – 10 years straight line off the carrying value of those derivatives in the consolidated
Product development 3 – 10 years straight line balance sheet.

Property, plant and equipment Right of use assets

Property, plant and equipment are recognised in the consolidated The Group has lease contracts relating to property and other assets
balance sheet at historical cost or at their initial fair value where (which predominantly relates to motor vehicles).
they are acquired as part of an acquisition, subject to depreciation
or impairment. The Group does not operate a revaluation model The Group recognises right of use assets, at the commencement
and therefore assets are not subject to ongoing revaluations. date of the lease (i.e. the date the underlying asset is available
for use). Right of use assets are measured at cost, less any
Land is not depreciated. Depreciation is provided on other accumulated depreciation and impairment losses, and adjusted for
property, plant and equipment so as to write down the initial cost any remeasurement of lease liabilities. The cost of right of use
of each asset to its residual value over its estimated useful life assets includes the amount of lease liabilities recognised, initial
as follows: direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless
Property up to 50 years straight line
the Group is reasonably certain to obtain ownership of the leased
Plant and equipment 2 – 20 years straight line/ asset at the end of the lease term, the recognised right of use asset
reducing balance
is depreciated on a straight-line basis over the shorter of its
Fixtures and motor vehicles 2 – 15 years straight line estimated useful life and the lease term. Right of use assets are
subject to impairment.
The assets’ residual values and useful lives are reviewed and,
if appropriate, adjusted at each balance sheet date. Lease liabilities
At the commencement date of the lease, the Group recognises
Financial instruments and hedging
lease liabilities measured at the present value of lease payments to
Receivables held under a hold to collect business model are stated
be made over the lease term. The lease payments include fixed
at amortised cost. Receivables held under a hold to sell business
payments less any lease incentives receivable, variable lease
model, which are expected to be sold via a non-recourse factoring
payments which depend on an index or a rate, and amounts
arrangement are separately classified as fair value through profit
expected to be paid under residual value guarantees. Lease payments
or loss, within trade and other receivables.
include the exercise of purchase options if determined reasonably
The calculation of impairment provisions is subject to an expected certain to be exercised and termination payments if the lease term
credit loss model, involving a prediction of future credit losses reflects the exercise of an option to terminate.
based on past loss patterns. The revised approach involves the
recognition of provisions relating to potential future impairments,
in addition to impairments that have already occurred. The expected
credit loss approach involves modelling of historic loss rates, and
consideration of the level of future credit risk. Expected loss rates
are then applied to the gross receivables balance to calculate the
impairment provision.

www.imperialbrandsplc.com 185
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

In calculating the present value of lease payments, the Group uses Provisions
the incremental borrowing rate, defined as the rate of interest that A provision is recognised in the consolidated balance sheet when
a lessee would have to pay to borrow over a similar term, and with the Group has a legal or constructive obligation as a result of a past
a similar security, the funds necessary to obtain an asset of a event, it is more likely than not that an outflow of resources will be
similar value to the right of use asset in a similar economic required to settle that obligation, and a reliable estimate of the
environment, at the lease commencement date if the interest amount can be made.
rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased A provision for restructuring is recognised when the Group
to reflect the accumulation of interest and reduced for the lease has approved a detailed formal restructuring plan, and the
payments made. In addition, the carrying amount of lease restructuring has either commenced or has been publicly
liabilities is remeasured if there is a modification, a change in the announced, and it is more likely than not that the plan will be
lease term, a change in the in-substance fixed lease payments or a implemented, and the amount required to settle any obligations
change in the assessment to purchase the underlying asset. arising can be reliably estimated. Future operating losses are not
provided for.
Lease payments on short-term leases and leases of low value
assets are recognised as expense on a straight line basis over Where there are a number of similar obligations, the likelihood
the lease term in cost of sales or distribution, advertising and that an outflow will be required in settlement is determined by
selling costs. considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
Short term leases, leases of low value assets and practical one item included in the same class of obligations may be small.
expedients applied
The Group has applied a number of practical expedients permitted Contingent liabilities
by IFRS 16. These include; Contingent liabilities are possible obligations that arise from
past events and whose existence will be confirmed only by the
• the exclusion of leases where the lease term ends within occurrence or non-occurrence of one or more uncertain future
12 months of the commencement of the lease or date of initial events, not wholly within the control of the Group. Contingent
application; and liabilities are not recognised, only disclosed, unless the possibility
• the exclusion of leases of low value assets, defined as those of of a future outflow of resources is considered remote, or where a
less than US$5,000. disclosure would seriously prejudice the position of the Group.

IFRS 16 was applied using the modified retrospective method, to Retirement benefit schemes
contracts that were previously identified as operating leases in For defined benefit schemes, the amount recognised in the
accordance with IAS 17 and IFRIC 4. The Group has elected to; consolidated balance sheet is the difference between the present
value of the defined benefit obligation at the balance sheet date
• apply hindsight in determining the lease term if the contract and the fair value of the scheme assets to the extent that they are
contains options to extend or terminate the lease; demonstrably recoverable either by refund or a reduction in future
• exclude initial direct costs from the measurement of the right of contributions. The defined benefit obligation is calculated annually
use asset; and by independent actuaries using the projected unit credit method.
• use a single discount rate to a portfolio of leases with reasonably The present value of the defined benefit obligation is determined
similar characteristics. by discounting the estimated future cash flows using interest
These elections were only applied on transition to IFRS 16 and rates of high quality corporate bonds that are denominated in
have not been applied to new leases following adoption of the currency in which the benefits will be paid, and that have
the standard. terms to maturity approximating to the terms of the related
pension obligation.
Inventories
Inventories are stated at the lower of cost and net realisable value. The service cost of providing retirement benefits to employees
Cost is determined using the first in first out (FIFO) method. during the year is charged to operating profit. Past service costs
The cost of finished goods and work in progress comprises raw are recognised immediately in operating profit, unless the changes
materials, direct labour, other direct costs and related production to the pension plan are conditional on the employees remaining in
overheads (based on normal operating capacity). Net realisable service for a specified period of time.
value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling
expenses. Inventory is considered for obsolescence or other
impairment issues and an associated provision is booked
where necessary.

Leaf tobacco inventory which has an operating cycle that exceeds

12 months is classified as a current asset, consistent with
recognised industry practice.

186 Imperial Brands | Annual Report and Accounts 2023

All actuarial gains and losses, including differences between Where the Group enters into a contract with a third party that
actual and expected returns on assets and differences that arise as contains an obligation to re-purchase its own shares for cash or
a result of changes in actuarial assumptions, are recognised another financial asset; a financial liability is recognised for the
immediately in full in the statement of comprehensive income for present value of the redemption amount. One example is an
the period in which they arise. An interest charge is made in the obligation under a forward contract to re-purchase shares in
income statement by applying the rate used to discount the Imperial Brands PLC for cash. The financial liability is recognised
defined benefit obligations to the net defined benefit liability of initially at the present value of the redemption amount, and is
the schemes. reclassified from equity. Subsequently, the financial liability is
measured in accordance with IFRS 9, and is revalued at subsequent
For defined contribution schemes, contributions are recognised as reporting points as appropriate. If the contract expires without
an employee benefit expense when they are due. delivery, the carrying amount of the financial liability is
reclassified to equity.
Share-based payments
The Group applies the requirements of IFRS 2 Share-Based New accounting standards
Payment Transactions to both equity-settled and cash-settled The following amendments to the accounting standards, issued
share-based employee compensation schemes. The majority of by the IASB or International Financial Reporting Standards
the Group’s schemes are equity-settled. Interpretations Committee (IFRS IC) and endorsed for use in the
Equity-settled share-based payments are measured at fair value at UK, have been adopted by the Group from 1 October 2022 with no
the date of grant and are expensed over the vesting period, based impact on the Group’s consolidated results, financial position
on the number of instruments that are expected to vest. For plans or disclosures:
where vesting conditions are based on total shareholder returns, • Amendments to IAS 12 International Tax Reform – Pillar Two
the fair value at the date of grant reflects these conditions. model rules. (The Group has applied the mandatory exception
Earnings per share and net revenue vesting conditions are under IAS 12 in relation to recognising and disclosing
reflected in the estimate of awards that will eventually vest. For information about deferred tax assets and liabilities related to
cash-settled share-based payments, a liability equal to the portion Pillar Two income taxes.)
of the services received is recognised at its current fair value at
each balance sheet date. Where applicable the Group recognises New accounting standards and interpretations not yet
the impact of revisions to original estimates in the consolidated in issue
income statement, with a corresponding adjustment to equity for There are also a number of other amendments and clarifications
equity-settled schemes and current liabilities for cash-settled to IFRS, effective in future years, none of which are expected
schemes. Fair values are measured using appropriate valuation to significantly impact the Group’s consolidated results or
models, taking into account the terms and conditions of financial position.
the awards.
2. ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group funds the purchase of shares to satisfy rights to shares
The Group makes estimates and judgements associated with
arising under share-based employee compensation schemes.
accounting entries which will be affected by future events.
Shares acquired to satisfy those rights are held in Employee
Estimates and judgements are continually evaluated based on
Share Ownership Trusts. On consolidation, these shares are
historical experience, and other factors, including current
accounted for as a deduction from equity attributable to owners of
information that helps form a forward-looking view of expected
the parent. When the rights are exercised, equity is increased by
future outcomes.
the amount of any proceeds received by the Employee Share
Ownership Trusts. Estimates involve the determination of the quantum of accounting
balances to be recognised. Judgements typically involve decisions
Treasury shares such as whether to recognise an asset or liability.
When the Company purchases its own equity share capital
(treasury shares), the consideration paid, including any directly The actual amounts recognised in the future may deviate from
attributable incremental costs (net of income taxes), is deducted these estimates and judgements.
on consolidation from equity attributable to owners of the parent
until the shares are reissued or disposed of. When such shares are Estimates
subsequently sold or reissued, any consideration received, net of Significant estimates
any directly attributable incremental transaction costs and the Companies are required to state whether estimates have a
related income tax effects, increases equity attributable to owners significant risk of a material adjustment to the carrying amounts
of the parent. When such shares are cancelled they are transferred of assets and liabilities within the next financial year. We have
to the capital redemption reserve. reviewed the items below where estimation uncertainty exists.
While a number of these areas do involve estimation of the
carrying value of assets or liabilities that are potentially significant
within the context of the financial statement. The Group considers
the probability of a significant risk of material adjustment to be
low. None of these estimates are expected to present a material
adjustment to the carrying amount of assets and liabilities in the
next financial year. Therefore, no significant estimates are
required to be disclosed.

www.imperialbrandsplc.com 187
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Other estimates Corporate income taxes

Other estimates involve other uncertainties, such as those Where tax liabilities have been judged to exist, estimation is often
carrying lower risk, which have a smaller potential impact or required to determine the potential future tax payments. The
would be expected to crystallise over a longer timeframe than a Group is subject to tax in numerous jurisdictions and significant
significant estimate. These items, listed below, are only disclosed judgement is required in determining the provision for tax. There
where this provides material relevant information. are many transactions and calculations for which the ultimate tax
determination is uncertain. The Group recognises provisions for
Determination of useful economic life of intangible assets tax based on estimates of the taxes that are likely to become due.
For non-goodwill intangible assets, there is a need to estimate the Where the final tax outcome is different from the amounts that
useful economical life of each asset. This includes determining were initially recorded, such differences will impact the current
whether the asset has an indefinite useful economic life, or not. income tax and deferred tax provisions in the period in which
The Davidoff trademark has a significant market share and such determination is made. Consideration of the valuation
positive cash flow growth expectations. There are no regulatory or estimates related to tax provisions is given in note 7 to these
contractual restrictions on the use of this trademark, and there are financial statements.
no plans to significantly redirect resources elsewhere which
would reduce the value of this asset. Consequently, in the view of Other legal proceedings and disputes
management, the Davidoff trademark does not have a foreseeable Where a liability is determined there can be a degree of estimation
and definite end to its ability to generate future cash flows and of the potential level of damages expected. Key areas of estimation
hence it is not amortised. The carrying value of Davidoff is subject uncertainty include consideration as to the expected future
to an annual impairment review under the requirements of IAS 36. amount to be paid out in the event the claim succeeds. In some
The most recent assessment indicates that the carrying value is situations where a probability risk calculation is required to
not impaired. determine the amount of an associated provision, both the
quantum of future payments and the probability of those
Amortisation and impairment of intangible assets payments crystallising needs to be considered, both factors having
For non-indefinite life assets, which are amortised, the useful a degree of uncertainty. More detail as to the considered position
economic life and recoverable amounts are estimated based upon of these claims is given in note 24 and note 29 of the financial
the expectation of the time period during which an intangible statements. To the extent that the Group’s assessments at any
asset will support future cash flows, and the quantum of those time do not reflect subsequent developments or the eventual
cash flows. Due to estimation uncertainties the useful economic outcome of any claim, its future financial statements may be
lives and associated amortisation rates have to be reviewed and materially affected, with a favourable or adverse impact upon the
revised where necessary. In addition, where there are indications Group’s operating profit, financial position and liquidity.
that the current carrying value of an intangible asset is greater
than its recoverable amount, an impairment to the carrying value Restructuring provisions
of the asset may be required. Factors considered important that The Group holds restructuring provisions where appropriate in
could trigger an impairment review of intangible assets include respect of estimated future economic outflows which arise due to
the following: past events. Estimates are based on information available at the
balance sheet date. Actual outflows may not occur as anticipated,
• significant underperformance relative to historical or projected and estimates may prove to be incorrect, leading to further charges
future operating results; or releases of provisions as circumstances dictate. These provisions
• significant changes in the manner of the use of the acquired cover the cost of factory closures, scaling down of capacity and
assets or the strategy for the overall business; and other structural changes to the business. These programmes
• significant negative industry or economic trends. are run as discrete projects with controls over the expected costs
The complexity of the estimation process and issues related to the and the associated accounting impacts. The calculation of
assumptions, risks and uncertainties inherent in the application of restructuring provisions includes estimation challenges relating
the Group’s accounting estimates in relation to intangible assets to asset remediation costs, the valuation of disposals and
can affect the amounts reported in the financial statements, termination costs. More details relating to the estimates
especially the estimates of the expected useful economic lives and associated with these restructuring programmes can be
the carrying values of those assets. If business conditions found in notes 5 and 24.
significantly change it is possible that materially different
amounts could be reported in the Group’s financial statements in
future periods. Indefinite life intangible assets, including goodwill,
are subject to annual impairment testing where an assessment of
the carrying value of the asset against its recoverable amount is
undertaken. There are long term uncertainties associated with
estimating the value of the recoverable amount, particularly with
regard to long term cash flow growth rates which are influenced
by the future size and shape of the tobacco sector. While long term
growth rates currently used in impairment assessments are based
on current best estimates of future performance, there may be
changes in these assumptions when conducting impairment tests
in subsequent years. Details of goodwill and intangible asset
impairment assessments are included in note 11.

188 Imperial Brands | Annual Report and Accounts 2023

Judgements Control of Logista
Paragraph 122 of IAS 1 requires disclosure of judgements made by A key judgement relates to whether the Group has effective control
management in applying an entity’s accounting policies, other than of Logista sufficient that the Group can consolidate this entity
those relating to estimation uncertainty. Paragraph 125 of IAS 1 within its Group accounts in line with the requirements of IFRS 10
requires more wide-ranging disclosures of judgements that depend Consolidated Financial Statements. The Group holds 50.01% of the
on management assumptions about the future, and other major voting shares. The Group has reviewed its control of Logista and
sources of estimation uncertainty ("significant judgements"). that it is appropriate to consolidate this entity in line with the
requirements of IFRS 10 Consolidated Financial Statements. The
Corporate income taxes Group continues to have Director presence on the Board of Logista,
Judgement is involved in determining whether the Group is representing 5 out of 12 Directors. The Group has powers to control
subject to a tax liability or not in line with tax law. The Group is as set out in the Relationship Framework Agreement which
subject to income tax in numerous jurisdictions and significant specifies certain areas of operation reserved for shareholder
judgement is required in determining whether there is a liability approval and through these measures the Group is able to exercise
requiring a provision for tax. Recognition of tax liabilities in control of Logista. The Group has therefore concluded that it
situations where there is uncertainty is based on precedent in continues to be appropriate to recognise Logista as a fully
similar tax cases and external advice as to whether challenges by consolidated subsidiary.
tax authorities are likely to result in future tax payments being
made. The recognition of a tax liability involves consideration of Climate change
the probability of tax authorities accepting the position taken in The Group has a designated program to manage and mitigate
the tax return and there is therefore some uncertainty. climate-related risks. The effect of climate change is not
considered to have a material effect on the estimates in the
Deferred tax assets financial statements. Governmental and societal responses to
Deferred tax assets are recognised for deductible temporary climate change risks are still developing and consequently
differences, unused tax losses and unused tax credits to the extent financial statements cannot capture all possible future outcomes
that it is probable that taxable profit will be available against which as these are not yet known or don’t have sufficient certainty
the temporary differences, losses and credits can be utilised. to be taken into account when determining asset and liability
Significant management judgement is required to determine the valuations and the timing of future cash flows under the
amount of deferred tax assets that can be recognised, based upon requirements of UK-adopted International Accounting Standards.
the likely timing and the level of future taxable profits, together Please refer to the following sections for further discussion on the
with future tax planning strategies. The Group has determined impact of climate change relating to going concern assumptions
that it cannot recognise deferred tax assets on the temporary in note 1, intangible assets impairment assumptions in note 11 and
differences, tax losses and tax credits carried forward for certain recoverability of deferred tax assets in note 22.
subsidiaries. Further details of the estimates related to deferred
taxes are given in note 22 to these financial statements.

Legal proceedings and disputes

The Group reviews outstanding legal cases following
developments in the legal proceedings at each balance sheet date,
considering the nature of the litigation, claim or assessment; the
legal processes and potential level of damages in the jurisdiction
in which the litigation, claim or assessment has been brought; the
progress of the case (including progress after the date of the
financial statements but before those statements are issued); the
opinions or views of legal counsel and other advisers; experience
of similar cases; and any decision of the Group’s management as
to how it will respond to the litigation, claim or assessment.
Judgement is required as to whether a liability exists. A provision
will only be recognised where it is probable that the Group will be
required to settle a claim.

www.imperialbrandsplc.com 189
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

3. SEGMENT INFORMATION
Imperial Brands comprises two distinct businesses – Tobacco & NGP and Distribution. The Tobacco & NGP business comprises the
manufacture, marketing and sale of Tobacco & NGP and Tobacco & NGP-related products, including sales to (but not by) the Distribution
business. The Distribution business comprises the distribution of Tobacco & NGP products for Tobacco & NGP product manufacturers,
including Imperial Brands, as well as a wide range of non-Tobacco & NGP products and services. The Distribution business is run on an
operationally neutral basis ensuring all customers are treated equally, and consequently transactions between the Tobacco & NGP and
Distribution businesses are undertaken on an arm’s length basis reflecting market prices for comparable goods and services.

On 1 October 2022 the Group reorganised the structure of the Europe and AAA regions. The Central and Eastern Europe cluster, which
includes operations in Poland, Czech Republic, Ukraine, Slovakia, Hungary, Azerbaijan, Armenia, Georgia and Slovenia, moved from the
Europe region to the AAA region. The AAA region has been re-named AAACE. The managerial and internal reporting structures of the
regions have been revised to reflect the new structure. Following the introduction of these changes we have revised our segmental
reporting as required under IFRS 8. The comparative figures below have been restated accordingly

The function of the Chief Operating Decision Maker (defined in IFRS 8), which is to review performance and allocate resources, is performed
by the Board and the Chief Executive, who are regularly provided with information on the Group's segments. This information is used as the
basis of the segment revenue and profit disclosures provided below. The main profit measure used by the Board and the Chief Executive is
adjusted operating profit. Segment balance sheet information is not provided to the Board or the Chief Executive.

The Group's reportable segments are Europe, Americas, Africa, Asia, Australasia and Central and Eastern Europe (AAACE) and Distribution.
Operating segments are comprised of geographical groupings of business markets. The main Tobacco & NGP business markets within the
Europe, Americas and AAACE reportable segments are:

Europe – United Kingdom, Germany, Spain, France, Italy, Greece, Sweden, Norway, Belgium and the Netherlands.

Americas – United States.

AAACE – Australia, Japan, Saudi Arabia, Taiwan, Poland, Czech Republic, Ukraine, Slovakia, Hungary, Slovenia and our African markets
including Algeria and Morocco.

Tobacco & NGP

2023 2022
Tobacco & Tobacco &
£ million unless otherwise indicated Tobacco NGP NGP Tobacco NGP NGP
Revenue 22,114 299 22,413 23,232 224 23,456
Net revenue 7,747 265 8,012 7,585 208 7,793
Operating profit/(loss) 3,262 (156) 3,106 2,599 (127) 2,472
Adjusted operating profit 3,583 3,441
Adjusted operating margin % 44.7 44.2

Distribution
£ million unless otherwise indicated 2023 2022
Revenue 10,819 9,756
Distribution gross profit 1,466 1,046
Operating profit 298 212
Adjusted operating profit 306 254
Adjusted operating margin % 20.9 24.3

190 Imperial Brands | Annual Report and Accounts 2023

Revenue
2022
2023 (restated)
Total External Total External
£ million revenue revenue revenue revenue
Tobacco & NGP
Europe 11,749 10,992 12,052 11,391
Americas 3,700 3,700 3,756 3,756
AAACE 6,964 6,964 7,648 7,648
Total Tobacco & NGP 22,413 21,656 23,456 22,795
Distribution 10,819 10,819 9,756 9,756
Eliminations (757) – (661) –
Total Group 32,475 32,475 32,551 32,551

The eliminations all relate to Tobacco & NGP sales to Distribution.

Tobacco & NGP net revenue

2022
2023 (restated)
£ million Tobacco NGP Total Tobacco NGP Total
Europe 3,020 220 3,240 2,883 156 3,039
Americas 2,778 34 2,812 2,784 42 2,826
AAACE 1,949 11 1,960 1,918 10 1,928
Total Tobacco & NGP 7,747 265 8,012 7,585 208 7,793

Adjusted operating profit and reconciliation to profit before tax

2022
£ million 2023 (restated)
Tobacco & NGP
Europe 1,482 1,447
Americas 1,257 1,179
AAACE 844 815
Total Tobacco & NGP 3,583 3,441
Distribution 306 254
Eliminations (2) (1)
Adjusted operating profit 3,887 3,694
Russia, Ukraine and associated markets – Tobacco & NGP (4) (399)
Amortisation and impairment of acquired intangibles – Tobacco & NGP (339) (323)
Amortisation of acquired intangibles – Distribution (8) (26)
Restructuring costs – Tobacco & NGP – (197)
Fair value adjustment and impairment of other financial assets – Tobacco & NGP (36) (37)
Loss on disposal of subsidiaries – Tobacco & NGP (1) (13)
Loss on disposal of subsidiaries – Distribution – (16)
Acquisition and disposal costs – Tobacco & NGP – (5)
Excise tax provision – Tobacco & NGP – 9
Charges related to legal provisions – Tobacco & NGP (85) –
Structural changes to defined benefit pension schemes – Tobacco & NGP (12) (4)
Operating profit 3,402 2,683
Net finance costs (298) (117)
Share of profit/(loss) of investments accounted for using the equity method 7 (15)
Profit before tax 3,111 2,551

www.imperialbrandsplc.com 191
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Other information
2022
2023 (restated)
Additions Depreciation Additions Depreciation
to property, and to property, and
plant and software plant and software
£ million equipment amortisation equipment amortisation
Tobacco & NGP
Europe 69 79 44 76
Americas 36 20 31 25
AAACE 46 41 41 52
Total Tobacco & NGP 151 140 116 153
Distribution 40 41 29 32
Total Group 191 181 145 185

Additional geographic analysis

External revenue and non-current assets are presented for individually significant countries. The geographical analysis is based on country
of origin. The Group’s products are sold in over 120 countries.

2022
2023 (restated)
External Non-current External Non-current
£ million revenue assets revenue assets
UK 3,926 148 4,286 149
Germany 4,142 3,245 4,238 3,280
France 3,428 2,350 3,215 2,371
USA 3,657 5,646 3,726 6,430
Other 17,322 7,553 17,086 7,490
Total Group 32,475 18,942 32,551 19,720

Non-current assets comprise intangible assets, property, plant and equipment, right of use assets and investments accounted for using the
equity method. Note the comparative figure has been restated to include right of use assets.

4. PROFIT BEFORE TAX

Profit before tax is stated after charging/(crediting):

£ million 2023 2022

Raw materials and consumables used 773 857
Changes in inventories of finished goods – Tobacco & NGP 2,630 2,660
Changes in inventories of finished goods – Distribution 7,994 7,350
Depreciation and impairment of fixed assets 153 235
Amortisation and impairment of intangible assets and investments in associates 394 406
Acquisition and disposal costs – 5
Expenses relating to short-term leases 4 3
Expenses relating to low value asset leases 1 2
Depreciation and impairment of right of use assets 85 74
Net foreign exchange (gains)/losses (11) 75
Write down of inventories 40 20
Profit on disposal of non-current assets 39 –
Write back of trade receivables (5) (3)

Analysis of fees payables to Ernst & Young LLP and its associates
£ million 2023 2022
Parent Company and consolidated financial statements 2.7 2.2
The Company’s subsidiaries 6.1 5.6
Total audit fees 8.8 7.8
Audit-related assurance services 0.5 0.4
Total audit-related fees 9.3 8.2
Other assurance services 0.5 0.6
Total non-audit fees 0.5 0.6
Total auditor’s remuneration 9.8 8.8

192 Imperial Brands | Annual Report and Accounts 2023

5. RESTRUCTURING COSTS
£ million 2023 2022
Employment related – 103
Asset impairments – 70
Other charges – 24
– 197

Analysed by workstream:

2023 2022
Cumulative Cumulative cash
£ million Costs Cash spend cash spend Costs Cash spend spend
2021 Strategic review programme – 61 165 197 56 104
Other – 37 1,276 – 35 1,239
– 98 1,441 197 91 1,343

Restructuring projects involve significant one-off costs that are incurred in integrating acquired businesses and in major rationalisation
and optimisation initiatives together with their related tax effects.

As these projects are not part of business as usual, any costs incurred are classified as restructuring costs and are included within
administrative and other expenses in the consolidated income statement and treated as adjusting items.

No accounting charges are now expected to be recognised in relation to historic restructuring programmes, however there remains some
ongoing cash costs to be incurred which are not expected to be in excess of existing provisions.

6. DIRECTORS AND EMPLOYEES

Employment costs
£ million 2023 2022
Wages and salaries 882 642
Social security costs 186 142
Other pension costs (note 23) 41 64
Share-based payments (note 26) 31 29
1,140 877

Operating executive (excluding executive directors)

£ million 2023 2022
Base salary 4.7 4.3
Benefits 0.9 0.7
Pension salary supplement 0.7 0.7
Bonus 4.8 5.3
Termination payments 2.1 5.8
LTIP annual vesting1 7.8 1.5
21.0 18.3
1. Share plans vesting represent the value of LTIP awards (inclusive of Recruitment Awards) where the performance periods ends in the year.
Note: aggregate remuneration paid to or receivable by Executive directors, Non-Executive Directors and members of the Operating Executive for qualifying services in accordance with IAS 24,
which includes National Insurance and similar charges was £39,323,966 (2022: £31,671,710).

Key management compensation1

£ million 2023 2022
Short term employee benefits 17.0 17.6
Post-employment benefits – 0.1
Termination payments 2.1 5.7
Share based payments (in accordance with IAS 24) 15.0 3.6
34.1 27.0
1. Key management includes Directors, members of the Executive Committee and the Company Secretary.
Details of Directors' emoluments and interests, and of key management compensation which represent related-party transactions requiring disclosure under IAS 24, are provided within the
Directors' Remuneration Report. The Directors' Remuneration Report, on pages 142-163 includes details on salary, benefits, pension and share plans. These disclosures form part of the
financial statements.

www.imperialbrandsplc.com 193
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Number of people employed by the group during the year

2023 2022
At 30 At 30
September Average September Average
Tobacco & NGP 18,800 19,100 19,900 22,600
Distribution 6,400 6,400 5,800 6,000
25,200 25,500 25,700 28,600

Number of people employed by the group by location during the year

2023 2022
At 30 At 30
September Average September Average
UK and European Union 12,200 11,900 14,000 14,200
Americas 4,700 5,100 5,700 7,800
Rest of the World 8,300 8,500 6,000 6,600
25,200 25,500 25,700 28,600

7. TAX
The major components of income tax expense for the years ended 30 September 2023 and 2022 are:
£ million 2023 2022
UK current tax
Current year (credited)/charged to the consolidated income statement (55) 217
Current year charged/(credited) to consolidated other comprehensive income 115 (158)
Total current year UK current tax 60 59
Adjustments in respect of prior years charged to the consolidated income statement 15 149
Total UK current tax 75 208

Overseas current tax

Current year charged to the consolidated income statement 620 670
Total current year overseas current tax 620 670
Adjustments in respect of prior years charged/(credited) to the consolidated income statement 233 (116)
Total overseas current tax 853 554

Total current tax charged to the consolidated statement of other comprehensive income 928 762

£ million 2023 2022

UK current tax
Current year (55) 217
Adjustments in respect of prior years 15 149
Overseas current tax
Current year 620 670
Adjustments in respect of prior years 233 (116)
Total current tax 813 920

Deferred tax
Relating to origination and reversal of temporary differences (158) (34)
Total tax charged to the consolidated income statement 655 886

194 Imperial Brands | Annual Report and Accounts 2023

£ million 2023 2022
Tax related to items recognised in consolidated other comprehensive income during the year:
Current tax on hedge of net investment and quasi-equity loans 115 (148)
Current tax on actuarial gains and losses – (10)
Total current tax 115 (158)

Deferred tax on actuarial gains and losses (135) 52

Deferred tax on hyperinflation adjustment 1 3
Total deferred tax (134) 55

Total tax credited to consolidated other comprehensive income (19) (103)

£ million 2023 2022

Tax related to items recognised in equity during the year:
Deferred tax on share-based payments (1) (2)
Total tax credited to equity (1) (2)

Factors affecting the tax charge for the year

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the average UK corporation tax rate of
22.0% (2022: 19.0%) as follows:

£ million 2023 2022

Profit before tax 3,111 2,551
Tax at the UK corporation tax rate of 22.0% (2022: 19.0%) 684 484
Tax effects of:
Differences in effective tax rates on overseas earnings 24 118
Movement in provision for uncertain tax positions 211 (78)
Remeasurement of deferred tax balances arising from changes in tax rates – 4
Remeasurement of previously recognised deferred tax assets (6) (1)
Increase in unrecognised deferred tax assets 1 14
Deferred tax on unremitted earnings 5 (26)
Share of (profit)/loss of investments accounted for using the equity method (2) 3
Non-deductible expenses 24 18
(Non-taxable gains)/non-deductible losses on net foreign exchange on financial instruments (122) 145
Recognition of deferred tax assets (212) –
Exempt losses on Russian and associated markets exit – 88
Provision for state aid tax recoverable – 101
Adjustments in respect of prior years 48 16
Total tax charged to the consolidated income statement 655 886

Differences in effective tax rates on overseas earnings represents the impact of worldwide profits being taxed at rates different from 22.0%.

The remeasurement of deferred tax balances arising from changes in tax rates for the year is £nil (2022: £4 million).

During the year the Group has increased the provision for deferred tax on unremitted earnings by £5 million (2022: £26 million decrease).
The tax will arise on the distribution of profits through the Group and on planned Group simplification.

www.imperialbrandsplc.com 195
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Movement on the current tax account

£ million 2023 2022
At 1 October 27 82
Charged to the consolidated income statement (813) (920)
(Charged)/credited to other comprehensive income (115) 158
Cash paid 590 681
Exchange movements 6 (7)
Balance sheet reclassification (1) 33
At 30 September (306) 27

The cash tax paid in the year is £223 million lower than the current tax charge (2022: £239 million lower). This arises as a result of timing
differences between the accrual of income taxes and the actual payment of cash and the movement in the provision for uncertain
tax positions.

Analysis of current tax account

£ million 2023 2022
Current tax assets 112 334
Current tax liabilities (418) (307)
(306) 27

Uncertain tax positions

As an international business the Group is exposed to uncertain tax positions and changes in legislation in the jurisdictions in which it
operates. The Group’s uncertain tax positions principally include cross border transfer pricing, interpretation of new or complex tax
legislation and tax arising on the valuation of assets.

Provisions arising from uncertain tax positions taken in the calculation of tax assets and liabilities are included within current tax
liabilities. At 30 September 2023 the total value of these provisions excluding compensating assets under mutual agreement procedure was
£261 million (2022: £215 million excluding compensating assets, 2022: £148 million including compensating assets). The assessment of
uncertain tax positions is subjective and significant management judgement is required. This judgement is based on current interpretation
of legislation, management experience and professional advice. Until matters are finally concluded it is possible that amounts ultimately
paid will be different from the amounts provided.

Management have assessed the Group’s provision for uncertain tax positions and have concluded that apart from the matters referred to
below the provisions in place are not material individually or in aggregate, and that a reasonably possible change in the next financial year
would not have a material impact on the results of the Group.

French tax litigation

The Group has an ongoing challenge from the French tax authorities, which is now in litigation, and could lead to additional liabilities of
£254 million including tax, interest, and penalties. The challenge concerns the valuation placed on the shares of Altadis Distribution France
(now known as Logista France) following an intragroup transfer of shares in October 2012 and the tax consequences flowing from a
potentially higher value that is argued for by the tax authorities. In May 2023 the Administrative Tribunal of Montreuil issued its decision,
ruling in favour of the French tax authorities. In July 2023 the Group appealed to the Administrative Court of Appeal of Paris. Whilst the
Group has appealed, in the light of the Administrative Tribunal of Montreuil’s decision, having subsequently reassessed the probability of a
successful appeal, the Group has now determined it is appropriate to increase the provision for uncertain tax positions to £180 million
(2022: £42 million).

State and UK CFC

In April 2019, the EU Commission’s final decision regarding its investigation into the UK’s Controlled Foreign Company regime was
published. It concludes that the legislation up until December 2018 does partially represent state aid. The UK Government has appealed to
the European Court seeking annulment of the EU Commission’s decision. The Group, along with a number of UK corporates, has made a
similar application to the European Court.

Based on the Commission’s decision and despite the appeals, the UK Government was obliged to recover state aid received. Whilst the
Group’s position remains that no state aid has been received, in February 2021 a recovery charging notice for £101 million was issued to the
Group by HMRC and has since been paid.

In June 2022 the European General Court rejected the appeals. Whilst this decision has been appealed to the Court of Justice of the
European Union (CJEU) and the appeal may possibly be successful, in the light of the European General Court’s decision, during 2022 the
Group reassessed recoverability of the £101 million previously recorded as a receivable and determined it was appropriate to provide in full.

196 Imperial Brands | Annual Report and Accounts 2023

Transfer pricing
The Group has been subject to tax audits relating to transfer pricing matters in several jurisdictions, principally UK, France and Germany.
The Group estimates the potential gross level of exposure relating to transfer pricing issues is approximately £100 million (2022: £200
million). The Group holds a provision of £68 million excluding compensating assets (2022: £121 million excluding compensating assets,
£54 million including compensating assets) in respect of these items.

In December 2021 the Group concluded a transfer pricing audit with the French tax authorities. In September 2022 the Group concluded
transfer pricing audits with the UK and German tax authorities. Settlements of the French and UK audits were made during 2022.
Settlement of the German audit was made during 2023. In September 2023 an additional separate transfer pricing audit was opened
by the German tax authorities.

The Group believes the transfer pricing provision held above appropriately provides for this and other transfer pricing issues.

French branch tax

In December 2021 the Group received assessments from the French tax authorities concerning the intragroup financing of the French
branch of Imperial Tobacco Limited. In February 2022 the Group appealed against the assessment. In September 2022 the French tax
authorities opened a further tax audit into this matter. Following discussions with the French tax authorities a settlement proposal
covering all years was made for £48 million including interest, for which a provision was made in 2022 and has since been settled in 2023.
The Group holds a provision of £nil (2022: £48 million) in respect of this matter.

8. DIVIDENDS
Distributions to ordinary equity holders
£ million 2023 2022 2021

Paid interim of 43.18 pence per share (2022: 42.54 pence, 2021: 42.12 pence)
• Paid June 2021 – – 199
• Paid September 2021 – – 199
• Paid December 2021 – – 458
• Paid June 2022 – 202 –
• Paid September 2022 – 202 –
• Paid December 2022 – 464 –
• Paid June 2023 196 – –
• Paid September 2023 195 – –
Interim dividend paid 391 868 856
Proposed third interim of 51.82 pence per share (2022: 49.31 pence, 2021: 48.48 pence)
• To be paid December 2023 466 – –
Interim dividend proposed 466 – –
Proposed final of 51.82 pence per share (2022: 49.32 pence, 2021: 48.48 pence)
• Paid March 2022 – – 458
• Paid March 2023 – 457 –
• To be paid March 2024 465 – –
Final dividend 465 457 458
Total ordinary share dividends of 146.82 pence per share (2022: 141.17 pence, 2021: 139.08 pence) 1,322 1,325 1,314

The proposed third interim dividend for the year ended 30 September 2023 of 51.82 pence per share amounts to a proposed dividend of
£466 million, which will be paid in December 2023. The proposed final dividend for the year ended 30 September 2023 of 51.82 pence per
share amounts to a proposed dividend payment of £465 million in March 2024 based on the number of shares ranking for dividend at
30 September 2023, and is subject to shareholder approval. If approved, the total dividend paid in respect of 2023 will be £1,322 million
(2022: £1,325 million). The dividend paid during 2023 is £1,312 million (2022: £1,320 million).

www.imperialbrandsplc.com 197
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

9. EARNINGS PER ORDINARY SHARE

Basic earnings per share is based on the profit for the period attributable to the owners of the parent and the weighted average number of
ordinary shares in issue during the period excluding shares held to satisfy the Group’s employee share schemes and shares purchased by
the Company and held as treasury shares. Diluted earnings per share have been calculated by taking into account the weighted average
number of shares that would be issued if rights held under the employee share schemes were exercised. No instruments have been
excluded from the calculation for any period on the grounds that they are anti-dilutive.

£ million 2023 2022

Earnings: basic and diluted – attributable to owners of the Parent Company 2,328 1,570

Millions of shares

Weighted average number of shares:

Shares for basic earnings per share 922.5 946.2
Potentially dilutive share options 5.7 6.8
Shares for diluted earnings per share 928.2 953.0

Pence

Basic earnings per share 252.4 165.9

Diluted earnings per share 250.8 164.7

10. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES

Russian associated markets exit
In the prior year a loss on exit from the Russian and associated markets of £423 million was incurred, comprising a loss on transfer of
Russian operations of £364 million, impairment of assets and exit costs of the associated markets of £35 million and the impairment of an
intangible asset held by the Global Horizon Ventures Limited joint venture of £24 million. Following a review of the impacts resulting from
the decision to transfer the Russian factory it was determined that it was unviable to continue trading in these areas for a number of
reasons including duty and supply chain challenges. The decision to exit operations results in a number of assets held by these markets
having to be impaired. In addition, certain exit costs are expected to be incurred in the process of ceasing operations. Total impairment and
exit costs of £35 million were recognised in the financial year ending 30 September 2022. There is ongoing work to complete the exit from
the associated markets. In the current year revisions to these exit provisions totalling £14 million have been recognised primarily arising
due to changes in the expected level of exit costs.

Logista
Acquisition of Speedlink Worldwide Express B.V.
On 16 February 2022, the Group’s subsidiary Logista acquired 70% of the share capital of Speedlink Worldwide Express B.V. for a purchase
consideration of €20 million (£16 million) which has been paid in cash. There is an intention to purchase the remaining 30% of share capital
over the next two years. As effective control has been achieved through this acquisition, Speedlink Worldwide Express B.V. has been
consolidated as a subsidiary within the Group with a 65% minority interest. Goodwill of €12 million (£10 million), intangible assets of
€15 million (£13 million) and deferred tax liability of €4 million (£3 million) were recognised on acquisition.

Acquisition of Herinvemol, S.L. (Transportes El Mosca)

On 17 June 2022, the Group's subsidiary Logista announced the acquisition of 60% of the shares of Herinvemol S.L. Herinvemol S.L. is the
parent company of a group of companies over which it holds control, trading as ‘Transportes El Mosca’. This acquisition completed on
28 October 2022.

Transportes El Mosca offers national and international intermodal transport services by road, sea and air, as well as frozen or refrigerated
transport. The main destination markets for the international road transport activity are the United Kingdom, Germany, Portugal, France,
the Netherlands, and Italy, and its clients are mainly producers and large distribution chains in the food sector.

The total purchase consideration for the 60% initial shareholding is €99 million (£86 million) with €1 million (£1 million) remaining as a
current liability as at 30 September 2023. The agreement contemplates cross-call and call options for the remaining 40% exercisable over a
3-year time horizon. At 30 September 2023 goodwill of €39 million (£33 million) has been recognised relating to this acquisition which has
been assigned to the Distribution segment. The valuation of the assets at fair value has been carried out by an independent expert. This
valuation includes, as intangible assets, Customer Relationships for €42 million (£38 million) and Trademarks for €5 million (£4 million).

On 3 August 2023, Logista announced the acquisition of an additional 13.33% of equity for a consideration of €23 million (£20 million),
increasing its total ownership to 73.33%.

At 30 September 2023, Logista has a purchase option for the remaining 26.67%, which is recorded at fair value as a non-current liability for
an amount of €25 million (£22 million) and a current liability for an amount of €25 million (£22 million), with a corresponding adjustment
taken to equity reserves. The equity movement of €56 million (£48 million) is calculated based on the initial valuation of the call options at
fair value of €75 million (£65 million) , reduced by the minority interests arising from the purchase transaction of €17 million (£14 million)
and those arising from the profit for the year generated by the acquired company.

198 Imperial Brands | Annual Report and Accounts 2023

The revenue and net profit that were contributed to the consolidated income statement for the period ended 30 September 2023 totalled
€260 million (£226 million) and €4 million (£3 million), respectively.

The ordinary income and net profit that would have contributed to the consolidated income statement if Transportes El Mosca had been
acquired on 1 October 2022 is not significantly different from the figures indicated in the previous paragraph.

Acquisition of Carbó Collbatallé S.L.

In April 2022, the Group's subsidiary Logista reached an agreement for the acquisition of 100% of the shares of Carbó Collbatallé, a company
that offers transport and logistics services for refrigerated and frozen foods, which carries out its commercial activity mainly in the Spanish
market. This acquisition was completed in October 2022.

The total consideration for the shares acquired was €55 million (£46 million) of which €51 million (£42 million) was paid in cash at the time
of the purchase with €4 million (£4 million) outstanding as at 30 September 2023.

As at 30 September 2023, goodwill of €36 million (£31 million) has been recognised which has been assigned to the Distribution segment.
The valuation of the assets at fair value has been carried out by an independent expert. This valuation includes, as intangible assets,
Customer Relationships for €20 million (£17 million) and Trademarks for €1 million (£1 million).

The revenue and net profit that were contributed to the consolidated income statement for the period ended 30 September 2023 totalled
€63 million (£55 million) and €5 million (£4 million) respectively.

Acquisition of Gramma Farmaceutici, S.R.L.

In July 2023, the Group’s subsidiary Logista acquired 100% of the equity shares of Gramma Farmaceutici, S.R.L., a company specialised in
logistics services for the pharmaceutical industry in Italy. The total purchase price of these shares amounted to €3 million (£3 million), paid
in cash at the time of purchase. The book value of the net assets acquired was €296 thousand (£257 thousand). As at 30 September 2023, the
company has recorded provisional goodwill of €3 million (£3 million) which has been assigned to the Distribution segment.

The revenue and net profit that were contributed to the consolidated income statement for the period ended 30 September 2023 totalled
€2 million (£2 million) and €18 thousand (£16 thousand) respectively. The ordinary income and net profit that would have contributed to the
consolidated income statement if the company had been acquired on 1 October 2022 is not significantly different from the figures indicated
in the previous paragraph.

The amounts of the assets and liabilities arising from the following acquisitions during the year ending 30 September 2023 are as follows:
Hernivemol,
S.L.
Carbó (Transportes
Collbatallé S.L. El Mosca) Total
£ million Fair value Fair value Fair value
Property, plant and equipment and right of use assets 29 67 96
Other intangible assets 18 42 60
Other non-current assets – 1 1
Trade receivables and other accounts receivable 10 75 85
Cash and other equivalent liquid assets 3 11 14
Other current assets 1 2 3
Deferred tax liabilities (5) (10) (15)
Trade payables and other accounts payable (16) (55) (71)
Other current financial liabilities – (43) (43)
Other non-current financial liabilities (25) (23) (48)
Total net assets 15 67 82
Less minority interests – (14) (14)
Net assets acquired by the group 15 53 68
Consideration for the acquisition 46 86 132
Goodwill 31 33 64

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

11. INTANGIBLE ASSETS

2023
Intellectual property
and product Supply
£ million Goodwill development agreements Software Total

Cost
At 1 October 2022 14,228 13,871 1,433 522 30,054
Additions – 136 1 119 256
Acquisitions 67 5 54 2 128
Disposals – (115) – (3) (118)
Reclassifications – (2) – 2 –
Exchange movements (510) (853) (31) (12) (1,406)
At 30 September 2023 13,785 13,042 1,457 630 28,914

Amortisation and impairment

At 1 October 2022 1,587 8,925 1,414 351 12,277
Amortisation charge for the year – 352 6 34 392
Disposals – (109) – (3) (112)
Reclassifications – (1) – 1 –
Exchange movements (31) (517) (31) (8) (587)
Accumulated amortisation – 8,111 1,389 374 9,874
Accumulated impairment 1,556 539 – 1 2,096
At 30 September 2023 1,556 8,650 1,389 375 11,970

Net book value

At 30 September 2023 12,229 4,392 68 255 16,944

2022
Intellectual property
and product Supply
£ million Goodwill development agreements Software Total

Cost
At 1 October 2021 13,417 12,359 1,387 451 27,614
Additions – 20 1 65 86
Acquisitions 10 – 13 – 23
Disposals – – – (8) (8)
Reclassifications 4 – – – 4
Exchange movements 797 1,492 32 14 2,335
At 30 September 2022 14,228 13,871 1,433 522 30,054

Amortisation and impairment

At 1 October 2021 1,542 7,735 1,355 308 10,940
Amortisation charge for the year – 331 27 35 393
Impairment – – – 1 1
Disposals – – – (5) (5)
Reclassifications 4 – – – 4
Exchange movements 41 859 32 12 944
Accumulated amortisation – 8,386 1,414 350 10,150
Accumulated impairment 1,587 539 – 1 2,127
At 30 September 2022 1,587 8,925 1,414 351 12,277

Net book value

At 30 September 2022 12,641 4,946 19 171 17,777

200 Imperial Brands | Annual Report and Accounts 2023

Amortisation and impairment of acquired intangibles excluded from adjusted operating profit amounted to £347 million (2022: £349 million),
this comprises amortisation on intellectual property of £341 million (2022: £323 million) and amortisation on supply agreements of
£6 million (2022: £26 million).

Intellectual property mainly comprises brands acquired in the USA in 2015 and through the purchases of Altadis in 2008 and
Commonwealth Brands in 2007.

Supply agreements include Distribution customer relationships acquired as part of the purchase of Altadis, and of Carbó Collbatallé S.L. and
Herinvemol S.L. (Transportes El Mosca) in the current financial year.

Intangible amortisation and impairment are included within administrative and other expenses in the consolidated income statement.

In June 2023 the Group purchased intellectual property relating to tobacco pouches to be marketed within the United States. The purchase
consideration was $130 million (£106 million) comprising $50 million (£41 million) which was paid in cash on completion, deferred
consideration of $31 million (£25 million) expected to be paid in December 2023 and contingent consideration currently estimated at
$49 million (£40 million) payable over a five-year period up until 2028. All deferred and contingent consideration has been discounted at a
rate of 13% and a corresponding consideration liability of $81 million (£66 million) has been recognised. The total initial intangible asset
value recognised was $130 million (£106 million).

Goodwill and intangible asset impairment review

On 1 October 2022 the Group reorganised the Tobacco & NGP business, changing our geographic footprint with the markets comprising our
Central and Eastern Europe cluster moving from our Europe region into the Africa, Asia & Australasia (AAA) region to form the newly
constituted AAACE region. The managerial and internal reporting structures of the business have been revised to reflect the new structure.
Following the introduction of these changes we have revised our segmental reporting as required under IFRS 8. As the Group’s Cash
Generating Unit Groupings (CGUG) that are used for annual goodwill impairment testing are aligned to the region-based segments, where
appropriate, goodwill and other indefinite life intangible assets has been reapportioned across the new CGUG structure on a relative value
basis to reflect the segmental changes.

One of the requirements of IAS 36 is to undertake an impairment test based on the former CGUG prior to reapportioning intangible assets
to new CGUG in the event of a Group reorganisation. The impairment testing which was undertaken as at 1 October 2022 indicated no
impairment. Therefore there was no requirement to impair any goodwill or brand intangible prior to the reallocation to new CGUG.

Our reportable segments have been updated to Americas, Europe, AAACE and Distribution. The Tobacco & NGP operating segments
continue to be comprised of geographical groupings of business markets. The main Tobacco & NGP business markets that have moved
segments as part of this restructuring are Poland, Czech Republic, Ukraine, Slovakia, Hungary, Azerbaijan, Armenia, Georgia, Moldova,
Croatia and Slovenia.

Goodwill is allocated to CGUG that are expected to benefit from the business combination in which the goodwill arose. For the Tobacco &
NGP business, CGUG are based on the markets where the business operates and are grouped in line with the regional structure in operation
during the year. The groupings represent the lowest level at which goodwill is monitored for internal management purposes. A summary of
the carrying value of goodwill and intangible assets with indefinite lives is set out below.

2023 2022 (restated)

Intangible Intangible
assets with assets with
indefinite indefinite
£ million Goodwill lives Goodwill lives

Europe 4,123 307 4,295 313

Americas 4,147 – 4,326 –
AAACE 2,181 162 2,277 165
Tobacco & NGP 10,451 469 10,898 478
Distribution 1,778 – 1,743 –
12,229 469 12,641 478

Goodwill has arisen principally on the acquisitions of Reemtsma in 2002 (all CGUG), Commonwealth Brands in 2007 (USA), Altadis in 2008
(all CGUG) and ITG Brands in 2015 (USA). Intangible assets with indefinite lives relate to the tobacco trademark, Davidoff, which was
purchased as part of the acquisition of Reemtsma in 2002.

The Group tests goodwill and intangible assets with indefinite lives for impairment annually, or more frequently if there are any indications
that impairment may have arisen. The value of a CGUG is based on value-in-use calculations. These calculations use cash flow projections
derived from financial plans of our Tobacco business which are based on detailed bottom-up market-by-market forecasts of projected sales
volumes for each product line. These forecasts reflect, on an individual market basis, numerous assumptions and estimates regarding
anticipated changes in market size, prices and duty regimes, consumer uptrading and downtrading, consumer preferences and other
changes in product mix, based on long-term market trends, market data, anticipated regulatory developments, and management experience
and expectations. We consider that pricing, market size, market shares and cost inflation are the key assumptions used in our plans.

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Growth rates and discount rates used

The compound annual growth rates implicit in these value-in-use calculations are shown below.

2023 2022
% Pre-tax Initial Long-term Pre-tax Initial Long-term
discount rate growth rate growth rate discount rate growth rate growth rate

Europe 10.4 4.5 1.0 10.3 4.6 0.6

Americas 8.9 5.8 2.1 8.7 5.2 1.6
AAACE 12.5 4.3 2.2 11.1 2.8 1.3
Distribution 12.3 5.0 1.6 11.8 3.9 1.5

The calculation to determine the value in use involves a discounted future cash flow forecast model. Nominal cash flows are used in the
calculation which will themselves already factor in the effects of inflation. The cash flows are sourced from the Group business plan which
considers and factors in the risk of variability of future business performance and hence cash flow variation. A nominal discount rate is
used within the model based on the Group's weighted average cost of capital which is itself calculated using the Capital Asset Pricing
Model. As risk has been applied within the undiscounted cash flows no adjustment is made to the discount rate for risk, except for the
application of country risk premia over and above the Group weighted average cost of capital where appropriate.

Country-specific discount rates are used based on the Group’s weighted average cost of capital adjusted for country risk premium. The
impairment review is undertaken at a CGUG level which involves the aggregation of the individual value in use amounts for the individual
countries which constitute each CGUG. Our impairment projections are prepared under the basis set out in IAS 36 which can differ from our
internal plans.

Nominal cash flows from the business plan period are used for year one, two and three, then extrapolated out to year five using the implicit
growth rate, shown in the table above as the initial growth rate. In certain markets, the extrapolated cash flow growth rate can exceed the
long term growth rate based on the business plan being a better reflection of the anticipated initial growth. Estimated long term weighted
average compound growth rates are used beyond year five.

Long term growth rates are determined as the lower of:

• the nominal GDP growth rates for the country of operation; and
• the extrapolation of the initial growth rates as estimated by management for years one to five.

Long-term growth rates are based on management’s long-term expectations, taking account of industry specific factors such as the nature
of our products, the role of excise in government fiscal policy, and relatively stable and predictable long-term macro trends in the Tobacco
industry. Year on year variations in initial growth rates may result in consequential changes to estimated long term rates.

Europe’s initial growth rate was in line with the prior year. The long term growth rate improved by 0.4%. This primarily reflects
improvements in the UK market where the outlook is forecast to be better than prior year forecast and where the long term growth rate was
not capped by the medium term rate.

Americas was broadly in line with the prior year growth assumptions for the initial and medium growth rate. The key changes which
largely offset each other were the 0.5% increase in long-term growth rate and an increased tax rate by 4%.

AAACE's increases in the initial growth rates are driven by improved initial and medium-term forecasts, which are both due to changes in
the growth outlook for a number of key markets including Taiwan, Ivory Coast and Hungary. Improvements in forecast profitability reflect
actions delivered in line with our strategic goals. The long-term growth rate has improved this year, in the prior year this needed to be
capped to the medium-term rate for a number of the key markets.

The Distribution improved initial growth rate reflects stronger business projections compared to prior year.

Goodwill and intangible asset impairment review conclusion

Our impairment testing confirms there are sufficient cash flows to support the current carrying values of the goodwill held at 30 September
2023. Any reasonable movement in the assumptions used in the impairment tests would not result in an impairment. The complexity of
the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the Group’s accounting
estimates in relation to intangible assets can affect the amounts reported in the financial statements, especially the estimates of the
expected useful economic lives and the carrying values of those assets. If business conditions significantly change it is possible that
materially different amounts could be reported in the Group’s financial statements in future periods. There are uncertainties associated
with estimating the valuation of the recoverable amount.

At the present time the recoverable amount is significantly in excess of the carrying value of goodwill and other intangible assets. However,
given the uncertainties mentioned above this could change in the future.

202 Imperial Brands | Annual Report and Accounts 2023

Consideration of the impact of climate change
The Group has completed an assessment of the impact of climate change which includes how it will vary future costs and therefore cash
flows. The detail of the Tobacco & NGP climate change review can be found on pages 74-77. The review has concluded that there are
impacts on future cash flows as a result of climate change, with the most significant being relating to NTM and leaf costs due to increases
in the operating costs of suppliers and raw materials. We have factored the additional costs to the Group relating to forecast climate costs
into our discounted cash flow forecasts used for impairment testing valuation purposes. The modelled impact of this for the Group was
£338 million (2022: £726 million). This concluded that there continues to be sufficient headroom. There is therefore no impairment
recognised as result of incremental climate change costs. However, the Group will continue to review the climate change impact going
forward and any future changes in impact assessment could potentially result in changes to the impairment assessment.

Other intangible assets

Other intangible assets are considered for impairment risk. The carrying values of brand intangibles are reviewed against expected future
cash flows of associated products. Impairment will only be recognised where there is evidence that the carrying value of the brand cannot
be recovered through those cash flows. No impairments (2022: £nil) have been recognised for brand intangibles.

Intellectual property and product development intangible assets have also been reviewed to identify potential impairment triggers. No such
impairment triggers were noted in the year ended 30 September 2023 and hence no impairment charge has been incurred (2022: £nil).

No impairment charge (2022: £1 million) was incurred in the year relating to software.

12. PROPERTY, PLANT AND EQUIPMENT

2023
Fixtures
Plant and and motor
£ million Property equipment vehicles Total
Cost
At 1 October 2022 806 2,080 455 3,341
Additions 3 130 58 191
Acquisitions – 5 9 14
Disposals (22) (74) (24) (120)
Hyperinflation adjustment (note 1) – 5 – 5
Exchange movements (31) (81) (14) (126)
At 30 September 2023 756 2,065 484 3,305

Depreciation and impairment

At 1 October 2022 181 1,200 301 1,682
Depreciation charge for the year 17 98 32 147
Impairment – 6 – 6
Disposals (11) (60) (15) (86)
Exchange movements (10) (41) (10) (61)
At 30 September 2023 177 1,203 308 1,688

Net book value

At 30 September 2023 579 862 176 1,617

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

2022
Fixtures
Plant and and motor
£ million Property equipment vehicles Total
Cost
At 30 September 2021 797 2,086 411 3,294
Hyperinflation restatement to 1 October 2021 1 24 2 27
At 1 October 2021 798 2,110 413 3,321
Additions 13 74 58 145
Disposals (51) (170) (24) (245)
Hyperinflation adjustment (note 1) 1 7 – 8
Reclassifications 19 (4) (5) 10
Exchange movements 26 63 13 102
At 30 September 2022 806 2,080 455 3,341

Depreciation and impairment

At 30 September 2021 162 1,146 271 1,579
Hyperinflation restatement to 1 October 2021 – – – –
At 1 October 2021 162 1,146 271 1,579
Depreciation charge for the year 14 102 34 150
Impairment 10 69 6 85
Disposals (13) (146) (21) (180)
Reclassifications – (4) 1 (3)
Exchange movements 8 33 10 51
At 30 September 2022 181 1,200 301 1,682

Net book value

At 30 September 2022 625 880 154 1,659

13. RIGHT OF USE ASSETS AND LEASE LIABILITY

The movements in right of use assets in the year were as follows:

2023
Fixtures
Plant and and motor
£ million Property equipment vehicles Total
Net book value
At 1 October 2022 194 3 31 228
Additions 74 3 37 112
Acquisitions 50 – 32 84
Terminations and modifications (3) – (2) (5)
Depreciation and impairment (53) (4) (28) (85)
Exchange movements (6) – (2) (8)
At 30 September 2023 256 2 68 326

The movements in lease liabilities in the year were as follows:

Lease
£ million Liabilities
At 1 October 2022 248
Cash flow (92)
Accretion of interest 10
New leases, terminations and modifications 106
Acquisitions 84
Exchange movements (7)
At 30 September 2023 349

The maturity profile and the future minimum lease payments of the carrying amount of the Group's lease liabilities and the contractual
cash flows as at 30 September 2023 is disclosed in Note 20.

204 Imperial Brands | Annual Report and Accounts 2023

The following are the amounts recognised in the consolidated income statement:

£ million 2023 2022

Expenses relating to short-term leases 4 3
Expenses relating to low value asset leases 1 2
Depreciation and impairment expense of right of use assets 85 74
Interest on lease liabilities 10 6

The movements in right of use assets in the year ending 30 September 2022 were as follows:
2022

Fixtures
Plant and and motor
£ million Property equipment vehicles Total
Net book value
At 1 October 2021 202 6 34 242
Additions 57 1 11 69
Terminations and modifications (13) – (2) (15)
Depreciation (56) (4) (14) (74)
Exchange movements 4 – 2 6
At 30 September 2022 194 3 31 228

The movements in lease liabilities in the year ending 30 September 2022 were as follows:

£ million Lease
Liabilities
At 1 October 2021 251
Cash flow (68)
Accretion of interest 6
New leases, terminations and modifications 54
Exchange movements 5
At 30 September 2022 248

The maturity profile and the future minimum lease payments of the carrying amount of the Group's lease liabilities and the contractual
cash flows as at 30 September 2022 is disclosed in Note 20.

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

The principal joint venture during the year was Global Horizon Ventures Limited. In the prior year, the entity held an intangible asset
relating to royalties arising on the sales of a specific brand within Russia. Following the transfer of the Russian assets on 27 April 2022 these
royalties ceased and, therefore, the Group's share of this intangible asset was fully impaired.

Summarised financial information for the Group’s joint ventures, which are accounted for using the equity method, is shown below:

2023
Global Horizon
£ million Ventures Others Total
Revenue 19 28 47
Profit after tax 13 4 17

Non-current assets – 7 7
Current assets 56 49 105
Total assets 56 56 112
Current liabilities (7) (41) (48)
Non-current liabilities – (14) (14)
Total liabilities (7) (55) (62)
Net assets 49 1 50

2022
Global Horizon
£ million Ventures Others Total
Revenue 23 27 50
Profit after tax (7) 5 (2)

Non-current assets – 6 6
Current assets 62 44 106
Total assets 62 50 112
Current liabilities – (39) (39)
Non-current liabilities (7) (10) (17)
Total liabilities (7) (49) (56)
Net assets 55 1 56

206 Imperial Brands | Annual Report and Accounts 2023

Transactions and balances with joint ventures
£ million 2023 2022
Purchases from 4 11
Accounts payable to (2) (3)

Movement on investments accounted for using the equity method

£ million 2023 2022
At 1 October 56 88
Share of profit/(loss) for the year from joint ventures 7 (15)
Share of profit for the year from associates 2 2
Increase in investment in associates – 2
Impairment of investment in associates (2) (12)
Dividends (7) (9)
Foreign exchange losses (1) –
At 30 September 55 56

15. INVENTORIES
£ million 2023 2022
Raw materials 1,159 910
Work in progress 81 73
Finished inventories 3,106 2,969
Other inventories 176 188
4,522 4,140

Other inventories mainly comprise duty-paid tax stamps.

Within finished inventories of £3,106 million (2022: £2,969 million) there is excise duty of £1,192 million (2022: £1,255 million).

It is generally recognised industry practice to classify leaf tobacco inventory as a current asset, although part of such inventory, because
of the duration of the processing cycle ordinarily would not be consumed within one year. We estimate that around £337 million
(2022: £114 million) of leaf tobacco held within raw materials will not be utilised within a year of the balance sheet date.

16. TRADE AND OTHER RECEIVABLES

2023 2022
£ million Current Non-current Current Non-current
Trade receivables 2,211 3 2,262 3
Less: loss allowance (63) (3) (76) (3)
Net trade receivables 2,148 – 2,186 –
Other receivables 149 26 200 37
Prepayments 193 37 157 30
2,490 63 2,543 67

Trade receivables may be analysed as follows:

2023 2022
£ million Current Non-current Current Non-current
Within credit terms 1,996 – 2,084 –
Past due by less than 3 months 121 – 93 –
Past due by more than 3 months 31 – 9 –
Amounts that are impaired 63 3 76 3
2,211 3 2,262 3

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

The movements in the total loss allowance for receivables can be analysed as follows:

£ million 2023 2022

At 1 October 79 71
Net (decrease)/increase in provision (13) 8
At 30 September 66 79

Trade receivables are reviewed by their risk profiles and loss patterns to assess credit risk. Historical and forward-looking information is
considered to determine the appropriate expected credit loss allowance. Provision levels are calculated on the residual credit risk after
consideration of any credit protection which is used by the Group. Expected credit losses (ECLs) are applied to net trade receivables which
are measured reflecting lifetime ECLs using the simplified approach.

17. CASH AND CASH EQUIVALENTS

£ million 2023 2022
Cash at bank and in hand 683 703
Short-term deposits and other liquid assets 662 1,147
1,345 1,850

£135 million (2022: £144 million) of total cash and cash equivalents is held in countries in which prior approval is required to transfer the
funds abroad. Nevertheless, if the Group complies with these requirements, such liquid funds are at its disposition within a reasonable
period of time which in all cases is three months or less from the date the transfer is requested.

18. TRADE AND OTHER PAYABLES

2023 2022
£ million Current Non-current Current Non-current
Trade payables 1,507 – 1,345 –
Duties payable 5,297 – 5,453 –
Other taxes and social security contributions 1,375 – 1,412 –
Other payables 526 – 500 –
Accruals 874 27 796 10
9,579 27 9,506 10

208 Imperial Brands | Annual Report and Accounts 2023

19. BORROWINGS
The Group’s borrowings held at amortised cost, are as follows:

£ million 2023 2022

Current borrowings
Bank loans and overdrafts 49 27
Capital market issuance:
$354 million 3.5% notes due February 2023 – 322
€750 million 1.125% notes due August 2023 – 662
£600 million 8.125% notes due March 2024 627 –
$1,000 million 3.125% notes due July 2024 823 –
Total current borrowings 1,499 1,011

Non-current borrowings
Bank loans 2 1
Capital market issuance:
£600 million 8.125% notes due March 2024 – 626
$1,000 million 3.125% notes due July 2024 – 910
€500 million 1.375% notes due January 2025 437 445
$1,500 million 4.25% notes due July 2025 1,236 1,367
€650 million 3.375% notes due February 2026 574 584
$750 million 3.5% notes due July 2026 617 682
£500 million 5.5% notes due September 2026 500 500
€750 million 2.125% notes due February 2027 657 670
$1,000 million 6.125% notes due July 2027 822 908
$1,000 million 3.875% notes due July 2029 822 909
€950 million 5.25% notes due February 2031 838 –
£500 million 4.875% notes due June 2032 505 505
€1,000 million 1.75% notes due March 2033 872 889
Total non-current borrowings 7,882 8,996
Total borrowings 9,381 10,007
Analysed as:
Capital market issuance 9,330 9,979
Bank loans and overdrafts 51 28

Current and non-current borrowings include interest payable of £33 million (2022: £2 million) and £96 million (2022: £104 million)
respectively as at the balance sheet date.

Interest payable on capital market issuances are at fixed rates of interest and interest payable on bank loans and overdrafts are at floating
rates of interest.

On 13 February 2023, $354 million (£292 million equivalent) 3.5% notes were repaid. On 15 February 2023, €600 million (£533 million
equivalent) 5.25% notes were issued. On 14 August 2023, €750 million (£646 million equivalent) 1.125% notes were repaid. On 12 September
2023, €350 million (£301 million equivalent) 5.25% notes were issued, supplementary to the 15 February 2023, €600 million issue.

All borrowings are unsecured and the Group has not defaulted on any borrowings during the year (2022: no defaults).

The maturity profile of the Group's bonds and the contractual cash flows as at September 2023 is disclosed in Note 20.

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Fair value of borrowings

The fair value of borrowings as at 30 September 2023 is estimated to be £8,669 million (2022: £9,030 million). £8,617 million (2022: £9,002 million)
relates to capital market issuance and has been determined by reference to market prices as at the balance sheet date. A comparison
of the carrying amount and fair value of capital market issuance by currency is provided below. The fair value of all other borrowings is
considered to equal their carrying amount.

2023 2022
Balance sheet Balance sheet
£ million amount Fair value amount Fair value
GBP 1,632 1,524 1,631 1,457
EUR 3,378 2,996 3,250 2,777
USD 4,320 4,097 5,098 4,768
Total capital market issuance 9,330 8,617 9,979 9,002

Undrawn revolving credit facilities

At 30 September the Group had the following undrawn committed facilities:

£ million 2023 2022

Amounts maturing:
In less than one year 550 –
Between one and two years 159 –
Between two and five years 2,866 3,091
3,575 3,091

During the year the maturity of €3,125 million of the Group's syndicated multicurrency facility of €3,493 million (2022 €3,500 million) was
extended to 30 September 2026. One syndicate member opted not to extend their participation of €184 million which has a maturity date of
30 September 2025. One syndicate member opted not to extend their participation of €184 million which has a maturity date of 30 March
2026. One syndicate member sold their participation of €125 million and one syndicate member sold their participation of €184 million.
Two syndicate members increased their participations from €125 million to €184 million and a new syndicate member joined with a
participation of €184 million.

During the year three new bilateral facilities for a total £550 million, all maturing in September 2024, were arranged.

20. FINANCIAL RISK FACTORS

Financial risk management
Overview
In the normal course of business, the Group is exposed to financial risks including, but not limited to, market, credit and liquidity risk.
This note explains the Group’s exposure to these risks, how they are measured and assessed, and summarises the policies and processes
used to manage them, including those related to the management of capital.

The Group operates a centralised treasury function which is responsible for the management of the financial risks of the Group, together
with its financing and liquidity requirements. Financial risks comprise, but are not limited to, exposures to funding and liquidity, interest
rate, foreign exchange and counterparty credit risk. The treasury function is also responsible for the financial risk management of the
Group’s global defined benefit pension schemes and management of Group-wide insurance programmes. The treasury function does not
operate as a profit centre, nor does it enter into speculative transactions.

The Group's treasury activities are overseen by the Treasury Committee, which meets four times per year and comprises the Chief
Financial Officer, the Director of Treasury, the Group Finance Director, the Chief Legal and Corporate Affairs Officer, the Chief Strategy and
Development Officer and three Group Regional Finance Directors. The Treasury Committee operates in accordance with the terms of
reference set out by the Board and a policy (the Treasury Operations Policy) which sets out the expectations and boundaries to assist in the
effective oversight of treasury activities.

The Board reviews and approves all major treasury decisions.

The Group’s management of financial risks covers the following:

210 Imperial Brands | Annual Report and Accounts 2023

(A) Market risk
Price risk
The Group is not exposed to equity securities price risk other than assets held by its pension funds disclosed in note 23 and an equity
holding in Oxford Cannabinoid Technologies PLC. The Group is exposed to commodity price risk in that there may be fluctuations in
the price of tobacco leaf. As with other agricultural commodities, the price of tobacco leaf tends to be cyclical as supply and demand
considerations influence tobacco plantings in those countries where tobacco is grown. Also, different regions may experience variations
in weather patterns that may affect crop quality or supply and so lead to changes in price. The Group seeks to reduce this price risk by
sourcing tobacco leaf from a number of different countries and counterparties and by varying the levels of tobacco leaf held. Currently,
these techniques reduce the expected exposure to this risk over the short to medium term to levels considered not material and
accordingly, no sensitivity analysis has been presented.

Foreign exchange risk

The Group is exposed to movements in foreign exchange rates due to its commercial trading transactions and profits denominated in
foreign currencies, as well as the translation of cash, borrowings and derivatives held in non-functional currencies.

The Group’s financial results are principally exposed to fluctuations in euro and US dollar exchange rates. Management of the Group’s
foreign exchange transaction and translation risk is addressed below.

Transaction risk
The Group’s material transaction exposures arise on costs denominated in currencies other than the functional currencies of subsidiaries,
including the purchase of tobacco leaf, which is sourced from various countries but purchased principally in US dollars, and packaging
materials which are sourced from various countries and purchased in a number of currencies. The Group is also exposed to transaction
foreign exchange risk on the conversion of foreign subsidiary earnings into sterling to fund the external dividends to shareholders. This is
managed by selling euros and US dollars monthly throughout the year. Other foreign currency flows are matched where possible and
remaining foreign currency transaction exposures are not hedged.

Translation risk
The Group's currency mix of debt and related derivatives is held with consideration to the currency mix of its net assets and profits, which
are primarily euros and US dollars. The Group issues debt in the most appropriate market or markets at the time of raising new finance and
has a policy of using derivative financial instruments, cross-currency swaps, to change the currency of debt as required. Borrowings
denominated in, or swapped into foreign currencies to match the Group’s investments in overseas subsidiaries are treated as a hedge
against the net investment where appropriate.

Foreign exchange sensitivity analysis

The Group’s sensitivity to foreign exchange rate movements, which impacts the translation of monetary items held by subsidiary
companies in currencies other than their functional currencies, is illustrated on an indicative basis below. The sensitivity analysis has been
prepared on the basis that net debt and the proportion of financial instruments in foreign currencies remain constant, and that there is no
change to the net investment hedge designations in place at 30 September 2023. The sensitivity analysis does not reflect any change to
revenue or non-finance costs that may result from changing exchange rates, and ignores any taxation implications and offsetting effects of
movements in the fair value of derivative financial instruments.

2023 2022
Increase/
(decrease) Increase in
£ million in income income
Income statement impact of non-functional currency foreign exchange exposures:
10% appreciation of sterling against euro (2022: 10%) 33 59
10% appreciation of sterling against US dollar (2022: 10%) (9) 2

An equivalent depreciation of sterling against the above currencies would cause a decrease in income of £41 million and £11 million
increase for euro and US dollar exchange rates respectively (2022: £72 million decrease and £2 million decrease).

Movements in equity in the table below relate to intercompany loans treated as quasi-equity under IAS 21 and hedging instruments
designated as net investment hedges of the Group's euro and US dollar denominated assets.

2023 2022
Change in Change in
£ million equity equity
Equity impact of non-functional currency foreign exchange exposures:
10% appreciation of sterling against euro (2022: 10%) 1,035 621
10% appreciation of sterling against US dollar (202: 10%) 205 276

An equivalent depreciation of sterling against the above currencies would result in a change in equity of £(1,265) million and £(250) million
for euro and US dollar exchange rates respectively (2022: £(759) million and £(338) million).

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

At 30 September 2023, after the effect of derivative financial instruments, approximately 111% of the Group’s net debt was denominated in
euro and non US dollar currencies (2022: 80%) and (11)% in US dollars (2022: 20%).

Interest rate risk

The Group’s interest rate risk arises from its borrowings net of cash and cash equivalents, with the primary exposures arising from
fluctuations in euro and US dollar interest rates. Borrowings at variable rates expose the Group to cash flow interest rate risk. Borrowings at
fixed rates expose the Group to fair value interest rate risk.

The Group manages its exposure to interest rate risk on its borrowings by entering into derivative financial instruments, interest rate
swaps, to achieve an appropriate mix of fixed and floating interest rate debt in accordance with the Treasury Operations Policy and
Treasury Committee discussions.

As at 30 September 2023, after adjusting for the effect of derivative financial instruments detailed in note 21, approximately 107% (2022: 103%)
of reported net debt was at fixed rates of interest and (7)% (2022: (3)%) was at floating rates of interest. After adjusting for cash held in
subsidiary bank accounts and cash in transit, accrued interest, the mark to market of the derivative portfolio and finance leases,
approximately 100% (2022: 97%) of debt was at fixed rates of interest and 0% (2022: 3%) was at floating rates of interest.

Interest rate sensitivity analysis

The Group’s sensitivity to interest rates on its euro and US dollar monetary items which are primarily external borrowings, cash and cash
equivalents, is illustrated on an indicative basis below. The impact in the Group’s income statement reflects the effect on net finance costs
in respect of the Group’s net debt and the fixed to floating rate debt ratio prevailing at 30 September 2023, ignoring any taxation implications
and offsetting effects of movements in the fair value of derivative financial instruments.

The sensitivity analysis has been prepared on the basis that net debt and the derivatives portfolio remain constant and that there is no net
impact on other comprehensive income (2022: £nil).

2023 2022
Change in Change in
£ million income income
Income statement impact of interest rate movements:
+/- 1% increase in euro interest rates (2022: 1%) 12 13
+/- 1% increase in US dollar interest rates (2022: 1%) (9) (9)

(B) Credit risk

IFRS 9 requires an expected credit loss (ECL) model to be applied to financial assets. The expected credit loss model requires the Group to
account for expected losses as a result of credit risk on initial recognition of financial assets and to recognise changes in those expected
credit losses at each reporting date. Allowances are measured at an amount equal to the lifetime expected credit losses where the credit
risk on the receivables increases significantly after initial recognition. The Group is primarily exposed to credit risk arising from the
extension of credit to its customers, on cash deposits and derivatives. The maximum aggregate credit risk to these sources was
£4,507 million at 30 September 2023 (2022: £5,151 million).

Trade and other receivables

Policies are in place to manage the risk associated with the extension of credit to third parties to ensure that commercial intent is balanced
effectively with credit risk management. Subsidiaries have policies in place that require appropriate credit checks on customers and credit
is extended with consideration to financial risk and creditworthiness. If a customer requires credit beyond an acceptable limit, security may
be put in place to minimise the financial impact in the event of a payment default. Instruments that may typically be used as security
include non-recourse receivables factoring and bank guarantees. At 30 September 2023 the level of trade receivables that were sold to a
financial institution under a non-recourse factoring arrangement, and subsequently derecognised totalled £570 million (2022: £570 million).
The total value of trade receivables reclassified as fair value was £22 million at 30 September 2023 (2022: £50 million). There was no
valuation difference between amortised cost and fair value. Analysis of trade and other receivables is provided in note 16.

Financial instruments
In order to manage its credit risk to any one counterparty, the Group places cash deposits and enters into derivative financial instruments
with a diversified group of financial institutions carrying suitable credit ratings in line with the Treasury Operations Policy. Utilisation of
counterparty credit limits is regularly monitored by treasury and ISDA agreements are in place to permit the net settlement of assets and
liabilities in certain circumstances. During the year the Group terminated one collateralised trade held under an ISDA Credit Support Annex
and as at 30 September 2023 had placed collateral of £nil (2022: £12 million) with a third party in order to manage their counterparty risk on
the Group under derivative financial instruments.

212 Imperial Brands | Annual Report and Accounts 2023

The table below summarises the Group’s largest exposures to financial counterparties as at 30 September 2023. At the balance sheet date
management does not expect these counterparties to default on their current obligations.

2023 2022
Maximum Maximum
exposure to exposure to
credit risk credit risk
Counterparty exposure £ million £ million
Highest 311 136
2nd highest 104 135
3rd highest 84 128
4th highest 83 127
5th highest 80 114

These exposures are held with counterparties with investment grade credit ratings or in money market funds with a AAA rating.

(C) Liquidity risk

The Group is exposed to liquidity risk, which represents the risk of having insufficient funds to meet its financing needs in any particular
location when needed. To manage this risk the Group has a policy of actively maintaining a mixture of short, medium and long-term
committed facilities that are structured to ensure that the Group has sufficient available funds to meet the forecast requirements of the
Group over the short to medium term. To prevent over-reliance on individual sources of liquidity, funding is provided across a range of
instruments including debt capital market issuance, bank term loans, bank revolving credit facilities and European commercial paper.

The Group primarily borrows centrally in order to meet forecast funding requirements, and the treasury function is in regular dialogue with
subsidiary companies to ensure their liquidity needs are met. Subsidiary companies are funded by a combination of share capital and
retained earnings, intercompany loans, and in very limited cases through external local borrowings. Cash pooling processes are used to
centralise surplus cash held by subsidiaries where possible in order to minimise external borrowing requirements and interest costs.
Treasury invests surplus cash in bank deposits and money market funds and uses foreign exchange contracts to manage short term
liquidity requirements in line with short term cash flow forecasts. As at 30 September 2023, the Group held liquid assets of £1,345 million
(2022: £1,850 million).

The table below summarises the Group’s non derivative financial liabilities by maturity based on their contractual cash flows as at
30 September 2023. The amounts disclosed are undiscounted cash flows calculated using spot rates of exchange prevailing at the relevant
balance sheet date. Contractual cash flows in respect of the Group’s derivative financial instruments are detailed in note 21.

2023
Contractual
Balance sheet cash flows Between 1 and Between 2 and
£ million amount total <1 year 2 years 5 years > 5 years
Non-derivative financial liabilities:
Bank loans 51 51 49 2 – –
Capital market issuance 9,330 10,663 1,767 1,951 3,651 3,294
Trade payables 1,507 1,507 1,507 – – –
Lease liabilities 349 406 82 70 114 140
Total non-derivative financial liabilities 11,237 12,627 3,405 2,023 3,765 3,434

2022
Contractual
Balance sheet cash flows Between 1 and Between 2 and
£ million amount total <1 year 2 years 5 years > 5 years
Non-derivative financial liabilities:
Bank loans 28 28 27 1 – –
Capital market issuance 9,979 11,440 1,349 1,830 5,710 2,551
Trade payables 1,345 1,345 1,345 – – –
Lease liabilities 248 289 64 56 84 85
Total non-derivative financial liabilities 11,600 13,102 2,785 1,887 5,794 2,636

www.imperialbrandsplc.com 213
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Capital management
The Group defines capital as adjusted net debt and equity and manages its capital structure through an appropriate balance of debt and
equity in order to drive an efficient mix for the Group. Besides the minimum capitalisation rules that may apply to subsidiaries in certain
countries, the Group’s only externally imposed capital requirements are interest cover and gearing covenants contained within its core
external bank debt facilities, with which the Group was fully compliant during the current and prior periods and expects to be so going
forward. Management have assessed that the likelihood of a future covenant breach is remote.

The Group continues to manage its capital structure to maintain investment grade credit ratings which it monitors by reference to a
number of key financial ratios, including ongoing consideration of the return of capital to shareholders via regular dividend payments and
share buybacks and in on-going discussions with the relevant rating agencies.

As at 30 September 2023 the Group was rated Baa3/stable outlook by Moody’s Investor Service Ltd, BBB/A-2/stable outlook by Standard and
Poor’s Credit Market Services Europe Limited and BBB/F2/stable outlook by Fitch Ratings Limited.

The Group regards its total capital as follows.

£ million 2023 2022

Adjusted net debt 8,026 8,054
Equity attributable to the owners of the parent 6,021 6,860
Total capital 14,047 14,914

Hedge accounting
The Group has investments in foreign operations which are consolidated in its financial statements and whose functional currencies are
euros or US dollars. Where it is practicable and cost effective to do so, the foreign exchange rate exposures arising from these investments
are hedged through the use of cross-currency swaps, foreign exchange swaps and foreign currency denominated debt.

The Group only designates the undiscounted spot element of the cross currency swaps, foreign exchange swaps and foreign currency debt
as hedging instruments. Changes in the fair value of the cross currency swaps and foreign exchange swaps attributable to changes in
interest rates and the effect of discounting are recognised directly in profit or loss within the “Finance costs” line. These amounts are,
therefore, not included in the hedge effectiveness assessment.

Net investment gains and losses are reported in exchange movements within other comprehensive income and the hedging instrument
foreign currency gains and losses deferred to the foreign currency revaluation reserve are detailed in the statement of changes in equity.

The Group establishes the hedging ratio by matching the notional balance of the hedging instruments with an equal notional balance of the
net assets of the foreign operation. Given that only the undiscounted spot element of hedging instruments is designated in the hedging
relationship, no ineffectiveness is expected unless the notional balance of the designated hedging instruments exceeds the total balance of
the foreign operation’s net assets during the reporting period. The foreign currency risk component is determined as the change in the
carrying amount of designated net assets of the foreign operation arising solely from changes in spot foreign currency exchange rates.

All net investment hedges were fully effective at 30 September 2023.

The following table sets out the maturity profile of the hedging instruments used in the Group’s net investment hedging strategies:

2023
Total Maturity
notional Between 1 and Between 2 and
£ million balance <1 year 2 years 5 years > 5 years
Bonds (3,897) – (433) (2,645) (819)
Cross-currency swaps (5,986) (1,447) (1,214) (1,971) (1,354)
Foreign exchange swaps (541) (541) – – –
(10,424) (1,988) (1,647) (4,616) (2,173)

2022
Total Maturity
notional Between 1 and Between 2 and
£ million balance <1 year 2 years 5 years > 5 years
Bonds (5,378) (982) (906) (3,490) –
Cross-currency swaps (3,623) – (1,475) (1,596) (552)
Foreign exchange swaps (273) (273) – – –
(9,274) (1,255) (2,381) (5,086) (552)

214 Imperial Brands | Annual Report and Accounts 2023

The following table contains details of the hedging instruments and hedged items used in the Group’s net investment hedging strategies:

2023
Carrying amount Changes in fair
value used for
calculating
Notional hedge in-
£ million balance Assets Liabilities Balance sheet line item effectiveness
Hedging instrument:
Bonds 3,897 – 3,929 Borrowings 338
Cross-currency swaps 5,986 – 249 Derivative financial instruments 75
Foreign exchange swaps 541 1 – Derivative financial instruments 14
Hedged item:
Investment in a foreign operation n/a 10,424 – 427

2022
Carrying amount Changes in fair
value used for
calculating
Notional hedge in-
£ million balance Assets Liabilities Balance sheet line item effectiveness
Hedging instrument:
Bonds 5,378 – 5,414 Borrowings (532)
Cross-currency swaps 3,623 – 331 Derivative financial instruments (117)
Foreign exchange swaps 273 – 7 Derivative financial instruments –
Hedged item:
Investment in a foreign operation n/a 9,274 – (649)

Reconciliation of changes in the value of net investment hedges:

2023
At the Other
beginning of Income comprehensive Designations/ At the end
£ million the year statement income (de-designations) of the year
Derivatives in net investment hedges of foreign operations (338) 1 89 – (248)
Bonds in net investment hedges of foreign operations (5,414) (3) 338 1,150 (3,929)
Total (5,752) (2) 427 1,150 (4,177)

2022
At the Other
beginning of Income comprehensive Designations/ At the end
£ million the year statement income (de-designations) of the year
Derivatives in net investment hedges of foreign operations (214) (7) (117) – (338)
Bonds in net investment hedges of foreign operations (5,286) (3) (532) 407 (5,414)
Total (5,500) (10) (649) 407 (5,752)

The Group also treats certain permanent intragroup loans that meet relevant qualifying criteria under IAS 21 as part of its net investment in
foreign operations where appropriate. Intragroup loans with a notional value of €3,714 million (£3,217 million equivalent) (2022: €674 million
(£595 million equivalent)) were treated as part of the Group’s net investment in foreign operations at the balance sheet date.

www.imperialbrandsplc.com 215
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Fair value estimation and hierarchy

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 Group’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 £2 million (2022: £3 million) and would have been a £5 million (2022: £8 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 as outlined in note 20.

Auxly Cannabis Group Inc.

The Group has invested CAD 123 million into Auxly Cannabis Group Inc. by way of a debenture convertible to equity at a conversion price of
$0.81 per share. Following a two year extension to the repayment date which was agreed in July 2023, repayment of the debenture is now
repayable on 25 September 2026. The debenture is valued as a loan receivable measured on the basis of discounting future cash flows at a
rate of 14% (2022: 14%) plus the application of an expected credit loss provision. At 30 September 2023 the loan was held at a fair value of £nil
(30 September 2022: £17 million) following an increase in the expected credit loss provision to £70 million (30 September 2022: £53 million).
The expected credit loss provision increase reflects changes in the counterparty credit risk.

Netting arrangements of financial instruments

The following tables set out the Group’s financial assets and financial liabilities that are subject to netting and set-off arrangements.
Financial assets and liabilities that are subject to set-off arrangements and disclosed on a net basis in the Group’s balance sheet primarily
relate to collateral in respect of one derivative financial instrument under an ISDA Credit Support Annex.

2023
Gross
Gross collateral Net financial Related
financial assets/ assets/ amounts not
assets/ (liabilities) (liabilities) per set-off in the
£ million (liabilities) set-off balance sheet balance sheet Net
Assets
Derivative financial instruments 950 – 950 (817) 133
Liabilities
Derivative financial instruments (1,003) – (1,003) 817 (186)

2022
Gross
Gross collateral Net financial Related
financial assets/ assets/ amounts not
assets/ (liabilities) (liabilities) per set-off in the
£ million (liabilities) set-off balance sheet balance sheet Net
Assets
Derivative financial instruments 1,051 (12) 1,039 (948) 91
Liabilities
Derivative financial instruments (1,138) 12 (1,126) 948 (178)

216 Imperial Brands | Annual Report and Accounts 2023

The table below sets out the Group’s accounting classification of each class of financial assets and liabilities:

2023
Fair value Fair value Assets and
through through other liabilities at
income comprehensive amortised
£ million statement income cost Total Current Non-Current
Trade and other receivables – – 2,323 2,323 2,297 26
Cash and cash equivalents – – 1,345 1,345 1,345 –
Derivatives 949 1 – 950 126 824
Total financial assets 949 1 3,668 4,618 3,768 850
Borrowings – – (9,381) (9,381) (1,499) (7,882)
Trade and other payables – – (8,705) (8,705) (8,705) –
Derivatives (754) (249) – (1,003) (174) (829)
Lease liabilities – – (349) (349) (81) (268)
Total financial liabilities (754) (249) (18,435) (19,438) (10,459) (8,979)
Total net financial assets/(liabilities) 195 (248) 14,767 14,820 (6,691) 8,129

2022
Fair value Fair value Assets and
through through other liabilities at
income comprehensive amortised
£ million statement income cost Total Current Non-Current
Trade and other receivables 17 – 2,406 2,423 2,386 37
Cash and cash equivalents – – 1,850 1,850 1,850 –
Derivatives 1,039 – – 1,039 54 985
Total financial assets 1,056 – 4,256 5,312 4,290 1,022
Borrowings – – (10,007) (10,007) (1,011) (8,996)
Trade and other payables – – (8,710) (8,710) (8,710) –
Derivatives (788) (338) – (1,126) (54) (1,072)
Lease liabilities – – (248) (248) (58) (190)
Total financial liabilities (788) (338) (18,965) (20,091) (9,833) (10,258)
Total net financial assets/(liabilities) 268 (338) (14,709) (14,779) (5,543) (9,236)

Derivatives classified as fair value through other comprehensive income relate to cross currency swaps and foreign exchange swaps
designated as hedges of foreign currency denominated net investments. The Group only designates the undiscounted foreign exchange
spot element of these derivative instruments and the changes in fair value related to this element are posted to other comprehensive
income. Changes in the fair value of these derivative instruments attributable to changes in interest rates and the effect of discounting
are recognised in the income statement. The Group also designates certain bonds as hedges of foreign currency denominated net
investments and the foreign exchange revaluation of those bonds is recognised in other comprehensive income. The carrying value at
30 September 2023 of those bonds included in the above table is £3,929 million (2022: £5,414 million). All of the Group’s net investment
hedges remain effective.

www.imperialbrandsplc.com 217
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

21. DERIVATIVE FINANCIAL INSTRUMENTS

The Group’s derivative financial instruments held at fair value, are as follows.

2023 2022
£ million Assets Liabilities Net Fair Value Assets Liabilities Net Fair Value
Current derivative financial instruments:
Interest rate swaps 30 (66) (36) 6 (36) (30)
Foreign exchange contracts 12 (5) 7 31 (13) 18
Cross-currency swaps 84 (103) (19) 17 (5) 12
Total current derivatives 126 (174) (48) 54 (54) –
126 (174) (48) 54 (54) –
Non-current derivative financial instruments:
Interest rate swaps 745 (652) 93 680 (746) (66)
Cross-currency swaps 79 (177) (98) 305 (338) (33)
Total non-current derivatives 824 (829) (5) 985 (1,084) (99)
Collateral¹ – – – – 12 12
824 (829) (5) 985 (1,072) (87)
Total carrying value of derivative financial instruments 950 (1,003) (53) 1,039 (1,126) (87)
Analysed as:
Interest rate swaps 775 (718) 57 686 (782) (96)
Foreign exchange contracts 12 (5) 7 31 (13) 18
Cross-currency swaps 163 (280) (117) 322 (343) (21)
Collateral1 – – – – 12 12
Total carrying value of derivative financial instruments 950 (1,003) (53) 1,039 (1,126) (87)
1. Collateral deposited against derivative financial liabilities under the terms and conditions of an ISDA Credit Support Annex.

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. Market data is sourced from a
reputable financial data provider and valuations are validated by comparison to counterparty valuations where appropriate. Some of the
Group'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 £2 million
(2022: £3 million) and would have been a £5 million (2022: £8 million) reduction without considering the early termination options.
The classification of these derivative assets and liabilities under the IFRS 7 fair value hierarchy is provided in note 20.

Maturity of obligations under derivative financial instruments

Derivative financial instruments have been classified in the balance sheet as current or non-current on an undiscounted contractual basis
based on spot rates as at the balance sheet date. For the purposes of the above and following analysis, maturity dates have been based on
the likelihood of any early termination options being exercised with consideration to counterparty expectations and market conditions
prevailing as at 30 September 2023. As at 30 September 2022 collateral transferred to counterparties in respect of derivative financial
liabilities was classified consistently with the related underlying derivative. No collateralised trades are outstanding as at
30 September 2023.

The table below summarises the Group’s derivative financial instruments by maturity based on their remaining contractual cash flows as at
30 September 2023. The amounts disclosed are the undiscounted cash flows calculated using spot rates of exchange prevailing at the
relevant balance sheet date. Contractual cash flows in respect of the Group’s non derivative financial instruments are detailed in note 20.

2023
Contractual
Balance sheet cash flows Between 1 and Between 2 and
£ million amount total <1 year 2 years 5 years >5 years
Net settled derivatives 57 200 (3) 34 143 26
Gross settled derivatives (110) – – – – –
• receipts – 17,822 5,429 4,010 5,283 3,100
• payments – (17,675) (5,374) (3,941) (5,247) (3,113)
(53) 347 52 103 179 13

218 Imperial Brands | Annual Report and Accounts 2023

 2022
Contractual
Balance sheet cash flows Between 1 and Between 2 and
£ million amount total <1 year 2 years 5 years >5 years
Net settled derivatives (84) (321) (71) (64) (101) (85)
Gross settled derivatives (3) – – – – –
• receipts – 9,890 1,934 3,293 4,059 604
• payments – (9,635) (1,851) (3,201) (3,944) (639)
(87) (66) 12 28 14 (120)

Derivatives as hedging instruments

As outlined in note 20, the Group hedges its underlying interest rate exposure and foreign currency translation exposures in an efficient,
commercial and structured manner, primarily using interest rate swaps and cross currency swaps. Foreign exchange contracts are used to
manage the Group’s short term liquidity requirements in line with short term cash flow forecasts as appropriate.

The Group does not apply cash flow or fair value hedge accounting, as permitted under IFRS 9, which results in fair value gains and losses
attributable to derivative financial instruments being recognised in net finance costs unless they are designated as hedges of a net
investment in foreign operations, in which case they are recognised in other comprehensive income.

As a result of the discontinuation of GBP LIBOR in December 2021 and US$ LIBOR discontinuation in June 2023, the Group amended all
GBP LIBOR derivatives to reference the daily risk free rate of SONIA instead of GBP LIBOR and all US$ LIBOR derivatives were amended to
reference the daily risk free rate of SOFR instead of US$ LIBOR. There are no changes pending for EUR derivatives. These changes did not
impact the Group's commercial hedging strategy and they did not have a material financial impact.

Interest rate swaps

To manage interest rate risk on its borrowings, the Group issues debt in the market or markets that are most appropriate at the time of
raising new finance with regard to currency, interest denomination or duration, and then uses interest rate swaps to re-base the debt into
the appropriate proportions of fixed and floating interest rates. Interest rate swaps are also transacted to manage and re-profile the Group’s
interest rate risk over the short, medium and long term in accordance with the Treasury Committee framework and Treasury Committee
discussions. Fair value movements are recognised in net finance costs in the relevant reporting period.

As at 30 September 2023, the notional amount of interest rate swaps outstanding that were entered into to convert fixed rate borrowings
into floating rates of interest at the time of raising new finance was £8,111 million equivalent (2022: £9,578 million equivalent) with a fair
value of £714 million liability (2022: £755 million liability). The fixed interest rates vary from 1.3% to 7.9% (2022: 1.1% to 7.9%), and the floating
rates are based on EURIBOR, SONIA and SOFR.

As at 30 September 2023, the notional amount of interest rate swaps outstanding that were entered into to convert the Group’s debt into the
appropriate proportion of fixed and floating rates to manage and re-profile the Group’s interest rate risk was £11,622 million equivalent (2022:
£11,548 million equivalent) with a fair value of £771 million asset (2022: £671 million asset). The fixed interest rates vary from 3.1% receivable
to 4.0% payable (2022: 0.5% payable to 4.0% payable), and the floating receivable rates reference EURIBOR and SOFR. This includes forward
starting interest rate swaps with a total notional amount of £4,055 million equivalent (2022: £3,353 million equivalent) with tenors between 1
and 10 years, starting between October 2023 and May 2032.

Cross-currency swaps
The Group enters into cross-currency swaps to convert the currency of debt into the appropriate currency with consideration to the
underlying assets of the Group as appropriate. Fair value movements are recognised in net finance costs in the relevant reporting period
unless the swaps are designated as hedges of a net investment in foreign operations, in which case the fair value movement attributable to
changes in foreign exchange is recognised in other comprehensive income.

As at 30 September 2023, the notional amount of cross-currency swaps entered into to convert sterling debt into the desired currency
was £1,600 million (2022: £1,600 million) and the fair value of these swaps was £111 million net liability (2022: £232 million net liability);
the notional amount of cross-currency swaps entered into to convert US dollar debt into the desired currency was $5,250 million
(2022: $2,250 million) and the fair value of these swaps was £6 million net liability (2022: £211 million net asset).

Foreign exchange contracts

The Group enters into foreign exchange contracts to manage short term liquidity requirements in line with cash flow forecasts. As at
30 September 2023, the notional amount of these contracts was £2,020 million equivalent (2022: £1,662 million equivalent) and the fair value
of these contracts was a net asset of £7 million (2022: £19 million net asset).

www.imperialbrandsplc.com 219
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Hedges of net investments in foreign operations

As at 30 September 2023, cross currency swaps with a notional amount of €6,910 million (2022: €4,103 million) were designated as hedges of
net investments in foreign operations. During the year, foreign exchange translation gains amounting to £75 million (2022: £105 million
losses) were recognised within exchange movements in other comprehensive income in respect of cross currency swaps designated as
hedges of a net investment in foreign operations. No hedging ineffectiveness occurred during the year (2022: £nil).

As at 30 September 2023, foreign exchange swaps with a notional amount of €624 million (2022: €309 million) were designated as hedges of
net investments in foreign operations. During the year, foreign exchange translation gains amounting to £14 million (2022: £12 million
losses) were recognised within exchange movements in other comprehensive income in respect of foreign exchange swaps that had been
designated as hedges of a net investment in foreign operations. No hedging ineffectiveness occurred during the year (2022: £nil).

The movements in other comprehensive income due to net investment hedging in the period were as follows:

£ million 2023 2022

Foreign exchange gains/(losses) on borrowings 338 (532)
Foreign exchange gains/(losses) on derivative financial instruments 89 (117)
427 (649)

22. DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax relates to the following:

Consolidated Consolidated Consolidated Consolidated

income income balance balance
statement statement sheet sheet
£ million 2023 2022 2023 2022
Temporary differences on depreciation and amortisation 164 14 (716) (895)
Retirement benefits (9) (4) 30 (90)
Tax credits and losses 6 (17) 282 278
Accruals, provisions and other temporary differences (3) 41 186 185
Deferred tax (expense)/benefit 158 34
Net deferred tax (liabilities)/assets (218) (522)

Reflected in the consolidated balance sheet as follows

£ million 2023 2022
Deferred tax assets 653 439
Deferred tax liabilities (871) (961)
(218) (522)

Reconciliation of net deferred tax liabilities

£ million 2023 2022
At 1 October (522) (479)
Credited to the income statement 158 34
Credited/(charged) to other comprehensive income 134 (55)
Credited to equity 1 2
Acquisitions (15) –
Exchange movements 22 (18)
Other movements 4 (6)
As at 30 September (218) (522)

Unrecognised deferred tax assets

Gross Net Gross Net
£ million 2023 2023 2022 2022
Tax losses 235 62 278 75
Tax credits 15 15 25 25
Other temporary differences 84 24 71 20
334 101 374 120

220 Imperial Brands | Annual Report and Accounts 2023

Analysis of unrecognised deferred tax assets by expiry date
Gross Net Gross Net
£ million 2023 2023 2022 2022
Tax losses expiring:
Within 2-5 years – – 20 4
No expiry 235 62 258 71
235 62 278 75
Tax credits expiring:
Within 1 year 15 15 22 22
Within 2-5 years – – 1 1
No expiry – – 2 2
15 15 25 25
Other temporary differences expiring:
No expiry 84 24 71 20
84 24 71 20

In December 2021, the OECD issued model rules for a new global minimum tax framework (Pillar Two), applicable for multinational
enterprise groups with global revenue over €750 million. The legislation implementing the rules in the UK was substantively enacted on
20 June 2023 and will apply to the Group from the financial year ending 30 September 2025 onwards. The Group has applied the mandatory
exception under IAS 12 in relation to the accounting for deferred tax assets and liabilities arising from the implementation of the Pillar
Two model rules. The Group is reviewing this legislation and monitoring the status of implementation of the model rules outside of the UK
to assess the potential impact.

Included within net deferred tax liabilities are deferred tax assets recognised of £257 million (2022: £257 million) for tax credits arising
in the Group's Spanish business. These tax credits have no time expiry. Utilisation of these tax credits is restricted to 50% of the Spanish
business's taxable profits arising in any given year; those tax law restrictions extend the period over which the deferred tax assets would
otherwise be recovered. The Group considers there to be forecast future taxable profits which support the recognition of these long-term
deferred tax assets. The period over which these deferred tax assets are utilised is sensitive to forecasting assumptions about future growth
rates (which may be influenced by the future effects of climate change) and regulatory changes. Any material effects of climate change in
the long term could extend the period over which the deferred tax asset will be recovered but as the tax credits do not expire, the Group
considers there is positive evidence that sufficient future taxable profits would still be available. Based on a range of forecast scenarios
modelling sensitivities (including the future effects of climate change) these deferred tax assets are expected to be utilised over a period of
18-22 years.

Included within net deferred tax liabilities are deferred tax assets recognised for retirement benefits of £88 million (2022: £55 million)
arising in the Group’s German business. These deferred tax assets are expected to be recovered both by way of utilisation against the
reversal of deferred tax liabilities of £40 million (2022: £20 million) arising in the Group’s German business and by way of utilisation against
future taxable profits. The Group considers there to be forecast future taxable profits which support the recognition of these long term
deferred tax assets. Based on a range of forecast scenarios modelling sensitivities these deferred tax assets are expected to be recovered
over a period of 20-40 years corresponding to the life of the pension scheme.

Included within net deferred tax liabilities are deferred tax assets recognised for intangibles of £199 million (2022: £nil) arising in the Group's
Dutch business. These deferred tax assets are expected to be recovered by way of utilisation against future taxable profits. The Group
considers there to be forecast future taxable profits which support the recognition of these long term deferred tax assets. The period over
which these deferred tax assets are utilised is sensitive to forecasting assumptions about future growth rates and regulatory changes.
These deferred tax assets are expected to be recovered over a period of 16 years corresponding to the life of the intangibles.

We have reviewed the recoverability of deferred tax assets in overseas territories in light of forecast business performance. In 2023 we have
recognised deferred tax assets of £6 million that were previously unrecognised (2022: recognised deferred tax assets of £1 million that were
previously unrecognised) on the basis that it is more likely than not that these are recoverable (2022: recoverable).

A deferred tax liability of £40 million (2022: £43 million) is recognised in respect of taxation expected to arise on the future distribution of
unremitted earnings totalling £2 billion (2022: £2 billion).

The temporary differences associated with investments in the Group's subsidiaries, associates and joint ventures for which a deferred tax
liability has not been recognised in the periods presented, aggregate to £1,215 million (2022: £1,244 million) for which a deferred tax liability
of £38 million (2022: £37 million) has not been recognised. No liability has been recognised because the Group is in a position to control the
timing of the reversal of those temporary differences and it is probable that such differences will not reverse in the foreseeable future.

23. RETIREMENT BENEFIT SCHEMES

The Group operates a number of retirement benefit schemes for its employees, including both defined benefit and defined contribution
schemes. The Group’s three principal schemes are defined benefit schemes and are operated by Imperial Tobacco Limited (ITL) in the UK,
Reemtsma Cigarettenfabriken GmbH in Germany and ITG Brands in the USA; these schemes represent 64%, 15% and 9% of the Group’s total
defined benefit obligations (2022: 62%, 15% and 10%) and 22%, 32% and 8% of the current service cost (2022: 31%, 32% and 10%) respectively.

www.imperialbrandsplc.com 221
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Imperial tobacco pension fund

The UK scheme, the Imperial Tobacco Pension Fund ("ITPF"), was closed to future accrual on 30 September 2023. All active members are
now enrolled into the defined contribution scheme as of 1 October 2023 alongside all new employees that have joined since 1 October 2010.
Former active members of the defined benefit section of the ITPF are now deferred members who are able to draw their pension in the
same way as an existing deferred member and are in receipt of annual inflationary increases as existing deferred members. The closure to
future accrual resulted in a curtailment credit of £8.3 million in the 2023 income statement. As part of the agreement with active members
to close to future accrual, the company agreed a compensation package. The main component included a number of payments to members
between October 2023 and October 2025, for which the company has accrued £14.3 million in the 2023 income statement. The ITPF defined
benefit obligation comprises 80% in respect of pensioners and dependants, 20% in respect of deferred members and has a weighted average
maturity of 12 years.

The ITPF operates under trust law and is managed and administered by the Trustees on behalf of the members in accordance with the
terms of the Trust Deed and Rules and relevant legislation. The ITPF assets are held by the trust.

The main risk for the company in respect of the ITPF is that additional contributions are required if the assets are not expected to be
sufficient to pay for the benefits. The investment portfolio is subject to a range of risks typical of the asset classes held, such as liquidity to
manage the Liability Driven Investment (LDI) portfolio, credit exposure within investment funds and exposure to the property market.
The ITPF holds a buy-in policy with Standard Life as an asset; this covers around 61% of the pensioner defined benefit obligation. The buy-in
eliminates investment return, longevity, inflation and funding risks in respect of those benefits covered. The ITPF also has access to a loan
facility to provide short-term liquidity to support the LDI portfolio in the event of significant changes in government bond yields.

The main uncertainties affecting the level of benefits payable under the ITPF are future inflation levels, as these impact increases to
pensions, and the actual longevity of the membership.

The contributions paid to the ITPF are set by the ITPF Scheme Actuary every three years. The Scheme Actuary is an external consultant,
appointed by the Trustees. Principal factors that the Scheme Actuary will have regard to include the covenant offered by the company,
the level of risk in the ITPF, the expected return on assets, the results of the funding assessment on the Technical Provisions basis and the
expected cost of securing benefits if the ITPF were to be wound up.

The latest valuation agreed at 31 March 2022 reported a 118% funding ratio on the Technical Provisions basis. The company and Trustee
agreed to maintain the existing dynamic contribution schedule, which means ITL’s annual contributions will reduce or increase depending
on the ITPF valuation going forward. The level of ITL's annual contribution to the ITPF was nil for the year to 31 March 2023. ITL expect to
pay £8.4 million in contributions to an escrow account for the year to 31 March 2024. Further contributions were agreed to be paid by ITL in
the event of a downgrade of the Group's credit rating to non-investment grade by either Standard & Poor's or Moody's. In addition, a reduced
surety guarantee with a total value of £120 million was agreed (previously £225 million) and a parental guarantee from Imperial Brands PLC
remains in place. In certain circumstances, surplus funds in the defined benefit section of the ITPF may be used to finance defined
contribution section contributions on ITL's behalf with company contributions reduced accordingly.

The IAS 19 measurement of the defined benefit obligation is sensitive to the assumptions made about future inflation as well as the
assumptions made about life expectancy. It is also sensitive to the discount rate, which depends on market yields on sterling denominated
AA corporate bonds. The main differences between the Technical Provisions and IAS 19 assumptions are a more prudent longevity
assumption for Technical Provisions and a different approach to setting the discount rate. A consequence of the ITPF’s investment strategy,
with a proportion of the assets invested in return-seeking assets, is that the difference between the market value of the assets and the
IAS 19 defined benefit obligation may be relatively volatile.

The ITPF has a pension surplus on the IAS 19 measure and, in line with IFRIC 14, recognition of the net asset on the fund is only appropriate
where it can be recovered. The ITPF trust deed gives the company an ability to receive a refund of surplus assets assuming the full
settlement of liabilities in the event of a wind-up. Furthermore, in the ordinary course of business the Trustee has no rights to unilaterally
wind up the ITPF or otherwise augment the benefits due to the ITPF's members. Based on these circumstances, any net surplus in the ITPF
is recognised in full.

The Reemtsma Cigarettenfabriken Pension Plan

The German scheme, the Reemtsma Cigarettenfabriken Pension Plan (RCPP), is primarily a career average pension plan, though a small
group of members has final salary benefits. The RCPP defined benefit obligation comprises 53% in respect of pensioners and dependants,
24% in respect of deferred members and 23% in respect of active members and has a weighted average maturity of 16 years. The RCPP was
closed to new members from 1 January 2020, but existing active members at that date continue to accrue benefits.

The RCPP is unfunded and the company pays benefits as they arise. The RCPP obligations arise under a works council agreement and are
subject to standard German legal requirements around such matters as the benefits to be provided to employees who leave service, and
pension increases in payment. Over the next year Reemtsma Cigarettenfabriken GmbH expects to pay £24 million (2022: £23 million) in
respect of benefits.

The main uncertainties affecting the level of benefits payable under the RCPP are future inflation levels, as these impact increases to
pensions, and the actual longevity of the membership.

The IAS 19 measurement of the defined benefit obligation and the current service cost are sensitive to the assumptions made about the
above variables, as well as the discount rate, which depends on market yields on euro denominated AA corporate bonds.

222 Imperial Brands | Annual Report and Accounts 2023

ITG scheme
The main US pension scheme, held by ITG Brands is the ITG Scheme, is a defined benefit pension plan that is closed to new entrants.
The ITG Scheme defined benefit obligation comprises 83% in respect of pensioners and dependants, 2% in respect of deferred members and
15% in respect of active members and has a weighted average maturity of nine years.

The ITG Scheme is funded and benefits are paid from the ITG Scheme assets. Contributions to the plan are determined based on US
regulatory requirements. ITG Brands made no contributions this year and is not expected to make any contributions in the next year.

Annual benefits in payment are assumed not to increase from current levels. The main uncertainty affecting the level of benefits payable
under the plan is the actual longevity of the membership. Other key uncertainties impacting the plan include investment risk and potential
past service benefit changes from future union negotiations.

The IAS 19 measurement of the defined benefit obligation and the service cost are sensitive to the assumptions made about the above
variables, as well as the discount rate, which depends on market yields on US dollar denominated AA corporate bonds.

Other plans
Other plans of the Group include various pension plans, other post-employment and long-term employee benefit plans in several countries
of operation. Some of the plans are funded, with assets backing the obligations held in separate legal vehicles such as trusts, whilst others
are operated on an unfunded basis. The benefits provided, the approach to funding and the legal basis of the plans reflect their local
territories. IAS 19 requires that the discount rate for calculating the DBO and service cost is set according to the level of relevant market
yields on corporate bonds where the market is considered "deep", or government bonds where it is not.

For the year ended 30 September 2023 the Group included no new schemes in the IAS 19 position that had not been previously reported in
the IAS 19 position or elsewhere in the financial statements.

The company agreed with the Trustees in Ireland to merge both defined benefit plans into a single trust and with the trustees in New
Zealand to fully close and wind-up the defined benefit plan.

The results of the most recent available actuarial valuations for the various plans have been updated to 30 September 2023 in order to
determine the amounts to be included in the Group's consolidated financial statements. The aggregate IAS 19 position is as follows:

Defined benefit plans

2023 2022
£ million DBO Assets Total DBO Assets Total
At 1 October (3,609) 3,541 (68) (5,319) 5,166 (153)
Consolidated income statement expense:
Current service cost (25) – (25) (49) – (49)
Settlements gains/(losses) 2 (6) (4) 136 (139) (3)
Past service income/(costs) 9 – 9 (2) – (2)
Cost of termination benefits (5) – (5) (10) – (10)
Net interest (expense)/income on net defined benefit
(liability)/asset (165) 178 13 (99) 107 8
Administration costs paid from plan assets – (5) (5) – (5) (5)
Cost recognised in the income statement (17) (61)
Remeasurements:
Actuarial loss due to liability experience (132) – (132) (94) – (94)
Actuarial gain due to financial assumption changes 234 – 234 1,659 – 1,659
Actuarial gain due to demographic assumption changes – – – 10 – 10
Return on plan assets excluding amounts included in net
interest (expense)/income above – (478) (478) – (1,499) (1,499)
Remeasurement effects recognised in other
comprehensive income (376) 76
Cash:
Employer contributions – 59 59 – 120 120
Employee contributions – – – (1) 1 –
Benefits paid directly by the company 265 (265) – 311 (311) –
Benefits paid from plan assets – – – – – –
Net cash 59 120
Immaterial benefit plans categorised as an IAS 19 obligation (8) – (8) – – –
Exchange movements 64 (47) 17 (151) 101 (50)
Total other 9 (50)
At 30 September (3,370) 2,977 (393) (3,609) 3,541 (68)

www.imperialbrandsplc.com 223
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Retirement benefit scheme costs charged to operating profit

£ million 2023 2022
Defined benefit expense in operating profit 30 69
Defined contribution expense in operating profit 16 16
Total retirement benefit scheme cost in operating profit 46 85

Split as follows in the consolidated income statement:

£ million 2023 2022

Cost of sales 15 25
Distribution, advertising and selling costs 20 39
Administrative and other expenses 11 21
Total retirement benefit scheme costs in operating profit 46 85

Assets and liabilities recognised in the consolidated balance sheet

£ million 2023 2022
Retirement benefit assets 414 826
Retirement benefit liabilities (807) (894)
Net retirement benefit liability (393) (68)

Key figures and assumptions used for major plans

2023 2022
£ million unless otherwise indicated ITPF RCPP ITG Scheme ITPF RCPP ITG Scheme
Defined benefit obligation (DBO) 2,142 496 311 2,229 538 365
Fair value of scheme assets (2,481) – (337) (2,958) – (405)
Net defined benefit (asset)/liability (339) 496 (26) (729) 538 (40)
Current service cost 6 8 2 15 15 3
Employer contributions – 23 – 50 – –
Principal actuarial assumptions used (% per annum)
Discount rate 5.6 4.2 5.7 5.3 3.7 5.4
Future salary increases n/a 3.5 n/a 3.7 3.7 n/a
Future pension increases 3.4 2.4 n/a 3.7 2.5 n/a
Inflation 3.4 2.4 2.3 3.7 2.5 2.3

2023
ITPF RCPP ITG Scheme
Male Female Male Female Male Female
Life expectancy at age 65 years:
Member currently aged 65 21.2 22.5 20.8 24.2 19.7 21.7
Member currently aged 50 21.9 23.8 22.8 25.8 20.8 22.8

2022
ITPF RCPP ITG Scheme
Male Female Male Female Male Female
Life expectancy at age 65 years:
Member currently aged 65 21.1 22.4 20.5 23.9 19.7 21.7
Member currently aged 50 21.8 23.7 22.6 25.6 20.9 22.9

Assumptions regarding future mortality experience are set based on advice that uses published statistics and experience in each territory.
In particular for the ITPF, SAPS S3 (2022: SAPS S3) tables are used with various adjustments for different groups of members, reflecting
observed experience. The largest group of members uses the SAPS S3 All Pensioner Male Amounts Middle table with a 105% multiplier.
An allowance for improvements in longevity is made using the 2021 (2022: 2021) CMI improvement rates with a long-term trend of
1.25% per annum.

224 Imperial Brands | Annual Report and Accounts 2023

Sensitivity analysis for key assumptions at the end of the year
Sensitivity analysis is illustrative only and is provided to demonstrate the degree of sensitivity of results to key assumptions. Generally,
estimates are made by re-performing calculations with one assumption modified and all others held constant.

2023 2022
% increase in DBO ITPF RCPP ITG Scheme ITPF RCPP ITG Scheme
Discount rate: 0.5% decrease 5.6 8.1 4.5 6.1 9.5 4.9
Rate of inflation: 0.5% decrease (4.2) (5.7) n/a (4.9) (6.3) n/a
One year increase in longevity for a member currently
age 65, corresponding changes at other ages 3.5 4.2 4.4 3.7 4.7 4.6

The sensitivity to the inflation assumption change includes corresponding changes to the future salary increases and future pension
increases assumptions, but is assumed to be independent of any change to discount rate.

We estimate that a 0.5% decrease in the discount rate at the start of the year would have increased the consolidated income statement
pension expense by approximately £12 million (2022: £22 million).

An approximate split of the major categories of ITPF scheme assets is as follows:

2023 2022
Percentage Percentage
of ITPF of ITPF
scheme scheme
£ million unless otherwise indicated Fair value assets Fair value assets
Bonds – index linked government / LDI funds 351 14.1 409 14.0
Bonds – corporate and other – – 34 1.0
Property including ground leases 488 19.7 604 20.0
Secured finance and private debt funds 620 25.0 827 28.0
Insurance contract (buy-in policy) 1,044 42.1 1,058 36.0
Other – including cash and short-term loan drawings (22) (0.9) 26 1.0
2,481 100.0 2,958 100.0

The primary investment objective is to invest the ITPF’s assets in an appropriate and secure manner such that members’ benefit
entitlements can be paid as they fall due.

The majority of the assets are non-quoted. The ITPF holds £nil of self-invested assets (2022: £nil).

An approximate split of the major categories of ITG Scheme assets is as follows:

2023 2022
Percentage Percentage
of ITG of ITG
Scheme Scheme
£ million unless otherwise indicated Fair value assets Fair value assets
Bonds – government, corporate and other 203 60.2 129 31.9
Other – including derivatives, commodities and cash 134 39.8 276 68.1
337 100.0 405 100.0

The majority of the assets are non-quoted.

www.imperialbrandsplc.com 225
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

24. PROVISIONS
2023
Employment
related
£ million Restructuring claims Other Total
At 1 October 2022 286 59 81 426
Additional provisions charged to the consolidated income statement – 106 40 146
Amounts used (100) (9) (18) (127)
Unused amounts reversed – (12) (8) (20)
Exchange movements (6) – (5) (11)
At 30 September 2023 180 144 90 414

Analysed as:

£ million 2023 2022

Current 148 203
Non-current 266 223
414 426

Restructuring provisions relate mainly to our 2021 Strategic review programme and other programmes (see note 5).

The restructuring provision is split between 2021 Strategic review programme of £88 million (2022: £155 million) and other programmes of
£92 million (2022: £131 million).

Employment related claims provisions include £31 million (2022: £37 million) relating to local employment requirements including holiday
pay and £28 million (2022: £21 million) of distribution requirements relating to employment and duty. An amount of £85 million (2022: £nil)
has been provided for employment related claims arising from a number of legacy legal disputes. Although the company continues to
appeal a number of these claims, in the current year the Group has resolved to engage with certain counterparties where a valid claim has
been established. There are uncertainties relating to the estimation and quantification of this provision and amounts may change in the
future, but any provisions are expected to be utilised within the next 2 years.

Other provisions include £38 million (2022: £46 million) relating to various local tax or duty requirements, £9 million (2022: £21 million) of
market exit provisions and £30 million for factory closure provisions (2022: £nil).

The provisions are spread throughout the Group and payment will be dependent on local statutory requirements.

Most of the other provisions will also be utilised within the next two years, though certain employee related provisions may be required to
be held for a period of up to 10 years.

25. SHARE CAPITAL

2023 2022
Ordinary shares Ordinary shares
10p each 10p each
Number £ million Number £ million
Authorised, issued and fully paid:
1 October 1,020,697,237 103 1,020,697,237 103
Shares cancelled (52,107,043) (6) – –
30 September 968,590,194 97 1,020,697,237 103

During the period a share buy back scheme was initiated and 52,107,043 10p shares were repurchased for a cost of £1,000 million.
Upon completion of the purchase, these shares were cancelled and transferred to the capital redemption reserve. The stamp duty costs
were £5 million and the fees charged for the share repurchase were £1 million.

On 6 March 2014, 31,942,881 shares held in treasury were cancelled creating the capital redemption reserve, and between September 2017
and December 2017, 4,973,916 shares were cancelled increasing this reserve.

26. SHARE SCHEMES

The Group operates four types of share-based incentive programmes, designed to incentivise staff and to encourage them to build a stake in
the Group.

Share matching scheme

Awards are made to eligible employees who are invited to invest a proportion of their eligible bonus in shares for a period of three years,
after which matching shares are awarded on a 1:1 ratio, plus dividend equivalents.

Long term incentive plan (LTIP)

Awards of shares under the LTIP are made to the Executive Directors and senior executives at the discretion of the Remuneration
Committee. They vest three years after grant and are subject to performance criteria. Dividend equivalents accrue on vested shares.

226 Imperial Brands | Annual Report and Accounts 2023

Sharesave plan
Options are granted to eligible employees who participate in a designated savings scheme for a three year period. Historically they were
also granted for a five year period.

Discretionary share awards plan (DSAP)

Under the DSAP, one-off conditional awards are made to individuals to recognise exceptional contributions within the business. Awards,
which are not subject to performance conditions and under which vested shares do not attract dividend roll-up, will normally vest on the
third anniversary of the date of grant subject to the participant’s continued employment. The limit of an award under the DSAP is capped at
25% of the participant’s salary at the date of grant. Shares used to settle awards under the DSAP will be market purchased.

Further details of the schemes including additional criteria applying to Directors and some senior executives are set out in the Directors’
Remuneration Report.

Analysis of charge to the consolidated income statement

£ million 2023 2022
Share Matching Scheme 2 2
Long Term Incentive Plan 27 25
Sharesave Plan 1 1
Discretionary Share Awards Plan 1 1
31 29

The awards are predominantly equity settled. The balance sheet liability in respect of cash settled schemes at 30 September 2023 was £3.4
million (2022: £3.6 million).

Reconciliation of movements in awards/options

2023
Sharesave
Share weighted
matching average
scheme LTIP Sharesave DSAP exercise
Thousands of shares unless otherwise indicated awards awards options awards price £
Outstanding at 1 October 2022 486 8,120 1,934 120 13.21
Granted 161 3,853 862 67 13.24
Lapsed/cancelled (18) (2,402) (90) (11) 12.63
Exercised (176) (1,069) (1,020) (3) 12.38
Outstanding at 30 September 2023 453 8,502 1,686 173 13.72
Exercisable at 30 September 2023 – – 264 – 12.37

2022
Sharesave
weighted
Share average
matching LTIP Sharesave DSAP exercise
Thousands of shares unless otherwise indicated awards awards options awards price £
Outstanding at 1 October 2021 482 7,412 2,053 60 13.89
Granted 192 2,658 274 106 14.56
Lapsed/cancelled (23) (873) (321) (5) 18.11
Exercised (165) (1,077) (72) (41) 16.14
Outstanding at 30 September 2022 486 8,120 1,934 120 13.21
Exercisable at 30 September 2022 – – 151 – 17.45

The weighted average Imperial Brands PLC share price at the date of exercise of awards and options was £18.28 (2022: £16.83). The weighted
average fair value of Sharesave options granted during the year was £3.26 (2022: £3.30).

www.imperialbrandsplc.com 227
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

Summary of awards/options outstanding at 30 September 2023

Vesting
Number of period Exercise price
awards/options remaining of options
Thousands of shares unless otherwise indicated outstanding in months outstanding £
Share Matching Scheme
2021 181 5 n/a
2022 139 17 n/a
2023 133 29 n/a
Total awards outstanding 453

Long Term Incentive Plan

2021 2,369 5 n/a
2022 2,896 17 n/a
2023 3,237 29 n/a
Total awards outstanding 8,502

Sharesave Plan
2020 264 – 17.45
2021 315 10 13.09
2022 254 22 14.56
2023 855 34 14.29
Total options outstanding 1,688

Discretionary Share Awards Plan

2021 5 10 n/a
2022 101 15 n/a
2023 67 30 n/a
Total options outstanding 173

The vesting period is the period between the grant of awards or options and the earliest date on which they are exercisable. The vesting
period remaining and the exercise price of options outstanding are weighted averages. Participants in the Sharesave Plan have six months
from the maturity date to exercise their options. Participants in the LTIP generally have seven years from the end of the vesting period to
exercise their options. The exercise price of the options is fixed over the life of each option.

Pricing
For the purposes of valuing options to calculate the share-based payment charge, the Black-Scholes option pricing model has been used for
the Share Matching Scheme, Sharesave Plan, Discretionary Share Awards Plan and one Long Term Incentive Plan with no market
conditions. A summary of the assumptions used in the Black-Scholes model for 2023 and 2022 is as follows:

2023
Share
Matching
Scheme Sharesave DSAP
Risk-free interest rate % 4.0 4.4 4.1
Volatility (based on 3 or 5 year history)% 33.1 27.7 33.2
Expected lives of options granted years 3.0 3.0 3.0
Dividend yield % 8.2 8.2 8.2
Fair value £ 16.04 3.30 14.72
Share price used to determine exercise price £ 20.53 17.88 18.84
Exercise price £ n/a 14.29 n/a

228 Imperial Brands | Annual Report and Accounts 2023

 2022
Share
Matching
Scheme Sharesave DSAP
Risk-free interest rate % 2.0 1.2–2.2 2.0–2.2
Volatility (based on 3 or 5 year history)% 35.5 35.3–35.5 35.5
Expected lives of options granted years 3.0 3.0 3.0
Dividend yield % 9.2 9.2 9.2
Fair value £ 10.35 3.21–3.31 10.35–10.67
Share price used to determine exercise price £ 13.65 17.83–18.39 13.65–14.08
Exercise price £ n/a 14.56 n/a

Market conditions were incorporated into the Monte Carlo method used in determining the fair value of LTIP awards at grant date.
Assumptions in 2023 and 2022 are given in the following table:

% 2023 2022
Future Imperial Brands share price volatility 23.3 29.6
Future Imperial Brands dividend yield – –
Share price volatility of the tobacco and alcohol comparator group 15.9–63.5 17.0–83.7
Correlation between Imperial Tobacco and the alcohol and tobacco comparator group 21.4 24.4

Employee share ownership trusts

The Imperial Tobacco Group PLC Employee and Executive Benefit Trust and the Imperial Tobacco Group PLC 2001 Employee Benefit Trust
(the Trusts) have been established to acquire ordinary shares in the Company to satisfy rights to shares arising on the exercise and vesting
of options and awards. The purchase of shares by the Trusts has been financed by a gift of £19.2 million and an interest free loan of
£147.5 million. In addition the Group has gifted treasury shares to the Trusts. None of the Trusts’ shares has been allocated to employees or
Executive Directors as at 30 September 2023. All finance costs and administration expenses connected with the Trusts are charged to the
consolidated income statement as they accrue. The Trusts have waived their rights to dividends and the shares held by the Trusts are
excluded from the calculation of basic earnings per share.

Shares held by employee share ownership trusts

Millions of shares 2023 2022
At 1 October 3.7 0.9
Gift of shares from Treasury – 4.0
Distribution of shares held by Employee Share Ownership Trusts (2.1) (1.2)
At 30 September 1.6 3.7

The shares in the Trusts are accounted for on a first in first out basis and comprise nil shares acquired in the open market (2022: nil) and
1.6 million (2022: 3.7 million) treasury shares gifted to the Trusts by the Group. No (2022: 4 million) shares were gifted to the Trusts in the
financial year 2023.

27. TREASURY SHARES

Subject to authorisation by special resolution, the Group may purchase its own shares in accordance with the Companies Act. Any shares
which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the
purchase, thereby reducing the amount of Group’s issued share capital. Shares held in treasury do not qualify for dividends. Shares
purchased under the share buyback programme initiated on 7 October 2022 will be cancelled immediately on completion of the purchase.
There were no movements in treasury shares during the year to 30 September 2023 (2022: reduced by 4.0 million shares).

2023 2022
Millions of Millions of
shares Value shares Value
£ million unless otherwise indicated (number) £ (number) £
At 1 October 70.3 2,183 74.3 2,183
Gifted to Employee Share Ownership Trusts – – (4.0) –
At 30 September 70.3 2,183 70.3 2,183
Percentage of issued share capital 7.3 n/a 6.9 n/a

28. COMMITMENTS
Capital commitments
£ million 2023 2022
Contracted but not provided for:
Property, plant and equipment and software 97 95

www.imperialbrandsplc.com 229
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

29. CONTINGENT LIABILITIES

The following summary includes updates to matters that have developed since the 2022 Annual Report and Accounts.

USA state settlement agreements

In November 1998, the major United States cigarette manufacturers, including Reynolds and Philip Morris, entered into the Master
Settlement Agreement (“MSA”) with 52 US states and territories and possessions. These cigarette manufacturers previously settled four
other cases, brought by Mississippi, Florida, Texas and Minnesota, by separate agreements with each state (collectively with the MSA,
the “State Settlement Agreements”, with Mississippi, Florida, Texas and Minnesota known collectively as the “Previously Settled States”).
ITG Brands (ITGB) is a party to the MSA and to the Mississippi, Minnesota, and Texas State Settlement Agreements.

In connection with its 12 June 2015 acquisition of four cigarette brands (Winston, Salem, Kool and Maverick, referred to as the “Acquired
Brands”) from Reynolds and Lorillard, ITGB has been involved in litigation and other disputes with the Previously Settled States, Philip
Morris, and Reynolds in their state courts.

Delaware
ITGB is involved in litigation with Reynolds in the Delaware court that has jurisdiction over disputes under the Asset Purchase Agreement
(APA) for the Acquired Brands. The current case in progress involves Reynolds’ claim to indemnity for Florida settlement payments. The
issue in this case is whether ITGB has satisfied its obligations to use “reasonable best efforts” to join the settlement with Florida under the
APA and whether regardless of that “reasonable best efforts” requirement whether ITGB is required to indemnify Reynolds for amounts the
Florida Court may require Reynolds to pay.

On 30 September 2022, the trial court granted summary judgment to Reynolds and denied summary judgment to ITGB. It held that the
Florida court’s determination that ITGB did not assume payments under the Florida settlement unless it agreed to do so was not binding on
the Delaware courts under principles of issue preclusion. It further held that as a matter of law the contract provisions were unambiguous
and no evidence was required, and that ITGB had assumed and was required to indemnify Reynolds for Florida settlement payments. The
Court did not determine the amount of Reynolds’ damages but left that question open for further proceedings. The parties submitted an
agreed schedule to the court to address the issue of damages.

On 23 February 2023 the initial motions on the amount of indemnity due were argued and supplemental briefing requested by the court was
completed on 9 June 2023, with the Court having 90 days to issue its decision. On 2 October 2023 the Court issued an order on damages. The
court rejected ITGB’s claim that no damages could be assessed but declined to decide the amount of damages and other issues until after a
trial. The trial is expected to take place in the first quarter of 2024.

Reynolds’ claim for indemnification in Delaware is limited at most to the amounts it has been required to pay under the Florida
determination described above, plus interest and attorney’s fees. ITGB continues to deny that indemnity is appropriate and intends to
appeal that determination. ITGB further contends that Reynolds’ damages should be substantially reduced by the amount by which
Reynolds’ settlement payments have been reduced through operation of the “profit adjustment” by reason of ITGB not becoming a party to
the Florida settlement as well as by reason of Reynolds’ and third-parties’ conduct.

Amounts at issue range to US$ 250 million through 2022, plus future payments of US$ 19 million to US$ 32 million annually going forward,
alleged accrued interest of up to US$ 23 million and attorney’s fees of up to US$ 7 million through 2022. Based on the current facts and
circumstances it is currently unclear as to what level of damages will become payable in this case. Due to the inability to determine a
reliable estimate of the amount involved, no provision has been recognised pending the outcome of the trial at which the level of damages
will be decided.

MSA previously settled states reduction

The MSA contains a downward adjustment, called the Previously Settled States Reduction, which reduces aggregate payments made by
Philip Morris, Reynolds, and ITGB by a specified percentage each year. The State of California, later joined by the remainder of the MSA
states and by Philip Morris, challenged the application of that Reduction to ITGB for every year from 2016 forward, claiming that it cannot
apply to ITGB since it is not making settlement payments to Florida, Minnesota, or Texas under their settlements. The Independent Auditor
to the MSA, which initially addresses disputes related to payments, has rejected that challenge every year. It is possible that one of the
parties making the challenge may seek to arbitrate the claim under the MSA. The PSS Reduction provides annual MSA payment reductions
of circa US$ 65 million.

Overall summary of liability position associated with USA state settlement agreements
The Group’s legal advice is that it has a strong position on pending claims related to the Acquired Brands and the Group therefore considers
that no provision is required for these matters.

Product liability investigations

The Group is currently involved in a number of legal cases in which claimants are seeking damages for alleged smoking and health related
effects. In the opinion of the Group’s lawyers, the Group has meritorious defences to these actions, all of which are being vigorously
contested. Although it is not possible to predict the outcome of the pending litigation, the Directors believe that the pending actions will not
have a material adverse effect upon the results of the operations, cash flow or financial condition of the Group. This assessment of the
probability of economic outflows at the year-end is a judgement which has been taken by management. Consequently, the Group has not
provided for any amounts in respect of these cases in the financial statements. There have been no material updates to matters in any
product liability investigations in the period since the 2023 Annual Report and Accounts.

230 Imperial Brands | Annual Report and Accounts 2023

Competition authority investigations
Spain
On 12 April 2019 the Spanish National Commission on Markets and Competition (CNMC) announced penalties against Philip Morris Spain,
Altadis, JT International Iberia and Logista. Altadis and Logista received fines of €11.4 million and €20.9 million, respectively, from the
CNMC. According to the decision, Altadis and Logista are alleged to have infringed competition law by participating in an exchange of sales
volume data between 2008 and February 2017. The CNMC considers that this conduct had the effect of restricting competition in the
Spanish tobacco market. Both companies believe that the arguments made by the CNMC that define this conduct as anti-competitive are
flawed. In June 2019, both Altadis and Logista commenced appeals to the CNMC’s decision, and the fines imposed in the Spanish High
Court where they believe they will be successful, a decision supported by external legal counsel. In September 2019 Altadis and, separately,
Logista arranged bank guarantees for the full amount of the fines with the result that payment of the fines had been suspended pending the
outcome of the appeals. Therefore, provision for these amounts is not considered appropriate.

Both in the Altadis and Logista appeals, the parties have concluded their submissions to the Court and a judgment is awaited. The judgment
of the Court of First Instance is currently pending, and it is possible it might be served in 2024.

In parallel to the main proceedings against the CNMC decision, on 28 February 2023, the Supreme Court annulled the unannounced
inspection carried out by the CNMC officials on Altadis' premises in February 2017 for lack of consent by Altadis. Therefore, all the
documents and evidence seized by the CNMC during Altadis' inspection have to be returned to the company and should be struck out
from the CNMC decision. It remains to be seen what the impact of this Court decision will be on the main proceedings.

Other litigation
US Helms-Burton litigation
Imperial Brands Plc has been named as a defendant in a civil action in federal court in Miami, Florida under Title III of the Cuban Liberty and
Democratic Solidarity Act of 1996 (“Helms-Burton”) filed on 6 August 2020. Title III provides United States nationals with a cause of action
and a claim for treble damages against persons who have “trafficked” in property expropriated by the Cuban government. Treble damages are
automatically available under Helms-Burton. Although the filed claim is for unquantified damages, we understand the claim could potentially
reach approximately US$ 365 million, based on the claimants’ claim to own 90% of the property, which they value at US$ 135 million (and
then treble). The claim is based on allegations that Imperial, through Corporación Habanos S.A. (a joint venture between one of Imperial’s
now former subsidiaries and the Cuban government), has “trafficked” in a factory in Havana, Cuba that the Cuban government confiscated
from the claimants’ ancestor in the early 1960s, by using the factory to manufacture, market, sell, and distribute Habanos cigars.

At the time the claim was filed against Imperial and up until the conclusion of the Brexit “transition period” on 31 December 2020, Imperial
was subject to an EU law known as the EU Blocking Statute (Regulation (EC) No. 2271/96), which conflicts with Helms-Burton, protected
Imperial against the impact of Title III, and impacted how Imperial might respond to the threatened litigation. The EU Blocking Statute has
been transposed into domestic law with only minimal changes. Accordingly, on 10 January 2021, Imperial submitted an application to the
UK Department for International Trade for authorisation from the Secretary of State for International Trade to defend the action or, at a
minimum, to file and litigate a motion to dismiss the action.

On 8 February 2021, the United Kingdom Secretary of State for International Trade authorised Imperial to file and litigate a motion to
dismiss the action. A hearing on the motion to dismiss took place on 26 July 2022 before a magistrate judge. On 2 November 2022 the
magistrate judge recommended that the action be dismissed, without prejudice to re-filing in a proper venue.

On 31 March 2023 the district judge issued an order addressing the magistrate’s recommended ruling and adopting the recommended
ruling in part. In respect of Habanos, the motion to dismiss was granted, without objection from the claimants, on the basis that the federal
court in Florida was an “improper venue” (wrong court). Habanos was therefore dismissed from the case, without prejudice to the claimants’
right to sue it in a proper venue. As to Imperial and the other defendants, the district judge remanded the motion to dismiss back to the
same magistrate for a further review and analysis and a report and recommendation on whether the ruling regarding Habanos should
result in dismissal of all defendants. The magistrate is also permitted to address “other issues if warranted”, including Imperial’s other
arguments for dismissal.

The hearing with the magistrate on further arguments on the motion to dismiss took place on 28 September 2023. The recommended
ruling from the magistrate is now expected by the end of November 2023. The magistrate’s recommendation will not be binding on the
parties, who will be permitted to file objections to the recommendation with the district judge. No provision has been made for potential
liabilities related to this claim.

UK
In June 2020, the Group responded to a claimant law firm’s allegation of human rights issues in the Malawian tobacco supply chain, which
included allegations relating to child and forced labour. In December 2020, a claim was filed in the United Kingdom High Court against
Imperial Brands plc, Imperial Tobacco Limited and four of its subsidiaries (the Imperial Defendants) and two entities in the British American
Tobacco (BAT) group by a group of tobacco farm workers. The Imperial Defendants have acknowledged service and confirmed to the
claimants that they intend to defend the claim in full. The Imperial Defendants have not yet been required to file their defence.

A procedural hearing scheduled for November/December 2021 was adjourned. The deadline for Imperial and BAT to file a defence was
postponed pending other case management actions and will be determined at a subsequent case management hearing after the
completion of a matching exercise (which will seek to establish whether the claimants worked for farmers who grew tobacco purchased by
either Defendant group). The claim is unquantified and given the early stage of the litigation a provision would not be appropriate.

www.imperialbrandsplc.com 231
CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

30. NET DEBT

The movements in cash and cash equivalents, borrowings, and derivative financial instruments in the year were as follows:
Derivative Liabilities Cash
Current Lease Non-current financial from financing and cash
£ million borrowings liabilities borrowings instruments activities equivalents Total
At 1 October 2022 (1,011) (248) (8,996) (87) (10,342) 1,850 (8,492)
Reallocation of current borrowings from
non-current borrowings (1,536) – 1,536 – – – –
Cash flow 891 92 (835) 64 212 (349) (137)
Change in accrued interest 2 (10) (24) 1 (31) – (31)
Change in fair values – – – 139 139 – 139
New leases, terminations and modifications – (106) – – (106) – (106)
Acquisitions – (84) – – (84) – (84)
Exchange movements 155 7 437 (170) 429 (156) 273
At 30 September 2023 (1,499) (349) (7,882) (53) (9,783) 1,345 (8,438)

Derivative Liabilities Cash

Current Lease Non-current financial from financing and cash
£ million borrowings liabilities borrowings instruments activities equivalents Total
At 1 October 2021 (1,107) (251) (8,715) (587) (10,660) 1,287 (9,373)
Reallocation of current borrowings from
non-current borrowings (1,392) – 1,392 – – – –
Cash flow 1,595 68 (829) (94) 740 515 1,255
Change in accrued interest 58 (6) (16) (7) 29 – 29
Change in fair values – – – 270 270 – 270
New leases, terminations and modifications – (54) – – (54) – (54)
Exchange movements (165) (5) (828) 331 (667) 48 (619)
At 30 September 2022 (1,011) (248) (8,996) (87) (10,342) 1,850 (8,492)

Average reported net debt during the year was £10,072 million (2022: £9,822 million).

Analysis by denomination currency

2023
£ million GBP EUR USD Other Total
Cash and cash equivalents 177 405 324 439 1,345
Total borrowings (1,631) (3,417) (4,319) (14) (9,381)
(1,454) (3,012) (3,995) 425 (8,036)
Effect of cross-currency swaps 1,576 (6,016) 4,323 – (117)
122 (9,028) 328 425 (8,153)
Lease liabilities (43) (247) (26) (33) (349)
Derivative financial instruments 64
Net debt (8,438)

2022
£ million GBP EUR USD Other Total
Cash and cash equivalents 257 216 971 406 1,850
Total borrowings (1,631) (3,261) (5,096) (19) (10,007)
(1,374) (3,045) (4,125) 387 (8,157)
Effect of cross-currency swaps 1,561 (3,637) 2,056 – (20)
187 (6,682) (2,069) 387 (8,177)
Lease liabilities (45) (148) (20) (35) (248)
Derivative financial instruments (67)
Net debt (8,492)

232 Imperial Brands | Annual Report and Accounts 2023

31. RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT
£ million 2023 2022
(Decrease)/increase in cash and cash equivalents (349) 515
Cash flows relating to derivative financial instruments 64 (94)
Repayment of lease liabilities 92 68
Increase in borrowings (1,462) (1,710)
Repayment of borrowings 1,518 2,476
Change in net debt resulting from cash flows (137) 1,255
Other non-cash movements including revaluation of derivative financial instruments 108 299
Lease liabilities (190) (54)
Exchange movements 273 (619)
Movement in net debt during the year 54 881
Opening net debt (8,492) (9,373)
Closing net debt (8,438) (8,492)

The increase in borrowings and repayment of borrowings reflect the cash flow movements relating to borrowings outstanding at the start
and at the end of each financial year; cash flows relating to short term borrowings drawn down and repaid within the year are not included
in this analysis.

32. NON-CONTROLLING INTERESTS

Material non-controlling interests
Detailed below is the summarised financial information of Logista, being a subsidiary where the non-controlling interest of 49.99% is
considered material to the Group.

Summarised balance sheet

at 30 September

Euro million 2023 2022

Current assets 6,246 6,094
Current liabilities (6,983) (6,763)
Current net liabilities (737) (669)
Non-current assets 1,816 1,599
Non-current liabilities (482) (365)
Non-current net assets 1,334 1,234
Net assets 597 565
Summarised statement of comprehensive income
for the year ended 30 September

Euro million 2023 2022

Revenue 12,428 11,464
Profit for the year 274 199
Other comprehensive income 3 7
Total comprehensive income 277 206
Summarised cash flow statement
for the year ended 30 September
2022
Euro million 2023 (restated)
Cash flows from operating activities 308 642
Cash flows from investing activities (83) (389)
Cash flows from financing activities (250) (206)
Net (decrease)/increase in cash and cash equivalents (25) 47

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CONSOLIDATED FINANCIAL STATEMENTS continued

NOTES TO THE FINANCIAL STATEMENTS continued

33. POST BALANCE SHEET EVENTS

Share Buybacks
On 5 October 2023 Imperial Brands PLC ("the Company") announced the start of an ongoing share buyback programme, to initially
repurchase up to £1.1 billion of shares in the period from 6 October 2023 to 30 September 2024.

34. RELATED UNDERTAKINGS

In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, and joint ventures, the
principal activity, the full registered address and the effective percentage of equity owned by Imperial Brands PLC, as at 30 September 2023,
are provided in the entity financial statements of Imperial Brands PLC. There are no material related parties other than Group companies.

234 Imperial Brands | Annual Report and Accounts 2023

SUPPLEMENTARY INFORMATION

ALTERNATIVE PERFORMANCE MEASURES

Use of alternative performance measures

Management believes that non-GAAP or alternative performance measures provide an important comparison of business performance
and reflect the way in which the business is controlled. The alternative performance measures seek to remove the distorting effects of a
number of significant gains or losses arising from transactions which are not directly related to the ongoing underlying performance of the
business and may be non-recurring events or not directly within the control of management.

Accordingly, alternative performance measures exclude, where applicable, amortisation and impairment of acquired intangibles, profit/loss
on disposal of subsidiaries, Russia, Ukraine and associated markets, restructuring costs, business acquisition and disposal costs, fair value
adjustment and impairment of other financial assets, charges related to legal provisions, structural changes to defined benefit pension
schemes, fair value and exchange gains and losses on financial instruments, post-employment benefits net financing cost, and related tax
effects and tax matters. Other significant gains or losses which are not representative of the underlying business may also be treated as
adjusting items where there is appropriate justification. The alternative performance measures in this report are not defined terms under
IFRS and may not be comparable with similarly titled measures reported by other companies. The alternative performance measures that
are used by the Group are defined and reconciled back to the associated IFRS metrics as detailed below.

Summary of key adjusting items

The items excluded from adjusted performance results are those which are one-off in nature or items which arose due to acquisitions and
are not influenced by the day to day operations of the Group, and the movements in the fair value of financial instruments which are
marked to market and not naturally offset. Adjusted net finance costs also excludes all post-employment benefit net finance cost since
pension assets and liabilities and redundancy and social plan provisions do not form part of adjusted net debt. This allows comparison of
the Group’s cost of debt with adjusted net debt. The adjusted performance measures are used by management to assess the Group’s
financial performance and aid comparability of results year on year.

Consolidated income statement adjusting items

The following tables summarise the key items recognised within the consolidated income statement that have been treated as
adjusting items:

Adjusting items recognised within administrative and other expenses

£ million Notes 2023 2022

Russia, Ukraine and associated markets (4) (399)

Amortisation and impairment of acquired intangibles (347) (349)
Restructuring costs 5 – (197)
Fair value adjustment and impairment of other financial assets (36) (37)
Loss on disposal of subsidiaries (1) (29)
Acquisition and disposal costs – (5)
Excise tax provision – 9
Charges related to legal provisions (85) –
Structural changes to defined benefit pension schemes (12) (4)
Total adjusting administrative and other expenses (485) (1,011)
Total non-adjusting administrative and other expenses (455) (323)
Administrative and other expenses (940) (1,334)

Russia, Ukraine and associated markets

In the current year the £4 million adjusted net charge relates to £18 million of costs relating to Ukraine partially offset by £14 million release
of other market exit provisions. The Ukraine costs relates to factory repairs and the redeployment of the production facility to service only
the domestic market. The release of the market exit provisions primarily relates to potential tax liabilities with insufficient certainty over
the quantum of future charges.

In the comparative period, the portion of the loss on exit of the Russian and associated markets adjusted out of operating profit was
£399 million comprising a loss on transfer of Russian operations of £364 million and impairment of assets and exit costs of the associated
markets of £35 million.

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SUPPLEMENTARY INFORMATION continued

Amortisation and impairment of acquired intangibles

Acquired intangibles are amortised over their estimated useful economic lives where these are considered to be finite. Acquired intangibles
considered to have an indefinite life are not amortised. Any negative goodwill arising is recognised immediately in the income statement.
The Group exclude from our adjusted performance measures the amortisation and impairment of acquired intangibles, other than software
and internally generated intangibles, and the deferred tax associated with amortisation of acquired intangibles. Gains and losses on the
sale of intellectual property are removed from adjusted operating profit.

It is recognised that there may be some correlation between the amortisation charges derived from the acquisition value of acquired
intangibles, and the subsequent future profit streams arising from sales of associated branded products. However, the amortisation of
intangibles is not directly related to the operating performance of the business. Conversely, the level of profitability of branded products is
directly influenced by day to day commercial actions, with variations in the level of profit derived from branded product sales acting as a
clear indicator of performance. Given this, the Group’s view is that amortisation and impairment charges do not clearly correlate to the
ongoing variations in the commercial results of the business and are therefore excluded to allow a clearer view of the underlying performance
of the organisation. The deferred tax arising on intangibles which are either being amortised or are fully amortised is excluded on the basis
that amortisation of intangibles is not directly related to the operating performance of the business. The related current cash tax benefit is
retained in the adjusted measure to reflect the ongoing tax benefit to the Group.

Total amortisation and impairment for the year is £392 million (2022: £394 million) of which £347 million (2022: £349 million) relates to
acquired intangibles and is adjusting and £45 million (2022: £45 million) relates to internally generated intangibles and is non adjusting. In
the year to 30 September 2023 adjusting items all relate to amortisation. £339 million (2022: £323 million) is attributable to Tobacco & NGP
and £8 million (2022: £26 million) is attributable to distribution.

Restructuring costs
Significant one-off costs incurred in integrating acquired businesses and in major rationalisation and optimisation initiatives together
with their related tax effects are excluded from our adjusted earnings measures. These include restructuring costs incurred as part of
fundamental multi-year transformational change projects but do not include costs related to ongoing cost reduction activity. These costs
are all Board approved, and include impairment of property, plant and equipment which are surplus to requirements due to restructuring
activity. These costs are required in order to address structural issues associated with operating within the Tobacco sector that have
required action to both modernise and right-size the organisation, ultimately delivering an operating model suitable for the future of the
business. The Group’s view is that as these costs are both significant and one-off in nature, excluding them allows a clearer presentation of
the underlying costs of the business.

No new restructuring programmes were initiated in the current financial year and no charges arose relating to historic restructuring
programmes. As a consequence, no restructuring charge adjustments were made in the calculation of any alternative performance metrics
within the current financial year.

Fair value adjustment and impairment of other financial assets

As the movement in the fair value of loan receivables associated with the investment in Auxly Cannabis Group Inc. has the potential to be
significant and does not show a fair representation of the day-to-day operational performance of the asset, it is treated as an adjusting item.
The fair value adjustment also includes changes in the carrying value of certain financial assets held by ITG Brands.

Loss on disposal of subsidiaries / acquisition and disposal costs

Adjusted performance measures exclude costs and profits or losses associated with major acquisitions and disposals as they do not relate
to the day-to-day operational performance of the Group. Acquisition and disposal costs, and profits or losses on disposal of subsidiaries can
be significant in size and are one-off in nature. Exclusion of these items allows a clearer presentation of the day-to-day underlying income
and costs of the business. Where applicable and not reported separately, this includes changes in contingent or deferred consideration.

Charges related to legal provisions

The adjusting item relates to legal provisions that the Group has provided for (see note 24). These are potential liabilities arising from a
number of legacy legal disputes across the Group that have been in the courts for several years and which the Group have considered as
being unrelated to ongoing business performance and therefore adjusted. The final settlement and agreement of these cases still remain
uncertain but future outflows are still expected.

Structural changes to defined benefit pension schemes

These are non-recurring pension scheme restructuring costs. They comprise £8m of net costs related to the closure of the UK defined
benefit retirement scheme to future accrual and £4m settlement charge on the full closure of the New Zealand defined benefit scheme.

In 2022, there was a charge relating to the restructuring of the Irish defined benefit pension scheme of £4 million.

236 Imperial Brands | Annual Report and Accounts 2023

Adjusting items recognised within share of profit/(loss) of investments accounted for using the equity method
£ million 2023 2022

Impairment of intangible assets held by Global Horizon joint venture – (24)

Other profits from investments accounted for using the equity method 7 9
Share of profits/(losses) of investments accounted for using the equity method 7 (15)

Adjusting items recognised within tax

£ million 2023 2022

Deferred tax on amortisation of acquired intangibles (4) 15

Tax on net foreign exchange and fair value gains and losses on financial instruments 89 (183)
Tax on post-employment benefits net financing cost – –
Tax on restructuring costs – 49
Tax on disposal of subsidiaries – 8
Tax on charges relating to legal provisions 26 –
Tax on structural changes to defined benefit pension schemes 3 –
Tax on fair value adjustment and impairment of other financial assets 5 –
Tax on interest settlements 2 –
Recognition of deferred tax assets 212 –
Provision for state aid tax recoverable – (101)
Uncertain tax positions (207) 63
Deferred tax on unremitted earnings – 26
Tax on unrecognised losses – (8)
Other non-adjusting taxation charges (781) (755)
Reported tax (665) (886)

Tax adjustments related to other pre-tax adjusting items

The adjusted tax charge has been calculated to include the tax effects of a number of pre-tax adjusting items including the amortisation of
acquired intangibles, net foreign exchange gains and losses, fair value movements on financial instruments, restructuring costs and post-
employment benefits net financing cost. The tax effect of the result of the disposal of subsidiaries has also been adjusted.

Significant one-off tax charges or credits

The adjusted tax charge also excludes significant one-off tax charges or credits arising from:

• prior period tax items (including re-measurement of deferred tax balances on a change in tax rates); or
• a provision for uncertain tax items not arising in the normal course of business; or
• newly enacted taxes in the year; or
• tax items that are closely related to previously recognised tax matters, and are excluded from our adjusted tax charge to aid
comparability and understanding of the Group’s performance.

The recognition and utilisation of deferred tax assets relating to tax losses and tax credits not historically generated in the normal course of
business are excluded on the same basis.

Uncertain tax positions

Significant one-off tax charges or credits arising from a provision for uncertain tax items not arising in the normal course of business are
excluded from the adjusted tax charge.

Recognition of deferred tax assets

Significant one-off tax charges or credits arising from prior period items, and arising due to a change of facts and circumstances in the
current year, are excluded from the adjusted tax charge. The recognition of deferred tax assets relating to the uplifted value of intangibles in
the Group’s Dutch business are excluded from the adjusted tax charge on this basis.

Provision for state aid tax recoverable

Significant one-off tax charges or credits arising from prior period items are excluded from the adjusted tax charge. The provision against
the state aid tax recoverable is excluded from the adjusted tax charge on this basis.

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SUPPLEMENTARY INFORMATION continued

Deferred tax on unremitted earnings

Significant one-off tax charges or credits arising from prior period items are excluded from the adjusted tax charge. The tax effect of the
release of a provision for deferred tax on unremitted earnings is excluded from the adjusted tax charge on this basis.

Tax on unrecognised losses

The recognition and utilisation of deferred tax assets relating to losses not historically generated in the normal course of business are
excluded from the adjusted tax charge.

DEFINITIONS AND RECONCILIATIONS OF ALTERNATIVE PERFORMANCE MEASURES

A) Net revenue Tobacco & NGP and net revenue excluding Russia
Tobacco & Next Generation Products (NGP) net revenue comprises associated revenue less duty and similar items, excluding peripheral
products. Management considers this an important measure in assessing the performance of Tobacco & NGP operations.

The Group recognises revenue on sales to Logista, a Group company, within its reported Tobacco & NGP revenue figure. As the revenue
calculation includes sales made to Logista from other Group companies but excludes Logista's external sales, this metric differs from
revenue calculated under IFRS accounting standards. For the purposes of alternative performance measures on net revenue the Group
treats Logista as an arm’s length distributor on the basis that contractual rights are in line with other Third Party suppliers to Logista.
Variations in the amount of inventory held by Logista results in a different level of revenue compared to that which is included within
the income statement. For tobacco product sales, inventory level variations are normally not significant. For the purpose of showing
comparable year-on-year metrics the Group have included a net revenue excluding Russia measure excluding the results of the Russia
business in the comparative figures, following the disposal of that operation in April 2022.

Reconciliation from Tobacco & NGP revenue to Tobacco & NGP net revenue and net revenue excluding Russia
2023 2022
£ million Tobacco NGP Total Tobacco NGP Total
Revenue 22,114 299 22,413 23,232 224 23,456
Duty and similar items (14,364) (34) (14,398) (15,628) (16) (15,644)
Sale of peripheral products (3) – (3) (19) – (19)
Net Revenue 7,747 265 8,012 7,585 208 7,793
Russia net revenue – – – (56) – (56)
Net revenue excluding Russia 7,747 265 8,012 7,529 208 7,737

B) Distribution gross profit

Distribution gross profit comprises the Distribution segment revenue less the cost of distributed products. Management considers this an
important measure in assessing the performance of Distribution operations. Distribution gross profit was previously described as
Distribution net revenue. There has been no change in calculation of this metric.

Reconciliation from distribution revenue to distribution gross profit

£ million 2023 2022
Revenue – Distribution 10,819 9,756
Cost of sales – Distribution (9,353) (8,710)
Distribution gross profit 1,466 1,046

C) Adjusted operating profit and adjusted operating profit excluding Russia

Adjusted operating profit is calculated as operating profit amended for a number of adjustments; the principal changes are detailed below.
This measure is separately calculated and disclosed for Tobacco, NGP and Distribution where appropriate. For the purpose of showing
comparable year-on-year metrics we have included an adjusted operating profit measure excluding the results of the Russia business in
the comparative figures, following the disposal of that operation in April 2022. For the year ending 30 September 2023 the previously
combined adjusted operating profit metric for Tobacco and NGP has been split into its two component parts.

238 Imperial Brands | Annual Report and Accounts 2023

Reconciliation from profit before tax to adjusted operating profit and adjusted operating profit excluding Russia
£ million 2023 2022
Profit before tax 3,111 2,551
Net finance costs 298 117
Share of (profit)/loss of investments accounted for using the equity method (7) 15
Operating profit 3,402 2,683
Russia, Ukraine and associated markets 4 399
Amortisation and impairment of acquired intangibles 347 349
Restructuring costs – 197
Fair value adjustment and impairment of other financial assets 36 37
Loss on disposal of subsidiaries 1 29
Acquisition and disposal costs – 5
Excise tax provision – (9)
Charges related to legal provisions 85 –
Structural changes to defined benefit pension schemes 12 4
Total adjustments 485 1,011
Adjusted operating profit 3,887 3,694
Russia operating profit – 5
Adjusted operating profit excluding Russia 3,887 3,689

Reconciliation from tobacco & NGP operating profit to adjusted operating profit
2023 2022
£ million Tobacco NGP Total Tobacco NGP Total
Operating profit/(loss) 3,262 (156) 3,106 2,599 (127) 2,472
Russian, Ukraine and associated markets 4 – 4 399 – 399
Amortisation and impairment of acquired intangibles 334 5 339 320 3 323
Restructuring costs – – – 197 – 197
Loss on disposal of subsidiaries 1 – 1 13 – 13
Fair value adjustment and impairment of other
financial assets 20 16 36 – 37 37
Acquisition and disposal costs – – – 5 – 5
Excise tax provision – – – (9) – (9)
Charges related to legal provisions 85 – 85 – – –
Structural changes to defined benefit pension schemes 12 – 12 4 – 4
Adjusted operating profit/(loss) 3,718 (135) 3,583 3,528 (87) 3,441
Russia operating profit – – – 5 – –
Adjusted operating profit/(loss) excluding Russia 3,718 (135) 3,583 3,523 (87) 3,436

Reconciliation from distribution operating profit to distribution adjusted operating profit

£ million 2023 2022
Distribution operating profit 298 212
Loss on disposal of subsidiaries – 16
Amortisation of acquired intangibles 8 26
Distribution adjusted operating profit 306 254

See note 11 for details on amortisation and impairment, note 10 for details of acquisition and disposal costs, and note 5 for details of
restructuring costs.

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SUPPLEMENTARY INFORMATION continued

D) Adjusted operating profit margin

Adjusted operating profit margin is adjusted operating profit divided by net revenue expressed as a percentage. This measure is separately
calculated and disclosed for the Tobacco & NGP and Distribution businesses where appropriate. There is no reconciliation required for
this metric.

E) Adjusted net finance costs

Adjusted net finance costs excludes the movements in the fair value of financial instruments which are marked to market and not
naturally offset. This measure also excludes all post-employment benefit net finance costs since pension assets and liabilities and
redundancy and social plan provisions do not form part of adjusted net debt. This allows comparison of the Group’s cost of debt with
adjusted net debt.

IFRS 9 requires that all derivative financial instruments are recognised in the consolidated balance sheet at fair value, with changes in the
fair value being recognised in the consolidated income statement unless the instrument satisfies the hedge accounting rules under IFRS
and the Group chooses to designate the derivative financial instrument as a hedge.

The Group hedges underlying exposures in an efficient, commercial and structured manner. However, the strict hedging requirements of
IFRS 9 may lead to some commercially effective hedge positions not qualifying for hedge accounting. As a result, and as permitted under
IFRS 9, the Group has decided not to apply cash flow or fair value hedge accounting for its derivative financial instruments. However, the
Group does apply net investment hedging, designating certain borrowings and derivatives as hedges of the net investment in the Group’s
foreign operations, as permitted by IFRS 9, in order to reduce income statement volatility.

The Group excludes fair value gains and losses on derivative financial instruments and exchange gains and losses on borrowings from
adjusted net finance costs. Fair value gains and losses on the interest element of derivative financial instruments are excluded as there is
no direct natural offset between the movements on derivatives and the interest charge on debt in any one period, as the derivatives and
debt instruments may be contracted over different periods, although they will reverse over time or are matched in future periods by interest
charges. The fair value gains on derivatives are excluded as they can introduce volatility in the finance charge for any given period.

Fair value gains and losses on the currency element of derivative financial instruments and exchange gains and losses on borrowings are
excluded as the relevant foreign exchange gains and losses on the instruments in a net investment hedging relationship are accumulated
as a separate component of other comprehensive income in accordance with the Group’s policy on foreign currency.

Fair value movements arising from the revaluation of contingent consideration liabilities are adjusted out where they represent one-off
acquisition costs that are not linked to the current period underlying performance of the business. Fair value adjustments on loans
receivable measured at fair value are excluded as they arise due to counterparty credit risk changes that are not directly related to the
underlying commercial performance of the business.

The net interest on defined benefit assets or liabilities, together with the unwind of discount on redundancy, social plans and other
long-term provisions are reported within net finance costs. These items together with their related tax effects are excluded from our
adjusted earnings measures, as they primarily represent charges associated with historic employee benefit commitments, rather than
the ongoing current period costs of operating the business.

Reconciliation from reported net finance costs to adjusted net finance costs
£ million 2023 2022
Reported net finance costs 298 117
Fair value gains on derivative financial instruments 707 1,483
Fair value losses on derivative financial instruments (568) (1,213)
Exchange gains/(losses) on financing activities 10 (69)
Net fair value and exchange gains on financial instruments 149 201
Interest income on net defined benefit assets 178 107
Interest cost on net defined benefit liabilities (165) (99)
Post-employment benefits net financing income 13 8
Tax settlement interest cost (50) –
Adjusted net finance costs 410 326
Comprising:
Interest income on bank deposits (12) (9)
Interest cost on lease liabilities 10 6
Interest cost on bank and other loans 412 329
Adjusted net finance costs 410 326

240 Imperial Brands | Annual Report and Accounts 2023

F) Adjusted tax charge
The adjusted tax charge is calculated by amending the reported tax charge for significant one-off tax charges or credits arising from:

• prior period tax items (including re-measurement of deferred tax balances on a change in tax rates); or
• a provision for uncertain tax items not arising in the normal course of business; or
• newly enacted taxes in the year; or
• tax items that are closely related to previously recognised tax matters, and are excluded from our adjusted tax charge to aid
comparability and understanding of the Group’s performance.

The recognition and utilisation of deferred tax assets relating to losses not historically generated in the normal course of business are
excluded on the same basis.

The adjusted tax rate is calculated as the adjusted tax charge divided by the adjusted profit before tax.

Reconciliation from reported tax to adjusted tax

£ million 2023 2022
Reported tax 655 886
Deferred tax on amortisation of acquired intangibles (4) 15
Tax on net foreign exchange and fair value gains and losses on financial instruments 89 (183)
Tax on post-employment benefits net financing cost – –
Tax on restructuring costs – 49
Tax on disposal of subsidiaries – 8
Tax on charges relating to legal provisions 26 –
Tax on structural changes to defined benefit pension schemes 3 –
Tax on fair value adjustment and impairment of other financial assets 5 –
Tax on interest settlements 2 –
Recognition of deferred tax assets 212 –
Provision for state aid recoverable – (101)
Uncertain tax positions (207) 63
Deferred tax on unremitted earnings – 26
Tax on unrecognised losses – (8)
Adjusted tax charge 781 755

G) Adjusted earnings per share and adjusted earnings per share excluding Russia
Adjusted earnings is calculated by amending the reported basic earnings for all of the adjustments recognised in the calculation of the
adjusted operating profit, adjusted finance costs and adjusted tax charge metrics as detailed above. Adjusted earnings per share is
calculated by dividing adjusted earnings by the weighted average number of shares. For the purpose of showing comparable year-on-year
metrics we have included an adjusted earnings per share measure excluding Russia which excludes the results of the Russia business in
the comparative figures following the disposal of that operation in April 2022.

www.imperialbrandsplc.com 241
SUPPLEMENTARY INFORMATION continued

Reconciliation from reported to adjusted earnings and earnings per share

2023 2022
Earnings Earnings
per share per share
£ million unless otherwise indicated (pence) Earnings (pence) Earnings
Reported basic 252.4 2,328 165.9 1,570
Russia, Ukraine and associated markets 0.4 4 42.2 399
Amortisation and impairment of acquired intangibles 38.0 351 35.4 334
Restructuring costs – – 15.6 148
Fair value adjustment and impairment of other financial assets 3.4 31 3.9 37
Loss on disposal of subsidiaries 0.1 1 2.2 21
Acquisition and disposal costs – – 0.5 5
Excise tax provision – – (1.0) (9)
Charges related to legal provisions 6.4 59 – –
Structural changes to defined benefit pension schemes 1.0 9 0.4 4
Brand impairment in equity accounted joint venture – – 2.5 24
Net fair value and exchange movements on financial instruments (25.8) (238) (1.9) (18)
Post-employment benefits net financing cost (1.4) (13) (0.8) (8)
Tax settlement interest costs 5.2 48 – –
Recognition of deferred tax assets (23.0) (212) – –
Provision for state aid recoverable – – 10.7 101
Uncertain tax positions 22.4 207 (6.7) (63)
Deferred tax on unremitted earnings – – (2.7) (26)
Tax on unrecognised losses – – 0.8 8
Adjustments above attributable to non-controlling interests (0.3) (3) (1.8) (18)
Adjusted 278.8 2,572 265.2 2,509
Adjusted diluted 277.1 2,572 263.3 2,509

Russia earnings per share – – 0.4 4

Adjusted excluding Russia 278.8 2,572 264.8 2,505
Adjusted diluted excluding Russia 277.1 2,572 262.9 2,505

H) Return on invested capital (ROIC)

Return on invested capital measures the effectiveness of capital allocation and is calculated by dividing adjusted operating profit after tax
by the annual average of: intangible assets, property, plant and equipment, net assets held for sale, inventories, trade and other receivables
and trade payables and other current liabilities.

The annual average is defined as the average of the opening and closing balance sheet values.

£ million unless otherwise stated 2023 2022 2021

Reported operating profit 3,402 2,683 3,146
Adjusting items (see section C) 485 1,011 427
Adjusted operating profit 3,887 3,694 3,573
Equivalent tax charge (871) (827) (807)
Net adjusted operating profit after tax 3,016 2,867 2,766

Working capital (2,567) (2,823) (2,523)

Intangibles 16,944 17,777 16,674
Property, plant and equipment 1,617 1,659 1,715
Invested capital 15,994 16,613 15,866
Average annual invested capital 16,304 16,240 16,741
Return on invested capital (%) 18.5 17.7 16.5

242 Imperial Brands | Annual Report and Accounts 2023

I) Constant currency
Constant currency removes the effect of exchange rate movements on the translation of the results of our overseas operations. The Group
translates current year results at prior year foreign exchange rates. An analysis of all key metrics can be found in the Group Financial
Review on pages 92-99.

J) Adjusted net debt

Management monitors the Group’s borrowing levels using adjusted net debt which excludes interest accruals, lease commitments and the
fair value of derivative financial instruments providing commercial hedges of interest rate risk. The adjusted net debt metric is used in
monitoring performance against various debt management obligations including covenant compliance.

Adjusted net debt calculation

£ million 2023 2022
Reported net debt (8,438) (8,492)
Accrued interest 125 105
Lease liabilities 349 248
Fair value of interest rate derivatives (62) 85
Adjusted net debt (8,026) (8,054)

Average adjusted net debt during the year was £9,574 million (2022: £9,198 million).

K) Adjusted net debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) multiple
This is defined as adjusted net debt divided by adjusted EBITDA. Adjusted net debt is measured at balance sheet foreign exchange rates,
with a full reconciliation shown in table J above. Adjusted EBITDA is calculated as adjusted operating profit plus amortisation, depreciation
and impairments. The reconciliation from adjusted operating profit to adjusted EBITDA is shown below.
2022
£ million 2023 (restated)
Adjusted operating profit (see section C above) 3,887 3,694
Depreciation, amortisation and impairments 270 244
Adjusted EBITDA 4,157 3,938

Note the comparative figure has been restated as it previously included a reconciliation from operating profit to EBITDA. This has been
changed to a reconciliation from adjusted operating profit to adjusted EBITDA.

L) Adjusted operating cash conversion

Adjusted operating cash conversion is calculated as cash flow from operations pre-restructuring and before interest and tax payments less
net capital expenditure relating to property, plant and equipment, software and intellectual property rights as a percentage of adjusted
operating profit.

Adjusted operating cash conversion calculation

£ million unless otherwise stated 2023 2022
Net cash flows generated from operating activities 3,129 3,186
Tax 590 681
Net capital expenditure (254) (177)
Restructuring 98 91
Cash flow post capital expenditure pre interest and tax 3,563 3,781
Adjusted operating profit 3,887 3,694
Adjusted operating cash conversion 92% 102%

M) Free cash flow

Free cash flow is adjusted operating profit adjusted for certain cash and non-cash items. The principal adjustments are depreciation,
working capital movements, net capex, restructuring cash flows, tax cash flows, cash interest and minority interest dividends.

Net cash flows generated from operating activities to free cash flow
£ million 2023 2022
Net cash flows generated from operating activities 3,129 3,186
Net capital expenditure (254) (177)
Cash interest (407) (358)
Minority interest dividends (104) (89)
Free cash flow 2,364 2,562

www.imperialbrandsplc.com 243
GLOSSARY

Financial terms
Adjusted closing net debt Adjusted closing net debt is measured at balance sheet foreign exchange rates, with a full
reconciliation shown within section J of the supplementary information.
Adjusted earnings per share This is an alternative performance measure which is defined within section G of the supplementary
information.
Adjusted earnings per share This is an alternative performance measure which is defined within section G of the supplementary
excluding Russia information.
Adjusted EBITDA Adjusted EBITDA is calculated as adjusted operating profit plus amortisation, depreciation and
impairments.
Adjusted net debt This is an alternative performance measure which is defined within section J of the supplementary
information.
Adjusted net debt to EBITDA This is an alternative performance measure. Adjusted net debt is defined within section J of the
multiple supplementary information. EBITDA is defined within section K of the supplementary information.
Adjusted net finance costs This is an alternative performance measure which is defined within section E of the
supplementary information.
Adjusted (Non-GAAP) Non-GAAP measures provide a useful comparison of performance from one period to the next.
Adjusted operating cash This is an alternative performance measure which is defined within section L of the
conversion supplementary information.
Adjusted operating profit This is an alternative performance measure which is defined within section C of the
supplementary information.
Adjusted operating profit This is an alternative performance measure which is defined within section C of the
excluding Russia supplementary information.
Adjusted operating profit margin Adjusted operating profit margin is calculated as adjusted operating profit divided by net revenue.
Adjusted tax charge This is an alternative performance measure which is defined within section F of the
supplementary information.
Aggregate priority market share Aggregate weighted market volume share, based on our five priority markets (USA, Germany, UK, Spain
and Australia). Market volume share is calculated based on a 12-month moving annual total (MAT)
volume share position from October to September. The market volume size used in the weighting
calculation is based on a constant prior year end actual market size.
All in cost of debt Adjusted net finance costs divided by the average net debt in the year.
Cash conversion Cash conversion is calculated as cash flow from operations pre-restructuring and before interest and
tax payments less net capital expenditure relating to property, plant and equipment, software
and intellectual property rights as a percentage of adjusted operating profit.
Constant currency Removes the effect of exchange rate movements on the translation of the results of our overseas
operations. The Group translate current year results at prior year foreign exchange rates.
Dividend per share Dividend per share represents the total annual dividends, being the sum of the paid interim dividend
and the proposed final dividend for the financial year.
EBITDA Earnings before interest, taxation, depreciation and amortisation.
GAAP Generally accepted accounting principles.
Market share Market share data is presented as a 12-month moving average weighted across the markets in
which we operate.
Net debt to EBITDA Adjusted closing net debt divided by adjusted EBITDA.
Net revenue excluding Russia This is an alternative performance measure which is defined within section A of the
supplementary information.
Reported (GAAP) Reported (GAAP) complies with UK-adopted International Accounting Standards and the
relevant legislation.
Return on invested capital This is an alternative performance measure which is defined within section H of the
supplementary information.
Stick equivalent volumes Stick equivalent volumes reflect our combined cigarette, fine cut tobacco, cigar and snus volumes but
exclude any NGP volume such as heated tobacco, modern oral nicotine and vapour.
Tobacco & NGP Net revenue/ This is an alternative performance measure which is defined within sections A and B of the
Distribution gross profit supplementary information.
Total shareholder return Total shareholder return is the total investment gain to shareholders resulting from the movement in
the share price and assuming dividends are immediately reinvested in shares.

244 Imperial Brands | Annual Report and Accounts 2023

Other
AAACE Africa, Asia and Australasia and Central & Eastern Europe.
CDP Carbon Disclosure Project
CEO Chief Executive Officer
CFO Chief Financial Officer
CO2E Carbon Dioxide Equivalent
CSRD The Corporate Sustainability Reporting Directive
DEI Diversity, Equity and Inclusion
Distribution Logistics Segment
ECLT Eliminating Child Labour in Tobacco Growing Foundation
EFRAG European Financial Reporting Advisory Group
ELT Executive Leadership Team
EPR Extended Producer Responsibility Scheme
ERG Employee Resource Groups
ESG Environmental, Social and Governance
ESRS European Sustainability Reporting Standards
EU European Union
EVP Electronic Vape Products
EY Ernst & Young LLP
FCT Fine Cut Tobacco
FDA US Food and Drug Administration
FMC Factory Made Cigarettes
GHG Greenhouse Gas
GRI Global Reporting Initiative
GWh / KWh Gigawatt-Hour / Kilowatt-Hour
HRIA Human Rights Impact Assessment
HT Heated Tobacco
HTP Heated Tobacco Products
ILO International Labour Organisation
IOSH Institution of Occupational Safety and Health
IPM Integrated Pest Management
ISAE International Standard for Assurance Engagements
ISO International Organization for Standardization
IVMS In Vehicle Monitoring System
KPI Key Performance Indicators
LCWG Leaf Compliance Working Group
Leaf CARE Leaf Compliance and Response Program
LGBTQ+ Lesbian, Gay, Bisexual, Transgender, Queer or Questioning, Intersex, Asexual, and More
LTA Lost Time Accident
LTIP Long Term Incentive Plans
MMC Mass Market Cigars
MOND Modern Oral Nicotine Delivery
MPI Manufacturer’s Price Increase
MSCI Company Name
NGOs Non-Government Organisation
NGP Next Generation Products
NGP Next Generation Products
NTM Non-Tobacco Materials
NTM Non Tobacco Materials

www.imperialbrandsplc.com 245
SUPPLEMENTARY INFORMATION continued

GLOSSARY continued

Other
OHSE Occupational Health Safety and Environment
OND Oral Nicotine Delivery Category
PDCA Plan Do Check Act
PG&S Purchased Goods and Services
PPE Personal Protective Equipment
Priority markets Top 5 combustible markets USA, Germany, UK, Spain and Australia
PSHG Product Stewardship and Health Group
RECs Renewable Energy Certificates
SASB Sustainable Accounting Standards Board
SBTi Science Based Target Initiatives
SCIA Supply Chain Impact Assessments
SDGs Sustainable Development Goals
SE Stick Equivalent (SE) volumes reflect our combined cigarette, fine cut tobacco, cigar and snus volumes
SECR Streamlined Energy and Carbon Reporting
SER Supplier Engagement Rating
STP Sustainable Tobacco Programme
T&Cs Terms and Conditions
TCFD Task Force on Climate-Related Financial Disclosures
Tobacco & NGP Tobacco & Next Generation Products
UK United Kingdom
UN SDGs United Nations Sustainable Development Goals
WDI Workforce Disclosure Initiative

246 Imperial Brands | Annual Report and Accounts 2023

IMPERIAL BRANDS PLC FINANCIALS

IMPERIAL BRANDS PLC BALANCE SHEET

at 30 September 2023

£ million Notes 2023 2022

Fixed assets
Investments iii 7,968 7,968

Current assets
Debtors iv 2,597 4,744

Creditors: amounts falling due within one year v (74) (39)

Net current assets 2,523 4,705
Net assets 10,491 12,673

Capital and reserves

Called up share capital vi 97 103
Capital redemption reserve 10 4
Share premium account 5,833 5,833
Retained earnings – brought forward 6,733 5,047
Retained earnings – profit for the year 136 3,006
Retained earnings – dividends paid (1,312) (1,320)
Retained earnings – repurchase of shares (1,006) –
Total shareholders’ funds 10,491 12,673

As permitted by section 408(3) of the Companies Act 2006, the profit and loss account of the Company is not presented. The profit
attributable to shareholders, dealt with in the financial statements of the Company, is £136 million (2022: £3,006 million).

The financial statements on pages 247 to 262 were approved by the Board of Directors on 13 November 2023 and signed on its behalf by:

Lukas Paravicini
Director

IMPERIAL BRANDS PLC STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2023
Share
premium and
capital Retained
£ million Share capital redemption earnings Total equity
At 1 October 2022 103 5,837 6,733 12,673
Profit for the year – – 136 136
Total comprehensive income – – 136 136
Transactions with owners
Repurchase of shares (6) 6 (1,006) (1,006)
Dividends paid – – (1,312) (1,312)
At 30 September 2023 97 5,843 4,551 10,491

At 1 October 2021 103 5,837 5,047 10,987

Profit for the year – – 3,006 3,006
Total comprehensive income – – 3,006 3,006
Transactions with owners
Repurchase of shares – – – –
Dividends paid – – (1,320) (1,320)
At 30 September 2022 103 5,837 6,733 12,673

Total distributable reserves were £4,537 million (2022: £6,720 million).

www.imperialbrandsplc.com 247
IMPERIAL BRANDS PLC FINANCIALS continued

NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC

I. ACCOUNTING POLICIES
Basis of preparation and statement of compliance with FRS 101
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities are discussed in note 2 of the Group financial statements for the year ended 30 September 2023.

Imperial Brands PLC (the Company) is the ultimate parent company within the Imperial Brands group (the Group). The Company is a public
company limited by shares, incorporated in England and Wales and its principal activity continued to be that of holding investments. The
Company's registered number is 3236483 and its registered address is 121 Winterstoke Road, Bristol, BS3 2LL. The Company does not have
any employees. The Directors of the Group manage the Group's risks at a Group level, rather than at an individual entity level. These risks
are detailed in note 2 of the Group's financial statements (see pages 187-189).

These financial statements were prepared in accordance with the Companies Act 2006 as applicable to Financial Reporting Standard 101
Reduced Disclosure Framework (FRS 101), and applicable accounting standards.

The financial statements have been prepared on the historical cost basis, and as a going concern. Historical cost is generally based on the
fair value of the consideration given in exchange for the assets.

As permitted by section 408(3) of the Companies Act 2006, no separate profit and loss account has been presented for the Company.

As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available in the preparation of the financial
statements, as detailed below:

• Paragraph 38 of IAS 1 ‘Presentation of financial statements’ – comparative information requirements in respect of:

(i) paragraph 79(a)(iv) of IAS 1;

• The following paragraphs of IAS 1 ‘Presentation of financial statements’:

(ii) 10(d) – statement of cash flows;

(iii) 10(f) – a statement of financial position as at the beginning of the preceding period when an entity applied an accounting policy
retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its
financial statements;
(iv) 16 – statement of compliance with all IFRS;
(v) 38A – requirement for minimum of two primary statements, including cash flow statements;
(vi) 38B-D – additional comparative information;
(vii) 40A-D – requirements for a third statement of financial position;
(viii) 111 – cash flow information; and
(ix) 134-136 – capital management disclosures;
• IAS 7 ‘Statement of cash flows’;
• Paragraph 30 and 31 of IAS 8 ‘Accounting Policies, changes in accounting estimates and errors’ – requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but is not yet effective;
• Paragraph 17 of IAS 24 ‘Related party disclosures’ – key management compensation;
• The requirements in IAS 24 ‘Related party disclosures’ to disclose related party transactions entered into between two or more
members of a group;
• The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 ‘Share-based Payment’;
• IFRS 7 ‘Financial Instruments: Disclosures’; and
• Paragraphs 91 to 99 of IFRS 13 ‘Fair value measurement’ – disclosure of valuation techniques and inputs used for fair value
measurement of assets and liabilities.

The principal accounting policies, which have been applied consistently are set out below. The Directors do not consider there to be any
critical accounting estimates or judgements in respect of the Company, see note 2 Accounting Estimates and Judgements of the
consolidated financial statements for further detail.

248 Imperial Brands | Annual Report and Accounts 2023

Investments
Investments held as fixed assets comprise the Company’s investment in subsidiaries and are shown at historic purchase cost less any
provision for impairment. An annual review of Investments is performed for indicators of impairment. If indicators of impairment are
identified investments are tested for impairment to ensure that the carrying value of the investment is supported by their
recoverable amount.

Dividends
Final dividends are recognised as a liability in the period in which the dividends are approved by shareholders, whereas interim dividends
are recognised in the period in which the dividends are paid. Dividends receivable are recognised as an asset when they are approved.

Financial instruments
Receivables held under a hold to collect business model are stated at amortised cost.

The calculation of impairment provisions is subject to an expected credit loss model, involving a prediction of future credit losses based on
past loss patterns. The revised approach involves the recognition of provisions relating to potential future impairments, in addition to
impairments that have already occurred. The expected credit loss approach involves modelling of historic loss rates, and consideration of
the level of future credit risk. Expected loss rates are then applied to the gross receivables balance to calculate the impairment provision.

Cash and cash equivalents include cash in hand and deposits held on call, together with other short-term highly liquid investments.

Treasury shares
When the Company purchases its own equity share capital (treasury shares), the consideration paid, including any directly attributable
incremental costs (net of income taxes), is deducted from equity until the shares are reissued or disposed of. When such shares are
subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related
income tax effects, increases shareholders’ funds. When such shares are cancelled they are transferred to the capital redemption reserve.

Income taxes
Judgement is involved in determining whether the Company is subject to a tax liability or not in line with tax law. Where liabilities exist,
estimation is often required to determine the potential future tax payments. The Company recognises provisions for tax based on estimates
of the taxes that are likely to become due. Where the final tax outcome is different from the amounts that were initially recorded, such
differences will impact the current income tax and deferred tax provisions in the period in which such determination is made.

New accounting standards

The following amendments to the accounting standards, issued by the IASB or International Financial Reporting Standards Interpretations
Committee (IFRS IC) and endorsed for use in the UK, have been adopted by the Company from 1 October 2022 with no impact on the
Company's results, financial position or disclosures:

• Amendments to IAS 12 International Tax Reform – Pillar Two model rules. (The Company has applied the mandatory exception under
IAS 12 in relation to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.)

II. DIVIDENDS
Distributions to ordinary equity holders
£ million 2023 2022 2021
Paid interim of 43.18 pence per share (2022: 42.54 pence, 2021: 42.12 pence)
• Paid June 2021 – – 199
• Paid September 2021 – – 199
• Paid December 2021 – – 458
• Paid June 2022 – 202 –
• Paid September 2022 – 202 –
• Paid December 2022 – 464 –
• Paid June 2023 196 – –
• Paid September 2023 195 – –
Interim dividend paid 391 868 856
Proposed third interim of 51.82 pence per share (2022: 49.31 pence, 2021: 48.48 pence) – – –
• To be paid December 2023 466 – –
Interim dividend proposed 466 – –
Proposed final of 51.82 pence per share (2022: 49.32 pence, 2021: 48.48 pence) – – –
• Paid March 2022 – – 458
• Paid March 2023 – 457 –
• To be paid March 2024 465 – –
Final dividend 465 457 458
Total ordinary share dividends of 146.82 pence per share (2022: 141.17 pence, 2021: 139.08 pence) 1,322 1,325 1,314

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IMPERIAL BRANDS PLC FINANCIALS continued

NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued

The proposed third interim dividend for the year ended 30 September 2023 of 51.82 pence per share amounts to a proposed dividend of
£466 million, which will be paid in December 2023.

The proposed final dividend for the year ended 30 September 2023 of 51.82 pence per share amounts to a proposed dividend payment of
£465 million in March 2024 based on the number of shares ranking for dividend at 30 September 2023, and is subject to shareholder
approval. If approved, the total dividend paid in respect of 2023 will be £1,322 million (2022: £1,325 million). The dividend paid during 2023 is
£1,312 million (2022: £1,320 million).

III. INVESTMENTS
Cost of shares in imperial tobacco holdings (2007) limited
£ million 2023 2022
At 1 October 7,968 7,968
At 30 September 7,968 7,968

The Directors confirm that the carrying value of the investment is supported by its underlying net assets.

A list of the subsidiaries of the Company is shown on pages 252-262.

IV. DEBTORS
£ million 2023 2022
Amounts owed from Group undertakings 2,597 4,744

Amounts owed from Group undertakings are unsecured, interest bearing, have no fixed date for repayment and are repayable on demand.

V. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

£ million 2023 2022
Amounts owed by Group undertakings 34 35
Bank overdrafts 2 2
Other creditors 38 2
74 39

Amounts owed by Group undertakings are unsecured, interest bearing, have no fixed date for repayment and are repayable on demand.

VI. CALLED UP SHARE CAPITAL

2023 2022
Ordinary shares Ordinary shares
10p each 10p each
Number £ million Number £ million
Authorised, issued and fully paid:

1 October 1,020,697,237 103 1,020,697,237 103

Shares cancelled (52,107,043) (6) – –
30 September 968,590,194 97 1,020,697,237 103

During the period a share buy back scheme was initiated and 52,107,043 10p shares were repurchased for a cost of £1,000 million.
Upon completion of the purchase, these shares were cancelled and transferred to the capital redemption reserve. The stamp duty costs
were £5 million and the fees charged for the share repurchase were £1 million.

On 6 March 2014, 31,942,881 shares held in treasury were cancelled creating the capital redemption reserve, and between September 2017
and December 2017, 4,973,916 shares were cancelled increasing this reserve.

250 Imperial Brands | Annual Report and Accounts 2023

VII. RESERVES
Treasury shares
Subject to authorisation by special resolution, the Group may purchase its own shares in accordance with the Companies Act. Any shares
which have been bought back may be held as treasury shares or, if not so held, must be cancelled immediately upon completion of the
purchase, thereby reducing the amount of Group’s issued share capital. Shares held in treasury do not qualify for dividends. Shares
purchased under the share buyback programme initiated on 7 October 2022 will be cancelled immediately on completion of the purchase.
There were no movements in treasury shares during the year to 30 September 2023 (2022: reduced by 4.0 million shares).

2023 2022
Millions of Millions of
shares Value shares Value
£ million unless otherwise indicated (number) £ (number) £
At 1 October 70.3 2,183 74.3 2,183
Gifted to Employee Share Ownership Trusts – – (4.0) –
At 30 September 70.3 2,183 70.3 2,183
Percentage of issued share capital 7.8 n/a 6.9 n/a

VIII. GUARANTEES
The Company provides guarantees to the following subsidiaries under section 479A of the Companies Act 2006, whereby the subsidiaries,
incorporated in the UK, are exempt from the requirements of the Act relating to the audit of individual accounts for the financial year
ending 30 September 2023:

• Imperial Tobacco Holdings (2007) Limited

• Imperial Tobacco Ventures Limited
• Rizla UK Limited
• Imperial Tobacco Overseas (Polska) Limited
• La Flor de Copan UK Limited
• Tabacalera de Garcia UK Limited
• Imperial Brands Ventures Limited
• Nerudia Consulting Limited
• Imperial Brands Ventures Finance Limited
• Imperial Brands Ventures Holdings (1) Limited
• Imperial Brands Ventures Holdings (2) Limited

The Company has guaranteed various committed and uncommitted borrowings facilities and liabilities of certain UK and overseas
undertakings. As at 30 September 2023, the amount guaranteed is £14,138 million (2022: £14,151 million).

Many of the committed revolving credit facilities remain undrawn as at 30 September 2023 but the maximum potential exposure under
each facility has been included due to the ongoing commitment, only drawn utilised balances have been included for facilities that are
uncommitted in nature.

The Company has also provided a parent guarantee to the Imperial Tobacco Pension Trustees Ltd (including their £300 million revolving
credit facility), the main UK pension scheme.

The Directors have assessed the fair value of the above guarantees and do not consider them to be material. They have therefore not been
recognised on the balance sheet.

IX. RELATED PARTY DISCLOSURES

Details of Directors’ emoluments and interests are provided within the Directors’ Remuneration Report. The Directors Remuneration Report,
on pages 142-163 includes details on salary, benefits, pension and share plans. These disclosures form part of the financial statements.

RELATED UNDERTAKINGS
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, and joint ventures, the
principal activity, the country of incorporation and the effective percentage of equity owned, as at 30 September 2023 are disclosed below.
With the exception of Imperial Tobacco Holdings (2007) Limited, which is wholly owned by the Company, none of the shares in the
subsidiaries is held directly by the Company.

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IMPERIAL BRANDS PLC FINANCIALS continued

NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued

SUBSIDIARIES: REGISTERED IN ENGLAND AND WALES, WHOLLY OWNED

Name Principal activity and registered address
Altadis NewCo Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Attendfriend Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
British Tobacco Company Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Congar International UK Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Enterprise Finance Limited Provision of treasury services to other Group companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Finance PLC Provision of treasury services to other Group companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Finance Limited (v) Provision of finance to other Group companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Holdings Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Holdings (1) Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Holdings (2) Limited (xi) Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Brands Ventures Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Investments Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Altadis Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (1) Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (2) Provision of finance to other Group companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (3) Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Capital Assets (4) Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Group Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Holdings (1) Limited (iv) Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Holdings (2007) Limited (iv) Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Holdings Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Initiatives Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Lacroix Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Limited Manufacture, marketing and sale of tobacco products in the UK
121 Winterstoke Road, Bristol BS3 2LL England
Imperial Tobacco Overseas (Polska) Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (1) Limited (viii) Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (2) Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (3) Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Holdings (4) Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England

252 Imperial Brands | Annual Report and Accounts 2023

Name Principal activity and registered address
Imperial Tobacco Overseas Holdings Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Overseas Limited (x) Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Pension Trustees (Burlington House) Dormant
Limited 121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Pension Trustees Limited (iv) Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Imperial Tobacco Ventures Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
ITG Brands Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Joseph & Henry Wilson Limited licensing rights for the manufacture and sale of tobacco products
121 Winterstoke Road, Bristol BS3 2LL England
Nerudia Limited Research and development of e-vapour products
Wellington House, Physics Road, Speke, Liverpool, L24 9HP, England
Nerudia Consulting Limited Research and development of e-vapour products
Wellington House, Physics Road, Speke, Liverpool, L24 9HP, England
La Flor de Copan UK Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England
Park Lane Tobacco Company Limited Dormant
121 Winterstoke Road, Bristol, BS3 2LL, England
Rizla UK Limited Entity ceased trading
121 Winterstoke Road, Bristol, BS3 2LL, England
Tabacalera de Garcia UK Limited Holding investments in subsidiary companies
121 Winterstoke Road, Bristol, BS3 2LL, England

SUBSIDIARIES: INCORPORATED OVERSEAS, WHOLLY OWNED

Name Country of incorporation Principal activity and registered address
1213509 B.C. Limited Canada Holding investments in subsidiary companies
Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC. V6C 2X8,
Canada
Altadis Canarias SAU (ii) Spain Marketing and sale of tobacco products in the Canary Islands
C/Comandante Azcarraga 5, Madrid, 28016, Spain
Altadis Holdings USA Inc United States of Holding investments in subsidiary companies
America 714 Green Valley Road Greensboro, NC27408 USA
Altadis Middle East FZCO United Arab Emirates Sales and marketing of tobacco products in the Middle East
P.O. Box. No. 261718, Jebel Ali Free Zone, Dubai, 261718,
United Arab Emirates
Altadis Ocean Indien SAS France (La Reunion Sales and distribution of tobacco products in la Reunion Island
Island) ZI n° 2 – BP 256 – 97457 Saint Pierre Cedex, La Reunion
Altadis S.A.U. Spain Manufacture, sales and distribution of tobacco products in Spain
C/Comandaute Azcarraga 5, Madrid 28016, Spain
Altadis Shade Company LLC United States of Manufacture and sale of tobacco products in the USA
America 217 Shaker Road, Somers, CT, 06071, USA
Athena IP Vermogensverwaltungs GmbH Germany Davidoff cigarette trademark owner
Behringstrasse 122 A, 22763, Hamburg
Cacique, SA – Comércio, Importaçao e Brazil Dormant
Exportaçao Rua Marechal Deodoro, 690 – Centro Arapiraca, Alagoas, Brazil
Commonwealth Brands Inc United States of Manufacture and sale of tobacco products in the USA
America 714 Green Vally Road Greensboro, NC27408 USA
Congar International Corp (Delaware) United States of Manufacturing and distribution of mass market cigars
America Road 14, Km. 72.2, Ave. Antonio R. Barcelo, Cayey, DE, PR 00736,
USA
Connecticut Shade Corporation United States of Holding investments in subsidiary companies
America 714 Green Vally Road Greensboro, NC27408 USA
Consolidated Cigar Holdings Inc (vii) United States of Holding investments in subsidiary companies
America 714 Green Vally Road Greensboro, NC27408 USA
Coralma International SAS France Holding investments in subsidiary companies
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
Dunkerquoise des Blends SAS France Tobacco processing
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France

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NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued

Name Country of incorporation Principal activity and registered address

Ets L Lacroix Fils NV/SA Belgium Manufacture and sale of tobacco products in Belgium
Sint-Bavostraat 66, 2610 Wilrijk, Belgium
Fontem (Beijing) Technology Solutions People’s Republic of Research and development
Limited (i) China Room 201, Floor 2, Building 6, Yuan Dong science and technology
park, 6 Hepingli North Street, Dong Cheng District, Beijing, 100013,
China
Fontem Canada Limited (vii) Canada Import and distribution of tobacco and tobacco related products in
Canada
C/O BDO Canada LLP, 6940 Mumford Road, Suite 510, Halifax, NS,
B3L 0B&, Canada
Fontem US LLC United States of Sales and marketing of tobacco products in the US
America 714 Green Valley Road Greensboro, NC27408 USA
Fontem Ventures B.V. The Netherlands Holding investments in subsidiary companies
Radarweg 60, Amsterdam, 1043 NT, The Netherlands
Huotraco International Limited Cambodia Production and marketing of tobacco products
No 299, Preah Ang Duong Street, Sangkat Wat Phnom, Khan
Daunh Penh, Phnom Penh, Cambodia
Imperial Brands Bulgaria EOOD (i) Bulgaria Manufacture and sale of tobacco products in Bulgaria
15 Henrih Ibsen str, Floor 4, Office 4, Sofia, 1407, Bulgaria
Imperial Brands CR s.r.o. Czech Republic Sales and marketing of tobacco products in the Czech Republic
Karla Engliše 3201/6, 15 00, Praha 5
Imperial Brands Finance Netherlands B.V. The Netherlands Provision of finance to other Group companies
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Imperial Brands Finland Oy Finland Sales and marketing of tobacco products in Finland
Auriga Business Center, Juhana Herttuan Puistokatu 21, 20100
Turku
Imperial Brands Global Duty Free & Export S.L. Spain Sale and export of duty-free tobacco products
C/Comandaute Azcarraga 5, Madrid 28016, Spain
Imperial Brands Hellas S.A. Greece Sales and marketing of tobacco products in Greece
300 Klisthenous Str, 15344 Gerakas, Attikis, Athens, Greece
Imperial Brands Holdings International B.V. The Netherlands Provision of finance to other Group companies
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Imperial Brands Italia S.r.l. Italy Sales and marketing of tobacco products in Italy
Via Luca Passi 22, Roma, 00166, Italy
Imperial Brands Japan G.K (v) Japan Sales and marketing of tobacco products in Japan
Shiodome Shibarikyu Building 21, 1-2-3 Kaigan Minato-ku, Tokyo,
Japan
Imperial Brands La Romana Dominican Republic Manufacture of cigars in the Dominican Republic
Industrial Free Zone #1, La Romana, Domincan Republic
Imperial Brands Luxembourg sarl Luxembourg Sale of tobacco products in Luxembourg
56 Rue Charles Martel, L-2134, Luxembourg
Imperial Brands Malta Limited Malta Provision of finance to other Group companies
Office 3, AX Business Centre, Ground Floor, Triq id-Difiza Civili
Mosta, MST 1741, Malta
Imperial Brands Norway A.S. Norway Sales and marketing of tobacco products in Norway
Ryensvingen 2-4, 0680, Oslo, Norway
Imperial Brands Portugal, Sociedade Portugal Advertising and support management
Unipessoal Lda 144, 7 DT, Avenida da Liberdade, Lisbon, Portugal
Imperial Brands Services Polska spolka z.o.o Poland Central Manufacturing and Central Supply Chain
Jankowice, Przemyslowa 1, 62-080 Tarnowo Padgorne, Poland
Imperial Brands Ventures LLC United States of Holding investments in subsidiary companies
America 251 Little Falls Drive, Wilmington, DE 19808 USA
Imperial Finance Ireland Limited Ireland Provision of finance to other Group companies
21 Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
Imperial Finance Malta Ltd Malta Provision of finance to other Group companies
Office 3, AX Business Centre, Ground Floor, Triq id-Difiza Civili
Mosta, MST 1741, Malta
Imperial Nominees Limited (ii) New Zealand Trustee Company
Level 24, 157 Lambton Quay, Wellington Central, Wellington 6011,
New Zealand

254 Imperial Brands | Annual Report and Accounts 2023

Name Country of incorporation Principal activity and registered address
Imperial Tobacco (Asia) Pte. Ltd Singapore Trading of tobacco-related products
80 Robinson Road, #02-00, 068898, Singapore
Imperial Tobacco Australia Limited Australia Sales and marketing of tobacco products in Australia
John Player Special House, Level 4, 4-8 Inglewood Place, Norwest,
NSW 2153, Australia
Imperial Tobacco Austria Marketing Service Austria Marketing of tobacco products in Austria
GmbH Zieglergasse 6, A-1070 Vienna, Austria
Imperial Tobacco BH doo (i) Bosnia-Herzegovina Marketing and distribution of tobacco products in Bosnia
Adema Buce, Sarajevo, 71000, Bosnia & Herzegovina
Imperial Tobacco Distribution Romania srl Romania Marketing and distribution of tobacco products in Romania
Nicolae Canea Street no. 140-160, EOS Business Park, 1st Floor
North, 2nd District, Bucharest, Romania
Imperial Tobacco EFKA Management GmbH Germany Manufacture of tobacco products in Germany
Behringstrasse 122 A, 22763, Hamburg
Imperial Tobacco España, S.L.U. Spain Holding investments in subsidiary companies
C/Comandaute Azcarraga 5, Madrid 28016, Spain
Imperial Tobacco Estonia OÜ Estonia Dormant
Veskiposti 2, 10138 Tallinn, Tallinn , Estonia
Imperial Tobacco Holdings (Netherlands) B.V. The Netherlands Provision of finance to other Group companies
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Imperial Tobacco Holdings International B.V. The Netherlands Provision of finance to other Group companies
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Imperial Tobacco Intellectual Property Limited Ireland Ownership of trademarks
21, Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
Imperial Tobacco International GmbH Germany Export and marketing of tobacco products
Behringstrasse 122 A, 22763, Hamburg
Imperial Tobacco Ireland Unlimited Ireland Dormant
Company (v) 6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
Imperial Tobacco Italy S.r.l. Italy Holding investments in subsidiary companies
Via Luca Passi 22, Roma, 00166, Italy
Imperial Tobacco Kyrgyzstan LLC (i) Kyrgyzstan Marketing and distribution of tobacco products in Kyrgyzstan
115, Ibraimov Street, 10th Floor, Business Center 'Asyl-Tash',
Bishkek, 720021, Kyrgyzstan
Imperial Tobacco La Romana S.A.S. France Manufacture of cigars in the Dominican Republic
320, Rue Saint-Honore, Paris, 75001, France
Imperial Tobacco Magyarország Hungary Sales and marketing of tobacco products in Hungary
Dohányforgalmázo Kft (Imperial Tobacco Váci út 141, 1138, Budapest, Hungary
Hungary)
Imperial Tobacco Management Luxembourg Holding investments in subsidiary companies
Luxembourg sarl 56 Rue Charles Martel, L-2134, Luxembourg
Imperial Tobacco Marketing Sdn Bhd Malaysia Trading of tobacco products (in liquidation)
12th Floor Menara Symphony, No 5 Jalan Prof, Khoo Kay Kim,
Seksyey, 46200 Petaling Jaya, Selangor, Malaysia
Imperial Tobacco New Zealand Limited New Zealand Manufacture and sale of tobacco products in New Zealand
Level 24, 157 Lambton Quay, Wellington Central, Wellington 6011,
New Zealand
Imperial Tobacco Polska Manufacturing SA Poland Manufacture of tobacco products in Poland
Ul. Tytoniowa 2/6, Radom, 26-600, Poland
Imperial Tobacco Polska S.A. Poland Manufacture and sale of tobacco products in Poland
Jankowice, ul. Przemyslowa 1, Pl-62-080, Tarnowo-Podgome,
Poland
Imperial Tobacco Production Ukraine (i) Ukraine Manufacture of tobacco products in Ukraine
ul. Akademika Zabolotnogo, 35, 03026, Kiev, Ukraine
Imperial Tobacco SCG doo Beograd (i) Serbia Marketing and distribution of tobacco products in Serbia
Milutina Milankovica 11a, Novi Beograd, Serbia
Imperial Tobacco Sigara ve Tutunculuck Turkey Manufacture of tobacco products in Turkey
Sanayi Ve Ticaret A.S. Kecilikoy OSB, Mah Ahmet Tutuncuoglu Cad. No.11, 45030
Yunusemre, Manisa, Turkey
Imperial Tobacco Slovakia A.S. Slovak Republic Sales and marketing of tobacco products in the Slovak Republic
7A Galvaniho, 824 53 Bratislava, Slovakia

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IMPERIAL BRANDS PLC FINANCIALS continued

NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued

Name Country of incorporation Principal activity and registered address

Imperial Tobacco Taiwan Co Limited Taiwan Sales and marketing of tobacco products in Taiwan
6F1-2 No.2 Sec. 3, Minsheng E road, Zhongshen District, Taipei,
Taiwan, Province of China
Imperial Tobacco Taiwan Manufacturing Taiwan Manufacture of tobacco products in Taiwan
Company Limited No 8 Cyunyi Road, Jhunan, MiaoLi County 350, Taiwan Province
of China
Imperial Tobacco Tutun Urunleri Satis Ve Turkey Sales and marketing of tobacco products in Turkey
Pazarlama A.S. Kecilikoy OSB, Mah Ahmet Tutuncuoglu Cad. No.11, 45030
Yunusemre, Manisa, Turkey
Imperial Tobacco Ukraine (i) Ukraine Sales and marketing of tobacco products in Ukraine
ul. Akademika Zabolotnogo, 35, 03026, Kiev, Ukraine
Imperial Tobacco US Holdings BV The Netherlands Holding investments in subsidiary companies
121, Winterstoke Road, Bristol, BS3 2LL
Imperial Tobacco West Africa SAS (i) Cote D'Ivoire Holding investments in subsidiary companies
Cocody-Nord, Quartier Gendarmerie, TF 5937, 01 B.P. 724 Abidjan
Imperial Tobacco Zagreb doo (i) Croatia Dormant (in liquidation)
Julija Kniefera 7, HR-100, Croatia
IMPTOB South Africa (Pty) Limited South Africa Provision of services to other Group companies
5 Sandwood Hills, Dunkirk Estate, Zimbali, South Africa
ITG Brands Holdco LLC United States of Holding investments in subsidiary companies
America 714, Green Valley Road, Greensboro, NC 27408, USA
ITG Brands LLC United States of Marketing and distribution of tobacco products in the USA
America 714, Green Valley Road, Greensboro, NC 27408, USA
ITG Cigars Inc United States of America
ITG Holdings USA Inc (ix) United States of Holding investments in subsidiary companies
America 714 Green Valley Road Greensboro, NC27408 USA
ITL Pacific (HK) Limited Hong Kong Manufacture and sale of tobacco and tobacco related products
Room 3905-06, 39th Floor, Hopewell Centre, 183 Queens Road East,
Wanchai, Hong Kong
Imperial Ventures Malta Limited Malta Provision of finance to other Group companies
Office 3, AX Business Centre, Ground Floor, Triq id-Difiza Civili
Mosta, MST 1741, Malta
JAW-Invest Oy Finland Trademark owner
Auriga Business Center, Juhana Herttuan puistokatu 21, 20100
Turku, Finland
John Player & Sons Limited Ireland Sales and marketing of tobacco products in the Republic of
Ireland
21, Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
John Player Ireland Pension Trustee Limited Ireland Trustee company (Strike off Listed)
21, Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
JSNM SARL France Trademark owner
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
MYBLU Spain S.L. Spain Marketing and sale of e-vapour products in Spain
CR. Robledo de Chavela, S/N. San Lorenzo del Escorial, Madrid,
28200, Spain
Millennium Tobacco Unlimited Company Ireland Provision of finance to other Group companies
21, Beckett Way, Park West, Nangor Road, Dublin, 12, Ireland
Newglade International Unlimited Company Ireland Dormant
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
Petone Vapes Limited New Zealand Non-trading
Russell McVeagh, Level 24, 157 Lambton Quay,
Wellington Central, Wellington, 6011 , New Zealand
Philippine Bobbin Corporation Philippines Manufacture of tobacco related products
Cavite Economic Zone, Phase II, Rosario, Cavite, Philippines
Real Club de Golf la Herrería S.A. Spain Management of golf course
CR. Robledo de Chavela, S/N. San Lorenzo del Escorial, Madrid,
28200, Spain
Reemtsma Cigarettenfabriken GmbH Germany Manufacture and sale of tobacco products in Germany
Behringstrasse 122 A, 22763 Hamburg, Germany
Skruf Snus AB Sweden Manufacture, marketing, sales of tobacco products in Sweden
PO Box 3068, Stockholm, SE-103 61, Sweden

256 Imperial Brands | Annual Report and Accounts 2023

Name Country of incorporation Principal activity and registered address
Société Centrafricaine de Cigarettes SA (i) Central African Manufacture and distribution of cigarettes in Central African
Republic Republic
Rue David Dacko, BP 1446, Bangui, Central African Republic
Société Centrafricaine de Distribution Sarl (i) Central African Dormant
Republic Avenue Boganda Pk4, Bangui, Central African Republic
Société du Mont Nimba Sarl (i) Guinee Conakry In Liquidation
BP 3391, Conakry, Guinea
Société Nationale d’Exploitation Industrielle France Manufacture and sale of tobacco products in France, and export of
des Tabacs et Allumettes S.A.S. tobacco products
200-216 rue Raymond Losserand, Paris, 75014, France
Société pour le Développement du Tabac en France Purchasing company
Afrique S.A.S. 122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
System Designed to Africa Sarl Morocco Distribution of tobacco products
Km 17, Route national de Rabat, Ain Harrouda, Morocco
Tabacalera de Garcia Limited Bermuda Holding investments in subsidiary companies
Claredon House, 2 Church Street, Hamilton, HM 11 Bermuda
Tahiti Tabacs SASU France, Papeete Distribution of tobacco products in Denmark and Greenland
(Tahiti) PK 4, 300 Côté mer, 98701 Arue, BP 20692 Papeete, French Polynesia
Tobaccor S.A.S. (v) France Holding investments in subsidiary companies
122 Avenue Charles de Gaulle, Neuilly sur Seine, 92200, France
Tobačna 3DVA, trgovsko podjetje, d.o.o. Slovenia Retail of products in Slovenia
Cesta 24., junija 90, SI 1231 Ljubljana – Ĉrnuče, Slovenia
Tobačna Grosist d.o.o. Slovenia Marketing and distribution in Slovenia
Cesta 24., junija 90, SI 1231 Ljubljana – Ĉrnuče, Slovenia
Tobačna Ljubljana d.o.o. (v) Slovenia Sales and marketing tobacco products in Slovenia
Cesta 24., junija 90, SI 1231 Ljubljana – Ĉrnuče, Slovenia
Van Nelle Tabak Nederland B.V. (x) The Netherlands Manufacture and sale of tobacco products in the Netherlands
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Van Nelle Tobacco International Holdings B.V. The Netherlands Sale of tobacco and tobacco related products
Slachtedijk 28a, 8501 ZA, Joure, Netherlands
Von Erl. Gmbh (i) Austria Sale of e-vapour products in the US and Europe
Hegelgasse 13/26, 1010 Vienna, Austria

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IMPERIAL BRANDS PLC FINANCIALS continued

NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued

SUBSIDIARIES: INCORPORATED OVERSEAS, PARTLY OWNED

Country of Percentage
Name incorporation Principal activity and registered address owned
Be To Be Pharma, S.L.U Spain Distribution of pharmaceuticals 50.0
C/ Trigo, 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
Spain
Carbo Collbatalle, S.L.U. Spain Transportation of food at a controlled temperature 50.0
Zona Franca, Sector E, Calle L, No 6-8. 08040 Barcelona, Spain
CDIL – Companhia de Portugal Marketing and sale of tobacco and other products, and payment services 50.0
Distribuicao Integral Logista in Portugal
Portugal, SA. Edificio Logista, Rua do Vale da Fote Coberta, 153 E 167, 2890-182,
Alcochete, Portugal
Compagnie Agricole et France Management company 99.9
Industrielle des Tabacs 143 bd Romain Rolland, Cedex 14, Paris, 75685, France
Africains S.A.S.
Compagnie Réunionnaise des France, St Pierre Manufacture of cigarettes 98.9
Tabacs S.A.S. (La Reunion Island) ZI n° 2 – BP 256 – 97457 Saint Pierre Cedex, La Reunion
Compañía de Distribución Spain Distribution of published materials and other products 50.0
Integral de Publicaciones Avenida de Europa No.2, Edificio Alcor Plaza/Ala Este Planta 4a – Modulo
Logista S.L.U. (iv) 3, Alcorcor, Madrid, 28922, Spain
Compañía de Distribución Spain Holding investments in subsidiary companies 50.0
Integral Logista Holdings, C/ Trigo, 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
S.A. (iii) Spain
Compañía de Distribución Poland Distribution of tobacco products in Poland 50.0
Integral Logista Polska, Avenida Jerozolimskie 96 – 7ª Planta, Edificio Equator II 133/131, 02-304
sp. Z o.o. Varsaw, Poland
Compañía de Distribución Spain Distribution of tobacco products in Spain 50.0
Integral Logista S.A.U. C/ Trigo, 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
Spain
Distribuidora Valenciana de Spain Distribution of published materials and other products in Valencia 50.0
Ediciones S.A.U. Pedrapiquers 5, Poligono Industrial Vara de Quart, Valencia, 46014, Spain
Dronas 2002, S.L.U. Spain Industrial parcel and express delivery service 50.0
Energía, 25-29; Polígono Industrial Nordeste, Sant Andreu de la Barca,
Barcelona, 08740, Spain
Gramma Farmaceutici S.r.l Italy The Logistic, storage and distribution throughout the Italian territory of 50.0
pharmaceutical, cosmetics and sanitary products
Via della Mola Saracena snc, 00065, Fiano Romano, Rome, Italy
Imperial Tobacco TKS a.d. (i) Macedonia Manufacture, marketing and distribution of tobacco products in 99.1
Macedonia
ul 11, Oktomvri 125, P O Box 37, 1000 Skopje, Macedonia
Imperial Tobacco TKS a.d. – Kosovo Manufacture, marketing and distribution of tobacco products in Kosovo 99.1
Dege Kosove Rrafshi i Kosoves, Nr. 80 (Magjistralja M2: Prishtine-Shkup, km i 2-te
Vetermik) Prishtine, Republic of Kosovo
Imprimerie Industrielle Cote D'Ivoire Printing company 78.8
Ivoirienne SA (i) Zone Industrielle du Banco, Lots No 147-149-150, 01 BP 4124,
Yopougon/Abdjan, Cote d'Ivoire
La Mancha 2000, S.A., Sociedad Spain Distribution services 50.0
Unipersonal Trigo 39, Poligno Industrial Polvoranca – 28914 Leganes, Madrid, Spain
Logesta Deutschland Gmbh, Germany Long haul transportation in Germany 50.0
Sociedad Unipersonal Pilotystrasse, 4, 80538 München, Germany
Logista France Holding S.A. France Holding investments in subsidiary companies 50.0
Inmeuble Le Bristol, 27 Avenue des Murs du Parc, 94300 Vincennes,
France
Logista France S.A.S. France Holding investments in subsidiary companies 50.0
Inmeuble Le Bristol, 27 Avenue des Murs du Parc, 94300 Vincennes,
France
Logesta Freight France Sarl France Long haul transportation in France 50.0
Inmeuble Le Bristol, 27 Avenue des Murs du Parc, 94300 Vincennes,
France
Logesta Lusa LDA Portugal Long haul transportation in Portugal 50.0
Edifico Logista, Rua do Vale da Fonte Coberta, 153 E 167, 2890-182
Alcochete, Portugal
Logista Freight Italia S.R.L Italy Long haul transportation in Italy 50.0
Via Valadier, 37 – 00193 Roma, Italy

258 Imperial Brands | Annual Report and Accounts 2023

 Country of Percentage
Name incorporation Principal activity and registered address owned
Logista Freight Polska S.r.l. Poland Long haul transportation in Poland 50.0
Av. Jerozolimskie 96 – 7ª Planta Edificio Equator II, Varsovia, Poland
Logista Freight, S.A.U Spain Long haul transportation services in Spain 50.0
C/ Trigo, 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
Spain
Logista Italia Spa Italy Long haul transportation in Italy 50.0
Via Valadier, 37 – 00193 Roma, Italy
Logista Payments, SL Spain Provision of financial services 50.0
C/ Trigo, 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
Spain
Logista Pharma S.A.U. Spain Distribution of pharmaceuticals 50.0
C/ Trigo Núm. 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
Spain
Logista Pharma Canarias, Spain Pharmaceutical products logistics in Canary Islands 50.0
S.A.U. C/ Entreríos Nave 3; Las Palmas de Gran Canaria, 35600, Spain
Logista Promotion et Transport France Marketing and distribution of tobacco products in France 50.0
S.A.S. Inmeuble Le Bristol, 27 Avenue des Murs du Parc, 94300 Vincennes,
France
Logista Regional de Spain Marketing, distribution and sale to points of sale in Spain. 50.0
Publicaciones, S.A.U. Avenida de Europa No.2, Edificio Alcor Plaza/Ala Este Planta 4a – Modulo
3, Alcorcor, Madrid, 28922, Spain
Logista Retail France S.A.S. France Long haul transportation in France 50.0
Inmeuble Le Bristol, 27 Avenue des Murs du Parc, 94300 Vincennes,
France
Logista Retail Italia S.P.A Italy Wholesale to tobacconists in Italy 50.0
Via Valadier, 37 – 00193 Roma, Italy
Logista Retail S.A.U Spain Sale of tobacco products in Spain 50.0
C/ Trigo, 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
Spain
Logista Strator, SLU Spain Distribution of POS software 50.0
C/ Trigo, 39 – Polígono Industrial Polvoranca, Leganés, Madrid, 28914,
Spain
Logista Transport Europe B.V. The Netherlands Holding Company 50.0
Wijkermeerstaat 31. 2131 HB, Hoofddorp, The Netherlands
Logista, Transportes, Portugal Industrial parcel delivery and pharmaceutical distribution in Portugal 50.0
Transitários e Pharma, Lda. Edifico Logista, Rua do Vale da Fonte Coberta, 153 E 167, 2890-182
Alcochete, Portugal
MABUCIG Industries SA Burkina Faso Manufacture of cigarettes in Burkina Faso 72.7
No 55, Rue 19.14, , B.P. 94, Kodeni, – Bobo Dioulasso, Burkina Faso
MABUCIG SA (Manufacture Burkina Faso Manufacture of cigarettes in Burkina Faso 72.7
Burkinabe de Cigarette) Zone Industrielle de Bobo-Dioulasso, Secteur No 19, Rue 19.14 No adressage
55, B.P. 94 – Bobo Dioulasso, Burkina Faso
Macotab SAS (Manufacture France, Bastia Manufacture and sales of cigarettes 99.9
Corse des Tabacs) Route Nationale 193, Furiani, 20600, France
Manufacture de Cigarettes du Tchad Manufacture and distribution of cigarettes in Chad 95.0
Tchad SA 0502 rue 1039, Arrondissement 1, N'DJamena, Chad
Midsid – Sociedade Portugal Wholesale of tobacco and other products 50.0
Portuguesa de Distribução, Edificio Logista, Pracetta do Vale Da Fonte, Coberta 153/167, Freguesia de
S.A.U Alcochete, Portugal
MTOA SA (i) Senegal Manufacture and sales of cigarettes in Senegal 98.3
Km 2-5 Bld du Centenaire de la commune de Dakar, Dakar, Senegal
Publicaciones y Libros SA Spain Publishing company 50.0
Avenida de Europa No.2, Edificio Alcor Plaza/Ala Este Planta 4a – Modulo
3, Alcorcor, Madrid, 28922, Spain
Reemtsma Kyrgyzstan OJSC (i) Kyrgyzstan In liquidation 99.7
115, Ibraimov Str., 10th Floor, Business Center "Asyl-Tash",, Bishkek,
Kyrgyzstan
S3T Pte Ltd (i) Singapore Holding investments in subsidiary companies 51.0
80 Robinson Road, #02-00, 068898, Singapore
SACIMEM SA (i) Madagascar Manufacture of cigarettes in Madagascar 65.4
110 Antsirabe – Madagascar, Route d'Ambositra, BP 128, Madagascar
SITAB Industries SA (i) Cote D'Ivoire Manufacture of cigarettes in Cote D'Ivoire 75.9
Rue de I'Industrie – Lot No 19, 01 – BP 607, Bouake, Cote d'Ivoire

www.imperialbrandsplc.com 259
IMPERIAL BRANDS PLC FINANCIALS continued

NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued

Country of Percentage
Name incorporation Principal activity and registered address owned
SITAR Holding SAS France (La Holding investments in subsidiary companiesr 99.0
Reunion Island) Z.I n2, B.P. 256, 97457 Saint Pierre, IIe de la Reunion, France
Société Africaine d’Impression Senegal Manufacture and distribution of cigarettes in Senegal 99.8
Industrielle SA (i) route de Bel Air – Km 2200, Dakar, Senegal
Société des Cigarettes Gabon In liquidation 87.8
Gabonaises SA (i) 2381 bld Léon MBA, BP 2175, Libreville, Gabon
Société Industrielle et Agricole Congo Manufacture and distribution of cigarettes in Congo 89.7
du Tabac Tropical SA (i) Avenue de la Pointe Hollandaise, Mpila, BP 50, Brazzaville, Congo
Société Ivoirienne des Tabacs Cote D'Ivoire Manufacture and distribution of cigarettes in Côte d’Ivoire 74.9
SA (i) (iii) Cocody-Nord, Quartier Gendarmerie, TF 5937, 01 B.P. 724 Abidjan
Société Marocaine des Tabacs Morocco Manufacture and distribution of cigarettes in Morocco 99.9
SA 87 Rue Hamed El Figuigui , Casablanca, 20500, Morocco
SOCTAM SA (i) Madagascar Manufacture and distribution of cigarettes in Mali 50.5
15 Rue Geoges V, Mahajanga, Madagascar
SOTCHADIS SAS Chad Non-trading 95.0
502 Rue 1039, BP 852, N'Djamena, Chad
Transportes J. Carbo Guijuelo, Spain Transportation of food at a controlled temperature 50.0
S.L.U. Calle De la Sierra Ventosa, Parcela 38, Pologono Industrial Agroalimentario
de Guijuelo. 37000, Salamanca

ASSOCIATES: INCORPORATED OVERSEAS

Country of Percentage
Name incorporation Principal activity and registered address owned
24 Hours B.V The Netherlands Courier express sector 35.01
Wijkermeerstraat 31, 2131 HB, Hoofddorp, The Netherlands
Albacetrans, S.L.U Spain Freight forwarding company 36.6
Poligono Industrial Campollano, Avenida Sexta, 0.02007 Albacete, Spain
Alcome S.A.S. France Waste management 24.0
88 avenue des Ternes, Paris, 75017, France
Azur Finances SA Cameroon Holding investments in subsidiary companies 20.0
B.P 1105, Douala, Cameroon
Compañia Española de Tabaco Spain Production and sale of raw tobacco 20.8
en Rama SA (Cetarsa) (i) Avenida de las Angustias, 20, 10300 Navalmoral de la Mata, Cáceres, Spain
Distribuidora de Ediciones Spain Distribution of published materials and other products in Spain 35.0
SADE, S.A Calle B, esquina calle 4, s/n. Sector B, Polígono Industrial Zona Franca,
08040 Barcelona, Spain
Distribuidora de Publicaciones Spain Distribution of published materials and other products 25.0
del Sur, S.A. Poligno Industrial Pineda, Carretera De Cadiz A, Dos Hermanas KM.547,
Nave B, Sevilla, 41014, Spain
Distribución de Publicaciones Spain Distribution of published materials and other products in Spain 40.0
Siglo XXI, Guadalajara Francisco Medina y Mendoza, 2, 19171 Cabanillas del Campo, Guadalajara,
Spain
Entreprises des Tabacs en Guinée Conakry Dormant 34.0
Guinée (i) B.P 3391, Conakry, Guinea
German-Ex B.V. The Netherlands Courier express sector 35.0
Wijkermeerstraat 31, 2131 HB, Hoofddorp, The Netherlands
Herinvemol, S.L. Spain Freight forwarding company 36.6
Carretera De Madrid, KM. 276. 30500 Molina De Segura (Murcia), Spain
Innoreste, S.L.U Spain Freight forwarding company 36.6
Carretera De Madrid-Cartegena, KM. 376. 30500 Molina de Segura (Murcia),
Spain
Lao Tabacco Limited Laos Manufacture and distribution of cigarettes in Laos 43.7
KM 8, Thadeua Road, P O Box 181, Vientiane, Lao People's Democratic
Republic
Logista Libros SL Spain Distribution of books 25.0
Avda. Castilla La Mancha, 2 – Naves 3-4 del Polígono Industrial La Quinta,
Cabanillas del Campo, Guadalajara, Spain
Mosca China Logistics Ltd China Freight forwarding company 30.0
603, no.32, Hong Kong Road, Nanfang district, Qingdao city
Mosca Italia, Srl Italy Transport activities 36.6
Via Luigi Canepa 13, 16165, Genova, Italy
Mosca Maritimo Baleares, S.L. Spain Freight forwarding company 36.6
Carretera De Madrid, S/N. 30500 Molina de Segura (Murcia), Spain

260 Imperial Brands | Annual Report and Accounts 2023

 Country of Percentage
Name incorporation Principal activity and registered address owned
Mosca Maritimo, S.L.U. Spain Freight forwarding company 36.6
Carretera De Madrid, S/N. 30500 Molina de Segura (Murcia), Spain
Mosca Portugal, Lda Portugal Freight forwarding company 36.6
Santa Iria, Na Avenida Casal SA Serra No 9, Portugal
Ordimur, S.L.U. Spain Freight forwarding company 36.6
Calle Argentina, Margen Izquierda, Poligono Industrial La Serreta, 30500
Molina de Segura, Murcia, Spain
Promotion et Distribution a Madagascar Distribution of cigarettes in Madagascar 33.4
Madagascar (i) Tour ZITAL Ankorondrano, Antananarivo, Madagascar
SITABAC S.A Cameroon Manufacture and distribution of tobacco products in Cameroon 34.5
113 Rue Kitchener, 1067 Bonanjo, Douala, Cameroon
Sociedad Anonima Spain Publications distribution 35.0
Distribuidora De Ediciones Calle B, esquina calle 4, s/n. Sector B, Polígono Industrial Zona Franca,
08040 Barcelona, Spain
Société Internationale des Madagascar Leaf processing 47.9
Tabacs Malgaches (i) BP 270, 401 Mahajanga, Madagascar
Société Nationale des Tabacs Mali Manufacture and distribution of cigarettes in Mali 28.0
et Allumettes du Mali SA (i) Route Sotuba – Z.I., BP 59, Bamako, Mali
Speedlink Worldwide Express The Netherlands Courier express sector 35.0
B.V. Wijkermeerstraat 31, 2131 HB, Hoofddorp, The Netherlands
Transportes El Mosca Murcia, Spain Freight forwarding company 36.6
S.A.U. Carretera Madrid-Cartagena, KM. 376.30500, Molina de Segura (Murcia),
Spain
Transportes El Mosca, S.A.U. Spain Freight forwarding company 36.6
Carretera Madrid-Cartagena, KM. 376.30500, Molina de Segura (Murcia),
Spain

JOINT VENTURES: INCORPORATED OVERSEAS

Country of Percentage
Name incorporation Principal activity and registered address owned
Global Horizon Ventures Hong Kong Sales and marketing of cigarettes in Asia 50.0
Limited Room 3907-08, 39th Floor, Hopewell Centre, 183 Queens Road East,
Wanchai, Hong Kong
Intertab SA (i) Switzerland Holding investments in subsidiary companies 50.0
Société Fiduciaire Suisse-Coopers & Lybrand S.A., Route de la Glâne 107,
Villars-sur-Glâne, 1752, Switzerland
West Tobacco Pte Ltd (i) Singapore Dormant 50.0
1 Harbourfront Avenue #14-07, Keppel Bay Tower, 098632 Singapore

www.imperialbrandsplc.com 261
IMPERIAL BRANDS PLC FINANCIALS continued

NOTES TO THE FINANCIAL STATEMENTS OF IMPERIAL BRANDS PLC continued

PARTNERSHIPS
The Group also owns the following partnerships:

Name Country Principal activity, registered address and principal place of business
Fabrica de Tabacos La Flor de Honduras Holding investments in subsidiary companies
Copan S de R.L. de CV Registered address and principal place of business: Apartado Postal 209, Colonia
Mejia-García, Santa Rosa de Copán, Honduras
Imperial Tobacco (Efka) GmbH & Germany Manufacture of tubs in Germany
Co. KG Registered address and principal place of business: Behrinstrasse 122 A,, Hamburg,
22763, Germany
Imperial Tobacco Kazakhstan Kazakhstan Marketing and distribution of tobacco products in Kazakhstan
LLP (i) Registered address and principal place of business: 3rd Floor, Prime Business Park,
100/2 Nursultan Nazarbayev Avenue, Medeuskiy District, Almaty, 050000,
Kazakhstan
ITG Brands Holdpartner LP United States of Marketing and sale of tobacco products in United States of America
America Registered address and principal place of business: 714 Green Valley Road,
Greensboro, NC27408, United States of America

The subsidiaries listed were held throughout the year and the consolidated Group financial statements include all the subsidiary
undertakings identified. All dormant UK entities have taken the exemption available to not have an audit of their financial statements.

Unless otherwise stated the entities are unlisted, have 1 type of ordinary share capital and a reporting period ending on 30 September
each year.

(i) December year end

(ii) March year end
(iii) Listed entity
(iv) Holding of one type of ordinary share only (where more than one type of share is authorised/in issue). Only applicable to partly owned
entities. Percentage ownership is shown in the tables above.
(v) Holding of two types of ordinary share (where more than one type of ordinary share is authorised/in issue). Only applicable to 100%
owned subsidiaries.
(vi) Holding of preference shares only
(vii) Holding of ordinary and preference shares
(viii) Holding of ordinary and redeemable shares
(ix) Holding of ordinary and deferred shares
(x) Holding of two types of ordinary share and redeemable shares

The percentage of issued share capital held by the immediate parent and the effective voting rights of the Group are the same except for
Imperial Tobacco Italia Srl where the entire share capital, and therefore 100% of the voting rights, are held by a number of Group companies.

262 Imperial Brands | Annual Report and Accounts 2023

SHAREHOLDER INFORMATION

FINANCIAL CALENDAR 8am and 4.30pm Monday to Friday for AMERICAN DEPOSITARY
AND DIVIDENDS more information about this service. RECEIPT FACILITY
Half year results are expected to If you wish to sell your Imperial Brands Imperial Brands PLC ordinary shares
be announced in May 2024 and the Full PLC ordinary shares, you will need your are traded on the OTCQX International
year results in November 2024. shareholder reference number, which Premier platform in the form of
you can find on your share certificate. American Depositary Shares (ADSs)
The Annual General Meeting of the
using the symbol ‘IMBBY’. The ADS
Company will be held on Wednesday
INDIVIDUAL SAVINGS ACCOUNT facility is administered by J.P. Morgan
31 January 2024 at 9.30am at the Bristol
Investors in Imperial Brands PLC Chase, N.A. and enquiries should
Marriott Royal Hotel, College Green
ordinary shares may take advantage of be directed to them at the address
Bristol, BS1 5TA. The Notice of Meeting
a low-cost Individual Savings Account shown below.
and explanatory notes about the
resolutions to be proposed are set out in (ISA) and Investment Account where
the circular enclosed with this Report. they can hold their Imperial Brands PLC WEBSITE
ordinary shares electronically. The ISA Information on Imperial Brands
Dividends are generally paid at and Investment Account are operated PLC is available on our website:
the end of March, June, September by Equiniti Financial Services Limited. www.imperialbrandsplc.com.
and December. Payment of the 2023
final dividend, if approved, will be For further information please go to Equiniti also offers a range of
on 28 March 2024 to shareholders on www.shareview.co.uk/dealing or call shareholder information online.
the Register of Members at the close Equiniti on 0345 0700 720. You can access information on your
of business on 16 February 2024. The holdings, indicative share prices and
associated ex-dividend date will be DIVIDEND REINVESTMENT PLAN dividend details and find practical help
15 February 2024. Imperial Brands PLC has set up a on transferring shares or updating your
dividend reinvestment plan (DRIP) details at: www.shareview.co.uk.
SHARE DEALING SERVICE to enable shareholders to use their cash
Our Registrars offer Shareview dividend to buy further Imperial Brands
Dealing, a service which allows you PLC ordinary shares in the market.
to buy or sell Imperial Brands PLC Further information can be obtained
ordinary shares if you are a UK from Equiniti on 0371 384 2037 (+44 371
resident. You can deal on the 384 2037 if calling from outside the UK)
internet or by phone. Log on to or online at www.shareview.co.uk.
www.shareview.co.uk/dealing or
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www.imperialbrandsplc.com 263
CAUTIONARY STATEMENT factors, changing economic, financial, interpreted to mean that the future
Certain statements in this report business or other market conditions. earnings per share of the Company for
constitute or may constitute forward- These and other factors could adversely current or future financial years will
looking statements. Any statement in affect the outcome and financial effects necessarily match or exceed the
this report that is not a statement of of the plans and events described in historical or published earnings per
historical fact including, without this report. As a result, you are share of the Company. This report has
limitation, those regarding the cautioned not to place any reliance on been prepared for, and only for the
Company’s future expectations, such forward-looking statements. The members of the Company, as a body,
operations, financial performance, forward-looking statements reflect and no other persons. The Company, its
financial condition and business is or knowledge and information available at Directors, employees, agents or advisers
may be a forward-looking statement. the date of this report and the Company do not accept or assume responsibility
Such forward-looking statements are undertakes no obligation to update its to any other person to whom this report
subject to risks and uncertainties that view of such risks and uncertainties or is shown or into whose hands it may
may cause actual results to differ to update the forward-looking come, and any such responsibility or
materially from those projected or statements contained herein. Nothing liability is expressly disclaimed.
implied in any forward-looking in this report should be construed as a
statement. These risks and profit forecast or profit estimate and no
uncertainties include, among other statement in this report should be

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A digital version of this Annual Report
is available online: www.imperialbrandsplc.com

Registered Office
Imperial Brands PLC
121 Winterstoke Road
Bristol BS3 2LL
UK
www.imperialbrandsplc.com