OUR VALUES

Our values express who we are and capture the behaviours we expect from everyone who works for us.

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CHAIRMAN’S STATEMENT

"This report provides an overview of performance and the actions we are taking to strengthen our sustainability and create long-term value for our stakeholders."

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CHIEF EXECUTIVE'S STATEMENT

"Our tobacco business continued to generate modest growth, with Next Generation Products adding to our revenue delivery."

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OUR STRATEGY FOR GROWTH

Our strategy is aligned to our purpose and focuses on creating sustainable value

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Our strategy is aligned to our purpose of creating something better for the world’s smokers and focuses on driving performance in three key areas: Tobacco, Next Generation Products (NGP) and Cost and Cash. In tobacco we maximise opportunities for our Asset Brands and priority markets. Through our expanding NGP portfolio we are providing adult smokers with a range of potentially less harmful alternatives to cigarettes.

The approach we take to managing cost and cash provides funds to invest in the business and return to shareholders. Our sustainability strategy is central to our growth aspirations and frames the way we manage our environmental, social and governance issues, with everything we do underpinned by high standards of governance.

AN EVOLVING ENVIRONMENT

Addressing the issues posed by our changing operating environment

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Our operating environment is evolving rapidly, with regulatory and social change influencing trends in nicotine consumption and an increasing number of smokers switching to potentially less harmful Next Generation Products (NGP) such as vapour, oral nicotine and heated tobacco products.

The value of the world tobacco market, however, remains significant at approximately US$785 billion (excluding China) with over 5,400 billion cigarettes consumed a year. Around a billion adults still choose to smoke and will continue to do so well into the future.

ENGAGING WITH STAKEHOLDERS

Stakeholder engagement is essential for the growth of the business

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Our business model creates value for a broad range of stakeholders.
Building and maintaining trust with our stakeholders underpins the success and reputation of Imperial Brands. Through stakeholder collaboration we aim to grow the business, minimise our environmental impact, make a positive social contribution and uphold high standards of governance.

Regular engagement with consumers, shareholders, suppliers, retailers, employees, governments and non-governmental organisations is not only the right thing to do, it also helps us make better business decisions.

ENABLING GROWTH, CREATING VALUE

Managing our environmental, social and governance issues

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Our sustainability strategy creates shared value for our stakeholders and is integral to the long-term growth of the business, ensuring that we develop a pipeline of Next Generation Products, maintain a sustainable supply of tobacco and operate responsibly at all times.

Our strategy is aligned with the UN Sustainable Development Goals (SDGs), which aim to have a transformational impact on the world by 2030 by addressing global challenges such as poverty, availability of clean water, inequality and climate change.

DELIVERING GOOD GOVERNANCE

High standards of governance underpin our long-term sustainability

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In what proved to be a difficult year for the Group, strong Board oversight was vitally important. A major focus of this was the discussions relating to the best allocation of resources to continue driving our strategy. These included approving our revised dividend policy, the commencement of a share buyback programme, our asset divestment programme and our investment in Auxly Cannabis Group Inc. We have also been focusing on Board succession, welcoming Sue Clark and Jon Stanton to the Board and looking to appoint suitable successors for both myself and Alison Cooper, who we announced in October will step down after 20 years with the Company, the last nine of which have been as CEO.

After eight years on the Board Malcolm Wyman retired in May 2019 with our thanks and best wishes for the future. Whilst we have applied and were fully compliant with the requirements of the 2016 UK Corporate Governance Code throughout the year, we have adopted several provisions from the 2018 Code early, including my intention to step down from the Board and the appointment of Steven Stanbrook as our Workforce Engagement Director. We will report on our application of the 2018 Code in next year’s Annual Report.

OPERATING REVIEW

We continue to reshape our brand portfolio, prioritising our high-quality Asset Brands to drive growth.

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FINANCIAL REVIEW

We will further optimise our cost base and capital discipline to prioritise investment more effectively and deliver growing returns.

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2019 Overview

TOBACCO & NGP NET REVENUE*

+2.2% 8.0bn

ASSET BRAND NET REVENUE*

+4.4% £5.3bn

ADJUSTED EARNINGS PER SHARE*

-1.6% 273.3p

REPORTED EARNINGS PER SHARE

-26.2% 106.0p

DIVIDEND PER SHARE

+10% 206.6p

* movement on a constant currency basis

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