An overview of our financial year performance and the key performance indicators we use to measure the progress we’re making in delivering our strategy.
TOBACCO & NGP NET REVENUE*
ASSET BRAND NET REVENUE*
ADJUSTED EARNINGS PER SHARE*
REPORTED EARNINGS PER SHARE
DIVIDEND PER SHARE
* movement on a constant currency basis
We use these key performance indicators and the metrics in the Operating Review to assess the progress we are making in delivering our strategy. As the business continues to grow, these measures are likely to change to reflect our evolving strategic priorities.
TOBACCO & NGP NET REVENUE1 (£BN)
Tobacco & NGP net revenue was down 0.1 per cent at actual exchange rates but grew by 0.8 per cent on a constant currency basis. Tobacco net revenue increased by 1.8 per cent and NGP revenue was down by 27.0 per cent at constant currency.
Tobacco & NGP net revenue comprises tobacco and NGP revenue less duty and similar items, excluding peripheral products
ADJUSTED EARNINGS PER SHARE1 (PENCE)
Adjusted earnings per share was down 5.6 per cent on a constant currency basis. Reported earnings per share was up 49.4 per cent. This is explained in the Financial Review.
Adjusted earnings per share represents adjusted profit after tax attributable to the equity holders of the Company divided by the weighted average number of shares in issue during the period, excluding shares held to satisfy employee share plans and shares purchased by the Company and held as treasury shares.
* 2019 EPS restated to exclude other income
ASSET BRANDS NET REVENUE (£BN)
Asset Brands net revenue increased by 1.0 per cent on a constant currency basis. Asset Brands account for 64.8 per cent of our total revenue, up 10 basis points on last year.
Asset Brands net revenue is revenue from our most important tobacco and NGP brands less duty and similar items, excluding peripheral products.
* Asset Brand net revenue restated to incorporate revised brand definitions
TOTAL SHAREHOLDER RETURN1
This was another challenging year in which total shareholder returns declined 25 per cent, with a lower share price and reduced dividend.
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.
TOBACCO & NGP OPERATING MARGIN (%)
Margins have declined with NGP write-downs, further NGP losses, COVID-19 related costs and increased regulatory costs.
Tobacco & NGP operating margin is adjusted operating profit divided by tobacco and NGP net revenue expressed as a percentage.
DIVIDEND PER SHARE (PENCE)
As announced in May 2020, we rebased our dividend by one-third to accelerate debt repayment. We retain a progressive dividend policy, growing annually from the rebased level.
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.
RETURN ON INVESTED CAPITAL (%)
Return on invested capital reduced in the year impacted by lower tobacco and NGP profitability.
Return on invested capital measures the effectiveness of capital allocation and is calculated by dividing adjusted net operating profit after tax by invested capital. Invested capital is adjusted total equity and reported net debt.
CASH CONVERSION RATE1 (%)
Reported 2020 cash conversion of 127 per cent benefited from temporary upside due to the timing of duty payments. Strong underlying cash conversion of 107 per cent was driven by working capital improvements.
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.
1KPIs used as bonus and LTIP performance criteria for Executive Directors.
ENERGY CONSUMPTION (GWH)3
We have seen a 12 per cent decrease in energy consumption from our 2017 baseline year. Our target is to reduce energy consumption by 25 per cent by 2030. Our 2020 relative energy consumption is 96,625 kWh/£million.
We measure relative indicators against ‘£million’ tobacco and NGP net revenue. Energy consumption covers the energy used in our offices, manufacturing sites and by our sales fleet vehicles. The energy we use originates from a variety of sources including fossil fuels and renewable sources.
ABSOLUTE CO2 EQUIVALENT EMISSIONS (TONNES)3
We have seen a 12 per cent decrease in total Scope 1 and 2 emissions from our 2017 baseline year. Our target is to reduce CO2e emissions by 25 per cent by 2030. We have also set a Scope 3 target to minimise our carbon impact beyond our direct operations.
We report on greenhouse gas emissions resulting from the operations that fall within our consolidated financial statements, using the operational control reporting approach. We report on the seven main greenhouse gases and report in terms of tonnes of CO2 equivalent (CO2e).
We have seen an 18 per cent decrease in waste from our 2017 baseline year. We seek to minimise the waste and waste to landfill associated with our production processes through a combined approach of reduce, reuse and recycle.
This includes waste from manufacturing sites and main offices, excluding Logista and Sales and Marketing entities. It does not include any material which is re-used.
LOST TIME ACCIDENT FREQUENCY RATE (PER 200,000 HOURS)4
Our continued focus on health, safety and risk management has resulted in a 20 per cent decline in our lost time accident rate compared to last year.
A lost time accident is an ‘on-the-job’ accident that results in an employee being unable to return to work for a minimum of one full day.
1 2020 data has been independently assured by EY. Our Reporting Criteria Document contains detail on definition and scope of all non-financial KPIs. See www.imperialbrandsplc.com/sustainability for more information.
2 Our 2020 environmental data follows the reporting period Q4 financial year 2019 to Q3 financial year 2020. This is to allow for data collection, validation and external assurance. Our reporting scope and definitions are detailed in the Reporting Criteria Document published on our website.
3 Our health and safety data is for the full 2020 financial year. Our reporting scope and definitions are detailed in the Reporting Criteria Document published on our website.