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Imperial Brands

Analysing companies' finances and value from their financial statements using ratios and formulae
monabri
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Re: Imperial Brands

#480357

Postby monabri » February 13th, 2022, 3:29 pm

I wonder what Terry Smith saw in Imperial which he held from November 2010 for over 7 years?

TUK020
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Re: Imperial Brands

#480473

Postby TUK020 » February 14th, 2022, 9:38 am

pennypunter wrote:the main capital events for this co:-

IMB annual report 2007 net debt £4.9bn
IMB 2008 Equity Raise 1 for 2 raising £4.9bn at 1475p

2014 IMB IPO of Logista raising EUR 470m
2017 sale of 10% Logista realising £230m
2018 sale of 10% Logista realising £235m
2021 sale of cigars EUR 1.2bn
sale proceeds c. £1.85bn

2021 YE net debt £9.4bn
hence total debt has still moved up £4.5bn in the last 14 years AFTER disposals of £1.85bn and cash call of £4.9bn

IMB realised its dividend promises were unsustainable and self defeating, causing the shares to crater because no one other than gullible retail shareholders believed it anyway. IMB reduced it from roughly 200p in 2019 to 161.7p in 2020 and to 138.7p in 2021- the dividend was also cut in 2009 from 72p to 63p in 2008

For most of the last decade the co has paid out more in dividends than in profit, in some years amounts very sizeably in excess of profit, hence the payout was not funded by profit but from debt, disposals or reserves.

Co has averaged around £1.1bn in dividends over the last decade hence £11bn outflow of which around £6.3bn has come from debt/ disposals.

% of earnings paid to shareholders data table
Year Payout ratio (%)
2021 46.18
2020 117.46
2019 182.87
2018 122.83
2017 108.63
2016 220.00
2015 74.67
2014 81.03
2013 113.65
2012 145.36

Even now, the co is still staying on the path of £1.3bn annual payout when funds should be used for acquisitions and advancing the business in nextgen products where the co is far behind the peer group or in getting the debt down, which IMB is only doing belatedly post the cigar sale.


This relates to what I was seeking help on in the OP.
My understanding is that profits over recent years have been depressed by write down of goodwill from acquisitions. Dividends are more that covered by free cash flow?


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