A Quantitative and Qualitative Assessment: Imperial Tobacco Group’s 2007 Annual Report and Accounts

A Quantitative and Qualitative Assessment:

Imperial Tobacco Group’s 2007 Annual Report and Accounts

Executive MBA Year 1 - Term 2

NBSBMB26 † ACCOUNTING FOR MANAGEMENT

NBS 3781658 - Edward Alexander Gauntt

Introduction:

There has been a marked increase in resistance in developed countries against the growth of so called “Sin Stocks” such as Alcohol, Tobacco and Gaming (Gambling). Despite this, stock values in these ‘vice industries’ have seen unprecedented share value increases compared to other stocks in the same period (Anderson, 2008). During the period of 2000-2002 † during which the S&P 500 stock index dropped 47% - the Casinos and Gaming index gained 115%. Similarly, Tobacco Company Stocks (“the single biggest preventable cause of death” - Bialous et al, 2003) saw record setting year-on-year performance, with Altria † the world’s largest producer of cigarettes setting an annualised 21% share-value increase for the past 30 years versus a stock-market standard of 11% (Anderson, 2008).

For purposes of this report I have accessed the online 2007 Annual Report & Accounts of a UK company, Imperial Tobacco Group (IMT), to further delve into the performance of the tobacco industry versus expected performance due to regulation and negative publicity. I shall assess the quantity and quality of Imperial Tobacco Group’s accounts & report for this period, in particular reference to:

▪ Performance of the company during the period covered by the annual report & accounts

▪ The validity and usefulness of the information contained in the 2007 accounts to the various stakeholder groups and why it is important that the narrative disclosure within the Annual Report and Accounts as compared to quantitative accounting disclosures is considered by each stakeholder group.

For purposes of review, I have attached a copy of the Imperial Tobacco Group’s 2007 Annual Accounts & Report as Annex 2.

Assessing true Performance:

Since 2003, Imperial Tobacco...