Derek Bonham: taxes at "unprecedented levels"

The government last month launched an investigation into claims that rival firm British American Tobacco, a strong critic of high tobacco duties, has itself been involved in smuggling.

"[High taxation] has caused market downtrading, increased levels of cross-border trade, both legal and illegal, and a decline in the official UK duty paid market," Mr Bonham said in the firm's preliminary results statement for the year to 23 September.

"The increasing availability of bootlegged and smuggled cigarettes has led to the total consumption in the UK remaining stable."

Foreign growth

The Bristol-based company, while claiming a market share of more than one third in the UK, is looking abroad for future growth, Mr Bonham said.

Results snapshot

Pre-tax profits: 450m (up 13%) UK sales: 65bn (down 10%) Intl sales: 25.6bn (up 55%) Brands owned: Lambert & Butler, John Player, Rizla, Panama cigars, St Bruno, Golden Virginia, Drum, Richmond, Embassy

"The strategic evolution of the group from its UK roots into a multi-national group with worldwide tobacco interests remains a key objective," Mr Bonham said.

The firm's sales abroad grew by more than one half to 26.5 billion cigarettes in the year to the end of September, boosted by takeovers in Australia and New Zealand, Monday's statement said.

Pre-tax profits rose to �450m, on turnover up 16% to �5.2bn.

Health claims

The results briefing also showed that the firm is being sued, or is under threat of legal action, by more than 300 people in the UK, Ireland and Holland in health-related cases.

"To date... no action has been settled in favour of a claimant," Mr Bonham said.

"Imperial Tobacco has been advised by its lawyers that... the company has meritorious defence to these actions, all of which are being vigorously contested."

Imperial Tobacco shares closed 17.5p higher at 740p in London on Monday.