Notes on the accounts
Related party disclosures
- 1 Accounting policies
- 2 Segmental analyses
- 3 Profit from operations
- 4 Net finance costs
- 5 Associates and joint ventures
- 6 Taxation on ordinary activities
- 7 Earnings per share
- 8 Dividends and other appropriations
- 9 Intangible assets
- 10 Property, plant and equipment
- 11 Investments in associates and joint ventures
- 12 Retirement benefit schemes
- 13 Deferred tax
- 14 Trade and other receivables
- 15 Available-for-sale investments
- 16 Derivative financial instruments
- 17 Inventories
- 18 Income tax receivable and payable
- 19 Cash and cash equivalents
- 20 Capital and reserves – reconciliation of movement in total equity
- 21 Borrowings
- 22 Other provisions for liabilities and charges
- 23 Trade and other payables
- 24 Financial instruments and risk management
- 25 Cash flow
- 26 Business combinations and disposals
- 27 Share-based payments
- 28 Group employees
- 29 Related party disclosures
- 30 Contingent liabilities and financial commitments
29 Related party disclosures
The Group has a number of transactions and relationships with related parties, as defined in IAS 24 (Related Party Disclosures), all of which are undertaken in the normal course of business.
Transactions and balances with associates relate mainly to the sale and purchase of cigarettes and tobacco leaf. Amounts receivable from associates in respect of dividends included in the table below were £87 million (2010: £77 million). The Group’s share of dividends from associates, included in other net income in the table below, was £486 million (2010: £466 million). Legal fees recovered from Reynolds American Inc. included in other net income amounted to £nil (2010: £1 million).
|– other net income||487||460|
|Amounts receivable at 31 December||97||99|
|Amounts payable at 31 December||(40)||(21)|
On 26 May 2010, a wholly-owned subsidiary of the Group, BATUS Japan Inc., entered into an American blend Cigarette Manufacturing Agreement (referred to as the 2010 Agreement) with a wholly-owned subsidiary of Reynolds American, R.J. Reynolds Tobacco Company (referred to as RJRTC), with an effective date of 1 January 2010. Under this Agreement, RJRTC has been appointed as BATUS Japan’s exclusive manufacturer of all BATUS Japan’s requirements for certain American-blend cigarettes intended to be distributed and sold in Japan for the five year period expiring on 31 December 2014, subject to the early termination and extension provisions set out in the agreement. The 2010 Agreement is based on arm’s length terms and conditions.
On the same date, RJRTC and BATUS Japan entered into a letter agreement terminating the existing Contract Manufacturing Agreement dated 30 July 2004 (referred to as the 2004 Agreement), as amended between the parties, with effect from midnight on 31 December 2009. The 2004 Agreement was scheduled to expire on 31 December 2014, subject to early termination and extension provisions. Under the terms of the letter agreement, certain sections and sub-sections of the 2004 Agreement will survive the termination, and, in consideration for RJRTC agreeing to terminate the agreement and in settlement of all disputes at issue between the parties, BATUS Japan agreed to pay RJRTC US$21 million. The payment has been presented as an adjusting item and is included within the Group’s restructuring and integration costs in note 3(e). The Group’s share of the income net of tax included within the post-tax results of Reynolds American is also presented as an adjusting item and is credited against other (see note 5).
In 2011, the Group acquired non-controlling interests of shareholders in Chile for £10 million. This transaction is shown as a £10 million reduction to reserves in
note 20. In 2010, the Group acquired non-controlling interests of shareholders in Indonesia and eastern Europe for £3 million and £9 million respectively. These transactions are shown as a £12 million reduction to reserves in note 20.
As explained in note 26(b), the Group sold its Belgium distribution business, Lyfra NV, to Landewyck Group S.a.r.l in 2010 for a consideration of €16 million. The Group’s German subsidiary has an available-for-sale investment in Landewyck Group S.a.r.l.
The key management personnel of British American Tobacco consist of the members of the Board of Directors of British American Tobacco p.l.c. and the members of the Management Board. No such person had any material interest during the year in a contract of significance (other than a service contract) with the Company or any subsidiary company. The term key management personnel in this context includes the respective members of their households.
|The total compensation for key management personnel, including Directors, was:|
|– salaries and other short-term employee benefits||21||22|
|– post-employment benefits||3||3|
|– share-based payments||8||12|
There were no other long-term benefits applicable in respect of key personnel other than those disclosed in the remuneration report in the Annual Report.