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British American Tobacco p.l.c. preliminary results year ended 31 December 2021
British American Tobacco p.l.c.
Incorporated in England and Wales
(Registration number: 03407696)
Short name: BATS
Share code: BTI
ISIN number: GB0002875804
("British American Tobacco p.l.c." or "the Company")
11 February 2022 – PRESS RELEASE / PRELIMINARY RESULTS
BRITISH AMERICAN TOBACCO p.l.c.
YEAR ENDED 31 DECEMBER 2021
2021 – A PIVOTAL YEAR DELIVERED; BUYBACK ANNOUNCED
PERFORMANCE HIGHLIGHTS REPORTED ADJUSTED
Current Vs 2020 Current Vs 2020
rates (current) Rates (constant)
Cigarette and THP volume share +10 bps
Cigarette and THP value share +20 bps
Non-Combustibles consumers1 18.3m +4.8m
Revenue (£m) £25,684m -0.4% £25,684m +6.9%
Revenue from New Categories (£m) £2,054m +42.4% £2,054m +50.9%
Profit from operations (£m) £10,234m +2.7% £11,150m +5.2%
Operating margin (%) 39.8% +120 bps 43.4% -70 bps
Diluted EPS (pence) 295.6p +6.0% 329.0p +6.6%
Net cash generated from operating activities (£m) £9,717m -0.7%
Free cash flow after dividends (£m) £2,543m -0.3%
Cash conversion (%)2 95.0% -320 bps 103.6% +60 bps
Borrowings3 (£m) £39,658m -9.8%
Adjusted Net Debt (£m) £35,548m -11.1%
Dividend per share (pence) 217.8p +1.0%
The use of non-GAAP measures, including adjusting items and constant currencies, are further discussed on pages 46 to 51, with reconciliations from the most comparable IFRS measure
provided. Note – 1. Internal estimate. 2. Movement in adjusted operating margin free cash flow after dividends and operating cash conversion are provided at current rates. 3. Includes lease
liabilities.
Faster Transformation Strong FY Results
• New Categories revenue up 51% to £2,178m* • Revenue up 6.9%* led by pricing and New Category
• Non-combustible product** consumer acquisition growth
+4.8m to 18.3m • Combustible revenue up 4.0%* with price/mix of
• Vapour revenue up 59%* 4.3%, reflecting Emerging Market (EM) performance
• glo revenue up 46%* and COVID-19 recovery
• Modern Oral revenue up 41%* • Cigarette value share up 10 bps
• Full Year New Category losses reduced by 9% • Further £595m cost savings, driven by Quantum
(c.£100m) • Adjusted profit from operations up 5.2%* includes a
• Operating cash flow conversion of 104% negative transactional FX impact of 1.7%
• Leverage down to 3x adj net debt / adj. EBITDA • Adjusted operating margin down 70 bps
• £2 billion 2022 buyback announced • Adjusted diluted EPS up 6.6%*
* at constant rates of exchange ** These products are not risk free and are addictive.
Jack Bowles, Chief Executive: “In 2021 the business delivered on our transformation journey to build A Better Tomorrow.
It has been a pivotal year: we accelerated New Category revenue, with growth of over 50%* and reached a total of 18.3m
consumers (up 4.8m) of our non-combustible products. New Category losses reduced for the first time, contributing to
earnings growth, and we reduced leverage to c.3x, while at the same time delivering strong financial results: 2021 has
been a pivotal year.
Putting ESG at the heart of our strategy and corporate purpose is delivering sustainable growth, encouraging more
consumers to transition to reduced risk products and reducing the health impact of our business. We are also on track to
achieve our other ESG targets, including carbon neutrality from our operations by 2030.
These strong foundations enable us to embark on the next phase of our journey - Faster Transformation - towards A
Better Tomorrow. We are on a path to deliver £5bn of revenue and profitability^ from New Categories by 2025 and are
developing opportunities Beyond Nicotine, leveraging our knowledge and capabilities from New Categories.
These foundations also provide the financial flexibility to be more active in our capital allocation to deliver sustainable
long-term value for shareholders. With leverage within our target range and expectations for c.£40bn of free cash flow
before dividends over the next five years we will continue to invest in a faster transformation and deliver strong returns to
shareholders. In addition to maintaining a growing dividend the Board has approved a £2bn share repurchase
programme for 2022.
I would like to thank all our people and partners for their continued focus and commitment in delivering our strong
results throughout this difficult COVID-19 period. The BAT of tomorrow will be a high-growth, consumer centric, multi-
category consumer goods company. We are confident in delivering a Faster Transformation, continued robust financial
performance and superior cash returns to shareholders. We are confident of delivering A Better Tomorrow.”
2022 outlook:
• Global tobacco industry volume expected to be down c.2.5%.
• Constant currency revenue growth of 3%-5%.
• Strong New Category revenue growth and further reduction in losses.
• High-single figure constant currency adjusted EPS growth, with growth second half weighted.
• Translational foreign exchange is expected to be broadly neutral on full year adjusted EPS growth.
• Operating cash flow conversion in excess of 90%.
^ Based upon Category Contribution – defined as profit from the sale of brands after directly attributable costs (including marketing expenses) and before the allocation of overheads
CHIEF EXECUTIVE’S STATEMENT
FASTER TRANSFORMATION - TOWARDS A BETTER TOMORROWTM
“2021 has been a pivotal year in our transformation journey to build A Better Tomorrow. We continued to make excellent progress
on our strategic commitments while delivering value to all our stakeholders. It is thanks to the resilience of our people and
partnerships that we are continuing to capitalise on the opportunities that are transforming our industry.
“We are committed to reducing the health impact of our business through a multi-category approach. As I said in our Half-Year
Report in July 2021, delivering on our purpose in the second half of the year would require a focus on developing and delivering
consumer-focused products and brands to accelerate momentum. That is exactly what this set of results demonstrates:
• The growth, from 13.5m to 18.3m, in consumers of non-combustible products was our strongest to date;
• Non-combustible products now account for 12% of Group revenues, up from 4% in 2017;
• Vapour revenue was up 59%*, with our global brand, Vuse, now the leading vapour brand by value share globally;
• Following volume share gains in ENA and Japan, revenue from our THP, glo, was up 46%*; and
• Revenue in Modern Oral, largely through Velo, was up 41%*.
“In 2021, we recorded New Category revenue growth of over 50%*. The performance of our reduced-risk**† portfolio, encompassing
our strong global brands, Vuse, glo and Velo, places us on track to reach the business transformation targets we set ourselves of:
• £5bn of revenue and profitability in our New Categories by 2025; and
• 50m consumers of non-combustible products by 2030.
“We are also firmly committed to the ESG targets we have set. These include becoming carbon neutral across our operations
(Scope 1 and 2 emissions) by 2030 and net zero across our value chain (Scope 1,2 and 3) by 2050. Sustainability has long been
central to our business and ethos. We produced our first ever Social Report 20 years ago and, in 2021, we were recognised as a
global sustainability leader for the 20th consecutive year in the Dow Jones Sustainability Indices.
“The next phase of our transformation will focus on creating a sustainable Enterprise of the Future. Across the business, we are
seeing the benefits of Quest, our organisational transformation programme. Quest is underpinned by five accelerators and has
been designed to enhance our existing strengths and deliver further value from our consumer reach and global presence.
“Through Quest, we continue to develop the capabilities required to build our multi-category business, enhance our future
sustainability and deliver our digital transformation, contributing to the delivery of A Better Tomorrow.”
FINANCE & TRANSFORMATION DIRECTOR’S STATEMENT
STRONG CASH FLOW DRIVES DELEVERAGE AND ENABLES SHARE BUYBACK.
2021 was the pivotal year in our transformation journey with key milestones achieved in both New Categories and in de-
leveraging.
Our accelerating New Category performance is now a sizeable contributor to Group revenue growth, with Non-Combustibles
contributing nearly half of total Group revenue growth. Capitalising on this momentum, we further increased New Category
investment by £496 million in 2021, while reducing New Category losses for the first time by nearly £100 million, with a clear
pathway to profitability by 2025. Investment is funded by continued strong value growth from combustibles together with
Quantum savings, which reached £1.3 billion annualised savings, with at least £1.5 billion total annualised savings expected by
2022.
Constant currency adjusted diluted EPS growth of 6.6% was at the top end of our mid-single digit EPS guidance. Our robust
operating performance enabled us to absorb the net impact of a number of one-off factors during the year. These included the
headwinds from the structural change in excise in Australasia, the disposal of our operations in Iran and a transactional foreign
exchange headwind of 1.7%, partially offset by the benefit of trade inventory movements in the U.S. (which are expected to
unwind in early 2022) mainly linked to the timing of price increases and uncertainty about a potential excise increase.
Reported volume in the U.S. was down 5.0%, with underlying volume down approximately 7%.
We have worked hard to generate strong cash flow over recent years with nearly £10 billion of net cash generated from operating
activities in 2021. This is our 4th consecutive year of operating cash flow conversion in excess of 95%, enabling us to deliver on our
commitment to reduce leverage to c.3x adjusted net debt / adjusted EBITDA in 2021. We are on track to generate around £40
billion of free cash flow before dividends over the next 5 years.
This gives us the flexibility to adopt a more active capital allocation framework to deliver long-term value for shareholders. This
will include continuing to grow the dividend and maintaining our target leverage corridor of 2-3x adjusted net debt / adjusted
EBITDA, whilst also considering potential bolt-on M&A opportunities and share buybacks to enhance shareholder returns.
The Board will prioritise capital allocation opportunities each year in-line with this new longer-term active capital allocation
framework, while continuing to take into account macro and fiscal influences, and potential regulatory and litigation outcomes.
As a first step, we have announced a dividend increase of 1.0% to 217.8p and a £2 billion share repurchase programme for 2022.
Our liquidity profile remains strong, with average debt maturity close to 10 years and maximum debt maturities in any one
calendar year of around £4 billion. In September 2021 we successfully launched our first €2 billion perpetual hybrid bond
transaction. The issuance contributes to the diversification of our sources of funding and further strengthens our capital structure.
Our medium-term rating target remains BBB+/Baa1, with a current rating of BBB+/Baa2**.
The next phase of our journey will be enabled by our transformation programme Quest. Through Quest we are building a
sustainable Enterprise of the Future, delivering the organisational flexibility to implement and operationalise our growth strategy
– from simplifying the business to faster decision-making, powered by our Ethos.
* at constant rates of exchange ** Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.
† Our products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.
**A credit rating is not a recommendation to buy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating should be evaluated separately of any
other rating.
Other Information
DIVIDENDS
Declaration
The Board has declared an interim dividend of 217.8p per ordinary share of 25p, for the year ended 31 December 2021,
payable in four equal quarterly instalments of 54.45p per ordinary share in May 2022, August 2022, November 2022 and
February 2023. This represents an increase of 1.0% on 2020 (2020: 215.6p per share), and a payout ratio, on 2021 adjusted
diluted earnings per share, of 66.2%.
The quarterly dividends will be paid to shareholders registered on either the UK main register or the South Africa branch
register and to holders of American Depositary Shares (ADSs), each on the applicable record dates set out under the
heading ‘Key Dates’ below.
Holders of ADSs
For holders of ADSs listed on the New York Stock Exchange (NYSE), the record dates and payment dates are set out
below. The equivalent quarterly dividends receivable by holders of ADSs in U.S. dollars will be calculated based on the
exchange rate on the applicable payment date. A fee of US$0.005 per ADS will be charged by Citibank, N.A. in its capacity
as depositary bank for the BAT American Depositary Receipt (ADR) programme in respect of each quarterly dividend
payment.
South Africa Branch Register
In accordance with the JSE Limited (JSE) Listing Requirements, the finalisation information relating to shareholders
registered on the South Africa branch register (comprising the amount of the dividend in South African rand, the
exchange rate and the associated conversion date) will be published on the dates stated below, together with South
Africa dividends tax information.
The quarterly dividends are regarded as ‘foreign dividends’ for the purposes of the South Africa Dividends Tax. For the
purposes of South Africa Dividends Tax reporting, the source of income for the payment of the quarterly dividends is the
United Kingdom.
General dividend information
Under IFRS, the dividend is recognised in the year that it is approved by shareholders or, if declared as an interim dividend
by directors, in the period that it is paid.
The cash flow, prepared in accordance with IFRS, reflects the total cash paid in the period, amounting to £4,904 million
(2020: £4,745 million).
2021 2020
Pence per USD per Pence per USD per
Dividends declared:
share ADS share ADS
Quarterly payment 1 (paid May 2021) 53.90 0.7576180 52.60 0.6424030
Quarterly payment 2 (paid August 2021) 53.90 0.7345300 52.60 0.6889020
Quarterly payment 3 (paid November 2021) 53.90 0.7217210 52.60 0.6895860
Quarterly payment 4 (paid February 2022) 53.90 0.7298860 52.60 0.7178320
215.6 2.943755 210.4 2.738723
Key dates
In compliance with the requirements of the London Stock Exchange (LSE), the NYSE and Strate, the electronic settlement
and custody system used by the JSE, the following salient dates for the quarterly dividends payments are applicable. All
dates are 2022, unless otherwise stated.
Event Payment No. 1 Payment No. 2 Payment No. 3 Payment No. 4
Preliminary announcement
(includes declaration data 11 February
required for JSE purposes)
Publication of finalisation 14 March 28 June 20 September 12 December
information (JSE)
No removal requests permitted 14 March– 28 June– 20 September– 12 December–
between the UK main register 28 March 11 July 3 October 27 December
and the South Africa branch (inclusive) (inclusive) (inclusive) (inclusive)
register
Last Day to Trade (LDT) cum 22 March 5 July 27 September 20 December
dividend (JSE)
Shares commence trading ex- 23 March 6 July 28 September 21 December
dividend (JSE)
No transfers permitted between 23 March– 6 July– 28 September – 21 December–
the UK main register and the 28 March 11 July 3 October 27 December
South Africa branch register (inclusive) (inclusive) (inclusive) (inclusive)
No shares may be dematerialised 23 March– 6 July– 28 September– 21 December–
or rematerialised on the South 28 March 11 July 3 October 27 December
Africa branch register (inclusive) (inclusive) (inclusive) (inclusive)
Shares commence trading ex- 24 March 7 July 29 September 22 December
dividend (LSE and NYSE)
Record date 25 March 8 July 30 September 23 December
(JSE, LSE and NYSE)
Last date for receipt of Dividend 8 April 27 July 20 October 12 January 2023
Reinvestment Plan (DRIP)
elections (LSE)
Payment date (LSE and JSE) 4 May 17 August 10 November 2 February 2023
ADS payment date (NYSE) 9 May 22 August 15 November 6 February 2023
Note:
(1) The dates set out above may be subject to any changes to public holidays arising and changes or revisions to the LSE,
JSE and NYSE timetables. Any confirmed changes to the dates will be announced.
SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the Directors of the Company. It is only a summary of the
information contained in the full Preliminary Announcement – Year Ended 31 December 2021 (the “Results
Announcement”) and does not contain full or complete details. Any investment decisions should be based on
consideration of the full Results Announcement available via the JSE at
https://senspdf.jse.co.za/documents/2022/JSE/ISSE/BTI/BATFY21.pdf and on the Company’s website at www.bat.com.
Copies of the full Results Announcement may also be obtained during normal business hours from the Company’s
registered office and the Company’s representative office in South Africa. Contact details are set out below.
SHAREHOLDER INFORMATION
FINANCIAL CALENDAR 2022*
Thursday 28 April Annual General Meeting at 11.30 am
Details of the venue and business to be proposed at
the meeting will be set out in the Notice of AGM, which
will be made available to all shareholders and published
on www.bat.com.
The format for the 2022 AGM will be contingent on
applicable UK Government health and safety restrictions
in place at that time.
Wednesday 27 July Half-Year Report
* Indicated dates are subject to change
CORPORATE INFORMATION
Premium listing
London Stock Exchange (Share Code: BATS; ISIN: GB0002875804)
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, UK
tel: 0800 408 0094; +44 370 889 3159
Share dealing tel: 0370 703 0084 (UK only)
Your account: www.computershare.com/uk/investor/bri
Share dealing: www.computershare.com/dealing/uk
Web-based enquiries: www.investorcentre.co.uk/contactus
Secondary listing
JSE (Share Code: BTI)
Shares are traded in electronic form only and transactions settled electronically through Strate.
Computershare Investor Services Proprietary Limited
Private Bag X9000, Saxonwold 2132, South Africa
tel: 0861 100 634; +27 11 870 8216
email enquiries: web.queries@computershare.co.za
Sponsor for the purpose of the JSE
UBS South Africa (Pty) Ltd
American Depositary Receipts (ADRs)
NYSE (Symbol: BTI; CUSIP Number: 110448107)
BAT’s shares are listed on the NYSE in the form of American Depositary Shares (ADSs) and these are evidenced by
American Depositary Receipts (ADRs), each one of which represents one ordinary share of British American Tobacco p.l.c.
Citibank, N.A. is the depositary bank for the sponsored ADR programme.
Citibank Shareholder Services
PO Box 43077, Providence, Rhode Island 02940-3077, USA
tel: +1 888 985 2055 (toll-free) or +1 781 575 4555
email enquiries: citibank@shareholders-online.com
website: www.citi.com/dr
Publications
British American Tobacco Publications
Unit 80, London Industrial Park, Roding Road, London E6 6LS, UK
tel: +44 20 7511 7797
e-mail enquiries: bat@team365.co.uk or the Company’s Representative office in South Africa using the contact details
shown below.
British American Tobacco p.l.c.
Registered office
Globe House, 4 Temple Place, London, WC2R 2PG, UK
tel: +44 20 7845 1000;
British American Tobacco p.l.c. is a public limited company which is listed on the London Stock Exchange, New York
Stock Exchange and the JSE Limited in South Africa. British American Tobacco p.l.c. is incorporated in England and Wales
(No. 3407696) and domiciled in the UK.
British American Tobacco p.l.c.
Representative office in South Africa
Waterway House South
No 3 Dock Road, V&A Waterfront, Cape Town 8000
South Africa
PO Box 631, Cape Town 8000, South Africa
tel: +27 21 003 671
ENQUIRIES
INVESTOR RELATIONS: PRESS OFFICE:
Mike Nightingale +44 (0)20 7845 1180 Press Office +44 (0)20 7845 2888
Victoria Buxton +44 (0)20 7845 2012
William Houston +44 (0)20 7845 1138
John Harney +44 (0)20 7845 1263
Webcast and Conference Call Participant Passcode: BAT Prelims
A webcast of the results presentation is available via www.bat.com/latestresults on 11 February 2022 from 08.30 GMT,
followed by a Q&A session.
If you wish to listen to the presentation via a conference call facility please use the dial-in details below:
Standard International Access: +44 (0) 33 0551 0200 SA (toll free): 0 800 980 512
UK (toll free): 0808 109 0700 U.S. (toll free): + 1 866 966 5335
FORWARD-LOOKING STATEMENTS AND OTHER MATTERS
This announcement contains certain forward-looking statements, including "forward-looking" statements made within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995.
In particular, these forward-looking statements include, among other statements, statements regarding the Group's future financial
performance, planned product launches and future regulatory developments and business objectives (including with respect to
sustainability and other environmental, social and governance matters), as well as: (i) certain statements in the 2021-A Pivotal Year
Delivered, Buyback Announced section and in the Chief Executive Statement (pages 1 to 2); (ii) certain statements in the Finance and
Transformation Director’s Statement (page 2); (iii) certain statements in the Category Performance Review (pages 4 to 8); (iv) certain
statements in the Regional Review section (pages 9 to 13); (v) certain statements in the Other Financial Information section (pages 14 to 17);
(vi) certain statements in the Other Information section (pages 18 to 22); (vii) certain statements in the Notes to the Financial Statements
section (pages 29 to 41), including the Liquidity and Contingent Liabilities and Financial Commitments sections; and (viii) certain
statements in the Other Information section (pages 42 to 53), including the Non-GAAP Measures sections and under the heading
“Dividends”.
These statements are often, but not always, made through the use of words or phrases such as "believe," "anticipate," "could," "may,"
"would," "should," "intend," "plan," "potential," "predict," "will," "expect," "estimate," "project," "positioned," "strategy," "outlook", "target" and
similar expressions. These include statements regarding our intentions, beliefs or current expectations concerning, amongst other things,
our results of operations, financial condition, liquidity, prospects, growth, strategies and the economic and business circumstances
occurring from time to time in the countries and markets in which the British American Tobacco Group (the “Group”) operates, including
the projected future financial and operating impacts of the COVID-19 pandemic.
All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors. It is
believed that the expectations reflected in this announcement are reasonable, but they may be affected by a wide range of variables that
could cause actual results and performance to differ materially from those currently anticipated. Among the key factors that could cause
actual results to differ materially from those projected in the forward-looking statements are uncertainties related to the following: the
impact of competition from illicit trade; the impact of adverse domestic or international legislation and regulation; the inability to develop,
commercialise and deliver the Group’s New Categories strategy; adverse litigation and dispute outcomes and the effect of such outcomes
on the Group’s financial condition; the impact of significant increases or structural changes in tobacco, nicotine and New Categories
related taxes; translational and transactional foreign exchange rate exposure; changes or differences in domestic or international economic
or political conditions; the ability to maintain credit ratings and to fund the business under the current capital structure; the impact of
serious injury, illness or death in the workplace; adverse decisions by domestic or international regulatory bodies; and changes in the
market position, businesses, financial condition, results of operations or prospects of the Group.
A review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within
forward-looking statements can be found by referring to the information contained under the headings “Cautionary statement”, "Group
Principal Risks" and "Group Risk Factors" in the 2020 Annual Report and Form 20-F of British American Tobacco p.l.c. (BAT). Additional
information concerning these and other factors can be found in BAT's filings with the U.S. Securities and Exchange Commission ("SEC"),
including the Annual Report on Form 20-F and Current Reports on Form 6-K, which may be obtained free of charge at the SEC's website,
http://www.sec.gov and BAT’s Annual Reports, which may be obtained free of charge from the British American Tobacco website
www.bat.com.
No statement in this announcement is intended to be a profit forecast and no statement in this communication should be interpreted to
mean that earnings per share of BAT for the current or future financial years would necessarily match or exceed the historical published
earnings per share of BAT. Past performance is no guide to future performance and persons needing advice should consult an
independent financial adviser. The forward-looking statements reflect knowledge and information available at the date of preparation of
this announcement and BAT undertakes no obligation to update or revise these forward-looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned not to place undue reliance on such forward-looking statements.
All financial statements and financial information provided by or with respect to the U.S. or Reynolds American are initially prepared on the
basis of U.S. GAAP and constitute the primary financial statements or financial records of the U.S. / Reynolds American. This financial
information is then converted to International Financial Reporting Standards as issued by the IASB and as adopted for use in the UK
(“IFRS”) for the purpose of consolidation within the results of the Group. To the extent any such financial information provided in this
announcement relates to the U.S. or Reynolds American it is provided as an explanation of, or supplement to, Reynolds American’s primary
U.S. GAAP based financial statements and information.
Our vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products including Velo, Grizzly, Kodiak, Camel Snus and Granit,
which are sold in the U.S., are subject to FDA regulation and no reduced-risk claims will be made as to these products without Agency
clearance.
11 February 2022
Sponsor: UBS South Africa (Pty) Ltd
Date: 11-02-2022 09:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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