Wrap Text
Half-Year Report for the six months to 30 June 2023
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")
26 July 2023 – Press Release / Interim Announcement
British American Tobacco p.l.c.
Half-Year Report for the six months to 30 June 2023
Resilient performance, renewed energy, full-year guidance on track
Half-Year summary
– Revenue up 4.4% (being +2.6% at constant FX), driven by New Categories (revenue up 26.6%, at constant FX) - good progress towards our £5
billion New Category target by 2025
– Revenue from Non-Combustibles now 16.6% of Group revenue, up 180 bps vs FY22
– Continued strong revenue performance of Vuse and Velo - commercial plans activated for glo, launch of glo Hyper X2 Air a first step in an
enhanced innovation pipeline
– New Categories financial delivery significantly improved - contributing £201 million increase to Group profit as losses reduce, on track to achieve
our New Category profitability target in 2024
– Combustible pricing remains strong - good revenue performances in AME and APMEA offset the U.S., demonstrating the benefit of our global
footprint
– Sequential performance improvement in our U.S. premium combustibles volume share in 2023 - with sharper portfolio management driving
early signs of stabilisation
– Reported profit from operations up 61.4% (with reported operating margin up 1,560 bps to 44.2%) - as prior period impacted by charges related to
Russia/Belarus, the U.S. DOJ/OFAC provision and Quantum
– Adjusted profit up 3.6% at constant FX, adjusted operating margin up 40 bps to 44.3%
– Reported diluted EPS up 118% to 176.0p; adjusted diluted EPS up 5.3% at constant FX
– Restructured Management Board - driving sharper execution, greater collaboration and agility
– Further strengthened sustainability delivery, building on Double Materiality Assessment1, including increased collaboration across our value
chain to drive progress towards our sustainability targets, including Scope 3 emissions and biodiversity
Tadeu Marroco, Chief Executive
“Having been in my new role for 10 weeks, I’m pleased with the resilient performance of BAT in the first half of 2023 and the renewed sense of energy across
the organisation.
It is a challenging external environment. High inflation and slower global growth are impacting consumers and business. Yet our revenue, profit from operations
and earnings are all up.
We are making great progress in New Categories. Revenues are up by 29% and we are now close to breakeven, with consumers of Non-Combustible products
up by 1.5 million versus FY 2022 . While it’s encouraging to see continued good performance in Vapour and Modern Oral, we recognise more work is required
in heated tobacco.
I remain confident that New Categories will deliver a positive contribution in 2024. However, we do not expect contribution growth to be linear, as levels of
investment will align with the phasing of our big innovation platforms.
While more focus is required in the U.S., our sequential performance improvement in the critical premium U.S. combustibles business since January 2023 is
encouraging.
These results are thanks to the hard work by BAT people around the world. To help ensure we continue to deliver, the recently announced Management Board
structure is designed to enhance our strategic capabilities and further embed the collaborative and inclusive culture I want to see everywhere across the
Group.
While more needs to be done, I’m excited by BAT's future. Our full-year guidance remains unchanged.”
Adjusted
Performance highlights Reported Adjusted2
Organic3
For six months to 30 June 2023 Current vs 2022 Current vs 2022 vs 2022
rates (current) rates (constant) (constant)
Cigarette and THP volume share flat
Cigarette and THP value share -50 bps
Non-Combustibles consumers4 24.0m +1.5m
Revenue (£m) £13,441m +4.4% £13,441m +2.6% +2.8%
Revenue from New Categories (£m) £1,656m +29.0% £1,656m +26.6% +27.9%
Profit from operations (£m) £5,935m +61.4% £6,020m +3.6% +2.7%
Category contribution - New Categories (£m)5 -£12m -90.7% -97.6%
Operating margin (%) +44.2% +1,560 bps +44.8% +40 bps flat
Diluted EPS (pence) 176.0p +118% 181.6p +5.3%
Net cash generated from operating activities (£m) £3,375m +4.8%
Adjusted cash generated from operations (£m) £1,965m -7.8%
Cash conversion (%) +56.9% -3,070 bps +72.4% -520 bps
Borrowings6 (£m) £42,169m -6.0%
Adjusted Net Debt (£m) £37,259m -2.3%
The use of non-GAAP measures, including adjusting items and constant currencies, are further discussed from page Error! Bookmark not defined. , with reconciliation from the most comparable IFRS measure provided.
Notes: 1. Although financial materiality has been considered in the development of our Double Materiality Assessment ("DMA"), our DMA and any related conclusions as to the materiality of sustainability or ESG
matters do not imply that all topics discussed therein are financially material to our business taken as a whole, and such topics may not significantly alter the total mix of information available about our securities.
2. See page Error! Bookmark not defined. for discussion on adjusting items. 3. Organic measures exclude the performance of businesses sold (including the Group's Russian and Belarusian businesses as those are
held-for-sale) or acquired, or that have an enduring structural change impacting performance that may significantly affect the users' understanding of the Group's performance in the current and comparator
periods to ensure like-for-like assessment across all periods. 4. Internal estimate, see page Error! Bookmark not defined.. 5. This represents an improvement in New Categories contribution as losses reduced by
94.4% (or 90.7% at constant rates of exchange). 6. Includes lease liabilities.
Other Information
Dividends
On 9 February 2023, the Company announced that the Board had declared an interim dividend of 230.9p per ordinary share of 25p, for the year ended 31
December 2022, payable in four equal quarterly instalments of 57.72p per ordinary share in May 2023, August 2023, November 2023 and February 2024.
The May 2023 quarterly dividend was paid to shareholders on the UK main register and South Africa branch register on 3 May 2023 and to holders of American
Depositary Shares (ADSs) on 8 May 2023. The three remaining quarterly dividends will be paid to shareholders registered on either the UK main register or the
South Africa branch register, and to holders of ADSs, each on the applicable record dates set out below.
General dividend information
Under IFRS, the interim dividend is recognised in the period that it is paid. Therefore, the results for the six months ended 30 June 2023 reflect the fourth
quarterly dividend from the declaration made on 11 February 2022, of 54.45p per ordinary share and the first quarterly dividend from the declaration made on
9 February 2023 of 57.72p per ordinary share as this was paid in May 2023.
For the six months to 30 June 2023
Dividends paid
Pence per share USD per ADS
Quarterly Payment paid February 2023 54.45 0.6691900
Quarterly Payment paid May 2023 57.72 0.7238660
112.17 1.3930560
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 US 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.
Key dividend 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.
Event Payment No. 2 Payment No. 3 Payment No. 4
Preliminary announcement (includes declaration data required for JSE
purposes)
Publication of finalisation information (JSE) 04 July 18 September 12 December
No removal requests permitted (in either direction) between the UK main 04 July - 18 September – 12 December –
register and the South Africa branch register 17 July 02 October 27 December
Last Day to Trade (LDT) cum-dividend (JSE) 11 July 26 September 19 December
Shares commence trading ex-dividend (JSE) 12 July 27 September 20 December
No transfers permitted between the UK main register and the South Africa 12 July – 27 September – 20 December –
branch register 17 July 02 October 27 December
No shares may be dematerialised or rematerialised on the South Africa 12 July – 27 September – 20 December –
branch register 17 July 02 October 27 December
Shares commence trading ex-dividend (LSE) 13 July 28 September 21 December
Shares commence trading ex-dividend (NYSE) 13 July 28 September 21 December
Record date (JSE, LSE and NYSE) 14 July 29 September 22 December
Last date for receipt of Dividend Reinvestment Plan (DRIP) 28 July 13 October 11 January 2024
Payment date (LSE and JSE) 18 August 03 November 01 February 2024
ADS payment date (NYSE) 23 August 08 November 06 February 2024
Notes:
– All dates are 2023, unless otherwise stated.
– 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.
– JSE finalisation information published on 4 July 2023 can be found on the BAT website www.bat.com.
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
Half-Year Report to 30 June 2023 (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/2023/JSE/ISSE/BTI/BATHY23.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.
Financial calendar
Event
Pre-close Trading Update December 2023
Preliminary Statement 2023 08 February 2024
Proposed dates for quarterly dividend payments for the year ending 31 December 2023
Event Payment No. 1 Payment No. 2 Payment No. 3 Payment No. 4
Last Day to Trade (LDT) cum-dividend (JSE) 18 March 25 June 23 September 17 December
Shares commence trading ex-dividend (JSE) 19 March 26 June 25 September 18 December
Shares commence trading ex-dividend (LSE and NYSE) 21 March 27 June 26 September 19 December
Record date (JSE, LSE and NYSE) 22 March 28 June 27 September 20 December
Payment date (LSE and JSE) 2 May 2 August 1 November 3 February 2025
ADS payment date (NYSE) 7 May 7 August 6 November 6 February 2025
Notes:
– All dates are 2024, unless otherwise stated.
2. A complete timetable for the quarterly dividend payments for the year ending 31 December 2023 and the declared amount will be included in the Preliminary Results Announcement in February 2024.
3. 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.
Corporate information
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.
Registered office
Globe House, 4 Temple Place, London, WC2R 2PG, UK
tel: +44 20 7845 1000
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 Limited (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 listing
Merrill Lynch South Africa (Pty) Ltd t/a BofA Securities
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 6712
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
If you require publications and are located in South Africa, please contact the Company’s Representative office in South Africa using the contact details shown
above.
Enquiries
For more information, please contact
Investor Relations: Press Office:
Victoria Buxton +44 (0)20 7845 2012 +44 (0)20 7845 2888 | @BATplc
Amy Chamberlain +44 (0)20 7845 1124 BAT Media Team
John Harney+44 (0)20 7845 1263
Jane Henderson +44 (0)20 7845 1117
BAT IR Team
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 Half-Year summary and the Chief Executive Statement (both on page 1); (ii) certain statements in
the Group Operating Review (pages Error! Bookmark not defined. to Error! Bookmark not defined.); (iii) certain statements in the Category Performance
Review (pages Error! Bookmark not defined. to Error! Bookmark not defined.); (iv) certain statements in the Regional Review section (pages Error! Bookmark
not defined. to Error! Bookmark not defined.); (v) certain statements in the Other Financial Information section (pages Error! Bookmark not defined. to Error!
Bookmark not defined.); (vi) certain statements in the Other Information (including Dividends) section (pages Error! Bookmark not defined. to Error!
Bookmark not defined.); (vii) certain statements in the Notes to the Unaudited Interim Financial Statements section (pages Error! Bookmark not defined. to
Error! Bookmark not defined.), including the Liquidity and Contingent liabilities and financial commitments sections; and (viii) certain statements in the Other
Information section (pages Error! Bookmark not defined. to Error! Bookmark not defined.).
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.
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; changes in the market position, businesses, financial
condition, results of operations or prospects of the Group; direct and indirect adverse impacts associated with Climate Change and the move towards a Circular
Economy; and Cyber Security caused by the heightened cyber-threat landscape, the increased digital interactions with consumers and changes to regulation.
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 2022 Annual Report and Accounts 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 BAT 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.
Sponsor: Merrill Lynch South Africa (Pty) Ltd t/a BofA Securities
Date: 26-07-2023 08:00:00
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