Wrap Text
Preliminary Announcement – Year Ended 31 December 2012
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")
BRITISH AMERICAN TOBACCO p.l.c.
PRELIMINARY ANNOUNCEMENT YEAR ENDED 31 DECEMBER 2012
PROVEN STRATEGY CONTINUES TO DELIVER
KEY FINANCIALS 2012 2011 Change
Revenue at constant currency GBP15,999m GBP15,399m +4%
Adjusted profit at constant currency GBP5,970m GBP5,519m +8%
Profit from operations GBP5,412m GBP4,721m +15%
Adjusted diluted earnings per share 207.5p 194.6p +7%
Basic earnings per share 198.1p 157.1p +26%
Dividends per share 134.9p 126.5p +7%
The non-GAAP measures, including adjusting items and constant currencies, are set out on page 18.
FULL YEAR HIGHLIGHTS
- Revenue at constant rates of exchange grew by 4% with continued good pricing momentum.
- Reported revenue was down 1% due to adverse currency movements.
- Adjusted profit from operations at constant rates of exchange increased by 8%.
- Reported profit from operations increased by 15%.
- All four regions grew operating margin, contributing to the excellent growth of 160 basis points at
Group level, to 37.4%.
- Group volumes were 694 billion, down 1.6%, mainly due to industry contractions in some of our
larger markets.
- The four Global Drive Brands grew volume by 3%. Dunhill volumes were up 2%, Kent was up 1%,
Lucky Strike grew 11%, and Pall Mall 3%.
- Adjusted diluted earnings per share rose by 7% and at constant rates, adjusted diluted earnings
per share would have been up by 12%, principally as a result of the growth in profit from
operations.
- Basic earnings per share were up 26% at 198.1p (2011: 157.1p).
- Recommended final dividend of 92.7p, taking the total dividend in respect of 2012 to 134.9p, an
increase of 7%.
- Free cash flow was 81% of adjusted earnings.
- 38.9 million shares were bought back at a cost of GBP1.25 billion, excluding transaction costs. The
Board agreed a GBP1.5 billion share buy-back programme for 2013.
- New Management Board appointees announced. Des Naughton, currently Group Operations
Director, appointed as Managing Director Next Generation Product, and Alan Davy to take over as
Group Operations Director, effective 1 March 2013.
Richard Burrows, Chairman, commenting on the year ended 31 December 2012
BAT delivered strong profit growth in 2012, achieved through good pricing and an outstanding
improvement in operating margin, partially offset by adverse exchange rate movements. Despite the
difficult trading conditions in many parts of the world, particularly southern Europe, these results
demonstrate the Company is in excellent shape and we remain confident that our strategy will continue
to deliver superior shareholder returns.
CHIEF EXECUTIVE'S REVIEW
Very good business performance
We exceeded all of our financial objectives in 2012. We delivered organic revenue growth on a constant
currency basis of 4% and adjusted profit from operations of 8% at constant rates of exchange. Despite the
adverse exchange rates, once again we delivered excellent returns to shareholders, with adjusted diluted
earnings per share up by 7% on last year, with an increase of 12% at constant exchange rates.
We grew our underlying market share in 2012, with good share momentum in the second half of the year.
Pricing remains strong and, while our cigarette volumes were down slightly, this was mainly due to
industry declines in some of our major markets.
Outstanding operating margin improvements
We achieved a substantial improvement in operating margin of 160 basis points, exceeding our target of
increasing operating margin by 50 to 100 basis points each year. In addition to a strong price mix of 6%,
we have continued to focus on productivity improvements, addressing our cost base through factory
rationalisation, systems standardisation and productivity savings.
Innovations driving growth
Our Global Drive Brands (GDBs) Dunhill, Lucky Strike, Kent and Pall Mall continued to perform well,
driven by our innovations, recording both volume and share growth. We saw outstanding volume growth
of 11% for Lucky Strike in 2012. Dunhill volumes grew by 2%, Kent by 1% (or 4% adjusting for the one-off
comparator in Japan) and Pall Mall by 3%. Collectively, our four GDBs achieved volume growth of 3% (or
4% excluding the impact of Japan) and now account for over one third of our total volumes. GDBs grew
market share by 30 basis points.
Fine Cut tobacco grew volume by 8% in Western Europe and increased market share. This was driven by
Pall Mall, by far the largest brand in this category.
Next-generation products
Alongside the innovations in the cigarette market, we are developing a portfolio of next-generation
products. Nicoventures, a company we set up in 2011, is aiming to launch nicotine-based products. In
December 2012, we acquired CN Creative, a UK-based company specialising in the development of e-cigarette
technologies.
Management Board changes
I am pleased to announce the creation of a new role on the Management Board, that of 'Managing
Director Next Generation Products', encompassing Nicoventures and CN Creative. Des Naughton,
currently Group Operations Director, will be appointed to this position from 1 March 2013. Des joined the
group in 1995 and has extensive experience in Marketing, General Management and Operations.
Furthermore, it is a pleasure to announce that Alan Davy, currently Group Head of Supply Chain, will be
promoted to Group Operations Director and join the Management Board also with effect from 1 March
2013. Alan joined the group in 1988 and has held various roles in Manufacturing, Supply Chain and
General Management.
Challenges and opportunities ahead
Our geographic diversity, powerful brands, investment in innovations and strong positions in emerging
markets remain key strengths and we are confident in the future of the tobacco business. We also believe
that building a portfolio of next-generation products alongside our main tobacco business will provide us
with significant new opportunities in the years ahead.
We ended 2012 with share growth in the majority of our markets. Pricing remains good and our GDBs get
stronger every year. While we cannot underestimate the challenges ahead in 2013, I am confident that
we have robust plans in place and the resources to succeed. We have momentum, proven capabilities and
passionate people to deliver another year of good growth and I look forward to 2013 with optimism.
Nicandro Durante
27 February 2013
REGIONAL REVIEW
Profit references in the regional review are based on adjusted profit from operations.
Adjusted profit from operations* at constant and current rates of exchange and volumes are as follows
for the twelve months ended 31 December:
Adjusted profit from operations* Cigarette Volumes
2012 2011 31.12.12 31.12.11
Constant Current
rates rates
GBPm GBPm GBPm Bns Bns
Asia-Pacific 1,653 1,666 1,539 188 191
Americas 1,544 1,415 1,441 142 143
Western Europe 1,262 1,186 1,228 129 135
EEMEA 1,511 1,414 1,311 235 236
5,970 5,681 5,519 694 705
* Refer to page 18 for the Group's non-GAAP measures. Adjusted profit from operations is derived after
excluding adjusting items from profit from operations. Adjusting items include restructuring and
integration costs, amortisation of trademarks and similar intangibles and the 2011 goodwill impairment
and Fox River provision as explained on page 22.
The Group delivered a very good performance in 2012. Exchange rate movements, especially the euro,
Brazilian real, South African rand and Russian rouble, had an adverse impact on reported results.
Reported revenue was 1% lower. At constant rates of exchange, revenue was 4% higher, reflecting
continued good pricing momentum.
The reported profit from operations was 15% higher at GBP5,412 million, with a 3% increase in adjusted
profit from operations. At constant rates of exchange, the adjusted profit was 8% higher.
Group volumes from subsidiaries were 694 billion, down by 11 billion or 1.6%. This was principally as a
result of industry volume declines in Western Europe, Brazil and Egypt, together with volume losses in low
value brands in Indonesia and Turkey. Organic volumes were down 2.0% or 1.7%, excluding the effect of
the one-off comparator in Japan in 2011.
Other tobacco products performed well. Fine Cut tobacco grew by 8% to 14,494 tonnes in Western
Europe, mainly in Germany, Spain, the United Kingdom, the Netherlands and Italy. Market share was up
strongly and profit was higher. Pall Mall is by far the largest Fine Cut brand in Western Europe.
The four Global Drive Brands achieved good overall volume growth of 3% and increased market share by
30 basis points, driven by the successful roll-out of innovations. GDBs now account for over one third of
total volumes. Dunhill volumes increased by 2% as strong growth in Indonesia, Malaysia, South Africa,
Romania, Hungary and Chile was partially offset by a decline in South Korea. Kent was 1% higher than last
year with increased volumes in Ukraine, Russia, Azerbaijan and Vietnam, offset by reduced volumes in
Japan. Adjusting for the one-off comparator in Japan, Kent grew by 4%.
Lucky Strike increased volumes by 11% with growth in Argentina, France, Germany and Chile. Pall Mall
volumes rose by 3%, with outstanding growth in Pakistan and increases in Canada, Romania and the
United Kingdom partially offset by lower volumes in Italy, Spain and Uzbekistan.
Asia-Pacific: adjusted profit at constant rates of exchange increased by GBP114 million or
7%
Adjusted profit was up GBP127 million to GBP1,666 million as a result of strong performances by a
number of markets in the region and favourable exchange rates. However, this was partially offset by
lower profit from South Korea and the increased level of investment in the Indonesian business. Volumes
at 188 billion were down 2%, with increases in Bangladesh, Pakistan, Taiwan and Vietnam more than
offset by lower volumes in South Korea, Indonesia and Japan. Adjusting for the one-off comparator in
Japan, volumes would have been stable.
Country Performance
Malaysia The growth in volumes, market share, profit and Global Drive Brands strengthened
the Group's market leadership position. Dunhill achieved record share growth.
Australia Profit was up as a result of cost saving initiatives, favourable exchange rate
movements and higher pricing, partially offset by lower volumes. Market share was
slightly down but ended the year with good momentum.
Japan Profit grew, while volumes and market share were down, following the one-off
sales in the same period last year. However, underlying market share reached a
record high, driven by the success of new innovations in Kent and Kool.
Vietnam Volumes and market share grew, driven by Kent, State Express 555 and Craven A.
Profit increased as a result of productivity savings, higher pricing and increased
volumes.
South Korea Volumes and market share were down due to competitor pricing activities. Higher
marketing investment stabilised market share during the last quarter impacting
profits.
Taiwan Strong performances by Dunhill and Pall Mall contributed to a record performance
in market share. Increased volumes coupled with higher pricing resulted in a strong
increase in profit.
Pakistan A strong performance by Pall Mall and John Player Gold Leaf drove market share to
a record high, strengthening the Group's leadership. Pall Mall is now the largest
brand in the market. Higher volumes and pricing, coupled with productivity savings,
drove a signficant profit increase.
Bangladesh A significant increase in profi was the result of both market share and volume
growth due to the strong performances of Benson & Hedges and the local brands.
Indonesia The Group continues to invest behind strategic brands. Launched in March, Dunhill
became the fastest growing and most successful launch of an international kretek
brand in the market. Profit declined, however, due to lower volumes in low margin
brands and higher marketing investment and clove prices.
Americas: adjusted profit at constant rates of exchange rose by GBP103 million or 7%
Adjusted profit declined by GBP26 million to GBP1,415 million, mainly attributable to adverse exchange
rate movements and lower profit from Mexico. Volumes were down 1 billion to 142 billion, mainly as a
result of industry decrease in Brazil, partially offset by increases in Colombia, following the Protabaco
acquisition. Organic volumes were down 4 billion to 139 billion.
Country Performance
Brazil Strong profit growth was driven by an improved product mix and higher pricing. This
was offset by the adverse exchange rate movement. Market share rose strongly but
volumes were lower due to market contraction after a significant excise increase and
a subsequent rise in illicit trade.
Canada Volumes and market share increased, consolidating leadership in each of the
segments. The company wa the only on to increase market share. Profit was
stable. Illicit trade was flat.
Mexico There was good market share growth but lower volumes as a result of an increase in
illicit trade following a significant excise-led price increase in 2011. Profits were down
due to a tough comparator resulting from an excise windfall.
Argentina Profit was higher, while volumes and market share were stable. The growth of Lucky
Strike led to an increase in market share of the premium segment.
Chile Higher volumes were achieved as a result of the strong performance of Lucky Strike
and this led to an increase in profit.
Venezuela Market share was higher and profit rose strongly as a result of price increases. This
was partially offset by the inflationary pressure on costs and adverse product mix.
Volumes were stable despite the growth in illicit trade.
Colombia The integration of the companies following the acquisition resulte in a significant
increase in volumes and profit. There was good growth from the Global Drive Brands
and Mustang, the main brand acquired in the acquisition.
Western Europe: adjusted profit at constant rates of exchange increased by GBP34 million or 3%
Adjusted profit decreased by GBP42 million to GBP1,186 million, mainly as a result of adverse exchange
rate movements and tough market conditions in southern Europe. This was partially offset by good
performances in Germany, Romania, Switzerland, Sweden and the United Kingdom. Regional volumes
were 5% lower at 129 billion mainly as a result of market contractions in Italy, Spain, Poland, Hungary and
Denmark.
Country Performance
Italy The difficult economic environment resulted in lower industry volumes, with market
share and profit declines. However, market share and profit in the Fine Cut segment
grew strongly.
Germany Profit increased as a result of higher pricing and good cost management. Volumes
rose in a declining market as a result of the good performances of Lucky Strike and
Pall Mall, leading to an increase in market share. In the Fine Cut segment, share grew
strongly due to the performance of Pall Mall.
France Industry volumes were lower but market share increased. This was achieved through
a strong performance of Lucky Strike. Profit increased due to improved pricing.
Switzerland Profit grew strongly as a result of higher pricing and lower costs. Volumes were
stable but market share rose due to strong performances of Parisienne, Lucky Strike
and Pall Mall.
Spain Industry volumes continued to decline sharply. Despite the strong growth of Lucky
Strike, market share was down. Profit grew on the back of both pricing and a lower
cost base.
Romania Higher market share was the result of strong performances of Dunhill and Pall Mall.
Profit grew as a result of both higher volumes and pricing.
Poland Industry volumes continued to decline, reducing volumes and profit. Lucky Strike and
the international brands performed well despite difficult trading conditions.
United Kingdom Strong performances from Pall Mall and Rothmans led bot to increased volumes
and market share. Profit grew strongly due to price increases and cost management.
Denmark Significant market contraction led to a decline i volumes, however, exit market
shar grew compared to the previous year. Profit grew strongly and margins
improved.
Sweden Profit increased strongly as a result of lower costs and higher prices, with volumes
stable. Market share grew due to the performances of Pall Mall and Lucky Strike.
Eastern Europe, Middle East and Africa: adjusted profit at constant rates of exchange
increased by GBP200 million or 15%
Adjusted profit increase by GBP10 million to GBP1,414 million. This was principally due to stable
volumes and price increases, partially offset by the adverse impact of exchange rate movements. Volumes
were marginally lower than last year at 235 billion with increases in a number of markets including South
Africa and Ukraine, partially offset by the declines in Egypt, Turkey and Nigeria.
Country Performance
Russia Kent maintained its leadership of the premium segment and the successful launch
of Rothmans drove market share higher. Strong profit growth was the result of
higher pricing, an improved mix and productivity savings, with volumes essentially
flat.
Ukraine Volumes and market share increased with a good performance from Kent.
However, profit was lower due to a competitive pricing environment and increased
marketing investment.
Turkey Continued volume declines in low margin brands impacted profit and market share,
despite growth by Kent and Lucky Strike.
GCC markets Profit was up strongly due to a better product mix and price increases across all
markets. Good growth in market share was mainly due to the performance of
Dunhill and Rothmans. Volumes were in line with last year.
Egypt Market instability led to record levels of illicit trade following multiple and
significant excise increases over the past three years. Both profit and volumes
decreased as a result.
Nigeria Political and social unrest resulted in a substantial reduction in industry volumes,
which led to lower profits.
South Africa Profit in local currency grew but was more than offset by the adverse exchange rate
movement. Volumes increased despite the continuing high incidence of illicit trade.
Dunhill and Peter Stuyvesant confirmed their positions as market leaders.
Western
For the year ended 31 December (GBPm) Asia-Pacific Americas Europe EEMEA Total
SUBSIDIARIES
2012 (billions) 188 142 129 235 694
2011 (billions) 191 143 135 236 705
Change* (1.7%) (0.4%) (4.6%) (0.4%) (1.6%)
Organic volumes
2012 (billions) 188 139 129 235 691
2011 (billions) 191 143 135 236 705
Change* (1.7%) (2.8%) (4.6%) (0.4%) (2.0%)
2012 (at constant) 4,224 3,742 3,682 4,351 15,999
2012 (at current) 4,214 3,460 3,442 4,074 15,190
2011 4,251 3,558 3,600 3,990 15,399
Change (at constant) (1%) 5% 2% 9% 4%
Change (at current) (1%) (3%) (4%) 2% (1%)
2012 (at constant) 4,224 3,696 3,682 4,351 15,953
2011 4,251 3,558 3,576 3,990 15,375
Change (1%) 4% 3% 9% 4%
2012 (at constant) 1,653 1,544 1,262 1,511 5,970
2012 (at current) 1,666 1,415 1,186 1,414 5,681
2011 1,539 1,441 1,228 1,311 5,519
Change (at constant) 7% 7% 3% 15% 8%
Change (at current) 8% (2%) (3%) 8% 3%
2012 (at constant) 1,653 1,527 1,262 1,511 5,953
2011 1,539 1,441 1,228 1,311 5,519
Change 7% 6% 3% 15% 8%
2012 (at constant) 39.1% 41.3% 34.3% 34.7% 37.3%
2012 (at current) 39.5% 40.9% 34.5% 34.7% 37.4%
2011 36.2% 40.5% 34.1% 32.9% 35.8%
*Based on absolute volumes.
REGIONAL INFORMATION Western
For the year ended 31 December (GBPm) Asia Pacific Americas Europe EEMEA Total
ASSOCIATES AND JOINT VENTURES
Share of post-tax results of associates
and joint ventures
2012 (at current) 265 425 - 2 692
2011 253 415 - 2 670
Change 5% 2% - 0% 3%
Adjusted share of post-tax results of
associates and joint ventures
2012 (at constant) 277 445 - 2 724
2012 (at current) 245 450 - 2 697
2011 225 432 - 2 659
Change (at constant) 23% 3% - 0% 10%
Change (at current) 9% 4% - 0% 6%
GROUP
For the year ended 31 December Total
Underlying tax rate of subsidiaries (%)
2012 30.6%
2011 31.2%
Adjusted diluted earnings per share (pence)
2012 (at constant) 217.8
2012 (at current) 207.5
2011 194.6
Change (at constant) 12%
Change (at current) 7%
RESULTS OF ASSOCIATES
The Group's share of post-tax results of associates increased by GBP22 million, or 3%, to GBP692 million.
The Group's share of the adjusted post-tax results of associates increased by 6% to GBP697 million, with
a rise of 10% at constant rates of exchange.
The adjusted contribution from Reynolds American increased by 4% to GBP448 million. At constant rates
of exchange the increase was 3%. The Group's adjusted contribution from its associate in India, ITC, was
GBP237 million, up 9%. At constant rates of exchange, the contribution would have been 23% higher
than last year.
See page 23 and 24 for the adjusting items.
NET FINANCE COSTS
Net finance costs at GBP456 million were GBP4 million lower than last year, reflecting the Group's strong
cash flow.
Net finance costs comprise:
2012 2011
GBPm GBPm
Finance costs (505) (577)
Finance income 49 117
(456) (460)
Comprising:
Interest payable (580) (567)
Interest and dividend income 84 82
Net impact of fair value and exchange 40 25
- fair value changes - derivatives 71 (12)
exchange differences (31) 37
(456) (460)
2012 2011
TAXATION GBPm GBPm
UK
- current year tax 13 14
- double tax relief (13) (14)
Overseas
- current year tax expense 1,556 1,449
- adjustment in respect of prior periods (18) 21
Current tax 1,538 1,470
Deferred tax (12) 86
1,526 1,556
The tax rates in the income statement of 27.0 per cent in 2012 and 31.6 per cent in 2011 are affected by
the inclusion of the share of associates' post-tax profit in the Group's pre-tax results and by adjusting
items. The underlying tax rate for subsidiaries reflected in the adjusted earnings per share was 30.6 per
cent in 2012 and 31.2 per cent in 2011. The decrease is mainly due to a change in the mix of profits.
Refer to page 33 for the Franked Investment Income Group Litigation Order.
FREE CASH FLOW AND NET DEBT
Operating cash flow decreased by GBP240 million or 5% to GBP5,087 million, reflecting working capital
movements and higher net capital expenditure partially offset by the growth in underlying operating
performance. The higher cash outflows in respect of taxation and the net movements relating to pension
funds, were offset by lower net interest and higher dividends and other appropriations from associates
due to the Reynolds share buy-back. These led to the Group's free cash flow reducing by GBP67 million or
2% to GBP3,259 million.
The ratio of free cash flow per share to adjusted diluted earnings per share was 81% (2011: 86%).
Closing net debt at GBP8,473 million was up GBP545 million from GBP7,928 million as at 31 December
2011.
The Group's alternative cash flow statement is shown on page 25 and explained on page 19 under non-
GAAP measures.
RISKS AND UNCERTAINTIES
The Board's assessment of the key risks and uncertainties facing the Group has remained broadly
unchanged over the past year, particularly with regard to illicit trade, excise and tax and financial risk.
However, as a consequence of the Board's continuing reappraisal of Group risks and the activities in place
to address them, some risks which have in previous years been considered as key Group risks are no
longer assessed as such in terms of their impact and likelihood. They are nevertheless still addressed as
Group risks, remain on the Group risk register and continue to be reviewed in ccordance with the
Group's risk management procedures. This applies, for example, to the management of the Group's cost
base, which was considered to be a key risk last year but is no longer this year.
Conversely, the Group's internal audit procedures in 2012 identified a number of opportunities for the
Group to enhance its Environment Health and Safety standards in multiple sites and operations. After a
detailed consideration of the risks faced by operational employees, the Board decided to elevate the risk
of injury, illness, or death in the workplace to the status of a key Group risk in the course of the year, in
order to recognise this as a fundamental concern of the Group and to drive improvements.
Regulatory risks facing the Group have been addressed in the Group's risk management governance for a
number of years, and reported as key risks previously. As this category of risk has become more
important in the context of the future development of the Group's business, so has the need to ensure
that all aspects of regulatory risk are specifically identified and addressed effectively. This year the Group
has identified a number of sub-categories of regulatory risk that the Directors now consider to be key.
Full details of all key Group risks will be included in the Annual Report for the year ended 31 December
2012.
IMPLEMENTATION OF A NEW OPERATING MODEL
The Group has embarked on a medium-term programme to implement a new operating model. This
includes revised organisation structures, standardised process and shared back office services
underpinned by a global single instance of SAP. The new organisation structures and processes are
currently being implemented and the deployment of the new SAP system was piloted in the third quarter
of 2012. This will take around four years to fully roll-out.
GOING CONCERN
A description of the Group's business activities, its financial position, cash flows, liquidity position,
facilities and borrowings position, together with the factors likely to affect its future development,
performance and position, are set outin this announcement. Further information will be provided in the
Directors' Report and in the notes to the financial statements, all of which will be included in the 2012
Annual Report.
The Group has, at the date of this report, sufficient existing financing available for its estimated
requirements for at least the next twelve months. This, together with the proven ability to generate cash
from trading activities, the performance of the Group's Global Drive Brands, its leading market positions
in a number of countries and its broad geographical spread, as well as numerous contracts with
established customers and suppliers across different geographical areas and industries, provides the
Directors with the confidence that the Group is well placed to manage its business risks successfully in the
context of current financial conditions and the general outlook in the global economy.
After reviewing the Group's annual budget, plans and financing arrangements, as well as the current
trading activities of the Group, the Directors consider that the Group has adequate resources to continue
operating for the foreseeable future and that it is therefore appropriate to continue to adopt the going
concern basis in preparing the Annual Report.
BOARD CHANGES
Sir Nicholas Scheele (Senior Independent Director) and Robert Lerwill (Chairman of the Audit Committee)
will both be standing down as Non-Executive Directors of the Company at the conclusion of the Annual
General Meeting on 25 April 2013, each having served eight years on the Board. At that time, Christine
Morin-Postel, who has extensive experience as a director of publicly listed companies and who has been a
Non-Executive Director of the Company since 2007, will become the Senior Independent Director.
Further, Kieran Poynter, a former practising accountant until 2008 and a Non-Executive Director of the
Company since 2010, will assume the responsibilities of Chairman of the Audit Committee.
In addition, Karen de Segundo, Robert Lerwill, Anthony Ruys and Sir Nicholas Scheele have all stood down
as members of the Remuneration Committee with effect from 27 February 2013. Dr Gerry Murphy
(Chairman of the Remuneration Committee), Ann Godbehere,Christine Morin-Postel and Kieran Poynter
will all continue as members of the Committee; the slimmed-down membership brings this Committee
into alignment with the other principal Committees of the Company's Board and with best practice. It will
facilitate the Company's continuing review and focus on Directors' remuneration in the light of the
Government's reforms on executive pay.
DIRECTORS' RESPONSIBILITY STATEMENT
The responsibility statement below has been prepared in connection with the company's full Annual
Report for the year ended 31 December 2012. Certain parts thereof are not included within this
announcement.
We confirm to the best of our knowledge:
- the financial statements, prepared in accordance with UK GAAP and IFRS as adopted by the
European Union, give a true and fair view of the assets, liabilities, financial position and profit or
loss of the Company and the Group respectively; and
- the Directors' report (which incorporates the Business Review), includes a fair review of the
development and performance of the business and the position of the Group and the Company,
together with a description of the principal risks and uncertainties that they face.
This responsibility statement was approved by the Board of Directors on 27 February 2013 and is signed
on its behalf by:
For and on behalf of the Board of Directors:
Richard Burrows Ben Stevens
Chairman Finance Director and Chief Information Officer
27 February 2013
ENQUIRIES:
INVESTOR RELATIONS: PRESS OFFICE:
Mike Nightingale 020 7845 1180 Kate Matrunola 020 7845 2888
Rachael Brierley 020 7845 1519 Jem Maidment
Will Hill
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GROUP INCOME STATEMENT
For the year ended 31 December
2012 2011
GBPm GBPm
Gross turnover (including duty, excise and other taxes of GBP30,682 million
(2011: GBP30,724 million)) 45,872 46,123
Revenue 15,190 15,399
Raw materials and consumables used (3,445) (3,507)
Changes in inventories of finished goods and work in progress 133 81
Employee benefit costs (2,386) (2,501)
Depreciation, amortisation and impairment costs (475) (817)
Other operating income 245 233
Other operating expenses (3,850) (4,167)
Profit from operations 5,412 4,721
Analysed as:
adjusted profit from operations 5,681 5,519
restructuring and integration costs (206) (193)
amortisation of trademarks and similar intangibles (63) (58)
goodwill impairment - (273)
Fox River - (274)
5,412 4,721
Net finance costs (456) (460)
Finance income 49 117
Finance costs (505) (577)
Share of post-tax results of associates and joint ventures 692 670
Analysed as:
adjusted share of post-tax results of associates and joint ventures 697 659
issue of shares and change in shareholding 20 28
smoking cessation programme - (23)
gain on disposal of business - 22
restructuring and integration costs (24) (4)
change in post-retirement obligations 24 -
other (25) (12)
692 670
Profit before taxation 5,648 4,931
Taxation on ordinary activities (1,526) (1,556)
Profit for the year 4,122 3,375
Attributable to:
Owners of the parent 3,841 3,095
Non-controlling interests 281 280
4,122 3,375
Earnings per share
Basic 198.1p 157.1p
Diluted 197.1p 156.2p
Adjusted diluted 207.5p 194.6p
All of the activities during both years are in respect of continuing operations.
The accompanying notes on pages 8 and 18 to 34 form an integral part of this condensed consolidated
financial information.
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December
2012 2011
GBPm GBPm
Profit for the year (page 12) 4,122 3,375
Other comprehensive income
Differences on exchange
subsidiaries (379) (411)
associates (145) (109)
Differences on exchange reclassified and reported in profit for the year - (4)
Cash flow hedges
net fair value losses (11) (21)
reclassified and reported in profit for the year 71 38
reclassified and reported in net assets 12 (5)
Available-for-sale investments
net fair value (losses)/gains (3) 26
reclassified and reported in profit for the year (1) (1)
Net investment hedges
net fair value gains 106 62
differences on exchange on borrowings 49 (104)
Retirement benefit schemes
net actuarial losses in respect of subsidiaries (415) (462)
surplus recognition and minimum funding obligations in respect
of subsidiaries 54 2
actuarial losses in respect of associates net of tax (55) (67)
Tax on items recognised directly in other comprehensive income 28 20
Total other comprehensive income for the year, net of tax (689) (1,036)
Total comprehensive income for the year, net of tax 3,433 2,339
Attributable to:
Owners of the parent 3,163 2,094
Non-controlling interests 270 245
3,433 2,339
The accompanying notes on pages 8 and 18 to 34 form an integral part of this condensed consolidated
financial information.
GROUP STATEMENT OF CHANGES IN EQUITY
At 31 December
2012 Attributable to owners of the parent
Share
premium,
capital Total
redemption attributable Non-
Share and merger Other Retained to owners controlling Total
capital reserves reserves earnings of parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2012 506 3,913 1,112 2,636 8,167 307 8,474
Total comprehensive income for the year - - (316) 3,479 3,163 270 3,433
Profit for the year (page 12) - - - 3,841 3,841 281 4,122
Other comprehensive income for the
year (page 13) - - (316) (362) (678) (11) (689)
Employee share options
value of employee services - - - 73 73 - 73
proceeds from shares issued 1 3 - 1 5 - 5
Dividends and other appropriations
ordinary shares - - - (2,538) (2,538) - (2,538)
to non-controlling interests - - - - - (267) (267)
Purchase of own shares
held in employee share ownership
trusts - - (121) (121) - (121)
share buy-back programme - - - (1,258) (1,258) - (1,258)
Non-controlling interests - acquisitions - - - (21) (21) (3) (24)
Other movements - - - 2 2 - 2
Balance at 31 December 2012 507 3,916 796 2,253 7,472 307 7,779
2011 Attributable to owners of the parent
Share
premium,
capital Total
redemption attributable Non-
Share and merger Other Retained to owners controlling Total
capital reserves reserves earnings of parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2011 506 3,910 1,600 3,190 9,206 342 9,548
Total comprehensive income for the year - - (488) 2,582 2,094 245 2,339
Profit for the year (page 12) - - - 3,095 3,095 280 3,375
Other comprehensive income for the year
(page 13) - - (488) (513) (1,001) (35) (1,036)
Employee share options
value of employee services - - - 76 76 - 76
proceeds from shares issued - 3 - 2 5 - 5
Dividends and other appropriations
ordinary shares - - - (2,358) (2,358) - (2,358)
to non-controlling interests - - - - - (279) (279)
Purchase of own shares
held in employee share ownership
trusts - - - (123) (123) - (123)
share buy-back programme - - - (755) (755) - (755)
Non-controlling interests acquisitions - - - (10) (10) - (10)
Other movements - - - 32 32 (1) 31
Balance at 31 December 2011 506 3,913 1,112 2,636 8,167 307 8,474
The accompanying notes on pages 8 and 18 to 34 form an integral part of this condensed consolidated financial
information.
GROUP BALANCE SHEET
At 31 December
2012 2011
GBPm GBPm
Assets
Non-current assets
Intangible assets 11,710 11,992
Property, plant and equipment 3,201 3,047
Investments in associates and joint ventures 2,330 2,613
Retirement benefit assets 105 105
Deferred tax assets 327 343
Trade and other receivables 224 305
Available-for-sale investments 37 40
Derivative financial instruments 207 179
Total non-current assets 18,141 18,624
Current assets
Inventories 4,026 3,498
Income tax receivable 83 127
Trade and other receivables 2,741 2,423
Available-for-sale investments 26 57
Derivative financial instruments 166 159
Cash and cash equivalents 2,081 2,194
9,123 8,458
Assets classified as held-for-sale 63 37
Total current assets 9,186 8,495
Total assets 27,327 27,119
The accompanying notes on pages 8 and 18 to 34 form an integral part of this condensed consolidated financial information.
GROUP BALANCE SHEET
At 31 December
2012 2011
GBPm GBPm
Equity
Capital and reserves
Share capital 507 506
Share premium, capital redemption and merger reserves 3,916 3,913
Other reserves 796 1,112
Retained earnings 2,253 2,636
Owners of the parent 7,472 8,167
after deducting
- cost of treasury shares (2,824) (1,539)
Non-controlling interests 307 307
Total equity 7,779 8,474
Liabilities
Non-current liabilities
Borrowings 9,083 8,510
Retirement benefit liabilities 1,152 1,003
Deferred tax liabilities 500 556
Other provisions for liabilities and charges 419 458
Trade and other payables 166 184
Derivative financial instruments 86 87
Total non-current liabilities 11,406 10,798
Current liabilities
Borrowings 1,636 1,766
Income tax payable 404 494
Other provisions for liabilities and charges 210 236
Trade and other payables 5,827 5,174
Derivative financial instruments 65 177
Total current liabilities 8,142 7,847
Total equity and liabilities 27,327 27,119
The accompanying notes on pages 8 and 18 to 34 form an integral part of this condensed consolidated
financial information.
GROUP CASH FLOW STATEMENT
For the year ended 31 December
2012 2011
GBPm GBPm
Cash flows from operating activities
Cash generated from operations 5,437 5,537
Dividends received from associates 486 476
Tax paid (1,496) (1,447)
Net cash generated from operating activities 4,427 4,566
Cash flows from investing activities
Interest received 72 79
Dividends received from investments 2 2
Purchases of property, plant and equipment (664) (510)
Proceeds on disposal of property, plant and equipment 56 45
Purchases of intangibles (140) (107)
Purchases and proceeds on disposals of investments 24 3
Proceeds from associates' share buy-backs 262 71
Purchases of subsidiaries (12) (295)
Net cash used in investing activities (400) (712)
Cash flows from financing activities
Interest paid (564) (580)
Interest element of finance lease rental payments (1) -
Capital element of finance lease rental payments (5) (13)
Proceeds from issue of shares to owners of the parent 4 3
Proceeds from the exercise of options over own shares
held in employee share ownership trusts 1 2
Proceeds from increases in and new borrowings 2,539 1,361
Movements relating to derivative financial instruments 93 5
Purchases of own shares (1,258) (755)
Purchases of own shares held in employee share ownership trusts (121) (123)
Purchases of non-controlling interests (24) (10)
Reductions in and repayments of borrowings (1,821) (1,304)
Dividends paid to owners of the parent (2,538) (2,358)
Dividends paid to non-controlling interests (259) (275)
Net cash used in financing activities (3,954) (4,047)
Net cash flows generated from/(used in) operating, investing and financing
activities 73 (193)
Differences on exchange (176) (48)
Decrease in net cash and cash equivalents in the year (103) (241)
Net cash and cash equivalents at 1 January 1,942 2,183
Net cash and cash equivalents at 31 December 1,839 1,942
The accompanying notes on pages 8 and 18 to 34 form an integral part of this condensed consolidated
financial information.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial information has been extracted from the Annual Report, including the audited financial
statements for the year ended 31 December 2012. This financial information does not constitute
statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The Group has prepared its annual consolidated financial statements in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union.
These financial statements have been prepared under the historical cost convention, except in respect of
certain financial instruments, and on a basis consistent with the IFRS accounting policies as set out in the
Annual Report for the year ended 31 December 2011.
The Group has not adopted any new and amended IFRSs and IFRIC interpretations with any significant
effect on reported profit or equity or on the disclosures in the financial statements with effect from
1 January 2012.
The preparation of these condensed consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities
and the disclosure of contingent liabilities at the date of these condensed consolidated financial
statements. Such estimates and assumptions are based on historical experience and various other factors
that are believed to be reasonable in the circumstances and constitute management's best judgement at
the date of the condensed consolidated financial statements. In the future, actual experience may deviate
from these estimates and assumptions, which could affect these condensed consolidated financial
statements as the original estimates and assumptions are modified, as appropriate, in the period in which
the circumstances change.
NON-GAAP MEASURES
In the reporting of financial information, the Group uses certain measures that are not required under
IFRS, the generally accepted accounting principles (GAAP) under which the Group reports. The Group
believes that these additional measures, which are used internally, are useful to users of the financial
information in helping them understand the underlying business performance.
The principal non-GAAP measures which the Group uses are adjusted profit from operations and
adjusted diluted earnings per share, which is reconciled to diluted earnings per share. Adjusting items are
significant items in the profit from operations, net finance costs, taxation and the Group's share of the
post-tax results of associates and joint ventures which individually or, if of a similar type, in aggregate,
are relevant to an understanding of the Group's underlying financial performance. While the disclosure
of adjusting items is not required by IFRS, these items are separately disclosed either as memorandum
information on the face of the income statement and in the segmental analysis, or in the notes to the
accounts as appropriate. The adjusting items are used to calculate the additional non-GAAP measures of
adjusted profit from operations and adjusted share of post-tax results of associates and joint ventures.
All adjustments to profit from operations and diluted earnings per share are explained in this
announcement. See pages 22 to 24 and page 28.
The Management Board, as the chief operating decision maker, reviews current and prior year adjusted
segmental income statement information of subsidiaries and associates and joint ventures at constant
rates of exchange which provides an approximate guide to performance in the current year had they
been translated at last year's rate of exchange. The constant rate comparison provided for reporting
segment information is based on a retranslation, at prior year exchange rates, of the current year results
of the Group's overseas entities but other than in exceptional circumstances, does not adjust for the
normal transactional gains and losses in operations which are generated by exchange movements. As an
additional measure to indicate the impact of the exchange rate movement on the Group results, the
principal measure of adjusted diluted earnings per share is also shown at constant rates of exchange. See
page 21.
In the presentation of financial information, the Group also uses another measure, organic growth, to
analyse underlying business performance. Organic growth is the growth after adjusting for mergers and
acquisitions and discontinued activities. Adjustments are made to current and prior year numbers, based
on the 2012 Group position. See page 20.
The Group prepares an alternative cash flow, which includes a measure of 'free cash flow', to illustrate
the cash flows before transactions relating to borrowings. A net debt summary is also provided. See
pages 25 and 26. The Group publishes gross turnover as an additional disclosure to indicate the impact of
duty, excise and other taxes.
Due to the secondary listing of the ordinary shares of British American Tobacco p.l.c. on the main board
of the JSE Limited (JSE) in South Africa, the Group is required to present headline earnings per share and
diluted headline earnings per share, as alternative measures of earnings per share, calculated in
accordance with Circular 3/2012 'Headline Earnings' issued by the South African Institute of Chartered
Accountants. These are shown on page 29.
ANALYSIS OF REVENUE, PROFIT FROM OPERATIONS AND DILUTED EARNINGS PER SHARE
REVENUE
2012
Impact Organic
Reported of Revenue Organic revenue
revenue exchange at CC(2) adjustments(3) at CC(2)
GBPm GBPm GBPm GBPm GBPm
Asia-Pacific 4,214 10 4,224 - 4,224
Americas 3,460 282 3,742 (46) 3,696
Western Europe 3,442 240 3,682 - 3,682
EEMEA 4,074 277 4,351 - 4,351
Total 15,190 809 15,999 (46) 15,953
2011
Reported Organic Organic
revenue adjustments(3) revenue
GBPm GBPm GBPm
Asia-Pacific 4,251 - 4,251
Americas
3,558 - 3,558
Western Europe
3,600 (24) 3,576
EEMEA
3,990 - 3,990
Total 15,399 (24) 15,375
PROFIT FROM OPERATIONS
2012
Adjusted Organic
Reported Adjusting Adjusted Impact of PFO(1) Organic PFO(1)
PFO(1) items PFO(1) exchange @ CC(2) adjustments(3) @ CC(2)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Asia-Pacific 1,586 80 1,666 (13) 1,653 - 1,653
Americas 1,351 64 1,415 129 1,544 (17) 1,527
Western Europe 1,087 99 1,186 76 1,262 - 1,262
EEMEA 1,388 26 1,414 97 1,511 - 1,511
Total 5,412 269 5,681 289 5,970 (17) 5,953
2011
Reported Adjusting Adjusted Organic Adjusted
PFO(1) items PFO(1) adjustments.(3) PFO(1)
GBPm GBPm GBPm GBPm GBPm
Asia-Pacific 1,481 58 1,539 - 1,539
Americas 1,426 15 1,441 - 1,441
Western Europe 1,075 153 1,228 - 1,228
EEMEA 1,013 298 1,311 - 1,311
Total Regions 4,995 524 5,519 - 5,519
Fox River (4) (274) 274 - - -
Total 4,721 798 5,519 - 5,519
DILUTED EARNINGS PER SHARE
2012
Adjusting Impact of Adjusted
Reported items Adjusted exchange @ CC(2)
GBPm GBPm GBPm GBPm GBPm
Profit from subsidiaries 5,412 269 5,681 289 5,970
Net Finance costs (456) - (456) (23) (479)
Associates and joint ventures 692 5 697 27 724
Profit before tax 5,648 274 5,922 293 6,215
Taxation (1,526) (70) (1,596) (71) (1,667)
Non controlling interest (281) (1) (282) (21) (303)
Profit attributable to shareholders 3,841 203 4,044 201 4,245
Diluted number of shares 1,949 1,949 1,949
Diluted earnings per share (pence) 197.1 207.5 217.8
2011
Adjusting
Reported items Adjusted
GBPm GBPm GBPm
Profit from subsidiaries 4,721 798 5,519
Net Finance costs (460) - (460)
Associates and joint ventures 670 (11) 659
Profit before tax 4,931 787 5,718
Taxation (1,556) (24) (1,580)
Non controlling interest (280) (1) (281)
Profit attributable to shareholders 3,095 762 3,857
Diluted number of shares 1,982 1,982
Diluted earnings per share (pence) 156.2 194.6
Notes:
(1) PFO: Profit from operations
(2) CC: Constant currencies
(3) Organic adjustments: Mergers and acquisitions and discontinued operations - adjustments for 2012 are made for the
Protabaco acquisition during 2011, while 2011 is adjusted for the termination of the distribution agreement in Norway
(see page 23).
(4) The Fox River provision made in 2011 (see page 23), was not allocated to a segment or segments as it relates to a 1998
settlement agreement. It is presented separately from the segmental reporting which is used to evaluate segment
performance and to allocate resources
ADJUSTING ITEMS INCLUDED IN PROFIT FROM OPERATIONS
Adjusting items are significant items in the profit from operations which individually or, if of a similar type,
in aggregate, are relevant to an understanding of the Group's underlying financial performance. See
page 18. These items are separately disclosed as memorandum information on the face of the income
statement and in the segmental analyses.
(a) Restructuring and integration costs
Restructuring costs reflect the costs incurred as a result of initiatives to improve the effectiveness and the
efficiency of the Group as a globally integrated enterprise, including the relevant operating costs of
implementing the new operating model. These initiatives include a review of the Group's manufacturing
operations, supply chain, overheads and indirect costs, organisational structure and systems and software
used. The costs of these initiatives together with the costs of integrating acquired businesses into existing
operations, including acquisition costs, are included in profit from operations under the following
headings:
2012 2011
GBPm GBPm
Employee benefit costs 96 100
Depreciation and impairment costs 26 39
Other operating expenses 100 72
Other operating income (16) (18)
Total 206 193
Restructuring and integration costs in 2012 principally relate to the implementation of the new operating
model, the continuation of the factory closure and downsizing activities in Australia and the restructuring
in Argentina. The costs also cover the social plan and other activities relating to the Bremen factory
closure in Germany, the integration of Productora Tabacalera de Colombia, S.A.S. (Protabaco) into existing
operations, as well as the write-off of non-compliant products and materials related to the
implementation of plain packaging in Australia. In addition they also include separation packages in
respect of permanent headcount reductions and permanent employee benefit reductions in the Group.
Restructuring and integration costs in 2011 principally relate to factory closure and downsizing activities
in Denmark and Australia respectively; a voluntary separation scheme and closure of the printing unit in
Argentina; the closure of the Jawornik factory in Poland, the Tire factory closure in Turkey and the Lecce
factory in Italy. The costs also cover the social plan and other closure activities relating to the Bremen
factory closure in Germany and the integration of Productora Tabacalera de Colombia, S.A.S. (Protabaco)
into existing operations, including acquisition costs, as well as other restructuring initiatives directly
related to improving the efficiency and effectiveness of the Group as a globally integrated enterprise. In
addition, they also include separation packages in respect of permanent headcount reductions and
permanent employee benefit reductions in the Group.
Other operating income in 2012 includes gains from the sale of land and buildings in the UK and South
Africa and the release of deferred income from a disposal in 2007. In 2011, other operating income
includes gains from sale of surplus land and buildings in Argentina and the release of deferred income
from a disposal in 2007.
(b) Amortisation of trademarks and similar intangibles
The acquisitions of Protabaco, Bentoel, Tekel, ST and CN Creative Limited resulted in the capitalisation of
trademarks and similar intangibles which are amortised over their expected useful lives, which do not
exceed 20 years. The amortisation charge of GBP63 million (2011: GBP58 million) is included in
depreciation, amortisation and impairment costs in the profit from operations.
(c) Goodwill impairment
In 2011, the Group impaired the remaining balance of the goodwill in respect of the Tekel acquisition in
2008, amounting to GBP273 million. Although cost savings initiatives in the acquisition plan have been
delivered successfully, the impairment charge arose as a result of further increases in excise announced
by the Turkish government effective from October 2011 and an additional increase effective from January
2013. The excise increases to date have resulted in the growth of illicit trade and a loss of volumes and
market share. Turkey remains an important strategic market for the Group.
Adjusting items included in profit from operations cont
(d) Fox River
In 2011, a provision of GBP274 million was made for a potential claim under a 1998 settlement agreement
entered into by a Group subsidiary in respect of the clean up of sediment in the lower Fox River. See
note 30 on contingent liabilities on page 182 of the 2011 Annual Report for full details.
OTHER CHANGES IN THE GROUP
(a) CN Creative Limited
On 18 December 2012, the Group acquired CN Creative Limited, a UK-based start-up company specialising
in the development of e-cigarette technologies. The company's entire share capital was acquired for
GBP40 million, of which GBP14 million was paid at year end. The only material asset acquired was the
company's intellectual property.
(b) Productora Tabacalera de Colombia, S.A.S. (Protabaco)
On 11 October 2011, the Group acquired a 100 per cent stake in Protabaco. The purchase price was
subject to the final agreement of adjustments for working capital and net debt with the vendors. This was
finalised in July 2012 with a reduction of GBP2 million to the previously reported purchase price and
goodwill.
Goodwill of GBP132 million arose on the acquisition of the cigarette business of Protabaco, stated at the
exchange rates ruling at the date of the transaction.
(c) Termination of distributor arrangement
With effect from 1 July 2011, the arrangement by which the Group acted as a distributor for a third party
in Norway was terminated. This arrangement contributed GBP24 million to revenue and less than a
GBP1 million to profit from operations in the Western Europe region in the six months ended 30 June
2011.
ADJUSTING ITEMS INCLUDED IN SHARE OF POST-TAX RESULTS OF ASSOCIATES AND JOINT
VENTURES
The share of post-tax results of associates and joint ventures is after the following adjusting items which
are excluded from the calculation of adjusted earnings per share as set out on page 28.
In 2012, the Group's interest in ITC decreased from 31.04% to 30.72% as a result of ITC issuing ordinary
shares under the company's employee stock option scheme. The issue of shares and change in the
Group's share of ITC resulted in a gain of GBP20 million, which is treated as a deemed partial disposal and
included in the income statement.
During the year, Reynolds American recognised restructuring charges of US$149 million in respect of its
overall activities. The Group's share of these charges is GBP24 million (net of tax).
In addition, Reynolds American amended a post-retirement medical plan that resulted in a gain of
US$157 million and the Group's share of this gain is GBP24 million (net of tax).
Reynolds American has also recognised amounts which have been combined in the table of adjusting
items and reported in other. These mainly consist of a charge of US$37 million in respect of a number of
Engle progeny lawsuits; the Group's share of these costs is GBP6 million (net of tax); and trademark
amortisation and impairment of US$86 million; the Group's share of these charges amounts to
GBP16 million (net of tax).
In 2011, the Group's interest in ITC decreased from 31.43% to 31.04% as a result of ITC issuing ordinary
shares under the company's employee stock option scheme. This resulted in a gain of GBP28 million,
which was treated as a deemed partial disposal and included in the income statement.
During 2011, Reynolds American, along with other tobacco companies, was refused by the US Supreme
Court a request to revoke a 2009 order requiring them to finance a US$278 million smoking cessation
programme in Louisiana (Scott case). The Group's share of this charge amounted to GBP23 million (net of
tax).
In March 2011, Reynolds American sold Lane Limited for US$205 million in cash. The Group's share of the
gain on the disposal of this business amounted to GBP22 million (net of tax).
In addition, during 2011, Reynolds American recognised restructuring charges of US$23 million and the
Group's share of these charges amounted to GBP4 million (net of tax).
In the year ended 31 December 2011, Reynolds American recognised amounts which have been
combined in the table of adjusting items and reported in other. These include of a charge of US$64 million
in respect of four Engle progeny lawsuits that have proceeded through the appellate process in the state
of Florida, the Group's share of this charge amounted to GBP10 million (net of tax). It also includes
trademark amortisation and impairment of US$47 million; the Group's share of these charges amounted
to GBP8 million (net of tax); and US$16 million and US$11 million of tax credits and interest, respectively,
the Group's share of these credits amounted to GBP6 million (net of tax).
CASH FLOW AND NET DEBT MOVEMENTS
a) Alternative cash flow
The IFRS cash flow statement on page 17 includes all transactions affecting cash and cash equivalents,
including financing. The alternative cash flow statement below is presented to illustrate the cash flows
before transactions relating to borrowings.
2012 2011
Restated*
GBPm GBPm
Adjusted profit from operations (page 12) 5,681 5,519
Depreciation, amortisation and impairment 385 447
Other non-cash items in operating profit 45 68
Profit from operations before depreciation and impairment 6,111 6,034
Increase in working capital (282) (141)
Net capital expenditure (742) (566)
Gross capital expenditure (798) (611)
Sale of fixed assets 56 45
Operating cash flow 5,087 5,327
Pension funds' shortfall funding net of one-off receipts (164) (140)
Net interest paid (429) (469)
Tax paid (1,496) (1,447)
Dividends paid to non-controlling interests (259) (275)
Cash generated from operations 2,739 2,996
Restructuring costs (228) (217)
Dividends and other appropriations from associates 748 547
Free cash flow 3,259 3,326
Dividends paid to shareholders (2,538) (2,358)
Share buy-back (including transaction costs) (1,258) (755)
Net investment activities (43) (311)
Net flow from share schemes and other (57) (93)
Net cash outflow (637) (191)
External movements on net debt
Exchange rate effects** 89 123
Change in accrued interest and other 3 (19)
Change in net debt (545) (87)
Opening net debt (7,928) (7,841)
Closing net debt (8,473) (7,928)
* 2011 numbers have been restated to separately show the pension funds' shortfall funding
** Including movements in respect of debt related derivatives.
Operating cash flow decreased by GBP240 million, or 5%, to GBP5,087 million, reflecting working capital
movements and the increase in net capital expenditure partially offset by growth in underlying operating
performance. The higher cash outflows in respect of taxation, and the net movement relating to pension
funds, were offset by lower net interest and higher dividends and other appropriations from associates
due to the Reynolds American share buy-back - GBP262 million (2011: GBP71 million). These led to the
Group's free cash flow reducing by GBP67 million or 2% to GBP3,259 million.
The ratio of free cash flow per share to adjusted diluted earnings per share was 81% (2011: 86%), with
free cash flow per share decreasing by 0.4% (2011: increasing by 3%).
Below free cash flow, the principal cash outflows for 2012 comprise the payment of the prior year final
dividend and the 2012 interim dividend, which was GBP180 million higher at GBP2,538 million, as well as a
GBP1,258 million outflow due to the continuation of the on-market share buy-back programme in 2012,
including transaction costs.
During 2012, the cash outflow from net investing activities of GBP43 million relates mainly to the GBP14
million cash consideration paid on the purchase of CN Creative Limited and a cash outflow of GBP24 million
for the acquisition of non-controlling interests in Bangladesh. In 2011, the cash outflow of GBP311 million
mainly relates to the GBP295 million purchase of Protabaco, comprising the purchase price less acquired net
cash and cash equivalents. In addition, there was a cash outflow of GBP10 million for the acquisition of non-
controlling interests in Chile and GBP6 million in respect of the purchase of trademarks.
The other net flows principally relate to the impact of the level of shares purchased by the employee share
ownership trusts and cash flows in respect of certain derivative financial instruments.
These flows resulted in a net cash outflow of GBP637 million (2011: GBP191 million outflow). After taking
account of other changes, especially exchange rate movements, total net debt was GBP545 million higher at
GBP8,473 million at 31 December 2012 (2011: GBP7,928 million).
During 2012 it was decided to separately show the additional cash flows in respect of the funding of pension
funds in deficit, or where one-off amounts have been repaid from pension fund surpluses to the Group
companies. The amount is shown after operating cash flow but is included in the free cash flow. 2011 has
been restated accordingly.
b) Net debt
The Group defines net debt as borrowings including related derivatives, less cash and cash equivalents
and current available-for-sale investments. The maturity profile of net debt is as follows:
2012 2011
GBPm GBPm
Net debt due within one year:
Borrowings (1,636) (1,766)
Related derivatives 41 5
Cash and cash equivalents 2,081 2,194
Current available-for-sale investments 26 57
512 490
Net debt due beyond one year:
Borrowings (9,083) (8,510)
Related derivatives 98 92
(8,985) (8,418)
Total net debt (8,473) (7,928)
The Group remains confident about its ability to access the debt capital markets successfully and reviews
its options on a continuing basis.
c) IFRS cash generated from operations
The cash generated from operating activities in the IFRS cash flows on page 17 includes the following
items:
2012 2011
GBPm GBPm
Profit from operations 5,412 4,721
Adjustments for:
Amortisation of trademarks and similar intangibles 63 58
Amortisation and impairment of intangible assets 53 365
Depreciation and impairment of property,
plant and equipment 359 394
Increase in inventories (755) (47)
Increase in trade and other receivables (329) (87)
Increase in trade and other payables 840 46
Decrease in net retirement benefit liabilities (200) (208)
(Decrease)/increase in provisions for liabilities and charges (45) 232
Other non-cash items 39 63
Cash generated from operations 5,437 5,537
d) IFRS net cash and cash equivalents
The net cash and cash equivalents in the IFRS Group cash flow statement on page 17 comprise:
2012 2011
GBPm GBPm
Cash and cash equivalents per balance sheet 2,081 2,194
Overdrafts (242) (252)
Net cash and cash equivalents 1,839 1,942
e) Liquidity
The Group has a target average centrally managed debt maturity of at least 5 years with no more than
20% of centrally managed debt maturing in a single rolling year. As at 31 December 2012, the average
centrally managed debt maturity was 7.2 years (2011: 7.0 years) and the highest proportion of centrally
managed debt maturing in a single rolling year was 19.3% (2011: 18.3%).
It is Group policy that short-term sources of funds (including drawings under both the US$2 billion
commercial paper programme and the GBP1 billion euro commercial paper programme) are backed by
undrawn committed lines of credit and cash. At 31 December 2012, no commercial paper was
outstanding (2011: GBP85 million).
In the year ended 31 December 2012, the Group continued with transactions in the capital markets.
In June 2012, the Group issued new US$2 billion bonds; US$500 million with a maturity of 2015,
US$600 million with a maturity of 2017 and US$900 million with a maturity of 2022. In June 2012, the
Group repaid a maturing EUR337 million bond and prepaid and cancelled a $690 million syndicated facility
due October 2012, a Mexican Peso 1,444 million borrowing due 2014 and a Mexican Peso 1,025 million
borrowing due 2014. In July 2012 the Group also prepaid and cancelled a EUR450 million syndicated facility
due October 2013. The repayments were financed from Group cash balances. In November 2012, the
Group issued a new EUR750 million bond with a maturity of January 2023.
In June 2011, the Group repaid a maturing EUR530 million bond with the repayment financed from Group
cash balances. In August 2011, the Group extended the maturity date of a US$200 million facility from
2011 to 2016, and simultaneously increased the size of the facility to US$240 million. The facility is
drawable in Chilean peso and was drawn to the value of US$225 million at 31 December 2012 (2011:
US$225 million). In September 2011, the Group repaid a Mexican peso 1,444 million borrowing which was
due in September 2011 with a new Mexican peso 1,444 million borrowing due September 2014. In
November 2011, the Group issued a new EUR600 million bond with a maturity of November 2021.
EARNINGS PER SHARE
Adjusted diluted earnings per share rose by 7% at 207.5p (2011: 194.6p), principally as a result of the
growth in profit from operations. Basic earnings per share were up 26% at 198.1p (2011: 157.1p).
2012 2011
pence pence
Earnings per share
- basic 198.1 157.1
- diluted 197.1 156.2
Adjusted earnings per share
- basic 208.6 195.8
- diluted 207.5 194.6
Headline earnings per share
- basic 197.4 168.7
- diluted 196.4 167.7
Basic earnings per share are based on the profit for the year attributable to ordinary shareholders and the
weighted average number of ordinary shares in issue during the period (excluding treasury shares). For
the calculation of the diluted earnings per share, the weighted average number of shares reflects the
potential dilutive effect of employee share schemes.
The presentation of headline earnings per share, as an alternative measure of earnings per share, is
mandated under the JSE Listing Requirements. It is calculated in accordance with Circular 3/2012
'Headline Earnings', as issued by the South African Institute of Chartered Accountants. Circular 3/2012
superseded Circular 3/2009 for periods ending on or after 31 July 2012 and requires comparative figures
to be restated. The comparative headline earnings per share for 2011, however, remain unchanged when
calculated in accordance with the new Circular.
Adjusted diluted earnings per share are calculated by taking the following adjustments into account:
2012 2011
pence pence
Unadjusted diluted earnings per share 197.1 156.2
Effect of restructuring and integration costs 8.3 7.4
Effect of goodwill impairment - 13.3
Effect of deferred tax (credit)/write offs (0.6) 2.2
Effect of amortisation of trademarks and similar intangibles 2.4 2.2
Effect of Fox River - 13.8
Effect of associates' adjusting items 0.3 (0.5)
Adjusted diluted earnings per share 207.5 194.6
As well as the adjusting items explained on pages 22 to 24, the above adjustments also take into account
a tax credit/write offs to the income statement, included in the taxation of ordinary activities. In 2012,
the merger of the Group's Colombian companies resulted in a reduction of GBP11 million against a
deferred tax liability set up on the acquisition of Protabaco in 2011. In 2011, following the goodwill
impairment of Turkey, the Group wrote off deferred tax assets of GBP43 million.
Diluted headline earnings per share are calculated by taking the following adjustments into account:
2012 2011
pence pence
Diluted unadjusted earnings per share 197.1 156.2
Effect of impairment of intangibles and property, plant and equipment 0.4 14.4
Effect of gains on disposal of property, plant and equipment and
held for sale assets (0.8) (0.5)
Effect of gains reclassified from the available-for-sale reserve (0.1) (0.1)
Effect of share of associates' trademark and other asset impairments 0.8 0.4
Effect of share of associates' gains on disposal of assets held-for-sale - (1.3)
Effect of issue of shares and change in shareholding in associate (1.0) (1.4)
Diluted headline earnings per share 196.4 167.7
An alternative measure of headline earnings per share has been
presented below to take account of the effect of Fox River (see
page 23); this measure is in addition to that mandated by the JSE Listing
Requirements.
Diluted headline earnings per share amended for Fox River 196.4 181.5
The earnings per share are based on:
2012 2011
Earnings Shares Earnings Shares
GBPm m GBPm m
Earnings per share
- basic 3,841 1,939 3,095 1,970
- diluted 3,841 1,949 3,095 1,982
Adjusted earnings per share
- basic 4,044 1,939 3,857 1,970
- diluted 4,044 1,949 3,857 1,982
Headline earnings per share
- basic 3,828 1,939 3,323 1,970
- diluted 3,828 1,949 3,323 1,982
DIVIDENDS
Recommendation
The Board recommends a final dividend of 92.7 pence per ordinary share of 25p for the year ended
31 December 2012. If approved by shareholders at the Annual General Meeting to be held on 25 April
2013, the final dividend will be payable on 8 May 2013 to shareholders registered on either the UK main
register or the South African branch register on 15 March 2013 (the record date).
General Dividend Information
The following is a summary of the dividends declared/recommended for the years ended 31 December
2012 and 2011:
2012 2011
Pence Pence
per GBPm per GBPm
share share
Ordinary shares
Interim
- 2012 paid 26 September 2012 42.2 815
- 2011 paid 28 September 2011 38.1 738
Final
- 2012 payable 8 May 2013 92.7 1,789
- 2011 paid 3 May 2012 88.4 1,723
134.9 2,604 126.5 2,461
Key Dates and South Africa Branch Register
In compliance with the requirements of the London Stock Exchange (LSE) and of Strate, the electronic
settlement and custody system used by the JSE Limited (JSE), the following salient dates for the payment
of the final dividend are applicable:
Event Date 2013
Last Day to Trade (LDT) cum dividend (JSE) Friday 8 March
Shares commence trading ex dividend (JSE) Monday 11 March
Shares commence trading ex dividend (LSE) Wednesday 13 March
Record date (JSE and LSE) Friday 15 March
Payment date Wednesday 8 May
No removal requests permitted between the UK main Thursday 28 February to Friday
register and the South Africa branch register 15 March (inclusive)
No transfers permitted between the UK main register and Monday 11 March to Friday 15 March
the South Africa branch register (inclusive)
No shares may be dematerialised or rematerialised Monday 11 March to Friday 15 March
(inclusive)
As the Group reports in sterling, dividends are declared and payable in sterling except for shareholders on
the branch register in South Africa whose dividends are payable in rand. A rate of exchange of GBP:R =
13.34290 as at 26 February 2013 (the closing rate on that date as quoted by Bloomberg), results in an
equivalent final dividend of 1236.88683 SA cents per ordinary share.
South Africa Branch Register: Dividend Tax Information
South Africa Dividend Tax will be withheld from the gross final dividend of 1236.88683 SA cents per
ordinary share paid to shareholders on the South African branch register at the rate of 15 per cent unless
a shareholder qualifies for an exemption. After Dividend Tax has been withheld, the net dividend will be
1051.35381 SA cents per ordinary share.
At the close of business on 26 February 2013 (the latest practicable date prior to the date of the
recommendation of the final dividend), British American Tobacco p.l.c. (the "Company") had a total of
2,026,389,292 ordinary shares in issue (excluding treasury shares). The Company held 95,892,487
ordinary shares in treasury giving a total issued share capital of 1,930,496,805 ordinary shares.
The Company, as a South Africa non-resident, was not subject to the secondary tax on companies (STC)
regime which used to operate before the introduction of Dividend Tax. No STC credits are available for
set-off against Dividend Tax liability on the final dividend which is regarded as a 'foreign dividend' for the
purposes of the South Africa Dividend Tax.
British American Tobacco p.l.c. is registered with the South African Revenue Service (SARS) with tax
reference number 9378193172.
For the avoidance of doubt, Dividend Tax and the information provided above is of only direct application
to shareholders on the South African branch register. Shareholders on the South African branch register
should direct any questions regarding the application of Dividend Tax to Computershare Investor Services
(Pty) Ltd, contact details for which are given in the 'Corporate Information' section below.
RETIREMENT BENEFIT SCHEMES
The Group's subsidiaries operate around 180 retirement benefit arrangements worldwide. The majority
of the scheme members belong to defined benefit schemes, most of which are funded externally and
many are closed to new entrants. The Group also operates a number of defined contribution schemes.
The present total value of funded scheme liabilities was GBP6,217 million (2011: GBP5,675 million), while
unfunded scheme liabilities amounted to GBP378 million (2011: GBP346 million). The scheme assets
increased from GBP5,200 million in 2011 to GBP5,563 million in 2012.
After excluding unrecognised scheme surpluses of GBP15 million (2011: GBP77 million), the overall net
liability for all pension schemes and healthcare schemes amounted to GBP1,047 million at the end of
2012, an increase from GBP898 million at the end of 2011.
Contributions to the defined benefit schemes are determined after consultation with the respective
trustees and actuaries of the individual externally funded schemes, taking into account the regulatory
environment.
With effect from 1 January 2013 the Group will adopt the revised accounting for employee benefits
(IAS 19). Had IAS 19 (Revised) been applied to the 2012 results, profit from operations would have been
GBP40 million lower at GBP5,372 million and profit for the year would have reduced by GBP47 million to
GBP4,075 million with a corresponding credit in other comprehensive income.
SHARE BUY-BACK PROGRAMME
In 2012, the Board approved the continuation of the on-market share buy-back programme with a value
of up to GBP1,250 million, excluding transaction costs. During the year ended 31 December 2012,
38.9 million shares were bought at a cost of GBP1,250 million, excluding transaction costs of GBP8 million.
For the year ended 31 December 2011, 28 million shares were bought at a cost of GBP750 million
excluding transaction costs of GBP5 million.
The Board has approved an on-market share buy-back programme for 2013 with a value of up to
GBP1,500 million, excluding costs.
CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS
The Group has contingent liabilities in respect of litigation, taxes and guarantees in various countries. The
Group is subject to contingencies pursuant to requirements that it complies with relevant laws,
regulations and standards. Failure to comply could result in restrictions in operations, damages, fines,
increased tax, increased cost of compliance, interest charges, reputational damage or other sanctions.
These matters are inherently difficult to quantify.
In cases where the Group has an obligation as a result of a past event existing at the balance sheet date, it
is probable that an outflow of economic resources will be required to settle the obligation and the
amount of the obligation can be reliably estimated, a provision will be recognised based on best estimates
and management judgment. There are, however, contingent liabilities in respect of litigation, taxes in
some countries and guarantees for which no provisions have been made.
Taxes
The Group has exposures in respect of the payment or recovery of a number of taxes. The Group is and
has been subject to a number of tax audits covering, amongst others, excise tax, value added taxes, sales
taxes, corporate taxes, withholding taxes and payroll taxes.
The estimated costs of known tax obligations have been provided in these accounts in accordance with
the Group's accounting policies. In some countries, tax law requires that full or part payment of disputed
tax assessments be made pending resolution of the dispute. To the extent that such payments exceed the
estimated obligation, they would not be recognised as an expense. In some cases disputes are proceeding
to litigation.
While the amounts that may be payable or receivable could be material to the results or cash flows of the
Group in the period in which they are recognised, the Board does not expect these amounts to have a
material effect on the Group's financial condition.
Product liability
Group companies, as well as other leading cigarette manufacturers, are defendants in a number of
product liability cases. In a number of these cases, the amounts of compensatory and punitive damages
sought are significant. At least in the aggregate and despite the quality of the defences available to the
Group, it is not impossible that the results of operations or cash flows of the Group in a particular period
could be materially affected by this.
While it is impossible to be certain of the outcome of any particular case or of the amount of any possible
adverse verdict, the Group believes that the defences of the Group's companies to all these various claims
are meritorious on both the law and the facts, and a vigorous defence is being made everywhere. If an
adverse judgment is entered against any of the Group's companies in any case, an appeal will be made.
Such appeals could require the appellants to post appeal bonds or substitute security in amounts which
could in some cases equal or exceed the amount of the judgment. In any event, with regard to US
litigation, the Group has the benefit of the indemnity from R.J. Reynolds Tobacco Company, a wholly-
owned subsidiary of Reynolds American Inc. At least in the aggregate, and despite the quality of defences
available to the Group, it is not impossible that the Group's results of operations or cash flows in a
particular period could be materially affected by this and by the final outcome of any particular litigation.
Having regard to all these matters, with the exception of the Fox River matter included in the adjusting
items section above (and further described in that section), the Group (i) does not consider it appropriate
to make any provision in respect of any pending litigation, save insofar as stated above and (ii) does not
believe that the ultimate outcome of this litigation will significantly impair the Group's financial condition.
Full details of the litigation will be included in the Annual Report for the year ended 31 December 2012.
There were no material developments during the year that would impact on the financial position of the
Group.
FRANKED INVESTMENT INCOME GROUP LITIGATION ORDER
British American Tobacco is the principal test claimant in an action in the United Kingdom against HM
Revenue and Customs in the Franked Investment Income Group Litigation Order (FII GLO). There are
25 corporate groups in the FII GLO. The case concerns the treatment for UK corporate tax purposes of
profits earned overseas and distributed to the UK. The claim was filed in 2003 and the case was heard in
the European Court of Justice (ECJ) in 2005 and a decision of the ECJ received in December 2006. In July
2008, the case reverted to a trial in the UK High Court for the UK Court to determine how the principles of
the ECJ decision should be applied in a UK context.
The High Court judgement in November 2008 concluded, amongst many other things, that dividends
received from EU subsidiaries should have been exempt from UK taxation. It also concluded that certain
dividends received before 5 April 1999 from the EU and, in some limited circumstances after 1993 from
outside the EU, should have been treated as franked investment income with the consequence that
advance corporation tax (ACT) need not have been paid. Claims for the repayment of UK tax incurred
where the dividends were from the EU were allowed back to 1973. The tentative conclusion reached by
the High Court would, if upheld, produce an estimated receivable of about GBP1.2 billion for British
American Tobacco.
The case was heard by the Court of Appeal in October 2009 and the judgment handed down on
23 February 2010. The Court of Appeal determined that various questions, including which companies in
the corporate tree can be included in a claim, should be referred back to the ECJ for further clarification.
In addition, the Court determined that the claim should be restricted to six years and not cover claims
dating back to 1973. The issue of time limits was heard by the Supreme Court in February 2012 and in
May 2012 the Supreme Court decided in British American Tobacco Group's favour, that claims submitted
before 8 September 2003 can go back to 1973. A hearing took place in February 2012 at the ECJ on the
questions referred from the Court of Appeal.
The ECJ judgement of 13 November 2012 confirms that the UK treatment of EU dividends was
discriminatory and produces the same outcome for third country dividends from 1994 in certain
circumstances. The judgement also confirms that the claim can cover dividends from all indirect as well as
direct EU subsidiaries and also ACT paid by a superior holding company.
The case will now revert to the UK High Court to apply the ECJ judgement and the date of the trial is
awaited.
No potential receipt has been recognised in the current year or the prior year, in the results of the Group,
due to the uncertainty of the amounts and eventual outcome.
RELATED PARTIES
The Group's related party transactions and relationships for 2011 were disclosed on page 176 of the
Annual Report for the year ended 31 December 2011. In the year to 31 December 2012, there were no
material changes in related parties or in related party transactions except for the increased level of shares
bought back by Reynolds American resulting in an amount of GBP262 million (2011: GBP71 million) being
received by the Group, as well as the extension of a manufacturing agreement between a Group
subsidiary and Reynolds American, which was due to expire on 31 December 2014.
FOREIGN CURRENCIES
The principal exchange rates used were as follows:
Average Closing
2012 2011 2012 2011
US dollar 1.586 1.604 1.626 1.554
Canadian dollar 1.584 1.586 1.619 1.583
Euro 1.234 1.153 1.233 1.197
South African rand 13.054 11.632 13.791 12.547
Brazilian real 3.109 2.683 3.328 2.899
Australian dollar 1.532 1.554 1.566 1.516
Russian rouble 49.277 47.116 49.656 49.922
Japanese yen 126.633 127.826 140.549 119.572
Indian rupee 84.838 74.802 89.061 82.531
ANNUAL REPORT
Statutory accounts
The financial information set out above does not constitute the Company's statutory accounts for the
years ended 31 December 2012 or 2011. Statutory accounts for 2011 have been delivered to the
Registrar of Companies and those for 2012 will be delivered following the Company's Annual General
Meeting. The auditors' reports on both the 2011 and 2012 accounts were unqualified, did not draw
attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of
Companies Act 2006 or equivalent preceding legislation.
Publication
The Annual Report will be published on bat.com on 25 March 2013. At that time, a printed copy will be
mailed to shareholders on the UK main register who have elected to receive it. Otherwise, such
shareholders will be notified that the Annual Report is available on the website and will, at the time of
that notification, receive a Performance Summary (which sets out an overview of the Group's
performance, headline facts and figures and key dates in the Company's financial calendar) together with
a Proxy Form and Notice of Annual General Meeting. Specific local mailing and/or notification
requirements will apply to shareholders on the South African branch register.
DISCLAIMERS
This announcement does not constitute an invitation to underwrite, subscribe for, orotherwise acquire or
dispose of any British American Tobacco p.l.c. shares or other securities.
This announcement contains certain forward looking statements which are subject to risk factors
associated with, among other things, the economic and business circumstances occurring from time to
time in the countries and markets in which the Group operates. It is believed that the expectations
reflected in this announcement are reasonable but they may be affected by a wide range of variables
which could cause actual results to differ materially from those currently anticipated.
Past performance is no guide to future performance and persons needing advice should consult an
independent financial adviser.
DISTRIBUTION OF PRELIMINARY STATEMENT
This announcement is released to the London Stock Exchange and the JSE Limited. It may be viewed and
downloaded from our website bat.com.
Copies of the announcement may also be obtained during normal business hours from: (1) the Company's
registered office; (2) the Company's representative office in South Africa; and (3) British American
Tobacco Publications, as above.
Nicola Snook
Secretary
27 February 2013
SHAREHOLDER INFORMATION
FINANCIAL CALENDAR 2013
25 April Interim Management Statement
25 April Annual General Meeting at 11.30am
The Banqueting House, Whitehall, London SW1A 2ER
31 July Half-Yearly Report
23 October Interim Management Statement
CALENDAR FOR THE FINAL DIVIDEND 2012
2013
Thursday 28 February Dividend announced: amount of dividend per share in both
sterling and rand; applicable exchange rate and conversion date
- Tuesday 26 February 2013; plus additional applicable
information as required in respect of South Africa Dividend Tax(1).
Thursday 28 February to From the commencement of trading on Thursday 28 February
Friday 15 March 2013 to Friday 15 March 2013, no removal requests in either
direction between the UK main register and the South Africa
branch register will be permitted.
Friday 8 March Last Day to Trade or LDT (JSE)
Monday 11 March to Friday 15 March No transfers between the UK main register and the South Africa
branch register will be permitted; no shares may be
dematerialised or rematerialised between these inclusive dates.
Monday 11 March Ex-dividend date (JSE)
Wednesday 13 March Ex-dividend date (LSE)
Friday 15 March Record date (LSE and JSE)
Wednesday 8 May Payment date (sterling and rand)
Note:
(1) Details of the applicable exchange rate and the South African Dividend Tax information can be
found under the heading 'Dividends' on page 30.
For holders of American Depositary Receipts (ADRs), the record date for ADRs is also Friday 15 March
2013 with an ADR payment date of Monday 13 May 2013.
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; +44 870 889 3159
Share dealing tel: 0870 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 (Pty) Ltd
PO Box 61051, Marshalltown 2107, South Africa
tel: 0861 100 925; +27 11 870 8222
email enquiries: web.queries@computershare.co.za
American Depositary Receipts (ADRs)
NYSE MKT Equities (Symbol: BTI; CUSIP Number: 110448107)
Sponsored ADR programme; each ADR represents two ordinary shares of British American
Tobacco p.l.c.
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; facsimile: +44 20 7540 4326
e-mail enquiries: bat@team365.co.uk or
Computershare Investor Services (Pty) Ltd in South Africa using the contact details shown above.
British American Tobacco p.l.c.
Registered office
Globe House
4 Temple Place
London
WC2R 2PG
tel: +44 20 7845 1000
British American Tobacco p.l.c. is a public limited company which is listed on the London 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
34 Alexander Street
Stellenbosch
7600
South Africa
(PO Box 631, Cape Town 8000, South Africa)
tel: +27 21 888 3722
28 February 2013
Sponsor: UBS South Africa (Pty) Ltd
Date: 28/02/2013 09:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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