Wrap Text
Annual Report for the Year Ended 31 December 2014 and Annual General Meeting 2015
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.
Annual Report for the Year Ended 31 December 2014 and Annual General Meeting 2015
British American Tobacco p.l.c. (the “Company”) reports that the following documents are
being mailed to its shareholders (as applicable) today, Friday 27 March 2015. Those
documents with a web-link shown will also available to be viewed or downloaded on the
British American Tobacco website as indicated:
(1) Annual Report 2014 (including the Strategic Report 2014) www.bat.com/annualreport
(2) Performance Summary 2014 www.bat.com/annualreport
(3) Notice of Annual General Meeting 2015 www.bat.com/AGM
(4) Proxy Form
(5) Proxy Form - South Africa
(6) Voting Instruction Form - South Africa
In compliance with Listing Rule 9.6.1, copies of each of the above documents will be
submitted to the National Storage Mechanism as soon as practicable and will be available
for inspection via the following link: www.morningstar.co.uk/uk/nsm.
The Company made its Preliminary Announcement of its audited results (which included a
Directors’ responsibility statement) in respect of the year ended 31 December 2014 (the
“Preliminary Announcement”) on 26 February 2015. Further to the Preliminary
Announcement and with reference to the requirements of Rules 4.1 and 6.3.5 of the
Disclosure Rules and Transparency Rules (“DTR”), the following disclosures are made in the
Appendices below.
Appendix A to this announcement contains a description of the Key Group risk factors (page
30 of the Annual Report 2014) and Appendix B is a statement of related party disclosures
(page 189 Annual Report 2014). Together these constitute the material required by DTR
6.3.5 to be communicated to the media in unedited full text through a Regulatory
Information Service. This material is not a substitute for reading the full Annual Report 2014.
Any page numbers and cross-references in the extracted information below refer to page
numbers in the Annual Report 2014.
The Annual General Meeting of the Company is scheduled to be held at Milton Court
Concert Hall, Silk Street, London EC2Y 9BH on Wednesday 29 April 2015 at 11.30am.
G C W Cunnington
Deputy Secretary
27 March 2015
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Press Office:
Will Hill/Anne Vickerstaff 020 7845 2888
Investor Relations:
Mike Nightingale 020 7845 1180
Rachael Brierley 020 7845 1519
Sponsor: UBS South Africa (Pty) Ltd
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APPENDIX A
KEY GROUP RISK FACTORS
Overview
The key risk factors that may affect the Group are set out below.
Each risk is considered in the context of the Group’s strategy, as set out in the Strategic Report.
Following a description of each risk, its causes and potential impact on the Group are
summarised. We also explain the activities we are undertaking to mitigate each risk.
The Group has identified, actively monitors and is taking action to mitigate many different risks.
This section does not include them all, but focuses on those risks that the Directors believe to
be the most important ones that are currently faced by the business. Not all of these risks are
within the control of the Group and other factors besides those listed may affect the Group’s
performance. Some risks may be unknown at present. Others, currently regarded as
immaterial, could become material risks in the future.
The risk factors listed in this section and the activities being undertaken to mitigate them should
be considered in the context of the Group’s internal control framework. This is described in the
section on risk management and internal control in the corporate governance statement. This
section should also be read in the context of the cautionary statement below regarding
forward-looking statements.
Assessment of Group risk
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, tax and
financial risk and regulation.
The Board has, however, increased its focus on the risks associated with the development of
the Group’s revised operating model and single IT operating system. The challenges to deliver
the Group’s pricing strategy in an increasingly aggressive competitor environment, the
increased impact of market contraction, consumer down-trading and the risks of strategic
litigation, were also considered by the Board. These are now listed as principal risks facing the
business.
The risk that the Group is unable to access cash resources in a number of markets is no longer
considered a principal risk for the purpose of this year’s report.
The Board also revised its view of the primary causes of the risk of failure to lead developing
next-generation products (referred to as the non-tobacco nicotine market in previous reports).
Details of each of these risks are set out in the following tables.
Cautionary statement
The Strategic Report and certain other sections of the Annual Report contain forward-looking statements
that 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 these statements 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.
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A. Marketplace Risk Factors
Competition from illicit tobacco trade
Illicit trade – in the form of counterfeit products, smuggled genuine products and locally
manufactured products on which applicable taxes are evaded – represents a significant and
growing threat to the legitimate tobacco industry. Most illicit products are sold at the bottom
end of the market and in contravention of applicable regulatory requirements.
Excise increases can encourage more consumers to switch to cheaper illegal tobacco products,
providing greater rewards for smugglers. The risk is exacerbated where current economic
conditions have resulted in high unemployment and/or reduced disposable incomes.
Global volume of illicit trade is estimated to be up to 12% of consumption. In the next decade,
we believe that the problem is likely to increase, driven by the increased regulatory and
compliance burden for legitimate manufacturers and further significant excise increases.
Time frame: Long term
Principal causes
• Unexpected and significant excise increases and widening excise differentials between
markets.
• Unintended consequences of regulation, e.g. plain packaging, graphic warnings, display bans
and ingredients restrictions.
• Extra compliance costs imposed on the legitimate industry giving a competitive advantage to
illicit manufacturers.
• Economic downturn.
• Lack of law enforcement and weak border controls.
Potential impact
• Erosion of brand value, with lower volumes and reduced profits.
• Reduced ability to take price increases.
• Investment in trade marketing and distribution is undermined.
Strategic impact: Growth (organic revenue growth)
Mitigation activities
• Dedicated Anti-Illicit Trade (AIT) teams operating at global and country levels and
internal cross-functional coordination.
• Active engagement with key external stakeholders.
• Cross-industry and multi-sector cooperation on a range of AIT issues.
• Global AIT strategy supported by a research programme to further the
understanding of the size and scope of the problem.
• AIT Intelligence Unit (including a dedicated analytical laboratory) works with
enforcement agencies in pursuit of priority targets.
• Strong internal business conduct and customer approval policies.
Risk owner: Group Corporate and Regulatory Affairs Director
Failure to lead developing next-generation products
The Group recognises the risk of not capitalising on the opportunities in developing and
successfully commercialising consumer-appealing next-generation products, including those
believed by scientific and regulatory authorities as posing substantially reduced risks to
health.
Time frame: Long term
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Principal causes
• Regulations that stifle the category, including those pertaining to marketing
freedom, product innovation, retail availability and excise.
• Failure to develop successful, consumer-appealing products and roll them out
faster than competitors.
Potential impact
• Consumer base, market share, profitability and achievement of growth targets
will be undermined if competitors are more successful in establishing new
categories or if regulation impedes the growth of the category.
• While considered unlikely, equalisation of the regulatory framework for next-
generation products with traditional cigarettes would tend to eliminate all
business opportunities for the new category. Furthermore, equalising e-
cigarettes to medicines would increase complexity, increase research and
development (R&D) costs, reduce the size of the opportunity and hinder the
ability to introduce innovations quickly.
Strategic impact: Growth (revenue growth) and Sustainability (reduced-risk products)
Mitigation activities
• Exclusive focus by a wholly-owned Group subsidiary, Nicovations Limited, on the
development and commercialisation of innovative regulatory approved nicotine
products to enable the Group to offer a consumer-acceptable alternative to
cigarettes with lower health risks.
• Establishment of a next-generation products group with the appointment of its
own leadership team.
• Appointment of senior R&D and product development executives and the
adoption of a portfolio approach to new technologies.
• Improved Vype product portfolio launched in the UK, with further market
launches planned.
• Regulatory plans in place for key markets.
• Ongoing mergers and acquisitions dialogue on potential next-generation
products opportunities.
Risk owner: Managing Director, Next-Generation Products
Market size reduction and consumer down-trading
As a consequence of steep excise-led price increases and the continuing difficult economic
and regulatory environment in many countries, market contraction and consumer down-
trading are expected to remain principal risks facing the Group. A number of instances of
market contraction have arisen, particularly in Europe, Australia, Brazil and Russia.
Time frame: Short term
Principal causes
• Downturn in the economic climate impacting consumers’ disposable incomes.
• Changes in the regulatory environment.
• Continued above-inflation price rises.
• Targeted growth of low-priced brands through aggressive pricing.
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Potential impact
• Volume decline and portfolio mix erosion.
• Funds to invest in growth opportunities are reduced.
Strategic impact: Growth (organic revenue growth)
Mitigation activities
• Geographic spread mitigates impact at Group level.
• Quarterly brand reviews are presented to the Global Marketing Leadership Team
as well as to the Management Board.
• Economic outlook embedded into quarterly performance reviews in markets.
• Key market reviews at Management Board meetings.
• Close monitoring of sales volume by segment to detect changes in consumer
purchasing patterns in markets.
• Clear portfolio and pricing strategies, ensuring balanced portfolio of strong
brands across key segments.
• Increased focus behind product quality and innovation across all segments to
provide tangible differentiation and improve the price-value ratio.
• Overlap with many mitigation activities undertaken for other principal risks
facing the Group, such as competition from illicit tobacco trade, significant excise
increases or structure changes and inability to obtain price increases.
Risk owner: Regional Directors
Inability to obtain price increases and impact of increases on consumer affordability
Annual manufacturers’ price increases are among the key drivers in increasing market
profitability. The Group faces a risk that such price increases will not materialise.
Time frame: Short term
Principal causes
• Increased regulation reduces the ability to build brand equity and enhance the
value proposition to the consumer.
• Stretched consumer affordability arising from deteriorating economic conditions
and rising prices.
• Sharp increase or change in excise structure reduces opportunities for
manufacturer-led pricing.
• Competitor pricing activities.
Potential impact
• Not achieving strategic growth metrics.
• Funds to invest in growth opportunities are reduced.
• Volumes may reduce faster than anticipated due to accelerated market decline.
• Down-trading and growth of illicit trade.
Strategic impact: Growth (organic revenue growth)
Mitigation activities
• Key market and pricing reviews at Management Board meetings.
• Pricing, excise and trade margin committees exist in all markets with regional
and global support.
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• Robust business cases underpinning key innovative launches.
• Clear portfolio and pricing strategies, ensuring a balanced portfolio of strong
brands across key segments.
Risk owner: Regional Director
B. Excise and Tax Risk factors
Significant excise increases or structure changes
Tobacco products are subject to substantial excise and sales taxes in most countries in which
the Group operates. In many of these countries, taxes are generally increasing, but the rate of
increase varies country by country and between different types of tobacco products.
A number of significant excise increases have taken place over the past three years, for example
in Australia, Russia, Brazil, South Korea, Indonesia, Turkey, the Philippines and New Zealand. To
date, the Group has been able to balance these increases with its geographic spread, and
continues to develop effective measures to address the risk.
Time frame: Short term and long term
Principal causes
• Fiscal pressures for higher government revenues.
• Increases advocated within context of national health policies.
• Insufficient opportunity to engage with stakeholders in meaningful dialogue.
Potential impact
• Consumers reject the Group’s legitimate tax-paid products for products from
illicit sources.
• Reduced legal industry volumes.
• Reduced sales volume and/or portfolio erosion.
• Some absorption of excise increases.
Strategic impact: Growth (organic revenue growth)
Mitigation activities
• Requirement for Group companies to have in place formal pricing and excise
strategies including contingency plans, with annual risk assessments.
• Pricing, excise and trade margin committees in markets, with regional and global
support.
• Engagement with local tax and customs authorities, where appropriate, in
particular in relation to the increased risk to excise revenues from higher illicit
trade.
• Portfolio reviews to ensure appropriate balance and coverage across price
segments.
• Monitoring of economic indicators, government revenues and the political
situation.
• Central team in place to define the excise management framework, develop
training materials, monitor and engage with international financial institutions
on excise and anti-illicit trade matters.
Risk owner: Regional Directors
Disputed taxes, interest and penalties
The Group may face significant financial penalties, including the payment of interest, in the
event of an unfavourable ruling by a tax authority in a disputed area.
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Time frame: Short term
Principal causes
• Unfavourable ruling by tax authorities in disputed areas and aggressive auditing
and/or pursuit of tax claims.
Potential impact
• Significant fines and potential legal penalties.
• Disruption and loss of focus on the business due to diversion of management
time.
• Impact on profit and dividend.
Strategic impact: Productivity (capital effectiveness)
Mitigation activities
• End market tax committees.
• Internal tax function provides dedicated advice and guidance, and external
advice sought where needed.
• Engagement with tax authorities at Group, regional and individual market level.
Risk owner: Finance Director
C. Finance Risk Factors
Foreign exchange rate exposures
The Group faces transactional and translational foreign exchange (FX) rate exposures for
earnings/cash flows from its global business. During periods of sterling strength and FX rate
volatility, as seen in 2014, the Group’s results can be impacted negatively.
Time frame: Short term
Principal causes
• FX rate exposures arise from exchange rate movement against the functional
currency and against sterling, the Group’s reporting currency.
Potential impact
• Fluctuations in FX rates of key currencies against sterling introduce volatility in
reported EPS, cash flow and the balance sheet driven by translation into sterling
of our financial results.
• The dividend may be impacted if the payout ratio is not adjusted.
• Differences in translation between earnings and net debt may affect key ratios
used by credit rating agencies.
• Volatility and/or increased costs in our business, due to transactional FX, may
adversely impact financial performance.
Strategic impact: Productivity (capital effectiveness)
Mitigation activities
• While translational FX exposure is not hedged, its impact is identified in results
presentations and financial disclosures; earnings are re-stated at constant rates
for comparability.
• Debt and interest are matched to assets and cash flows to mitigate volatility
where possible and economic to do so.
• Hedging strategy for transactional FX and framework is defined in the treasury
policy and signed off by the Board.
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• Illiquid currencies of many markets where hedging is either not possible or
uneconomic are reviewed on a regular basis.
• The treasury system provides visibility of FX exposures and the hedge portfolio.
Risk owner: Finance Director
D. Operations Risk Factors
Geopolitical tensions
Geopolitical tensions, social unrest, terrorism and organised crime have the potential to disrupt
the Group’s business in multiple markets.
Time frame: Long term
Principal causes
• Regional and/or global conflicts.
• Terrorism and political violence.
• Criminal activity leading to attacks on our people, supply chain or other assets.
• Economic policy changes, including nationalisation of assets and withdrawal
from international trade agreements.
Potential impact
• Potential loss of life, loss of assets and disruption to normal business processes.
• Increased costs due to more complex supply chain arrangements and/or the cost
of building new facilities or maintaining inefficient facilities.
• Reputational impact of inability to protect staff and assets from serious harm.
Strategic impact: Growth (organic revenue growth)
Mitigation activities
• Globally integrated sourcing strategy and contingency sourcing arrangements.
• Security risk modelling, including external risk assessments and the monitoring of
geopolitical and economic policy developments worldwide.
• Insurance cover and business continuity planning, including scenario planning
and testing and risk awareness training.
• Security controls for field force, direct store sales, supply chain, with an emphasis
on the protection of Group employees.
Risk owner: Director, Legal
Injury, illness or death in the workplace
The Group is committed to operating responsibly by maintaining the necessary controls that
safeguard the health, safety and welfare of the people who work for the Group and alongside it,
as well as minimising the impact on the natural environment and the local communities in
which the Group conducts business activities. The risk of injury, death or ill-health to employees
and those who work with the business is a fundamental concern of the Group, and can have a
significant effect on its operations.
Time frame: Short term
Principal causes
• Failure to assess risk and implement appropriate control measures.
• Failure to monitor, assess and implement the requirements of regulations that apply
to Group sites and operations resulting in non-compliance with environment, health
and safety (EHS) standards.
• Insufficient information, instruction and training on health and safety at work.
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Potential impact
• Serious injuries, ill-health, disability or loss of life suffered by employees and the
people who work with the Group.
• Exposure to civil and criminal liability and the risk of prosecution from
enforcement bodies and the cost of associated fines and/or penalties.
• Interruption of Group operations if issues are not addressed quickly.
• High staff turnover or difficulty recruiting employees if perceived to have a poor
EHS record.
Strategic impact: Sustainability
Mitigation activities
• Risk control systems in place to ensure equipment and infrastructure are
provided and maintained.
• An EHS strategy ensures that employees at all levels receive appropriate EHS
training and information.
• Behavioural-based safety programme to drive Operations safety performance
and culture closer to zero accidents.
• Analysis of incidents undertaken regionally and globally to identify increasing
incident trends or high potential risks that require coordinated action to address.
• Focused programmes within Marketing to address specific risks associated with
sales and distribution activities.
• Dedicated global team to support management of EHS risks.
• Key issues and incidents monitored regionally and reported globally to oversee
compliance.
Risk owner: Director, Operations
E. Regulation Risk Factors
Tobacco regulation inhibits growth strategy
The enactment of unreasonable regulation that prohibits the Group’s ability to communicate
with consumers, differentiate our products and launch future products. This increases business
costs and complexity.
Time frame: Long term
Principal causes
• Pressure from some international health organisations, governments and the
tobacco control community to pursue regulation and policy that: is not evidence-
based; is designed to eradicate tobacco and nicotine use; excludes the industry
from the manufacture and sale of next-generation products or regulates them in
a way that fails to incentivise their commercialisation; and fails to deliver
legitimate public health objectives.
Potential impact
• Erosion of brand value through commoditisation, the inability to launch
innovations, differentiate products, maintain or build brand equity and leverage
price.
• Adverse impact on ability to compete within the legitimate tobacco industry, and
also with increased illicit trade.
• Reduced consumer acceptability of new product specifications, leading to
consumers seeking alternatives in illicit trade.
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• Shocks to share price on enactment of unduly onerous and restrictive regulation.
• Reduced ability to compete in future product categories and make new market
entries.
• Construction of the retail universe and limitations on product visibility.
• Increased scope and severity of compliance regimes in new regulation leading to
higher costs, greater complexity, and potential reputational damage or fines for
inadvertent breach.
Strategic impact: Growth (organic revenue growth) and Sustainability (balanced regulation)
Mitigation activities
• Engagement and litigation strategy coordinated and aligned across the Group to
drive a balanced global policy framework for tobacco control.
• Prioritisation of key current and emerging regulatory issues.
• Stakeholder mapping and prioritisation, developing robust compelling advocacy
materials (with supporting evidence and data), and regulatory engagement
programmes.
• Regulatory risk assessment of marketing plans to ensure decisions are informed
by an understanding of the potential regulatory environments.
• Advocating the application of our integrated regulatory proposals to
governments and public health practitioners based on the harm reduction
principles.
• Development of an integrated regulatory strategy that spans conventional
combustibles and includes next-generation products.
Risk owner: Group Corporate and Regulatory Affairs Director; Director, Operations; and
Director, Marketing
F. Programmes and Projects Risk Factors
Deployment of the Group’s revised operating model and single IT operating system
Risks of delays to the on-time, in-full delivery of the Group’s revised operating model and
single IT operating system (‘TaO’), due to the complexity involved in the deployment. This may
result in increased costs and/or delaying the realisation of both qualitative and quantitative
benefits.
Time frame: Short term
Principal causes
• The scale of change required is large as the scope is more than SAP
implementation and includes deploying the Group’s revised Target Operating
Model.
• Resource constraints within the programme and regions.
• Assumptions are not fully correct or the ways identified for achieving
streamlined and uniform deployment are not sufficient.
• Planned infrastructure architecture and/or SAP application may not meet the
performance needs of high-order-volume markets.
• Markets that have implemented TaO affected by system downtime due to
potential lack of network resilience.
Potential impact
• Implementation of new ways of working may not be fully embedded until well
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after implementation – delaying the delivery of the benefits.
• Resource not being available for TaO or business as usual adversely impacting
TaO benefits and/or business results.
• Deployment is delayed with a corresponding impact on TaO programme costs
and benefits realisation.
• Benefits may not be realised due to failure to sustain the change post-TaO.
• Potential business disruption in the regions for a longer period of time, impacting
operations and ability to deliver other programmes and activities.
• Poor response times in high volume markets could mean that batch transaction
processes do not complete on time. This may impact key business processes,
including sales.
• System downtime could render markets that have implemented TaO unable to
manufacture, move or sell.
Strategic impact: Productivity (globally integrated enterprise)
Mitigation activities
• Importance of TaO understood and supported by senior management.
• On-going stakeholder engagement and knowledge transfer at Regional senior
management level.
• Regular monitoring of the integrated plan and key dependencies.
• Major risks and issues actively managed by TaO Leadership Team or within the
relevant management layer as appropriate.
Risk owner: Director, Business Development
G. Litigation Risk Factors
Litigation
Product liability, regulatory or other significant cases may be lost or compromised resulting in
a material loss or other consequence. Legal costs may increase significantly.
Time frame: Long term
Principal causes
• Case lost by either a non-Group or Group company may set a precedent for the
filing of future claims against the Group.
• Cases are brought on the basis of the reversal of the burden of proof which
places the Group, as a defendant, at a disadvantage e.g. Health Care
Recoupment cases.
• Aggressive court time line or approach that undermines defence preparation.
Potential impact
• Damages and fines, negative impact on reputation, disruption and loss of focus
on the business.
• Consolidated results of operations, cash flows and financial position could be
materially affected, in a particular fiscal quarter or fiscal year, by an unfavourable
outcome or settlement of certain pending or future litigation.
Strategic impact: Growth (revenue impact)
Mitigation activities
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• Consistent litigation strategy across the Group.
• Expertise and legal talent maintained both within the Group and with our
external partners.
• Closer integration in Group litigation strategy and cost controls pursued.
Risk owner: Director, Legal
APPENDIX B
RELATED PARTY DISCLOSURES
The Group has a number of transactions and relationships with related parties, as defined in IAS
24 Related Party Disclosures, all of which are undertaken in the normal course of business.
Transactions with CTBAT International Limited are not included in these disclosures as it is a joint
operation.
Transactions and balances with associates relate mainly to the sale and purchase of cigarettes
and tobacco leaf. Amounts receivable from associates in respect of dividends included in the
table below were £96 million (2013: £86 million). The Group’s share of dividends from
associates, included in other net income in the table below, was £518 million (2013: £512
million).
2014 2013
£m £m
Transactions
-revenue 38 54
-purchases (279) (345)
-other net income 512 501
Amounts receivable at 31 December 98 96
Amounts payable at 31 December (25) (33)
On 17 December 2012, a wholly-owned subsidiary of the Group, BATUS Japan Inc. (BATUSJ),
entered into an Amendment and Extension Agreement (referred to as the Amendment) with a
wholly-owned subsidiary of Reynolds American Inc (RAI), R.J. Reynolds Tobacco Company
(referred to as RJRTC). The Amendment modifies the American blend Cigarette Manufacturing
Agreement (referred to as the 2010 Agreement), effective as of 1 January 2010.
Prior to the Amendment, the term of the 2010 Agreement was scheduled to expire on 31
December 2014, subject to early termination and extension provisions. Pursuant to the
Amendment, the Manufacturing Agreement will remain in effect beyond 31 December 2014,
provided that either RJRTC or BATUSJ may terminate the Manufacturing Agreement by
furnishing three years’ notice to the other party, with any such notice to be given no earlier than
1 January 2016.
During the year, the Group received proceeds of £94 million (2013: £189 million) in respect of its
participation in the share buy-back programme conducted by RAI. This programme ceased in the
second quarter of 2014.
On 15 July 2014, the Group announced that it has agreed to invest US$4.7 billion as part of RAI’s
proposed acquisition of Lorillard enabling the Group to maintain its 42% equity position in the
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enlarged business. The investment is contingent upon the completion of RAI’s acquisition of
Lorillard, which has been approved by the shareholders of RAI and Lorillard, and the proposed
acquisition, while subject to a number of regulatory approvals in the US, is anticipated to be
completed in the first half of 2015.
In addition, the Group and RAI have agreed in principle to collaborate on next-generation
products and negotiations are ongoing.
During 2014, the Group acquired a further 1% interest in BAT Chile Operaciones, S.A. at a cost of
£3 million. This increased the Group’s shareholding to 99%. This transaction is shown as a £3
million reduction to reserves attributable to the owners of the parent in note 20 to the Financial
Statements.
On 15 December 2014, the Group acquired a further 1% interest in BAT Central America S.A. at a
cost of £1 million. This increased the Group’s shareholding to 79%. This transaction is shown as a
£1 million reduction to reserves attributable to the owners of the parent in note 20 to the
Financial Statements.
Contributions to the British American Tobacco UK Pension Fund are secured by a charge over the
Group’s Head Office (Globe House) up to a maximum of £150 million.
The key management personnel of British American Tobacco consist of the members of the
Board of Directors of British American Tobacco p.l.c. and the members of the Management
Board. No such person had any material interest during the year in a contract of significance
(other than a service contract) with the Company or any subsidiary company. The term key
management personnel in this context includes the respective members of their households.
2014 2013
£m £m
The total compensation for key management personnel, including Directors,
was:
-salaries and other short-term employee benefits 20 20
-post-employment benefits 3 3
-share-based payments 13 11
36 34
There were no other long-term benefits applicable in respect of key personnel other than those
disclosed in the Remuneration Report in the Annual Report.
Sponsor: UBS South Africa (Pty) Ltd
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