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BRITISH AMERICAN TOBACCO PLC - Interim Management Statement for the three months ended 31 March 2015

Release Date: 29/04/2015 08:00
Code(s): BTI     PDF:  
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Interim Management Statement for the three months ended 31 March 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")


29 APRIL 2015
                                                           BRITISH AMERICAN TOBACCO p.l.c.

            INTERIM MANAGEMENT STATEMENT FOR THE THREE MONTHS ENDED 31 MARCH 2015

                           GOOD UNDERLYING PERFORMANCE CONTINUES

-        Revenue increased by 1.7% at constant rates of exchange
-        Revenue declined by 5.8% at current rates of exchange
-        Cigarette volume from subsidiaries decreased by 3.6% to 152 billion
-        Strong market share growth of 40 basis points (bps)
-        Global Drive Brands’ cigarette volume grew by 5.7%
-        The Group continues to make significant progress in next-generation products

Nicandro Durante, Chief Executive, commented: “The Group continued to perform well in the first three
months of the year despite the challenging trading environment. Our market share increased by 40 bps driven
by our Global Drive Brands which continue to deliver strong share and volume growth. Revenue increased at
constant rates of exchange, driven by pricing more than offsetting lower volume, while adverse exchange rate
movements led to a reduction in reported revenue. I remain confident that we will deliver another year of
good earnings growth at constant rates of exchange, with performance significantly skewed to the second half
of the year principally due to a strong first-half volume comparator and the timing of price increases.”

SUMMARY OF PERFORMANCE
Trading environment
The trading environment remains challenging due to continued pressure on consumers' disposable income
worldwide and the impact of adverse exchange rates at a transactional level.

Trading update
Cigarette volume from subsidiaries was 3.6% lower at 152 billion due to industry volume decline (in particular
in Brazil, Russia and Vietnam), inventory movements and a strong volume comparator in the same period last
year, the impact of which is expected to moderate during the year. This offset a good volume performance in a
number of markets, including in South/Central Asia and Mexico, with the Group’s market share higher by 40
bps driven by South Korea (which will partially unwind), Mexico, Bangladesh, Japan, France and Poland.
Revenue at constant rates of exchange grew by 1.7% driven by strong pricing, in part due to price increases in
high inflation markets. At current rates of exchange revenue declined by 5.8%, as movements in the majority
of the Group’s key trading currencies continued to adversely impact reported revenue.
The five Global Drive Brands’ cigarette volume was up by 5.7%, with their combined market share in the
Group’s key markets continuing to grow strongly.
Dunhill volume increased by 1.2%, as good growth in Indonesia and Brazil outweighed lower volume in South
Korea and the GCC. Kent volume was 1.6% lower, as higher volume in Iran and Turkey was more than offset by
1
    T40 Offtake share, as independently measured by AC Nielsen

lower volume in Russia, Japan and Romania. Lucky Strike was 5.0% higher with increases in Mexico, France and
Belgium more than compensating for lower volume in Japan and Italy. Pall Mall volume was up 2.4% as growth
in Pakistan, Poland and Mexico more than offset reductions in Italy and Russia. Rothmans volume increased by
36.9%, driven by a strong performance in a number of markets, including Russia, Australia, Kazakhstan, Turkey
and Italy.

Vype continued to deliver excellent organic growth in the UK e-cigarette market, providing a strong platform
for planned launches in other countries in 2015. We remain on track to launch Voke, a nicotine inhalation
product licensed as a medicine, in the UK later this year, and we continue to make good progress in tobacco
heating products, with plans to test market a product in 2015.
The Group is performing well and we are on track for another good year of earnings growth at constant rates
of exchange. We continue to expect profit growth to be significantly weighted to the second-half of the year
principally due to a strong first-half volume comparator and the timing of price increases.


Cigarette volumes
The segmental analysis of the volumes of subsidiaries was as follows:

                                                     3 months to        3 months to               Year to
                                                        31.03.15           31.03.14              31.12.14
                                                              bns              bns                    bns
Asia-Pacific                                                   49               50                    197
Americas                                                       29               31                    131
Western Europe                                                 23               24                    112
EEMEA                                                          51               53                    227
                                                             152               158                    667

Total tobacco volume                                         158               164                    694


POTENTIAL TENDER OFFER FOR SOUZA CRUZ
On 3 March the Group announced a public tender offer to acquire up to all of the 24.7% of Souza Cruz shares
not currently owned by the Group and to delist the company. The offer price of R$26.75 per share to be paid
in cash represented a premium of 30.0% to Souza Cruz’s volume weighted average closing price per share in
the three months prior to 20 February 2015 and would be reduced by any dividend paid by Souza Cruz after 3
March 2015. The current offer price is R$26.13 per share.
In accordance with Brazilian regulatory procedures, on 9 April 2015 a special free float Souza Cruz
shareholders meeting approved the appointment of Credit Suisse (Brasil) S.A. to undertake a new valuation of
Souza Cruz shares within 30 days of this date. Any actual offer which may be made by the Group for the Souza
Cruz shares which it does not own must be at a price which is within or above such valuation. If an offer is
made, we expect that the financial settlement relating to such offer would occur in Q3 2015.


INVESTMENT IN REYNOLDS AMERICAN, INC.
On 15 July 2014, the Group announced that it had agreed to invest US$4.7 billion as part of Reynolds American
Inc.’s proposed acquisition of Lorillard, enabling the Group to maintain its 42% equity position in the enlarged
business. The transaction has been approved by both Reynolds American Inc. and Lorillard shareholders. The
acquisition is subject to approval from the US anti-trust authority, the Federal Trade Commission, with a
decision expected shortly.


AUDIT TENDER
The Group appointed KPMG LLP as external auditors on 23 March 2015 following a competitive tender
process.
Shareholder approval to confirm the appointment of KPMG LLP will be sought at the AGM on 29 April 2015.
PricewaterhouseCoopers LLP, who had been the Company’s auditors since it listed on the London Stock
Exchange in September 1998, resigned with effect from 23 March 2015.


FINANCIAL POSITION
The Group has sufficient financing and facilities available for the foreseeable future.
The changes in the financing arrangements of the Group since the beginning of the financial year included the
issue in March of four bonds in the Euro market for a total of €3 billion. They comprised an €800 million bond
with a maturity of 2019, an €800 million bond with a maturity of 2023, an €800 million bond with a maturity of
2027 and a €600 million bond with a maturity of 2045. These issues were for general corporate purposes,
including financing of working capital, refinancing of bonds and commercial paper.
There have been no material events, transactions or changes in the financial position of the Group since the
year end, other than as outlined in this statement. Further, the Board is not aware of any material events,
transactions or changes in the financial position of the Group which have occurred up to and including 28 April
2015, being the latest practicable date before the date of the publication of this Interim Management
Statement.

On behalf of the Board
Nicola Snook
Secretary
28 April 2015

NOTES AND ADDITIONAL INFORMATION
British American Tobacco is the world's second largest quoted tobacco group by global market share, with
brands sold in more than 200 markets. We have five Global Drive Brands – Dunhill, Kent, Lucky Strike, Pall Mall
and Rothmans – and over 200 brands in our portfolio. We hold robust market positions in each of our regions
and have leadership positions in more than 60 markets.

Disclaimers
This Interim Management Statement (IMS) relates to the three months ended 31 March 2015 and contains
information that covers the three months and the period since the first quarter end to 28 April 2015, being the
latest practicable date before the date of the publication of this IMS.
This announcement does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or
dispose of any British American Tobacco p.l.c. shares or other securities.
This IMS 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 this Interim Management Statement (IMS)
The IMS is released to the London Stock Exchange and the JSE Limited. It may be viewed and downloaded from
our website, www.bat.com
Copies of the IMS 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,
details of which are given below.


FINANCIAL CALENDAR 2015
7 May             Payment date of 2014 final dividend
29 July           Half-Yearly Report
28 October        Interim Management Statement

HALF-YEARLY REPORT AND INTERIM DIVIDEND
With particular reference to the Company’s obligations in respect of the secondary listing of its ordinary shares
on the JSE, the proposed dates in respect of the Half-Yearly Report and the interim dividend for the year
ending 31 December 2015 are currently scheduled as follows:
2015

Wednesday 29 July                     Half-Yearly Report (to include announcement of declaration of interim dividend:
                                      amount of dividend per share in both sterling and rand; applicable exchange rate
                                      and conversion date – 27 July 2015; plus additional applicable information as
                                      required in respect of South African dividend tax).

Wednesday 29 July to                  From the commencement of trading on Wednesday 29 July 2015 to Friday 21
Friday 21 August                      August 2015 (inclusive), no removal requests in either direction between the UK
                                      main register and the South Africa branch register will be permitted.

Friday 14 August                      Last Day to Trade or LDT (JSE)

Monday 17 August to                   From the commencement of trading on Monday 17 August 2015 to Friday 21
Friday 21 August                      August 2015 (inclusive), no transfers between the UK main register and the
                                      South Africa branch register will be permitted; no shares may be dematerialised
                                      or rematerialised.

Monday 17 August                      Ex-dividend date (JSE)

Thursday 20 August                    Ex-dividend date (LSE)

Friday 21 August                      Record date (LSE and JSE)

Wednesday 9 September                 Last date for receipt of Dividend Reinvestment Plan (DRIP) elections (UK main
                                      register only).

Wednesday 30 September                Payment date (sterling and rand)

Note: Any changes to the dates set out above will be announced. This timetable will be included in the Half-
Yearly Report scheduled for release on Wednesday 29 July 2015.


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 Proprietary Limited
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 (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
The Company’s Representative office in South Africa using the contact details shown below.

British American Tobacco p.l.c.
Registered office
Globe House
4 Temple Place
London
WC2R 2PG
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 3194

ENQUIRIES:

INVESTOR RELATIONS:                               PRESS OFFICE:
Mike Nightingale           020 7845 1180          Will Hill                          020 7845 1222
Rachael Brierley           020 7845 1519          Anna Vickerstaff                   020 7845 2469




Sponsor: UBS South Africa (Pty) Ltd

Date: 29/04/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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