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Reclassification of half-year 2017 results for IFRS 15
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")
2 May 2018
BRITISH AMERICAN TOBACCO p.l.c. (the “Company”)
RECLASSIFICATION OF HALF-YEAR 2017 RESULTS FOR IFRS 15, NEW REGIONAL STRUCTURE, NEW
PERFORMANCE MEASURE and INCLUSIVE OF ACQUISITIONS
British American Tobacco is today reissuing the Group’s results for the six-month period ended 30
June 2017, the sole purpose of which is to provide a consistent basis for the organic performance
measurements of the Group for the six months ending 30 June 2018, including a representative
comparator base inclusive of the 2017 acquisitions. These are provided prior to the announcement
of the Group’s half-year report for the period ending 30 June 2018 (due to be released on 26 July
2018).
The reclassification is to reflect the accounting treatment of IFRS 15 “Revenue from Contracts with
customers” as if that accounting standard had been effective during the comparator period, to
reflect the implementation of the previously announced regional structure, which was effective from
1 January 2018 and to include the results of 2017 acquisitions, including Reynolds American Inc.
(RAI), acquired in July 2017, for the full period.
While these reclassifications affect the presentation of regional results, they do not affect the
Group's reported income statement, balance sheet, or cash flow, other than as relating to IFRS 15.
The Group is also providing the performance in the six-months to June 2017 for the Group’s
announced new performance measure “Revenue from Strategic Portfolio”.
A similar disclosure regarding the Group’s full year 2017 results, restated on the same basis, has
previously been provided within the preliminary announcement for the year ended 31 December
2017, issued on 22 February 2018.
REVENUE, PROFIT FROM OPERATIONS and DILUTED EARNINGS PER SHARE
RESTATED for Regional structure, IFRS 15 and inclusive of the acquisitions in 2017 - to
provide 2018 comparator base for the Group Key Performance Indicators (“KPIs”) only
Period ended 30 June 2017
IFRS Non-GAAP (Adjusted)
As reclassified Restated Post
for regional incl Adjust for 6-
structure in IFRS 15 IFRS15 IFRS 15 month acq
2017 impact IFRS 15 Adjusted impact adjusted uplift Repres adj1
£m £m £m £m £m £m £m £m
Revenue
United States (US) - - - - - - 4,943 4,943
Asia-Pacific and Middle
2,601 (112) 2,489 2,601 (112) 2,489 (7) 2,482
East (APME)
Americas and Sub-Saharan
2,179 (30) 2,149 2,179 (30) 2,149 (6) 2,143
Africa (AMSSA)
Europe and North Africa
2,937 (157) 2,780 2,868 (157) 2,711 38 2,749
(ENA)
Total Region 7,717 (299) 7,418 7,648 (299) 7,349 4,968 12,317
Profit from operations
US - - - - - - 2,173 2,173
APME 1,016 - 1,016 1,061 - 1,061 27 1,088
AMSSA 806 - 806 860 - 860 23 883
ENA 752 - 752 920 - 920 28 948
Profit from operations 2,574 - 2,574 2,841 - 2,841 2,251 5,092
Operating Margin 33.4% - 34.7% 37.1% - 38.7%
Net finance costs (325) - (325) (276) - (276)
Associates and joint ventures 778 - 778 756 - 756
Profit before tax 3,027 - 3,027 3,321 - 3,321
Taxation (680) - (680) (728) - (728)
Non-controlling interest (86) - (86) (88) - (88)
Profit attributable to
2,261 - 2,261 2,505 - 2,505
shareholders
Diluted number of shares
1,863 1,863 1,863 1,863
(m)
Diluted earnings per share
121.4 121.4 134.4 134.4
(pence)
1 Repres adj (Representative adjusted) is a non-GAAP measure and reflects the representative 6-month performance of the Group, under
the new regional structure and after adjusting for the effect of IFRS 15, assuming RAI and other acquisitions had been owned for the
whole period ended 30 June 2017.
REVENUE FROM OUR STRATEGIC PORTFOLIO
In February 2018, the Group announced a new, non-GAAP, performance measure, effective 1 January
2018.
For the six-months ended June 2017, whilst not part of the Group’s KPIs, to provide the comparator
against which 2018 will be measured, Revenue of our Strategic Portfolio was £3,569 million (including the
impact of IFRS 15 which was effective 1 January 2018 with retrospective application), or £8,106 million
including six months revenue from acquisitions including the US business.
2017 2017
Restated reported for IFRS 15 Representative, adjusted including 6
impact months from acquisitions
Strategic Other Total Strategic Other Total
Portfolio Brands Portfolio Brands
£m £m £m £m £m £m
Combustible Tobacco 3,476 3,585 7,061 7,521 3,908 11,429
Potentially Reduced Risk:
Vapour 46 - 46 125 - 125
Tobacco Heating Product 35 - 35 35 - 35
Total Next Generation Products 81 - 81 160 - 160
Oral tobacco 12 - 12 425 - 425
Total Potentially Reduced Risk 93 - 93 585 - 585
Other businesses* - 264 264 - 303 303
Total 3,569 3,849 7,418 8,106 4,211 12,317
* Other businesses includes sales of leaf and other semi-finished products to third parties.
CIGARETTE AND TOBACCO HEATING PRODUCT VOLUME INCLUDING FULL PERIOD EFFECT
OF ACQUISITIONS
Six months ended 30 June 2017 Year ended 31 December 2017
Uplift for Repres incl Uplift for Repres incl
Bn sticks Reported acquisitions acquisitions Reported acquisitions acquisitions
US - 41 41 36 46 82
APME 112 - 112 226 - 226
AMSSA 82 - 82 166 - 166
ENA 120 1 121 258 2 260
Total Volume 314 42 356 686 48 734
Enquiries:
British American Tobacco Investor Relations
Mike Nightingale / Rachael Brierley / Stephanie Brassinne
+44 (0) 20 7845 1180 / 1519 / 2012
British American Tobacco Press Office
+44 (0) 20 7845 2888 (24 hours) | @BATPress
Forward looking statements
This announcement contains certain forward-looking statements, including “forward-looking”
statements made within the meaning of Section 21E of the United States Securities Exchange Act of
1934. These statements are often, but not always, made through the use of words or phrases such
as “believe,” “anticipate,” “could,” “may,” “would,” “should,” “intend,” “plan,” “potential,”
“predict,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “outlook”, “target” and
similar expressions. These include statements regarding our intentions, beliefs or current
expectations concerning, amongst other things, our results of operations, financial condition,
liquidity, prospects, growth, strategies and the economic and business circumstances occurring from
time to time in the countries and markets in which the Group operates.
All such forward-looking statements involve estimates and assumptions that are subject to risks,
uncertainties and other factors that could cause actual future financial condition, performance and
results to differ materially from the plans, goals, expectations and results expressed in the forward-
looking statements and other financial and/or statistical data within this announcement. Among the
key factors that could cause actual results to differ materially from those projected in the forward-
looking statements are uncertainties related to the following: the impact of competition from illicit
trade; the impact of adverse domestic or international legislation and regulation; changes in
domestic or international tax laws and rates; adverse litigation and dispute outcomes and the effect
of such outcomes on the Group’s financial condition; changes or differences in domestic or
international economic or political conditions; the inability to obtain price increases and the impact
of price increases on consumer affordability thresholds; adverse decisions by domestic or
international regulatory bodies; the impact of market size reduction and consumer down-trading;
translational and transactional foreign exchange rate exposure; the impact of serious injury, illness
or death in the workplace; the ability to maintain credit ratings and to fund the business under the
current capital structure; the ability to develop and commercialise new alternative products and to
do so profitably; and changes in the market position, businesses, financial condition, results of
operations or prospects of the Group.
It is believed that the expectations reflected in this announcement are reasonable but they may be
affected by a wide range of variables that could cause actual results 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. The forward-looking statements reflect
knowledge and information available at the date of preparation of this announcement and the
Group undertakes no obligation to update or revise these forward-looking statements, whether as a
result of new information, future events or otherwise. Readers are cautioned not to place undue
reliance on such forward-looking statements.
Additional information concerning these and other factors can be found in the Company’s filings
with the U.S. Securities and Exchange Commission (“SEC”), including the Annual Report on Form 20-F
filed on 15 March 2018 and Current Reports on Form 6-K, which may be obtained free of charge at
the SEC’s website, http://www.sec.gov, and the Company’s Annual Reports, which may be obtained
free of charge from the British American Tobacco website www.bat.com.
Sponsor: UBS South Africa (Pty) Ltd
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