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Speech by Richard Burrows, Chairman, at the British American Tobacco p.l.c. Annual General Meeting on 25 April 2019
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")
25 APRIL 2019
SPEECH BY RICHARD BURROWS, CHAIRMAN, AT THE BRITISH AMERICAN TOBACCO p.l.c.
ANNUAL GENERAL MEETING ON 25 APRIL 2019
Good morning ladies and gentlemen.
It is my pleasure to welcome you to British American Tobacco’s 2019 Annual General Meeting.
I am pleased to report that our 2018 results demonstrate that the business is in good shape. This is
the result of our established strategy that focuses on a multicategory approach, and which enables
us to continue to deliver shareholder returns today while investing in our future.
While our business is continuing to perform very well we are very conscious that investor sentiment
over the last year has been negatively impacted by concerns over possible regulation in the US and
competitor dynamics in new categories resulting in a sharp fall in our share price.
I am, however, confident that the business is in good shape and that the causes of these concerns in
fact present significant opportunities for future growth. Our core combustible business continues to
outperform the industry; we have established a successful and fast growing potentially reduced risk
product business, and our US acquisition – which has a long track record of managing regulatory
change – is now fully integrated. Against a backdrop of a strong set of results and consequently
rising share price, all of this, I believe, puts us is a strong position to deliver long-term sustainable
growth, reflected in our continued annual dividend increases, this year’s of 4%.
With respect to potentially reduced-risk products, which we call PRRPs, this past year has seen a
near-doubling of our revenues in vapour and tobacco heating products alone. Our vapour revenues
increased by 26%, while our tobacco heating products grew revenue by over 180%.
These are early stages in our PRRP journey, and as technology and innovation increasingly play a role
in our business, our product pipeline will continue to expand. In 2018 we filed 130 patents and
expect that number to nearly double this year.
The result is better and more innovative products appearing in markets around the world. Last year
we launched new products in over a dozen countries, including our Vype ePen3 which won vapour
category Product of the Year in the UK’s largest consumer survey, and the successful launch of our
Vuse Alto product in the US.
In the combustible category, our overall market share increased 40 basis points, powered by the
strong performance of our Strategic Portfolio which grew volume by 4.8%.
Our combustible products continue to make up the bulk of our revenues and profit. This will remain
the case for many years to come, and these profits will drive sustainable returns and dividends for
our shareholders as we make the investment required to grow our PRRP business.
Looking forward to 2019 we can expect another year of good earnings growth.
Turning to the composition of our board, let me begin by welcoming our new Chief Executive Jack
Bowles, who took over from our outgoing CEO, Nicandro Durante, at the beginning of April this year.
Jack’s track record of success across many regions within the company equips him to write the next
chapter in BAT’s history, which will be focused on combustible value growth, a step change in new
categories, and ultimately creating a stronger, simpler, and faster company.
In August this year our Finance Director Ben Stevens will be retiring following a 30-year career at
BAT. Tadeu Marroco, our current Director of Group Transformation and former director of both
Business Development and Western Europe, will succeed Ben.
And, as you would expect, given my tenure in office as Chairman, the Board and Nominations
Committee will be focussed on succession planning for my role bearing in mind the need for
continuity in a period when our two top executives will have retired during 2019.
Before we move to the Resolutions, let me thank my fellow Directors, our new Chief Executive and
his management team, as well as colleagues around the world for their outstanding contributions to
the Group’s continued success.
ENQUIRIES:
Investor Relations
Mike Nightingale/Rachael Brierley/John Harney
+44 20 7845 1180/1519/1263
British American Tobacco Press Office
+44 (0) 20 7845 2888 (24 hours) | @BATPress
Forward looking statements
This announcement does not constitute an invitation to underwrite, subscribe for, or otherwise
acquire or dispose of any British American Tobacco p.l.c. ("BAT") shares or other securities. This
announcement contains certain forward-looking statements, made within the meaning of Section
21E of the United States Securities Exchange Act of 1934, 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.
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.
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.
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; 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 inability to develop, commercialise and roll-out Potentially Reduced-Risk Products;
and changes in the market position, businesses, financial condition, results of operations or
prospects of the Group.
Past performance is no guide to future performance and persons needing advice should consult an
independent financial adviser. The forward-looking statements reflect knowledge and information
available at the date of preparation of this announcement and BAT undertakes no obligation to
update or revise these forward-looking statements, whether as a result of new information, future
events or otherwise. Readers are cautioned not to place undue reliance on such forward-looking
statements.
No statement in this communication is intended to be a profit forecast and no statement in this
communication should be interpreted to mean that earnings per share of BAT for the current or
future financial years would necessarily match or exceed the historical published earnings per share
of BAT.
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 2019 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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