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Accounting Consequences of Quebec Judgment
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")
5 March 2019
British American Tobacco p.l.c.
Accounting Consequences of Quebec Judgment
On 1 March 2019, the judgment in the two Quebec Class Action lawsuits against our subsidiary,
Imperial Tobacco Canada Ltd. (ITCAN), and two other Canadian tobacco companies was publicly
issued by the Quebec Court of Appeal in Montreal. The Court of Appeal has upheld the trial court’s
decision of May 2015, including the previously stated requirements for the defendants to deposit
approximately CAD1.1 billion into a court escrow account.
As part of the 2015 decision, ITCAN was required to place CAD758 million (approximately £436
million) in escrow – the final payment of which was made in 2017. This deposit was held as an asset
on the Group’s balance sheet at the year-end (31 December 2018).
Following the 1 March 2019 judgment, the Board of Directors of ITCAN have reassessed the
recoverability of the deposit and have determined that the asset’s recoverability is, under IFRS, less
than virtually certain. Consequently, a provision of approximately £436 million will be charged to the
Group’s consolidated income statement in 2019. This will be treated as an adjusting expense.
There will be no impact from this charge to the ratio of adjusted net debt to adjusted EBITDA, with
this decision having no impact to cash flow in 2019.
The Board of Directors of ITCAN and the Group are monitoring developments. As previously stated,
ITCAN intends to seek leave to appeal this judgment to the Supreme Court of Canada.
British American Tobacco p.l.c. was not a party to the proceeding and is not a party to the judgment.
Enquiries:
Press Office
+44 (0)20 7845 2888 (24 hours) | @BATPress
Investor Relations
Mike Nightingale / Rachael Brierley / John Harney
+44 (0)20 7845 1180 / 1519 / 1263
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; 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.
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.
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 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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