TIDMBATS
RNS Number : 7269R
British American Tobacco PLC
02 March 2023
BRITISH AMERICAN TOBACCO p.l.c. (the "Company")
Annual Report for the Year Ended 31 December 2022
In compliance with Listing Rule 9.6.1 and Disclosure Guidance
and Transparency Rule ("DTR") 4.1, the Company announces that the
following documents have been published on its website:
www.bat.com/annualreport :
-- Annual Report and Form 20-F 2022 (the "Annual Report 2022"); and
-- Combined Performance and ESG Summary 2022.
These documents have been submitted to the National Storage
Mechanism and will shortly be available for inspection via the
following link:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
In addition, in accordance with Section 203.01 of the New York
Stock Exchange Listed Company Manual, the Company announces that it
filed its Annual Report on Form 20-F 2022 (the "Form 20-F 2022")
with the Securities and Exchange Commission on 2 March 2023. The
Form 20-F 2022 included audited financial statements for the year
ended 31 December 2022. The Form 20-F 2022 will shortly be
available on the Company's website at www.bat.com/annualreport and
also online at www.sec.gov.
The Annual Report 2022 and other ancillary shareholder documents
will be mailed and made available to shareholders on 14 March 2023.
Investors have the option to receive a hard copy of the Company's
complete audited financial statements, free of charge, upon
request, by contacting the below:
United Kingdom
British American Tobacco Telephone: +44 20 7511 7797
Publications Email: bat@team365.co.uk
-----------------------------------------
South Africa
The Company's Representative Telephone: +27 21 003 6712
Office
-----------------------------------------
United States
Citibank Shareholder Services Telephone: +1 888 985 2055
(toll-free)
Email: citibank@shareholders-online.com
-----------------------------------------
This announcement should be read in conjunction with the
Company's Final Results announcement which was released to the
market on 9 February 2023. 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 2022. Page
numbers and cross-references in the extracted information below
refer to page numbers in the Annual Report 2022. The following
disclosures are set out in the appendices to this announcement:
-- Appendix A: Group Principal Risks (pages 116 to 121 of the Annual Report 2022);
-- Appendix B: Related Party Disclosures (pages 272 and 273 of the Annual Report 2022); and
-- Appendix C: Directors' Responsibility Statement (page 181 of the Annual Report 2022).
P McCrory
Company Secretary
2 March 2023
Enquiries:
British American Tobacco Media Centre
+44 (0)20 7845 2888 (24 hours) @BATPlc
Investor Relations
Victoria Buxton / Yetunde Ibe / John Harney:
+44 (0)20 7845 2012 / 1095 / 1263
APPIX A
"GROUP PRINCIPAL RISKS
Overview
The Principal Risks that may affect the Group are set out on the
following pages.
Each risk is considered in the context of the Group's strategy
and business model, as set out in this Strategic Report beginning
on page 2 and page 12. On the following pages is a summary of each
Principal Risk, its potential impact and management by the Group.
The Group defines the Principal Risks as those assessed with a high
impact and probable likelihood. Additionally, "Litigation" and
"Solvency and liquidity" risks are also recognised as Principal
Risks; they are not assessed as having high impact and probable
likelihood but are material to the delivery of the Group's
strategic objectives.
The Group has identified risks and is actively monitoring and
mitigating these risks, including those related to climate change
and other sustainability matters. This section focuses on those
risks that the Directors believe to be the Principal Risks to the
Group. Not all of these risks are within the control of the Group
and other risks besides those listed may affect the Group's
performance. Some risks may be unknown at present. Other risks,
currently regarded as less material, could become material in the
future. Clear accountability is attached to each risk through the
risk owner.
The risks listed in this section and the activities being
undertaken to manage 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 from page 150. This
section should also be read in the context of the cautionary
statement on page 374.
A summary of all the risk factors (including the Principal
Risks) which are monitored by the Board through the Group's risk
register is set out in the Additional Disclosures section from page
341.
Assessment of Group Principal Risks
During the year, the Directors carried out a robust assessment
of the Principal Risks, uncertainties and emerging risks facing the
Group, including those that could impact delivery of its strategic
objectives, business model, future performance, solvency or
liquidity.
ESG is core to the Group's long-term business strategy and ESG
risk factors are embedded across the Group's risks in accordance
with how risks are managed within the Group.
The Double Materiality Assessment conducted during 2022
highlighted the existing ESG focus areas of Harm Reduction, Climate
Change and Circular Economy for the Group. Harm Reduction is
captured as part of "Inability to develop, commercialise and
deliver the New Categories strategy". The Board further highlighted
"Climate and circularity" as a Principal Risk to the Group,
recognising the Group's existing commitments in relation to climate
change and circular economy matters and mitigation of associated
risks.
Due to the embeddedness of ESG across the Group, other elements
of environmental, social and governance are captured across other
risks.
The viability statement below provides a broader assessment of
long-term solvency and liquidity. The Directors considered a number
of factors that may affect the resilience of the Group. Except for
the risk "Injury, illness or death in the workplace", the Directors
also assessed the potential impact of the Principal Risks that may
impact the Group's viability.
Viability Statement
The Board has assessed the viability of the Group taking into
account the current position and principal risks, in accordance
with provision 31 of the UK Corporate Governance Code 2018. Whilst
the Board believes the Group will be viable over a longer period,
owing to the inherent uncertainty arising due to ongoing litigation
and regulation, the period over which the Board considers it
possible to form a reasonable expectation as to the Group's
longer-term viability (that it will continue in operation and meet
its liabilities as they fall due) is three years.
In making this assessment, the Board considered the Group's:
- strong cash generation from operating activities;
- access to, and ability to raise, external sources of
financing, including the removal, in prior years, of any financial
covenants in such credit facilities; and
- the current macro-economic environment, including the impact
of inflation and higher interest rates.
This assessment included a robust review of the Group's
operational and financial processes, (which cover both short-term
financial forecasts and capacity plans) and the Principal Risks (as
indicated on pages 117 to 121) that may impact the Group's
viability. These are considered, with the mitigating actions, at
least once a year. The assessment included a reverse stress test of
the principal risks and did not identify any individual risk, based
upon a prudent annual forecast, that would, if arising in isolation
and without mitigation, impact the Group's viability within the
three-year confirmation period. Furthermore, the Board recognised
that even if all the principal risks arose simultaneously, given
the underlying strong free cash flow generation before the payment
of dividends (2022: GBP8.0 billion), the Group would be able to
undertake mitigating actions to meet the liabilities as they fall
due. The assessment also reviewed the potential impact of inflation
on the Group's delivery and the impact of climate-related risks and
concluded that these, including the potential cost implications and
noting the mitigating actions, would not impact the Group's
viability (see discussion commencing on page 70 with respect to
TCFD).
The Board noted that the Group has access to a GBP5.7 billion
credit facility (2022: undrawn), US (US$4 billion) and Euro (GBP3
billion) commercial paper programmes (2022: GBP27 million drawn)
and GBP3.0 billion of bilateral agreements which may be utilised to
support the Group's ability to operate. However, the Group is
subject to inherent uncertainties with regards to regulatory change
and litigation, the outcome of which may have a bearing on the
Group's viability. The Group maintains, as referred to in note 31
in the Notes on the Accounts 'Contingent Liabilities and Financial
Commitments,' that, whilst it is impossible to be certain of the
outcome of any particular case, the defences of the Group's
companies to all the various claims are meritorious on both law and
the facts. If an adverse judgment is entered against any of the
Group's companies in any case, an appeal may be made, the duration
of which can be reasonably expected to last for a number of
years.
Risks
Competition from illicit trade
Increased competition from illicit trade and illegal products -
either local duty evaded, smuggled, counterfeits, or non-regulatory
compliant, including products diverted from one country to
another.
Time frame
Short-/medium-/long-term
Strategic impact
Simplification/New Categories/ Combustibles
Key Stakeholders
Consumers, Society, Shareholders & Investors
Considered in viability statement
Yes
Impact
Erosion of goodwill, with lower volumes and/or increased
operational costs (e.g. track and trace costs) and reduced
profits.
Reduced ability to take price increases.
Investment in trade marketing and distribution is undermined and
the product is commoditised.
Counterfeit products (especially in New Categories) and other
illicit products could harm consumers, damaging goodwill, and/or
the category (with lower volumes and reduced profits), potentially
leading to misplaced claims against BAT, further regulation and a
failure to deliver the corporate harm reduction objective.
Breach of legislation, criminal offences, contract breaches
under the EU Cooperation Agreement, allegations of facilitating
smuggling and reputational damage, including negative perceptions
of our governance.
Existence of illicit trade reduces our ability to reduce the
health impact of our business.
Mitigation activities across all categories
Dedicated Anti-Illicit Trade (AIT) teams operating at regional
and country levels; internal cross-functional levels; compliance
procedures, toolkit and best practice shared.
Active engagement with key external stakeholders.
Cross-industry and multi-sector cooperation on a range of AIT
issues.
Regional AIT strategy supported by a research programme to
further the understanding of the size and scope of the problem.
AIT Engagement Teams (including a dedicated analytical
laboratory and a forensic and compliance team) work with
enforcement agencies in pursuit of priority targets.
Geopolitical tensions
Geopolitical tensions, civil unrest, economic policy changes,
global health crises, terrorism and organised crime have the
potential to disrupt the Group's business in multiple markets.
Time frame
Short-/medium-term
Strategic impact
Simplification/New Categories/ Combustibles
Key Stakeholders
Society, Our people, Shareholders & Investors
Considered in viability statement
Yes
Impact
Potential injury or loss of life, loss of assets and disruption
to supply chains and normal business processes.
Increased costs due to more complex supply chain and security
arrangements and/or the cost of building new facilities or
maintaining inefficient facilities.
Lower volumes as a result of not being able to trade in a
country.
Higher taxes or other costs of doing business as a foreign
company or the loss of assets as a result of nationalisation.
Reputational damage, including negative perceptions of our
governance and protection of our people and our ESG credentials.
Disruption to the supply chain impacts our ability to reduce the
health impact of our business.
Mitigation activities across all categories
Physical and procedural security controls are in place, and
regularly reviewed in accordance with our Security Risk Management
process, for all field force and supply chain operations, with an
emphasis on the protection of Group employees.
Globally integrated sourcing strategy and contingency sourcing
arrangements are in place.
Security risk modelling, including external risk assessments and
the monitoring of geopolitical and economic policy developments
worldwide.
Insurance coverage and business continuity planning, including
scenario planning and testing, and risk awareness training.
Geopolitical assessment and monitoring by the Group Security
Centre of Excellence and regions inform the Business Continuity
Management organisation plans and responses to geopolitical risks,
including readiness of Crisis Management Teams at all levels.
Tobacco, New Categories and other regulation interrupts growth
strategy
The enactment of, proposals for, or rumours of, regulation that
significantly impairs the Group's ability to communicate,
differentiate, market or launch its products, and/or the lack of
appropriate regulation for New Categories.
Time frame
Short-/medium-/long-term
Strategic impact
New Categories/Combustibles
Key Stakeholders
Consumers, Society, Shareholders & Investors
Considered in viability statement
Yes
Impact
A lack of acceptance or rejection of tobacco harm reduction as a
tobacco control policy could prevent a balanced regulatory
framework for New Categories.
Restricted ability to sell and communicate New Categories could
lead to failure of the harm reduction objective and loss of
confidence in the Group's ESG performance.
Disproportionate regulations for New Categories, such as
questionable regulatory classifications or total bans, that may not
be science-based and/or risk-proportionate and that neither
recognise unintended consequences nor respect legal rights (e.g.
wrong regulatory classifications or total bans).
Reduced ability to make scientific claims and compete in future
product categories and make new market entries.
Erosion of brand value through commoditisation and the inability
to launch innovations may negatively affect our ability to generate
value growth.
Regulation with respect to bans or severe restrictions on
menthol flavours, product design & features and nicotine levels
may adversely impact individual brand portfolios.
Reduced consumer acceptability of new product specifications,
leading to consumers seeking alternatives in illegal markets or
irresponsible operators exploiting regulatory loopholes.
Shocks to share price on rumours of, or the announcement or
enactment of, restrictive regulation (e.g. sales ban to future
generations).
Failure to deliver appropriate and proportionately costed
Extended Producer Responsibility (EPR) schemes.
Mitigation activities across all categories
Establishment of Management Board Regulatory Committee.
Engagement and litigation strategy coordinated and aligned
across the Group to drive a balanced global policy framework for
combustibles and New Categories.
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 integrated regulatory proposals to
governments and public health regulators and practitioners based on
the harm reduction potential of New Categories.
Development of an integrated regulatory strategy that spans
conventional combustibles and New Categories.
Training and capability programmes for End Markets to upskill
Legal and External Affairs managers on combustible and New
Categories regulatory engagement, including product knowledge.
Direct access to online portal providing latest position and
advocacy material for End Market engagement on combustibles and New
Categories.
Working to define a sustainable EPR model and markets
negotiating to implement effective EPR schemes.
Please refer to the to the description of the tobacco and
nicotine regulatory regimes under which the Group's businesses
operate set out from page 363
Litigation
Product liability, regulatory or other significant cases
(including investigations) may be lost or settled resulting in a
material loss or other consequence.
Time frame
Short-/medium-/long-term
Strategic impact
New Categories/Combustibles
Key Stakeholders
Shareholders & Investors
Considered in viability statement
Yes
Impact
Damages and fines, negative impact on reputation (including ESG
credentials), disruption and loss of focus on the business.
Consolidated results of operations, cash flows and financial
position could be materially affected by an unfavourable outcome or
settlement of pending or future litigation, criminal prosecution or
other contentious action, or by the costs associated with bringing
proceedings or defending claims.
Inability to sell products as a result of an injunction arising
out of a patent infringement action against the Group may restrict
growth plans and competitiveness.
Potential share price impact.
ESG-related litigation could also result in a reduction in the
investor base due to sustainability and ESG-related concerns.
Mitigation activities across all categories
Consistent litigation and patent management strategy across the
Group.
Expertise and legal talent maintained both within the Group and
external partners, including for New Categories and ESG-related
matters.
Ongoing monitoring of key legislative and case law developments
related to our business.
Delivery with Integrity compliance programme.
Please refer to note 31 in the Notes on the Accounts for details
of contingent liabilities applicable to the Group.
Significant increases or structural changes in tobacco, nicotine
and New Categories related taxes
The Group is exposed to unexpected and/or significant increases
or structural changes in tobacco, nicotine and New Categories
related taxes in key markets.
Time frame
Short-/medium-/long-term
Strategic impact
New Categories/Combustibles
Key Stakeholders
Consumers, Society, Shareholders & Investors
Considered in viability statement
Yes
Impact
Consumers reject the Group's legitimate tax-paid products for
products from illicit sources or cheaper alternatives.
Reduced legal industry volumes.
Reduced sales volume and/or portfolio erosion leading to
inability to invest in, develop, commercialise and deliver New
Category products.
Partial absorption of excise increases leading to lower
profitability.
Mitigation activities across all categories
Formal pricing and excise strategies, including Revenue Growth
Management using a data science-led approach, with annual risk
assessments and contingency plans across all products.
Pricing, excise and trade margin committees in markets, with
global support.
Engagement with relevant local and international 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.
Inability to develop, commercialise and deliver the New
Categories strategy
Risk of not capitalising on the opportunities in developing and
commercialising successful, safe and consumer-appealing
innovations.
Time frame
Short-/medium-/long-term
Strategic impact
Simplification/New Categories/ Combustibles
Key Stakeholders
Consumers, Society, Shareholders & Investors
Considered in viability statement
Yes
Impact
Failure to deliver Group strategic imperative, 2025 growth
ambition and 2030 consumer targets.
Potentially missed opportunities, unrecoverable costs and/or
erosion of brand, with lower volumes and reduced profits.
Reputational damage and recall costs may arise in the event of
defective product design or manufacture.
Loss of market share due to non-compliance of product portfolio
with regulatory requirements.
Loss of investor confidence in ESG performance.
Failure to deliver our corporate purpose of harm reduction.
Mitigation activities across all categories
Focus on product stewardship to ensure high-quality standards
across the portfolio.
Brand Expression, which sets out how our brand expresses itself
(including through its logo, name, product, packaging, etc.)
deployed to lead End Markets via activation workshops and best
practices shared.
Generating sufficient IP to develop competitive and sustainable
products.
Accelerating digital and consumer analytics along with data
management platforms for enhanced methodologies, insight generation
and line of sight across the Group.
R&D is accredited to ISO9001 standard and laboratories are
accredited to ISO17025 for key methods.
Injury, illness or death in the workplace
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 our operations.
Time frame
Short-term
Strategic impact
Simplification/New Categories/ Combustibles
Key Stakeholders
Our people
Considered in viability statement
No
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
legal costs, fines and/or penalties.
Interruption of Group operations if issues are not addressed
promptly.
High staff turnover or difficulty recruiting employees if
perceived to have a poor Environment, Health and Safety (EHS)
record.
Reputational damage to the Group and negative impact on our ESG
credentials.
Mitigation activities across all categories
Risk control systems in place to ensure equipment and
infrastructure are provided and maintained.
EHS strategy aims to ensure that employees at all levels receive
appropriate EHS training and information.
Behavioural-based safety programme to drive operations' safety
performance, culture and closer to zero accidents.
Analysis of incidents undertaken regionally and globally by a
dedicated team to identify increasing incident trends or high
potential risks that require coordinated action.
Global monthly Health & Safety (H&S) Committee
established, formed by senior members from the H&S and
Operations Sustainability leadership team.
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.
Time frame
Short-/medium-term
Strategic impact
Simplification/New Categories/ Combustibles
Key Stakeholders
Shareholders & Investors
Considered in viability statement
Yes
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.
Mitigation activities across all categories
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.
Foreign exchange rates exposures
The Group faces translational and transactional foreign exchange
(FX) rate exposure for earnings/cash flows from its global
businesses.
Time frame
Short-/medium-term
Strategic impact
New Categories/Combustibles
Key Stakeholders
Shareholders & Investors
Considered in viability statement
Yes
Impact
Fluctuations in FX rates of key currencies against sterling
introduce volatility in reported earnings per share (EPS), cash
flow and the balance sheet driven by translation into sterling of
our financial results and these exposures are not normally
hedged.
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.
Mitigation activities across all categories
While translational FX exposure is not hedged, its impact is
identified in results presentations and financial disclosures;
earnings are restated 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 is defined in the treasury
policy, a global policy approved by the Board.
Illiquid currencies of many markets where hedging is either not
possible or uneconomic are reviewed on a regular basis.
Solvency and liquidity
Liquidity (access to cash and sources of finance) is essential
to maintaining the Group as a going concern in the short-term
(liquidity) and medium-term (solvency).
Time frame
Short-/medium-term
Strategic impact
Simplification/New Categories/ Combustibles
Key Stakeholders
Shareholders & Investors
Considered in viability statement
Yes
Impact
Inability to access the Group's cash resources and to fund the
business under the current capital structure resulting in missed
strategic opportunities or inability to respond to threats.
Decline in our creditworthiness and increased funding costs for
the Group.
Requirement to issue equity or seek new sources of capital.
Reputational risk of failure to manage the financial risk
profile of the business, resulting in an erosion of shareholder
value reflected in an underperforming share price.
Inability to mitigate accounting and economic exposures.
Economic loss as a result of devaluation/revaluation of assets
(including cash) valued or held in local currency, and additional
costs as a result of paying premiums to obtain hard currency.
Mitigation activities across all categories
Group policies include a set of financing principles and key
performance indicators, including the monitoring of credit ratings,
interest cover, solvency and liquidity with regular reporting to
the Corporate Finance Committee and the Board.
Controls in place to ensure full compliance with Sanctions
regimes.
Plans implemented to manage the risk in key geographies.
The Group targets an average centrally managed debt maturity of
at least five years with no more than 20% of centrally managed debt
maturing in a single rolling year.
The Group holds a two-tranche revolving credit facility of
GBP5.7bn syndicated across a wide banking group, consisting of a
364-day tranche (with a one-year term-out option remaining) and a
five-year tranche.
Liquidity pooling structures are in place to ensure that there
is maximum mobilisation of cash liquidity within the Group.
Going concern and viability support papers are presented to the
Board on a regular basis.
Climate and circularity
Direct and indirect adverse impacts associated with Climate
Change and the move towards a Circular Economy.
Time frame
Short-/medium-/long-term
Strategic impact
New Categories/Combustibles
Key Stakeholders
Consumers, Society, Shareholders & Investors
Considered in viability statement
Yes
Impact
Poor ESG ratings by investors or platforms/indices used by them
may lead to reduced access to capital, increased cost of capital or
impact the share price.
Loss or damage to reputation may reduce market share and
revenue, due to retail customers and/or consumers having a reduced
or negative perception of BAT and its products in comparison to its
competitors, or of specific products/product categories
overall.
Failure to adequately manage supply chain risks associated with
transitional and operational impacts (of Climate Change
particularly) may cause increased volatility in supply volume,
quality or cost of raw materials and services necessary for the
effective and efficient operation of BAT's business across its
value chain.
Negative impact upon the attraction, retention and motivation of
skilled employees and contractors.
Punitive actions against the Group or an inability to sell its
products in key markets, due to failure to comply in an effective,
competitive or economic manner with evolving regulations and
requirements relevant to business operations, products and supply
chain, and reporting.
Mitigation activities across all categories
The Group has a well-established Environmental Sustainability
Committee and Operations Sustainability Forum. ESG matters overall,
and Climate Change and Circular Economy specifically, are under the
governance remit of the Audit Committee.
Life Cycle Assessment is used in the development and approval
processes for new products to understand and improve their Climate
Change and Circular Economy impacts.
Monitoring of Climate Change- and Circular Economy-related
governmental policy and regulations, and taking proactive actions
to meet and/or surpass it.
Working to mitigate Climate Change impacts and optimise Circular
Economy alignment across the value chain by designing for the reuse
and recycling of end-of-life products and increasing the use of
recycled and environmentally preferable materials.
2022 review of future ESG reporting requirements and frameworks,
globally, and increasing alignment with them, ahead of required
timescales. Including public provision to financial actors of
information required by investors for their own reporting.
Internal and external goals and targets related to the risks and
opportunities posed by Climate Change and Circular Economy to the
Group's business and wider society, along with comprehensive
programmes for review of progress against these goals.
Climate Change- and Circular Economy-related objectives, targets
and metrics publicly reported and externally assured and integrated
into personal performance objectives of those functionally
responsible for their delivery.
In 2022, the Group proactively engaged with over 200 top
suppliers on Climate Change and Circular Economy matters."
APPIX 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 (a joint operation)
are not included in these disclosures as the results are immaterial
to the Group.
Intercompany transactions and balances are eliminated on
consolidation and therefore are not disclosed.
Transactions and balances with associates relate mainly to the
sale and purchase of cigarettes and tobacco leaf. The Group's share
of dividends from associates, included in other net income in the
table below, was GBP438 million (2021: GBP392 million; 2020: GBP394
million).
2022 2021 2020
GBPm GBPm GBPm
---------------------------------- ----- -------- -----
Transactions
- revenue 494 524 495
- purchases (190) (123) (80)
- other net income 440 387 388
Amounts receivable at 31 December 51 48 33
Amounts payable at 31 December (4) (3) (5)
In 2022, as mentioned in note 27, the Group made a GBP32 million
investment in exchange for 16% of Sanity Group GmbH and made a
non-controlling investment in Steady State LLC for GBP4
million.
Also in 2022, the Group acquired a further 3.3% in Hrvatski
Duhani d.d. Tobacco Leaf Processing at a cost of GBP1 million,
following the acquisition of an additional 2.7% in 2021 at a cost
of GBP1 million.
During 2022, the Group increased its ownership of a wholesale
producer and distributor operating in the agriculture sector based
in Uzbekistan, FE "Samfruit" JSC to 45.40% for GBP1 million. In
2021, the Group increased its ownership to 42.61%, for GBP1 million
(2020: increase to 38.63% for GBP5 million).
In 2021, the Group made a capital contribution in Brascuba
Cigarrillos S.A. at a cost of GBP6 million (2020: GBP17 million).
There was a capital reduction in CTBAT International Limited of
approximately US$171 million with funds remitted prorata to
investors in 2021.
On 5 October 2021, PT Bentoel Internasional Investama Tbk
(Bentoel) announced its intention to delist from the Indonesia
Stock Exchange and go private by conducting a Voluntary Tender
Offer (VTO). As part of this, in two phases in November and
December 2021, the Group acquired an additional 0.2% of shares in
Bentoel from independent shareholders at a cost of GBP4 million and
terminated the total return swap (as explained in note 32).
As explained in note 15, in 2022 the Group provided a temporary
liquidity facility to the main UK pension fund. As at 31 December
2022 this facility was undrawn.
As set out in note 27, in March 2021, the Group acquired a 19.9%
equity stake in Organigram. The Group and Organigram also entered
into a Product Development Collaboration Agreement following which
a Centre of Excellence has been established to focus on developing
the next generation of cannabis products with an initial focus on
cannabidiol (CBD).
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 their close family members.
2022 2021 2020
GBPm GBPm GBPm
----------------------------------------------------- ----- ----- -----
The total compensation for key management personnel,
including Directors, was:
- salaries and other short-term employee benefits 19 18 17
- post-employment benefits 1 1 2
- share-based payments 17 16 13
37 35 32
The following table, which is not part of IAS 24 disclosures,
shows the aggregate emoluments of the Directors of the Company.
Executive Directors Chairman Non-Executive Total
Directors
-----------
2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020
-----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ------- ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- -------
Salary;
fees;
benefits;
incentives
- salary 2,129 2,119 2,026 2,129 2,119 2,026
- fees 670 727 714 1,027 1,045 1,028 1,697 1,772 1,742
- taxable
benefits 449 420 744 59 55 77 78 2 72 586 477 893
-
short-term
incentives 3,761 4,128 3,274 3,761 4,128 3,274
- long-term
incentives 7,888 3,399 1,294 7,888 3,399 1,294
----------- ------- ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- -------
Sub-total 14,227 10,066 7,338 729 782 791 1,105 1,047 1,100 16,061 11,895 9,229
----------- ------- ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- -------
Pension;
other
emoluments
- pension 320 318 304 320 318 304
- other
emoluments 6 6 20 6 6 20
----------- ------- ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- -------
Sub-total 326 324 324 326 324 324
----------- ------- ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- -------
Total
emoluments 14,553 10,390 7,662 729 782 791 1,105 1,047 1,100 16,387 12,219 9,553
----------- ------- ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- -------
"
APPIX C
"RESPONSIBILITY OF DIRECTORS
Statement of Directors' Responsibilities in Respect of the
Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report
and the Group and Parent Company financial statements in accordance
with applicable law and regulations. Under company law, directors
must not approve the Financial Statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Parent Company and the Group for that period.
Under the law, directors are required to prepare the financial
statements in accordance with UK-adopted international accounting
standards and applicable law. The Directors have elected to prepare
the Parent Company financial statements in accordance with UK
Accounting Standards and applicable law, including FRS 101 'Reduced
Disclosure Framework'. In preparing these Group financial
statements, the Directors have also elected to comply with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
In preparing each of the Group and Parent Company financial
statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable, relevant, reliable and prudent;
- state whether Group financial statements have been prepared in
accordance with UK-adopted international accounting standards;
- state whether, for the Parent Company financial statements,
applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the those
statements;
- assess the Group and Parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
- use the going concern basis of accounting unless the Directors
either intend to liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but to do
so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent Company and enable them
to ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that comply with applicable law and regulations.
The Directors are responsible for the maintenance and integrity
of the Annual Report included on the Company's website. Legislation
in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule
4.1.14R, the financial statements will form part of the annual
financial report prepared using the single electronic reporting
format under the TD ESEF Regulation. The auditor's report on these
financial statements provides no assurance over the ESEF
format.
Directors' Declaration in Relation to Relevant Audit
Information
Having made appropriate enquiries, each of the Directors who
held office at the date of approval of this Annual Report confirms
that:
- to the best of his or her knowledge and belief, there is no
relevant audit information of which the Company's auditors are
unaware; and
- he or she has taken all steps that a Director might reasonably
be expected to have taken in order to make himself or herself aware
of relevant audit information and to establish that the Company's
auditors are aware of that information.
Responsibility Statement of the Directors in Respect of the
Annual Financial Report
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
- the Strategic Report and the Directors' Report include a fair
review of the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face."
Forward looking statements
This announcement contains certain forward-looking statements,
including "forward-looking" statements made within the meaning of
U.S. Private Securities Litigation Reform Act 1995. 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 British
American Tobacco Group (the "Group") operates, including the
projected future financial and operating impacts of the COVID-19
pandemic.
All such forward-looking statements involve estimates and
assumptions that are subject to risks, uncertainties and other
factors. 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 and performance
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; the inability to develop,
commercialise and deliver the Group's New Categories strategy;
adverse litigation and dispute outcomes and the effect of such
outcomes on the Group's financial condition; the impact of
significant increases or structural changes in tobacco, nicotine
and New Categories related taxes; translational and transactional
foreign exchange rate exposure; changes or differences in domestic
or international economic or political conditions; the ability to
maintain credit ratings and to fund the business under the current
capital structure; the impact of serious injury, illness or death
in the workplace; adverse decisions by domestic or international
regulatory bodies; changes in the market position, businesses,
financial condition, results of operations or prospects of the
Group and direct and indirect adverse impacts associated with
Climate Change and the move towards a Circular Economy.
A review of the reasons why actual results and developments may
differ materially from the expectations disclosed or implied within
forward-looking statements can be found by referring to the
information contained under the headings "Cautionary statement",
"Group Principal Risks" and "Group Risk Factors" in the Annual
Report 2022 and Form 20-F of British American Tobacco p.l.c. (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 2 March 2023 and Current Reports on Form 6-K, which
may be obtained free of charge at the SEC's website, www.sec.gov ,
and the Company's Annual Reports, which may be obtained free of
charge from the Company's website www.bat.com .
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.
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 Annual Report 2022 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
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Policy.
END
ACSSSLFMEEDSELD
(END) Dow Jones Newswires
March 02, 2023 11:55 ET (16:55 GMT)
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