25/07/2024 - British American Tobacco plc: Press release (HY 2024 Annoucement)

25 July 2024 - Press Release/Interim Results

British American Tobacco p.l.c.

Half-Year Report for the six months to 30 June 2024

Building a Smokeless World

On Track for Full-Year 2024 Guidance

Tadeu Marroco, Chief Executive

"We are Building a Smokeless World. We added 1.4 million consumers (to 26.4 million1) of our Smokeless brands, now accounting for 17.9% of Group revenue, an increase of 1.4 ppts vs FY23.

Our H1 2024 performance is in line with our expectations, and we are on track to deliver our full-year guidance.

Focusing on 'Quality Growth' is delivering better returns on more targeted investments across all three New Categories. In H1 2024, we increased organic New Category contribution by £165 million (at constant rates) and I am particularly pleased with the growth of Modern Oral. We expect to deliver further improvement in revenue and profitability across our New Categories for the full year.

We welcome the FDA's marketing authorisation for our Vuse Alto device and tobacco flavour consumables, demonstrating that marketing these products are appropriate for the protection of public health. However, the continued lack of enforcement against illicit single-use vapour products in the U.S., compounded by the sale of our businesses in Russia and Belarus in 2023, means that New Category revenue is likely to be below our £5 billion ambition in 2025.

Combustibles in AME and APMEA delivered resilient organic performances with solid volume share growth. These were offset by the U.S. where, driven by our commercial investment, volume share is now showing signs of recovery and the rate of value share decline has sequentially improved, led by premium. However, U.S. Combustibles industry volumes remain under pressure, largely driven by macro headwinds and the continued lack of effective enforcement against illicit single-use vapour products.

While there is more to do, we are making good progress and I am encouraged that our New Category launches and our first-half investments to strengthen our U.S. Combustibles portfolio are gaining traction. Together with the expected unwind of U.S. wholesaler inventory movements, I am confident this will drive an acceleration in our second-half performance.

BAT is a highly cash generative business, and we are committed to continuing to reward shareholders with strong cash returns. We have made progress in enhancing financial flexibility, enabling the initiation of a sustainable share buy-back programme.

Guided by our refined strategy, I am confident that we will progressively improve our performance to deliver 3-5% revenue, and mid- single digit adjusted profit from operations growth on an organic constant currency basis by 2026."

Half-Year Summary

• Reported revenue down 8.2% (-3.7% at constant FX), driven by the sale of businesses in Russia and Belarus in September 2023 and translational FX headwinds
• Organic revenue down 0.8% at constant rates, mainly due to investment in U.S. commercial actions and negative impact of wholesaler inventory movements
• New Categories revenue down 0.4%; on an organic constant rate basis it was up 7.4%
• Expected H2 acceleration, driven by the roll-out of product innovations, our U.S. commercial actions gaining traction in the first-half of 2024 and the unwind of wholesaler inventory movements
• Revenue from Smokeless products now 17.9% of Group revenue, up 1.4 ppts vs FY23
• New Categories contribution increased by £165 million on an organic, constant FX basis
• Robust Combustibles pricing - AME and APMEA volume and value share gains offset by the U.S.
• Reported profit from operations down 28.3% (with reported operating margin down 9.7 ppts to 34.5%), driven by higher amortisation charges related to U.S. Combustibles brands and lapping comparator inclusive of Russia and Belarus
• Adjusted organic profit from operations down 0.9% at constant FX, adjusted organic operating margin flat at 44.9%
• Reported diluted EPS up 13.8% to 200.3p largely due to one-off credits related to ITC monetisation and net finance costs
• Adjusted organic diluted EPS up 1.3% at constant FX
• PartialmonetisationofITCstake enabled the initiation of a sustainable share buy-back programme, with £700m in 2024 and £900m in 2025

Performance highlights					2		Adjusted
	Reported			Adjusted		Organic3
For six months to 30 June 2024	Current	vs 2023		Current	vs 2023		vs 2023
	rates	(current)		rates	(constant)		(constant)
Cigarette and HP volume share		+30 bps
Cigarette and HP value share		-20 bps
Consumers of Smokeless products1	26.4m	+1.4m
Revenue (£m)	£12,340m	-8.2%		£12,340m	-3.7%	-0.8%
Revenue from New Categories (£m)	£1,651m	-0.4%		£1,651m	+3.1%	+7.4%
Profit from operations (£m)	£4,258m	-28.3%		£5,564m	-3.5%	-0.9%
Category contribution - New Categories (£m)4				£129m	n/m		n/m
Operating margin (%)	34.5%	-9.7 ppts	45.1%	+10 bps		flat
Diluted EPS (pence)	200.3p	+13.8%		169.3p	-2.1%	+1.3%
Net cash generated from operating activities (£m)	£3,165m	-6.2%
Adjusted cash generated from operations (£m)				£2,237m	+20.0%
Cash conversion (%)	74.3%	+17 bps	78.4%	5.6 ppts
Borrowings5 (£m)	£40,158m	-4.8%
Adjusted Net Debt (£m)				£32,973m	-12.4%

The use of non-GAAP measures, including adjusting items and constant currencies, are further discussed from page 48, with reconciliation from the most comparable IFRS measure provided. Notes:

1. Internal estimate, see page 42 for a discussion on the revision to prior estimates. 2. See page 27 for discussion on adjusting items. 3. Organic measures exclude the performance of businesses sold (including the Group's Russian and Belarusian businesses) or acquired, or that have an enduring structural change impacting performance that may significantly affect the users' understanding of the Group's performance in the current and comparator periods to ensure like-for-like assessment across all periods. 4.n/m - not meaningful as New Categories contribution for the first half of 2023 represented losses of £12 million and £29 million on adjusted and adjusted organic bases, respectively. 5. Includes lease liabilities.

1

BAT Interim Announcement 2024			Performance		Financial		Other		Data Lake and
Summary		Review		Statements		Information		Reconciliations

Group Operating Review

Total Group volume and revenue

Prior year data is provided in the tables on pages 47 and 49

				Volume							Revenue
										Reported		Organic
		Reported		Organic			Current	Exchange		Constant		Constant
For six months to 30 June 2024	Unit	vs 2023		vs 2023	£m	vs 2023	£m	£m	vs 2023		vs 2023
New Categories						1,651	-0.4%	58	1,709	+3.1%	+7.4%
Vapour (units mn)	290	-9.0%	-9.0%		869	+0.3%	20	889	+2.6%		+2.6%
HP (sticks bn)	9.9	-17.8%	-1.0%		441	-19.9%	28	469	-14.7%		-4.0%
Modern Oral (pouches mn)	3,522	+50.0%	+52.4%		341	+41.9%	10	351	+46.2%		+48.7%
Traditional Oral (stick eq bn)	3.1	-6.6%	-6.6%		555	-2.7%	14	569	-0.3%		-0.3%
Total Smokeless						2,206	-1.0%	72	2,278	+2.3%	+5.4%
Cigarettes (sticks bn)	250	-12.5%	-6.8%
OTP incl RYO/MYO (stick eq bn)	6	-12.6%		-12.6%
Total Combustibles	256	-12.5%	-6.9%		9,856	-10.1%	513	10,369	-5.5%	-2.6%
Other						278	+12.8%	19	297	+20.9%		+21.9%
Total						12,340	-8.2%	604	12,944	-3.7%	-0.8%
Cigarettes and HP (sticks bn)	260	-12.7%	-6.6%

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Movement in Revenue

The following chart is in £m

							-3.7% at Constant				-8.2% at Current
						-0.8% Organic at					FX headwind 4.5%
						Constant
13,441
		13,056			118		52	12,944
				457
(385)
				(1)		12,340
				(738)						(604)

HY23	Russia	HY23	Comb.	Comb.	New	Traditional	Other	HY24	Translational	HY24
Reported	Belarus	Organic	Volume	Price/Mix	Categories	Oral		Revenue	FX	Reported
Revenue		Revenue						(constant)		Revenue

Note: The term "Comb." above refers to Combustibles.

Reported revenue decreased 8.2% to £12,340 million, largely due to:

• The sale of the Group's businesses in Russia and Belarus in the second half of 2023, with £385 million revenue included in the prior year;
• Lower organic Combustibles volume (down 6.9%) largely due to the challenging Combustibles market and inventory movements in the U.S. combined with the negative impact of the supply chain disruption in Sudan and the headwind on revenue as the Group exited a number of markets in APMEA (largely in Africa); and
• A translational foreign exchange headwind of 4.5%.

These more than offset the continued growth of New Categories, with revenue up 7.4% on an organic, constant rates basis. Our New Categories performance is expected to be weighted to the second half of 2024, driven by the phasing of innovation launches.

Group cigarette volume share grew 30 bps, with value share down 10 bps with gains in AME and APMEA offset by the U.S.

The following analysis is on an organic, constant currency basis, which we believe reflects the operational performance of the Group:

• In the U.S., revenue declined 6.7%, driven by lower Combustibles volume (down 13.7%) with the market down 10.0% due to the continued macro-economic pressures on consumer spending and lack of enforcement against illicit single-use vapour products. Our performance was further impacted by the investment in our commercial actions and related phasing of wholesaler inventory movements, which is expected to fully unwind by the year-end. In Vapour, we maintained value share leadership of closed systems consumables in tracked channels, despite a decline of 1.1 ppts to 51.2%. The growth of illicit single-use vapes continues to negatively impact the legal market with industry volumes in rechargeable closed systems down c. 9% in the first half of the year. Despite this, Vuse delivered revenue in line with the prior year as pricing (+8.0%) offset lower consumables volume (down 8.1%);
• In AME, revenue grew 5.4%, driven by robust Combustibles pricing (with organic price/mix of +5.9%) and further growth in New Categories (up 15.8%), notably in Modern Oral; and
• In APMEA, revenue was up 1.8%, as growth in Pakistan, Indonesia, New Zealand, Nigeria and across the Gulf Cooperation Council (GCC) more than offset Australia (due to lower volume and the growth of illicit trade), Japan (where revenue declined in HP as we lapped a strong comparator following the price repositioning in 2023) and Sudan (driven by the supply chain disruption due to the ongoing conflict in that country).

Please refer to pages 6 to 7 for a further discussion on the performance by category and pages 8 to 10 for discussion on regional performance.

2

BAT Interim Announcement 2024			Performance		Financial		Other		Data Lake and
Summary		Review		Statements		Information		Reconciliations

Group Operating Review

Continued

Profit from operations, operating margin and category contribution

Reconciliation of profit from operations and operating margin, to adjusted profit from operations at constant rates of exchange

Prior year data is provided in the table on page 51

									Adjusted
		Reported		Adj.	Exchange		Adjusted		Organic
		Current					Constant		Constant
For six months to 30 June 2024	£m	vs 2023		£m	£m	£m	vs 2023		vs 2023
Profit from Operations (PfO)	4,258	-28.3%	1,306	245	5,809	-3.5%	-0.9%
Operating Margin	34.5%	-9.7 ppts				44.9%	+10 bps		flat
PfO delivered by
New Categories contribution^						136	n/m		n/m
Rest of the Business						5,673	-5.9%	-3.7%

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments. ^New Categories contribution for the first half of 2023 represented losses of £12 million and £29 million on adjusted and adjusted organic bases, respectively.

Movement in profit from operations

The following chart is in £m

5,935

85

6,020

5,860

79

40

5,809

5,564

(160)

(170)

(245)

4,258

(1,306)

HY23

Adj Items

HY23

Russia

HY23

U.S.

AME

APMEA

HY24

Trans-

HY24

Adj Items

HY24

Reported

Adjusted

Belarus

Organic

Adjusted

lational

Adjusted

Reported

(constant)

FX

(current)

Profit from operations and operating margin

Profit from operations on a reported basis was down 28.3% to £4,258 million, with reported operating margin down 9.7 ppts to 34.5%, due to:

• Higher amortisation and impairment charges recognised of £1,362 million (30 June 2023: £192 million) following the decision to commence amortising the U.S. acquired Combustibles brands from 1 January 2024 combined with additional impairment charges recognised in respect of Camel Snus reflecting the ongoing market dynamics;
• The sale, in the second half of 2023, of the Group's businesses in Russia and Belarus which had contributed £160 million to the Group's profit from operations in the first half of 2023;
• The continued investment in commercial plans in the U.S., including the related phasing of wholesaler inventory movements, which is expected to fully unwind by the year-end;
• High single digit inflation on our cost of sales (mainly related to leaf which we expect to ease in the second half of the year), with a transactional foreign exchange headwind of 2% on profit from operations; and
• A translational foreign exchange headwind of £245 million due to the relative strength of sterling against the Group's operating currencies.

These more than offset an improvement in New Categories performance, which delivered a positive category contribution (on an organic, constant currency basis) of £136 million, compared to a loss of £29 million in the first six months of 2023.

The following analysis is on an organic, adjusted constant currency basis, which we believe reflects the operational performance of the Group:

• In the U.S., adjusted profit from operations was lower than HY23 (down 5.1% to £3,135 million), driven by the lower volume in Combustibles (described earlier) and associated decline in revenue, combined with the investment in commercial plans including the related wholesaler inventory movements; this was partly offset by ongoing efficiency initiatives;
• In AME, adjusted profit from operations increased 5.3%, driven by the UK, Türkiye, Mexico and Romania more than offsetting reductions in Brazil and Canada; and
• In APMEA, adjusted profit from operations increased 3.8%, driven by Japan, Indonesia, New Zealand and Sri Lanka which more than offset a decline in Australia and supply chain disruptions in Sudan.

In aggregate, adjusted organic profit from operations at constant rates was down 0.9%, with adjusted organic operating margin flat at 44.9% at constant rates of exchange.

For a full discussion on the performance by region, please see pages 8 to 10.

3

BAT Interim Announcement 2024			Performance		Financial		Other		Data Lake and
Summary		Review		Statements		Information		Reconciliations

Note: The term "Dil." above refers to diluted.

Basic earnings per share were up 13.9% to 201.1p (30 June 2023: 176.6p) driven by:

• A gain of £1,361 million recognised in respect of the partial sale of the Group's investment in ITC (see page 29); and
• A credit of £590 million related to the debt liability management exercise undertaken in the first half of 2024 (see page 29).

These more than offset the reduction in profit from operations (largely in respect of higher amortisation and impairment charges and due to the sale, in the second half of 2023, of the Group's businesses in Russia and Belarus) discussed earlier.

Basic earnings per share were also positively impacted by the reduction in the number of shares due to the 2024 share buy-back programme, under which 15,189,762 ordinary shares have been repurchased in the six months ended 30 June 2024.

Before adjusting items and including the dilutive effect of employee share schemes, adjusted diluted earnings per share declined 6.8% to 169.3p (30 June 2023: 181.6p).

Excluding the impact of the sale of the Group's businesses in Russia and Belarus and before the impact of translational foreign exchange, on an organic basis, adjusted diluted earnings per share were 1.3% higher at 177.7p. For a full reconciliation of diluted earnings per share to adjusted diluted earnings per share, at constant rates, see page 53.

Enhancing financial flexibility

We continue to make good progress on de-leveraging our balance sheet and expect to be within our narrowed leverage target range of 2.0-2.5x adjusted net debt/adjusted EBITDA range by the end of 2024, driven by continued strong cash generation.

While cash flow is typically weighted to the second half, mainly due to timing of Master Settlement Agreement ("MSA") payments and leaf purchases, we are on track to deliver another year of operating cash conversion in excess of our 90% guidance. We continue to expect the Group to generate c.£40 billion of free cash flow before dividends over the next five years.

Liquidity remains strong with average debt maturity of 9.2 years, and a fixed debt profile of 84% and close currency matching. The Group continues to maintain investment-grade credit ratings, with ratings from Moody's, S&P and Fitch at Baa2 (positive outlook), BBB+ (stable outlook) and BBB+ (stable outlook), respectively, with a medium-term target of Baa1, BBB+ and BBB+. The Group expects gross capital expenditure in 2024 to increase to approximately £600 million, mainly related to the ongoing investments to expand our New Categories portfolio and enhancements to our Modern Oral capacity.

Our active capital allocation framework considers the continued investment in our transformation, the macro-environment, and potential future litigation and regulatory outcomes.

We understand the importance of cash returns to shareholders, and remain committed to our progressive dividend based upon 65% of long-term sustainable earnings. Furthermore, in March 2024, we completed the monetisation of a portion of our ITC stake (lowering our holding from 29.02% (31 December 2023) to 25.49% at 30 June 2024), enabling the initiation of a sustainable share buy-back, starting with £700m in 2024 and £900m in 2025.

However, we are aware of and recognise future uncertainty surrounding a number of ongoing litigation and regulatory challenges:

• with respect to the Franked Investment Income Group Litigation order (described on page 37): we have agreed to repay £0.8 billion to HMRC (being the difference between the amounts received (£0.9 billion net of tax) plus accrued interest, and the amount determined in the July 2021 judgment (£0.3 billion)). This will be paid in instalments with £50 million payable in 2024 (as previously disclosed), £479 million in 2025, £222 million in 2026 and £43 million in 2027. We continue to believe we have strong evidential based arguments to support our remaining claim; and
• in Canada, the confidential CCAA mediation process is still ongoing and the outcome remains uncertain. At 30 June 2024, Canada had a balance of £1,972 million related to restricted cash and cash equivalents and £445 million related to investments held at fair value.

4

BAT Interim Announcement 2024			Performance		Financial		Other		Data Lake and
Summary		Review		Statements		Information		Reconciliations

On Track for Full-Year 2024 Guidance

• Global tobacco industry volume expected to be down c.2% with continued weakness in U.S., France and Sudan, offset by an improving outlook in Türkiye and Mexico.
• Low-singlefigure organic constant currency revenue growth.
• Low-singlefigure organic adjusted profit from operations growth, including a c.2% transactional FX headwind.
• Expected translational foreign exchange headwind of c.4% on full-year adjusted profit from operations.
• Net finance costs now expected to be around £1.7 billion, subject to FX and interest rate volatility.
• Gross capital expenditure in 2024 of approximately £600 million.
• Operating cash flow conversion in excess of 90%.
• Expect to be within our narrowed leverage target range of 2.0-2.5x adjusted net debt/adjusted EBITDA* by year-end 2024.

* at constant rates of exchange

Enquiries

For more information, please contact	Press Office:
Investor Relations:
Victoria Buxton	+44	(0)20 7845 2012	+44 (0)20 7845 2888 | BATplc
Amy Chamberlain +44	(0)20 7845 1124	BAT Media Team
John Harney	+44	(0)20 7845 1263
Jane Henderson	+44	(0)20 7845 1117
BAT IR Team

Webcast and Q&A session:

BAT will hold a live webcast for investors and analysts at 9.30am (BST) on 25 July 2024, hosted by Tadeu Marroco, Chief Executive, and Soraya Benchikh, Chief Financial Officer. The presentation will be followed by a Q&A session. The webcast and presentation slides will be available to view on our website at www.bat.com/latestresults.

If you prefer to listen via conference call, please use the following dial-in details (participant passcode: BAT).

Standard International: +44 (0) 33 0551 0200	SA (toll free): 0 800 980 512
UK (toll free): 0808 109 0700	U.S. (toll free): + 1 866 580 3963

5

BAT Interim Announcement 2024			Performance		Financial		Other	Data Lake and
Summary		Review		Statements		Information	Reconciliations

Category Performance Review

Please see page 49 for a full reconciliation to constant currency and organic metrics, including prior year data.

All references to volume share or value share movement in the following discussion are compared to FY 2023. See page 41 for a discussion on the use of this measure.

Our products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak, and Camel Snus, are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

			Volume							Revenue
								Reported		Organic
	Reported		Organic			Current	Exchange	Constant		Constant
For six months to 30 June 2024	Unit vs 2023		vs 2023		£m	vs 2023	£m	£m vs 2023		vs 2023

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Vapour - Maintained global value share* leadership, and APMEA growing strongly

• Maintained value share leadership in Top Vapour markets** at 40.9%, down 50 bps with gains in Europe offset by the U.S. and Canada.
• Vapour reported revenue up 0.3%, and 2.6% (at constant rates), as pricing more than offset 9.0% decline in volume.
• Strong pipeline of innovation launched in May, expected to drive accelerated growth in the second half.
• Four of the seven Top Vapour markets are profitable1, driven by increased scale and marketing spend effectiveness.

Group Vapour revenue was up 0.3% to £869 million, or 2.6% at constant rates of exchange, as pricing more than offset lower volume (down 9.0% vs H1 2023) driven by the U.S. and Canada.

In the U.S., the world's largest Vapour market, Vuse maintained value share leadership (of closed system consumables and single-use vapour in tracked channels) at 51.2%, down 1.1 ppts. Volume was down 8.1%, in a market that was down c.9%, negatively impacted by the continued growth of illicit single-use vapes. This was largely offset by pricing (+8.0%), with revenue down 2.6%, or 0.1% on a constant currency basis.

We continue to call for more appropriate regulation and enforcement to tackle illicit products in the category, and we welcome signs of increasing action, including the:

• Creation of Federal Multi-Agency Task Force, including Department of Justice and Federal Trade Commission;
• Implementation of vapour directories in 3 states with an additional 10 states having passed vapour directory and enforcement legislation to date in 2024; and
• Encouraging early signs of illicit products volume decline in Louisiana, the first state to implement a vapour directory and enforcement legislation in October 2023, with Vuse Alto capturing the majority of the volume outflow back into the legal segment.

In AME, revenue declined 0.5%, but was up 0.7% on a constant currency basis as growth in Italy, Spain, Romania and Mexico more than offset lower revenue in Canada, driven by a reduction in volume following the flavour ban in Quebec and the lack of enforcement against illegal flavoured vapour products, leading to a reduction in total volume (down 16.3%). Our value share leadership in the Top AME markets was maintained at 32.2% with gains in our Top European markets offset by value share loss in Canada.

In APMEA, total Vapour consumables volume grew 40.0%, with revenue up 41.1%, or 48.4% on a constant currency basis, driven by our geographical expansion into South Korea coupled with strong growth in New Zealand and Indonesia.

In May 2024, we launched Vuse Go 2.0, with upgraded heating technology enabling our entry into pen and box formats in 11 markets. Vuse Go 2.0 also has a device lock and removable battery, addressing key sustainability and safety concerns. In addition, in May 2024, we launched Vuse Go Reload, a rechargeable disposable style device with a device lock, together with upgraded consumables in 8 markets, with further market roll-outs for both new devices and consumables planned for the second half of the year.

• Based on Vuse estimated value share in measured retail for Vapour (i.e., value share of rechargeable closed systems consumables and disposables sales in retail) in the Top global markets**.
  ** Top Vapour markets are defined as the Top markets by industry revenue, being the U.S., Canada, France, the UK, Spain, Poland and Germany. These Top markets account for c.90% of total industry vapour revenue (rechargeable closed systems consumables and disposables in tracked channels) in 2023.
  1. On a market contribution basis.

Heated Products (HP) - Innovation pipeline driving early volume share recovery

• Revenue down 14.7% at constant rates, impacted by the sale of our businesses in Russia and Belarus and price repositionings in Japan and Italy in mid-2023. Revenue down 4.0% on an organic, constant rate basis.
• glo: sequential volume share improvement since December 2023 in Top HP markets***, while volume share declined20 bps to 16.8% vs FY2023.
• Encouraging early consumer response to our new glo Hyper system innovations with Hyper Pro device and improved consumables.
• glo Hyper Pro already launched in 32 markets with premium price positioning.
• veo (our range of herbal products for heating with glo Hyper pro) launched in 19 markets, strongly outperforming competing products.

Total HP revenue was down 19.9%, or 14.7% at constant rates of exchange (or down 4.0% on an organic basis). Consumables volume declined by 17.8%, or 1.0% on an organic basis, impacted by pipeline build at the end of 2023 in certain AME markets ahead of the ban on flavoured tobacco heated consumables. glo has started to deliver sequential category volume share improvement since December 2023 in Top HP markets. This improvement has been driven by the encouraging consumer response to our new innovations glo Hyper Pro, with enhanced consumables, and our tobacco-free consumables range veo.

As part of our enhanced innovation pipeline, glo Hyper Pro has a distinctive EasyView screen with HeatBoost technology, with premium price positioning. Through this and our new enhanced consumables, glo's category volume share in Japan and Italy has stabilised since January 2024. With the majority of our roll-outs now completed, we expect this performance momentum to continue in the second half of 2024 and drive an acceleration in our performance.

In AME, volume was down 31.8%, driven by the sale of the Group's businesses in Russia and Belarus, with revenue down 17.5%. On an organic basis, volume was up 2.2%, with revenue growth of 6.8% at constant currency, driven by strong performances in Poland, Germany, Romania and Spain, further portfolio price laddering and volume share gains in Top HP markets.

In APMEA, volume was down 3.1%. Revenue was down 22.4%, or 13.1% at constant currency, against a strong comparator impacted by price repositioning in Japan in mid-2023.

• Top HP markets are defined as the Top markets by industry revenue. Top markets are Japan, South Korea, Italy, Germany, Greece, Hungary, Poland, Romania and the Czech Republic. These Top markets account for c.80% of total industry HP revenue in 2023.

6

BAT Interim Announcement 2024			Performance		Financial		Other	Data Lake and
Summary		Review		Statements		Information	Reconciliations

Category Performance Review

Continued

Modern Oral - Strong growth and continued AME leadership

• Modern Oral reported revenue up 41.9%, or 46.2% at constant rates, with volume growth of 50.0%.
• BAT's volume share in Top markets* up 1.1 ppts to 10.6% of Total Oral and up 30 bps to 27.4% of Modern Oral.
• AME leadership position maintained, including Sweden where BAT is leading the Modern Oral category with 57.4% market share.
• Strong volume and revenue growth in the U.S. following the national roll-out of refreshed Velo brand expression.
• Emerging market opportunities, illustrated by strong volume growth in Pakistan (+50.0%) and South Africa (+261%).

Modern Oral is the fastest growing New Category and its global footprint continues to develop quickly.

We continue to advocate for science-based regulation of the category. In April 2024, we published the findings of a four-year Velo research study, which support the reduced-risk potential of our oral nicotine pouches compared to traditional tobacco products.

In the U.S., volume grew 226%, with volume share up 50 bps to 5.0%. Revenue was up 117% (or 122% at constant rates), driven by the traction of our refreshed Velo brand expression, partly offset by returns of the previous product. While we continue to await the outcome of our PMTA submission for our Velo product, we are encouraged by results from the phased roll-out with 14.5% volume share in our first pilot in New York, up 3.9 ppts. In addition, utilising our insights regarding consumers of Traditional Oral using Modern Oral and following positive testing, we started to roll out Grizzly Modern Oral nationally in the U.S. in June 2024.

In AME, we are category leaders, with 64.7% volume share of the Modern Oral category (down 10 bps) and lead in 20 Modern Oral markets, with volume growth of 43.0% and revenue up 44.1% at constant rates. This reflects the strength of our position in both established oral markets like Sweden, Denmark and Norway, and also our strong momentum in markets that are more recent adopters of Modern Oral, such as the UK and Poland. As the Modern Oral category continues to grow and becomes more established in AME, we continue to see strong growth in the Nordics. In Sweden, Velo is still the largest of any snus or Modern Oral nicotine pouch brand.**

In APMEA, our volume grew 32.6% and our revenue grew 15.6% (or 23.6% at constant rates), fuelled by robust growth from Global Travel Retail and continued strong Emerging Market volume performances in Pakistan (up 50.0%) and South Africa (up 261%).

• Top Oral and Modern Oral markets are defined as the Top markets by industry revenue, being the U.S., Sweden, Denmark, Norway, Switzerland, UK and Poland, accounting for c.90% of total industry Modern Oral revenue in 2023.

** Source: Kantar New Category Tracker.

Combustibles

• Group volume share up 30 bps in Top cigarette markets*, led by AME (up 30 bps) and APMEA (up 70 bps) and partly offset by the U.S. (10 bps down).
• Group value share down 10 bps in Top cigarette markets, with gains in AME and APMEA offset by geographic mix and the implementation of U.S. commercial plans.
• U.S. volume share down 10 bps and value share down 30 bps vs 2023 with sequential improvement vs. FY2023 driven by premium.
• Robust Combustibles pricing with a positive organic price/mix of 4.3% more than offset by an organic volume decline of 6.9% resulting in organic revenue down 2.6% at constant rates of exchange.

Group cigarette volume was down 12.5% to 250 billion sticks (30 June 2023: 286 billion sticks) as volume growth in Türkiye, Brazil, Pakistan and Indonesia was more than offset by lower volume in the U.S., Vietnam, Azerbaijan, Chile and Bangladesh, and the supply chain disruption in Sudan, market exits in APMEA (notably in Africa) while also reflecting the sale of our businesses in Russia and Belarus. On an organic basis, this was a decline of 6.8%.

In the U.S., cigarette volume declined 13.7%, compared to an industry which was down 10.0%, largely due to macro-economic pressures impacting consumer behaviour and the increase of solus-usage of alternative nicotine products, driven by the growth of illicit single-use Vapour products. In addition, our volume decline was impacted by the phasing of wholesaler inventory movements (2%) related to our commercial actions. The majority of these previously announced commercial initiatives have now been completed and are gaining traction, including:

• Strong performance of Newport soft-pack in key investment states which, together with further volume and value share gains in Natural American Spirit, has driven our volume share of the premium segment up 40 bps; and
• Lucky Strike continues to grow volume and value, maintaining its position as the fastest growing Combustibles brand in the U.S.

Revenue from Combustibles was down 10.1% to £9,856 million (30 June 2023: £10,967 million) due to the decline in volume (in part due to the sale of our businesses in Russia and Belarus in 2023) and a translational foreign exchange headwind. Organic revenue declined 2.6% at constant rates of exchange basis.

Strong pricing notably in Brazil, Pakistan, Türkiye and Germany, more than offset negative geographic mix (driven by the U.S.) and lower pricing in Canada, with an overall organic price/mix of 4.3%.

• Top cigarette markets are defined as the Top cigarette markets by industry revenue, being the U.S., Japan, Bangladesh, Brazil, Germany, Pakistan, Mexico and Romania, accounting for c.65% of total industry cigarettes revenue in 2023.

Traditional Oral

Group volume declined 6.6% to 3.1 billion stick equivalents. Total revenue was £555 million (30 June 2023: £571 million), down 2.7% or 0.3% at constant rates. Continued strong pricing in the U.S. drove Group price/mix of 6.3%. This was more than offset by the reduction in volume in both AME (down 7.9%) and the U.S. (down 6.4%) in the first half of 2024.

In the U.S. (which accounts for 97% of the Group's revenue from the category), revenue declined 0.4% (at constant rates of exchange) as pricing was more than offset by the volume decline. This was largely due to continued strong macro-economic headwinds and the accelerated cross-category use of Modern Oral. Value share in Traditional Oral decreased 60 bps, with volume share down 40 bps.

Beyond Nicotine

BTV has completed 25 investments since its launch in 2020 and continues to invest in innovative, consumer-led brands, new sciences and technologies.

The Group has continued its exploration of Beyond Nicotine, with our functional shot brand Ryde. Following successful pilot launches, we are commencing national roll-outs in Australia and Canada.

7

BAT Interim Announcement 2024			Performance		Financial		Other	Data Lake and
Summary		Review		Statements		Information	Reconciliations

Regional Review

The performances of the regions are discussed below. The following discussion is based upon the Group's internal reporting structure.

All references to volume share or value share movement in the following discussion are compared to FY 2023. See page 41 for a discussion on the use of these measures. Our products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak, and Camel Snus, are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

United States (U.S.):

• Vuse maintained value share leadership in tracked channels - despite a 2.6% decline in revenue, being a decrease of 0.1% at constant rates of exchange, driven by lower volume due to the continued impact of illicit single-use vapour products.
• Combustibles volume down, driven by macro-economic pressures continuing to impact consumer affordability, our investment in commercial plans, the negative impact of wholesaler inventory movements and the continued growth of illicit single-use vapour products.
• Grizzly Modern Oral commenced national roll-out in H1 2024.

Volume/Revenue

Please see page 49 for a full reconciliation to constant currency and organic metrics, including prior year data.

Volume

Revenue

Reported

Organic

Reported

Organic

Current

Exchange

Constant

Constant

For six months to 30 June 2024

Unit

vs 2023

vs 2023

£m

vs 2023

£m

£m

vs 2023

vs 2023

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Reported revenue decreased 9.0%, driven by the translational foreign exchange headwind and lower Combustibles volume. Smokeless now represents 19.8% of total revenue.

On a constant currency basis (excluding translational foreign exchange), which we believe reflects the operational performance, revenue declined 6.7%. This was driven by the relative performance in:

• Vapour, where the U.S. is the world's largest Vapour market. Vuse maintained leadership in value share (of Vapour closed systems consumables in tracked channels) despite a decline in value share of 1.1 ppts to 51.2%. Revenue was marginally lower, down 0.1%, as pricing (+8.0%) was offset by an 8.1% decline in consumables volume due to the continued impact of illicit single-use vapes which we estimate to be more than 50% of the total Vapour market. We welcome the 3 states that have implemented vapour directories and the additional 10 states that have passed vapour directory and enforcement legislation in 2024. We are encouraged by the illicit volume decline in Louisiana following the implementation of legislation, with Vuse Alto capturing the majority of volume flowing back to the legal segment;
• Modern Oral revenue increased 122%, driven by higher volume (up 226%) following the roll-out of the refreshed Velo brand expression and as we commenced the national roll-out of Grizzly Modern Oral - building on the growing trend of Traditional Oral consumers moving to Modern Oral;
• Traditional Oral revenue declined 0.4%, as pricing was more than offset by lower volume (down 6.4%) due to the continued strong macro-economic headwinds and the accelerated cross-category use of Modern Oral category; and
• Combustibles revenue declined 8.5%, driven by a reduction in volume of 13.7%, with the industry volume down 10.0%. This was largely due to the growth of illicit single-use vapour products, weak U.S. macro-economic environment and the deployment of our commercial plans including the phasing of wholesaler inventory (which is expected to fully unwind in the second half of 2024). Our commercial plans are gaining traction, with:
• • Premium volume share up 40 bps, driven by Newport soft-pack and Natural American Spirit; and
  • A good performance from Lucky Strike as the deep discount segment growth stabilised, benefiting the value for money segment.

Combustibles volume share was down 10 bps with value share down 30 bps as affordability pressures on consumers impacted the Group's more premium-skewed portfolio.

Profit from operations and operating margin

Please see page 47 for a full reconciliation to constant currency and organic metrics, including prior year data.

									Adjusted
		Reported		Adj.	Exchange		Adjusted		Organic
		Current					Constant		Constant
For six months to 30 June 2024	£m	vs 2023		£m	£m	£m	vs 2023		vs 2023
Profit from Operations	1,775	-44.0%	1,278	82	3,135	-5.1%	-5.1%
Operating Margin	33.0%	-20.6 ppts				56.9%	100 bps		100 bps

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Reported profit from operations declined by 44.0%, largely due to the amortisation charges of £721 million following the decision to commence amortising the acquired U.S Combustibles brands from 1 January 2024 and an impairment charge of £472 million in respect of Camel Snus (see page 27). This was partly offset by the recognition of net income of £132 million in connection with the settlement of historical litigation in respect of the Fox River (see page 36). Accordingly, reported operating margin was down 20.6 ppts to 33.0%.

Excluding adjusting items (largely in respect of amortisation, impairment and the Fox River) and a translational foreign exchange headwind of £82 million, our performance was negatively impacted by the decline in Combustibles volume (described above). Adjusted profit from operations, at constant rates of exchange (which excludes the impact of adjusting items and translational foreign exchange) was down 5.1% to £3,135 million.

8

BAT Interim Announcement 2024			Performance		Financial		Other	Data Lake and
Summary		Review		Statements		Information	Reconciliations

Regional Review

Continued

Americas and Europe (AME):

• Multi-categoryregion with Smokeless now representing 19.6% of revenue.
• New Category revenue growth of 4.4%, or 15.8% on an organic basis, at constant rates of exchange.
• Resilient Combustibles performance driven by pricing.
• Combustibles volume share up 30 bps and value share up 20 bps.

Volume/Revenue

Please see page 50 for a full reconciliation to constant currency and organic metrics, including prior year data.

			Volume						Revenue
	Reported		Organic				Reported		Organic
					Current	Exchange	Constant		Constant
For six months to 30 June 2024	Unit vs 2023		vs 2023		£m vs 2023	£m	£m vs 2023		vs 2023

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Reported revenue was down 7.5% at current rates due to the sale of the Group's businesses in Russia and Belarus in the second half of 2023, combined with a translational foreign exchange headwind of 4.3%. These more than offset a robust organic growth from Combustibles (up 3.0%) and New Categories (up 15.8%).

Smokeless now represents 19.6% of total revenue.

On an organic, constant currency basis (excluding translational foreign exchange), which we believe reflects the operational performance, revenue increased by 5.4% to £4,580 million, driven by:

• Higher revenue from Combustibles (up 3.0%), largely driven by robust pricing across the region (notably in Germany and Brazil) coupled with volume performance in Türkiye, Mexico and Brazil, which more than offset a reduction in revenue in Canada;
• Continued growth in Vapour revenue (up 0.7%), largely due to the performance of Vuse in Italy, Spain, Romania and Mexico, which more than offset lower revenue in Canada, driven by a reduction in volume following the flavour ban in Quebec and lack of effective enforcement;
• HP (up 6.8%), as revenue was higher in Poland followed by Germany, Romania and Spain (partly offset by reductions in the Czech Republic), driven by the roll-out of glo Hyper Pro and other consumables initiatives such as Veo.
• Modern Oral revenue growth of 47.0%, driven by Sweden, the UK, Norway, Austria, Poland and Canada, with the latter driven by the launch of our nicotine replacement therapy product, Zonnic.

Profit from operations and operating margin

Please see page 47 for a full reconciliation to constant currency and organic metrics, including prior year data.

									Adjusted
		Reported		Adj.	Exchange		Adjusted		Organic
		Current					Constant		Constant
For six months to 30 June 2024	£m	vs 2023		£m	£m	£m	vs 2023		vs 2023
Profit from Operations	1,473	-16.6%	14	80	1,567	-4.9%	+5.3%
Operating Margin	33.7%	-3.7 ppts				34.2%	-60 bps		flat

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Reported profit from operations declined by 16.6% due to the sale of the Group's businesses in Russia and Belarus in the second half of 2023, while 2023 also benefited from the settlement of a tax dispute in Brazil (£160 million) that did not repeat. H1 2024 was also impacted by a translational foreign exchange headwind.

Excluding the impact of foreign exchange, adjusting items and on an organic basis, adjusted profit from operations was up 5.3% to £1,567 million, driven by an improved financial performance in:

• Romania, due to pricing in Combustibles;
• Türkiye, due to the revenue performance in Combustibles;
• Mexico, due to the robust volume performance in Combustibles; and
• An improving financial performance across our New Categories, specifically in the UK (in Vapour and Modern Oral), Germany (HP), Poland (HP), Sweden (Modern Oral) and Switzerland (across all New Categories).

These increases more than offset lower adjusted profit from operations in Canada (largely due to the reduction in revenue).

9

BAT Interim Announcement 2024			Performance		Financial		Other	Data Lake and
Summary		Review		Statements		Information	Reconciliations

Regional Review

Continued

Asia-Pacific, Middle East and Africa (APMEA):

• New Category revenue down 12.2%, or 3.3% at constant rates of exchange, driven by HP in Japan.
• Robust Combustibles performance led by pricing, which more than offset lower volume (partly due to market exits, notably in Africa).
• Combustibles value share up 20 bps with volume share up 70 bps, driven by Bangladesh and Pakistan.

Volume/Revenue

Please see page 50 for a full reconciliation to constant currency and organic metrics, including prior year data.

Volume

Revenue

Reported

Organic

Reported

Organic

Current

Exchange

Constant

Constant

For six months to 30 June 2024

Unit

vs 2023

vs 2023

£m

vs 2023

£m

£m

vs 2023

vs 2023

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Reported revenue declined 7.7% due to a translational foreign exchange headwind. Constant currency revenue was 1.8% higher, as growth in Pakistan, Indonesia, New Zealand, Nigeria, Sri Lanka and across the GCC more than offset lower revenue in Australia (driven by lower industry volume in part due to the growth of illicit trade in Combustibles and Vapour), Japan (where revenue declined in HP due to the price repositioning in mid-2023) and due to supply chain disruptions in Sudan due to the ongoing conflict.

Smokeless now represents 10.9% of total revenue.

On a constant currency basis (excluding translational foreign exchange), which we believe reflects the operational performance, New Categories decreased by 3.3%, driven by a reduction in HP in Japan, following the price repositioning in mid-2023. This more than offset higher revenue in:

• Vapour, driven by geographical expansion into South Korea coupled with strong growth in New Zealand and Indonesia; and
• Modern Oral, due to continued strong volume performance in Pakistan and within Global Travel Retail.

Profit from operations and operating margin

Please see page 47 for a full reconciliation to constant currency and organic metrics, including prior year data.

									Adjusted
		Reported		Adj.	Exchange		Adjusted		Organic
		Current					Constant		Constant
For six months to 30 June 2024	£m	vs 2023		£m	£m	£m	vs 2023		vs 2023
Profit from Operations	1,010	+1.0%	14	83	1,107	+3.8%	+3.8%
Operating Margin	39.1%	3.4 ppts				38.8%	70 bps		70 bps

Constant currency measures are calculated based upon a re-translation, at the prior year's exchange rates, of the current year's results of the Group and, where applicable, its segments.

Profit from operations was 1.0% higher, despite a translational foreign exchange headwind.

Excluding adjusting items and translational foreign exchange, adjusted profit from operations at constant rates was up 3.8% to £1,107 million was driven by:

• Japan, largely due to marketing investment optimisation and productivity savings;
• Indonesia, largely due to pricing and volume growth;
• New Zealand, driven by pricing; and
• Sri Lanka, largely due to pricing in Combustibles.

These more than offset a decline in Australia (driven by lower industry volume) and in Sudan, where the Group was negatively impacted by the ongoing conflict leading to supply chain disruptions.

10