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Delivering
Transformation

Combined Performance and ESG Summary 2022
Scroll to our 2022 overview

Chief Executive’s Review 

Transforming and Delivering
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2022 shows that our strategy is working. We have strong, global New Category brands, targeted geographic expansion plans and an unwavering commitment to innovation that means we are delivering for the consumer.

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Chair's Introduction

Transforming for A Better Tomorrow™
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In an increasingly complex world, BAT's North Star remains its purpose – to build A Better Tomorrow. To succeed in delivering this, we must continue to win and nurture the trust of all our stakeholders, including shareholders.

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Finance and Transformation
Director’s Overview

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We are committed to our active capital allocation framework, which will deliver long-term value to our shareholders, driven by our cash flow generation and
deleverage plans.

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Our year in numbers 2022

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Download PDF

Our performance metrics

Number of Non-Combustible Product Consumers

0.0m
XXX%

Cigarette and THP volume share growth (bps)

-0bps
XXX%

Cigarette and THP value share growth (bps)

flat
2021: +20 bps
2020: +20 bps

Vapour (mn 10ml units/pods)

0
14%

THP (bn sticks)

0
2021: 19
2020: 11

Cigarettes (bn sticks)

0
2021: 637
2020: 638

Profit from Operations (£m)

0,0
2.8%

Revenue (£m)

0,0
2021: 25,684
2020: 25,776

Revenue from New Categories (£m)

0,0
2021: 2,054
2020: 1,443

Scope 1 & 2 (market based) CO2e emissions (thousand tonnes)
Target: Net Zero by 2050

0
2.8%

% female representation in management roles

0
2021: 39
2020: 38

% waste sent to landfill from direct operations

0.0
2021: 8.70
2020: 8.90

Our purpose

Our purpose is to reduce the health impact of our business by offering a greater choice of enjoyable and less risky products*† for our consumers.

We are clear that combustible cigarettes pose serious health risks.
The only way to avoid these risks is not to start or to quit. However, we encourage those who would otherwise continue to smoke to switch completely to scientifically-substantiated, reduced-risk alternatives*†.

To deliver this, BAT is transforming into a truly multi-category consumer products business, with a mission to stimulate the senses of new adult generations.

Chief Growth Officer

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Our purpose to build A Better Tomorrow™, by reducing the health impact of our business, while also driving excellence across ESG matters, is well-aligned to the attitudes and expectations of our stakeholders.

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Chief Sustainability Officer

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We challenge ourselves to take a forward-looking, future-oriented approach: in our products, our governance, our stakeholder engagement, our ESG goals and targets, and in our reporting.

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A Strategy for Accelerated Growth

In 2022, 15% of Group revenue was from non-combustible products. This was achieved through a multi-category approach which is the very essence of our purpose to build A Better Tomorrow – providing adult consumers with a range of enjoyable and less risky*† choices for every mood and moment.

BAT strategy diagram
Our Mission
How We Win
Our Purpose
Key Stakeholder Outcomes
Ethos

Short-Term Deliverables to Fuel A Better Tomorrow

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Simplify the Business

Our ongoing simplification programme, Project Quantum, which had realised £1.9 billion of annualised savings through simplification and efficiencies by the end of 2022.

Read more
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Ensure a Step Change in New Categories Performance

With our unique cross-category
consumer understanding, we are
clear there is a huge opportunity
for our New Categories.

Read more
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Drive Value From Combustibles

We drive value from combustibles to fuel our investment in, and transition revenue to, New Categories.

Read more

A Decade of Portfolio

Transformation

all BAT products on colourful backgrounds
an icon of two BAT products

2013

Our first Vapour product launched in the UK

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2016

Our first Tobacco Heating
Product launched in Japan

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2017

Our Modern Oral nicotine
pouches are launched

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2019

Our New Category portfolio is consolidated under three global brands - Vuse, Velo and glo

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2020

Our evolved strategy to deliver A Better TomorrowTM by reducing the health-impact of our business is launched

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2021

Vuse becomes number one global vaping brand by value share and the first global carbon neutral vape brand

Our Consumer-Centric Multi-Category Portfolio

BAT is a leading consumer-centric, multi-category consumer goods business dedicated to stimulating the senses of adult consumers worldwide. Our portfolio reflects our commitment to meeting the evolving and varied needs of today’s adult consumer who seeks sensorial enjoyment for different moods and moments.

Strategic portfolio

Non-Combustibles

Our global business

To build A Better Tomorrow™, our marketplace analysis delivers insights regarding consumer trends and segmentation. This facilitates our geographic brand prioritisation across our regions and markets.

To achieve a step change in New Categories, we are creating the Enterprise of the Future – building new capabilities around the world focused on science, innovation and digital information. Consumer preferences and technology are evolving rapidly, and we are staying ahead of the curve with our digital hubs, the creation of innovation hubs and further development of our world-class R&D laboratories. We are also leveraging the expertise of our external partners and are looking forward to exciting results from our venturing initiative, Btomorrow Ventures.

Select a region to learn more

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Map is accurate as at 31 Dec 2022 and is representative of general geographic regions and does not suggest that the Group operates in each country of every region.

Revenue by region
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£0,0m
Total revenue
Revenue by product category
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£0,0m
Total revenue

Our business is divided into four complementary regions, with a balanced presence in both high-growth emerging markets and highly profitable developed markets.

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0

regions

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0

major product
categories

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0

employee
nationalities

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0,000+

employees

Our business model

As a global business, we strive to understand our diverse consumers, develop products to satisfy their preferences and ultimately distribute them across 170+ markets. Taking into account feedback from stakeholders also enables us to refine our strategy, deliver sustainable value and build A Better Tomorrow.

business model diagram

A Better Tomorrow for:

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Consumers
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Shareholders
and investors
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Society
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Employees

As one of the most long-standing and established consumer goods businesses in the world, we have a unique view of the consumer across our product categories, which is increasingly driven by powerful data and analytics. These insights ensure that the development and responsible marketing of our products are fit to satisfy consumer needs.

Driven by our unique and data-driven consumer insight platform (PRISM), we focus on product categories and consumer segments across our global business that have the best potential for long-term sustainable growth.

Link to risks
Tobacco, New Categories and other regulation interrupts growth strategy
Inability to develop, commercialise and deliver the New Categories strategy
Climate and circularity

World-class science is needed to substantiate the quality, product safety and reduced-risk potential of our New Category products. This is crucial for building consumer trust and encouraging adult smokers to completely switch to less risky alternatives*†.

We have an extensive scientific research programme in a broad spectrum of scientific fields, including molecular biology, toxicology and chemistry. We are transparent about our science and publish details of our research programmes on our dedicated website, www.batscience.com, and the results of our studies in peer-reviewed journals.

Link to risks
Inability to develop, commercialise and deliver the New Categories strategy

As consumer preferences and technology rapidly evolve, we rely on our growing global network of digital hubs, innovation hubs, world-class R&D laboratories, external partnerships and our corporate venturing initiative, Btomorrow Ventures, to stay ahead of the curve.

Driving sustainable growth is at the core of our innovation. We make significant investments in research and development to deliver innovations that satisfy or anticipate consumer preferences and generate growth for the business.

Led by our strength in developing consumer insights, each innovation helps us on our journey to build A Better Tomorrow  by reducing the health impact of our business.

Link to risks
Inability to develop, commercialise and deliver the New Categories strategy

The majority of our tobacco is sourced by BAT Group's vertically integrated Leaf Operations through direct contracts with c.81,000 farmers. The remainder is from third-party suppliers that, in turn, contract with an estimated 195,000 farmers. The vast majority of tobacco farms in our supply chain are smallholder family farms.

Beyond tobacco, we source product materials like paper and filters for cigarettes and, for our New Category products, we have a growing supply chain in consumer electronics and eliquids. We also have a vast number of suppliers of indirect goods and services that are not related to our products, such as for IT services and facilities management.

Link to risks
Geopolitical tensions Injury, illness or death in the workplace
Solvency and liquidity
Climate and circularity

We manufacture high-quality products in facilities all over the world. We also ensure that these products and the tobacco leaf we purchase are in the right place at the right time.

Our New Category products are manufactured in a mix of our own and third-party factories. We work to ensure that our costs are globally competitive and that we use our resources as effectively as possible.

Link to risks
Geopolitical tensions Injury, illness or death in the workplace
Disputed taxes, interest and penalties Foreign exchange rate exposures
Solvency and liquidity
Climate and circularity

By applying modern technologies, including AI and machine learning, we ensure our products are where they are needed when they are needed.

Our products are sold around the world and we distribute them effectively and efficiently using a variety of distribution models suited to local circumstances and conditions. These distribution models include retailers, supplied through our direct distribution capability or exclusive distributors, and our Direct-to-Consumer business – which has been accelerated through the deployment of owned e-commerce sites.

Link to risks
Tobacco, New Categories and other regulation interrupts growth strategy
Inability to develop, commercialise and deliver the New Categories strategy
Litigation
Foreign exchange rate exposures
Climate and circularity

Tobacco and nicotine products should be marketed responsibly to adults only and not designed to appeal to youth.

Through a globally responsible approach to marketing, we help to raise standards and prevent underage access, while growing our market share by encouraging adult consumers to choose our products over those of our competitors.

Our International Marketing Principles (IMP) govern our marketing across all product categories. They include strict requirements to be responsible, accurate and targeted at adult consumers only. Our IMP are applied even when they are stricter than local laws.

Link to risks
Tobacco, New Categories and other regulation interrupts growth strategy
Inability to develop, commercialise and deliver the New Categories strategy
Litigation

We have a powerful brand portfolio that we are proud of. Our global brands are well positioned, with leading-edge insights, science and innovation behind our product pipeline.

We offer adult consumers a range of products, including combustible products, Vapour, Modern Oral and THPs, in markets around the world. Our range of high-quality products covers all segments, from value-for money to premium.

Link to risks
Competition from illicit trade
Geopolitical tensions
Significant increases or structural changes in tobacco, nicotine and New Categories related taxes
Inability to develop, commercialise and deliver the New Categories strategy
Foreign exchange rate exposures
Disputed taxes, interest and penalties
Climate and circularity

Accelerating the Enterprise of the Future

QUEST is our Group-wide programme designed to accelerate our transformation into the Enterprise of the Future: a global, consumer-centric, multi-category company, with sustainability at its core.

Q
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Quantum

has achieved annualised savings of £1.9bn whilst we continue simplifying the organisation.

£0m+

productivity savings in 2022

0

new Global Business Services (GBS) Hubs embedded in Mexico, Poland and Pakistan

0+

new capabilities added to our GBS Hubs, such as our Customer & Consumer Engagement Centres

u
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Unleash Innovation

is transforming our capabilities to win as a multi-category business.

New

global device development centre in Shenzhen, China

0+

engineers, scientists and product developers recruited

~0x

New Categories R&D spend vs 2021

e
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Empowered Organisation

is strengthening our talent pool.

0,000+

new capability hires since 2019

0

global graduates from 39 markets at our graduate academy for future leaders

0

consecutive years as a
certified Global Top Employer

s
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Shaping Sustainability

continues to put sustainability front and centre of everything we do.

0

ground-breaking studies with New Category product consumers1

0

key environmental metrics tracked as part of our new, dynamic Green Impact Analytics tool

0+

stakeholder dialogues undertaken as part of our first Double Materiality Assessment

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Technology & Digital

is creating new channels to connect with our consumers and enabling the simplification of our organisation.

0m

consumers in our contactable consumer database (2021: 14.2m)

0.0%

increase in Active Subscriptions – delivering 31.8% of total
e-commerce revenue

0k

hours saved via 290 new Robotic Process Automation bots

1. indicating that consumers, who switched completely to Velo or to glo, had better results for several biomarkers linked to early developmental processes of smoking-related diseases compared with smokers.

† Our Vapour product Vuse (including Alto, Solo, Ciro and Vibe), and certain products, including Velo, Grizzly, Kodiak, and Camel Snus, which are sold in the U.S., are subject to FDA regulation and no reduced-risk claims will be made as to these products without agency clearance.

* Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.