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Half-year Report to 30 June 2015

PRESS RELEASE

29 JULY听2015

Half-year Report to 30 June 2015

Good performance in a tough environment

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KEY FINANCIALS

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Six听months results - unaudited

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听 2015
Current
rates		 2015
Constant
rates		 2014
听		 Change
Current
rates		 Change
Constant
rates
Revenue 拢6,398尘 拢6,962尘 拢6,798尘 -5.9% +2.4%
Adjusted profit from operations* 拢2,507尘 拢2,699尘 拢2,665尘 -6.0% +1.3%
Profit from operations 拢2,347尘 拢2,533尘 拢2,458尘 -4.6% +3.0%
Adjusted diluted听earnings per share* 100.2p 105.8p 101.8p -1.6% +3.9%
Basic听earnings per share 142.4p - 93.3p +52.6% -
Interim dividend per share 49.4p - 47.5p +4.0% -

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*The non-GAAP measures, including adjusting items and constant currencies, are set out on page 22 of the attached full announcement.

HALF-YEAR HIGHLIGHTS

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  • 听Group revenue was up by 2.4% at constant rates of exchange, driven by good pricing. Reported revenue was 5.9% lower, as a result of adverse exchange rate movements.
  • 听Adjusted Group profit from operations was ahead of prior year by 1.3% at 拢2,699 million at constant rates of exchange, but would have been significantly higher after adjusting for the effect of transactional foreign exchange. At current rates of exchange, adjusted profit from operations fell by 6.0%.
  • 听Profit from operations, at current rates of exchange, was 4.6% lower at 拢2,347 million.
  • 听Operating margin, at current rates of exchange, was maintained despite the significant transactional foreign exchange impact.
  • 听Adjusted diluted earnings per share, at constant rates of exchange, was up by 3.9%. At current rates, it was 1.6% lower at 100.2p.
  • 听Basic earnings per share was 52.6% higher at 142.4p (2014: 93.3p), benefiting from gains as a result of the acquisition of Lorillard Inc. by the Group鈥檚 associate Reynolds American Inc.
  • 听Group cigarette volume was 322 billion, a decline of 2.9% against an estimated industry decline of approximately 3.5%.
  • 听The Group鈥檚 cigarette market share in its Key Markets [1] continued to grow strongly [2], driven by the Global Drive Brands which increased volume by 6.0%.
  • 听The Group continued to invest in the future, concluding the previously announced investment of US$4.7 billion in cash in the enlarged Reynolds American Inc., announcing the proposed 鈧550 million acquisition of TDR, progressing the possible offer for the shares in Souza Cruz not currently owned by the Group and strengthening the pipeline of Next Generation Products.
  • 听The Board has declared an interim dividend of 49.4p, being one third of the 2014 dividend, a 4.0% increase on last year. This will be paid on 30 September 2015.

[1] The Group鈥檚 Key Markets represent over 70% of the Group鈥檚 volume
[2] Key Market offtake share, as independently measured by AC Nielsen

Richard Burrows, Chairman, commenting on the 6 months ended 30 June 2015

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鈥淎s we anticipated, the first half of the year has been impacted by adverse exchange rate movements and a strong first half volume comparator. The underlying performance of the business remains strong and we are confident that we are on course to deliver an improved second half, leading to another year of good earnings growth at constant rates of exchange. Underscoring our commitment to growing shareholder returns we intend to reflect this good underlying performance with an increase in the full year dividend.鈥

Half-year report to 30 June 2015 - Full announcement (1.1 mb)

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