| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Investment held at fair value | | | | | | | | | | |
| | | | | | | | | | |
\u2013 interest rate swaps | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | |
\u2013 forward foreign currency contracts | | | | | | | | | | |
| | | | | | | | | | |
Liabilities at fair value | | | | | | | | | | |
| | | | | | | | | | |
\u2013 interest rate swaps | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | |
\u2013 forward foreign currency contracts | | | | | | | | | | |
Liabilities at fair value | | | | | | | | | | |
board and will account for the investment as an associate. The Group\u2019s investment was allocated against the Group\u2019s share of Sanity Group\u2019s net
assets, including the recognition of \u00a34\u00a0million of intangibles, and goodwill of \u00a328\u00a0million, which represents a strategic premium in
expectation of the legalisation of cannabis in Germany and elsewhere in Europe.
In November 2022, the Group announced that it had invested in Charlotte\u2019s Web Holdings, Inc. (Charlotte\u2019s Web), via a convertible
debenture of \u00a348\u00a0million. Charlotte's Web is based in Colorado, USA, listed on the Toronto Stock Exchange, and holds a prominent
position in innovative hemp extract wellness products across major retail channels, including food/drug/mass retail, and natural grocery
and vitamin retailers. Their product formats include tinctures, capsules, chews and topicals. The debenture is currently convertible into a
non-controlling equity stake in Charlotte\u2019s Web of approximately 19.9% and is convertible at BAT\u2019s discretion. Given that the nature of the
investment as a convertible loan note does not give the Group any current right to a share of the earnings or net assets of the investee,
despite the ability to appoint directors, the investment will be recognised at fair value through profit and loss with fair value changes in
the investment recognised in net finance costs. On conversion of the loan note, the Group will equity account for its investment.
During 2022, the Group increased its ownership of a wholesale producer and distributor operating in the agriculture sector based in
Uzbekistan, FE \u201cSamfruit\u201d JSC by 2.8% to 45.4%, for \u00a31\u00a0million. During 2021, the ownership was increased by 4%, for \u00a31\u00a0million and in
2020, by 28.4%, for \u00a35\u00a0million. The Group accounts for the investment as an associate.
In addition, during 2022, the Group made a non-controlling investment in Steady State LLC, a U.S. based cGMP certified manufacturer
and distributor of cannabinoid ingredients, food products and nutraceuticals, for \u00a34\u00a0million. The Group accounts for the investment as an
associate.
(d) Assets held for sale and business disposals
(i) BAT Russia
On 11 March 2022, the Group announced the intention to transfer its Russian business in full compliance with international and local laws.
The Group has two subsidiaries in Russia (BAT Russia), being JSC British American Tobacco-SPb and JSC International Tobacco
Marketing Services (ITMS). In addition, the Group\u2019s subsidiary in Belarus, International Tobacco Marketing Services BY, will form part
of the transaction. Upon completion, it is intended that the Group will no longer have a presence in Russia (or Belarus).
It is intended that, as a result of a potential sale of its shares to an acquirer, the Group will have neither voting rights nor the ability or
means to direct day-to-day activities, appoint management, or make business decisions. Since the Group will not own any shares in the
transferred businesses, and is not providing any financing to the proposed buyer, the Group will not have any exposure to returns from
the business, having no rights to dividends, royalties or amendments to the agreed-upon consideration to take account of post-disposal
trading. Consequently, management have classified the assets and liabilities of these entities as a disposal group in accordance with
IFRS 5.
At 30 June 2022, \u00a3387\u00a0million of property, plant and equipment and other non-current assets, \u00a3696\u00a0million of trade and other receivables,
\u00a3240\u00a0million of cash and cash equivalents and \u00a3144\u00a0million of other current assets principally relating to inventories, were classified as
held-for-sale in respect of this anticipated disposal and presented as such on the balance sheet at an estimated fair value less costs to
sell. In addition, \u00a311\u00a0million of borrowings and \u00a3528\u00a0million of trade creditors and other current liabilities were also classified as held-for-
sale. Impairment charges and associated costs of \u00a3957\u00a0million were recognised in the Income Statement and were treated as a non-
cash, adjusting item. The assets and liabilities recognised as held-for-sale, as at 30 June 2022, and the subsequent impairment charge,
did not include Belarus.
At 31 December 2022, \u00a3281 million of property, plant and equipment and other non-current assets, \u00a3474 million of trade and other
receivables, \u00a3368 million of cash and cash equivalents and \u00a3181 million of other current assets principally relating to inventories, have
been similarly classified as held-for-sale and presented as such on the balance sheet at an estimated fair value less costs to sell. In
addition, \u00a316 million of borrowings and \u00a3412 million of trade creditors and other current liabilities have been classified as held-for-sale at
31 December 2022. Impairment charges of \u00a3554 million and associated costs of \u00a358 million have been recognised in the Income
Statement as adjusting items.
An estimated charge of \u00a3295 million in respect of foreign exchange previously recognised in other comprehensive income will be
reclassified to the income statement on completion of the transaction as has been shown as a separate amount within Group reserves.
At the date of approval of these accounts, no definitive agreement to transfer the shares in these subsidiaries had been entered into,
with no final consideration agreed. The assessment of the recoverable value (fair value less costs to sell) at 30 June and 31 December
2022 has taken into account a range of internal assumptions, including those regarding the likely consideration for the sale, the impact,
extent and duration of sanctions, the likelihood of consideration being significantly deferred and ongoing macro-economic
developments, including the impact of inflation and interest rates. All assumptions are based on current expectations and are subject to
a very high degree of volatility and uncertainty and therefore may change up until the final value can be determined, based on an actual
transaction.
The following is a reconciliation between the total assets available for sale and their estimated recoverable value (fair value less costs to
sell):
| |
| |
Total assets held-for-sale1 | |
Impairment of non-current assets held-for-sale - Russia and Belarus | |
| |
Excess impairment beyond non-current assets held-for-sale - Russia and Belarus | |
| |
Share-based payment liability
The Group issues to certain employees cash-settled share-based payments that require the Group to pay the intrinsic value of these
share-based payments to the employee at the date of exercise. The Group has recorded liabilities in respect of vested and unvested
grants at the end of 2022 and 2021:
As at 31 December 2022, the Group has 8,960,000 shares (2021: 9,891,000 shares) outstanding which includes 1,749,762 shares (2021:
2,650,364 shares) which are related to Reynolds American LTIP awards from which nil shares (2021: nil shares) are exercisable at the end
of the year.
The weighted average British American Tobacco p.l.c. share price at the date of exercise for share options exercised during the period
was \u00a332.84 (2021: \u00a327.67; 2020: \u00a329.37) for equity-settled and \u00a333.01 (2021: \u00a327.59; 2020: \u00a328.68) for cash-settled options.
The weighted average British American Tobacco p.l.c. share price for ADS on the New York Stock Exchange at the date of exercise for
share options exercised during the period relating to equity-settled Reynolds American LTIP awards was US$38.37 (2021: US$35.93;
2020: US$40.04).
The outstanding shares for the year ended 31 December 2022 had a weighted average remaining contractual life of 1.8 years (2021: 3.7
years; 2020: 8.1 years) for the equity-settled scheme, 1.8 years for Reynolds American equity-settled scheme (2021: 1.70 years; 2020: 1.72
years) and 1.7 years (2021: 4.1 years; 2020: 8.1 years) for the cash-settled share-based payment arrangements.
(b) Deferred Share Bonus Scheme
Details of the movements for the equity- and cash-settled DSBS scheme during the years ended 31 December 2022 and 31 December
2021, were as follows:
| | | | | |
| | | | | |
| Equity-settled Number of options in thousands | Cash-settled Number of options in thousands | | Equity-settled Number of options in thousands | Cash-settled Number of options in thousands |
Outstanding at start of year | | | | | |
Granted during the period | | | | | |
Exercised during the period | | | | | |
Forfeited during the period | | | | | |
Outstanding at end of year | | | | | |
Exercisable at end of year | | | | | |
The weighted average British American Tobacco p.l.c. share price at the date of exercise for share options exercised during the financial
year was \u00a332.20 (2021: \u00a327.58; 2020: \u00a328.08) for equity-settled and \u00a332.50 (2021: \u00a327.70; 2020: \u00a328.06) for cash-settled options.
The outstanding shares for the year ended 31 December 2022 had a weighted average remaining contractual life of 1.3 years (2021: 1.3
years; 2020: 1.4 years) for the equity-settled scheme and 1.1 years (2021: 1.3 years; 2020: 1.4 years) for the cash-settled scheme.
Valuation assumptions
Assumptions used in the Black-Scholes models to determine the fair value of share options at grant date were as follows:
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Average expected term to exercise (years) | | | | | |
| | | | | |
Expected dividend yield (%) | | | | | |
Share price at date of grant (\u00a3) | | | | | |
Fair value at grant date (\u00a3)* | | | | | |
Fair value at grant date (\u00a3)* - Management Board | | | | | |
Note:
*Where two figures have been quoted for the Long-Term Incentive Plan, the numbers relate to PSP and RSP awards, respectively.
Market condition features were incorporated into the Monte-Carlo models for the total shareholder return elements of the LTIP - PSP, in
determining fair value at grant date. Assumptions used in these models were as follows:
| | |
| | |
Average share price volatility FMCG comparator group (%) | | |
Average correlation FMCG comparator group (%) | | |
Fair values determined from the Black-Scholes and Monte-Carlo models use assumptions revised at the end of each reporting period for
cash-settled share-based payment arrangements.
The expected British American Tobacco p.l.c. share price volatility was determined taking account of the return index (the share price
index plus the dividend reinvested) over a five-year period. The FMCG share price volatility and correlation was also determined over the
same periods. The average expected term to exercise used in the models has been adjusted, based on management\u2019s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural conditions, forfeiture and historical experience.
The risk-free rate has been determined from market yield curves for government gilts with outstanding terms equal to the average
expected term to exercise for each relevant grant. The expected dividend yield was determined by calculating the yield from the last two
declared dividends divided by the grant share price.
In addition to these valuation assumptions, LTIP awards, excluding RSP, contain earnings per share performance conditions. As these are
non-market performance conditions they are not included in the determination of fair value of share options at the grant date, however,
they are used to estimate the number of awards expected to vest. This pay-out calculation is based on expectations published in
analysts\u2019 forecasts.
29 Group employees
The average number of persons employed by the Group and its associates during the year, including Directors, was 77,951 (2021: 82,868).
Included within the employee numbers for Europe are certain employees in the UK in respect of central functions. Some of the costs of
these employees are allocated or charged to the various regions and markets in the Group.
30 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\u2019s share of
dividends from associates, included in other net income in the table below, was \u00a3438 million (2021: \u00a3392 million; 2020: \u00a3394 million).
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Amounts receivable at 31 December | | | |
Amounts payable at 31 December | | | |
The following table, which is not part of IAS 24 disclosures, shows the aggregate emoluments of the Directors of the Company.
| | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
Salary; fees; benefits; incentives | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
\u2013 short-term incentives | | | | | | | | | | | | | | | |
\u2013 long-term incentives | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Pension; other emoluments | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Subsidiaries subject to restrictions:
As a result of the Group\u2019s Canadian subsidiary, Imperial Tobacco Canada (ITCAN), entering CCAA protection, the assets of ITCAN
are subject to restrictions. The table below summarises the assets and liabilities of ITCAN:
| | |
Summarised financial information | | |
| | |
| | |
| | |
| | |
| | |
Under the terms of CCAA, the court has appointed FTI Consulting Canada Inc. to act as a monitor. This monitor has no operational input
and is not involved in the management of the business. The Group considers that ITCAN continues to meet the requirements of IFRS 10
Consolidated Financial Statements, and, until such requirements are not met, the Group will continue to consolidate the results of ITCAN.
Whilst the Group continues to control the operations of its Canadian subsidiary, there are restrictions over the ability to access or use
certain assets including the ability to remit dividends. Included in non-current assets for 2022 and 2021 is goodwill of \u00a32.5 billion subject
to impairment reviews (note 12). Included in current liabilities are trade and other payables of \u00a3391 million (2021: \u00a3341 million), the majority
of which are amounts payable in respect of duties and excise. A breakdown of current assets has been provided below.
| | |
| | |
Cash and cash equivalents* | | |
| | |
Investments held at fair value | | |
| | |
| | |
Note:
*Cash and cash equivalents above include \u00a31,411 million (2021: \u00a31,024 million) of restricted cash and cash equivalents. The Group defines restricted cash and cash equivalents as where
there are significant restrictions on its ability to access or use the assets and settle the liabilities of the Group, but excludes cash and cash equivalents where there are also outstanding
local currency borrowings or where there is an outstanding excise liability. In addition, dividends payable would also be excluded from restricted cash and cash equivalents if the dividend
has been approved by the necessary regulatory channels.
Refer to note 31 for information on the Quebec Class Actions.
Other shareholdings
At 31 December 2022, the Group holds almost 100% (2021: 99%; 2020: 92%) of the equity shares of PT Bentoel Internasional Investama
Tbk (Bentoel). Between 2011 and 2021, the Group was party to a total return swap on approximately 7% of Bentoel\u2019s issued capital. While
the Group did not have legal ownership of these shares in this period, it retained the risks and rewards associated with them which
resulted in the Group continuing to recognise an effective interest in 99% of Bentoel\u2019s net assets and results. In 2021, the Group
terminated the total return swap as part of its intention to delist from the Indonesia Stock Exchange and go private by conducting a
Voluntary Tender Offer (VTO), as a result of which the Group acquired 0.2% additional shares at a cost of \u00a34\u00a0million. Shares from over one
thousand individual shareholders who could not be contacted are in the process of being transferred to a courts-approved Public
Trustee. When this is complete, approvals will be sought from the relevant authorities to delist the company.
33 Summarised financial information
The following summarised financial information is required by the rules of the Securities and Exchange Commission and has been
prepared as a requirement of the Regulation S-X 3-10 in respect of the guarantees of:
\u2013US$11.00\u00a0billion of outstanding bonds issued by B.A.T Capital Corporation (BATCAP) in connection with the acquisition of Reynolds
American Inc. (Reynolds American), including registered bonds issued in exchange for the initially issued bonds (the 2017 Bonds);
\u2013US$12.15\u00a0billion of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on July 17,
2019, and US$0.6\u00a0billion of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on
July 1, 2022 pursuant to which BATCAP or BATIF may issue an indefinite amount of debt securities; and
\u2013US$2.50\u00a0billion of outstanding bonds issued by BATIF pursuant to the Shelf Registration Statement on Form F-3 filed on July 17, 2019,
pursuant to which BATCAP or BATIF may issue an indefinite amount of debt securities.
As of July 28, 2020, all relevant Group entities suspended their reporting obligations with respect to the US$7.7\u00a0billion (2022:
US$7.7\u00a0billion) of Reynolds American unsecured notes and US$40.9\u00a0million (2022: US$40.9\u00a0million) of Lorillard unsecured notes. As such,
no summarised financial information is provided with respect to these securities.
As described below, Reynolds American is a subsidiary guarantor of all outstanding series of BATCAP and BATIF bonds. Under the terms
of the indentures governing such notes, any subsidiary guarantor (including Reynolds American) other than BATCAP or BATIF, as
applicable, BATNF and BATHTN, will automatically and unconditionally be released from all obligations under its guarantee, and such
guarantee shall thereupon terminate and be discharged and of no further force or effect, in the event that (1) its guarantee of all then
outstanding notes issued under the Group\u2019s EMTN Programme is released or (2) at substantially the same time its guarantee of the debt
securities is terminated, such subsidiary guarantor is released from all obligations in respect of indebtedness for borrowed money for
which such subsidiary guarantor is an obligor (as a guarantor or borrower). Under the EMTN Programme, Reynolds American\u2019s
guarantee is released if at any time the aggregate amount of indebtedness for borrowed money, subject to certain exceptions, for which
Reynolds American is an obligor does not exceed 10% of the outstanding long-term debt of BAT as reflected in the balance sheet
included in BAT\u2019s most recent publicly released interim or annual consolidated financial statements.
Reynolds American\u2019s guarantee may be released notwithstanding Reynolds American guaranteeing other indebtedness, provided
Reynolds American\u2019s guarantee of outstanding notes issued under the EMTN Programme is released. If Reynolds American\u2019s guarantee
is released, BAT is not required to replace such guarantee, and the debt securities will have the benefit of fewer subsidiary guarantees for
the remaining maturity of the debt securities.
Note: The following summarised financial information report the unconsolidated contribution of each applicable company to the Group\u2019s
consolidated results and not the separate financial statements for each applicable company as local financial statements are prepared in
accordance with local legislative requirements and may differ from the financial information provided below. In particular, in respect of
the U.S. region, all financial statements and financial information provided by or with respect to the U.S. business or RAI (and/or RAI and
its subsidiaries (collectively, the Reynolds Group)) are prepared on the basis of US GAAP and constitute the primary financial statements
or financial information of the U.S. business or RAI (and/or the Reynolds Group). Solely for the purpose of consolidation within the results
of BAT p.l.c. and the BAT Group, this financial information is then converted to IFRS. To the extent any such financial information provided
in these financial statements relates to the U.S. business or RAI (and/or the Reynolds Group), it is provided as an explanation of the U.S.
business\u2019s or RAI\u2019s (and/or the Reynolds Group\u2019s) primary US GAAP based financial statements and information.
The subsidiaries disclosed below are wholly-owned and the guarantees provided are full and unconditional, and joint and several:
a.British American Tobacco p.l.c. (as the parent guarantor), referred to as \u2018BAT p.l.c.\u2019 in the financials below;
b.B.A.T Capital Corporation (as an issuer or a subsidiary guarantor, as the case may be), referred to as \u2018BATCAP\u2019 in the financials below;
c.B.A.T. International Finance p.l.c. (as an issuer or a subsidiary guarantor, as the case may be), referred to as \u2018BATIF\u2019 in the financials
below;
d.B.A.T. Netherlands Finance B.V. (as a subsidiary guarantor), referred to as \u2018BATNF\u2019 in the financials below;
e.Reynolds American Inc. (as a subsidiary guarantor), referred to as \u2018RAI\u2019 in the financials below; and
f.British American Tobacco Holdings (The Netherlands) B.V. (as a subsidiary guarantor of the 2017 Bonds only), referred to as \u2018BATHTN\u2019
in the financials below.
In accordance with Regulation S-X 13-01, information in respect of investments in subsidiaries that are not issuers or guarantors has been
excluded from non-current assets as shown in the balance sheet table below. The \u2018BATHTN\u2019 column in the summarised financial
information is only applicable in the context of the 2017 Bonds.\u00a0British American Tobacco Holdings (The Netherlands) B.V. (BATHTN) is
not an issuer nor guarantor of any of the other securities referenced in this note.\u00a0None of the issuers or other guarantors has material
balances with or an investment in BATHTN. Investments in subsidiaries represents share capital acquired in relation to or issued by
subsidiary undertakings.
| | | | | | |
| Summarised Financial Information |
Year ended 31 December 2022 | | | | | | |
| | | | | | |
| | | | | | |
(Loss)/profit from operations | | | | | | |
| | | | | | |
Net finance income/(costs) | | | | | | |
Profit/(loss) before taxation | | | | | | |
Taxation on ordinary activities | | | | | | |
Profit/(loss) for the year | | | | | | |
Intercompany Transactions \u2013 Income Statement | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries (expense)/income | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries net finance (cost)/income | | | | | | |
Dividend income from non-issuer/non-guarantor subsidiaries | | | | | | |
| | | | | | |
| Summarised Financial Information |
Year ended 31 December 2021 | | | | | | |
| | | | | | |
| | | | | | |
(Loss)/profit from operations | | | | | | |
| | | | | | |
Net finance income/(costs) | | | | | | |
Profit/(loss) before taxation | | | | | | |
Taxation on ordinary activities | | | | | | |
Profit/(loss) for the year | | | | | | |
Intercompany Transactions \u2013 Income Statement | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries (expense)/income | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries net finance (cost)/income | | | | | | |
Dividend income from non-issuer/non-guarantor subsidiaries | | | | | | |
| | | | | | |
| Summarised Financial Information |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Other non-current liabilities | | | | | | |
| | | | | | |
| | | | | | |
Other current liabilities | | | | | | |
Intercompany Transactions \u2013 Balance Sheet | | | | | | |
Amounts due from non-issuer/non-guarantor subsidiaries | | | | | | |
Amounts due to non-issuer/non-guarantor subsidiaries | | | | | | |
Investment in subsidiaries (that are not issuers or guarantors) | | | | | | |
| | | | | | |
| Summarised Financial Information |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Other non-current liabilities | | | | | | |
| | | | | | |
| | | | | | |
Other current liabilities | | | | | | |
Intercompany Transactions - Balance Sheet | | | | | | |
Amounts due from non-issuer/non-guarantor subsidiaries | | | | | | |
Amounts due to non-issuer/non-guarantor subsidiaries | | | | | | |
Investment in subsidiaries (that are not issuers or guarantors) | | | | | | |
Perpetual hybrid bonds
BAT p.l.c. has issued two \u20ac1\u00a0billion of perpetual hybrid bonds which have been classified as equity as there is no contractual obligation
to either repay the principal or make payments of interest (note 22(d)).
BAT p.l.c.\u2019s unconsolidated contribution to the Group\u2019s consolidated equity results is shown below:
BAT p.l.c.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board
(IASB) and UK-adopted international accounting standards@, and
in accordance with the provisions of the UK Companies Act
2006@. UK-adopted international accounting standards differ in
certain respects from IFRS as issued by the IASB. The differences
have no impact on the Group\u2019s consolidated financial statements
for the periods presented.
The consolidated financial statements have been prepared on a going
concern basis under the historical cost convention except as described
in the accounting policy below on financial instruments. In performing
its going concern assessment, management considered forecasts and
liquidity requirements covering a period of at least twelve months from
the date of approval of the financial statements and including the
Group\u2019s ability to fund its operations and generate cash to pay for debt
as it falls due and takes into account the payments arising from the
Master Settlement Agreement due in the U.S. in 2023 and other known
liabilities or future payments (including interim dividends), as they fall
due. This assessment includes consideration of geopolitical events in
Europe and the general outlook in the global economy, as well as
plausible downside scenarios after taking into account the Group\u2019s
Principal Risks @(as indicated on page 119)@ and how they could
impact the Group\u2019s operations. Any mitigating actions, should they be
required, are all within management\u2019s control and could include
reductions in discretionary spending such as acquisitions and capital
expenditure, or drawdowns on committed facilities. After reviewing the
Group\u2019s annual budget, plans and financing arrangements, the
Directors consider that the Group has adequate resources to continue
operating and that it is therefore appropriate to continue to adopt the
going concern basis in preparing the Annual Report and Form 20\u2011F.
Management have, in preparing the financial statements, considered
the impact of climate change@, particularly in the context of the risks
identified in the TCFD disclosure@. Management has considered the
impact of climate change and determined that the impact is not
expected to be material:
\u2013On the going concern @and viability@ of the Group, over the
next three years;
\u2013On the Group\u2019s assessment of future cash flows (including as
related to the capital expenditure plans as related to the Group\u2019s
emission commitments) as used in impairment assessments for
the value in use of non-current assets including goodwill (note
12(e)); and
\u2013In respect of factors including useful lives and residual values
that determine the carrying value of non-financial current assets.
There has been no material impact identified on the financial reporting
judgements and estimates. Management is aware that the risks
related to climate change are developing and ever changing.
Accordingly, these judgements and estimates will be kept under review
as the future impacts of climate change on the Group\u2019s financial
statements depend on environmental, regulatory and other factors
outside of the Group\u2019s control which are not all currently known.
The preparation of the consolidated financial statements requires
management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and
the disclosure of contingent liabilities at the date of the financial
statements. The key estimates and assumptions are set out in
the accounting policies below, together with the related notes
to the accounts.
The critical accounting judgements include:
\u2013the identification and quantification of adjusting items, which are
separately disclosed as memorandum information, is explained
below and the impact of these on the calculation of adjusted
earnings per share is described in note\u00a011;
\u2013the presentation of disposal groups, including assets classified as
held-for-sale and liabilities associated with assets classified as
held-for-sale, including the assessment as to whether control
would be lost based on the proposed terms of the sale and the
impact of regulatory procedures, where applicable, to approve the
sale, including amounts in respect of the proposed disposal of the
Group\u2019s businesses in Russia and Belarus (note 27(d));
\u2013the determination as to whether to recognise provisions and the
exposures to contingent liabilities related to pending litigation or
other outstanding claims, as well as other contingent liabilities.
The accounting policy on contingent liabilities, which are not
provided for, is set out below and the contingent liabilities of the
Group are explained in note 31. Judgement is necessary to assess
the likelihood that a pending claim is probable (more likely than
not to succeed), possible or remote;
\u2013the determination as to whether control (subsidiaries), joint
control (joint arrangements), or significant influence (associates)
exists in relation to the investments held by the Group. This is
assessed after taking into account the Group\u2019s ability to appoint
Directors to the entity\u2019s Board, its relative shareholding compared
with other shareholders, any significant contracts or arrangements
with the entity or its other shareholders and other relevant facts
and circumstances. The application of these policies to Group
subsidiaries in territories including Canada is explained in note 32;
\u2013the review of applicable exchange rates for transactions with and
translation of entities in territories where there are restrictions on
free access to foreign currency, or multiple exchange rates; and
\u2013the determination as to whether perpetual hybrid bonds should
be classified as equity instead of borrowings (note 22(d)).
The critical accounting estimates include:
\u2013the review of asset values, including indefinite life assets, such as
goodwill and certain trademarks and similar intangibles. The key
assumptions used in respect of the impairment testing are the
determination of cash-generating units, the budgeted and forecast
cash flows of these units, the long-term growth rate for cash flow
projections and the rate used to discount the cash flow projections.
These are described in note 12;
\u2013the estimation of value ascribed to held-for-sale assets and disposal
groups, which are measured at the lower of carrying amount and
fair value of expected consideration less costs to sell, reflecting
management\u2019s best estimates after taking into account the amount
and anticipated timing of sales proceeds less any costs to sell;
\u2013the estimation of and accounting for retirement benefit costs.
The determination of the carrying value of assets and liabilities,
as well as the charge for the year, and amounts recognised in
other comprehensive income, involves judgements made in
conjunction with independent actuaries. These involve estimates
about uncertain future events based on the environment in different
countries, including life expectancy of scheme members, salary and
pension increases, inflation, as well as discount rates and asset
values at the year-end. The assumptions used by the Group and
sensitivity analysis are described in note 15; and
\u2013the estimation of amounts to be recognised in respect of
taxation and legal matters, and the estimation of other
provisions for liabilities and charges are subject to uncertain
future events, may extend over several years and so the amount
and/or timing may differ from current assumptions. The
accounting policy for taxation is explained below. The recognised
deferred tax assets and liabilities, together with a note of
unrecognised amounts, are shown in note 16, and a contingent
tax asset is explained in note 10(b). Other provisions for liabilities
and charges are as set out in note 24. Litigation related deposits
are shown in note 17. The application of these accounting policies
to the payments made and credits recognised under the Master
Settlement Agreement by Reynolds American Inc. (Reynolds
American) is described in note 6(b).
Such estimates and assumptions are based on historical
experience and various other factors that are believed to be
reasonable in the circumstances and constitute management\u2019s
best judgement at the date of the financial statements. In the
future, actual experience may deviate from these estimates and
assumptions, which could affect the financial statements as the
original estimates and assumptions are modified, as appropriate,
in the year in which the circumstances change.
These consolidated financial statements were authorised for
issue by the Board of Directors on 8\u00a0February 2023.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDc3_7ec10398-3c1f-444b-9faa-f369442da59f": {
"value": "
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board
(IASB) and UK-adopted international accounting standards@, and
in accordance with the provisions of the UK Companies Act
2006@. UK-adopted international accounting standards differ in
certain respects from IFRS as issued by the IASB. The differences
have no impact on the Group\u2019s consolidated financial statements
for the periods presented.",
"dimensions": {
"concept": "ifrs-full:StatementOfIFRSCompliance",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDc5_0cb65f98-5fb8-417c-8945-08e7150937d4": {
"value": "
The preparation of the consolidated financial statements requires
management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and
the disclosure of contingent liabilities at the date of the financial
statements. The key estimates and assumptions are set out in
the accounting policies below, together with the related notes
to the accounts.
The critical accounting judgements include:
\u2013the identification and quantification of adjusting items, which are
separately disclosed as memorandum information, is explained
below and the impact of these on the calculation of adjusted
earnings per share is described in note\u00a011;
\u2013the presentation of disposal groups, including assets classified as
held-for-sale and liabilities associated with assets classified as
held-for-sale, including the assessment as to whether control
would be lost based on the proposed terms of the sale and the
impact of regulatory procedures, where applicable, to approve the
sale, including amounts in respect of the proposed disposal of the
Group\u2019s businesses in Russia and Belarus (note 27(d));
\u2013the determination as to whether to recognise provisions and the
exposures to contingent liabilities related to pending litigation or
other outstanding claims, as well as other contingent liabilities.
The accounting policy on contingent liabilities, which are not
provided for, is set out below and the contingent liabilities of the
Group are explained in note 31. Judgement is necessary to assess
the likelihood that a pending claim is probable (more likely than
not to succeed), possible or remote;
\u2013the determination as to whether control (subsidiaries), joint
control (joint arrangements), or significant influence (associates)
exists in relation to the investments held by the Group. This is
assessed after taking into account the Group\u2019s ability to appoint
Directors to the entity\u2019s Board, its relative shareholding compared
with other shareholders, any significant contracts or arrangements
with the entity or its other shareholders and other relevant facts
and circumstances. The application of these policies to Group
subsidiaries in territories including Canada is explained in note 32;
\u2013the review of applicable exchange rates for transactions with and
translation of entities in territories where there are restrictions on
free access to foreign currency, or multiple exchange rates; and
\u2013the determination as to whether perpetual hybrid bonds should
be classified as equity instead of borrowings (note 22(d)).
The critical accounting estimates include:
\u2013the review of asset values, including indefinite life assets, such as
goodwill and certain trademarks and similar intangibles. The key
assumptions used in respect of the impairment testing are the
determination of cash-generating units, the budgeted and forecast
cash flows of these units, the long-term growth rate for cash flow
projections and the rate used to discount the cash flow projections.
These are described in note 12;
\u2013the estimation of value ascribed to held-for-sale assets and disposal
groups, which are measured at the lower of carrying amount and
fair value of expected consideration less costs to sell, reflecting
management\u2019s best estimates after taking into account the amount
and anticipated timing of sales proceeds less any costs to sell;
\u2013the estimation of and accounting for retirement benefit costs.
The determination of the carrying value of assets and liabilities,
as well as the charge for the year, and amounts recognised in
other comprehensive income, involves judgements made in
conjunction with independent actuaries. These involve estimates
about uncertain future events based on the environment in different
countries, including life expectancy of scheme members, salary and
pension increases, inflation, as well as discount rates and asset
values at the year-end. The assumptions used by the Group and
sensitivity analysis are described in note 15; and
\u2013the estimation of amounts to be recognised in respect of
taxation and legal matters, and the estimation of other
provisions for liabilities and charges are subject to uncertain
future events, may extend over several years and so the amount
and/or timing may differ from current assumptions. The
accounting policy for taxation is explained below. The recognised
deferred tax assets and liabilities, together with a note of
unrecognised amounts, are shown in note 16, and a contingent
tax asset is explained in note 10(b). Other provisions for liabilities
and charges are as set out in note 24. Litigation related deposits
are shown in note 17. The application of these accounting policies
to the payments made and credits recognised under the Master
Settlement Agreement by Reynolds American Inc. (Reynolds
American) is described in note 6(b).
Such estimates and assumptions are based on historical
experience and various other factors that are believed to be
reasonable in the circumstances and constitute management\u2019s
best judgement at the date of the financial statements. In the
future, actual experience may deviate from these estimates and
assumptions, which could affect the financial statements as the
original estimates and assumptions are modified, as appropriate,
in the year in which the circumstances change.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDgw_0ae2f214-70d3-4e2d-a8f1-f0b58143c88c": {
"value": "These consolidated financial statements were authorised for
issue by the Board of Directors on 8\u00a0February 2023.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTEw_d0d6fb62-7c6d-4d25-aefb-dd3007eb60d5": {
"value": "
Basis of consolidation
The consolidated financial information includes the financial
statements of British American Tobacco p.l.c. and its subsidiary
undertakings, collectively \u2018the Group\u2019, together with the Group\u2019s
share of the results of its associates and joint arrangements.
A subsidiary is an entity controlled by the Group. The Group
controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
Non-controlling interests represent the share of earnings or equity
in subsidiaries that is not attributable, directly or indirectly, to
shareholders of the Group. Business combinations are accounted
for using the acquisition method with identifiable assets, liabilities
and contingent liabilities acquired measured at fair value at the
date of acquiring control. Disposals of subsidiaries and businesses
due to sale or market withdrawal are accounted for as disposals
from the date of losing control and may be classified as held-for-
sale disposal groups at the balance sheet date if specific tests
under IFRS 5 Non-current Assets Held For Sale and Discontinued
Operations are met.
A disposal group is a group of assets to be disposed of, by sale or
otherwise, together in a single transaction. Discontinued
operations, where applicable, comprise material disposal groups
representing a significant geographical area of operations or
business activities.
Associates comprise investments in undertakings, which are not
subsidiary undertakings or joint arrangements, where the Group\u2019s
interest in the equity capital is long-term and over whose
operating and financial policies the Group exercises significant
influence. They are accounted for using the equity method.
Joint arrangements comprise contractual arrangements where
two or more parties have joint control and where decisions regarding
the relevant activities of the entity require unanimous consent.
Joint operations are jointly-controlled arrangements where the
parties to the arrangement have rights to the underlying assets
and obligations for the underlying liabilities relating to the
arrangement. The Group accounts for its share of the assets,
liabilities, income and expenses of any such arrangement.
Joint ventures comprise arrangements where the parties to the
arrangement have rights to the net assets of the arrangement.
They are accounted for using the equity method.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTEx_17f31839-efe2-4deb-9051-70894f6dacd0": {
"value": "
Foreign currencies and hyperinflationary territories
The functional currency of the Parent Company is sterling and this
is also the presentation currency of the Group. The income and
cash flow statements of Group undertakings expressed in
currencies other than sterling are translated to sterling using
exchange rates applicable to the dates of the underlying transactions.
Average rates of exchange in each year are used where the average
rate approximates the relevant exchange rate at the date of the
underlying transactions. Assets and liabilities of Group undertakings
are translated at the applicable rates of exchange at the end of
each year. In territories where there are restrictions on free access
to foreign currency or multiple exchange rates, the applicable rates
of exchange are regularly reviewed.
The differences between retained profits translated at average
and closing rates of exchange are taken to reserves, as are
differences arising on the retranslation to sterling (using closing
rates of exchange) of overseas net assets at the beginning of the
year, and are presented as a separate component of equity in the
Translation reserve within Other reserves, as shown in note 22.
They are recognised in the income statement when the gain or
loss on disposal of a Group undertaking is recognised.
Foreign currency transactions are initially recognised in the
functional currency of each entity in the Group using the exchange
rate ruling at the date of the transaction. Foreign exchange gains
and losses resulting from the settlement of such transactions and
from the translation of foreign currency assets and liabilities at
year-end rates of exchange are recognised in the income
statement, except when deferred in equity as qualifying cash flow
hedges, on intercompany net investment loans and qualifying net
investment hedges. Foreign exchange gains or losses recognised
in the income statement are included in profit from operations or
net finance costs depending on the underlying transactions that
gave rise to these exchange differences.
In addition, for hyperinflationary countries where the effect on the
Group results would be significant, the financial statements in
local currency are adjusted to reflect the impact of local inflation
prior to translation into sterling, in accordance with IAS 29
Financial Reporting in Hyperinflationary Economies. Where
applicable, IAS 29 requires all transactions to be indexed by an
inflationary factor to the balance sheet date, potentially leading
to a monetary gain or loss on indexation. In addition, the Group
assesses the carrying value of fixed assets after indexation and
applies IAS 36 Impairment of Assets, where appropriate, to ensure
that the carrying value correctly reflects the economic value of
such assets.
The results and balance sheets of operations in hyperinflationary
territories are translated at the period end rate.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDgx_2b315629-ccbf-42b2-a599-c797e0361878": {
"value": "The functional currency of the Parent Company is sterling and this is also the presentation currency of the Group.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDgy_778be601-b08a-4d96-99f9-45a5ec004512": {
"value": "
In addition, for hyperinflationary countries where the effect on the
Group results would be significant, the financial statements in
local currency are adjusted to reflect the impact of local inflation
prior to translation into sterling, in accordance with IAS 29
Financial Reporting in Hyperinflationary Economies. Where
applicable, IAS 29 requires all transactions to be indexed by an
inflationary factor to the balance sheet date, potentially leading
to a monetary gain or loss on indexation. In addition, the Group
assesses the carrying value of fixed assets after indexation and
applies IAS 36 Impairment of Assets, where appropriate, to ensure
that the carrying value correctly reflects the economic value of
such assets.
The results and balance sheets of operations in hyperinflationary
territories are translated at the period end rate.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfHyperinflationaryReportingExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTEy_5043b7f4-7595-4c5d-812c-afc54513e63a": {
"value": "
Revenue
Revenue principally comprises sales of cigarettes, other tobacco
products, and nicotine products, to external customers. Revenue
excludes duty, excise and other taxes related to sales in the period
and is stated after deducting rebates, returns and other similar
discounts and payments to direct and indirect customers. For the
vast majority of the Group\u2019s sales, revenue is recognised when
control of the goods is transferred to a customer at a point in time;
this is usually evidenced by a transfer of the significant risks and
rewards of ownership upon delivery to the customer, which in
terms of timing is not materially different to the date of shipping.
For certain e-commerce subscription sales, revenue is allocated to
each component of the subscription, with revenue recognised as
each component is delivered to the customer. These sales are not
material to the Group\u2019s results.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTEz_b320ffde-fd8c-4095-939b-afcb9c6f4349": {
"value": "
Retirement benefit costs
The Group operates both defined benefit and defined contribution
schemes including post-retirement healthcare schemes. For
defined benefit schemes, the actuarial cost charged to profit from
operations consists of current service cost, net interest on the net
defined benefit liability or asset, past service cost and the impact
of any settlements. The net deficit or surplus for each defined
benefit pension scheme is calculated in accordance with IAS 19
Employee Benefits based on the present value of the defined
benefit obligation at the balance sheet date less the fair value of
the scheme assets adjusted, where appropriate, for any surplus
restrictions or the effect of minimum funding requirements. Some
benefits are provided through defined contribution schemes and
payments to these are charged as an expense as they fall due.
@Denotes phrase, paragraph or similar that does not form part of BAT's Annual Report on
Form 20-F as filed with the SEC.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTE0_1e7a9515-d0d7-4e7b-8f47-36793adbc9a2": {
"value": "
Share-based payments
The Group has equity-settled and cash-settled share-based
compensation plans.
Equity-settled share-based payments are measured at fair value at
the date of grant. The fair value determined at the grant date of
the equity-settled share-based payments is expensed over the
vesting period, based on the Group\u2019s estimate of awards that will
eventually vest. For plans where vesting conditions are based on
total shareholder returns, the fair value at date of grant reflects
these conditions, whereas earnings per share vesting conditions
are reflected in the calculation of awards that will eventually vest
over the vesting period.
For cash-settled share-based payments, a liability equal to the
portion of the services received is recognised at its current fair
value determined at each balance sheet date.
Fair value is measured by the use of the Black-Scholes option
pricing model, except where vesting is dependent on market
conditions when the Monte-Carlo option pricing model is used.
The expected life used in the models has been adjusted, based on
management\u2019s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTE1_9554382b-df73-4293-8b57-f83de8b69e53": {
"value": "
Research and development
Research expenditure is charged to profit or loss in the year in
which it is incurred. Development expenditure is charged to profit
or loss in the year it is incurred, unless it meets the recognition
criteria of IAS 38 Intangible Assets to be capitalised as an
intangible asset.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDgz_2c0a0a25-ad2e-4fb6-9a0d-e5b3a5b997d3": {
"value": "
Taxation
Tax is chargeable on the profits for the period, together with
deferred tax. The current income tax charge is calculated
on the basis of tax laws enacted or substantively enacted
at the balance sheet date in the countries where the Group\u2019s
subsidiaries, associates and joint arrangements operate and
generate taxable income.
Deferred tax is provided in full using the liability method for
temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amount used for
taxation purposes. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
Deferred tax is determined using the tax rates that have been
enacted or substantively enacted by the balance sheet date and
are expected to apply when the related deferred tax asset is
realised or deferred tax liability is settled.
Tax is recognised in the income statement except to the extent
that it relates to items recognised in other comprehensive income
or directly in equity, in which case it is recognised in the statement
of other comprehensive income or the statement of changes in
equity.
The Group has exposures in respect of the payment or recovery of
taxes and applies IFRIC 23 Uncertainty over Income Tax
Treatments which requires that, where there is uncertainty as to
whether a particular tax treatment will be accepted by the relevant
taxation authority, the financial statements reflect the probable
outcome with estimated amounts determined based on the most
likely amount or expected value, depending on which method is
expected to better predict the resolution of the uncertainty.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTE2_4d83712b-6135-4ae8-8cac-a782f1941e64": {
"value": "
Taxation
Tax is chargeable on the profits for the period, together with
deferred tax. The current income tax charge is calculated
on the basis of tax laws enacted or substantively enacted
at the balance sheet date in the countries where the Group\u2019s
subsidiaries, associates and joint arrangements operate and
generate taxable income.
Deferred tax is provided in full using the liability method for
temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amount used for
taxation purposes. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
Deferred tax is determined using the tax rates that have been
enacted or substantively enacted by the balance sheet date and
are expected to apply when the related deferred tax asset is
realised or deferred tax liability is settled.
Tax is recognised in the income statement except to the extent
that it relates to items recognised in other comprehensive income
or directly in equity, in which case it is recognised in the statement
of other comprehensive income or the statement of changes in
equity.
The Group has exposures in respect of the payment or recovery of
taxes and applies IFRIC 23 Uncertainty over Income Tax
Treatments which requires that, where there is uncertainty as to
whether a particular tax treatment will be accepted by the relevant
taxation authority, the financial statements reflect the probable
outcome with estimated amounts determined based on the most
likely amount or expected value, depending on which method is
expected to better predict the resolution of the uncertainty.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTE3_aec7f07c-859e-44ca-9102-275ae3675084": {
"value": "
Goodwill
Goodwill arising on acquisitions is capitalised and any impairment
of goodwill is recognised immediately in the income statement
and is not subsequently reversed.
Goodwill in respect of subsidiaries is included in intangible assets.
In respect of associates and joint ventures, goodwill is included in
the carrying value of the investment in the associated company or
joint venture. On disposal of a subsidiary, associate or joint
venture, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTE4_f7b327a8-f68f-47cc-bfd5-492dfe886ffb": {
"value": "
Intangible assets other than goodwill
The intangible assets shown on the Group balance sheet consist
mainly of trademarks and similar intangibles, including certain
intellectual property, acquired by the Group\u2019s subsidiary
undertakings and computer software.
Acquired trademarks and similar assets are carried at cost less
accumulated amortisation and impairment. Trademarks with
indefinite lives are not amortised but are reviewed annually for
impairment. Other trademarks and similar assets are amortised on
a straight-line basis over their remaining useful lives, consistent
with the pattern of economic benefits expected to be received,
which do not exceed 20 years. Any impairments of trademarks are
recognised in the income statement, but increases in trademark
values are not recognised.
Computer software is carried at cost less accumulated
amortisation and impairment, and, with the exception of global
software solutions, is amortised on a straight-line basis over
periods ranging from three years to five years.
Global software solutions are software assets designed to be
implemented on a global basis and used as a standard solution by
all of the operating companies in the Group. Prior to 2021, these
assets were amortised on a straight-line basis over periods not
exceeding 10 years and are currently amortised on a straight-line
basis over periods not exceeding 13 years due to ongoing use of
the assets and the extension of third-party supplier support. In
2021 and 2022, the impact of this change in accounting estimate
was a reduction in annual amortisation expense of \u00a326\u00a0million and,
in 2023, is estimated to be a reduction in annual amortisation
expense of \u00a312\u00a0million.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTE5_916ebd2e-7a56-417c-a1e2-23b9a6621930": {
"value": "
Property, plant and equipment
Purchased property, plant and equipment are stated at cost less
accumulated depreciation and impairment. Depreciation is
calculated on a straight-line basis to write off the assets over their
useful economic life. No depreciation is provided on freehold land
or assets classified as held-for-sale. Non-current assets are
classified as held-for sale if their carrying value will be recovered
principally through a sale transaction rather than through
continuing use and if all of the conditions of IFRS 5 are met.
Purchased freehold and leasehold property are depreciated at
rates between 2.5% and 4% per annum, and plant and equipment
at rates between 3% and 25% per annum.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTIw_665e60c7-2e93-44e9-b2e5-7bfe5cd7d5bd": {
"value": "
Capitalised interest
Borrowing costs which are directly attributable to the acquisition,
construction or production of intangible assets or property, plant
and equipment that takes a substantial period of time to get ready
for its intended use or sale, are capitalised as part of the cost of
the asset.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTIx_00333dfa-9eea-4694-af74-c162eeef5f90": {
"value": "
Leased assets
The Group applies IFRS 16 Leases to contractual arrangements
which are, or contain, leases of assets. Lease liabilities are initially
recognised at an amount equal to the present value of estimated
contractual lease payments at the inception of the lease, after
taking into account any options to extend the term of the lease.
Lease commitments are discounted to present value using the
interest rate implicit in the lease if this can be readily determined,
or the applicable incremental rate of borrowing, as appropriate.
Right-of-use lease assets are initially recognised at an amount
equal to the lease liability, adjusted for initial direct costs in relation
to the assets, then depreciated over the shorter of the lease term
and their estimated useful lives. Right-of-use assets are included
as part of property, plant and equipment in note 13, with the lease
liabilities included as part of borrowings in note 23.
The Group has adopted several practical expedients available
under the Standard including not applying the requirements of
IFRS 16 to leases of intangible assets, applying the portfolio
approach where appropriate to do so, and to not apply the
recognition and measurement requirements of IFRS 16 to short-
term leases (leases of less than 12 months maximum duration) or
leases of low-value assets. Except for property-related leases, non-
lease components have not been separated from lease
components.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTIy_5c40ae97-f161-4455-ba56-70976ddc6aad": {
"value": "
Impairment of non-financial assets
Assets are reviewed for impairment whenever events indicate that
the carrying amount of a cash-generating unit may not be
recoverable. In addition, assets that have indefinite useful lives are
tested annually for impairment. An impairment loss is recognised
to the extent that the carrying value exceeds the higher of the
asset\u2019s fair value less costs to sell and its value-in-use.
A cash-generating unit is the smallest identifiable group of assets
that generates cash flows which are largely independent of
the cash flows from other assets or groups of assets. At the
acquisition date, any goodwill acquired is allocated to the relevant
cash-generating unit or group of cash-generating units expected
to benefit from the acquisition for the purpose of impairment
testing of goodwill.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTIz_ea1a298b-05d5-4b0c-84b5-8c03f883219c": {
"value": "
Impairment of financial assets held at amortised cost
Loss allowances for expected credit losses on financial assets
which are held at amortised cost are recognised on initial
recognition of the underlying asset. As permitted by IFRS 9
Financial Instruments, loss allowances on trade receivables arising
from the recognition of revenue under IFRS 15 Revenue from
Contracts with Customers are initially measured at an amount
equal to lifetime expected losses. Allowances in respect of loans
and other receivables are initially recognised at an amount equal
to 12-month expected credit losses. Allowances are measured at
an amount equal to the lifetime expected credit losses where
the credit risk on the receivables increases significantly after
initial recognition.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTI1_bae18d85-31f0-4714-9b00-22b680e70f38": {
"value": "
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is based on the weighted average cost incurred in acquiring
inventories and bringing them to their existing location and
condition, which will include raw materials, direct labour and
overheads, where appropriate. Net realisable value is the
estimated selling price less costs to completion and sale. Tobacco
inventories which have an operating cycle that exceeds 12 months
are classified as current assets, consistent with recognised
industry practice.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTI2_07a86b55-28f5-4d6e-af92-7a977665e1c3": {
"value": "
Biological Assets
The investments in associates and joint ventures shown in the
Group balance sheet include biological assets held by Organigram
Holdings Inc. In accordance with IAS 41 Agriculture, the Group
measures biological assets at fair value less costs to sell up to the
point of harvest, at which point this becomes the basis for the cost
of finished goods inventories after harvest with subsequent
expenditures incurred on these being capitalised, where
applicable, in accordance with IAS 2 Inventories. Unrealised fair
value gains and losses arising during the growth of biological
assets are recognised immediately in the income statement.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForBiologicalAssetsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc0MjE3MDM1MjExOTI4_4aa158fd-a7d9-425d-bcaf-e6d7c38c0c13": {
"value": "
Equity instruments
Instruments are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements. Instruments that cannot be settled in the Group\u2019s
own equity instruments and that include no contractual obligation
to deliver cash or another financial asset are classified as equity.
Equity instruments issued by the Group are recognised at the
proceeds received, net of issuance costs.
On 27 September 2021, the Group issued two \u20ac1 billion perpetual
hybrid bonds. As the Group has the unconditional right to avoid
transferring cash or another financial asset in relation to these
bonds, they are classified as equity instruments in the
consolidated financial statements.
Financial instruments
The Group\u2019s business model for managing financial assets is set
out in the Group Treasury Manual which notes that the primary
objective with regard to the management of cash and investments
is to protect against the loss of principal. Additionally, the Group
aims: to maximise Group liquidity by concentrating cash at the
Centre, to align the maturity profile of external investments with
that of the forecast liquidity profile, to wherever practicable, match
the interest rate profile of external investments to that of debt
maturities or fixings, and to optimise the investment yield within the
Group\u2019s investment parameters. The majority of financial assets are
held in order to collect contractual cash flows (typically cash and
cash equivalents and loans and other receivables), but some assets
(typically investments) are held for investment potential.
Financial assets and financial liabilities are recognised when the
Group becomes a party to the contractual provisions of the
relevant instrument and derecognised when it ceases to be a party
to such provisions. Such assets and liabilities are classified as
current if they are expected to be realised or settled within 12
months after the balance sheet date. If not, they are classified as
non-current. In addition, current liabilities include amounts where
the entity does not have an unconditional right to defer settlement
of the liability for at least 12 months after the balance sheet date.
The Group early adopted the phase one and phase two
Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial
Instruments: Disclosures regarding Interest Rate Benchmark
Reform in 2019 and 2020, respectively. The Amendments provide
an exemption for certain hedging relationships directly affected by
changes in interest rate benchmarks where the reform gives rise
to uncertainties regarding the interest rate designated as a
hedged risk, or the timing or amount of interest rate cash flows of
either the hedged item or of the hedging instrument, such that
without the exemption the relationship might not qualify for hedge
accounting.\u00a0In addition, the Amendments provide a practical
expedient for financial assets and financial liabilities that are
modified or have existing contractual terms activated that change
the basis for determining the contractual cash flows as a result of
Interest Rate Benchmark Reform, such that the change to the
contractual cash flows is applied prospectively by revising the
effective interest rate.
Non-derivative financial assets are classified on initial
recognition in accordance with the Group\u2019s business model as
investments, loans and receivables, or cash and cash equivalents
and accounted for as follows:
\u2013Investments: these are non-derivative financial assets that
cannot be classified as loans and other receivables or cash
and cash equivalents. Dividend and interest income on these
investments are included within finance income when the
Group\u2019s right to receive payments is established. This category
includes financial assets at fair value through profit and loss
and financial assets at fair value through other comprehensive
income.
\u2013Loans and other receivables: these are non-derivative financial
assets with fixed or determinable payments that are solely
payments of principal and interest on the principal amount
outstanding, that are primarily held in order to collect
contractual cash flows. These balances include trade and
other receivables, which are measured at amortised cost,
using the effective interest rate method, and stated net of
allowances for credit losses, and deposits with banks and
other financial institutions which cannot be classified as cash
and cash equivalents. In addition, as explained in note 17,
certain litigation related deposits are recognised as assets within
loans and other receivables where management has determined
that these payments represent a resource controlled by the
entity as a result of past events. These deposits are held at the
fair value of consideration transferred less impairment, if
applicable, and have not been discounted.
\u2013Cash and cash equivalents: cash and cash equivalents include
cash in hand and deposits held on call, together with other short-
term highly liquid investments including investments in certain
money market funds. Cash equivalents normally comprise
instruments with maturities of three months or less at their
date of acquisition. In the cash flow statement, cash and cash
equivalents are shown net of bank overdrafts, which are included
as current borrowings in the liabilities section on the balance sheet.
Fair values for quoted investments are based on observable
market prices. If there is no active market for a financial asset, the
fair value is established by using valuation techniques principally
involving discounted cash flow analysis.
Non-derivative financial liabilities, including borrowings and
trade payables, are stated at amortised cost using the effective
interest method. For borrowings, their carrying value includes
accrued interest payable, as well as unamortised issue costs.
Drawdowns and repayments of short-term borrowings which
have a maturity period of three months or less are stated net in the
cash flow statement; drawdowns and repayments on all other
borrowings are stated gross in the cash flow statement. As shown
in note 23, certain borrowings are subject to fair value hedges, as
defined below.
Derivative financial assets and liabilities are initially recognised,
and subsequently measured, at fair value, which includes accrued
interest receivable and payable where relevant. Changes in their
fair values are recognised as follows:
\u2013for derivatives that are designated as cash flow hedges, the
changes in their fair values are recognised directly in other
comprehensive income, to the extent that they are effective,
with the ineffective portion being recognised in the income
statement. Where the hedged item results in a non-financial
asset, the accumulated gains and losses, previously recognised
in other comprehensive income, are included in the initial
carrying value of the asset (basis adjustment) and recognised in
the income statement in the same periods as the hedged item.
Where the underlying transaction does not result in such an
asset, the accumulated gains and losses are reclassified to the
income statement in the same periods as the hedged item;
\u2013for derivatives that are designated as fair value hedges, the
carrying value of the hedged item is adjusted for the fair value
changes attributable to the risk being hedged, with the
corresponding entry being made in the income statement. The
changes in fair value of these derivatives are also recognised in
the income statement;
\u2013for derivatives that are designated as hedges of net investments
in foreign operations, the changes in their fair values are
recognised directly in other comprehensive income, to the
extent that they are effective, with the ineffective portion being
recognised in the income statement. Where non-derivatives
such as foreign currency borrowings are designated as net
investment hedges, the relevant exchange differences are
similarly recognised. The accumulated gains and losses are
reclassified to the income statement when the foreign operation
is disposed of; and
\u2013for derivatives that do not qualify for hedge accounting or are not
designated as hedges, the changes in their fair values are
recognised in the income statement in the period in which they
arise. These are referred to as \u2018held-for-trading\u2019.
In order to qualify for hedge accounting, the Group is required to
document prospectively the economic relationship between the
item being hedged and the hedging instrument. The Group is also
required to demonstrate an assessment of the economic
relationship between the hedged item and the hedging instrument,
which shows that the hedge will be highly effective on an ongoing
basis. This effectiveness testing is re-performed periodically to
ensure that the hedge has remained, and is expected to remain,
highly effective.
Hedge accounting is discontinued when a hedging instrument is
derecognised (e.g. through expiry or disposal), or no longer
qualifies for hedge accounting. Where the hedged item is a highly
probable forecast transaction, the related gains and losses remain
in equity until the transaction takes place, when they are
reclassified to the income statement in the same manner as for
cash flow hedges as described above. When a hedged future
transaction is no longer expected to occur, any related gains and
losses, previously recognised in other comprehensive income, are
immediately reclassified to the income statement.
Derivative fair value changes recognised in the income statement
are either reflected in arriving at profit from operations (if the
hedged item is similarly reflected) or in finance costs.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDg0_21ad5c50-9904-4e9c-9beb-32ee047bbaf8": {
"value": "
Non-derivative financial assets are classified on initial
recognition in accordance with the Group\u2019s business model as
investments, loans and receivables, or cash and cash equivalents
and accounted for as follows:
\u2013Investments: these are non-derivative financial assets that
cannot be classified as loans and other receivables or cash
and cash equivalents. Dividend and interest income on these
investments are included within finance income when the
Group\u2019s right to receive payments is established. This category
includes financial assets at fair value through profit and loss
and financial assets at fair value through other comprehensive
income.
\u2013Loans and other receivables: these are non-derivative financial
assets with fixed or determinable payments that are solely
payments of principal and interest on the principal amount
outstanding, that are primarily held in order to collect
contractual cash flows. These balances include trade and
other receivables, which are measured at amortised cost,
using the effective interest rate method, and stated net of
allowances for credit losses, and deposits with banks and
other financial institutions which cannot be classified as cash
and cash equivalents. In addition, as explained in note 17,
certain litigation related deposits are recognised as assets within
loans and other receivables where management has determined
that these payments represent a resource controlled by the
entity as a result of past events. These deposits are held at the
fair value of consideration transferred less impairment, if
applicable, and have not been discounted.
\u2013Cash and cash equivalents: cash and cash equivalents include
cash in hand and deposits held on call, together with other short-
term highly liquid investments including investments in certain
money market funds. Cash equivalents normally comprise
instruments with maturities of three months or less at their
date of acquisition. In the cash flow statement, cash and cash
equivalents are shown net of bank overdrafts, which are included
as current borrowings in the liabilities section on the balance sheet.
Fair values for quoted investments are based on observable
market prices. If there is no active market for a financial asset, the
fair value is established by using valuation techniques principally
involving discounted cash flow analysis.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc2NDE2MDU4NDY3NDgy_f7a75ec7-36ee-4d0a-895e-a62bbd96b285": {
"value": "
Loans and other receivables: these are non-derivative financial assets with fixed or determinable payments that are solely
payments of principal and interest on the principal amount
outstanding, that are primarily held in order to collect
contractual cash flows. These balances include trade and
other receivables, which are measured at amortised cost,
using the effective interest rate method, and stated net of
allowances for credit losses, and deposits with banks and
other financial institutions which cannot be classified as cash
and cash equivalents. In addition, as explained in note 17,
certain litigation related deposits are recognised as assets within
loans and other receivables where management has determined
that these payments represent a resource controlled by the
entity as a result of past events. These deposits are held at the
fair value of consideration transferred less impairment, if
applicable, and have not been discounted.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDg1_95a421ac-0041-48d2-850b-2ed27142d9b9": {
"value": "
Non-derivative financial liabilities, including borrowings and
trade payables, are stated at amortised cost using the effective
interest method. For borrowings, their carrying value includes
accrued interest payable, as well as unamortised issue costs.
Drawdowns and repayments of short-term borrowings which
have a maturity period of three months or less are stated net in the
cash flow statement; drawdowns and repayments on all other
borrowings are stated gross in the cash flow statement. As shown
in note 23, certain borrowings are subject to fair value hedges, as
defined below.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5Xzc2NDE2MDU4NDY3NDg0_92ee8fb2-c313-4082-841c-2a798f0d3b52": {
"value": "
Derivative financial assets and liabilities are initially recognised,
and subsequently measured, at fair value, which includes accrued
interest receivable and payable where relevant. Changes in their
fair values are recognised as follows:
\u2013for derivatives that are designated as cash flow hedges, the
changes in their fair values are recognised directly in other
comprehensive income, to the extent that they are effective,
with the ineffective portion being recognised in the income
statement. Where the hedged item results in a non-financial
asset, the accumulated gains and losses, previously recognised
in other comprehensive income, are included in the initial
carrying value of the asset (basis adjustment) and recognised in
the income statement in the same periods as the hedged item.
Where the underlying transaction does not result in such an
asset, the accumulated gains and losses are reclassified to the
income statement in the same periods as the hedged item;
\u2013for derivatives that are designated as fair value hedges, the
carrying value of the hedged item is adjusted for the fair value
changes attributable to the risk being hedged, with the
corresponding entry being made in the income statement. The
changes in fair value of these derivatives are also recognised in
the income statement;
\u2013for derivatives that are designated as hedges of net investments
in foreign operations, the changes in their fair values are
recognised directly in other comprehensive income, to the
extent that they are effective, with the ineffective portion being
recognised in the income statement. Where non-derivatives
such as foreign currency borrowings are designated as net
investment hedges, the relevant exchange differences are
similarly recognised. The accumulated gains and losses are
reclassified to the income statement when the foreign operation
is disposed of; and
\u2013for derivatives that do not qualify for hedge accounting or are not
designated as hedges, the changes in their fair values are
recognised in the income statement in the period in which they
arise. These are referred to as \u2018held-for-trading\u2019.
In order to qualify for hedge accounting, the Group is required to
document prospectively the economic relationship between the
item being hedged and the hedging instrument. The Group is also
required to demonstrate an assessment of the economic
relationship between the hedged item and the hedging instrument,
which shows that the hedge will be highly effective on an ongoing
basis. This effectiveness testing is re-performed periodically to
ensure that the hedge has remained, and is expected to remain,
highly effective.
Hedge accounting is discontinued when a hedging instrument is
derecognised (e.g. through expiry or disposal), or no longer
qualifies for hedge accounting. Where the hedged item is a highly
probable forecast transaction, the related gains and losses remain
in equity until the transaction takes place, when they are
reclassified to the income statement in the same manner as for
cash flow hedges as described above. When a hedged future
transaction is no longer expected to occur, any related gains and
losses, previously recognised in other comprehensive income, are
immediately reclassified to the income statement.
Derivative fair value changes recognised in the income statement
are either reflected in arriving at profit from operations (if the
hedged item is similarly reflected) or in finance costs.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDg2_0f3f1071-fe3e-48b4-bbfc-e147b3a6cbaf": {
"value": "
Derivative financial assets and liabilities are initially recognised,
and subsequently measured, at fair value, which includes accrued
interest receivable and payable where relevant. Changes in their
fair values are recognised as follows:
\u2013for derivatives that are designated as cash flow hedges, the
changes in their fair values are recognised directly in other
comprehensive income, to the extent that they are effective,
with the ineffective portion being recognised in the income
statement. Where the hedged item results in a non-financial
asset, the accumulated gains and losses, previously recognised
in other comprehensive income, are included in the initial
carrying value of the asset (basis adjustment) and recognised in
the income statement in the same periods as the hedged item.
Where the underlying transaction does not result in such an
asset, the accumulated gains and losses are reclassified to the
income statement in the same periods as the hedged item;
\u2013for derivatives that are designated as fair value hedges, the
carrying value of the hedged item is adjusted for the fair value
changes attributable to the risk being hedged, with the
corresponding entry being made in the income statement. The
changes in fair value of these derivatives are also recognised in
the income statement;
\u2013for derivatives that are designated as hedges of net investments
in foreign operations, the changes in their fair values are
recognised directly in other comprehensive income, to the
extent that they are effective, with the ineffective portion being
recognised in the income statement. Where non-derivatives
such as foreign currency borrowings are designated as net
investment hedges, the relevant exchange differences are
similarly recognised. The accumulated gains and losses are
reclassified to the income statement when the foreign operation
is disposed of; and
\u2013for derivatives that do not qualify for hedge accounting or are not
designated as hedges, the changes in their fair values are
recognised in the income statement in the period in which they
arise. These are referred to as \u2018held-for-trading\u2019.
In order to qualify for hedge accounting, the Group is required to
document prospectively the economic relationship between the
item being hedged and the hedging instrument. The Group is also
required to demonstrate an assessment of the economic
relationship between the hedged item and the hedging instrument,
which shows that the hedge will be highly effective on an ongoing
basis. This effectiveness testing is re-performed periodically to
ensure that the hedge has remained, and is expected to remain,
highly effective.
Hedge accounting is discontinued when a hedging instrument is
derecognised (e.g. through expiry or disposal), or no longer
qualifies for hedge accounting. Where the hedged item is a highly
probable forecast transaction, the related gains and losses remain
in equity until the transaction takes place, when they are
reclassified to the income statement in the same manner as for
cash flow hedges as described above. When a hedged future
transaction is no longer expected to occur, any related gains and
losses, previously recognised in other comprehensive income, are
immediately reclassified to the income statement.
Derivative fair value changes recognised in the income statement
are either reflected in arriving at profit from operations (if the
hedged item is similarly reflected) or in finance costs",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzODc2MDcwMDk4MDc3_92b09129-0910-4deb-a868-9a809d4b6c7b": {
"value": "
Dividends
The Company pays interim quarterly dividends, and the Group
recognises the interim dividend in the period in which it is paid.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzODc2MDcwMDk4MDc4_2e807dfb-1e79-4895-ab50-246a5b31f2ce": {
"value": "
Segmental analysis
The Group is organised and managed on the basis of its
geographic regions. These are the reportable segments for the
Group as they form the focus of the Group\u2019s internal reporting
systems and are the basis used by the chief operating decision
maker, identified as the Management Board, for assessing
performance and allocating resources. While the Group has clearly
differentiated brands, global segmentation between a wide
portfolio of brands is not part of the regular internally reported
financial information. The results of New Category products are
reported as part of the results of each geographic region.
The prices agreed between Group companies for intra-group
sales of materials, manufactured goods, charges for royalties,
commissions, services and fees, are based on normal commercial
practices which would apply between independent businesses.
Royalty income, less related expenditure, is included in the region
in which the licensor is based.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzODc2MDcwMDk4MDgw_ee301eee-ee71-4de8-9174-287a1d0b5d08": {
"value": "
Provisions
Provisions are recognised when either a legal or constructive
obligation as a result of a past event exists at the balance sheet
date, it is probable that an outflow of economic resources will be
required to settle the obligation and a reasonable estimate can be
made of the amount of the obligation.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzODc2MDcwMDk4MDgx_8d2487e3-f4e9-4c99-b315-ae1ae356599a": {
"value": "
Contingent liabilities and contingent assets
Subsidiaries and associate companies are defendants in tobacco-
related and other litigation. These exposures are regularly reviewed
on an on-going basis and provision for this litigation (including legal
costs) is made at such time as an unfavourable outcome becomes
probable and the amount can be reasonably estimated.
Contingent assets are possible assets whose existence will only
be confirmed by future events not wholly within the control of the
entity and are not recognised as assets until the realisation of
income is virtually certain.
Where a provision has not been recognised, the Group records its
external legal fees and other external defence costs for tobacco-
related and other litigation as these costs are incurred.
As explained in note 17, certain litigation-related deposits are
recognised as assets within loans and other receivables where
management has determined that these payments represent a
resource controlled by the entity. These deposits are held at the
fair value of consideration transferred less impairment, if applicable,
and have not been discounted.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzMzI2MzE0MzA1NDg3_b43b0967-cf4a-4ae5-90ce-ee6eb04d2e8a": {
"value": "
Repurchase of share capital
When share capital is repurchased, the amount of consideration
paid, including directly attributable costs, is recognised as a
deduction from equity. Repurchased shares which are not
cancelled, or shares purchased for the employee share ownership
trusts, are classified as treasury shares and presented as a
deduction from total equity.
",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl81NzUvZnJhZzplY2FjNjEzNTRhZjE0N2Q5YjdiOTgxZTE5NTQwZDgyOS90ZXh0cmVnaW9uOmVjYWM2MTM1NGFmMTQ3ZDliN2I5ODFlMTk1NDBkODI5XzUzODc2MDcwMDk4MDgz_7f2274d8-eaf9-4240-8164-d85cd4a3232d": {
"value": "
Future changes to accounting policies
Certain changes to IFRS will be applicable to the Group financial
statements in future years, but are not expected to have a material
effect on reported profit or equity or on the disclosures in the
financial statements.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8yOC9mcmFnOjdmMjZhNzJiZmUxODRiZGE4NjYzMmQyOWI0ZDBiNjdjL3RleHRyZWdpb246N2YyNmE3MmJmZTE4NGJkYTg2NjMyZDI5YjRkMGI2N2NfNTM4NzYwNjk4MDE1OTE_6a1098fa-119e-4413-9692-4ab71beaa524": {
"value": "
2 Segmental analyses
The chief operating decision maker, the Management Board, reviews adjusted profit from operations at constant currencies to
evaluate segment performance and allocate resources to the overall business on a geographic region basis, including the results of
New Categories (comprising Vapour products, Tobacco Heating products and Modern Oral products), which are reported to the
Management Board as part of the results of each geographic region. The Management Board also reviews, at constant currencies,
revenues on a geographic region basis, which are included within adjusted profit from operations.
The four geographic regions are the reportable segments for the Group as they form the focus of the Group\u2019s internal reporting systems
and are the basis used by the Management Board for assessing performance and allocating resources. Transactions between Group
subsidiaries are conducted on arm\u2019s length terms in accordance with appropriate transfer pricing rules and Organisation for Economic
Cooperation & Development (OECD) principles. Net finance costs (comprising interest income and interest expense), share of post-tax
results of associates and joint ventures and taxation are centrally managed, and accordingly, such items are not presented by segment
as they are excluded from the measure of segment profitability.
Regional Directors are responsible for delivering the operating and financial results of their Region inclusive of all product categories.
Therefore, the results of New Categories (comprising Vapour products, Tobacco Heating products and Modern Oral products) are
reported to the Management Board as part of the results of each geographic region.
However, additional information has been provided to disaggregate revenue based on product category to enable investors to better
compare the Group\u2019s business performance across periods and by reference to the Group\u2019s investment activity.
In respect of the U.S. region, all financial statements and financial information provided by or with respect to the U.S. business or
Reynolds American Inc. (RAI) (and/or RAI and its subsidiaries (collectively, the \u2018Reynolds Group\u2019)) are prepared on the basis of US GAAP
and constitute the primary financial statements or financial information of the U.S. business or RAI (and/or the Reynolds Group). Solely for
the purpose of consolidation within the results of BAT p.l.c. and the BAT Group, this financial information is then converted to IFRS. To the
extent any such financial information provided in these financial statements relates to the U.S. business or RAI (and/or the Reynolds
Group), it is provided as an explanation of the U.S. business\u2019s or RAI\u2019s (and/or the Reynolds Group\u2019s) primary US GAAP based financial
statements and information.
Effective 1 January 2022, the North African markets of Algeria, Egypt, Libya, Morocco, Sudan and Tunisia, which formed part of the
Europe and North Africa (ENA) region were moved to the Africa and Middle East (APME) region. From 2022, the ENA region has been
renamed Europe. The impact of this is not considered material to the understanding of the regional results of the Europe and APME
regions and therefore the prior year comparative information has not been restated.
As part of plans to reduce complexity and drive efficiency in management structures and achieve a better balance in the scale of our
regions, it was decided to reduce the management structure from four regions to three regions, with the new organisational structures
expected to be in place by early April 2023. The markets which comprise the Americas and Sub-Saharan Africa (AmSSA) region will be
distributed to the Asia-Pacific and Middle East (APME) and Europe regions. The new regional structure will be:
\u2013Americas and Europe (AME), comprising the old Europe region with the inclusion of markets in Latin America and Canada;
\u2013Asia-Pacific, Middle East and Africa (APMEA) comprising the old APME region with the inclusion of markets in Sub-Saharan Africa; and
\u2013the U.S.
The change to our segment reporting is a subsequent event and therefore does not affect the historical results, discussion or
presentation of our consolidated results as set forth in this Report.
The results of 2023 will be presented in the above structure, with comparator data restated accordingly.
The following table shows 2022 revenue at current rates, and 2022 revenue translated using 2021 rates of exchange. The 2021 figures are
stated at the 2021 rates of exchange.
| | | | | | | |
| | | | | | | |
| | | Revenue Constant rates \u00a3m | Translation exchange \u00a3m | Revenue Current Rates \u00a3m | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
The following table shows 2021 revenue at current rates, and 2021 revenue translated using 2020 rates of exchange. The 2020 figures are
stated at the 2020 rates of exchange.
| | | | | | | |
| | | | | | | |
| | | Revenue Constant rates \u00a3m | Translation exchange \u00a3m | Revenue Current Rates \u00a3m | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
The following table shows 2022 profit from operations and adjusted profit from operations at current rates, and 2022 adjusted profit
from operations translated using 2021 rates of exchange. The 2021 figures are stated at the 2021 rates of exchange.
| | | | | | | | | |
| | | | | | | | | |
| Adjusted* segment result Constant rates \u00a3m | Translation exchange \u00a3m | Adjusted* segment result Current rates \u00a3m | | Segment result Current rates \u00a3m | | Adjusted* segment result \u00a3m | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Share of post-tax results of associates and joint ventures | | | | | | | | | |
| | | | | | | | | |
Taxation on ordinary activities | | | | | | | | | |
| | | | | | | | | |
Note:
*The adjustments to profit from operations are explained in notes 3, 4, 6(d), 6(f), 6(g), 6(h), 6(i), 6(j), and 7.
The following table shows 2021 profit from operations and adjusted profit from operations at current rates, and 2021 adjusted profit from
operations translated using 2020 rates of exchange. The 2020 figures are stated at the 2020 rates of exchange.
| | | | | | | | | |
| | | | | | | | | |
| Adjusted* segment result Constant rates \u00a3m | Translation exchange \u00a3m | Adjusted* segment result Current rates \u00a3m | | Segment result Current rates \u00a3m | | Adjusted* segment result \u00a3m | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Share of post-tax results of associates and joint ventures | | | | | | | | | |
| | | | | | | | | |
Taxation on ordinary activities | | | | | | | | | |
| | | | | | | | | |
Note:
*The adjustments to profit from operations are explained in notes 3, 4, 6(d), 6(f), 6(g), 6(h), 6(i), 6(j), and 7.
Adjusted profit from operations at constant rates of \u00a311,626 million (2021: \u00a311,952 million; 2020: \u00a311,661\u00a0million) excludes adjusting
depreciation, amortisation and impairment charges as explained in notes 4 and 7. These are excluded from segmental adjusted profit
from operations at constant rates as follows:
| | | | | | | | | |
| | | | | | | | | |
| Adjusted depreciation, amortisation and impairment Constant rates \u00a3m | Translation exchange \u00a3m | Adjusted depreciation, amortisation and impairment Current rates \u00a3m | | Depreciation, amortisation and impairment Current rates \u00a3m | | Adjusted depreciation, amortisation and impairment \u00a3m | | Depreciation, amortisation and impairment \u00a3m |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
External revenue and non-current assets other than financial instruments, deferred tax assets and retirement benefit assets are analysed
between the UK and all foreign countries at current rates of exchange as follows:
| | | | | | | | | | | |
| | | | | |
Revenue is based on location of sale | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | |
| | | | | |
| | | | | | | | |
| | | | | | | | |
Property, plant and equipment | | | | | | | | |
Investments in associates and joint ventures | | | | | | | | |
The consolidated results of the Reynolds Group operating in the U.S. met the criteria for separate disclosure under the requirements of
IFRS 8 Operating Segments. Revenue arising from the operations of the Reynolds Group, inclusive of the sales made to fellow Group
companies, in 2022, 2021 and 2020 was \u00a312,635 million, \u00a311,707 million and \u00a311,481 million, respectively. The majority of sales are to
customers based in the U.S.. Non-current assets attributable to the operations of the Reynolds Group were \u00a3119,597 million (2021:
\u00a3106,495 million).
The main acquisitions comprising the goodwill balance of \u00a347,956 million (2021: \u00a343,194 million), included in intangible assets, are
provided in note 12. Included in investments in associates and joint ventures are amounts of \u00a3 1,865 million (2021: \u00a31,759 million)
attributable to the investment in ITC Ltd. Further information is provided in notes 9 and 14.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
3 Employee benefit costs
| | | | | | | | | |
| | | | | | | | | |
| | | | | | |
| | | | | | |
Other pension and retirement benefit costs | | | | | | |
Share-based payments - equity and cash-settled | | | | | | |
| | | | | | | | | |
Included within employee benefits costs are expenses in relation to the Group\u2019s restructuring and integration initiatives of \u00a3315 million
(2021: \u00a3160 million; 2020: \u00a391 million), as explained in note 7.
Following a partial buy-out in 2021, in 2022, a second partial buy-out was concluded in the U.S. with approximately US$1.6\u00a0billion
(\u00a31.3\u00a0billion) (2021: US$1.9\u00a0billion (\u00a31.4\u00a0billion)) of plan liabilities being removed from the balance sheet, resulting in a settlement gain of
\u00a316 million (2021: \u00a335\u00a0million), which was reported in the income statement, and recognised as an adjusting item.
15 Retirement benefit schemes
The Group operates various funded and unfunded defined benefit schemes, including pension and post-retirement healthcare schemes,
and defined contribution pension schemes through its subsidiary undertakings in multiple jurisdictions, with its most significant
arrangements being in the U.S., the UK, Canada, Germany, Switzerland and the Netherlands. Together, schemes in these territories
account for over 90% of the total underlying obligations of the Group\u2019s defined benefit arrangements and over 70% of the current service
cost.
Pension obligations consist mainly of final salary pension schemes which provide benefits to members in the form of a guaranteed level
of pension payable for life. The level of benefits provided depends on members\u2019 length of service and their salary in the final years leading
up to retirement. In addition, the Group operates several healthcare benefit schemes, of which the most significant are in the U.S. and
Canada. The majority of defined benefit schemes allow for the future accrual of benefits. With the exception of arrangements required
under local regulations, most of the Group\u2019s arrangements are closed to new entrants.
Benefits provided through defined contribution schemes are charged as an expense as payments fall due. The liabilities arising in respect
of defined benefit schemes are determined in accordance with the advice of independent, professionally qualified actuaries, using the
projected unit credit method. It is Group policy that all schemes are formally valued at least every three years.
Through its defined benefit pension schemes and healthcare benefit schemes, the Group is exposed to a number of risks, including:
\u2013Asset volatility: The scheme liabilities are calculated using discount rates set by reference to bond yields. If scheme assets
underperform this yield, e.g. due to stock market volatility, this may create a deficit. However, most funded schemes hold a proportion
of assets which are expected to outperform bonds in the long term, and the majority of schemes by value are subject to local
regulation regarding funding deficits. In addition, schemes in the UK and Canada have purchased insurance contracts which exactly
match valuation volatility of all or part of the scheme liabilities.
\u2013Changes in bond yields: A decrease in corporate bond yields will increase scheme liabilities, although this will be partially offset by an
increase in the value of the schemes\u2019 bond holdings, \u2018buy-in\u2019 insurance assets or other hedging instruments.
\u2013Inflation risk: Some of the Group\u2019s pension obligations are linked to inflation, and higher inflation will lead to higher liabilities, although in
most cases, caps on the level of inflationary increases are in place in the scheme rules, while some assets and derivatives provide
specific inflation protection.
\u2013Life expectancy: The majority of the schemes\u2019 obligations are to provide benefits for the life of the member, so increases in life
expectancy will result in an increase in the plans\u2019 liabilities. Assumptions regarding mortality and mortality improvements are regularly
reviewed in line with actuarial tables and scheme specific experience.
The Group has an internal body, the Pensions Executive Committee (PEC), that is chaired by the Finance and Transformation Director.
The PEC sets and oversees a set of philosophies, policies and practices in respect of post-employment benefits including, but not limited
to, design, funding, investment strategy, risk management and governance. It also reviews significant changes to defined benefit
schemes in the countries with the most significant liabilities, and defined contribution schemes in the countries with the most significant
costs. Significant changes to defined benefit arrangements include scheme closures to future accrual and risk management exercises
such as the \u2018buy-in\u2019 and \u2018buy-out\u2019 transactions referred to below.
A \u2018buy-out\u2019 transaction is where a pension scheme derecognises all (or part) of its liabilities, removing it from the balance sheet, by
permanently transferring those obligations from the sponsoring employer to a third-party provider and eliminating all further legal or
constructive obligation to the pension scheme or to the sponsoring employer. By contrast, with a \u2018buy-in\u2019 transaction the scheme
liabilities remain on the balance sheet and the sponsoring employer remains responsible for the fulfilment of the pension obligations.
However, these obligations are de-risked through the purchase of an insurance product designed to match the underlying cash flows of
the pension liability reducing the risks associated with improved longevity and interest and discount rate movements. The Group
consequently benefits from the \u2018buy-in\u2019 as it reduces the individual scheme\u2019s reliance on the Group for future cash funding requirements.
All of the Group\u2019s arrangements, including funded schemes where formal trusts or equivalents are required, have been developed and are
operated in accordance with local practices and regulations where applicable in the countries concerned. Responsibility for the
governance of these schemes, including specific investment decisions and funding contribution schedules, generally lies with the
trustees, or equivalent bodies, of each arrangement. The trustees will usually consist of representatives appointed by both the
sponsoring company and the beneficiaries.
The funded arrangements in the Group have policies on investment management, including strategies over a preferred long-term
investment profile, and schemes in certain territories including Canada and the Netherlands manage their bond portfolios to match the
weighted average duration of scheme liabilities. In addition, as noted below, certain arrangements in the UK and Canada have been de-
risked through the purchase of insurance policies. The majority of funded schemes are subject to local regulations regarding funding
requirements. Contributions to defined benefit schemes are determined after consultation with the respective trustees and actuaries of
the individual externally funded schemes, and after taking into account regulatory requirements in each territory. The Group\u2019s
contributions to funded defined benefit schemes in 2023 in total are expected to be \u00a3110 million compared to \u00a374 million in 2022.
U.S.
In the U.S., the main funded pension plan is the Reynolds and Affiliates Pension Plan which was formed at the end of 2022 through a
merger of the Reynolds American Retirement Plan (PEP) and the Retirement Income Plan for Certain RAI Affiliates (Affiliates). The only
funded healthcare scheme is the Brown & Williamson Tobacco Corporation Welfare & Fringe Benefit Plan. Each of the above were
established with corporate trustees that are required to run the plan in accordance with the plan\u2019s rules and to comply with all relevant
legislation, including the Employee Retirement Income Security Act of 1974.
The corporate trustees act as custodians with a committee of local management acting in a fiduciary capacity with regard to investment
decisions, risk mitigation and administration of the arrangements. Contributions to the various funded plans are agreed with the named
fiduciary, scheme actuaries and the committee of local management after taking account of statutory requirements including the
Pension Protection Act of 2006, as amended. Through its U.S. subsidiaries, the Group may make significant contributions, either as
required by statutory requirements or at the discretion of the Group, with the aim of maintaining a funding status of at least 90% and
remaining fully funded in the long term. During 2022, the Group did not contribute to its funded pension and post-retirement plans in the
U.S. and does not expect to do so in 2023.
For funded plans in the U.S., the trustees employ a risk mitigation strategy which seeks to balance pension plan returns with a reasonable
level of funded status volatility. Based on this framework, the asset allocation has two primary components. The first component is the
hedging portfolio, which uses extended duration fixed income holdings (typically U.S. Government and investment grade corporate
bonds) and, to a lesser extent, derivatives to match a significant portion of the interest rate risk associated with the benefit obligations,
thereby reducing expected funded status volatility. The second component is the return-seeking portfolio, which is designed to enhance
portfolio returns. The return-seeking portfolio is broadly diversified across asset classes.
On 7 October 2021, the Group concluded a transaction affecting portions of the membership of the former PEP and former Affiliates
plans referred to above, allowing the Group to fully settle portions of its liability by transferring the obligations to the Metropolitan Tower
Life Insurance Company in a buy-out. Approximately US$1.9\u00a0billion (\u00a31.4\u00a0billion) of plan liabilities were removed from the balance sheet,
resulting in a settlement gain of \u00a335\u00a0million. A further partial buy-out affecting portions of the membership of the former PEP and former
Affiliates plans was concluded on 7 June 2022, with approximately US$1.6\u00a0billion (\u00a31.3\u00a0billion) of plan liabilities removed from the balance
sheet, resulting in a settlement gain of \u00a316 million.
At 31 December 2022, the Reynolds and Affiliates Pension Plan was reporting a surplus under IAS 19 in total of \u00a3567 million (2021: \u00a3463
million). Under the rules of this plan, after assuming the gradual settlement of the plan liabilities over the lives of the arrangements, any
surplus would be returnable to the Group in the event of a termination or could otherwise be repurposed for other existing or
replacement benefit plans, and accordingly, no surplus restriction has been recognised.
United Kingdom
In the UK, the main pension arrangement is the British American Tobacco UK Pension Fund (UKPF), which is established under trust law
and has a corporate trustee that is required to run the scheme in accordance with the UKPF\u2019s Trust Deed and Rules and to comply with
the Pension Scheme Act 1993, Pensions Act 1995, Pensions Act 2004 and all other relevant legislation. With effect from 1 July 2020, UKPF
was closed to further accrual of benefits with all active members becoming deferred members. A past service credit was recognised on
the difference between the salary increase assumption for active members and the inflation assumption for deferred members at the
date of the plan amendment and curtailment of benefits.
The formal triennial actuarial valuation of the UKPF was last carried out with an effective date of 31 March 2020. This showed that UKPF
had a surplus of \u00a3139\u00a0million on a Technical Provisions basis, in accordance with the statutory funding objective. The Trustee also has a
Long-Term Funding Target to be fully funded on a Solvency Liabilities basis by 2026, and on this basis UKPF had a surplus of \u00a37\u00a0million at
the valuation date. Under IAS 19, this was reported as a net retirement benefit asset of \u00a3143 million (2021: \u00a3293 million).
Under the UKPF scheme rules, the Trustee does not have a unilateral power to commence a wind up of UKPF, and the Group has
recognised a surplus as an unconditional right to a refund assuming the gradual settlement of the UKPF liabilities over the life of the
scheme with any future surplus returnable to the Group at the end of the life of the scheme. The funding commitment is not considered
onerous, and no additional liabilities or surplus restrictions have been recognised.
Following the completion of the valuation noted above, the Trustee and the Group agreed a new Schedule of Contributions with an
effective date of 5 October 2020. This schedule was subsequently replaced with a new Schedule with an effective date of 30 March 2021,
such that the Group made no contributions in 2021 but was committed to pay \u00a318\u00a0million in July 2022 and \u00a318\u00a0million in July 2023 as
contributions towards further de-risking of UKPF\u2019s assets and securing members\u2019 benefits. The Schedule of Contributions was further
amended on 8 August 2022 such that the Group would make no contributions in 2022 but would commit to pay \u00a336\u00a0million in July 2023.
However, the Trustee retained the right to require an interim payment of up to \u00a318\u00a0million at any time before 19 August 2023 should it
consider this, in all the circumstances, to be necessary and appropriate. Consequently, no contributions were made to UKPF in 2022 or 2021.
On 26 October 2022, the Group entered into an agreement with the Trustee to provide a temporary liquidity facility capped at \u00a340\u00a0million
for up to two years. The facility will be used for the purposes of providing short-term liquidity for UKPF, should this be necessary, in
meeting capital calls in respect of the certain residual investments held by UKPF. Once borrowed and repaid, amounts cannot be
redrawn. Interest will accrue on the amounts borrowed under the facility at SONIA plus 2.25% p.a. A commitment charge of 0.56% will be
paid by the Trustee. As at 31 December 2022 this facility was undrawn.
As part of its risk management strategy, on 31 May 2019, the UK Trustee entered into a buy-in agreement with Pension Insurance
Corporation plc (\u2018PIC\u2019) to acquire an insurance policy with the intent of matching a specific part of UKPF\u2019s future cash flows arising from
the accrued pension liabilities of retired and deferred members and improving the security to the UKPF and its members. On an IAS 19
basis, the subsequent fair value of the insurance policy matches the present value of the liabilities being insured. On 19 May 2021, the
Trustee entered into an agreement with PIC to acquire a second buy-in policy which involved the transfer of \u00a3383\u00a0million of assets held
by UKPF to PIC, and on 26 October 2022, a third and final buy-in policy was acquired with PIC. \u00a3198\u00a0million of assets were transferred
immediately with \u00a335\u00a0million of the premium deferred until 2023 and 2024.
As a result of these transactions, approximately 94% of the assets held by UKPF (2021: 84%) are represented by the buy-in contracts,
covering 100% of UKPF\u2019s retirement liabilities (2021: 91%). On an IAS 19 basis, the subsequent fair value of the insurance policies matches
the present value of the liabilities being insured.
For the residual assets held by UKPF, the current allocation is broadly split as 75% in risk reducing assets and 25% in return seeking
assets. The return seeking portfolio is invested in illiquid assets which, in the normal course of events, will wind down naturally over time,
with their value being realised as the investments mature. This is consistent with the Trustee\u2019s ultimate target which is to be 100%
invested in risk reducing assets or matching assets. Given the strong funding position of UKPF as shown in the 31 March 2020 actuarial
valuation, the Trustee will continue to review the investment strategy and may look to increase the proportion of risk-reducing or
matching assets, commensurate with their ultimate target to further reduce UKPF\u2019s exposure to asset volatility.
Other territories
Payments made to pensioners by the operating companies in Germany, net of income on scheme assets, are deemed to be company
contributions to the Contractual Trust Arrangements and are anticipated to be around \u00a340 million in 2023 and \u00a339 million per annum for
the four years after that.\u00a0Contributions to pension schemes in Canada, Netherlands and Switzerland in total are anticipated to be around
\u00a317 million in 2023 and then also around \u00a39 million per annum for the four years after that.
For schemes in the Netherlands reporting surpluses of \u00a346 million (2021: \u00a377 million), these surpluses have been recognised as an
unconditional right to a refund assuming the gradual settlement of the pension liabilities over the life of the scheme, with any future
surplus returnable to the Group at the end of the life of the scheme, and similarly for the surplus relating to schemes in Germany of \u00a3150
million (2021: \u00a3nil). For schemes in surplus in Canada of \u00a335 million (2021: \u00a327 million), the economic benefit has been calculated as a
combination of the expected level of administration expenses which may be charged to the plan assets in accordance with the plan rules,
which economically represents a potential surplus refund, and the value of the employer reserve account as defined in legislation, which
represents a potential reduction in contributions on an ongoing basis or a surplus refund at the end of the life of the scheme.
On 2 September 2021, the Group through its Canadian subsidiaries entered into a buy-in agreement with five insurers to acquire
insurance policies that operate as assets of its largest Canadian scheme, the Imasco Pension Fund Society Plan (Society Plan), by
transferring plan assets of CAD $766\u00a0million (\u00a3451\u00a0million). The transaction was met entirely from the pension plan assets with no further
funding required from the Group. The buy-in covered all the Society Plan\u2019s liabilities in relation to pensioners and deferred members as
well as the pensions accrued up to 31 December 2021 for active members. The Group consequently benefits from the buy-in as it
reduces the Society Plan\u2019s reliance on the Group for future cash funding requirements. For the residual assets, the Society Plan is 100%
invested in risk reducing assets, consistent with the Canadian subsidiary\u2019s ultimate de-risking target.
Unfunded arrangements
The majority of benefit payments are from trustee administered funds, however, there are also a number of unfunded schemes where
the sponsoring company meets the benefit payment obligation as it falls due, including UK-based Defined Benefit and Defined
Contribution Unapproved Unfunded Retirement Benefit Schemes (DB UURBS and DC UURBS respectively). The DC UURBS credits
accrued in the year are increased in line with the Company\u2019s Weighted Average Cost of Debt and the scheme is therefore treated as a
defined benefit scheme under IAS 19. For unfunded pension schemes in the U.S. and UK, 50% of the liabilities reported at year-end are
expected to be settled by the Group within 10 years, 29% between 10 and 20 years, 14% between 20 and 30 years, and 7% thereafter. For
unfunded healthcare schemes in the U.S. and Canada, 71% of the liabilities reported at year-end are expected to be settled by the Group
within 10 years, 23% between 10 and 20 years, 5% between 20 and 30 years, and 1% thereafter.
The amounts recognised in the balance sheet are determined as follows:
| | | | | | | | |
| | | | | |
| | | | | | | | |
Present value of funded scheme liabilities | | | | | | | | |
Fair value of funded scheme assets | | | | | | | | |
| | | | | | | | |
Unrecognised funded scheme surpluses | | | | | | | | |
| | | | | | | | |
Present value of unfunded scheme liabilities | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
The above net asset/(liability) is recognised in the balance sheet as follows: | | | | |
\u2013 retirement benefit scheme liabilities | | | | | | | | |
\u2013 retirement benefit scheme assets | | | | | | | | |
| | | | | | | | |
Of the Group\u2019s unfunded pension schemes, 47% (2021: 57%) relate to arrangements in the UK and 39% (2021: 32%) relate to
arrangements in the U.S., while 86% (2021: 85%) of the Group\u2019s unfunded healthcare arrangements relate to arrangements in the U.S.
The amounts recognised in the income statement are as follows:
| | | | | | | | |
| | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
\u2013 current service cost | | | | | | | | |
\u2013 past service credit, curtailments and settlements | | | | | | | | |
Net interest on the net defined benefit liability | | | | | | | | |
\u2013 interest on scheme liabilities | | | | | | | | |
\u2013 interest on scheme assets | | | | | | | | |
\u2013 interest on unrecognised funded scheme surpluses | | | | | | | | |
| | | | | | | | |
Defined contribution schemes | | | | | | | | |
Total amount recognised in the income statement (note 3) | | | | | | | | |
The above charges are recognised within employee benefit costs in note 3 and include a credit of \u00a39 million in 2022 (2021: \u00a323 million) in
respect of settlements, past service costs and defined contribution costs reported as part of the restructuring costs and other adjusting
items charged in arriving at profit from operations (note 7). Included in current service cost in 2022 is \u00a313 million (2021: \u00a315 million) of
administration costs. Current service cost is stated after netting employee contributions, where applicable.
The movements in scheme liabilities are as follows:
| | | | | | | | |
| | | | | |
| | | | | | | | |
Present value at 1 January | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Past service (credit)/cost and settlements | | | | | | | | |
Interest on scheme liabilities | | | | | | | | |
Contributions by scheme members | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
\u2013 arising from changes in demographic assumptions | | | | | | | | |
\u2013 arising from changes in financial assumptions | | | | | | | | |
Experience losses/(gains) | | | | | | | | |
Present value at 31 December | | | | | | | | |
Changes in financial assumptions principally relate to discount rate movements in both years, offset by changes in inflation. Experience
losses/(gains) relates to variations from previous assumptions for inflationary increases for pensions-in-payment and deferred pensions
as well as adjustments for membership data. Past service (credit)/cost and settlements in the table above includes amounts relating to
the U.S. buy-out transaction in both years.
Scheme liabilities by scheme membership:
| | | | | | | | |
| | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Present value at 31 December | | | | | | | | |
The actuarial losses and gains in both years principally relate to movements in the fair values of scheme assets including revaluations on
initial recognition and subsequent remeasurement of insurance assets acquired in the buy-in transactions referred to above. Actual
returns are stated net of applicable taxes and fund management fees. Past service and settlements in the table above includes amounts
relating to the U.S. buy-out transactions in both years.
Scheme assets have been diversified into equities, bonds and other assets and are typically invested via fund investment managers into
both pooled and segregated mandates of listed and unlisted equities and bonds.
| | | | | | | | |
| | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Other assets \u2012 listed | | | | | | | | |
Other assets \u2012 unlisted | | | | | | | | |
Fair value of scheme assets at 31 December | | | | | | | | |
In the above analysis, investments via equity-based investment funds are shown under listed equities, and investments via bond-based
investment funds are shown under listed bonds. Other assets include insurance contracts, cash and other deposits, derivatives and other
hedges, recoverable taxes, infrastructure investments and investment property. The fair values of listed scheme assets were derived
from observable data including quoted market prices and other market data, including market values of individual segregated
investments and of pooled investment funds where quoted.
Insurance policies of \u00a32,453 million (2021: \u00a33,473 million), acquired in buy-in transactions in the UK and Canada are included within \u2018other
assets-unlisted\u2019 in the table above. The fair value of these assets was estimated as the present value of the underlying obligations
covered by the insurance policy and consequently the valuation of these assets at each balance sheet date is subject to the same
measurement uncertainty as for the related scheme liabilities. The fair values of other unlisted assets, excluding buy-in insurance policies,
were determined using an income approach that utilised cash flow models utilising observable inputs and comparing these valuations to
benchmark valuations of similar assets. In addition, the fair value of a proportion of the unlisted bonds is estimated by reference to daily
broker auctions.
In the U.S, pension plan assets are invested using active investment strategies and multiple investment management firms. Managers
within each asset class cover a range of investment styles and approaches.\u00a0Allowable investment types include public equity, fixed
income, real assets, private equity and hedge funds.\u00a0The range of allowable investment types utilised for pension assets provides
enhanced returns and more widely diversifies the plan.
As noted above, during 2022, 2021 and 2019, the UKPF Trustee acquired insurance policies that operate as a UK Fund investment asset in
a buy-in transaction. The residual assets of this fund of \u00a3143 million (2021: \u00a3586 million) now predominantly consist of cash and a
proportion of illiquid investments, such as private equity and infrastructure investments, as well as certain liability-driven investments
and absolute return funds.
The recognition of retirement benefit surpluses on the balance sheet is restricted where the economic benefit, in the form of a potential
refund or reduction in future contributions, has a present value which is less than the net assets of the scheme. The movements in the
unrecognised scheme surpluses, recognised in other comprehensive income, are as follows:
| | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | |
Unrecognised funded scheme surpluses at 1 January | | | | | | | | | | | |
| | | | | | | | | | | |
Interest on unrecognised funded scheme surpluses | | | | | | | | | | | |
Movement in year (note 22) | | | | | | | | | | | |
Unrecognised funded scheme surpluses at 31 December | | | | | | | | | | | |
The principal actuarial assumptions (weighted to reflect individual scheme differences) used in the following territories are shown below.
In both years, discount rates are determined by reference to normal yields on high quality corporate bonds at the balance sheet date.
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Rate of increase in salaries (%) | | | | | | | | | | | | | |
Rate of increase in pensions in payment (%) | | | | | | | | | | | | | |
Rate of increase in deferred pensions (%) | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Weighted average duration of liabilities (years) | | | | | | | | | | | | | |
For the remaining territories, typical assumptions are that real salary increases will be from 0% to 8.0% (2021: 0% to 8.0%) per annum
and discount rates will be from 0% to 7.5% (2021: 0% to 11.0%) above inflation. Pension increases, where allowed for, are generally
assumed to be in line with inflation. Assumptions of life expectancy are in line with best practice in each territory. For countries where
there is not a deep market in such corporate bonds, the yield on government bonds is used.
The valuation of retirement benefit schemes involves judgements about uncertain future events. Sensitivities in respect of the key
assumptions used to measure the principal pension schemes as at 31 December 2022 are set out below. These sensitivities show the
hypothetical impact of a change in each of the listed assumptions in isolation, with the exception of the sensitivity to inflation which
incorporates the impact of certain correlating assumptions such as salary increases and pension increases. While each of these
sensitivities holds all other assumptions constant, in\u00a0practice such assumptions rarely change in isolation, while asset values also change,
and the impacts may offset to some extent.
| | | | |
| | | percentage increase \u00a3m | percentage decrease \u00a3m |
Average life expectancy \u2013 increase/(decrease) of scheme liabilities | | | | |
Rate of inflation (+/- 25bps) \u2013 increase/(decrease) of scheme liabilities | | | | |
Discount rate (+/- 50bps) \u2013 (decrease)/increase of scheme liabilities | | | | |
Enumerated below are movements in costs that have impacted depreciation, amortisation and impairment in 2022, 2021 and 2020.
These include changes in our underlying business performance, as well as impact of adjusting items, as defined in note 1.
Intangibles \u2013 amortisation and impairment of trademarks and similar intangibles
Acquisitions in previous years have resulted in the capitalisation of trademarks and similar intangibles, including those which are
amortised over their expected useful lives, which do not exceed 20 years. The amortisation and impairment of these acquired
trademarks and similar intangibles are charged to the income statement of which the adjusting element is \u00a3288 million (2021:
\u00a3306 million; 2020: \u00a3339 million). Also included under amortisation and impairment of trademarks and similar intangibles is a \u00a33 million
gain (2021: \u00a3nil, 2020:\u00a3nil) related to a trademark disposal, which has been treated as adjusting.
Impairment of goodwill
The impairment of goodwill is charged to the income statement as adjusting.
During 2022, the Group made no impairments of goodwill.
During 2021, the Group impaired \u00a33\u00a0million of goodwill held in Myanmar as a result of the decision to cease activities in the market.
The Group also recognised a goodwill impairment charge of \u00a354\u00a0million in 2021 due to continued difficult trading conditions in Peru as
a consequence of the COVID-19 pandemic.
During 2020, the Group impaired the goodwill arising from Malaysia amounting to \u00a3197\u00a0million, goodwill arising from the acquisition of
Twisp of \u00a311\u00a0million and goodwill arising from the acquisition of Blue Nile of \u00a31\u00a0million.
Property, plant and equipment \u2013 depreciation and impairment
The following items are included within depreciation and impairment of property, plant and equipment:
\u2013Restructuring and integration related depreciation and impairment costs and reversals were a net cost of \u00a3220 million (2021: \u00a311 million
net credit; 2020: \u00a3151 million net cost) resulting from obsolete machines in relation to downsizing and factory rationalisation as
mentioned in note 7; and
\u2013Gains and losses recognised on disposal of property, plant and equipment.
",
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Intangibles \u2013 amortisation and impairment of trademarks and similar intangibles
Acquisitions in previous years have resulted in the capitalisation of trademarks and similar intangibles, including those which are
amortised over their expected useful lives, which do not exceed 20 years. The amortisation and impairment of these acquired
trademarks and similar intangibles are charged to the income statement of which the adjusting element is \u00a3288 million (2021:
\u00a3306 million; 2020: \u00a3339 million). Also included under amortisation and impairment of trademarks and similar intangibles is a \u00a33 million
gain (2021: \u00a3nil, 2020:\u00a3nil) related to a trademark disposal, which has been treated as adjusting.
Impairment of goodwill
The impairment of goodwill is charged to the income statement as adjusting.
During 2022, the Group made no impairments of goodwill.
During 2021, the Group impaired \u00a33\u00a0million of goodwill held in Myanmar as a result of the decision to cease activities in the market.
The Group also recognised a goodwill impairment charge of \u00a354\u00a0million in 2021 due to continued difficult trading conditions in Peru as
a consequence of the COVID-19 pandemic.
During 2020, the Group impaired the goodwill arising from Malaysia amounting to \u00a3197\u00a0million, goodwill arising from the acquisition of
Twisp of \u00a311\u00a0million and goodwill arising from the acquisition of Blue Nile of \u00a31\u00a0million.
Property, plant and equipment \u2013 depreciation and impairment
The following items are included within depreciation and impairment of property, plant and equipment:
\u2013Restructuring and integration related depreciation and impairment costs and reversals were a net cost of \u00a3220 million (2021: \u00a311 million
net credit; 2020: \u00a3151 million net cost) resulting from obsolete machines in relation to downsizing and factory rationalisation as
mentioned in note 7; and
\u2013Gains and losses recognised on disposal of property, plant and equipment.
(e) Impairment testing
(i) Overview
a. Estimation uncertainty
As described in note 1, the critical accounting estimates used in the preparation of the consolidated financial statements include the
review of asset values, especially indefinite life assets such as goodwill and certain trademarks and similar intangibles.
There is significant judgement with regard to assumptions and estimates involved in the forecasting of future cash flows, which form the
basis of the assessment of the recoverability of these assets, with the effect that the value-in-use of calculations incorporate estimation
uncertainty, particularly for certain assets held in relation to the Canadian and U.S. markets.
b. Impact of climate change
The impact of climate change on the future cash flows has been considered for scenarios analysed in terms of future access to tobacco
and nicotine. The climate change scenario analyses \u2013 conducted in line with TCFD recommendations \u2013 undertaken this year did not
identify any material financial impact.
(ii) Impairment testing \u2013 Trademarks and similar intangibles with indefinite lives (brands)
The trademarks and similar intangibles with indefinite lives (brands) have been tested for impairment on a value-in-use basis. The value-
in-use calculations use cash flows based on detailed brand budgets prepared by management using projected sales volumes and pricing
(net revenue) and projected brand profitability covering a five-year horizon and, thereafter, grown into perpetuity. Corporate costs are
allocated to the brand budgets based on either specific allocations, where appropriate, or based on revenue. The discount rates and long-
term growth rates applied to the brand value-in-use calculations have been determined by local management based on experience,
specific market and brand trends and pricing and cost expectations. As the trademarks and similar intangibles with indefinite lives relate
to the acquisition of Reynolds American, the brand budgets used in the value-in-use calculations have also been incorporated into the
budget information used in the impairment testing of Reynolds American goodwill.
| | | | | |
| | | | | |
| | | | | |
Indefinite-lived intangibles | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Note:
*The pre-tax discount rates for all indefinite-lived intangibles have declined in comparison to 2021 primarily as the result of a change in U.S. federal tax rate assumption in 2022. On a
post-tax basis the discount rates for all the indefinite-lived intangibles have increased when compared with 2021, except for Newport which, as the most exposed brand to mentholated
products, saw a greater shift in risk for the discount rate into the cash flows, in 2022, in relation to the proposed product standard to prohibit menthol as a characterising flavour in
cigarettes (outlined further in note 12(e)(v).
Refer to note 12(e)(v) for further information on brand impairment testing.
(iii) Cash-generating units and information on goodwill impairment testing
In 2022, goodwill was allocated for impairment testing purposes to 17 (2021: 17) individual cash-generating units (CGUs) \u2013 one in the U.S.
(2021: one), six in AmSSA (2021: six), four in Europe (2021: four) and six in APME (2021: six).
Note:
*Due to difficult trading conditions and uncertainties resulting from the COVID-19 pandemic in the prior year, a more granular market-led approach was adopted in formulating the CGUs
financial forecast and value-in-use assumptions. However, given these risk factors have now dissipated, the CGUs have been assessed through the established Group approach in the
current year.
Included within \u2018Other\u2019 above is goodwill arising on various acquisitions that have been allocated to eight cash-generating units which
are, individually, insignificant. The pre-tax discount rate represents the weighted average pre-tax discount rate.
The recoverable amounts of all cash-generating units have been determined on a value-in-use basis. The key assumptions for the
recoverable amounts of all units are the projected sales volumes and pricing (net revenues), operating margins and long-term growth
rates, which directly impact the cash flows, and the discount rates used in the calculation. The long-term growth rate is used purely for
the impairment testing of goodwill under IAS 36 Impairment of Assets and does not reflect long-term planning assumptions used by the
Group for investment proposals or for any other assessments.
Post-tax discount rates were used in the impairment testing, based on the Group\u2019s weighted average cost of capital, taking into account
the cost of capital and borrowings, to which specific market-related premium adjustments are made. These adjustments are derived
from external sources and are based on the spread between bonds (or credit default swaps, or similar indicators) issued by the relevant
local (or comparable) government, adjusted for the Group\u2019s own credit market risk. For ease of use and consistency in application, these
results are periodically calibrated into bands based on internationally recognised credit ratings. This applies to all CGUs with the
exception of Reynolds which had its discount rate independently determined based on its own weighted average cost of capital and U.S.
market-related premiums. In general, an overall increase in post-tax discount rates in 2022 has been observed, primarily driven by higher
interest rates and bond yields. In relation to Reynolds, this has been partially offset by a reduction in the risk-adjustment incorporated
into the 2021 discount rates which has now been incorporated directly into the cash flows.
The long-term growth rates and discount rates have been applied to the budgeted cash flows of each cash-generating unit. These cash
flows have been determined by local management based on experience, specific market and brand trends, as well as pricing and cost
expectations. These have been endorsed by Group management as part of the consolidated Group\u2019s budget.
(iv) Impairment testing \u2013 Goodwill (excluding Reynolds American and Canada)
The value-in-use calculations use cash flows based on detailed financial budgets prepared by management covering a one-year period
extrapolated over a 10-year horizon with growth of 3% (2021: 3%) in years 2 to 10, after which a growth rate of 1% (2021: 1%) having been
assumed as the long-term volume decline is more than offset by pricing to drive revenue growth. A 10-year horizon is considered appropriate
based on the Group\u2019s history of profit and cash growth, its well-balanced portfolio of brands and the industry in which it operates.
For the Malaysian cash-generating unit, as a result of regulatory and macro-economic conditions, the above assumptions were amended
to reflect the short- to medium-term plans of the country or area management spanning up to a period of five years after which a long-
term growth rate of 0% has been assumed. For the Malaysian cash-generating units headroom to reduce to \u00a3nil, the forecasted cash
flows would need to reduce by 11.5% year on year or the pre-tax discount rate would have to increase by 1.5%, both of which
management does not consider to be reasonably possible. The Group will continue to monitor Malaysia's performance going forward to
identify if any impairment triggers materialise.\u00a0
South Africa is positively recovering from the COVID-19 pandemic and the five-month sales ban in 2020, with the forecasted cashflows
prepared to reflect the continued expected recovery with no further indication of impairment.
The Group had recognised an impairment charge of \u00a354\u00a0million in 2021 for its Peruvian cash generating unit due to continued difficult
trading conditions as a consequence of the COVID-19 pandemic and its impact on the forecasted operating cashflows which partially
reduced the carrying value of goodwill to \u00a391\u00a0million. As a result of the assessment, in 2022, no further deterioration in performance was
identified requiring further impairment consideration.
In 2021, the Group also impaired in full the goodwill of Myanmar resulting in an impairment charge of \u00a33\u00a0million.
Following the application of a reasonable range of sensitivities to all cash-generating units, there was no reasonably possible scenario
identified that would lead to a potential impairment charge.
(v) Impairment testing \u2013 Reynolds American
Goodwill relating to Reynolds American and the indefinite-lived brand intangibles
On 28 April 2022, the FDA announced a proposed product standard to prohibit menthol as a characterising flavour in cigarettes,
consistent with their previously stated timeline. Management notes that the proposal of a product standard does not itself constitute a
ban on menthol in cigarettes given the proposed standard is still required to go through the established U.S. comprehensive rule-making
process, the timetable and outcome for which was, and remains, uncertain. Further to this, on 21 June 2022, the FDA announced plans to
develop a proposed product standard that would establish a maximum nicotine level in cigarettes and certain other combustible tobacco
products to reduce addictiveness. Management notes that the FDA announcement does not itself constitute restrictions on nicotine
levels in cigarettes, and any proposed regulation of nicotine in cigarettes would need to be introduced through the established U.S.
comprehensive rule-making process, the timetable and outcome for which was, and remains, uncertain. Management do not deem this
to be a new development but rather a continuation of the rulemaking process that the FDA initiated in 2017 that was later put on hold.
In December 2022, the sale of most tobacco products with characterising flavours (including menthol) other than tobacco were banned
in the state of California. The impact of such ban does not present an indicator of a potential impairment for Reynolds American goodwill
or any of the indefinite-lived intangibles. The Group has a long-standing track record of managing regulatory shifts and, in the event of
regulatory change, the Group remains confident in its ability to navigate that environment successfully. Since 2018, having considered
the combination of the risk of implementation and impact of any change in regulations, the Group has not recognised any impairment on
either the Newport or Camel brands or the Reynolds American cash-generating unit.
In 2022, the value-in-use calculations have been determined based on probability weighted scenarios to derive a risk-adjusted cash flow
forecast applied within the valuations. Management incorporated the following scenarios into the valuation:
\u2013Management\u2019s internal forecast (risk of the proposed product standard to prohibit menthol as a characterising flavour in cigarettes
incorporated into the long-term growth rate).
\u2013Assuming a final product standard to prohibit menthol as a characterising flavour in cigarettes becomes effective in the final year of
the discrete forecast period (Management\u2019s best estimate of the ban\u2019s effective date, if a final rule is published).
\u2013No product standard to prohibit menthol as a characterising flavour in cigarettes ultimately ends up being introduced.
This is a change in valuation methodology from 2021 where management prepared one cash flow forecast with the potential impact/risk of a
proposed product standard to prohibit menthol as a characterising flavour in cigarettes incorporated into the long-term growth rate and discount
rate. This change was a result of the timing of a proposed product standard narrowing given we have moved one year further forward.
The value-in-use calculations for brands, as described in note 12(e)(ii) above, have been incorporated in the probability weighted
scenarios used in the Reynolds American goodwill model. The value-in-use calculations have been prepared based on a five-year risk-
adjusted cash flow forecast which assumes a long-term volume decline of cigarettes generally offset by pricing. After this forecast, a
probability weighted growth rate of 1.05% has been assumed for the Reynolds American cash-generating unit, 0.89% for Newport,
0.93% for Camel, and 1.0%for all remaining indefinite life intangibles.
The excess of value-in-use earnings over the carrying values (headroom) of the Reynolds American cash-generating unit and the
Newport, Camel, Pall Mall, Grizzly and Camel Snus brand intangibles would be reduced to nil if the following individual changes were
made to the key assumptions used in the impairment model.
| | | | | | |
| Reynolds American goodwill % | | | | | |
| | | | | | |
| | | | | | |
Increase in pre-tax discount rate by | | | | | | |
Decrease in long-term growth rate by | | | | | | |
Reasonably possible changes to key assumptions, within the value-in-use model, which could result in an impairment charge were also identified
for Camel Snus. The following movements in key assumptions are deemed to be reasonably possible and would result in the following:
| | | | |
Current headroom (\u00a3m) | | Reasonable possible change | | Possible impairment (\u00a3m) |
| | | | |
| | | |
The sensitivities relating to the pre-tax discount rates above are based upon a change in the risk-free rate only, as a directional potential
impact. It is recognised that such changes may arise in a combination of assumptions within the discount rate calculation.\u00a0
Apart from Camel Snus, management concluded that no reasonably possible scenarios were identified that resulted in any of the
indefinite-lived intangibles requiring an impairment charge. However, it is noted that if adverse movement occurred in a combination of
the above key assumptions for the Pall Mall brand intangible this may result in an impairment charge.
(vi) Impairment testing \u2013 Canada
Goodwill relating to Imperial Tobacco Canada Ltd (ITCAN)
In March 2019, ITCAN obtained an Initial Order from the Ontario Superior Court of Justice granting it protection under the Companies\u2019
Creditors Arrangement Act (CCAA). If the CCAA creditor protection were to end, significant liabilities might crystallise. As a
consequence, to reflect the risk to future operating cash flows, the value-in-use calculations have been prepared based on a five-year
cash flow forecast, after which a growth rate of -2.5% and a pre-tax discount rate of 19.4% (2021: 19.3%) have been assumed. Further
information on the Quebec Class Actions and CCAA can be found in note 31.
In addition to the increase in discount rate, a reasonable range of sensitivities was applied to the value-in-use calculation, and there was
no risk of an impairment charge identified.
The excess of value-in-use earnings over the carrying values (headroom) of the ITCAN goodwill would be reduced to nil if the following
individual changes, none of which are considered reasonably possible by management, were made to the key assumptions used in the
impairment model. The change in revenue assumption is based on combustibles revenue in the five-year forecast reducing by 20.6% in
each year and assumes that other assumptions are not changed.
| |
| |
| |
| |
Increase in pre-tax discount rate by | |
Note:
*Revenue sensitivities are performed in isolation and do not include the removal of the corresponding variable cost of sales.
The \u00a32,460 million of goodwill relating to ITCAN on the Group\u2019s balance sheet at 31 December 2022 will continue to be reviewed on a
regular basis. Any future impairment charge would result in a non-cash charge to the income statement that will be treated as an
adjusting item.
",
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"value": "
5 Other operating income
Other operating income of \u00a3722 million (2021: \u00a3196 million; 2020: \u00a3188 million) comprises income that is associated with the Group\u2019s
normal activities, but which falls outside the definition of turnover and includes one-off capital profits on property sales and one-off
disposals of fixed assets.
In 2022, other operating income mainly related to the calculation of historical VAT on social contributions in Brazil, where the Group
recognised \u00a3472 million. This has been treated as an adjusting item.
In addition, \u00a378\u00a0million of the contingent asset in respect of historical VAT on social contributions claims was sold to financial institutions
for \u00a338\u00a0million.
In 2021 and 2020, the Group recognised \u00a35\u00a0million and \u00a358\u00a0million, respectively, in respect of a tax case in Brazil. In addition, during 2021,
\u00a3130\u00a0million of the unrecognised contingent asset in respect of historical VAT on social contributions claims was sold to financial
institutions for \u00a345\u00a0million.
In 2022, as disclosed in note 7, certain items of operating income have been recognised as part of the Group\u2019s restructuring and
integration activities.
Also, in 2021, R.J. Reynolds Tobacco Company (RJRT) reached an agreement with several Master Settlement Agreement (MSA) states to
waive RJRT\u2019s claims under the MSA in connection with a settlement between those MSA states and a non-participating manufacturer,
S&M Brands, Inc. (S&M Brands), under which the states released certain claims against S&M Brands in exchange for receiving a portion
of the funds S&M Brands had deposited into escrow accounts in those states pursuant to the states\u2019 escrow statutes. In consideration
for waiving claims, RJRT, together with Santa Fe Natural Tobacco Company, received approximately \u00a340\u00a0million from the escrow funds
paid to those MSA states under their settlement with S&M Brands.
",
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}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl82MjcvZnJhZzo4ZWUzODMxZDEwMDU0NmRmODkyZWE5OWMyZGZlNTE3My90ZXh0cmVnaW9uOjhlZTM4MzFkMTAwNTQ2ZGY4OTJlYTk5YzJkZmU1MTczXzEwOTk1MTE2Mjk0Mzk_018773ba-c48f-4728-a8d2-70f9975e6d79": {
"value": "722000000",
"decimals": -6,
"dimensions": {
"concept": "ifrs-full:OtherIncome",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00",
"unit": "iso4217:GBP"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl82MjcvZnJhZzo4ZWUzODMxZDEwMDU0NmRmODkyZWE5OWMyZGZlNTE3My90ZXh0cmVnaW9uOjhlZTM4MzFkMTAwNTQ2ZGY4OTJlYTk5YzJkZmU1MTczXzEwOTk1MTE2Mjk0NDU_8b14ad34-bfd8-479b-ab52-2487c31fc2e2": {
"value": "196000000",
"decimals": -6,
"dimensions": {
"concept": "ifrs-full:OtherIncome",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2021-01-01T00:00:00/2022-01-01T00:00:00",
"unit": "iso4217:GBP"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl82MjcvZnJhZzo4ZWUzODMxZDEwMDU0NmRmODkyZWE5OWMyZGZlNTE3My90ZXh0cmVnaW9uOjhlZTM4MzFkMTAwNTQ2ZGY4OTJlYTk5YzJkZmU1MTczXzEwOTk1MTE2Mjk0NTE_4bf59c38-2eb0-43d3-a472-17b7ac45adb2": {
"value": "188000000",
"decimals": -6,
"dimensions": {
"concept": "ifrs-full:OtherIncome",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2020-01-01T00:00:00/2021-01-01T00:00:00",
"unit": "iso4217:GBP"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl80OTYvZnJhZzo5OTE5MWQ4YmIzOWU0NGFhYWEyYmZjNWUwYTE5YzkyZS90ZXh0cmVnaW9uOjk5MTkxZDhiYjM5ZTQ0YWFhYTJiZmM1ZTBhMTljOTJlXzUzODc2MDY5Nzk4NzAz_5aabfd06-fcdd-45d9-bb05-745248fa699a": {
"value": "
6 Other operating expenses
(a) Items included within other operating expenses
The following items are included within other operating expenses:
| | | | |
| | | | |
| | | | |
The following items are included within other operating expenses: | | | | |
Master settlement agreement | | | | |
Marketing costs in operating expenses | | | | |
| | | | |
Research and development expenses (excluding employee benefit costs and depreciation) | | | | |
Loss on disposal of businesses | | | | |
Excise, VAT and penalties in respect of disputes in Turkey, South Korea and Russia | | | | |
Charges in respect of DOJ investigation | | | | |
Charges in respect of assets held-for-sale | | | | |
Charges in respect of Nigerian FCCPC case | | | | |
Social contribution expense related to Brazil VAT case | | | | |
| | | | |
Hedge ineffectiveness within operating profit | | | | |
Expenses relating to short-term leases | | | | |
Expenses relating to leases of low-value assets | | | | |
Gains arising from sale and leaseback transactions | | | | |
Auditor\u2019s remuneration | | | | |
, will form part of the transaction. Upon completion, it is intended that the Group will no longer have a presence in Russia (or Belarus).
In accordance with IFRS 5, the assets and liabilities of these subsidiaries have been classified as held-for-sale at 31 December 2022 and
presented as such on the balance sheet at an estimated fair value less costs to sell. An impairment charge of \u00a3554 million and associated
costs of \u00a358 million have been recognised in Other operating expenses as adjusting items. Refer to note 27(d)(i) for further details.
(k) Auditor\u2019s remuneration
| | | |
| | | |
Auditor\u2019s remuneration | | | |
Total expense for audit services pursuant to legislation: | | | |
\u2013fees to KPMG LLP for Parent Company and Group audit | | | |
\u2013fees to KPMG LLP firms and associates for local statutory and Group reporting audits | | | |
Total audit fees expense - KPMG LLP firms and associates | | | |
Audit fees expense to other firms | | | |
| | | |
Fees to KPMG LLP firms and associates for other services: | | | |
\u2013audit-related assurance services | | | |
\u2013other assurance services | | | |
\u2013tax advisory services | | | |
| | | |
\u2013audit of defined benefit schemes of the Company | | | |
\u2013other non-audit services | | | |
| | | |
The total auditor\u2019s remuneration to KPMG firms and associates included above are \u00a328.6 million (2021: \u00a326.9 million; 2020: \u00a328.1 million).
Under SEC regulations, the remuneration to KPMG firms and associates of \u00a328.6 million in 2022 (2021: \u00a326.9 million; 2020: \u00a328.1 million)
is required to be presented as follows: audit fees \u00a327.5 million (2021: \u00a326.2 million; 2020: \u00a327.5 million), audit-related fees \u00a30.2 million
(2021: \u00a30.4 million; 2020: \u00a30.5 million), tax fees \u00a3nil (2021: \u00a3nil; 2020: \u00a3nil) and all other fees \u00a30.9 million (2021: \u00a30.3 million; 2020: \u00a30.1
million). Audit-related fees are in respect of services provided to associated pension schemes. All other fees are in respect of other
assurance services, including those provided over information derived from the financial information systems subject to audit or over the
controls over those systems.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl80OTYvZnJhZzo5OTE5MWQ4YmIzOWU0NGFhYWEyYmZjNWUwYTE5YzkyZS90ZXh0cmVnaW9uOjk5MTkxZDhiYjM5ZTQ0YWFhYTJiZmM1ZTBhMTljOTJlXzUzODc2MDY5Nzk4NzA0_84d718f5-6169-455f-9b6b-0b96d305854d": {
"value": "
(e) Research and development
Total research and development costs, including employee benefit costs and depreciation, are \u00a3323 million (2021: \u00a3304\u00a0million; 2020:
\u00a3307\u00a0million).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl80OTYvZnJhZzo5OTE5MWQ4YmIzOWU0NGFhYWEyYmZjNWUwYTE5YzkyZS90ZXh0cmVnaW9uOjk5MTkxZDhiYjM5ZTQ0YWFhYTJiZmM1ZTBhMTljOTJlXzUzMzI2MzE0MDAzODQy_5bb75161-d50b-4466-bfa6-d9dde22d4ea2": {
"value": "
(j) Charges in respect of assets held-for-sale
On 11 March 2022, the Group announced the intention to transfer its Russian business in full compliance with international and local laws.
The Group has two subsidiaries in Russia (BAT Russia), being JSC British American Tobacco-SPb and JSC International Tobacco
Marketing Services (ITMS). In addition, the Group's subsidiary in Belarus, International Tobacco Marketing Services BY, will form part of
the transaction. Upon completion, it is intended that the Group will no longer have a presence in Russia (or Belarus).
In accordance with IFRS 5, the assets and liabilities of these subsidiaries have been classified as held-for-sale at 31 December 2022 and
presented as such on the balance sheet at an estimated fair value less costs to sell. An impairment charge of \u00a3554 million and associated
costs of \u00a358 million have been recognised in Other operating expenses as adjusting items. Refer to note 27(d)(i) for further details.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl80OTYvZnJhZzo5OTE5MWQ4YmIzOWU0NGFhYWEyYmZjNWUwYTE5YzkyZS90ZXh0cmVnaW9uOjk5MTkxZDhiYjM5ZTQ0YWFhYTJiZmM1ZTBhMTljOTJlXzUzODc2MDY5Nzk4NzA3_705cb127-7061-4812-95a7-e0e5dcd81fd6": {
"value": "
(k) Auditor\u2019s remuneration
| | | |
| | | |
Auditor\u2019s remuneration | | | |
Total expense for audit services pursuant to legislation: | | | |
\u2013fees to KPMG LLP for Parent Company and Group audit | | | |
\u2013fees to KPMG LLP firms and associates for local statutory and Group reporting audits | | | |
Total audit fees expense - KPMG LLP firms and associates | | | |
Audit fees expense to other firms | | | |
| | | |
Fees to KPMG LLP firms and associates for other services: | | | |
\u2013audit-related assurance services | | | |
\u2013other assurance services | | | |
\u2013tax advisory services | | | |
| | | |
\u2013audit of defined benefit schemes of the Company | | | |
\u2013other non-audit services | | | |
| | | |
The total auditor\u2019s remuneration to KPMG firms and associates included above are \u00a328.6 million (2021: \u00a326.9 million; 2020: \u00a328.1 million).
Under SEC regulations, the remuneration to KPMG firms and associates of \u00a328.6 million in 2022 (2021: \u00a326.9 million; 2020: \u00a328.1 million)
is required to be presented as follows: audit fees \u00a327.5 million (2021: \u00a326.2 million; 2020: \u00a327.5 million), audit-related fees \u00a30.2 million
(2021: \u00a30.4 million; 2020: \u00a30.5 million), tax fees \u00a3nil (2021: \u00a3nil; 2020: \u00a3nil) and all other fees \u00a30.9 million (2021: \u00a30.3 million; 2020: \u00a30.1
million). Audit-related fees are in respect of services provided to associated pension schemes. All other fees are in respect of other
assurance services, including those provided over information derived from the financial information systems subject to audit or over the
controls over those systems.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl83MjUvZnJhZzoyMTQwMjNiYzIzODY0NzczYTcwNGYxNzQwYjNlZjYzZC90ZXh0cmVnaW9uOjIxNDAyM2JjMjM4NjQ3NzNhNzA0ZjE3NDBiM2VmNjNkXzUzMzI2MzEzOTY0NTk0_52bf7d31-55d3-4b2d-923a-f36343e4494d": {
"value": "
7 Restructuring and integration costs
Restructuring costs reflect the costs incurred as a result of initiatives to improve the effectiveness and the efficiency of the Group as a globally
integrated enterprise. These costs represent additional expenses incurred that are not related to the normal business and day-to-day activities.
These initiatives include the costs associated with Quantum, being a review of the Group\u2019s organisational structure announced in 2019 to simplify
the business and create a more efficient, agile and focused company. In 2020 and 2022, these also included a review of the Group\u2019s manufacturing
operations. Restructuring initiatives (including as related to Quantum) have largely been announced to those that will be impacted, although the
delivery of such programmes is expected to be substantially completed by the end of 2023.
The costs of the Group\u2019s initiatives are included in profit from operations under the following headings:
| | | | |
| | | | |
| | | | |
Depreciation, amortisation and impairment costs | | | | |
| | | | |
| | | | |
| | | | |
The adjusting charge in 2022, 2021 and 2020 relates to the cost of employee packages in respect of Quantum and the ongoing costs associated
with initiatives to improve the effectiveness and efficiency of the Group as a globally integrated organisation. In addition, Quantum initiatives in
certain countries have resulted in the move to above market business models utilising local distributors as importers. As a consequence, with the
cessation of a physical presence in these markets, foreign exchange previously recognised in Other Comprehensive Income for these countries
has been reclassified to the income statement and reported within other operating expenses (note 22(c)(i)).
The restructuring costs in 2022 include costs related to factory closures or rationalisation in APME, Europe and the U.S. and costs
recognised as part of the Group's announced exit from Egypt.
In 2021, included under the Quantum initiatives above is a charge of \u00a327\u00a0million, including \u00a34\u00a0million for foreign exchange reclassified from
equity (note 22(c)(i)), related to the Group's withdrawal from Myanmar. In addition, as set out in note 4, goodwill in relation to Myanmar
was impaired and charged to the income statement.
The depreciation, amortisation and impairment costs in 2021 included a credit of \u00a325\u00a0million due to a partial reversal of previously
estimated impairment following the revision of factory rationalisation initiatives.
Also, in 2021, included within other operating expenses is a credit of \u00a359\u00a0million representing the release of an accrual on the successful
conclusion of the dispute with former shareholders of Reynolds American, as explained in note 31.
The adjusting charges in 2020 are mainly in relation to Quantum and the downsizing and factory rationalisation activities in the
Netherlands, Hungary, Russia and APME.
Also, in 2020, as a consequence of a reduction in volumes due to the significant increase in excise in Indonesia, the Group announced a
restructuring programme which included the partial closure of the factory operations in Indonesia. As a result of this decision, a
\u00a369\u00a0million impairment was recognised in respect of machinery. This impairment charge related to some of the machinery in use as well
as machinery held for future use which, following the significant changes in consumer preferences, is not expected to be brought in to
manufacturing in the future.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfExpensesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8zNC9mcmFnOjg0ZmVlODczZTIwYTQ5YWU5NTFmMzI4NzE0MTM4MmFmL3RleHRyZWdpb246ODRmZWU4NzNlMjBhNDlhZTk1MWYzMjg3MTQxMzgyYWZfNTM4NzYwNjk3Njk2Mzg_285e938a-b689-44c5-aca6-4c9098a1e4cd": {
"value": "
8 Net finance costs
(a) Net finance costs/(income)
| | | | | | |
| | | |
| | | |
Interest expense on lease liabilities | | | |
| | | |
Interest and fair value related to early repurchase of bonds (note 8(b)) | | | |
Interest related to adjusting tax payables (note 8(b)) | | | |
Fair value changes on derivative financial instruments and hedged items | | | |
Fair value change on other financial items (note 8(b)) | | | |
| | | |
| | | |
Interest under the effective interest method | | | |
| | | |
| | | |
The Group manages foreign exchange gains and losses and fair value changes on a net basis excluding adjusting items, which are
explained in note 8(b). The derivatives that generate the fair value changes are explained in note 19.
Facility fees principally relate to the Group\u2019s central banking facilities.
In October 2020, the Group completed a tender offer to repurchase sterling-equivalent \u00a32,653\u00a0million of bonds, including \u00a324\u00a0million
of accrued interest. Following this, in November 2020, the Group also completed a \u2018make-whole\u2019 bond redemption exercise of sterling-
equivalent \u00a3462\u00a0million of bonds, including \u00a36\u00a0million of accrued interest. Other costs directly associated with the early repurchase of
bonds, including the premium paid, were treated as adjusting items, as detailed in note 8(b).
(b) Adjusting items included in net finance costs
Adjusting items are significant items in net finance costs which individually or, if of a similar type, in aggregate, are relevant to an
understanding of the Group\u2019s underlying financial performance.
The Group recognised interest on adjusting tax payables of \u00a336 million (2021: \u00a331 million; 2020: \u00a311 million), which included interest of
\u00a333 million (2021: \u00a320 million; 2020: \u00a321 million) in relation to the Franked Investment Income Group Litigation Order (FII GLO) (note 10(b)),
\u00a33 million in respect of a potential tax claw back due to the factory closure in Switzerland in 2022, an amnesty tax payment of \u00a311\u00a0million
in Turkey in 2021 and a net credit of \u00a310\u00a0million in 2020 in respect of the excise dispute (note 6(g)) and withholding tax in Russia.
Included within \u00a32 million of fair value changes on other financial items are:
(i) \u00a315 million of foreign exchange arising on the revaluation of foreign currency balances held in Russia that no longer qualify for hedge
accounting, due to the proposed transfer of the Group's Russian business as detailed in note 27(d)(i); and
(ii) In 2021, as part of the disposal of the Group\u2019s operations in Iran (note 27(d)), a provision of \u00a324\u00a0million was charged to net finance costs
against non-current investments held at fair value due to the uncertainty around recovery of these funds. In 2022, part of these funds
were recovered and therefore a reversal of the provision of \u00a317 million is recognised in net finance costs.
In 2020, the Group incurred additional interest costs of \u00a3157\u00a0million and fair value gains of \u00a315\u00a0million in relation to the early repurchase of bonds.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8zNC9mcmFnOjg0ZmVlODczZTIwYTQ5YWU5NTFmMzI4NzE0MTM4MmFmL3RleHRyZWdpb246ODRmZWU4NzNlMjBhNDlhZTk1MWYzMjg3MTQxMzgyYWZfNTM4NzYwNjk3Njk2Mzg_2a2f3cb5-40a0-4220-b4bc-cc59008a2eeb": {
"value": "
8 Net finance costs
(a) Net finance costs/(income)
| | | | | | |
| | | |
| | | |
Interest expense on lease liabilities | | | |
| | | |
Interest and fair value related to early repurchase of bonds (note 8(b)) | | | |
Interest related to adjusting tax payables (note 8(b)) | | | |
Fair value changes on derivative financial instruments and hedged items | | | |
Fair value change on other financial items (note 8(b)) | | | |
| | | |
| | | |
Interest under the effective interest method | | | |
| | | |
| | | |
The Group manages foreign exchange gains and losses and fair value changes on a net basis excluding adjusting items, which are
explained in note 8(b). The derivatives that generate the fair value changes are explained in note 19.
Facility fees principally relate to the Group\u2019s central banking facilities.
In October 2020, the Group completed a tender offer to repurchase sterling-equivalent \u00a32,653\u00a0million of bonds, including \u00a324\u00a0million
of accrued interest. Following this, in November 2020, the Group also completed a \u2018make-whole\u2019 bond redemption exercise of sterling-
equivalent \u00a3462\u00a0million of bonds, including \u00a36\u00a0million of accrued interest. Other costs directly associated with the early repurchase of
bonds, including the premium paid, were treated as adjusting items, as detailed in note 8(b).
(b) Adjusting items included in net finance costs
Adjusting items are significant items in net finance costs which individually or, if of a similar type, in aggregate, are relevant to an
understanding of the Group\u2019s underlying financial performance.
The Group recognised interest on adjusting tax payables of \u00a336 million (2021: \u00a331 million; 2020: \u00a311 million), which included interest of
\u00a333 million (2021: \u00a320 million; 2020: \u00a321 million) in relation to the Franked Investment Income Group Litigation Order (FII GLO) (note 10(b)),
\u00a33 million in respect of a potential tax claw back due to the factory closure in Switzerland in 2022, an amnesty tax payment of \u00a311\u00a0million
in Turkey in 2021 and a net credit of \u00a310\u00a0million in 2020 in respect of the excise dispute (note 6(g)) and withholding tax in Russia.
Included within \u00a32 million of fair value changes on other financial items are:
(i) \u00a315 million of foreign exchange arising on the revaluation of foreign currency balances held in Russia that no longer qualify for hedge
accounting, due to the proposed transfer of the Group's Russian business as detailed in note 27(d)(i); and
(ii) In 2021, as part of the disposal of the Group\u2019s operations in Iran (note 27(d)), a provision of \u00a324\u00a0million was charged to net finance costs
against non-current investments held at fair value due to the uncertainty around recovery of these funds. In 2022, part of these funds
were recovered and therefore a reversal of the provision of \u00a317 million is recognised in net finance costs.
In 2020, the Group incurred additional interest costs of \u00a3157\u00a0million and fair value gains of \u00a315\u00a0million in relation to the early repurchase of bonds.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceCostExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8zNC9mcmFnOjg0ZmVlODczZTIwYTQ5YWU5NTFmMzI4NzE0MTM4MmFmL3RleHRyZWdpb246ODRmZWU4NzNlMjBhNDlhZTk1MWYzMjg3MTQxMzgyYWZfNTM4NzYwNjk3Njk2Mzg_944fadb5-1698-4d21-860d-8badc93f0022": {
"value": "
8 Net finance costs
(a) Net finance costs/(income)
| | | | | | |
| | | |
| | | |
Interest expense on lease liabilities | | | |
| | | |
Interest and fair value related to early repurchase of bonds (note 8(b)) | | | |
Interest related to adjusting tax payables (note 8(b)) | | | |
Fair value changes on derivative financial instruments and hedged items | | | |
Fair value change on other financial items (note 8(b)) | | | |
| | | |
| | | |
Interest under the effective interest method | | | |
| | | |
| | | |
The Group manages foreign exchange gains and losses and fair value changes on a net basis excluding adjusting items, which are
explained in note 8(b). The derivatives that generate the fair value changes are explained in note 19.
Facility fees principally relate to the Group\u2019s central banking facilities.
In October 2020, the Group completed a tender offer to repurchase sterling-equivalent \u00a32,653\u00a0million of bonds, including \u00a324\u00a0million
of accrued interest. Following this, in November 2020, the Group also completed a \u2018make-whole\u2019 bond redemption exercise of sterling-
equivalent \u00a3462\u00a0million of bonds, including \u00a36\u00a0million of accrued interest. Other costs directly associated with the early repurchase of
bonds, including the premium paid, were treated as adjusting items, as detailed in note 8(b).
(b) Adjusting items included in net finance costs
Adjusting items are significant items in net finance costs which individually or, if of a similar type, in aggregate, are relevant to an
understanding of the Group\u2019s underlying financial performance.
The Group recognised interest on adjusting tax payables of \u00a336 million (2021: \u00a331 million; 2020: \u00a311 million), which included interest of
\u00a333 million (2021: \u00a320 million; 2020: \u00a321 million) in relation to the Franked Investment Income Group Litigation Order (FII GLO) (note 10(b)),
\u00a33 million in respect of a potential tax claw back due to the factory closure in Switzerland in 2022, an amnesty tax payment of \u00a311\u00a0million
in Turkey in 2021 and a net credit of \u00a310\u00a0million in 2020 in respect of the excise dispute (note 6(g)) and withholding tax in Russia.
Included within \u00a32 million of fair value changes on other financial items are:
(i) \u00a315 million of foreign exchange arising on the revaluation of foreign currency balances held in Russia that no longer qualify for hedge
accounting, due to the proposed transfer of the Group's Russian business as detailed in note 27(d)(i); and
(ii) In 2021, as part of the disposal of the Group\u2019s operations in Iran (note 27(d)), a provision of \u00a324\u00a0million was charged to net finance costs
against non-current investments held at fair value due to the uncertainty around recovery of these funds. In 2022, part of these funds
were recovered and therefore a reversal of the provision of \u00a317 million is recognised in net finance costs.
In 2020, the Group incurred additional interest costs of \u00a3157\u00a0million and fair value gains of \u00a315\u00a0million in relation to the early repurchase of bonds.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8zNy9mcmFnOjU1NGNiYmE5ZDYxODRlMDA4YzllNzkwODgxNTVhYWY4L3RleHRyZWdpb246NTU0Y2JiYTlkNjE4NGUwMDhjOWU3OTA4ODE1NWFhZjhfNTM4NzYwNjk3Njg2NjI_25d8c900-ebe9-45b6-8786-289be3a0a656": {
"value": "
9 Associates and joint ventures
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Profit on ordinary activities before taxation | | | | | | | | |
Taxation on ordinary activities | | | | | | | | |
Profit on ordinary activities after taxation | | | | | | | | |
Non-controlling interests | | | | | | | | |
Post-tax results of associates and joint ventures | | | | | | | | |
Enumerated below are movements that have impacted the post-tax results of associates and joint ventures in 2022, 2021 and 2020.
The amounts below were reported as adjusting items under the share of profit from associates in the income statement.
(a) Adjusting items
In 2022, the Group\u2019s interest in ITC Ltd. (ITC) decreased from 29.38% to 29.19% (2021: 29.42% to 29.38%; 2020: 29.46% to 29.42%) as a
result of ITC issuing ordinary shares under the ITC Employee Share Option Scheme. The issue of these shares and change in the Group\u2019s
share of ITC resulted in a loss of \u00a33 million (2021: \u00a36 million gain; 2020: \u00a317 million gain), which is treated as a deemed partial disposal and
included in the income statement.
Also, in the first half of 2022, the Group impaired the investment in Organigram by \u00a359 million (net of tax), driven by the decrease in the
company\u2019s share price.
In addition to this, the Group incurred a \u00a32 million charge (2021: \u00a32 million; 2020: \u00a3nil) in relation to the amortisation of acquired
intangibles associated with the acquisition of Organigram in March 2021, as described in note 14.
During 2022, the Group decided to cease business activities altogether in Yemen, due to the challenging operating environment in the
country. This led to the full impairment of the investment in the Group's remaining associate in Yemen, United Industries Company
Limited, with a charge of \u00a318 million to the income statement.
In 2021, the Group had already impaired the investment in Kamaran Industry & Investment Company, the Group\u2019s other associate in
Yemen. This resulted in a charge of \u00a318 million to the income statement.
As detailed in note 14, also in 2021, as a result of the liquidation of Tisak d.d., the Group reclassified the foreign exchange previously
recognised in other comprehensive income to the income statement. This resulted in a credit of \u00a32\u00a0million to the income statement.
In 2020, ITC recognised a charge in respect of the cost of leaf tobacco stocks destroyed in a third-party warehouse fire, the Group\u2019s
share of which was \u00a34\u00a0million.
(b) Other financial information
The Group\u2019s share of the results of associates and joint ventures is shown in the table below.
| | | |
| | | |
| | | |
Profit on ordinary activities after taxation | | | |
\u2013 attributable to owners of the parent | | | |
Other comprehensive income: | | | |
Items that may be reclassified to profit and loss | | | |
Items that will not be reclassified to profit and loss | | | |
Total comprehensive income | | | |
The principal associate undertaking of the Group is ITC Ltd. (ITC). Included within the dividends amount of \u00a3438 million
(2021: \u00a3392 million) are \u00a3427 million (2021: \u00a3383 million) attributable to dividends declared by ITC.
As explained in note 27(c), acquisitions during the year included mostly investments in Sanity Group GmbH and Steady State LLC.
In 2021, acquisitions largely related to investments in Organigram Holdings Inc.
Organigram
On 11 March 2021, the Group announced a strategic collaboration agreement with Organigram Inc., a wholly owned subsidiary of publicly
traded Organigram Holdings Inc. (collectively, Organigram). Under the terms of the transaction, a Group subsidiary acquired a 19.9%
(2022: 19.4%) equity stake in Organigram Holdings Inc. (listed on both the Nasdaq and Toronto Stock Exchange under the symbol \u2018OGI\u2019) to
become its largest shareholder.
The Group\u2019s share of the fair value of net assets acquired included \u00a349\u00a0million of intangibles and \u00a330\u00a0million of goodwill, representing a
strategic premium to enter the legal cannabis market in North America.
During 2022, management reassessed the carrying value of the Group\u2019s investment in Organigram Holdings Inc. due to a reduction in the
entity's share price being identified as a trigger for a detailed impairment assessment to be undertaken. As part of this exercise,
management took into consideration Organigram\u2019s share price, internal value-in-use calculations, external trading multiples and broker
forecasts. As a result of this analysis, it was concluded that an impairment charge of \u00a365 million (or \u00a359 million net of tax) was required
against the carrying value of the investment in associate, with the recoverable amount as at 31 December 2022 being \u00a373 million (2021: \u00a3125
million). Management will continue to monitor the carrying value, in line with IAS 36, over the course of future periods.
Tisak d.d.
The Group\u2019s investment in Tisak d.d. (Tisak) was acquired as part of the TDR Group in 2015. During 2016, the Group entered into an
agreement with Tisak\u2019s parent Agrokor d.d. (Agrokor) to convert certain outstanding trading balances into long-term loans and an
additional shareholding in Tisak. As part of the agreement, Agrokor had the right to reacquire the additional shareholding in Tisak. As a
consequence of this, while the Group had legal ownership of the additional shareholding, it did not consider that the shares provided any
additional equity interest and continued to account for 26% of the equity of Tisak. In 2017, due to the financial difficulties of Agrokor and
Tisak, the Group fully impaired this investment resulting in a charge of \u00a327\u00a0million to the income statement in that year that was reported
as an adjusting item. In July 2018, Agrokor\u2019s creditors approved a settlement plan proposed by Agrokor\u2019s administrators. The settlement
plan has not returned any value to the Group, and Tisak was liquidated on 21 September 2021.
Charlotte\u2019s Web Holdings Inc.
In November 2022, the Group announced a \u00a348\u00a0million investment in Charlotte\u2019s Web Holdings, Inc. (Charlotte's Web). Based in
Colorado, USA, and listed on the Toronto Stock Exchange, Charlotte\u2019s Web holds a prominent position in innovative hemp extract
wellness products. The Group\u2019s investment has been made via a 7-year convertible debenture which is convertible at the Group\u2019s
discretion into a non-controlling equity stake in Charlotte\u2019s Web of around 19.9%. As part of the investment agreement, the Group has
the right to appoint directors to the Board of Charlotte\u2019s Web. However, given the investment does not give the Group any current right
to a share of the earnings or net assets of the investee, the investment has been classified as an investment at fair value through profit
and loss (see note 18). On conversion of the loan note, the Group would equity account for its investment.
ITC Ltd.
ITC is an Indian conglomerate based in Kolkata and maintains a presence in cigarettes, hotels, paper and packaging, agri-business
and other fast-moving goods (e.g. confectionery, branded apparel, personal care, stationery and safety matches). BAT\u2019s interest in ITC
is 29.19%.
ITC prepares accounts on a quarterly basis with a 31 March year-end. As permitted by IAS 28 Investments in associates and joint
ventures, results up to 30 September 2022 have been used in applying the equity method. This is driven by the availability of information
at the half-year, to be consistent with the treatment in the Group\u2019s interim accounts. Any further information available after the date
used for reporting purposes is reviewed and any material items adjusted for in the final results. The latest published information available
is at 31 December 2022.
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Group\u2019s share of ITC Ltd. (2022: 29.19%; 2021: 29.38%) | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8zNy9mcmFnOjU1NGNiYmE5ZDYxODRlMDA4YzllNzkwODgxNTVhYWY4L3RleHRyZWdpb246NTU0Y2JiYTlkNjE4NGUwMDhjOWU3OTA4ODE1NWFhZjhfNTM4NzYwNjk3Njg2NjI_6f09c9d0-8c35-48ec-926e-74d31016c985": {
"value": "
9 Associates and joint ventures
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Profit on ordinary activities before taxation | | | | | | | | |
Taxation on ordinary activities | | | | | | | | |
Profit on ordinary activities after taxation | | | | | | | | |
Non-controlling interests | | | | | | | | |
Post-tax results of associates and joint ventures | | | | | | | | |
Enumerated below are movements that have impacted the post-tax results of associates and joint ventures in 2022, 2021 and 2020.
The amounts below were reported as adjusting items under the share of profit from associates in the income statement.
(a) Adjusting items
In 2022, the Group\u2019s interest in ITC Ltd. (ITC) decreased from 29.38% to 29.19% (2021: 29.42% to 29.38%; 2020: 29.46% to 29.42%) as a
result of ITC issuing ordinary shares under the ITC Employee Share Option Scheme. The issue of these shares and change in the Group\u2019s
share of ITC resulted in a loss of \u00a33 million (2021: \u00a36 million gain; 2020: \u00a317 million gain), which is treated as a deemed partial disposal and
included in the income statement.
Also, in the first half of 2022, the Group impaired the investment in Organigram by \u00a359 million (net of tax), driven by the decrease in the
company\u2019s share price.
In addition to this, the Group incurred a \u00a32 million charge (2021: \u00a32 million; 2020: \u00a3nil) in relation to the amortisation of acquired
intangibles associated with the acquisition of Organigram in March 2021, as described in note 14.
During 2022, the Group decided to cease business activities altogether in Yemen, due to the challenging operating environment in the
country. This led to the full impairment of the investment in the Group's remaining associate in Yemen, United Industries Company
Limited, with a charge of \u00a318 million to the income statement.
In 2021, the Group had already impaired the investment in Kamaran Industry & Investment Company, the Group\u2019s other associate in
Yemen. This resulted in a charge of \u00a318 million to the income statement.
As detailed in note 14, also in 2021, as a result of the liquidation of Tisak d.d., the Group reclassified the foreign exchange previously
recognised in other comprehensive income to the income statement. This resulted in a credit of \u00a32\u00a0million to the income statement.
In 2020, ITC recognised a charge in respect of the cost of leaf tobacco stocks destroyed in a third-party warehouse fire, the Group\u2019s
share of which was \u00a34\u00a0million.
(b) Other financial information
The Group\u2019s share of the results of associates and joint ventures is shown in the table below.
| | | |
| | | |
| | | |
Profit on ordinary activities after taxation | | | |
\u2013 attributable to owners of the parent | | | |
Other comprehensive income: | | | |
Items that may be reclassified to profit and loss | | | |
Items that will not be reclassified to profit and loss | | | |
Total comprehensive income | | | |
The principal associate undertaking of the Group is ITC Ltd. (ITC). Included within the dividends amount of \u00a3438 million
(2021: \u00a3392 million) are \u00a3427 million (2021: \u00a3383 million) attributable to dividends declared by ITC.
As explained in note 27(c), acquisitions during the year included mostly investments in Sanity Group GmbH and Steady State LLC.
In 2021, acquisitions largely related to investments in Organigram Holdings Inc.
Organigram
On 11 March 2021, the Group announced a strategic collaboration agreement with Organigram Inc., a wholly owned subsidiary of publicly
traded Organigram Holdings Inc. (collectively, Organigram). Under the terms of the transaction, a Group subsidiary acquired a 19.9%
(2022: 19.4%) equity stake in Organigram Holdings Inc. (listed on both the Nasdaq and Toronto Stock Exchange under the symbol \u2018OGI\u2019) to
become its largest shareholder.
The Group\u2019s share of the fair value of net assets acquired included \u00a349\u00a0million of intangibles and \u00a330\u00a0million of goodwill, representing a
strategic premium to enter the legal cannabis market in North America.
During 2022, management reassessed the carrying value of the Group\u2019s investment in Organigram Holdings Inc. due to a reduction in the
entity's share price being identified as a trigger for a detailed impairment assessment to be undertaken. As part of this exercise,
management took into consideration Organigram\u2019s share price, internal value-in-use calculations, external trading multiples and broker
forecasts. As a result of this analysis, it was concluded that an impairment charge of \u00a365 million (or \u00a359 million net of tax) was required
against the carrying value of the investment in associate, with the recoverable amount as at 31 December 2022 being \u00a373 million (2021: \u00a3125
million). Management will continue to monitor the carrying value, in line with IAS 36, over the course of future periods.
Tisak d.d.
The Group\u2019s investment in Tisak d.d. (Tisak) was acquired as part of the TDR Group in 2015. During 2016, the Group entered into an
agreement with Tisak\u2019s parent Agrokor d.d. (Agrokor) to convert certain outstanding trading balances into long-term loans and an
additional shareholding in Tisak. As part of the agreement, Agrokor had the right to reacquire the additional shareholding in Tisak. As a
consequence of this, while the Group had legal ownership of the additional shareholding, it did not consider that the shares provided any
additional equity interest and continued to account for 26% of the equity of Tisak. In 2017, due to the financial difficulties of Agrokor and
Tisak, the Group fully impaired this investment resulting in a charge of \u00a327\u00a0million to the income statement in that year that was reported
as an adjusting item. In July 2018, Agrokor\u2019s creditors approved a settlement plan proposed by Agrokor\u2019s administrators. The settlement
plan has not returned any value to the Group, and Tisak was liquidated on 21 September 2021.
Charlotte\u2019s Web Holdings Inc.
In November 2022, the Group announced a \u00a348\u00a0million investment in Charlotte\u2019s Web Holdings, Inc. (Charlotte's Web). Based in
Colorado, USA, and listed on the Toronto Stock Exchange, Charlotte\u2019s Web holds a prominent position in innovative hemp extract
wellness products. The Group\u2019s investment has been made via a 7-year convertible debenture which is convertible at the Group\u2019s
discretion into a non-controlling equity stake in Charlotte\u2019s Web of around 19.9%. As part of the investment agreement, the Group has
the right to appoint directors to the Board of Charlotte\u2019s Web. However, given the investment does not give the Group any current right
to a share of the earnings or net assets of the investee, the investment has been classified as an investment at fair value through profit
and loss (see note 18). On conversion of the loan note, the Group would equity account for its investment.
ITC Ltd.
ITC is an Indian conglomerate based in Kolkata and maintains a presence in cigarettes, hotels, paper and packaging, agri-business
and other fast-moving goods (e.g. confectionery, branded apparel, personal care, stationery and safety matches). BAT\u2019s interest in ITC
is 29.19%.
ITC prepares accounts on a quarterly basis with a 31 March year-end. As permitted by IAS 28 Investments in associates and joint
ventures, results up to 30 September 2022 have been used in applying the equity method. This is driven by the availability of information
at the half-year, to be consistent with the treatment in the Group\u2019s interim accounts. Any further information available after the date
used for reporting purposes is reviewed and any material items adjusted for in the final results. The latest published information available
is at 31 December 2022.
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Group\u2019s share of ITC Ltd. (2022: 29.19%; 2021: 29.38%) | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfJointVenturesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl80MC9mcmFnOjYwMmI4MjRlMTVmYTQxNTRiMDg3MDk5OWY3ZjJiNTQ4L3RleHRyZWdpb246NjAyYjgyNGUxNWZhNDE1NGIwODcwOTk5ZjdmMmI1NDhfNTM4NzYwNjk3OTEyNDY_b8371744-6bfd-492d-8189-3e5a344ff512": {
"value": "
10 Taxation on ordinary activities
(a) Summary of taxation on ordinary activities
| | | |
| | | |
| | | |
| | | |
\u00a0\u2013 current year tax expense | | | |
\u00a0\u2013 adjustments in respect of prior periods | | | |
| | | |
| | | |
\u00a0\u2013 current year tax expense | | | |
\u00a0\u2013 adjustments in respect of prior periods | | | |
| | | |
| | | |
| | | |
\u00a0\u2013 deferred tax relating to origination and reversal of temporary differences | | | |
\u00a0\u2013 deferred tax relating to changes in tax rates | | | |
| | | |
(d) Adjusting items included in taxation
In 2022, adjusting items in taxation included a net credit of \u00a327 million mainly relating to the revaluation of deferred tax liabilities arising
on trademarks recognised in the Reynolds American acquisition in 2017 due to changes in U.S. state tax rates and a potential clawback of
tax reliefs arising on the closure of the Group's factory in Switzerland.
In 2021, adjusting items in taxation included a net credit of \u00a391 million mainly relating to the revaluation of deferred tax liabilities arising on
trademarks recognised in the Reynolds American acquisition in 2017 due to changes in U.S. state tax rates.
In 2020, adjusting items in taxation included a net credit of \u00a335 million mainly relating to the release of a provision regarding the
application of overseas withholding tax, the revaluation of deferred tax liabilities arising on trademarks recognised in the Reynolds
American acquisition in 2017 due to changes in U.S. state tax rates and the excise dispute in Russia (note 6(g)).
(e) Tax on adjusting items
In addition, the tax on adjusting items, separated between the different categories, as per note 11, amounted to \u00a3176 million (2021: \u00a3119
million; 2020: \u00a3287 million). The adjustment to the adjusted earnings per share (note 11) also includes \u00a35 million (2021: \u00a36 million; 2020: \u00a38
million) in respect of the non-controlling interests\u2019 share of the adjusting items net of tax.
(f) Tax on items recognised directly in other comprehensive income
| | | |
| | | |
| | | |
| | | |
(Charged)/credited to other comprehensive income | | | |
(g) Tax on items recognised directly in equity
In relation to the perpetual hybrid bonds issued on 27 September 2021 (note 22(d)), tax relief of \u00a311\u00a0million (2021: \u00a35\u00a0million) has been
recognised, principally in relation to the coupon incurred.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl85MDkvZnJhZzo2ZDNjMDQ0YzkwZDY0NDlhYjQ3N2RmYzQ3MTc5NDI0Ny90ZXh0cmVnaW9uOjZkM2MwNDRjOTBkNjQ0OWFiNDc3ZGZjNDcxNzk0MjQ3XzUzODc2MDY5NzY4ODgy_a394b5a1-8fb2-4426-9162-b006b251457b": {
"value": "
11 Earnings per share
Earnings used in the basic, diluted and headline earnings per share calculation represent the profit attributable to the ordinary equity
shareholders after deducting amounts representing the coupon on perpetual hybrid bonds on a pro-rata basis regardless of whether
coupons have been deferred or paid in the period. Below is a reconciliation of the earnings used to calculate earnings per share:
| | | |
| | | |
Earnings attributable to owners of the parent | | | |
Coupon on perpetual hybrid bonds | | | |
Tax on coupon on perpetual hybrid bonds | | | |
| | | |
Adjusted earnings per share calculation
Earnings have been affected by a number of adjusting items, which are described in notes 3 to 10. Adjusting items are significant items in
the profit from operations, net finance costs, taxation and the Group\u2019s share of the post-tax results of associates and joint ventures
which individually or, if of a similar type, in aggregate, are relevant to an understanding of the Group\u2019s underlying financial performance.
The Group believes that these items are useful to users of the Group financial statements in helping them to understand the underlying
business performance. To illustrate the impact of these items, an adjusted earnings per share calculation is shown below.
| | | | | | | | | |
| | | | | | | | | |
| | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Effect of amortisation and impairment of goodwill, trademarks and similar intangibles | | | | | | | | | |
Tax and non-controlling interests on amortisation and impairment of goodwill, trademarks and similar intangibles | | | | | | | | | |
Effect of Brazil VAT case | | | | | | | | | |
| | | | | | | | | |
Effect of disposal of subsidiaries | | | | | | | | | |
Effect of excise and VAT disputes | | | | | | | | | |
Tax on excise and VAT disputes | | | | | | | | | |
Effect of charges in respect of DOJ and OFAC investigations | | | | | | | | | |
Effect of charges in respect of Nigerian FCCPC case | | | | | | | | | |
Effect of impairment on held-for-sale assets and associated costs | | | | | | | | | |
Tax effect of impairment of assets held-for-sale and associated costs | | | | | | | | | |
Effect of restructuring and integration costs | | | | | | | | | |
Tax and non-controlling interests on restructuring and integration costs | | | | | | | | | |
| | | | | | | | | |
Tax effect on other adjusting items | | | | | | | | | |
Effect of early repurchase of bonds | | | | | | | | | |
Tax effect of early repurchase of bonds | | | | | | | | | |
Effect of interest on FII GLO settlement and other | | | | | | | | | |
Tax effect of interest on FII GLO settlement and other | | | | | | | | | |
Effect of associates' adjusting items net of tax | | | | | | | | | |
Deferred tax relating to changes in tax rates | | | | | | | | | |
Effect of retrospective guidance on WHT | | | | | | | | | |
Adjusted earnings per share (basic) | | | | | | | | | |
| | | | | | | | | Deferred tax relating to changes in tax rates | | | | | | | | | |
Effect of retrospective guidance on WHT | | | | | | | | | |
Adjusted earnings per share (diluted) | | | | | | | | | |
Headline earnings per share as required by the JSE Limited
The presentation of headline earnings per share, as an alternative measure of earnings per share, is mandated under the JSE Listing
Requirements. It is calculated in accordance with Circular 1/2021 \u2018Headline Earnings\u2019, as issued by the South African Institute of
Chartered Accountants.
| | | | | | | | |
| | | | | | | | |
| | | | | |
| | | | | | | | |
| | | | | | | | |
Effect of impairment of intangibles, property, plant and equipment, associates and assets held-for-sale | | | | | | | | |
Tax and non-controlling interests on intangibles, property, plant and equipment, associates and assets held-for-sale | | | | | | | | |
Effect of gains on disposal of property, plant and equipment, trademarks, held-for-sale assets, partial/full termination of IFRS 16 leases, and sale and leaseback | | | | | | | | |
Tax and non-controlling interests on disposal of property, plant and equipment, held-for-sale assets, partial/full termination of IFRS 16 leases, and sale and leaseback | | | | | | | | |
Effect of impairment of subsidiaries | | | | | | | | |
Tax on impairment of subsidiaries | | | | | | | | |
Effect of foreign exchange reclassification from reserves to the income statement | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Issue of shares and change in shareholding in associate | | | | | | | | |
Headline earnings per share (basic) | | | | | | | | |
| | | | | |
| | | | | |
| | | Trademarks and similar intangibles \u00a3m | Assets in the course of development \u00a3m | |
| | | | | |
| | | | | |
Accumulated amortisation and impairment | | | | | |
Net book value at 1 January | | | | | |
| | | | | |
| | | | | |
\u2013 internal development | | | | | |
\u2013 separately acquired | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Accumulated amortisation and impairment | | | | | |
Net book value at 31 December | | | | | |
(b) Goodwill
Goodwill of \u00a347,956 million (2021: \u00a343,194 million) is included in intangible assets in the balance sheet of which the following are the
significant acquisitions: Reynolds American \u00a337,181 million (2021: \u00a333,021 million); Rothmans Group \u00a34,704 million (2021: \u00a34,408 million);
Imperial Tobacco Canada \u00a32,460 million (2021: \u00a32,345 million); ETI (Italy) \u00a31,461 million (2021: \u00a31,384 million) and ST (principally
Scandinavia) \u00a31,102 million (2021: \u00a31,043 million). The principal allocations of goodwill in the Rothmans\u2019 acquisition are to the cash-
generating units of Europe and South Africa, with the remainder mainly relating to operations in APME.
During 2022, there was no goodwill impairment (2021: \u00a357 million) as explained in note 12(e)(iv) below.
(c) Trademarks and similar intangibles
Trademarks and similar intangibles with indefinite lives
The net book value of trademarks and similar intangibles with indefinite lives is \u00a378,228 million (2021: \u00a369,475 million) and relates to the
acquisition of Reynolds American. The trademarks acquired, including Newport, Camel, Natural American Spirit, Grizzly and Pall Mall, all of
which are part of the Group\u2019s Strategic Portfolio of key brands, form the core focus of the U.S. business and receive significant support in
the form of dedicated internal resources, forecasting and, where appropriate, marketing investment. These trademarks have significant
market share and positive cashflow growth expectations. There are no regulatory or contractual restrictions on the use of the trademarks,
and there are no plans by management to significantly redirect resources elsewhere. Consequently, in the view of management, these
trademarks do not have a foreseeable and definite end to their ability to generate future cash flows and hence are not amortised.
Trademarks and similar intangibles with definite lives
The majority of trademarks and similar intangibles with definite lives relate to trademarks acquired in previous years. These trademarks
are amortised over their expected useful lives, which do not exceed 20 years. Included in the net book value of trademarks and similar
intangibles are trademarks relating to the acquisition of Reynolds American \u00a32,071 million (2021: \u00a32,038 million).
(d) Computer software and assets in the course of development
Included in computer software and assets in the course of development are internally developed assets with a carrying value of \u00a3423
million (2021: \u00a3517 million). The costs of internally developed assets include capitalised expenses of employees working full time on
software development projects, third-party consultants and software licence fees from third-party suppliers.
The Group has \u00a31 million of future contractual commitments (2021: \u00a32 million) related to intangible assets.
(e) Impairment testing
(i) Overview
a. Estimation uncertainty
As described in note 1, the critical accounting estimates used in the preparation of the consolidated financial statements include the
review of asset values, especially indefinite life assets such as goodwill and certain trademarks and similar intangibles.
There is significant judgement with regard to assumptions and estimates involved in the forecasting of future cash flows, which form the
basis of the assessment of the recoverability of these assets, with the effect that the value-in-use of calculations incorporate estimation
uncertainty, particularly for certain assets held in relation to the Canadian and U.S. markets.
b. Impact of climate change
The impact of climate change on the future cash flows has been considered for scenarios analysed in terms of future access to tobacco
and nicotine. The climate change scenario analyses \u2013 conducted in line with TCFD recommendations \u2013 undertaken this year did not
identify any material financial impact.
(ii) Impairment testing \u2013 Trademarks and similar intangibles with indefinite lives (brands)
The trademarks and similar intangibles with indefinite lives (brands) have been tested for impairment on a value-in-use basis. The value-
in-use calculations use cash flows based on detailed brand budgets prepared by management using projected sales volumes and pricing
(net revenue) and projected brand profitability covering a five-year horizon and, thereafter, grown into perpetuity. Corporate costs are
allocated to the brand budgets based on either specific allocations, where appropriate, or based on revenue. The discount rates and long-
term growth rates applied to the brand value-in-use calculations have been determined by local management based on experience,
specific market and brand trends and pricing and cost expectations. As the trademarks and similar intangibles with indefinite lives relate
to the acquisition of Reynolds American, the brand budgets used in the value-in-use calculations have also been incorporated into the
budget information used in the impairment testing of Reynolds American goodwill.
| | | | | |
| | | | | |
| | | | | |
Indefinite-lived intangibles | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Note:
*The pre-tax discount rates for all indefinite-lived intangibles have declined in comparison to 2021 primarily as the result of a change in U.S. federal tax rate assumption in 2022. On a
post-tax basis the discount rates for all the indefinite-lived intangibles have increased when compared with 2021, except for Newport which, as the most exposed brand to mentholated
products, saw a greater shift in risk for the discount rate into the cash flows, in 2022, in relation to the proposed product standard to prohibit menthol as a characterising flavour in
cigarettes (outlined further in note 12(e)(v).
Refer to note 12(e)(v) for further information on brand impairment testing.
(iii) Cash-generating units and information on goodwill impairment testing
In 2022, goodwill was allocated for impairment testing purposes to 17 (2021: 17) individual cash-generating units (CGUs) \u2013 one in the U.S.
(2021: one), six in AmSSA (2021: six), four in Europe (2021: four) and six in APME (2021: six).
Note:
*Due to difficult trading conditions and uncertainties resulting from the COVID-19 pandemic in the prior year, a more granular market-led approach was adopted in formulating the CGUs
financial forecast and value-in-use assumptions. However, given these risk factors have now dissipated, the CGUs have been assessed through the established Group approach in the
current year.
Included within \u2018Other\u2019 above is goodwill arising on various acquisitions that have been allocated to eight cash-generating units which
are, individually, insignificant. The pre-tax discount rate represents the weighted average pre-tax discount rate.
The recoverable amounts of all cash-generating units have been determined on a value-in-use basis. The key assumptions for the
recoverable amounts of all units are the projected sales volumes and pricing (net revenues), operating margins and long-term growth
rates, which directly impact the cash flows, and the discount rates used in the calculation. The long-term growth rate is used purely for
the impairment testing of goodwill under IAS 36 Impairment of Assets and does not reflect long-term planning assumptions used by the
Group for investment proposals or for any other assessments.
Post-tax discount rates were used in the impairment testing, based on the Group\u2019s weighted average cost of capital, taking into account
the cost of capital and borrowings, to which specific market-related premium adjustments are made. These adjustments are derived
from external sources and are based on the spread between bonds (or credit default swaps, or similar indicators) issued by the relevant
local (or comparable) government, adjusted for the Group\u2019s own credit market risk. For ease of use and consistency in application, these
results are periodically calibrated into bands based on internationally recognised credit ratings. This applies to all CGUs with the
exception of Reynolds which had its discount rate independently determined based on its own weighted average cost of capital and U.S.
market-related premiums. In general, an overall increase in post-tax discount rates in 2022 has been observed, primarily driven by higher
interest rates and bond yields. In relation to Reynolds, this has been partially offset by a reduction in the risk-adjustment incorporated
into the 2021 discount rates which has now been incorporated directly into the cash flows.
The long-term growth rates and discount rates have been applied to the budgeted cash flows of each cash-generating unit. These cash
flows have been determined by local management based on experience, specific market and brand trends, as well as pricing and cost
expectations. These have been endorsed by Group management as part of the consolidated Group\u2019s budget.
(iv) Impairment testing \u2013 Goodwill (excluding Reynolds American and Canada)
The value-in-use calculations use cash flows based on detailed financial budgets prepared by management covering a one-year period
extrapolated over a 10-year horizon with growth of 3% (2021: 3%) in years 2 to 10, after which a growth rate of 1% (2021: 1%) having been
assumed as the long-term volume decline is more than offset by pricing to drive revenue growth. A 10-year horizon is considered appropriate
based on the Group\u2019s history of profit and cash growth, its well-balanced portfolio of brands and the industry in which it operates.
For the Malaysian cash-generating unit, as a result of regulatory and macro-economic conditions, the above assumptions were amended
to reflect the short- to medium-term plans of the country or area management spanning up to a period of five years after which a long-
term growth rate of 0% has been assumed. For the Malaysian cash-generating units headroom to reduce to \u00a3nil, the forecasted cash
flows would need to reduce by 11.5% year on year or the pre-tax discount rate would have to increase by 1.5%, both of which
management does not consider to be reasonably possible. The Group will continue to monitor Malaysia's performance going forward to
identify if any impairment triggers materialise.\u00a0
South Africa is positively recovering from the COVID-19 pandemic and the five-month sales ban in 2020, with the forecasted cashflows
prepared to reflect the continued expected recovery with no further indication of impairment.
The Group had recognised an impairment charge of \u00a354\u00a0million in 2021 for its Peruvian cash generating unit due to continued difficult
trading conditions as a consequence of the COVID-19 pandemic and its impact on the forecasted operating cashflows which partially
reduced the carrying value of goodwill to \u00a391\u00a0million. As a result of the assessment, in 2022, no further deterioration in performance was
identified requiring further impairment consideration.
In 2021, the Group also impaired in full the goodwill of Myanmar resulting in an impairment charge of \u00a33\u00a0million.
Following the application of a reasonable range of sensitivities to all cash-generating units, there was no reasonably possible scenario
identified that would lead to a potential impairment charge.
(v) Impairment testing \u2013 Reynolds American
Goodwill relating to Reynolds American and the indefinite-lived brand intangibles
On 28 April 2022, the FDA announced a proposed product standard to prohibit menthol as a characterising flavour in cigarettes,
consistent with their previously stated timeline. Management notes that the proposal of a product standard does not itself constitute a
ban on menthol in cigarettes given the proposed standard is still required to go through the established U.S. comprehensive rule-making
process, the timetable and outcome for which was, and remains, uncertain. Further to this, on 21 June 2022, the FDA announced plans to
develop a proposed product standard that would establish a maximum nicotine level in cigarettes and certain other combustible tobacco
products to reduce addictiveness. Management notes that the FDA announcement does not itself constitute restrictions on nicotine
levels in cigarettes, and any proposed regulation of nicotine in cigarettes would need to be introduced through the established U.S.
comprehensive rule-making process, the timetable and outcome for which was, and remains, uncertain. Management do not deem this
to be a new development but rather a continuation of the rulemaking process that the FDA initiated in 2017 that was later put on hold.
In December 2022, the sale of most tobacco products with characterising flavours (including menthol) other than tobacco were banned
in the state of California. The impact of such ban does not present an indicator of a potential impairment for Reynolds American goodwill
or any of the indefinite-lived intangibles. The Group has a long-standing track record of managing regulatory shifts and, in the event of
regulatory change, the Group remains confident in its ability to navigate that environment successfully. Since 2018, having considered
the combination of the risk of implementation and impact of any change in regulations, the Group has not recognised any impairment on
either the Newport or Camel brands or the Reynolds American cash-generating unit.
In 2022, the value-in-use calculations have been determined based on probability weighted scenarios to derive a risk-adjusted cash flow
forecast applied within the valuations. Management incorporated the following scenarios into the valuation:
\u2013Management\u2019s internal forecast (risk of the proposed product standard to prohibit menthol as a characterising flavour in cigarettes
incorporated into the long-term growth rate).
\u2013Assuming a final product standard to prohibit menthol as a characterising flavour in cigarettes becomes effective in the final year of
the discrete forecast period (Management\u2019s best estimate of the ban\u2019s effective date, if a final rule is published).
\u2013No product standard to prohibit menthol as a characterising flavour in cigarettes ultimately ends up being introduced.
This is a change in valuation methodology from 2021 where management prepared one cash flow forecast with the potential impact/risk of a
proposed product standard to prohibit menthol as a characterising flavour in cigarettes incorporated into the long-term growth rate and discount
rate. This change was a result of the timing of a proposed product standard narrowing given we have moved one year further forward.
The value-in-use calculations for brands, as described in note 12(e)(ii) above, have been incorporated in the probability weighted
scenarios used in the Reynolds American goodwill model. The value-in-use calculations have been prepared based on a five-year risk-
adjusted cash flow forecast which assumes a long-term volume decline of cigarettes generally offset by pricing. After this forecast, a
probability weighted growth rate of 1.05% has been assumed for the Reynolds American cash-generating unit, 0.89% for Newport,
0.93% for Camel, and 1.0%for all remaining indefinite life intangibles.
The excess of value-in-use earnings over the carrying values (headroom) of the Reynolds American cash-generating unit and the
Newport, Camel, Pall Mall, Grizzly and Camel Snus brand intangibles would be reduced to nil if the following individual changes were
made to the key assumptions used in the impairment model.
| | | | | | |
| Reynolds American goodwill % | | | | | |
| | | | | | |
| | | | | | |
Increase in pre-tax discount rate by | | | | | | |
Decrease in long-term growth rate by | | | | | | |
Reasonably possible changes to key assumptions, within the value-in-use model, which could result in an impairment charge were also identified
for Camel Snus. The following movements in key assumptions are deemed to be reasonably possible and would result in the following:
| | | | |
Current headroom (\u00a3m) | | Reasonable possible change | | Possible impairment (\u00a3m) |
| | | | |
| | | |
The sensitivities relating to the pre-tax discount rates above are based upon a change in the risk-free rate only, as a directional potential
impact. It is recognised that such changes may arise in a combination of assumptions within the discount rate calculation.\u00a0
Apart from Camel Snus, management concluded that no reasonably possible scenarios were identified that resulted in any of the
indefinite-lived intangibles requiring an impairment charge. However, it is noted that if adverse movement occurred in a combination of
the above key assumptions for the Pall Mall brand intangible this may result in an impairment charge.
(vi) Impairment testing \u2013 Canada
Goodwill relating to Imperial Tobacco Canada Ltd (ITCAN)
In March 2019, ITCAN obtained an Initial Order from the Ontario Superior Court of Justice granting it protection under the Companies\u2019
Creditors Arrangement Act (CCAA). If the CCAA creditor protection were to end, significant liabilities might crystallise. As a
consequence, to reflect the risk to future operating cash flows, the value-in-use calculations have been prepared based on a five-year
cash flow forecast, after which a growth rate of -2.5% and a pre-tax discount rate of 19.4% (2021: 19.3%) have been assumed. Further
information on the Quebec Class Actions and CCAA can be found in note 31.
In addition to the increase in discount rate, a reasonable range of sensitivities was applied to the value-in-use calculation, and there was
no risk of an impairment charge identified.
The excess of value-in-use earnings over the carrying values (headroom) of the ITCAN goodwill would be reduced to nil if the following
individual changes, none of which are considered reasonably possible by management, were made to the key assumptions used in the
impairment model. The change in revenue assumption is based on combustibles revenue in the five-year forecast reducing by 20.6% in
each year and assumes that other assumptions are not changed.
| |
| |
| |
| |
Increase in pre-tax discount rate by | |
Note:
*Revenue sensitivities are performed in isolation and do not include the removal of the corresponding variable cost of sales.
The \u00a32,460 million of goodwill relating to ITCAN on the Group\u2019s balance sheet at 31 December 2022 will continue to be reviewed on a
regular basis. Any future impairment charge would result in a non-cash charge to the income statement that will be treated as an
adjusting item.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl80My9mcmFnOjA3MmM3NzYxYjdmZTQ1ZmJiNDQyODY3MjI2ODMzNWQzL3RleHRyZWdpb246MDcyYzc3NjFiN2ZlNDVmYmI0NDI4NjcyMjY4MzM1ZDNfNTMzMjYzMTQwODM0OTU_76b39fc1-d3a4-406a-bcc5-020e1a5a4c8c": {
"value": "
(b) Goodwill
Goodwill of \u00a347,956 million (2021: \u00a343,194 million) is included in intangible assets in the balance sheet of which the following are the
significant acquisitions: Reynolds American \u00a337,181 million (2021: \u00a333,021 million); Rothmans Group \u00a34,704 million (2021: \u00a34,408 million);
Imperial Tobacco Canada \u00a32,460 million (2021: \u00a32,345 million); ETI (Italy) \u00a31,461 million (2021: \u00a31,384 million) and ST (principally
Scandinavia) \u00a31,102 million (2021: \u00a31,043 million). The principal allocations of goodwill in the Rothmans\u2019 acquisition are to the cash-
generating units of Europe and South Africa, with the remainder mainly relating to operations in APME.
During 2022, there was no goodwill impairment (2021: \u00a357 million) as explained in note 12(e)(iv) below.",
"dimensions": {
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"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
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}
},
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"value": "
(c) Trademarks and similar intangibles
Trademarks and similar intangibles with indefinite lives
The net book value of trademarks and similar intangibles with indefinite lives is \u00a378,228 million (2021: \u00a369,475 million) and relates to the
acquisition of Reynolds American. The trademarks acquired, including Newport, Camel, Natural American Spirit, Grizzly and Pall Mall, all of
which are part of the Group\u2019s Strategic Portfolio of key brands, form the core focus of the U.S. business and receive significant support in
the form of dedicated internal resources, forecasting and, where appropriate, marketing investment. These trademarks have significant
market share and positive cashflow growth expectations. There are no regulatory or contractual restrictions on the use of the trademarks,
and there are no plans by management to significantly redirect resources elsewhere. Consequently, in the view of management, these
trademarks do not have a foreseeable and definite end to their ability to generate future cash flows and hence are not amortised.
Trademarks and similar intangibles with definite lives
The majority of trademarks and similar intangibles with definite lives relate to trademarks acquired in previous years. These trademarks
are amortised over their expected useful lives, which do not exceed 20 years. Included in the net book value of trademarks and similar
intangibles are trademarks relating to the acquisition of Reynolds American \u00a32,071 million (2021: \u00a32,038 million).
(d) Computer software and assets in the course of development
Included in computer software and assets in the course of development are internally developed assets with a carrying value of \u00a3423
million (2021: \u00a3517 million). The costs of internally developed assets include capitalised expenses of employees working full time on
software development projects, third-party consultants and software licence fees from third-party suppliers.
The Group has \u00a31 million of future contractual commitments (2021: \u00a32 million) related to intangible assets.
",
"dimensions": {
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"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl85NDMvZnJhZzo1MzE2OGY2NWQ3Mjc0MTc0YWIzM2JkMmM5Y2RmYzQzOC90ZXh0cmVnaW9uOjUzMTY4ZjY1ZDcyNzQxNzRhYjMzYmQyYzljZGZjNDM4XzUzODc2MDY5Nzc2Njk1_c554897b-6514-4c3d-852b-617af4b765ef": {
"value": "
13 Property, plant and equipment
(a) Overview of property, plant and equipment, including right-of-use assets
| | | | | | |
| | | | | | |
| | | Plant, equipment and other owned \u00a3m | Plant, equipment and other leased \u00a3m | Assets in the course of construction \u00a3m | |
| | | | | | |
| | | | | | |
Accumulated depreciation and impairment | | | | | | |
Net book value at 1 January | | | | | | |
| | | | | | |
| | | | | | |
\u2013 right-of-use assets | | | | | | |
\u2013 separately acquired | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Right-of-use assets - reassessments, modifications and terminations | | | | | | |
| | | | | | |
Net reclassifications as held-for-sale | | | | | | |
| | | | | | |
| | | | | | |
Accumulated depreciation and impairment | | | | | | |
Net book value at 31 December | | | | | | |
| | | | | | |
| | | | | | |
| | | Plant, equipment and other owned \u00a3m | Plant, equipment and other leased \u00a3m | Assets in the course of construction \u00a3m | |
| | | | | | |
| | | | | | |
Accumulated depreciation and impairment | | | | | | |
Net book value at 1 January | | | | | | |
| | | | | | |
| | | | | | |
\u2013 right-of-use assets | | | | | | |
\u2013 separately acquired | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Right-of-use assets - reassessments, modifications and terminations | | | | | | |
| | | | | | |
Net reclassifications as held-for-sale | | | | | | |
| | | | | | |
| | | | | | |
Accumulated depreciation and impairment | | | | | | |
Net book value at 31 December | | | | | | |
Refer to notes 4 and 7 for more information on property, plant and equipment impairments. The \u00a3254 million (2021: \u00a327 million) of assets
reclassified as held-for-sale in 2022 primarily relates to the Group's operations in Russia and Belarus and in 2021, the Group's Iranian
subsidiary, BAT Pars, as disclosed in note 27(d).
ESG Investments: Included in additions in 2022 is an amount of \u00a327.1 million related to investments directed towards equipment to drive
energy efficiency and renewable energy generation, water recycling and efficiency projects, waste reduction, and product innovation-led
specification improvements to drive recyclability and reduce waste.
The Group has \u00a380 million of future contractual commitments (2021: \u00a390 million) related to property, plant and equipment.
(b) Right-of-use assets
In accordance with IFRS 16 Leases, the right-of-use assets related to leased properties have been included in the asset class \u2018Leasehold
Property\u2019 (note 13(c)) and other right-of-use assets have been reported under \u2018Plant, equipment and other leased\u2019.
The Group leases various offices, warehouses, retail spaces, equipment and vehicles through its subsidiaries across the globe.
Arrangements are entered into in the course of ordinary business, and lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions reflecting local commercial practice. The lease agreements do not impose any covenants
other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing
purposes.
Assets representing \u2018plant, equipment and other\u2019 relate to leases of various assets including tobacco vending machines, industrial
equipment and distribution vehicles in Brazil, Japan, Pakistan, Poland, Romania, Switzerland, the U.S. and other countries.
(c) Leasehold property
As of 31 December 2022, the Group holds \u00a3152 million (2021: \u00a3165 million) of leasehold properties acquired and another \u00a3314 million (2021:
\u00a3312 million) of right-of-use leased properties.
Assets representing \u2018leasehold property\u2019 relate to leases in respect of offices, retail space, warehouses and manufacturing facilities
occupied by Group subsidiaries and include property leases with lease terms of more than five years in Bangladesh, Brazil, China,
Germany, Italy, Mexico, Romania, Singapore, the UK and the U.S., amongst other countries. In addition, capitalised expenditure
representing leasehold improvements is included in this asset class.
| | |
| | |
Leasehold land and property comprises | | |
- net book value of long leasehold | | |
- net book value of short leasehold | | |
| | |
",
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"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl80OS9mcmFnOjM5ZTQ2Y2NhNGM5ZTRmYzZhZjY5OGY5MjBmMTcyM2ZjL3RleHRyZWdpb246MzllNDZjY2E0YzllNGZjNmFmNjk4ZjkyMGYxNzIzZmNfNTM4NzYwNjk3OTUxOTM_608bf174-bab5-4897-b0c7-5eaa96922ca3": {
"value": "
16 Deferred tax
Net deferred tax (liabilities)/assets comprise:
| | | | | | | | |
| | Excess of capital allowances over depreciation \u00a3m | | Undistributed earnings of associates and subsidiaries \u00a3m | Retirement benefits \u00a3m | | Other temporary differences \u00a3m | |
| | | | | | | | |
| | | | | | | | |
Credited/(charged) to the income statement | | | | | | | | |
Credited/(charged) relating to changes in tax rates | | | | | | | | |
Charged to other comprehensive income | | | | | | | | |
Net reclassifications as held-for- sale | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Credited/(charged) to the income statement | | | | | | | | |
Credited/(charged) relating to changes in tax rates | | | | | | | | |
Charged to other comprehensive income | | | | | | | | |
| | | | | | | | |
The majority of receivables are held in order to collect contractual cash flows, in accordance with the Group\u2019s business model for
managing financial assets, and hence are measured at amortised cost. In certain countries, however, the Group has entered into
factoring arrangements and periodically sells certain trade receivables to banks and other financial institutions, without recourse, for
cash. These trade receivables have been derecognised from the statement of financial position to reflect the transfer by the Group of
substantially all of the risks and rewards of the receivables, including credit risk. Consequently, the cash inflows have been recognised
within operating cash flows. Typically in these arrangements, the Group also acts as a collection agent for the bank. At 31 December
2022, the value of trade receivables derecognised through the factoring arrangements where the Group acts as a collection agent was
\u00a3533 million (2021: \u00a3562 million) and where the Group does not act as a collection agent was \u00a322 million (2021: \u00a38 million). Included in
trade receivables above is \u00a3164 million (2021: \u00a3110 million) of trade debtor balances which were available for factoring under these
arrangements. In addition, the Group participates in certain supply chain finance programmes utilised by our customers allowing us to
receive payment for invoices earlier than the agreed due date at a discounted value. At 31 December 2022, the value of trade receivables
derecognised through these arrangements was \u00a381 million (2021: \u00a3171 million).
Included in loans and other receivables are \u00a3114 million of litigation related deposits (2021: \u00a384 million). Management has determined that
these payments represent a resource controlled by the entity, as a result of past events and from which future economic benefits are
expected to flow to the entity either by being recoverable on conclusion of ongoing appeal processes or by reducing amounts potentially
payable should the appeal process fail. These deposits are held at the fair value of consideration transferred less impairment, if
applicable. The effect of discounting would be immaterial.
In March 2017, the Brazilian Supreme Court ruled that for all taxpayers VAT should not be included in the calculation of social contribution
taxes (PIS/Cofins) which are levied based on revenue. In August 2022, Souza Cruz achieved the favourable final and unappealable decision
in its individual lawsuit in respect of overpaid taxes to the government. Accordingly, an asset has been recognised in the amount of
\u00a3624\u00a0million (principal amount plus interest) . Furthermore, the Group has a right related to an earn-out linked to the timing of the credit
compensation of \u00a397\u00a0million.
Also included in loans and other receivables are deposits that do not meet the definition of cash and cash equivalents as well as loans
provided to farmers. The cash flows arising from these transactions are included in investing activities and have been reconciled, in note
18, to the cash flow statement.
Prepayments and accrued income include \u00a321 million (2021: \u00a324 million) of accrued income primarily in relation to rebates.
Amounts receivable from related parties including associated undertakings are shown in note 30.
Trade and other receivables have been reported in the balance sheet net of allowances as follows:
| | |
| | |
Trade receivables \u2013 gross | | |
Trade receivables \u2013 allowance | | |
Loans and other receivables \u2013 gross | | |
Loans and other receivables \u2013 allowance | | |
Prepayments and accrued income | | |
Net trade and other receivables per balance sheet | | |
The movements in the allowance account are as follows:
| | | | | | | |
| | | | | | | |
| | Loans and other receivables \u00a3m | | | | Loans and other receivables \u00a3m | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
As permitted by IFRS 9, the loss allowance on trade receivables arising from the recognition of revenue under IFRS 15 is initially measured
at an amount equal to lifetime expected losses. Allowances in respect of loans and other receivables are initially recognised at an amount
equal to 12-month expected credit losses. Allowances are measured at an amount equal to the lifetime expected credit losses where the
credit risk on the receivables increases significantly after initial recognition.
The Group holds bank guarantees, other guarantees and credit insurance in respect of some of the past due debtor balances.
Trade and other receivables are predominantly denominated in the functional currencies of subsidiary undertakings apart from the
following: U.S. dollar: 1.9% (2021: 2.2%), UK sterling: 0.0% (2021: 0.1%), Euro: 5.7% (2021: 3.6%) and other currencies: 2.4% (2021: 0.9%).
There is no material difference between the above amounts for trade and other receivables and their fair value due to the short-term
duration of the majority of trade and other receivables as determined using discounted cash flow analysis. There is no concentration of
credit risk with respect to trade receivables as the Group has a large number of internationally dispersed customers.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzA5L2ZyYWc6NzAxZTA2YWIxNjA2NDdkMWE2NGVkMjRmMzM4YjZiNjMvdGV4dHJlZ2lvbjo3MDFlMDZhYjE2MDY0N2QxYTY0ZWQyNGYzMzhiNmI2M181Mzg3NjA2OTc3MTUyNw_205dc5c5-bde8-4dd4-a871-2f86fb9374e0": {
"value": "
18 Investments held at fair value
| | | | | | | |
| | | | | | | |
| Fair value\u00a0 through P&L \u00a3m | Fair value through OCI \u00a3m | | | Fair value\u00a0 through P&L \u00a3m | Fair value through OCI \u00a3m | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Other fair value movements | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
The Group\u2019s investments principally consist of non-derivative financial assets that cannot be classified as loans and other receivables
or cash and cash equivalents, as well as investments made by the Group\u2019s corporate venture capital unit, Btomorrow Ventures, and other
Group companies.
Investments held at fair value through profit and loss principally consist of government securities, indexed deposits, treasury bills or other
treasury products with maturities of more than three months which, if held for less than 12 months, form part of the Group\u2019s definition
of net debt. Investments held at fair value through profit and loss also includes the Group\u2019s investment in Charlotte\u2019s Web (see note 14).
Investments held at fair value through other comprehensive income (OCI) include equity investments in various start-up businesses
which are held for their strategic value.
Investments held at fair value through profit and loss above include restricted amounts of \u00a3396 million (2021: \u00a3351 million) due to
investments held by subsidiaries in CCAA protection (note 32), as well as \u00a378 million (2021: \u00a361 million) subject to potential exchange
control restrictions.
In 2021, as part of the disposal of the Group\u2019s operations in Iran (note 27(d)), a provision of \u00a324\u00a0million against non-current investments
held at fair value was charged to net finance costs as recoverability of these funds was not certain. During 2022, \u00a317\u00a0million was
recovered with some progress on resolving issues over the release of the remaining funds.
Investments held at fair value are predominantly denominated in the functional currencies of subsidiary undertakings with less than
5% in other currencies (2021: less than 4% in other currencies). There is no material difference between the investments held at fair value
and their gross contractual values.
The classification of these investments under the IFRS 13 Fair Value Measurement fair value hierarchy is given in note 26. Fair values for
quoted investments are based on observable market prices. If there is no active market for a financial asset, the fair value is established
by using valuation techniques, including discounted cash flow analyses and share of net assets. The fair value of the 7-year convertible
debenture in Charlotte\u2019s Web has been determined using a binomial option pricing model.
Included in the values in the table above are \u00a3186\u00a0million (2021: \u00a3101\u00a0million) of level 3 assets. Movements in these assets in 2022 included
\u00a3133\u00a0million (2021: \u00a373\u00a0million) of additions, \u00a382\u00a0million (2021: \u00a356\u00a0million) of disposals and \u00a326\u00a0million (\u00a39\u00a0million) of net fair value gains.
Below is a reconciliation of the fair value investments cash flows to the cash flow statement \u2013 investing activities:
| | |
| | |
Cash outflow from investments held at fair value | | |
Cash outflow from loans and other receivables | | |
Cash outflows from investments per cash flow statement | | |
Cash inflow from investments held at fair value | | |
Cash inflow from loans and other receivables | | |
Cash inflows from investments per cash flow statement | | |
Notes:
*Derivatives which do not meet the tests for hedge accounting under IFRS 9 or which are not designated as hedging instruments are referred to as \u2018held-for-trading\u2019. These derivatives
principally consist of interest rate swaps and forward foreign currency contracts which have not been designated as hedges due to their value changes offsetting with other
components of net finance costs relating to financial assets and financial liabilities. The Group does not use derivatives for speculative purposes. All derivatives are undertaken for risk
management purposes.
**Derivatives in respect of net debt are in a net liability position of \u00a3167 million as at 31 December 2022 (2021: net asset position of \u00a391 million). The Group\u2019s net debt is presented in note
23.
For cash flow hedges, the timing of expected cash flows is as follows: assets of \u00a3202 million (2021: \u00a3188 million) of which \u00a372 million
(2021: \u00a378 million) is expected within one year and \u00a3nil million (2021: \u00a3107 million) beyond five years and liabilities of \u00a3192 million (2021: \u00a370
million) of which \u00a3134 million (2021: \u00a333 million) is expected within one year and \u00a3nil (2021: \u00a3nil) beyond five years.
The Group\u2019s cash flow hedges are principally in respect of sales or purchases of inventory and certain debt instruments. A certain
number of forward foreign currency contracts were used to manage the currency profile of external borrowings and are reflected in the
currency table in note 23. Interest rate swaps have been used to manage the interest rate profile of external borrowings and are reflected
in the re-pricing table in note 23.
The tables below set out the maturities of the Group\u2019s derivative financial instruments on an undiscounted contractual basis, based on
spot rates.
The maturity dates of all gross-settled derivative financial instruments are as follows:
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
\u2013forward foreign currency contracts | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between one and two years | | | | | | | | | | | |
\u2013forward foreign currency contracts | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between two and three years | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between three and four years | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between four and five years | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
| | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
| | | | | | | | | | | |
The maturity dates of net-settled derivative financial instruments, which primarily relate to interest rate swaps, are as follows:
| | | | | |
| | | | | |
| Assets Inflow/ (outflow) \u00a3m | Liabilities Outflow/ (inflow) \u00a3m | | Assets Inflow/ (outflow) \u00a3m | Liabilities Outflow/ (inflow) \u00a3m |
| | | | | |
Between one and two years | | | | | |
Between two and three years | | | | | |
Between three and four years | | | | | |
Between four and five years | | | | | |
| | | | | |
| | | | | |
The items designated as hedging instruments are as follows:
| | | | | |
| | | | | |
| Nominal\u00a0 amount of hedging instrument \u00a3m | Changes\u00a0in\u00a0 fair value used for calculating hedge ineffectiveness \u00a3m | | Nominal\u00a0 amount of hedging instrument \u00a3m | Changes\u00a0in\u00a0 fair value used for calculating hedge ineffectiveness \u00a3m |
Interest rate risk exposure: | | | | | |
| | | | | |
\u2013 interest rate swaps | | | | | |
\u2013 cross-currency swaps | | | | | |
| | | | | |
\u2013 interest rate swaps | | | | | |
\u2013 cross-currency swaps | | | | | |
Foreign currency risk exposure: | | | | | |
| | | | | |
\u2013 forward foreign currency contracts | | | | | |
Net investment hedges (derivative related) | | | | | |
\u2013 forward foreign currency contracts | | | | | |
Net investment hedges (non-derivative related) | | | | | |
\u2013 debt (carrying value) in borrowings designated as net investment hedges of net assets | | | | | |
Fair value estimation
The fair values of financial assets and liabilities with maturities of
less than one year, other than derivatives, are assumed to
approximate their book values. For other financial instruments
which are measured at fair value in the balance sheet, the basis for
fair values is described below.
Fair value hierarchy
In accordance with IFRS 13 classification hierarchy, the following table presents the Group\u2019s financial assets and liabilities that are
measured at fair value:
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Investment held at fair value | | | | | | | | | | |
| | | | | | | | | | |
\u2013 interest rate swaps | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | |
\u2013 forward foreign currency contracts | | | | | | | | | | |
| | | | | | | | | | |
Liabilities at fair value | | | | | | | | | | |
| | | | | | | | | | |
\u2013 interest rate swaps | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | |
\u2013 forward foreign currency contracts | | | | | | | | | | |
Liabilities at fair value | | | | | | | | | | |
The Group\u2019s investments principally consist of non-derivative financial assets that cannot be classified as loans and other receivables
or cash and cash equivalents, as well as investments made by the Group\u2019s corporate venture capital unit, Btomorrow Ventures, and other
Group companies.
Investments held at fair value through profit and loss principally consist of government securities, indexed deposits, treasury bills or other
treasury products with maturities of more than three months which, if held for less than 12 months, form part of the Group\u2019s definition
of net debt. Investments held at fair value through profit and loss also includes the Group\u2019s investment in Charlotte\u2019s Web (see note 14).
Investments held at fair value through other comprehensive income (OCI) include equity investments in various start-up businesses
which are held for their strategic value.
Investments held at fair value through profit and loss above include restricted amounts of \u00a3396 million (2021: \u00a3351 million) due to
investments held by subsidiaries in CCAA protection (note 32), as well as \u00a378 million (2021: \u00a361 million) subject to potential exchange
control restrictions.
In 2021, as part of the disposal of the Group\u2019s operations in Iran (note 27(d)), a provision of \u00a324\u00a0million against non-current investments
held at fair value was charged to net finance costs as recoverability of these funds was not certain. During 2022, \u00a317\u00a0million was
recovered with some progress on resolving issues over the release of the remaining funds.
Investments held at fair value are predominantly denominated in the functional currencies of subsidiary undertakings with less than
5% in other currencies (2021: less than 4% in other currencies). There is no material difference between the investments held at fair value
and their gross contractual values.
The classification of these investments under the IFRS 13 Fair Value Measurement fair value hierarchy is given in note 26. Fair values for
quoted investments are based on observable market prices. If there is no active market for a financial asset, the fair value is established
by using valuation techniques, including discounted cash flow analyses and share of net assets. The fair value of the 7-year convertible
debenture in Charlotte\u2019s Web has been determined using a binomial option pricing model.
Included in the values in the table above are \u00a3186\u00a0million (2021: \u00a3101\u00a0million) of level 3 assets. Movements in these assets in 2022 included
\u00a3133\u00a0million (2021: \u00a373\u00a0million) of additions, \u00a382\u00a0million (2021: \u00a356\u00a0million) of disposals and \u00a326\u00a0million (\u00a39\u00a0million) of net fair value gains.
Below is a reconciliation of the fair value investments cash flows to the cash flow statement \u2013 investing activities:
| | |
| | |
Cash outflow from investments held at fair value | | |
Cash outflow from loans and other receivables | | |
Cash outflows from investments per cash flow statement | | |
Cash inflow from investments held at fair value | | |
Cash inflow from loans and other receivables | | |
Cash inflows from investments per cash flow statement | | |
Notes:
*Derivatives which do not meet the tests for hedge accounting under IFRS 9 or which are not designated as hedging instruments are referred to as \u2018held-for-trading\u2019. These derivatives
principally consist of interest rate swaps and forward foreign currency contracts which have not been designated as hedges due to their value changes offsetting with other
components of net finance costs relating to financial assets and financial liabilities. The Group does not use derivatives for speculative purposes. All derivatives are undertaken for risk
management purposes.
**Derivatives in respect of net debt are in a net liability position of \u00a3167 million as at 31 December 2022 (2021: net asset position of \u00a391 million). The Group\u2019s net debt is presented in note
23.
For cash flow hedges, the timing of expected cash flows is as follows: assets of \u00a3202 million (2021: \u00a3188 million) of which \u00a372 million
(2021: \u00a378 million) is expected within one year and \u00a3nil million (2021: \u00a3107 million) beyond five years and liabilities of \u00a3192 million (2021: \u00a370
million) of which \u00a3134 million (2021: \u00a333 million) is expected within one year and \u00a3nil (2021: \u00a3nil) beyond five years.
The Group\u2019s cash flow hedges are principally in respect of sales or purchases of inventory and certain debt instruments. A certain
number of forward foreign currency contracts were used to manage the currency profile of external borrowings and are reflected in the
currency table in note 23. Interest rate swaps have been used to manage the interest rate profile of external borrowings and are reflected
in the re-pricing table in note 23.
The tables below set out the maturities of the Group\u2019s derivative financial instruments on an undiscounted contractual basis, based on
spot rates.
The maturity dates of all gross-settled derivative financial instruments are as follows:
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
\u2013forward foreign currency contracts | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between one and two years | | | | | | | | | | | |
\u2013forward foreign currency contracts | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between two and three years | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between three and four years | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
Between four and five years | | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
| | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | | |
| | | | | | | | | | | |
The maturity dates of net-settled derivative financial instruments, which primarily relate to interest rate swaps, are as follows:
| | | | | |
| | | | | |
| Assets Inflow/ (outflow) \u00a3m | Liabilities Outflow/ (inflow) \u00a3m | | Assets Inflow/ (outflow) \u00a3m | Liabilities Outflow/ (inflow) \u00a3m |
| | | | | |
Between one and two years | | | | | |
Between two and three years | | | | | |
Between three and four years | | | | | |
Between four and five years | | | | | |
| | | | | |
| | | | | |
The items designated as hedging instruments are as follows:
| | | | | |
| | | | | |
| Nominal\u00a0 amount of hedging instrument \u00a3m | Changes\u00a0in\u00a0 fair value used for calculating hedge ineffectiveness \u00a3m | | Nominal\u00a0 amount of hedging instrument \u00a3m | Changes\u00a0in\u00a0 fair value used for calculating hedge ineffectiveness \u00a3m |
Interest rate risk exposure: | | | | | |
| | | | | |
\u2013 interest rate swaps | | | | | |
\u2013 cross-currency swaps | | | | | |
| | | | | |
\u2013 interest rate swaps | | | | | |
\u2013 cross-currency swaps | | | | | |
Foreign currency risk exposure: | | | | | |
| | | | | |
\u2013 forward foreign currency contracts | | | | | |
Net investment hedges (derivative related) | | | | | |
\u2013 forward foreign currency contracts | | | | | |
Net investment hedges (non-derivative related) | | | | | |
\u2013 debt (carrying value) in borrowings designated as net investment hedges of net assets | | | | | |
Hedge accounting
In order to qualify for hedge accounting, the Group is required to
document prospectively the economic relationship between the
item being hedged and the hedging instrument. The Group is also
required to demonstrate an assessment of the economic
relationship between the hedged item and the hedging
instrument, which shows that the hedge will be highly effective on
an ongoing basis. This effectiveness testing is repeated
periodically to ensure that the hedge has remained, and is
expected to remain, highly effective. The prospective effectiveness
testing determines that an economic relationship between the
hedged item and the hedging instrument exists.
In accordance with the Group Treasury Policy, the exact hedge
ratios and profile of a hedge relationship will depend on several
factors, including the desired degree of certainty and reduced
volatility of net interest costs and market conditions, trends and
expectations in the relevant markets. The sources of
ineffectiveness include spot and forward differences, impact of
time value and timing differences between periods in the hedged
item and hedging instrument.
The Group\u2019s risk management strategy has been explained in
further detail under the interest rate risk and currency risk sections
of this note.
Netting arrangements of derivative financial instruments
The gross fair value of derivative financial instruments as presented in the Group balance sheet, together with the Group\u2019s rights of
offset associated with recognised financial assets and recognised financial liabilities subject to enforceable master netting
arrangements and similar agreements, is summarised as follows:
| | | | | | | |
| | | | | | | |
| Amount presented in the Group balance sheet* \u00a3m | Related amounts not offset in the Group balance sheet \u00a3m | | | Amount presented in the Group balance sheet* \u00a3m | Related amounts not offset in the Group balance sheet \u00a3m | |
| | | | | | | |
\u2013 Derivative financial instruments (note 19) | | | | | | | |
| | | | | | | |
\u2013 Derivative financial instruments (note 19) | | | | | | | |
| | | | | | | |
The carrying value of cash and cash equivalents approximates their fair value.
Cash and cash equivalents are denominated in the functional currency of the subsidiary undertaking or other currencies as shown below:
In the Group cash flow statement, net cash and cash equivalents are shown after deducting bank overdrafts and accrued interest where
applicable, as follows:
| | |
| | |
Cash and cash equivalents as above | | |
Less overdrafts and accrued interest | | |
Net cash and cash equivalents | | |
Cash and cash equivalents also include \u00a334 million (2021: \u00a342 million) of cash that is held as a hedging instrument.
Restricted cash
Cash and cash equivalents include restricted amounts of \u00a31,411 million (2021: \u00a31,024 million) due to subsidiaries in CCAA protection (note
32), as well as \u00a3324 million (2021: \u00a3305 million) principally due to exchange control restriction",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzM3L2ZyYWc6OWU2NjBiMGEyN2ZiNDVjOWJlOGQ4ZjBjYTdmNmM1M2YvdGV4dHJlZ2lvbjo5ZTY2MGIwYTI3ZmI0NWM5YmU4ZDhmMGNhN2Y2YzUzZl81MzMyNjMxMzk3MjU3OA_2ff9b697-ae31-4d39-8350-c7f06ab37c8d": {
"value": "
Restricted cash
Cash and cash equivalents include restricted amounts of \u00a31,411 million (2021: \u00a31,024 million) due to subsidiaries in CCAA protection (note
32), as well as \u00a3324 million (2021: \u00a3305 million) principally due to exchange control restriction",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzUyL2ZyYWc6ZTcxMTFiNWMzYmMzNGQ4NWEzMTEzNTc0NWU3ZjkwNmMvdGV4dHJlZ2lvbjplNzExMWI1YzNiYzM0ZDg1YTMxMTM1NzQ1ZTdmOTA2Y181Mzg3NjA2OTc5NTgyNA_3e3b5989-94a5-4089-9ea6-13d2d4a1ca9f": {
"value": "
22 Capital and reserves
(a) Share capital
| | | |
| Ordinary shares of 25p each Number of shares | | |
| | | |
| | | |
| | | |
\u2013 share option schemes | | | |
| | | |
| | | |
| | | |
| | | |
\u2013 share option schemes | | | |
| | | |
| | | |
| | | |
| | | |
\u2013 share option schemes | | | |
| | | |
Share capital
The Company\u2019s ordinary shares are fully paid and no further contribution of capital may be required by the Company from the
shareholders.\u00a0All ordinary shares rank equally with regard to participation in dividends and to share in the proceeds of the Company\u2019s
residual assets upon a winding up of the Company. Shareholders may, by ordinary resolution, declare final dividends, but not in excess of
the amount recommended by the Directors. Holders of ordinary shares have no pre-emptive rights.
On a show of hands every shareholder who is present in person at a general meeting is entitled to one vote regardless of the number of
shares held by the shareholder, unless a poll is demanded. On a poll, every shareholder who is present in person or by proxy has one vote
for every share held by the shareholder. The Company\u2019s Annual General Meeting voting is undertaken by way of a poll.
All rights attached to the Company\u2019s shares held by the Group as treasury shares are suspended until those shares are reissued.
(b) Share premium account, capital redemption reserves and merger reserves comprise:
| | | | |
| Share premium account \u00a3m | Capital redemption reserves \u00a3m | | |
| | | | |
| | | | |
| | | | |
Share capital
The Company\u2019s ordinary shares are fully paid and no further contribution of capital may be required by the Company from the
shareholders.\u00a0All ordinary shares rank equally with regard to participation in dividends and to share in the proceeds of the Company\u2019s
residual assets upon a winding up of the Company. Shareholders may, by ordinary resolution, declare final dividends, but not in excess of
the amount recommended by the Directors. Holders of ordinary shares have no pre-emptive rights.
On a show of hands every shareholder who is present in person at a general meeting is entitled to one vote regardless of the number of
shares held by the shareholder, unless a poll is demanded. On a poll, every shareholder who is present in person or by proxy has one vote
for every share held by the shareholder. The Company\u2019s Annual General Meeting voting is undertaken by way of a poll.
All rights attached to the Company\u2019s shares held by the Group as treasury shares are suspended until those shares are reissued.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfClassesOfShareCapitalExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
(b) Share premium account, capital redemption reserves and merger reserves comprise:
| | | | |
| Share premium account \u00a3m | Capital redemption reserves \u00a3m | | |
| | | | |
| | | | |
| | | | |
Note:
*As at 31 December 2022, there were no outstanding floating rate U.S. dollar bonds (2021: \u00a3554\u00a0million, 3M LIBOR +88bps)
Perpetual hybrid bonds issued by the Group have been classified as equity (note 22(d)) and are therefore excluded from borrowings.
Other loans comprise \u00a3875 million (2021: \u00a3500 million) relating to a bilateral facility. Commercial paper is issued at competitive rates to
meet short-term borrowing requirements as and when needed.
Current borrowings per the balance sheet include interest payable of \u00a3524 million at 31 December 2022 (2021: \u00a3460 million). Included
within borrowings are \u00a39,223 million (2021: \u00a39,197 million) of borrowings subject to fair value hedges where their amortised cost has
been decreased by \u00a3355 million (2021: \u00a3101 million increase).
The fair value of borrowings is estimated to be \u00a337,170 million (2021: \u00a340,557 million) of which \u00a335,440 million (2021: \u00a338,683 million)
has been calculated using quoted market prices and is within level 1 of the fair value hierarchy and \u00a31,730 million (2021: \u00a31,874 million)
has been calculated based on discounted cash flow analysis and is within level 3 of the fair value hierarchy.
Amounts secured on Group assets including property, plant and equipment, inventory and receivables as at 31 December 2022 are
\u00a39 million (2021: \u00a310 million). The majority of lease liabilities are also secured against the associated assets.
Borrowings are repayable as follows:
| | | | | |
| | | Contractual gross maturities |
| | | | | |
| | | | | |
Between one and two years | | | | | |
Between two and three years | | | | | |
Between three and four years | | | | | |
Between four and five years | | | | | |
| | | | | |
| | | | | |
The contractual gross maturities in each year include the borrowings maturing in that year together with forecast interest payments on
all borrowings which are outstanding for all or part of that year.
Borrowings are denominated in the functional currency of the subsidiary undertaking or other currencies as shown below:
| | | | | | |
| Functional currency \u00a3m | | | | | |
| | | | | | |
| | | | | | |
Effect of derivative financial instruments | | | | | | |
\u2013 cross-currency swaps | | | | | | |
\u2013 forward foreign currency contracts | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Effect of derivative financial instruments | | | | | | |
\u2013 cross-currency swaps | | | | | | |
\u2013 forward foreign currency contracts | | | | | | |
| | | | | | |
The exposure to interest rate changes when borrowings are re-priced is as follows:
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Effect of derivative financial instruments | | | | | | | |
\u2013 interest rate swaps | | | | | | | |
\u2013 cross-currency swaps | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Effect of derivative financial instruments | | | | | | | |
\u2013 interest rate swaps | | | | | | | |
\u2013 cross-currency swaps | | | | | | | |
| | | | | | | |
Lease liabilities are repayable as follows:
| | | | | |
| | | Contractual gross maturities |
| | | | | |
| | | | | |
Between one and two years | | | | | |
Between two and three years | | | | | |
Between three and four years | | | | | |
Between four and five years | | | | | |
| | | | | |
| | | | | |
For more information on leasing arrangements, refer to note 13(b).
As at 31 December 2022, the Group\u2019s undrawn committed borrowing facilities (note 26) amount to \u00a37,828 million (2021: \u00a37,850 million)
with \u00a34,828 million maturing within one year (2021: \u00a34,850 million maturing within one year), \u00a3150 million maturing between two and
three years (2021: \u00a3nil maturing between two and three years), \u00a3350 million maturing between three and four years (2021: \u00a3150 million
maturing between three and four years) and \u00a32,500 million maturing between four and five years (2021: \u00a32,850 million maturing between
four and five years).
The Group\u2019s composition and movements in net debt are presented below along with a reconciliation to the financing activities in the
Group Cash Flow Statement:
| | | | | | | |
| | | | | | | |
| | | | | Fair value, accrued interest and other | | |
Borrowings (excluding lease liabilities)* | | | | | | | |
| | | | | | | |
Derivatives in respect of net debt | | | | | | | |
Cash and cash equivalents | | | | | | | |
Current investments held at fair value | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | Fair value, accrued interest and other | | |
Borrowings (excluding lease liabilities)* | | | | | | | |
| | | | | | | |
Derivatives in respect of net debt | | | | | | | |
Cash and cash equivalents | | | | | | | |
Current investments held at fair value | | | | | | | |
| | | | | | | |
Fair value, accrued interest and other\u2019 movements in lease liabilities in 2022 mainly comprise additions of \u00a3218 million (2021: \u00a3147 million) (net of reassessments, modifications and terminations), see note 13(a). The movement of \u00a322 million (2021: \u00a37 million) in current
investments held at fair value represents the fair value gains for these investments.
| | |
| | |
Cash flows per net debt statement | | |
Non-financing cash flows included in net debt | | |
| | |
Interest element of lease liabilities | | |
Remaining cash flows relating to derivative financial instruments | | |
Purchases of own shares held in employee share ownership trusts | | |
| | |
Proceeds from issue of perpetual hybrid bonds | | |
Coupon paid on perpetual hybrid bonds | | |
Dividends paid to owners of the parent | | |
Capital injection from and purchase of non-controlling interests | | |
Dividends paid to non-controlling interests | | |
| | |
Net cash used in financing activities per cash flow statement | | |
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBorrowingsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzY2L2ZyYWc6NGRjOGRiNTBiOGNmNGJiNGI3MTgxMTE2N2UxOTNmYWUvdGV4dHJlZ2lvbjo0ZGM4ZGI1MGI4Y2Y0YmI0YjcxODExMTY3ZTE5M2ZhZV81Mzg3NjA2OTg0NzgwMQ_644cca13-457f-449c-9a6c-cc73af08ec7c": {
"value": "
24 Provisions for liabilities
| | | | | | |
| Restructuring of existing businesses \u00a3m | Employee- related benefits \u00a3m | | DOJ and OFAC investigations \u00a3m | | |
| | | | | | |
| | | | | | |
Provided in respect of the year (*) | | | | | | |
Transferred to liabilities associated with assets held for sale | | | | | | |
| | | | | | |
| | | | | | |
Analysed on the balance sheet as | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Note:
*Amounts provided above are shown net of reversals of unused provisions which include reversals of \u00a335 million (2021: \u00a320 million) for restructuring of existing businesses,
\u00a310 million (2021: \u00a31 million) for employee benefits and \u00a3225 million (2021: \u00a3147 million) for other provisions, of which \u00a374 million (2021: \u00a334 million) was reclassified to trade and other
payables.
The restructuring provisions relate to the restructuring and integration costs incurred and are reported as adjusting items. The principal
restructuring activities in 2022 and 2021 are as described in note 7 and primarily include the cost of employee packages and long-term
social plans associated with redundancy programmes from previous years. Provisions associated with redundancy packages are
determined based on termination packages offered in each country. The long-term social plans primarily relate to social plans in
Germany, which span over several years and are based on actuarial calculations. These are discounted to present value using Central
Bank rates. We do not consider the effect of discounting to be material. The provisions for long-term social plans include future
payments related to contracts that are already fixed. Given that there is little or no variability expected in the timing and amount of the
payments, no additional risk has been incorporated in the discounting. While some elements of the non-current provisions of \u00a357 million
will unwind over several years, as termination payments are made over extended periods in some countries, it is estimated that
approximately 97% of these non-current provisions will unwind within five years.
Employee-related benefits mainly relate to employee benefits other than post-employment benefits. The principal components of these
provisions are gratuity and termination awards, \u2018jubilee\u2019 payments due after a certain service period and expected payments associated
with long-term disability. The majority of these provisions are calculated by actuaries. It is estimated that approximately 81% of the non-
current provisions of \u00a330 million will unwind within five years.
A provision of \u00a3274\u00a0million was made in 2011 for a potential claim under a 1998 settlement agreement entered into by a Group subsidiary
in respect of the clean-up of sediment in the Fox River. On 30 September 2014, the Group, NCR, Appvion and Windward Prospects
entered into a funding agreement; the details of this agreement are explained in note 31. This agreement led to payments of \u00a31 million in
2022 (2021: \u00a32 million). In addition, the Group incurred legal costs of \u00a37 million (2021: \u00a36 million), which were also charged against the
provision. It is expected that the non-current provision will unwind within five years.
As discussed earlier (in note 6(h) Other Operating Expenses), the Group has been cooperating with investigations by the DOJ and OFAC
into suspicions of breaches of sanctions. The Group is engaged in discussions with both agencies to find a resolution through settlement.
A provision of \u00a3450 million has been recognised in 2022, however it cannot be excluded that the amount of any potential settlement with
the DOJ and OFAC may vary from this amount.
Other provisions comprise balances set up in the ordinary course of general business that cannot be classified within the other
categories, such as sales returns and onerous contracts, together with amounts in respect of supplier, excise and other disputes. The
nature of the amounts provided in respect of disputes is such that the extent and timing of cash flows are difficult to estimate and the
ultimate liability may vary from the amounts provided. Other provisions also include a provision for interest of \u00a3183 million in relation to
the Franked Investment Income Group Litigation Order (FII GLO), as mentioned in notes 8(b) and 10(b). The provision is calculated based
on the UK central bank base rate plus 2% and has been charged to net finance costs. As there is uncertainty over the potential timing
of the utilisation, as explained in note 10(b), the provision has been reported as a non-current provision.
In 2020, the Group recognised a provision of US$272\u00a0million (\u00a3212\u00a0million) in relation to the ITG Brands, LLC MSA litigation agreements
with the States of Texas, Minnesota and Mississippi which was utilised in 2021. Further details are provided in note 31.
On 1 March 2019, the Quebec Court of Appeal in Montreal upheld the Superior Court\u2019s decision of May 2015 (reducing ITCAN\u2019s share of
the judgment due to a change in interest computation to a maximum of CAD$9.2\u00a0billion). The Court of Appeal also upheld the previously
stated requirements for the defendants to deposit CAD$1.1\u00a0billion into an escrow account. The Board of Directors of ITCAN reassessed
the recoverability of the litigation related deposit and, accordingly, the Group recognised a charge against the income statement of
CAD$758\u00a0million (\u00a3436\u00a0million) in 2019, reflecting the amount of the judgment that is considered to be probable and estimable in line with
IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Consequently, the Group utilised the litigation related deposit which was
shown as a receivable at 31 December 2018 (within trade and other receivables) against the current estimate of the liability and both the
provision and litigation related deposit were reduced accordingly. Further details are provided in note 31.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfProvisionsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xNDk5NS9mcmFnOjU5MDY2MjhlZGY4MjQ5Y2JiYzE2MGM2NDc0YjdmMTJmL3RleHRyZWdpb246NTkwNjYyOGVkZjgyNDljYmJjMTYwYzY0NzRiN2YxMmZfNTM4NzYwNjk3NjMyOTg_c00d73c0-14b2-469e-9235-19618dd1af0d": {
"value": "
25 Trade and other payables
| | |
| | |
| | |
Duty, excise and other taxes | | |
Accrued charges and deferred income | | |
| | |
Social security and other taxation | | |
| | |
| | |
| | |
| | |
| | |
As explained in note 17, the Group acts as a collection agent for banks and other financial institutions in certain debt factoring
arrangements. The cash collected in respect of these arrangements that has not yet been remitted amounts to \u00a3119 million (2021: \u00a3137
million) and is included in sundry payables.
In addition, the Group has certain Supply Chain Financing (SCF) or \u2018reverse factoring\u2019 arrangements in place. The principal purpose of
these arrangements is to provide the supplier with the option to access liquidity earlier through the sale of its receivables due from the
Group to a bank or other financial institution prior to their due date. Management has determined that the Group\u2019s payables to these
suppliers have neither been extinguished nor have the liabilities been significantly modified by these arrangements. The value of amounts
payable, invoice due dates and other terms and conditions applicable, from the Group\u2019s perspective, remain unaltered, with only the
ultimate payee being changed. At 31 December 2022, the value of amounts payable under the SCF programmes was \u00a3257 million (2021:
\u00a3251 million). The cash outflows in respect of these arrangements have been recognised within operating cash flows. Included in this
amount is \u00a3161 million (2021: \u00a3156 million) of leaf payables where the standard payment terms with the vendor is 150 days, consistent
with credit terms normally available in certain markets.
During 2022, following an investigation by the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) into alleged
violations of the Nigerian Competition and Consumer Protection Act and National Tobacco Control Act, a consent order was entered
into between the FCCPC and British American Tobacco (Holdings) Limited, British American Tobacco (Nigeria) Limited and British
American Tobacco Marketing (Nigeria) Limited in December 2022 terminating the investigation and associated proceedings. A penalty
equivalent to US$110\u00a0million has been accrued for and will be paid in Naira in instalments, among other measures.
Accrued charges and deferred income include \u00a320 million of deferred income (2021: \u00a31 million) relating to certain customer deposits in
advance of shipments and \u00a366 million (2021: \u00a358 million) in respect of interest payable mainly related to tax matters. FII GLO of \u00a3913
million (2021: \u00a3963 million) relates to receipts in 2015, in respect of the Franked Investment Income Government Litigation Order (note
10(b)). Amounts payable to related parties including associated undertakings are shown in note 30.
There is no material difference between the above amounts for trade and other payables and their fair value due to the short-term
duration of the majority of trade and other payables, as determined using discounted cash flow analysis.
Trade and other payables are predominantly denominated in the functional currencies of subsidiary undertakings with less than 7% in
other currencies (2021: less than 6% in other currencies).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory",
"language": "en",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
26 Financial instruments and risk management
Management of financial risks
One of the principal responsibilities of Treasury is to manage
the financial risks arising from the Group\u2019s underlying
operations. Specifically, Treasury manages, within an overall
policy framework set by the Group\u2019s Main Board and Corporate
Finance Committee (CFC), the Group\u2019s exposure to funding and
liquidity, interest rate, foreign exchange and counterparty risks.
The Group\u2019s treasury position is monitored by the CFC which
meets regularly throughout the year and is chaired by the Group
Finance Director. The approach is one of risk reduction within an
overall framework of delivering total shareholder return.
The Group defines capital as net debt (note 23) and equity (note 22).
There are no externally imposed capital requirements for the
Group. Group policies include a set of financing principles that
provide a framework within which the Group\u2019s capital base is
managed and, in particular, the policies on dividends (as a
percentage of long-term sustainable earnings) and share buy-back
are decided. The key objective of the financing principles is to
appropriately balance the interests of equity and debt holders in
driving an efficient financing mix for the Group. The Group\u2019s
average cost of debt in 2022 is 4.0% (2021: 3.5%).
The Group manages its financial risks in line with the classification
of its financial assets and liabilities in the Group\u2019s balance sheet
and related notes. The Group\u2019s management of specific risks is
dealt with as follows:
Liquidity risk
It is the policy of the Group to maximise financial flexibility
and minimise refinancing risk by issuing debt with a range of
maturities, generally matching the projected cash flows of the
Group and obtaining this financing from a wide range of sources.
The Group has a target 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. As at 31 December 2022, the
average centrally managed debt maturity was 9.9 years (2021: 10.1
years) and the highest proportion of centrally managed debt
maturing in a single rolling year was 18.6% (2021: 18.6%). Perpetual
hybrid bonds are treated as equity (note 22(d)) and therefore not
included within the debt maturity analysis.
The Group utilises cash pooling and zero balancing bank account
structures in addition to intercompany loans and borrowings to
mobilise cash efficiently within the Group. The key objectives of
Treasury in respect of cash and cash equivalents are to protect
their principal value, to concentrate cash at the centre, to minimise
the required debt issuance and to optimise the yield earned. The
amount of debt issued by the Group is determined by forecasting
the net debt requirement after the mobilisation of cash.
The Group continues to target a solid investment-grade credit
rating. Moody\u2019s and S&P's current ratings for the Group are Baa2
(stable outlook) and BBB+ (negative outlook), respectively. The
Group\u2019s strategy is to continue deleveraging @and is seeking to
recover to Baa1/BBB+ in the medium term@. The Group is
confident of its continued ability to successfully access the debt
capital markets for future refinancing requirements.
As part of its short-term cash management, the Group invests in a
range of cash and cash equivalents, including money market funds,
which are regarded as highly liquid and are not exposed to significant
changes in fair value. These are kept under continuous review as
described in the credit risk section below. At 31 December 2022,
the Group does not have any investments in money market funds
(2021: \u00a3nil).
As part of its working capital management, in certain countries,
the Group has entered into factoring arrangements and supply
chain financing arrangements. These are explained in further detail
in note 17 and note 25.
@Denotes phrase, paragraph or similar that does not form part of BAT's Annual Report on
Form 20-F as filed with the SEC.
Subsidiary companies are funded by share capital and retained
earnings, loans from the central finance companies on commercial
terms, or through local borrowings by the subsidiaries in appropriate
currencies to predominantly fund short- to medium-term working
capital requirements.
Available facilities in current year:
It is Group policy that short-term sources of funds (including
drawings under both the Group US$4\u00a0billion U.S. commercial
paper (U.S. CP) programme and the Group \u00a33\u00a0billion euro
commercial paper (ECP) programme) are backed by undrawn
committed lines of credit and cash. Commercial paper is issued
by B.A.T. International Finance p.l.c, B.A.T. Netherlands Finance B.V.
and B.A.T Capital Corporation and guaranteed by British American
Tobacco p.l.c. At 31 December 2022, commercial paper of \u00a327
million was outstanding (2021: \u00a3269 million). Cash flows relating to
commercial paper that have maturity periods of three months or
less are presented on a net basis in Group\u2019s cash flow statement.
At 31 December 2022, the Group had access to a \u00a35.69 billion
revolving credit facility. In February 2022, the Group exercised the
second of the one-year extension options.Therefore,
the\u00a0\u00a32.85\u00a0billion 364-day tranche was extended to March 2023 at
the reduced amount of \u00a32.7\u00a0billion and \u00a32.5\u00a0billion of the five-year
tranche was extended from March 2026 to March 2027 (with
\u00a33.0\u00a0billion of this tranche remaining available until March 2025 and
\u00a32.85 billion remaining available from March 2025 to March 2026).
The Group anticipates to refinance the \u00a32.7 billion 364-day tranche
in the first half of the 2023 financial year.
During 2022, the Group extended short-term bilateral facilities
totalling \u00a33.0 billion. As at 31 December 2022, \u00a3875 million was
drawn on a short-term basis with \u00a32.1 billion undrawn and still
available under such bilateral facilities. Cash flows relating to
bilateral facilities that have maturity periods of three months or less
are presented on a net basis in the Group\u2019s cash flow statement.
Issuance, drawdowns and repayments in current year:
\u2013In March 2022, the Group accessed the US dollar market under
its SEC Shelf Programme, raising a total of US$2.5\u00a0billion across
two tranches;
\u2013In May 2022, the Group repaid a \u20ac600\u00a0million bond at maturity;
\u2013In June 2022, the Group repaid US$419\u00a0million and \u00a3180\u00a0million
bonds at maturity;
\u2013In August 2022, the Group repaid US$750\u00a0million and
US$601\u00a0million bonds at maturity; and
\u2013In October 2022, the Group raised US$600\u00a0million in the US
dollar market under its SEC Shelf Programme.
In January 2023, the Group repaid a\u00a0 \u20ac750\u00a0million bond at maturity.
Available facilities in prior year:
At 31 December 2021, the Group had access to a \u00a35.85 billion
revolving credit facility. This facility was undrawn at
31 December 2021.
During 2021, the Group extended short-term bilateral facilities
totalling \u00a32.5 billion until March or April 2022, some with extension
options to extend for further periods. As at 31 December 2021,
\u00a3500 million was drawn on a short-term basis.
Issuance, drawdowns and repayments in prior year:
\u2013In February 2021, the Group repaid a \u20ac650\u00a0million bond at maturity;
\u2013In June 2021, the Group repaid \u00a3500\u00a0million of the \u00a31,929\u00a0million
term loan that has a maturity date in January 2022; the
remaining \u00a31,429\u00a0million was repaid in September 2021;
\u2013In July, August, September and November 2021, the Group repaid
\u00a3500\u00a0million, \u20ac1,100\u00a0million, CHF 400\u00a0million and \u20ac500\u00a0million of
bonds at maturity, respectively; and
The Group issued perpetual hybrid bonds totalling \u20ac2\u00a0billion in
September 2021. Please refer to note 22(d) for further details.
Currency risk
The Group is subject to exposure on the translation of the net
assets of foreign currency subsidiaries and associates into its
reporting currency, sterling. The Group\u2019s primary balance sheet
translation exposures are to the US dollar, Euro, Canadian dollar,
Australian dollar, Indian rupee, South African rand, Indonesian
rupiah, Danish krone, Brazilian real, Russian rouble, Singaporean
dollar and Swiss franc. These exposures are kept under continuous
review. The Group\u2019s policy on borrowings is to broadly match the
currency of these borrowings with the currency of cash flows
arising from the Group\u2019s underlying operations. Within this overall
policy, the Group aims to minimise all balance sheet translation
exposure where it is practicable and cost-effective to do so
through matching currency assets with currency borrowings. The
main objective of these policies is to protect shareholder value by
increasing certainty and minimising volatility in earnings per share.
At 31 December 2022, the currency profile of the Group\u2019s gross
debt, after taking into account derivative contracts, was 71% U.S.
dollar (2021: 68%), 13% euro (2021: 13%), 12% sterling (2021: 13%)
and 4% other currencies (2021: 6%).
The Group faces currency exposures arising from the translation
of profits earned in foreign currency subsidiaries and associates
and joint arrangements; these exposures are not normally hedged.
Exposures also arise from:
(i) foreign currency denominated trading transactions undertaken
by subsidiaries. These exposures comprise committed and highly
probable forecast sales and purchases, which are offset wherever
possible. The remaining exposures are hedged within the Treasury
policies and procedures with forward foreign exchange contracts
and options, which are designated as hedges of the foreign
exchange risk of the identified future transactions; and
(ii) forecast dividend flows from subsidiaries to the centre. To
ensure cash flow certainty, the Group enters into forward foreign
exchange contracts which are designated as net investment
hedges of the foreign exchange risk arising from the investments
in these subsidiaries.
IFRS 7 requires a sensitivity analysis that shows the impact on the
income statement and on items recognised directly in other
comprehensive income of hypothetical changes of exchange rates
in respect of non-functional currency financial assets and liabilities
held across the Group. All other variables are held constant
although, in practice, market rates rarely change in isolation.
Financial assets and liabilities held in the functional currency of the
Group\u2019s subsidiaries, as well as non-financial assets and liabilities
and translation risk, are not included in the analysis. The Group
considers a 10% strengthening or weakening of the functional
currency against the non-functional currency of its subsidiaries as
a reasonably possible change. The impact is calculated with
reference to the financial asset or liability held as at the year-end,
unless this is unrepresentative of the position during the year.
A 10% strengthening of functional currencies against non-
functional currencies would result in pre-tax profit being \u00a349 million
lower (2021: \u00a353 million lower; 2020: \u00a361 million lower) and items
recognised directly in other comprehensive income being \u00a3445
million higher (2021: \u00a3144 million higher; 2020: \u00a357 million higher). A
10% weakening of functional currencies against non-functional
currencies would result in pre-tax profit being \u00a360 million higher
(2021: \u00a365 million higher; 2020: \u00a374 million higher) and items
recognised directly in other comprehensive income being \u00a3543
million lower (2021: \u00a3177 million lower; 2020: \u00a370 million lower).
The exchange sensitivities on items recognised directly in other
comprehensive income relate to hedging of certain net asset
currency positions in the Group, as well as on cash flow hedges in
respect of future transactions, but do not include sensitivities in
respect of exchange on non-financial assets or liabilities.
Interest rate risk
The objectives of the Group\u2019s interest rate risk management policy
are to lessen the impact of adverse interest rate movements on
the earnings, cash flow and economic value of the Group.
Additional objectives are to minimise the cost of hedging and the
associated counterparty risk.
In order to manage its interest rate risk, the Group maintains both
floating rate and fixed rate debt. The Group sets targets (within
overall guidelines) for the desired ratio of floating to fixed rate debt
on a net basis (at least 50% fixed on a net basis in the short to
medium term) as a result of regular reviews of market conditions
and strategy by the Corporate Finance Committee and the board
of the main central finance company. Underlying borrowings are
arranged on both a fixed rate and a floating rate basis and, where
appropriate, the Group uses derivatives, primarily interest rate
swaps to vary the fixed and floating mix, or forward starting swaps
to manage the refinancing risk. The interest rate profile of liquid
assets included in net debt are considered to offset floating rate
debt and are taken into account in determining the net interest
rate exposure. At 31 December 2022, the relevant ratio of floating
to fixed rate borrowings after the impact of derivatives was 12:88
(2021: 18:82). On a net debt basis, after offsetting liquid assets, the
relevant ratio of floating to fixed rate borrowings was 3:97 (2021:
10:90). Excluding cash and other liquid assets in Canada, which are
subject to certain restrictions under CCAA protection, the ratio of
floating to fixed rate borrowings was 7:93 (2021: 13:87).
IFRS 7 requires a sensitivity analysis that shows the impact on the
income statement and on items recognised directly in other
comprehensive income of hypothetical changes of interest rates in
respect of financial assets and liabilities of the Group. All other
variables are held constant although, in practice, market rates
rarely change in isolation. For the purposes of this sensitivity
analysis, financial assets and liabilities with fixed interest rates are
not included. The Group considers a 100 basis point change in
interest rates a reasonably possible change except where rates are
less than 100 basis points. In these instances, it is assumed that
the interest rates increase by 100 basis points and decrease to
zero for the purpose of performing the sensitivity analysis. The
impact is calculated with reference to the financial asset or liability
held as at the year-end, unless this is unrepresentative of the
position during the year.
A 100 basis point increase in interest rates would result in pre-tax
profit being \u00a350 million lower (2021: \u00a344 million lower; 2020: \u00a331
million lower). A 100 basis point decrease in interest rates, or less
where applicable, would result in pre-tax profit being \u00a350 million
higher (2021: \u00a347 million higher; 2020: \u00a329 million higher). The
effect of these interest rate changes on items recognised directly
in other comprehensive income is not material in either year.
In accordance with the UK Financial Conduct Authority\u2019s
announcement on 27 July 2017, and following the decision taken by
global regulators in 2018 to replace Interbank Offered Rates with
alternative nearly risk-free rates, such benchmark rates were
expected to be largely discontinued after 2021. The IASB addressed
the effects of interest rate benchmark reform on financial
reporting, with two phases of Amendments to IFRS 9 Financial
Instruments (and other Standards) which the Group adopted in its
2019 and 2020 accounts, respectively, as explained in the
accounting policies (note 1). The impact on the Group\u2019s profit or
equity from the application of these amendments was not material.
In January 2021, the Group confirmed adherence to the ISDA 2020
IBOR Fallbacks Protocol as published by the International Swaps
and Derivatives Association, Inc. (ISDA) on 23 October 2020 (the
Protocol), ensuring that appropriate fallback rates can apply to
derivatives in the event of LIBOR discontinuation.
As at 31 December 2022, the Group had no outstanding floating
rate bonds using historical benchmark rates (2021: US$750\u00a0million
(\u00a3554\u00a0million)). The Group\u2019s syndicated revolving credit facility
(undrawn at 31 December 2022 and 2021) has historically had
references to USD London Interbank Offered Rate (''LIBOR''),
EURIBOR and GBP LIBOR. This facility includes\u00a0market standard
LIBOR replacement language, and with effect from June 2021 the
agreement has adopted SOFR and SONIA as the alternative
benchmark rates in respect of USD LIBOR and GBP LIBOR,
respectively.
Following announcements by the respective regulators, EURIBOR
is expected to continue for the foreseeable future, with USD LIBOR
rates potentially discontinued only after June 2023.
The Group is party to the ISDA fallback protocol and in January
2022, it automatically replaced the GBP LIBOR with economically
equivalent interest rate derivatives referencing SONIA on their
reset date. The four impacted derivatives (cross currency interest
rate swaps) with nominal values totalling \u20ac800\u00a0million
(\u00a3672\u00a0million) maturing in October 2023 are in fair value hedge
relationships which were indexed to GBP LIBOR interest rates. The
Group has updated the respective hedge documentation
accordingly since the uncertainty regarding the transition for these
four derivatives has ceased. The hedge relationships on these
derivatives continue with resulting ineffectiveness expected to be
immaterial.
Credit risk
The Group has no significant concentrations of customer credit
risk. Subsidiaries have policies in place requiring appropriate credit
checks on potential customers before sales commence. The
process for monitoring and managing credit risk once sales to
customers have been made varies depending on local practice in
the countries concerned.
Certain territories have bank guarantees, other guarantees or
credit insurance provided in the Group\u2019s favour in respect of Group
trade receivables, the issuance and terms of which are dependent
on local practices in the countries concerned. All derivatives are
subject to ISDA agreements or equivalent documentation.
Cash deposits and other financial instruments give rise to credit
risk on the amounts due from the related counterparties.
Generally, the Group aims to transact with counterparties with
strong investment grade credit ratings. However, the Group
recognises that due to the need to operate over a large geographic
footprint, this will not always be possible. Counterparty credit risk
is managed on a global basis by limiting the aggregate amount and
duration of exposure to any one counterparty, taking into account
its credit rating. The credit ratings of all counterparties are
reviewed regularly.
The Group ensures that it has sufficient counterparty credit
capacity of requisite quality to undertake all anticipated
transactions throughout its geographic footprint, while at the
same time ensuring that there is no geographic concentration in
the location of counterparties.
With the following exceptions, the maximum exposure to the
credit risk of financial assets at the balance sheet date is reflected
by the carrying values included in the Group\u2019s balance sheet. The
Group has entered into short-term risk participation agreements
in relation to certain leaf supply arrangements and the maximum
exposure under these would be \u00a390 million (2021: \u00a389 million). In
addition, the Group has entered into a guarantee arrangement to
support a short-term bank credit facility with a supply chain
partner. The maximum exposure under the arrangement would be
\u00a31 million (2021: \u00a31 million).
Price risk
The Group is exposed to price risk on investments held by the
Group, which are included in investments held at fair value on the
consolidated balance sheet, but the quantum of such is not
material.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzgzL2ZyYWc6NjUxZjZhNWM4ZTVkNGQzY2JkMDI1Njg1YWQ3YzczOTMvdGV4dHJlZ2lvbjo2NTFmNmE1YzhlNWQ0ZDNjYmQwMjU2ODVhZDdjNzM5M181NjA3NTA5MzEwOTQxNA_eafe833b-f7b2-474d-97d8-46347923fa53": {
"value": "
Liquidity risk
It is the policy of the Group to maximise financial flexibility
and minimise refinancing risk by issuing debt with a range of
maturities, generally matching the projected cash flows of the
Group and obtaining this financing from a wide range of sources.
The Group has a target 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. As at 31 December 2022, the
average centrally managed debt maturity was 9.9 years (2021: 10.1
years) and the highest proportion of centrally managed debt
maturing in a single rolling year was 18.6% (2021: 18.6%). Perpetual
hybrid bonds are treated as equity (note 22(d)) and therefore not
included within the debt maturity analysis.
The Group utilises cash pooling and zero balancing bank account
structures in addition to intercompany loans and borrowings to
mobilise cash efficiently within the Group. The key objectives of
Treasury in respect of cash and cash equivalents are to protect
their principal value, to concentrate cash at the centre, to minimise
the required debt issuance and to optimise the yield earned. The
amount of debt issued by the Group is determined by forecasting
the net debt requirement after the mobilisation of cash.
The Group continues to target a solid investment-grade credit
rating. Moody\u2019s and S&P's current ratings for the Group are Baa2
(stable outlook) and BBB+ (negative outlook), respectively. The
Group\u2019s strategy is to continue deleveraging @and is seeking to
recover to Baa1/BBB+ in the medium term@. The Group is
confident of its continued ability to successfully access the debt
capital markets for future refinancing requirements.
As part of its short-term cash management, the Group invests in a
range of cash and cash equivalents, including money market funds,
which are regarded as highly liquid and are not exposed to significant
changes in fair value. These are kept under continuous review as
described in the credit risk section below. At 31 December 2022,
the Group does not have any investments in money market funds
(2021: \u00a3nil).
As part of its working capital management, in certain countries,
the Group has entered into factoring arrangements and supply
chain financing arrangements. These are explained in further detail
in note 17 and note 25.
@Denotes phrase, paragraph or similar that does not form part of BAT's Annual Report on
Form 20-F as filed with the SEC.
Subsidiary companies are funded by share capital and retained
earnings, loans from the central finance companies on commercial
terms, or through local borrowings by the subsidiaries in appropriate
currencies to predominantly fund short- to medium-term working
capital requirements.
Available facilities in current year:
It is Group policy that short-term sources of funds (including
drawings under both the Group US$4\u00a0billion U.S. commercial
paper (U.S. CP) programme and the Group \u00a33\u00a0billion euro
commercial paper (ECP) programme) are backed by undrawn
committed lines of credit and cash. Commercial paper is issued
by B.A.T. International Finance p.l.c, B.A.T. Netherlands Finance B.V.
and B.A.T Capital Corporation and guaranteed by British American
Tobacco p.l.c. At 31 December 2022, commercial paper of \u00a327
million was outstanding (2021: \u00a3269 million). Cash flows relating to
commercial paper that have maturity periods of three months or
less are presented on a net basis in Group\u2019s cash flow statement.
At 31 December 2022, the Group had access to a \u00a35.69 billion
revolving credit facility. In February 2022, the Group exercised the
second of the one-year extension options.Therefore,
the\u00a0\u00a32.85\u00a0billion 364-day tranche was extended to March 2023 at
the reduced amount of \u00a32.7\u00a0billion and \u00a32.5\u00a0billion of the five-year
tranche was extended from March 2026 to March 2027 (with
\u00a33.0\u00a0billion of this tranche remaining available until March 2025 and
\u00a32.85 billion remaining available from March 2025 to March 2026).
The Group anticipates to refinance the \u00a32.7 billion 364-day tranche
in the first half of the 2023 financial year.
During 2022, the Group extended short-term bilateral facilities
totalling \u00a33.0 billion. As at 31 December 2022, \u00a3875 million was
drawn on a short-term basis with \u00a32.1 billion undrawn and still
available under such bilateral facilities. Cash flows relating to
bilateral facilities that have maturity periods of three months or less
are presented on a net basis in the Group\u2019s cash flow statement.
Issuance, drawdowns and repayments in current year:
\u2013In March 2022, the Group accessed the US dollar market under
its SEC Shelf Programme, raising a total of US$2.5\u00a0billion across
two tranches;
\u2013In May 2022, the Group repaid a \u20ac600\u00a0million bond at maturity;
\u2013In June 2022, the Group repaid US$419\u00a0million and \u00a3180\u00a0million
bonds at maturity;
\u2013In August 2022, the Group repaid US$750\u00a0million and
US$601\u00a0million bonds at maturity; and
\u2013In October 2022, the Group raised US$600\u00a0million in the US
dollar market under its SEC Shelf Programme.
In January 2023, the Group repaid a\u00a0 \u20ac750\u00a0million bond at maturity.
Available facilities in prior year:
At 31 December 2021, the Group had access to a \u00a35.85 billion
revolving credit facility. This facility was undrawn at
31 December 2021.
During 2021, the Group extended short-term bilateral facilities
totalling \u00a32.5 billion until March or April 2022, some with extension
options to extend for further periods. As at 31 December 2021,
\u00a3500 million was drawn on a short-term basis.
Issuance, drawdowns and repayments in prior year:
\u2013In February 2021, the Group repaid a \u20ac650\u00a0million bond at maturity;
\u2013In June 2021, the Group repaid \u00a3500\u00a0million of the \u00a31,929\u00a0million
term loan that has a maturity date in January 2022; the
remaining \u00a31,429\u00a0million was repaid in September 2021;
\u2013In July, August, September and November 2021, the Group repaid
\u00a3500\u00a0million, \u20ac1,100\u00a0million, CHF 400\u00a0million and \u20ac500\u00a0million of
bonds at maturity, respectively; and
The Group issued perpetual hybrid bonds totalling \u20ac2\u00a0billion in
September 2021. Please refer to note 22(d) for further details.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzgzL2ZyYWc6NjUxZjZhNWM4ZTVkNGQzY2JkMDI1Njg1YWQ3YzczOTMvdGV4dHJlZ2lvbjo2NTFmNmE1YzhlNWQ0ZDNjYmQwMjU2ODVhZDdjNzM5M181MzMyNjMxNDA1NjM0Nw_ec5bee62-4087-47a4-b8c4-fd1b20968fb6": {
"value": "
Currency risk
The Group is subject to exposure on the translation of the net
assets of foreign currency subsidiaries and associates into its
reporting currency, sterling. The Group\u2019s primary balance sheet
translation exposures are to the US dollar, Euro, Canadian dollar,
Australian dollar, Indian rupee, South African rand, Indonesian
rupiah, Danish krone, Brazilian real, Russian rouble, Singaporean
dollar and Swiss franc. These exposures are kept under continuous
review. The Group\u2019s policy on borrowings is to broadly match the
currency of these borrowings with the currency of cash flows
arising from the Group\u2019s underlying operations. Within this overall
policy, the Group aims to minimise all balance sheet translation
exposure where it is practicable and cost-effective to do so
through matching currency assets with currency borrowings. The
main objective of these policies is to protect shareholder value by
increasing certainty and minimising volatility in earnings per share.
At 31 December 2022, the currency profile of the Group\u2019s gross
debt, after taking into account derivative contracts, was 71% U.S.
dollar (2021: 68%), 13% euro (2021: 13%), 12% sterling (2021: 13%)
and 4% other currencies (2021: 6%).
The Group faces currency exposures arising from the translation
of profits earned in foreign currency subsidiaries and associates
and joint arrangements; these exposures are not normally hedged.
Exposures also arise from:
(i) foreign currency denominated trading transactions undertaken
by subsidiaries. These exposures comprise committed and highly
probable forecast sales and purchases, which are offset wherever
possible. The remaining exposures are hedged within the Treasury
policies and procedures with forward foreign exchange contracts
and options, which are designated as hedges of the foreign
exchange risk of the identified future transactions; and
(ii) forecast dividend flows from subsidiaries to the centre. To
ensure cash flow certainty, the Group enters into forward foreign
exchange contracts which are designated as net investment
hedges of the foreign exchange risk arising from the investments
in these subsidiaries.
IFRS 7 requires a sensitivity analysis that shows the impact on the
income statement and on items recognised directly in other
comprehensive income of hypothetical changes of exchange rates
in respect of non-functional currency financial assets and liabilities
held across the Group. All other variables are held constant
although, in practice, market rates rarely change in isolation.
Financial assets and liabilities held in the functional currency of the
Group\u2019s subsidiaries, as well as non-financial assets and liabilities
and translation risk, are not included in the analysis. The Group
considers a 10% strengthening or weakening of the functional
currency against the non-functional currency of its subsidiaries as
a reasonably possible change. The impact is calculated with
reference to the financial asset or liability held as at the year-end,
unless this is unrepresentative of the position during the year.
A 10% strengthening of functional currencies against non-
functional currencies would result in pre-tax profit being \u00a349 million
lower (2021: \u00a353 million lower; 2020: \u00a361 million lower) and items
recognised directly in other comprehensive income being \u00a3445
million higher (2021: \u00a3144 million higher; 2020: \u00a357 million higher). A
10% weakening of functional currencies against non-functional
currencies would result in pre-tax profit being \u00a360 million higher
(2021: \u00a365 million higher; 2020: \u00a374 million higher) and items
recognised directly in other comprehensive income being \u00a3543
million lower (2021: \u00a3177 million lower; 2020: \u00a370 million lower).
The exchange sensitivities on items recognised directly in other
comprehensive income relate to hedging of certain net asset
currency positions in the Group, as well as on cash flow hedges in
respect of future transactions, but do not include sensitivities in
respect of exchange on non-financial assets or liabilities.
Interest rate risk
The objectives of the Group\u2019s interest rate risk management policy
are to lessen the impact of adverse interest rate movements on
the earnings, cash flow and economic value of the Group.
Additional objectives are to minimise the cost of hedging and the
associated counterparty risk.
In order to manage its interest rate risk, the Group maintains both
floating rate and fixed rate debt. The Group sets targets (within
overall guidelines) for the desired ratio of floating to fixed rate debt
on a net basis (at least 50% fixed on a net basis in the short to
medium term) as a result of regular reviews of market conditions
and strategy by the Corporate Finance Committee and the board
of the main central finance company. Underlying borrowings are
arranged on both a fixed rate and a floating rate basis and, where
appropriate, the Group uses derivatives, primarily interest rate
swaps to vary the fixed and floating mix, or forward starting swaps
to manage the refinancing risk. The interest rate profile of liquid
assets included in net debt are considered to offset floating rate
debt and are taken into account in determining the net interest
rate exposure. At 31 December 2022, the relevant ratio of floating
to fixed rate borrowings after the impact of derivatives was 12:88
(2021: 18:82). On a net debt basis, after offsetting liquid assets, the
relevant ratio of floating to fixed rate borrowings was 3:97 (2021:
10:90). Excluding cash and other liquid assets in Canada, which are
subject to certain restrictions under CCAA protection, the ratio of
floating to fixed rate borrowings was 7:93 (2021: 13:87).
IFRS 7 requires a sensitivity analysis that shows the impact on the
income statement and on items recognised directly in other
comprehensive income of hypothetical changes of interest rates in
respect of financial assets and liabilities of the Group. All other
variables are held constant although, in practice, market rates
rarely change in isolation. For the purposes of this sensitivity
analysis, financial assets and liabilities with fixed interest rates are
not included. The Group considers a 100 basis point change in
interest rates a reasonably possible change except where rates are
less than 100 basis points. In these instances, it is assumed that
the interest rates increase by 100 basis points and decrease to
zero for the purpose of performing the sensitivity analysis. The
impact is calculated with reference to the financial asset or liability
held as at the year-end, unless this is unrepresentative of the
position during the year.
A 100 basis point increase in interest rates would result in pre-tax
profit being \u00a350 million lower (2021: \u00a344 million lower; 2020: \u00a331
million lower). A 100 basis point decrease in interest rates, or less
where applicable, would result in pre-tax profit being \u00a350 million
higher (2021: \u00a347 million higher; 2020: \u00a329 million higher). The
effect of these interest rate changes on items recognised directly
in other comprehensive income is not material in either year.
In accordance with the UK Financial Conduct Authority\u2019s
announcement on 27 July 2017, and following the decision taken by
global regulators in 2018 to replace Interbank Offered Rates with
alternative nearly risk-free rates, such benchmark rates were
expected to be largely discontinued after 2021. The IASB addressed
the effects of interest rate benchmark reform on financial
reporting, with two phases of Amendments to IFRS 9 Financial
Instruments (and other Standards) which the Group adopted in its
2019 and 2020 accounts, respectively, as explained in the
accounting policies (note 1). The impact on the Group\u2019s profit or
equity from the application of these amendments was not material.
In January 2021, the Group confirmed adherence to the ISDA 2020
IBOR Fallbacks Protocol as published by the International Swaps
and Derivatives Association, Inc. (ISDA) on 23 October 2020 (the
Protocol), ensuring that appropriate fallback rates can apply to
derivatives in the event of LIBOR discontinuation.
As at 31 December 2022, the Group had no outstanding floating
rate bonds using historical benchmark rates (2021: US$750\u00a0million
(\u00a3554\u00a0million)). The Group\u2019s syndicated revolving credit facility
(undrawn at 31 December 2022 and 2021) has historically had
references to USD London Interbank Offered Rate (''LIBOR''),
EURIBOR and GBP LIBOR. This facility includes\u00a0market standard
LIBOR replacement language, and with effect from June 2021 the
agreement has adopted SOFR and SONIA as the alternative
benchmark rates in respect of USD LIBOR and GBP LIBOR,
respectively.
Following announcements by the respective regulators, EURIBOR
is expected to continue for the foreseeable future, with USD LIBOR
rates potentially discontinued only after June 2023.
The Group is party to the ISDA fallback protocol and in January
2022, it automatically replaced the GBP LIBOR with economically
equivalent interest rate derivatives referencing SONIA on their
reset date. The four impacted derivatives (cross currency interest
rate swaps) with nominal values totalling \u20ac800\u00a0million
(\u00a3672\u00a0million) maturing in October 2023 are in fair value hedge
relationships which were indexed to GBP LIBOR interest rates. The
Group has updated the respective hedge documentation
accordingly since the uncertainty regarding the transition for these
four derivatives has ceased. The hedge relationships on these
derivatives continue with resulting ineffectiveness expected to be
immaterial.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfMarketRiskExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
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"value": "
Credit risk
The Group has no significant concentrations of customer credit
risk. Subsidiaries have policies in place requiring appropriate credit
checks on potential customers before sales commence. The
process for monitoring and managing credit risk once sales to
customers have been made varies depending on local practice in
the countries concerned.
Certain territories have bank guarantees, other guarantees or
credit insurance provided in the Group\u2019s favour in respect of Group
trade receivables, the issuance and terms of which are dependent
on local practices in the countries concerned. All derivatives are
subject to ISDA agreements or equivalent documentation.
Cash deposits and other financial instruments give rise to credit
risk on the amounts due from the related counterparties.
Generally, the Group aims to transact with counterparties with
strong investment grade credit ratings. However, the Group
recognises that due to the need to operate over a large geographic
footprint, this will not always be possible. Counterparty credit risk
is managed on a global basis by limiting the aggregate amount and
duration of exposure to any one counterparty, taking into account
its credit rating. The credit ratings of all counterparties are
reviewed regularly.
The Group ensures that it has sufficient counterparty credit
capacity of requisite quality to undertake all anticipated
transactions throughout its geographic footprint, while at the
same time ensuring that there is no geographic concentration in
the location of counterparties.
With the following exceptions, the maximum exposure to the
credit risk of financial assets at the balance sheet date is reflected
by the carrying values included in the Group\u2019s balance sheet. The
Group has entered into short-term risk participation agreements
in relation to certain leaf supply arrangements and the maximum
exposure under these would be \u00a390 million (2021: \u00a389 million). In
addition, the Group has entered into a guarantee arrangement to
support a short-term bank credit facility with a supply chain
partner. The maximum exposure under the arrangement would be
\u00a31 million (2021: \u00a31 million).",
"dimensions": {
"concept": "ifrs-full:DisclosureOfCreditRiskExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzgzL2ZyYWc6NjUxZjZhNWM4ZTVkNGQzY2JkMDI1Njg1YWQ3YzczOTMvdGV4dHJlZ2lvbjo2NTFmNmE1YzhlNWQ0ZDNjYmQwMjU2ODVhZDdjNzM5M185MTgwOTIyMTAyODUxNA_87324c6a-b0c9-4ce4-9caf-5ccb7f482b7c": {
"value": "
Fair value estimation
The fair values of financial assets and liabilities with maturities of
less than one year, other than derivatives, are assumed to
approximate their book values. For other financial instruments
which are measured at fair value in the balance sheet, the basis for
fair values is described below.
Fair value hierarchy
In accordance with IFRS 13 classification hierarchy, the following table presents the Group\u2019s financial assets and liabilities that are
measured at fair value:
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Investment held at fair value | | | | | | | | | | |
| | | | | | | | | | |
\u2013 interest rate swaps | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | |
\u2013 forward foreign currency contracts | | | | | | | | | | |
| | | | | | | | | | |
Liabilities at fair value | | | | | | | | | | |
| | | | | | | | | | |
\u2013 interest rate swaps | | | | | | | | | | |
\u2013 cross-currency swaps | | | | | | | | | | |
\u2013 forward foreign currency contracts | | | | | | | | | | |
Liabilities at fair value | | | | | | | | | | |
board and will account for the investment as an associate. The Group\u2019s investment was allocated against the Group\u2019s share of Sanity Group\u2019s net
assets, including the recognition of \u00a34\u00a0million of intangibles, and goodwill of \u00a328\u00a0million, which represents a strategic premium in
expectation of the legalisation of cannabis in Germany and elsewhere in Europe.
In November 2022, the Group announced that it had invested in Charlotte\u2019s Web Holdings, Inc. (Charlotte\u2019s Web), via a convertible
debenture of \u00a348\u00a0million. Charlotte's Web is based in Colorado, USA, listed on the Toronto Stock Exchange, and holds a prominent
position in innovative hemp extract wellness products across major retail channels, including food/drug/mass retail, and natural grocery
and vitamin retailers. Their product formats include tinctures, capsules, chews and topicals. The debenture is currently convertible into a
non-controlling equity stake in Charlotte\u2019s Web of approximately 19.9% and is convertible at BAT\u2019s discretion. Given that the nature of the
investment as a convertible loan note does not give the Group any current right to a share of the earnings or net assets of the investee,
despite the ability to appoint directors, the investment will be recognised at fair value through profit and loss with fair value changes in
the investment recognised in net finance costs. On conversion of the loan note, the Group will equity account for its investment.
During 2022, the Group increased its ownership of a wholesale producer and distributor operating in the agriculture sector based in
Uzbekistan, FE \u201cSamfruit\u201d JSC by 2.8% to 45.4%, for \u00a31\u00a0million. During 2021, the ownership was increased by 4%, for \u00a31\u00a0million and in
2020, by 28.4%, for \u00a35\u00a0million. The Group accounts for the investment as an associate.
In addition, during 2022, the Group made a non-controlling investment in Steady State LLC, a U.S. based cGMP certified manufacturer
and distributor of cannabinoid ingredients, food products and nutraceuticals, for \u00a34\u00a0million. The Group accounts for the investment as an
associate.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl8xMzk5L2ZyYWc6YWNiZmY5YmE4ZDBlNGIwMmIzNTJmZDY1MTVhNDMxNWUvdGV4dHJlZ2lvbjphY2JmZjliYThkMGU0YjAyYjM1MmZkNjUxNWE0MzE1ZV81Mzg3NjA2OTc4MzE5NA_a7709c9b-c882-4da1-a29e-7c9c145d6982": {
"value": "
(d) Assets held for sale and business disposals
(i) BAT Russia
On 11 March 2022, the Group announced the intention to transfer its Russian business in full compliance with international and local laws.
The Group has two subsidiaries in Russia (BAT Russia), being JSC British American Tobacco-SPb and JSC International Tobacco
Marketing Services (ITMS). In addition, the Group\u2019s subsidiary in Belarus, International Tobacco Marketing Services BY, will form part
of the transaction. Upon completion, it is intended that the Group will no longer have a presence in Russia (or Belarus).
It is intended that, as a result of a potential sale of its shares to an acquirer, the Group will have neither voting rights nor the ability or
means to direct day-to-day activities, appoint management, or make business decisions. Since the Group will not own any shares in the
transferred businesses, and is not providing any financing to the proposed buyer, the Group will not have any exposure to returns from
the business, having no rights to dividends, royalties or amendments to the agreed-upon consideration to take account of post-disposal
trading. Consequently, management have classified the assets and liabilities of these entities as a disposal group in accordance with
IFRS 5.
At 30 June 2022, \u00a3387\u00a0million of property, plant and equipment and other non-current assets, \u00a3696\u00a0million of trade and other receivables,
\u00a3240\u00a0million of cash and cash equivalents and \u00a3144\u00a0million of other current assets principally relating to inventories, were classified as
held-for-sale in respect of this anticipated disposal and presented as such on the balance sheet at an estimated fair value less costs to
sell. In addition, \u00a311\u00a0million of borrowings and \u00a3528\u00a0million of trade creditors and other current liabilities were also classified as held-for-
sale. Impairment charges and associated costs of \u00a3957\u00a0million were recognised in the Income Statement and were treated as a non-
cash, adjusting item. The assets and liabilities recognised as held-for-sale, as at 30 June 2022, and the subsequent impairment charge,
did not include Belarus.
At 31 December 2022, \u00a3281 million of property, plant and equipment and other non-current assets, \u00a3474 million of trade and other
receivables, \u00a3368 million of cash and cash equivalents and \u00a3181 million of other current assets principally relating to inventories, have
been similarly classified as held-for-sale and presented as such on the balance sheet at an estimated fair value less costs to sell. In
addition, \u00a316 million of borrowings and \u00a3412 million of trade creditors and other current liabilities have been classified as held-for-sale at
31 December 2022. Impairment charges of \u00a3554 million and associated costs of \u00a358 million have been recognised in the Income
Statement as adjusting items.
An estimated charge of \u00a3295 million in respect of foreign exchange previously recognised in other comprehensive income will be
reclassified to the income statement on completion of the transaction as has been shown as a separate amount within Group reserves.
At the date of approval of these accounts, no definitive agreement to transfer the shares in these subsidiaries had been entered into,
with no final consideration agreed. The assessment of the recoverable value (fair value less costs to sell) at 30 June and 31 December
2022 has taken into account a range of internal assumptions, including those regarding the likely consideration for the sale, the impact,
extent and duration of sanctions, the likelihood of consideration being significantly deferred and ongoing macro-economic
developments, including the impact of inflation and interest rates. All assumptions are based on current expectations and are subject to
a very high degree of volatility and uncertainty and therefore may change up until the final value can be determined, based on an actual
transaction.
The following is a reconciliation between the total assets available for sale and their estimated recoverable value (fair value less costs to
sell):
| |
| |
Total assets held-for-sale1 | |
Impairment of non-current assets held-for-sale - Russia and Belarus | |
| |
Excess impairment beyond non-current assets held-for-sale - Russia and Belarus | |
| |
Share-based payment liability
The Group issues to certain employees cash-settled share-based payments that require the Group to pay the intrinsic value of these
share-based payments to the employee at the date of exercise. The Group has recorded liabilities in respect of vested and unvested
grants at the end of 2022 and 2021:
As at 31 December 2022, the Group has 8,960,000 shares (2021: 9,891,000 shares) outstanding which includes 1,749,762 shares (2021:
2,650,364 shares) which are related to Reynolds American LTIP awards from which nil shares (2021: nil shares) are exercisable at the end
of the year.
The weighted average British American Tobacco p.l.c. share price at the date of exercise for share options exercised during the period
was \u00a332.84 (2021: \u00a327.67; 2020: \u00a329.37) for equity-settled and \u00a333.01 (2021: \u00a327.59; 2020: \u00a328.68) for cash-settled options.
The weighted average British American Tobacco p.l.c. share price for ADS on the New York Stock Exchange at the date of exercise for
share options exercised during the period relating to equity-settled Reynolds American LTIP awards was US$38.37 (2021: US$35.93;
2020: US$40.04).
The outstanding shares for the year ended 31 December 2022 had a weighted average remaining contractual life of 1.8 years (2021: 3.7
years; 2020: 8.1 years) for the equity-settled scheme, 1.8 years for Reynolds American equity-settled scheme (2021: 1.70 years; 2020: 1.72
years) and 1.7 years (2021: 4.1 years; 2020: 8.1 years) for the cash-settled share-based payment arrangements.
(b) Deferred Share Bonus Scheme
Details of the movements for the equity- and cash-settled DSBS scheme during the years ended 31 December 2022 and 31 December
2021, were as follows:
| | | | | |
| | | | | |
| Equity-settled Number of options in thousands | Cash-settled Number of options in thousands | | Equity-settled Number of options in thousands | Cash-settled Number of options in thousands |
Outstanding at start of year | | | | | |
Granted during the period | | | | | |
Exercised during the period | | | | | |
Forfeited during the period | | | | | |
Outstanding at end of year | | | | | |
Exercisable at end of year | | | | | |
The weighted average British American Tobacco p.l.c. share price at the date of exercise for share options exercised during the financial
year was \u00a332.20 (2021: \u00a327.58; 2020: \u00a328.08) for equity-settled and \u00a332.50 (2021: \u00a327.70; 2020: \u00a328.06) for cash-settled options.
The outstanding shares for the year ended 31 December 2022 had a weighted average remaining contractual life of 1.3 years (2021: 1.3
years; 2020: 1.4 years) for the equity-settled scheme and 1.1 years (2021: 1.3 years; 2020: 1.4 years) for the cash-settled scheme.
Valuation assumptions
Assumptions used in the Black-Scholes models to determine the fair value of share options at grant date were as follows:
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Average expected term to exercise (years) | | | | | |
| | | | | |
Expected dividend yield (%) | | | | | |
Share price at date of grant (\u00a3) | | | | | |
Fair value at grant date (\u00a3)* | | | | | |
Fair value at grant date (\u00a3)* - Management Board | | | | | |
Note:
*Where two figures have been quoted for the Long-Term Incentive Plan, the numbers relate to PSP and RSP awards, respectively.
Market condition features were incorporated into the Monte-Carlo models for the total shareholder return elements of the LTIP - PSP, in
determining fair value at grant date. Assumptions used in these models were as follows:
| | |
| | |
Average share price volatility FMCG comparator group (%) | | |
Average correlation FMCG comparator group (%) | | |
Fair values determined from the Black-Scholes and Monte-Carlo models use assumptions revised at the end of each reporting period for
cash-settled share-based payment arrangements.
The expected British American Tobacco p.l.c. share price volatility was determined taking account of the return index (the share price
index plus the dividend reinvested) over a five-year period. The FMCG share price volatility and correlation was also determined over the
same periods. The average expected term to exercise used in the models has been adjusted, based on management\u2019s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural conditions, forfeiture and historical experience.
The risk-free rate has been determined from market yield curves for government gilts with outstanding terms equal to the average
expected term to exercise for each relevant grant. The expected dividend yield was determined by calculating the yield from the last two
declared dividends divided by the grant share price.
In addition to these valuation assumptions, LTIP awards, excluding RSP, contain earnings per share performance conditions. As these are
non-market performance conditions they are not included in the determination of fair value of share options at the grant date, however,
they are used to estimate the number of awards expected to vest. This pay-out calculation is based on expectations published in
analysts\u2019 forecasts.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl82NC9mcmFnOmE3MjljODA1OThhZTQ5YWRhNTc1MTYzZWM3Y2IyNGE1L3RleHRyZWdpb246YTcyOWM4MDU5OGFlNDlhZGE1NzUxNjNlYzdjYjI0YTVfNTM4NzYwNjk3NjMwMjQ_1c5f1d6c-8b90-4fba-b560-d66264f2cc59": {
"value": "
29 Group employees
The average number of persons employed by the Group and its associates during the year, including Directors, was 77,951 (2021: 82,868).
Included within the employee numbers for Europe are certain employees in the UK in respect of central functions. Some of the costs of
these employees are allocated or charged to the various regions and markets in the Group.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl82Ny9mcmFnOmRhZTA3OGE3ZTkwZTQyODRhOTQwZmY3MGYyYTc2OWI0L3RleHRyZWdpb246ZGFlMDc4YTdlOTBlNDI4NGE5NDBmZjcwZjJhNzY5YjRfNTM4NzYwNjk3NzgxNDY_d9693e3a-5f14-43f5-b1ed-29102d68bdff": {
"value": "
30 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\u2019s share of
dividends from associates, included in other net income in the table below, was \u00a3438 million (2021: \u00a3392 million; 2020: \u00a3394 million).
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Amounts receivable at 31 December | | | |
Amounts payable at 31 December | | | |
The following table, which is not part of IAS 24 disclosures, shows the aggregate emoluments of the Directors of the Company.
| | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
Salary; fees; benefits; incentives | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
\u2013 short-term incentives | | | | | | | | | | | | | | | |
\u2013 long-term incentives | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Pension; other emoluments | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
The following table, which is not part of IAS 24 disclosures, shows the aggregate emoluments of the Directors of the Company.
| | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
Salary; fees; benefits; incentives | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
\u2013 short-term incentives | | | | | | | | | | | | | | | |
\u2013 long-term incentives | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Pension; other emoluments | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Subsidiaries subject to restrictions:
As a result of the Group\u2019s Canadian subsidiary, Imperial Tobacco Canada (ITCAN), entering CCAA protection, the assets of ITCAN
are subject to restrictions. The table below summarises the assets and liabilities of ITCAN:
| | |
Summarised financial information | | |
| | |
| | |
| | |
| | |
| | |
Under the terms of CCAA, the court has appointed FTI Consulting Canada Inc. to act as a monitor. This monitor has no operational input
and is not involved in the management of the business. The Group considers that ITCAN continues to meet the requirements of IFRS 10
Consolidated Financial Statements, and, until such requirements are not met, the Group will continue to consolidate the results of ITCAN.
Whilst the Group continues to control the operations of its Canadian subsidiary, there are restrictions over the ability to access or use
certain assets including the ability to remit dividends. Included in non-current assets for 2022 and 2021 is goodwill of \u00a32.5 billion subject
to impairment reviews (note 12). Included in current liabilities are trade and other payables of \u00a3391 million (2021: \u00a3341 million), the majority
of which are amounts payable in respect of duties and excise. A breakdown of current assets has been provided below.
| | |
| | |
Cash and cash equivalents* | | |
| | |
Investments held at fair value | | |
| | |
| | |
Note:
*Cash and cash equivalents above include \u00a31,411 million (2021: \u00a31,024 million) of restricted cash and cash equivalents. The Group defines restricted cash and cash equivalents as where
there are significant restrictions on its ability to access or use the assets and settle the liabilities of the Group, but excludes cash and cash equivalents where there are also outstanding
local currency borrowings or where there is an outstanding excise liability. In addition, dividends payable would also be excluded from restricted cash and cash equivalents if the dividend
has been approved by the necessary regulatory channels.
Refer to note 31 for information on the Quebec Class Actions.
Other shareholdings
At 31 December 2022, the Group holds almost 100% (2021: 99%; 2020: 92%) of the equity shares of PT Bentoel Internasional Investama
Tbk (Bentoel). Between 2011 and 2021, the Group was party to a total return swap on approximately 7% of Bentoel\u2019s issued capital. While
the Group did not have legal ownership of these shares in this period, it retained the risks and rewards associated with them which
resulted in the Group continuing to recognise an effective interest in 99% of Bentoel\u2019s net assets and results. In 2021, the Group
terminated the total return swap as part of its intention to delist from the Indonesia Stock Exchange and go private by conducting a
Voluntary Tender Offer (VTO), as a result of which the Group acquired 0.2% additional shares at a cost of \u00a34\u00a0million. Shares from over one
thousand individual shareholders who could not be contacted are in the process of being transferred to a courts-approved Public
Trustee. When this is complete, approvals will be sought from the relevant authorities to delist the company.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfConsolidatedAndSeparateFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:213800FKA5MF17RJKT63",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"id3VybDovL2RvY3MudjEvZG9jOmQ3MzllYjhhMDk0MzQ2ZTRhMWRkOTk4OWM4NjIwNThmL3NlYzpkNzM5ZWI4YTA5NDM0NmU0YTFkZDk5ODljODYyMDU4Zl83My9mcmFnOjlkM2Y3YjI2NWVlYzQ0Zjg5ODlhMTY5ZmZjM2I0MGRlL3RleHRyZWdpb246OWQzZjdiMjY1ZWVjNDRmODk4OWExNjlmZmMzYjQwZGVfNTM4NzYwNjk3ODY3Mjc_16ded01a-b649-4ee1-b870-194e1c5ece66": {
"value": "
33 Summarised financial information
The following summarised financial information is required by the rules of the Securities and Exchange Commission and has been
prepared as a requirement of the Regulation S-X 3-10 in respect of the guarantees of:
\u2013US$11.00\u00a0billion of outstanding bonds issued by B.A.T Capital Corporation (BATCAP) in connection with the acquisition of Reynolds
American Inc. (Reynolds American), including registered bonds issued in exchange for the initially issued bonds (the 2017 Bonds);
\u2013US$12.15\u00a0billion of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on July 17,
2019, and US$0.6\u00a0billion of outstanding bonds issued by BATCAP pursuant to the Shelf Registration Statement on Form F-3 filed on
July 1, 2022 pursuant to which BATCAP or BATIF may issue an indefinite amount of debt securities; and
\u2013US$2.50\u00a0billion of outstanding bonds issued by BATIF pursuant to the Shelf Registration Statement on Form F-3 filed on July 17, 2019,
pursuant to which BATCAP or BATIF may issue an indefinite amount of debt securities.
As of July 28, 2020, all relevant Group entities suspended their reporting obligations with respect to the US$7.7\u00a0billion (2022:
US$7.7\u00a0billion) of Reynolds American unsecured notes and US$40.9\u00a0million (2022: US$40.9\u00a0million) of Lorillard unsecured notes. As such,
no summarised financial information is provided with respect to these securities.
As described below, Reynolds American is a subsidiary guarantor of all outstanding series of BATCAP and BATIF bonds. Under the terms
of the indentures governing such notes, any subsidiary guarantor (including Reynolds American) other than BATCAP or BATIF, as
applicable, BATNF and BATHTN, will automatically and unconditionally be released from all obligations under its guarantee, and such
guarantee shall thereupon terminate and be discharged and of no further force or effect, in the event that (1) its guarantee of all then
outstanding notes issued under the Group\u2019s EMTN Programme is released or (2) at substantially the same time its guarantee of the debt
securities is terminated, such subsidiary guarantor is released from all obligations in respect of indebtedness for borrowed money for
which such subsidiary guarantor is an obligor (as a guarantor or borrower). Under the EMTN Programme, Reynolds American\u2019s
guarantee is released if at any time the aggregate amount of indebtedness for borrowed money, subject to certain exceptions, for which
Reynolds American is an obligor does not exceed 10% of the outstanding long-term debt of BAT as reflected in the balance sheet
included in BAT\u2019s most recent publicly released interim or annual consolidated financial statements.
Reynolds American\u2019s guarantee may be released notwithstanding Reynolds American guaranteeing other indebtedness, provided
Reynolds American\u2019s guarantee of outstanding notes issued under the EMTN Programme is released. If Reynolds American\u2019s guarantee
is released, BAT is not required to replace such guarantee, and the debt securities will have the benefit of fewer subsidiary guarantees for
the remaining maturity of the debt securities.
Note: The following summarised financial information report the unconsolidated contribution of each applicable company to the Group\u2019s
consolidated results and not the separate financial statements for each applicable company as local financial statements are prepared in
accordance with local legislative requirements and may differ from the financial information provided below. In particular, in respect of
the U.S. region, all financial statements and financial information provided by or with respect to the U.S. business or RAI (and/or RAI and
its subsidiaries (collectively, the Reynolds Group)) are prepared on the basis of US GAAP and constitute the primary financial statements
or financial information of the U.S. business or RAI (and/or the Reynolds Group). Solely for the purpose of consolidation within the results
of BAT p.l.c. and the BAT Group, this financial information is then converted to IFRS. To the extent any such financial information provided
in these financial statements relates to the U.S. business or RAI (and/or the Reynolds Group), it is provided as an explanation of the U.S.
business\u2019s or RAI\u2019s (and/or the Reynolds Group\u2019s) primary US GAAP based financial statements and information.
The subsidiaries disclosed below are wholly-owned and the guarantees provided are full and unconditional, and joint and several:
a.British American Tobacco p.l.c. (as the parent guarantor), referred to as \u2018BAT p.l.c.\u2019 in the financials below;
b.B.A.T Capital Corporation (as an issuer or a subsidiary guarantor, as the case may be), referred to as \u2018BATCAP\u2019 in the financials below;
c.B.A.T. International Finance p.l.c. (as an issuer or a subsidiary guarantor, as the case may be), referred to as \u2018BATIF\u2019 in the financials
below;
d.B.A.T. Netherlands Finance B.V. (as a subsidiary guarantor), referred to as \u2018BATNF\u2019 in the financials below;
e.Reynolds American Inc. (as a subsidiary guarantor), referred to as \u2018RAI\u2019 in the financials below; and
f.British American Tobacco Holdings (The Netherlands) B.V. (as a subsidiary guarantor of the 2017 Bonds only), referred to as \u2018BATHTN\u2019
in the financials below.
In accordance with Regulation S-X 13-01, information in respect of investments in subsidiaries that are not issuers or guarantors has been
excluded from non-current assets as shown in the balance sheet table below. The \u2018BATHTN\u2019 column in the summarised financial
information is only applicable in the context of the 2017 Bonds.\u00a0British American Tobacco Holdings (The Netherlands) B.V. (BATHTN) is
not an issuer nor guarantor of any of the other securities referenced in this note.\u00a0None of the issuers or other guarantors has material
balances with or an investment in BATHTN. Investments in subsidiaries represents share capital acquired in relation to or issued by
subsidiary undertakings.
| | | | | | |
| Summarised Financial Information |
Year ended 31 December 2022 | | | | | | |
| | | | | | |
| | | | | | |
(Loss)/profit from operations | | | | | | |
| | | | | | |
Net finance income/(costs) | | | | | | |
Profit/(loss) before taxation | | | | | | |
Taxation on ordinary activities | | | | | | |
Profit/(loss) for the year | | | | | | |
Intercompany Transactions \u2013 Income Statement | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries (expense)/income | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries net finance (cost)/income | | | | | | |
Dividend income from non-issuer/non-guarantor subsidiaries | | | | | | |
| | | | | | |
| Summarised Financial Information |
Year ended 31 December 2021 | | | | | | |
| | | | | | |
| | | | | | |
(Loss)/profit from operations | | | | | | |
| | | | | | |
Net finance income/(costs) | | | | | | |
Profit/(loss) before taxation | | | | | | |
Taxation on ordinary activities | | | | | | |
Profit/(loss) for the year | | | | | | |
Intercompany Transactions \u2013 Income Statement | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries (expense)/income | | | | | | |
Transactions with non-issuer/non-guarantor subsidiaries net finance (cost)/income | | | | | | |
Dividend income from non-issuer/non-guarantor subsidiaries | | | | | | |
| | | | | | |
| Summarised Financial Information |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Other non-current liabilities | | | | | | |
| | | | | | |
| | | | | | |
Other current liabilities | | | | | | |
Intercompany Transactions \u2013 Balance Sheet | | | | | | |
Amounts due from non-issuer/non-guarantor subsidiaries | | | | | | |
Amounts due to non-issuer/non-guarantor subsidiaries | | | | | | |
Investment in subsidiaries (that are not issuers or guarantors) | | | | | | |
| | | | | | |
| Summarised Financial Information |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Other non-current liabilities | | | | | | |
| | | | | | |
| | | | | | |
Other current liabilities | | | | | | |
Intercompany Transactions - Balance Sheet | | | | | | |
Amounts due from non-issuer/non-guarantor subsidiaries | | | | | | |
Amounts due to non-issuer/non-guarantor subsidiaries | | | | | | |
Investment in subsidiaries (that are not issuers or guarantors) | | | | | | |
Perpetual hybrid bonds
BAT p.l.c. has issued two \u20ac1\u00a0billion of perpetual hybrid bonds which have been classified as equity as there is no contractual obligation
to either repay the principal or make payments of interest (note 22(d)).
BAT p.l.c.\u2019s unconsolidated contribution to the Group\u2019s consolidated equity results is shown below:
BAT p.l.c.
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