Investment Case


Building a better and stronger business

We have enhanced our investor proposition by building a stronger and more consumer-focused business as well as through our clear capital allocation framework, which supports investment in our new strategy, maintains a strong and efficient balance sheet and delivers enhanced shareholder returns.

Our investment case rests on five pillars.

The tobacco value creation model remains resilient, with affordability and strong brand loyalty supporting sustainable pricing.

By focusing on our top five combustible markets that generate c.70% of operating profit contribution, and with selective investment in brand equity and our sales force, we are starting to stem market share losses.

This, together with strong performance from our broader portfolio and the exit from select markets, underpins the generation of improving cash returns from our combustible business.

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Next generation products (NGP) have growth potential as they are still a relatively nascent category in the majority of markets.

We seek to build a sustainable NGP business through a relentless consumer focus, focusing on offering consumers a choice where they have already expressed an NGP preference and where we can leverage our existing customer relationships.

Continued investment and operational improvements will enhance financial performance as we focus on making our enabling functions more efficient.

We are placing the consumer at the centre of our business and our decision-making. We are adopting a challenger mindset and embedding behaviours to support a performance-based culture.

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The business remains highly cash-generative with low capital intensity, a working capital focus and disciplined capital expenditure producing adjusted operating cash conversion of typically 90% to 100%.

With the foundations for growth in place, expectations are to deliver a three-year mid-single-digit compound annual growth rate in adjusted operating profit.

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We have clear capital allocation priorities: (1) targeted investment to support our strategy, (2) a strong and efficient balance sheet with an investment grade credit rating, (3) a progressive dividend policy reflecting underlying performance, and (4) to return surplus capital to investors via a share buyback.

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