Investment Case

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Building a better and stronger business

Our new five-year strategy will build a better and stronger business by leveraging our assets and capabilities to unlock value for all stakeholders.

Alongside our strategy we have set out a clear capital allocation framework to support investment in the new strategy, strengthen our balance sheet and deliver enhanced shareholder returns.


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, with selective investment in brand equity and sales force, we will stem market share losses to generate improving cash returns from our combustible business.

Our five-year plan will deliver a stronger financial outlook with a clear operational and financial focus over two phases.

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

We have unified our NGP operations under a single leadership, incorporating agile and entrepreneurial ways of working as a differentiated fast follower.

By revising our category prioritisation and limiting our category/market combinations, taking a relentless consumer focus and a more disciplined investment approach, we have a clear plan to enhance our NGP delivery.

Investment and operational improvements will enhance financial delivery as we build the right capability and focus on our enabling functions to support the new strategy.

With the consumer firmly placed at the centre of our business, and a challenger mindset re-established, teamwork and collaboration are encouraged with rewards and incentives based mainly on shared Group objectives.

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

Group expectations are for flat adjusted operating profit in FY22, thereafter delivering improving profit growth with a three-year mid-single digit compound annual growth rate.

Near-term capital priorities include targeted investment in operational levers, a progressive dividend policy reflecting underlying performance and a commitment to an investment grade credit rating.

Once target leverage is achieved, the Board supports surplus capital returns via a share buyback and/or special dividend.


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