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Interim Results for the six months ended 31 March 2019


“This has been another half of pleasing underlying tobacco performance enhanced by the growing contribution of our NGP business, with overall revenues up 2.5 per cent; and Europe and the Americas both growing revenue by 4%. In tobacco, we continue to focus on our longstanding brand and market priorities, and are delivering high margin sales growth. Our Asset Brands continue to outperform and now represent two thirds of our revenue. We have made significant progress in building our NGP business with investment behind myblu generating awareness and consumer adoption, resulting in leading retail shares in most markets. We are building on this momentum in the second half focused on further omnichannel expansion and new product initiatives. We have set the foundations for accelerated revenue growth and we are on track to meet our full year expectations.”

Alison Cooper
Chief Executive

Overview - Adjusted Basis Half Year Result Change
  2019 2018 Actual Constant Currency1
Tobacco volume bn SE 115.2 123.6 -6.9% -6.9%
Net revenue2 £m 3,656 3,523 +3.8% +2.5%
Asset Brand net revenue2 £m 2,386 2,213 +7.8% +7.0%
Tobacco & NGP adjusted operating profit £m 1,538 1,533 +0.3% -1.8%
Distribution adjusted operating profit £m 102 99 +3.0% +3.0%
Total adjusted operating profit £m 1,620 1,624 -0.2% -2.3%
Adjusted earnings per share pence 115.6 114.3 +1.1% -1.3%
Adjusted net debt £m (12,958) (12,698)    
Overview - Reported Basis Half Year Result Change
  2019 2018 Actual                      
Revenue2 £m 14,390 14,060 +2.3%      
Operating profit £m 1,150 833 +38.1%  
Basic earnings per share pence 71.2 51.7 +37.7%  
Dividend per share pence 62.56 56.87 +10.0%  
Reported net debt £m (13,381) (13,008)    

See page 3 for basis of preparation and page 13 for the reconciliation between reported and adjusted measures.
1 Constant currency removes effect of exchange rate movements on the translation of the results of our overseas operations.
2 2018 revenue restated following adoption of IFRS 15.

On Track to Deliver FY19

  • Net revenue up +2.5% driven by strong NGP growth and a good underlying tobacco performance
  • Tobacco benefiting from strong price/mix while volumes temporarily affected by shipment timings
  • NGP revenues of £148m (£158m pre IFRS 15) up +245% with growth in Europe, the US and Japan
  • Quality growth from Asset Brands with net revenue up 7.0%; +280bps as percentage of net revenue
  • Good growth in tobacco profitability driven by the Americas and Europe
  • Adjusted operating profit reflects additional £94m gross NGP investment & £40m profit on OTP disposal last year
  • Reported operating profit up 38.1% with lower amortisation, the prior year impact of distributor administration, lower restructuring costs and an increase in the contingent consideration liability for the Von Erl acquisition
  • On track to deliver growth in revenue, adjusted EPS and cash conversion in line with full year expectations
  • Divestment programme on track