Tag: United Kingdom

  • US urged to probe BAT

    US urged to probe BAT

    The Campaign for Tobacco-Free Kids (CfTFK) is urging the US Department of Justice and the US Securities and Exchange Commission to investigate British American Tobacco and its subsidiaries for possible violations of the anti-bribery and accounting provisions of the Foreign Corrupt Practices Act (FCPA).

    The CfTFK) said in a note posted on its website that it had requested the investigation following new allegations about the conduct of BAT in Africa published on Friday by the UK-based newspaper, The Guardian.

    ‘British American Tobacco has faced mounting allegations that the company engaged in widespread bribery and corruption in Africa to gain advantage over competitors and stifle government efforts to curb smoking,’ the CfTFK note said. ‘Earlier this month, the UK Serious Fraud Office (SFO) formally launched an investigation of BAT on suspicions of corruption.

    ‘An investigative report published today [Friday] by The Guardian revealed new allegations that, for years, BAT secretly and possibly illegally moved millions of US dollars in cash across international borders into the war-torn Democratic Republic of Congo (DRC) allegedly to support the company’s tobacco leaf operations in that country. The new allegations indicate BAT’s operations included engaging with armed rebels involved in the long-standing DRC conflict in order to make secret cash drops used to pay for tobacco leaf from farmers in Auzi, an unmapped town BAT built in the 1950s, according to The Guardian.

    ‘In addition to possible violations of the FCPA, The Guardian report raises questions about whether BAT’s conduct in moving US dollars during the DRC conflict also violates federal anti-money laundering laws, especially as the US has had sanctions in place against the DRC since 2006.’

    Later in its note, the CfTFK said the growing allegations about BAT’s conduct were particularly alarming following the July 2017 merger of BAT and Reynolds American in the US. ‘The recent merger places BAT in a leading position in the US market and, according to BAT, created the largest tobacco company in the world by operating profits,’ the note said.

    Meanwhile, BAT said on August 1 that it intended to co-operate with the UK Serious Fraud Office investigation.

    ‘As previously announced, we are investigating, through external legal advisers, allegations of misconduct,’ the company said in a note posted on its website.

    ‘We have been co-operating with the Serious Fraud Office (“SFO”) and British American Tobacco (“BAT”) has been informed that the SFO has now opened a formal investigation.

    ‘BAT intends to co-operate with that investigation.’

    The CfTFK note is at: http://www.tobaccofreekids.org/press_releases/post/2017_08_18_bat.

    The Guardian story, by Sarah Boseley, is at: https://www.theguardian.com/world/2017/aug/18/british-american-tobacco-cigarettes-africa-middle-east.

  • Mini-tender targets BAT

    Mini-tender targets BAT

    British American Tobacco has recommended that stockholders reject a mini-tender offer by TRC Capital Corporation.

    In a news release issued yesterday, BAT said it had been notified of an unsolicited ‘mini-tender’ offer by TRC Capital Corporation (TRC) to purchase up to 2,000,000 American Depositary Shares (ADSs), or about 0.087 percent of the outstanding issued ordinary shares of BAT (excluding treasury shares) as at the close of business on August 16, at a price of $60.13 per ADS in cash. Each ADS represents one ordinary share of BAT.

    ‘TRC’s offer price is approximately 4.42 percent less than the closing price of BAT’s ADSs on 11 August 2017, the day before the mini-tender offer commenced,’ BAT said in its release.

    ‘BAT does not endorse TRC’s mini-tender offer and recommends that BAT ADS holders do not tender their ADSs in response to the offer because it is a mini-tender offer at a price below the market price for BAT ADSs (as of the date BAT received notice of the offer) and is subject to numerous conditions.

    ‘According to TRC’s offer documents, BAT ADS holders who have already tendered their shares may withdraw their ADSs at any time prior to 12:01 a.m. New York City time, on Wednesday, 13 September 2017, the expiration date set forth in the offer documents (unless extended), by following the procedures described in the offer documents…’

    The full BAT release with links to information about mini-tenders is at: http://www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DOAQBCNN.

  • Smoking saves £14.7 billion

    Smoking saves £14.7 billion

    Contrary to popular belief, the three most censured ‘lifestyle factors’ – drinking alcohol, smoking tobacco and eating to obesity – do not cost the UK taxpayer money, according to a note posted on the Institute of Economic Affairs’ (IEA) website.

    In fact, the punitive taxes levied on the products that fuel these lifestyles more than cover the costs they impose on public finances, ‘providing a net saving to the government of £22.8 billion,’ the IEA says.

    The findings of the latest instalment of a three-part series of reports from the IEA, debunks the claims of public health campaigners that these lifestyle choices are draining public services.

    ‘It may be easy to point the finger of blame at smokers, drinkers and the obese for rising NHS [National Health Service] costs, but this no longer stands up to scrutiny given the findings of this report and the levels of taxation now levied on “sin”,’ the IEA note said. ‘And by scapegoating these people, campaigners and policymakers risk ignoring the real problem that our healthcare system faces: an ageing population.’

    The latest report, Smoking and the Public Purse, is said to be the first of its kind to measure the net effect of smoking on the taxpayer in the UK, including savings and focusing purely on external costs.

    The costs and savings from smoking are said to be:

    • The government spends £3.6 billion treating smoking-related diseases on the NHS and up to £1 billion collecting cigarette butts and extinguishing smoking-related house fires.
    • The government saves £9.8 billion annually in pension, healthcare and other benefit payments due to premature mortality.
    • The government brings in £9.5 billion annually in duty paid on tobacco.

    This means that smoking produces a net saving to the government of £14.7 billion a year, at current rates of consumption.

    “We are constantly being told that people who choose to drink, smoke or eat too much are a burden on the UK taxpayer,” said the report’s author Christopher Snowdon, head of Lifestyle Economics at the IEA. “This is one reason why we have seen such aggressive hikes in taxes on alcohol, smoking and very soon, a tax on sugar. But the justification for these taxes is based on an illusion.

    “Smokers, drinkers and those who are obese actually provide a net benefit to the public finances, so vilifying them is futile in the quest to make savings for the NHS.

    “A careful consideration of the evidence shows that the popular belief that costs will fall if people live healthier and for longer is false. While it’s good that we now have longer life expectancies, policymakers must now address how we tackle the financial consequences of the ageing population rather than pointing the finger elsewhere.”

    The IEA note is at https://iea.org.uk/media/uk-will-pay-almost-25-billion-in-sin-taxes-next-year/; from where it is possible to download a copy of ‘Smoking and the Public Purse’, and the separate reports on alcohol and obesity.

  • Insurance “rip-off”

    Insurance “rip-off”

    Insurance companies are still hitting electronic-cigarette users with a ‘smoker’s surcharge’ despite mounting reports that indicate vaping is far less dangerous than is smoking tobacco, according to a story by Russell Blackstock for The Sunday Post, Scotland.

    Although recent government-backed studies have found that vaping e-cigarettes is 95 percent less harmful than smoking cigarettes, life insurers take the view that a puff on a cigarette is identical to a puff on a vaping device. And life insurance premiums are often twice as expensive for smokers as they are for non-smokers.

    Linda Bauld, professor of health policy at Scotland’s Stirling University, believes that classing people who use e-cigarettes as being the same as smokers is “fundamentally wrong”.

    “It is just not fair,” she reportedly told the Sunday Post. “As well as being financially punitive to people who vape, it can also send negative messages to those who want to stop smoking. It is not helpful.

    “If vapers are regarded as being the same as tobacco smokers it could lead to an attitude of ‘why bother’ and before you know it they are back at the corner shop buying cigarettes.”

    People who vape and don’t use combustible tobacco products should be treated the same as non-smokers by insurance companies, Bauld added.

    It is estimated that about three million people in the UK are now using vaping devices.

    Many don’t realise they will pay up to twice as much as non-smokers for life or critical illness insurances.

    Meanwhile, Andy Morrison, Scottish lead advocate for the vaping organization the New Nicotine Alliance, said the practice by insurance companies was a “rip-off”.

    “Vapers are being fleeced by insurance companies,” he said.

    “It is ridiculous that insurers are still conflating combustible tobacco and vaping products despite all the evidence from bodies such as Public Health England that vaping is far less harmful than smoking.”

  • Coesia acquires Molins

    Coesia acquires Molins

    The Coesia Group, which includes G.D, Sasib and Flexlink, said today it had completed the acquisition of the Molins Instrumentation and Tobacco Machinery business.

    The acquisition was foreshadowed on June 8.

    ‘The Instrumentation and Tobacco Machinery division, with 2016 revenues of approximately GB£40 million, is a global player in the design, development and manufacturing of secondary tobacco processing machinery, under the brand name Molins, as well as a leading player in process and quality control instruments and analytical smoke constituent capture machinery, under the brand name Cerulean,’ Coesia said in a press note.

    “With the acquisition of Molins and Cerulean, Coesia will strengthen its leadership in the tobacco machinery industry and enhance its portfolio and product offering in the packaging and instrumentation markets” Angelos Papadimitriou, the Coesia Group’s CEO was quoted as saying.

    ‘Coesia is a group of innovation-based industrial and packaging solutions companies operating globally, headquartered in Bologna, Italy, fully owned by Isabella Seràgnoli,’ the note said. ‘The Group has 89 operating units (52 of which with production facilities) in 32 countries, a turnover in 2016 of €1,457 million and over 6,000 employees.’

  • Illegal trade targeted

    Illegal trade targeted

    The trade association representing the UK tobacco industry yesterday launched a campaign targeting the illegal tobacco trade across some of the busiest transport hubs in the UK, key transports routes in and out of the country and online.

    ‘The campaign which builds on previous TMA [UK] activities seeks to challenge the flows of non-UK duty paid tobacco from known high-risk routes into the UK which is then sold on illegally in a variety of ways,’ said a TMA press note.

    ‘Research shows that this ranges from simply selling on to friends and family or by more sophisticated means such as through the use of retailers, social media and community websites.

    ‘The TMA is therefore extending its campaign activities to focus on such online platforms used for the sale of illegal tobacco as well as known transport routes used to bring non-UK duty paid tobacco into the UK.’

    The campaign, which will run during the summer, will target, for instance, airports, ports, international coaches, websites and social media platforms.

    The TMA said it was advising adult consumers to adhere to the government guidelines and only bring tobacco into the UK for personal use, because the consequences for doing otherwise could be severe.

    And it said it was advising smokers not to buy illicit tobacco products from online sources because in doing so they could be aiding organised crime.

    “As people travel to and from the continent over the summer holidays, we are taking this opportunity to remind them with this new campaign that it is illegal to bring back tobacco from overseas and then sell it on in the UK,” said Giles Roca, director general of the TMA.

    “Reselling tobacco bought overseas is not a victimless crime. This practice affects many hard-working independent shopkeepers who are deprived of legitimate tobacco sales and related footfall.”

  • BAT under investigation

    BAT under investigation

    British American Tobacco said today that it intended to co-operate with a UK Serious Fraud Office investigation.

    ‘As previously announced, we are investigating, through external legal advisers, allegations of misconduct,’ the company said in a note posted on its website.

    ‘We have been co-operating with the Serious Fraud Office (“SFO”) and British American Tobacco (“BAT”) has been informed that the SFO has now opened a formal investigation.

    ‘BAT intends to co-operate with that investigation.’

  • BAT’s volume down

    BAT’s volume down

    British American Tobacco’s cigarette volume during the six months to the end of June, at 314 billion, was down by 5.6 percent on that of the six months to the end of June 2016.

    Volume, at 58 billion, was increased by 1.7 percent in the company’s Western Europe region, but it was down in each of its other three regions: in its Asia Pacific region by 9.5 percent to 95 billion; in its Americas region by 5.3 percent to 53 billion; and in its EEMEA (Eastern Europe, the Middle East and Africa) region by 5.3 percent to 108 billion.

    BAT reported that group cigarette volume from subsidiaries (excluding associates and joint ventures) fell by 5.6 percent to 314 billion, or by 5.8 percent on an organic basis, as growth in Bangladesh, Gulf Co-operation Council countries, Vietnam and Nigeria was more than offset by market contractions in Pakistan, Ukraine, Iran, Brazil, Indonesia and Japan. The company said that its market share had increased by 0.30 of a percentage point, driven by the continued growth of its Global Drive Brands, whose market share had risen by 0.50 of a percentage point, albeit on volume that was by 1.3 percent down.

    Of the drive brands, Dunhill’s volume fell by 4.5 percent and its market share was lower by 0.10 of a percentage point; Kent’s volume was 1.6 percent lower while its market share was up by 0.15 of a percentage point; Lucky Strike’s volume was up by 12.4 percent and its market share was increased by 0.20 of a percentage point; Pall Mall’s volume fell by 9.6 percent while its market share grew by 0.10 of a percentage point; and Rothmans’ volume grew by 6.2 percent and its market share was up by 0.15 of a percentage point.

    Meanwhile, the volume of BAT’s other international cigarette brands fell by 7.0 percent, as sales growth in State Express 555, in Vietnam, and Shuang Xi, mainly in Russia, was more than offset by lower volumes of Viceroy in Turkey and Venezuela, Peter Stuyvesant in South Africa and Vogue in Russia, South Korea and Canada.

    BAT’s revenue, calculated at constant rates of exchange during the six months to the end of June, at £6,901 million, was said to be up by 3.5 percent on that of the six months to the end of June 2016. It was up by 15.7 percent to £7,717 million at current rates.

    Profit from operations was up by 3.7 percent to £2,295 million at constant rates of exchange, and by 16.3 percent to £2,574 million at current rates.

    Basic earnings per share were down by 15.3 percent to 121.8p.

    In announcing the half-year results, CEO, Nicandro Durante, said the performance of the group in the first six months of the year had been in line with expectations and demonstrated the good organic progress the company was making.

    “The relative weakness of sterling led to a significant tailwind on our reported results, with revenue 15.7 percent higher and profit from operations up 16.3 percent at current rates of exchange,” he said. “Excluding the translational tailwind and the adjusting items, adjusted revenue and adjusted profit from operations were both up, 2.5 percent and 3.2 percent respectively at constant rates of exchange.”

    Durante said that BAT had made good progress with its next-generation-product business and was now present in 15 markets worldwide with its vapor products and THP [tobacco-heating product]. “In the Japanese city of Sendai, glo continues to perform exceptionally well, reaching an estimated 8 percent share and with one in three smokers in Sendai having purchased glo,” he said. “We have recently expanded our coverage to Tokyo, Miyagi and Osaka and national rollout in Japan is planned for October 2017. While it remains early days, the initial results in Tokyo are excellent, with performance ahead of [that of] Sendai over the same period. We are also now present in Canada (Vancouver) and nationally in Switzerland, with very encouraging early signs.

    “To support our on-going glo expansion plans, and to meet the increasing demand, investment in Neostik production capacity is taking place in South Korea and Russia.

    “We are the largest vapor company in the world, with market leadership in the US, through Vuse, and in Poland and the UK, with the latter driven by the two fastest growing vapor brands in the market, Vype and Ten Motives. Vype is now present in 10 markets and, whilst still immaterial in the context of the group, our European vapor business grew with turnover up strongly against [that of] the same period last year.”

    Durante said he was delighted that BAT had completed the deal to acquire the balance of Reynolds shares on July 25.

    He said the company was on course to deliver another good year.  “We continue to expect profit growth to be weighted to the second half of the year, which will be moderated by the continued roll out of NGP and is against a strong prior year comparator in Ukraine,” he said. “Although the challenging environment in a number of markets continues, including in Russia, I am confident that we remain on course to deliver another year of good earnings growth at constant rates of exchange.”

  • Making smokers receptive

    Making smokers receptive

    New research suggests that smokers who undergo a CT (computed tomography) scan of their lungs are more likely to quit than are those who don’t undergo such a process, according to a story by Rod Minchin published by independent.co.uk.

    Scientists said the findings of a study – looking at the effect of CT screening on smokers at high-risk of developing lung cancer – was at odds with the belief that a negative screening result offered a ‘licence to smoke’.

    They suggested that engaging with lung screening could provide smokers with an opportunity to access smoking cessation support at a time when they were likely to be more receptive to offers of help.

    “Our trial shows that CT lung cancer screening offers a teachable moment for smoking cessation among high-risk groups in the UK,” Dr. Kate Brain, of Cardiff University, was quoted as saying.

    “We now need evidence about the best ways of integrating lung cancer screening with stop-smoking support, so that services are designed to deliver the maximum health benefits for current and future generations.”

    The trial, led by researchers at Cardiff University working with the University of Liverpool, King’s College London and Queen Mary University, London, involved 4,055 participants aged 50 to 75.

    Minchin’s story, which includes information about how the research was conducted, is at: http://www.independent.co.uk/news/health/smokers-ct-scan-lungs-quitting-more-likely-tobacco-cigarettes-cardiff-university-dr-kate-brain-a7857691.html.

  • BAT acquires RAI

    BAT acquires RAI

    British American Tobacco plc said yesterday it had completed the acquisition of the 57.8 percent of Reynolds American Inc. it did not already own.

    According to a press note posted on BAT’s website, the acquisition creates a stronger, global supplier of tobacco and next generation products ‘committed to delivering sustained long-term profit growth and returns’.

    ‘BAT now has a balanced presence in high-growth emerging-markets and high-profitability developed-markets, combined with direct access to the attractive US market,’ the note said.

    ‘Increased access to a significant proportion of group cash flows provides further support to the company’s continued commitment to a dividend pay-out ratio of at least 65 percent and a strong financial profile, targeting a solid investment grade credit rating through progressive deleveraging.’

    BAT’s chief executive Nicandro Durante described the acquisition as a “transformational deal”.

    “We will take the best of the best from both businesses across all areas to create a stronger, more sustainable company,” he was quoted as saying.

    “We are pleased to welcome Reynolds group employees to British American Tobacco and look forward to progressing what we are confident will be a smooth integration.

    “Work has already begun to realise the projected cost synergies and we are committed to driving continued, sustainable profit growth and returns for shareholders long into the future.”