British American Tobacco to cough up more than £400m following landmark ruling

British American Tobacco is to take a £436 million hit after it lost an appeal in a long-running court case brought by disgruntled smokers.

Last week, the Quebec Court of Appeal dismissed an appeal by BAT, Philip Morris and Japan Tobacco, which had challenged a judgment ordering them to shell out 15.6 billion Canadian dollars (£8.8 billion) as part of a class action lawsuit.

The ruling relates to compensation for smokers suffering health problems. They allege the firms did not do enough to warn them of the risks of smoking.

BAT said on Tuesday that it will take a £436 million provision on its 2019 balance sheet as the recoverability of money put in escrow as part of the saga is not certain.

The tobacco giant stressed that it will not impact its adjusted net debt to earnings ratio or impact cash flow.

Its subsidiary, Imperial Tobacco Canada, is still planning on appeal against the judgment to the Supreme Court of Canada.

A British American Tobacco spokesman had said on Monday that it is “extremely disappointed” in the Quebec ruling, adding: “We are still of the view that this decision is wrong – ignoring the reality that both adult consumers and government have known about the risk associated with smoking for decades. As a result, we believe it should be overturned.”