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Importantnotice
ThispresentationinrelationtoBritishAmericanTobaccop.l.c.(BAT)anditssubsidiaries(collectively,theBATGroup)andReynoldsAmericanInc.(Reynolds)anditssubsidiarieshasbeen
preparedsolelyforuseatthispresentation.Thepresentationisnotdirectedto,orintendedfordistributiontooruseby, anypersonorentitythatisacitizenorresidentorlocatedinany
jurisdictionoutsideoftheUnitedStatesandtheUnitedKingdomwheresuchdistribution,publication,availabilityorusewould becontrarytolaworregulationorwhichwouldrequireany
registrationorlicensingwithinsuchjurisdiction.
Theinformationcontainedinthispresentationdoesnotpurporttobecomprehensiveandhasnotbeenindependentlyverified.
Certainindustryandmarketdatacontainedinthispresentationhascomefromthirdpartysources.Thirdpartypublications,studiesandsurveysgenerallystatethatthedatacontainedtherein
havebeenobtainedfromsourcesbelievedtobereliable,butthatthereisnoguaranteeofaccuracyorcompletenessofsuchdata.
Forwardlookingstatements
CertainstatementsinthispresentationregardingtheproposedmergerofReynoldsandBAT(theProposedTransaction),theexpectedtimetableforcompletingtheProposedTransaction,the
benefitsandsynergiesoftheProposedTransaction,futureopportunitiesforthecombinedcompanyandanyotherstatementsregardingBATs,Reynoldssorthecombinedcompanysfuture
expectations,beliefs,plans,objectives,financialconditions,assumptionsorfutureeventsorperformancethatarenothistoricalfactsareforwardlookingstatementsmadewithinthemeaning
ofSection21EoftheUnitedStatesSecuritiesExchangeActof1934.Thesestatementsareoften,butnotalways,madethrough theuseofwordsorphrasessuchasbelieve,anticipate,could,
may,would,should,intend,plan,potential,predict,will,expect,estimate,project,positioned,strategy,outlookandsimilarexpressions.Allsuchforwardlooking
statementsinvolveestimatesandassumptionsthataresubjecttorisks,uncertaintiesandotherfactorsthatcouldcauseactualfuturefinancialcondition,performanceandresultstodiffer
materiallyfromtheplans,goals,expectationsandresultsexpressedintheforwardlookingstatementsandotherfinancialand/orstatisticaldatawithinthispresentation.Amongthekeyfactors
thatcouldcauseactualresultstodiffermateriallyfromthoseprojectedintheforwardlookingstatementsareuncertaintiesrelatedtothefollowing:whethertheconditionstotheProposed
TransactionwillbesatisfiedandtheProposedTransactionwillbecompletedontheanticipatedtimeframe,oratall;thefailuretorealizecontemplatedsynergiesandotherbenefitsfromthe
ProposedTransaction;theincurrenceofsignificantcostsandtheavailabilityandcostoffinancinginconnectionwiththeProposedTransaction;theeffectoftheannouncementoftheProposed
Transaction,andrelateduncertaintiesastowhethertheProposedTransactionwillbecompleted,onBATs,Reynoldssorthecombinedcompanysabilitytoretaincustomers,retainandhirekey
personnelandmaintainrelationshipswithsuppliersandtheiroperatingresultsandbusinessesgenerally;theabilitytomaintaincreditratings;changesinthetobaccoindustryandstockmarket
tradingconditions;changesordifferencesindomesticorinternationaleconomicorpoliticalconditions;changesintaxlaws andrates;theimpactofadverselegislationandregulation;theabilityto
develop,produceormarketnewalternativeproductsprofitably;theabilitytoeffectivelyimplementstrategicinitiativesandactionstakentoincreasesalesgrowth;theabilitytoenhancecash
generationandpaydividends;adverselitigationanddisputeoutcomes;andchangesinthemarketposition,businesses,financial condition,resultsofoperationsorprospectsofBAT,Reynoldsor
thecombinedcompany.
Importantnotice
AdditionalinformationconcerningtheseandotherfactorscanbefoundinReynoldssfilingswiththeU.S.SecuritiesandExchangeCommission(SEC),includingReynoldssmostrecentAnnual
ReportsonForm10K,QuarterlyReportsonForm10QandCurrentReportsonForm8K,whichmaybeobtainedfreeofchargefromtheSECswebsitewww.sec.gov,andBATsAnnualReports,
whichmaybeobtainedfreeofchargefromBATswebsitewww.bat.com.Readersarecautionednottoplaceunduerelianceontheseforwardlookingstatementsthatspeakonlyasofthedate
hereofandBATundertakesnoobligationtoupdateorrevisepubliclyanyforwardlookingstatementsorotherdataorstatementscontainedwithinthispresentation,whetherasaresultofnew
information,futureeventsorotherwise. Nostatementinthispresentationisintendedtobeaprofitforecastandnostatement inthispresentationshouldbeinterpretedtomeanthatearnings
pershareofBATorReynoldsforthecurrentorfuturefinancialyearswouldnecessarilymatchorexceedthehistoricalpublishedearningspershareofBATorReynolds,respectively.
Thispresentationisanadvertisementanddoesnotconstituteaprospectusorprospectusequivalentdocument.Investorsshouldnotmakeanyinvestmentdecisionbasedonthispresentation. A
prospectusrelatingtotheBATordinarysharestobeissuedinconnectionwiththeproposedacquisitionofReynoldsAmericanInc.willbepublishedinduecourse.
Additionalinformationandwheretofindit
ThispresentationisneitherasolicitationofaproxynorasubstituteforanyproxystatementorotherfilingsthatmaybemadewiththeSECinconnectionwiththeProposedTransaction.Any
solicitationwillonlybemadethroughmaterialsfiledwiththeSEC.Nonetheless,thispresentationmaybedeemedtobesolicitationmaterialinrespectoftheProposedTransactionbyBAT. BAT
hasfiledrelevantmaterialswiththeSEC,includingaregistrationstatementonFormF4thatincludesaproxystatementofReynoldsthatalsoconstitutesaprospectusofBAT.Theregistration
statementhasnotyetbecomeeffectiveandtheproxystatementincludedthereinisinpreliminaryform.Investorsandsecurityholdersareurgedtoreadallrelevantdocumentsfiledwiththe
SEC,includingtheproxystatement/prospectus,becausetheycontainimportantinformationabouttheProposedTransaction.Investorsandsecurityholdersmayobtainthedocumentsfreeof
chargeattheSECswebsite,http://www.sec.gov,orforfreefromBATatbatir@bat.com/+44(0)2078451000.
Participantsinsolicitation
ThispresentationisneitherasolicitationofaproxynorasubstituteforanyproxystatementorotherfilingsthatmaybemadewiththeSECinconnectionwiththeProposedTransaction.
Nonetheless,BAT,anditsaffiliatesandeachoftheirdirectorsandexecutiveofficersandcertainemployeesmaybedeemedtobeparticipantsinthesolicitationofproxiesfromtheholdersof
ReynoldscommonstockwithrespecttotheProposedTransaction.InformationaboutsuchpartiesandadescriptionoftheirinterestsaresetforthinBATs2016AnnualReport,whichmaybe
obtainedfreeofchargefromBATswebsitewww.BAT.comandReynoldssannualreportfortheyearended31December2016,whichwasfiledonForm10KwiththeSECon9February2017
andReynoldssForm10K/A,whichwasfiledwiththeSECon20March2017(suchfilingsbyReynolds,collectively,ReynoldsSEC filings).TotheextentholdingsofReynoldssecuritiesbysuch
partieshavechangedsincetheamountscontainedintheReynoldsSECfilings,suchchangeshavebeenorwillbereflectedonStatementsofChangeinOwnershiponForm4filedwiththeSEC.
AdditionalinformationregardingtheinterestofsuchpartiesisalsoincludedinthematerialsthatBAThasfiledwiththeSECinconnectionwiththeProposedTransaction.Thesedocumentsmay
beobtainedfreeofchargefromtheSECswebsitehttp://www.sec.gov,orfromBATusingthecontactinformationabove.
Nonsolicitation
Thispresentationshallnotconstituteanoffertosellorthesolicitationofanoffertosellorthesolicitationofanoffertobuyanysecurities,norshalltherebeanysaleofsecuritiesinany
jurisdictioninwhichsuchoffer,solicitationorsalewouldbeunlawfulpriortoregistrationorqualificationunderthesecuritieslawsofanysuchjurisdiction.Noofferofsecuritiesshallbemade
exceptbymeansofaprospectusmeetingtherequirementsofSection10oftheSecuritiesActof1933,asamended. Thispresentationshouldnotbeconstruedas,investmentadviceandisnot
intendedtoformthebasisofanyinvestmentdecision,nordoesitformthebasisofanycontractforacquisitionorinvestmentinanymemberoftheBATGroup,financialpromotionoranyoffer,
invitationorrecommendationinrelationtoanyacquisitionof,orinvestmentin,anymemberoftheBATGroup.
Consistentgrowthinearningsanddividend
Earningspersharegrowth Dividendspershare
Averagegrowth2005 2016:11%p.a.* CAGR:12%
169
154
148
142
135
127
114
100
84
66
56
47
5% 10% 10% 9%
5%
12% 15% 12%
10% 9% 9% 10% 11% 10% 8% 10% 10%
4% 5% 4%
12% 10%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EPS@constantcurrency TranslationalfximpactonEPS Dividendspershare
*Growth@constantcurrency
Our strategy continues to deliver
+40bps
+100bps GDB Share
+120bps
+90bps
+90bps
+40bps
+20bps +10bps
+40bps +10bps
Note:ReportedYearEndFigures/IndependentNielsenretailauditdata/FMCOnly/YTDApril17
CONTINUING TO DEPLOY INNOVATIONS
Drivenbyaninnovationpipelinethatisrichandgrowing
WITH SPEED & SCALE
100%
100%
10%
90%
26% 29% 45bn 130 94bn 97 97bn 96 80% 45%
80% 54%
2016 Markets 2016 Markets 2016 Markets 60%
70%
40%
60%
Demi,
50% SL&SS 20%
Source:Companydata
DifferentiatedstrategytowininNGPs
SOCIALCONSIDERATION TOBACCOTASTEAND
ANDHYGIENE SENSORIALS
VAPOUR by 2020* THP by 2020
FLAVOUREXPERIENCES 10bn+ industry value 9bn+ industry value NICOTINESATISFACTION
53m+ consumers 9m+ consumers
PROFILEOFVAPERSINT12MARKETS**,% DEMANDFORTOBACCOFLAVOURSDECREASING
100%
10 12 10% 13% Tobacco
Neversmoked 10 10 12% 11%
6% 7% Botanical
19 23
Returningexsmoker 20% 23%
50% Fruit
23% 21%
Convertedexsmoker 61 Sweet(e.g.Caramel,Honey)
55
28% 25% Beverages
Smoker
0%
2015 2016 2015 2016 Others
*Internalestimates;T25markets,excludingUS
**12markets(incl.US)annualonlineconsumertracker Source:E&YENDSreport,January2017
Vapour BATamarketleader
BATVOLUMESALESGROWTHQ117VSSPLY VAPOURSHAREINRETAIL
10.6% 10.8%
9.2%
7.5%
6.1%
+100% +310% 5.7%
3.1%
2.7%
1.3% 1.7%
UK IT DE FR PO
Source:BATvolumepacksalessellout;Vype UKretaildatafromNielsen;
Vype onlinesalesdatafromOmetria Source:Shareinretail:UKNielsen,allothersestimateonshipmentsales6MMAbasis
Strongvolumeandsharegrowthacrosskeyvapourmarkets
Tobacco Heating Products - Glo is exceeding expectations
w1 w5 w9 w13 w17 w21 w25 w1 w3 w5 w7 w9 w11 w13 w15 w17 w19 w21 wk23
Based on CVS-B in Sendai Based on total estimated device offtake and total adult smoker population in Sendai
Source: CCC T-Point Purchaser Data N=60,000 Source: BLM Sendai Week 8
THP Glo roll-out on track
UK VIPacquisition
Acceleratedretailnetworkexpansion
UK 10Motivesacquisition
NGPs Strengthenedmarketposition,togetherwithVype,BATisnow
themarketleader
Poland CHICacquisition
Acceleratedretailnetworkexpansionandleadingmarketposition
Atrulyglobal
Directaccessto Balancedpresence Portfolioof
companyinthe
theattractive inhighgrowth strong,growing
fastgrowing
USmarket emergingmarkets globalbrands
NGPcategory
andhighprofitability
developedmarkets
Enhancedcash Continued
Atleast$400m
generationwith commitmentto
ofannualised
increasedaccess BATsdividend
costsynergies
EPSandDPS toasignificant policywitha
anticipatedby
accretiveinthe proportionof payoutratioofat
theendofthird
firstfullyear groupcashflows least65%
fullyear
HighlyattractiveUSmarket
ONEOFTHEBIGGESTTOBACCOMARKETSBYVOLUME ANDLARGESTOPENMARKETBYVALUE
Billionsticks2015 Value$bn2015
2,490 228
USCAGR 94 USCAGR
2015 20E: 2015 20E:
(2.1)% 1.8%
303
269 264
182
32
103 97 88 83 23 23 20 20
81 17 17 16
France
Russia
US
Turkey
Egypt
US
Germany
Russia
Italy
Turkey
Philippines
China
India
Indonesia
Japan
China
Japan
Indonesia
Bangladesh
UK
WITHLOWCIGARETTEPRICESRELATIVETOINCOME*
9.8 9.3
7.7 7.4
5.9 5.0 4.2 4.1 3.6 3.6 2.9 2.9 2.4
Japan US Russia Germany Italy France Australia China Indonesia UK Turkey Philippines Egypt
*IncomedefinedasGDPpercapita(000)/averagepackprice(US$)
Source:Euromonitor,GlobalInsights,Companyinternaldata
RAI OntrackforcompletionearlyQ3
SECregistrationprocessexpectedtobecompletedshortly
Shareholderdocumentsexpectedtobepublishedshortly
ShareholdervotemidJuly
Completionexpectedshortlythereafter
Currenttrading
Tradinginlinewithexpectations
Marketsharegrowthmomentumcontinues:+10bps*YTD,ontopof+50bpsin2016
Profitgrowthexpectedtobeweightedtothesecondhalf,dueto:
Phasingofvolumeshipments
NGPinvestments
Marketingspend
AtcurrentratesFXa7%tailwindfortranslationonFYoperatingprofit
and13%onH1operatingprofit
* Nielsen Retail Audit, April 2017 YTD
Thebusinessisperformingverywell
Last5years consistentdeliveryforshareholderswhilstalsoinvesting
forthefuture
Corporate share up
170 bps
GDB share up
530 bps
*Atconstantratesofexchange
BRITISHAMERICANTOBACCO
DeutscheBankConference,June2017
CONFIDENTIAL