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BRITISHAMERICANTOBACCO

Nicandro Durante CEO


DeutscheBankConference,June2017

CONFIDENTIAL
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

Strong organic growth powered by


GDBs and innovations

Further growth driven by NGP


Portfolio & Geographic Expansion

Augmented by strategic M&A in


combustibles and NGP

RAI - on track for a


transformational deal
ExcellentmarketsharegrowthpoweredbyGDBs

+40bps
+100bps GDB Share

+120bps

+90bps

+90bps

+40bps BAT Share


+80bps +50bps +10bps

+40bps
+20bps +10bps
+40bps +10bps

2010 2011 2012 2013 2014 2015 2016 2017YTD

Note:ReportedYearEndFigures/IndependentNielsenretailauditdata/FMCOnly/YTDApril17
CONTINUING TO DEPLOY INNOVATIONS
Drivenbyaninnovationpipelinethatisrichandgrowing
WITH SPEED & SCALE

Innovationvolumetripled2016 Innovations|1 inevery3 54%ofGDBvolume


vs2010 cigarettessold carriesaninnovation

CIGARETTEVOLUME CAPSULE TUBE SLIMMER GDBVOLUME

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%

All All Format


40% 28% Formats 133% Formats
20% 0%
2010 2015 2016 2010 2016

Innovation Conventional baseline 2015 baseline 2015 baseline 2015


44% Demi Innovation Conventional

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

Vype ispresentin10marketsglobally MarketleaderinUK&Poland

BATVOLUMESALESGROWTHQ117VSSPLY VAPOURSHAREINRETAIL

VypeQ1'16 VypeQ1'17 10M/ChicQ1'17 1 56.1%


50%

+20% +310% -23% 1 37.6%


27%

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

OFFTAKE SHARE - SENDAI DEVICE PENETRATION

8% 7.9% 23% 24%


7% 8%
7% 7% 7% 7% 7% 7% 21% 21%
6% 6% 6% 7% 19% 20%
6% 18% 18%
5% 6% 16% 17%
4%
5% 14% 15%
4% 11% 12% 13%
3% 10% 10%
3% 3% 8% 9%
2% 2% 6% 7%
4%
3%

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

SOLE USAGE CONSUMER DISPOSITION

Dec 16 Jan 17 Feb 17 Mar 17 Apr 17


AWARENESS 73%
Glo sole consumers CONSIDERATION 63%
(% of total Sendai smokers)
1.0% 2.0% 3.4% 4.0% 4.3%
TRIAL 13%
Conversion rate
(cigarettes to sole Glo usage)
40% 43% 50% 51% 53% REGULAR 6%

Source: CCC T-Point Purchaser Data N=60,000 Source: BLM Sendai Week 8
THP Glo roll-out on track

JAPAN (July 2017) SWITZERLAND (April 2017)


July 3rd: Expansion to Tokyo / Launched in one of the biggest
Osaka / Miyagi covering 25% of retailers nationwide
tobacco consumers
By end of 2017: National Expansion
National awareness
already at 25%

CANADA (May 2017) SOUTH KOREA (H2 2017)


Launched in Vancouver Launch announced for H2 2017
StrategicM&AaugmentinggrowthinNGP&tobacco

UK VIPacquisition
Acceleratedretailnetworkexpansion
UK 10Motivesacquisition
NGPs Strengthenedmarketposition,togetherwithVype,BATisnow
themarketleader

Poland CHICacquisition
Acceleratedretailnetworkexpansionandleadingmarketposition

Bulgaria Bulgartabac acquisition


Marketleadingpositionof40%inBulgaria
TOBACCO
Sweden&Norway WinningtonHoldingsacquisition
UniqueWhiteSnusproduct EPOC onlygrowingPremium
brandinSwedenandNorway
RAI Atransformationaltransaction
Createsstronger,trulyglobaltobacco&NGPcompany

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

One of the largest NGP


businesses in the world $1bn
Portfolio Transformation
EPS +10%* average
growth p.a. last 5 years

DPS +6% CAGR last 5 years Whilealsoinvestinginourfuture

*Atconstantratesofexchange
BRITISHAMERICANTOBACCO
DeutscheBankConference,June2017

CONFIDENTIAL